<PAGE>
DELAWARE
INVESTMENTS
Philadelphia * London
Delaware Diversified Growth Fund
(Formerly Capital Appreciation Fund)
Institutional Class
Prospectus
December 17, 1999
Growth of Capital Fund
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy of this prospectus, and any
representation to the contrary is a criminal offense.
<PAGE>
Table of contents
Fund profile page
Delaware Diversified Growth Fund
How we manage the Fund page
Our investment strategies The securities
we typically invest in The risks of
investing in the Fund
Who manages the Fund page
Investment manager
Portfolio managers
Fund administration (Who's who)
About your account page
Investing in the Fund
How to buy shares
How to redeem shares
Account minimum
Exchanges
Dividends, distributions and taxes
Certain management considerations
Financial highlights page
Glossary page
<PAGE>
Profile: Delaware Diversified Growth Fund
What are the Fund's goals?
Delaware Diversified Growth Fund seeks capital appreciation. Although the Fund
will strive to meet its goals, there is no assurance that it will.
What are the Fund's main investment strategies?
We invest primarily in common stocks of large-sized companies. We look for
companies that we believe have growth potential that significantly exceeds the
average anticipated growth rate of companies in the S&P 500, a commonly quoted
stock index. We generally consider large-sized companies to be companies that
have at least $3 billion in market capitalization, though we may invest in
companies with a smaller market capitalization.
In evaluating companies, we use a two-fold approach. First, we rank a broad
universe of companies using what is known as a quantitative model. We then do
additional qualitative research on the companies that appear most promising. A
quantitative approach generally utilizes a computer program to evaluate a large
number of stocks based on a variety of pre-selected characteristics for the
stocks. We combine that with additional hands-on research that might evaluate
such factors as the quality of the company's management, new product lines, the
outlook for the industry and competitive pressures they might be facing. We seek
to identify companies that are highly ranked by our quantitative screening and
also look promising from a qualitative perspective.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The value of your investment in the Fund
will increase and decrease according to changes in the value of the securities
in the Fund's portfolio. This Fund will be affected by declines in stock prices,
which can be caused by a decline in the stock market or poor performance from
specific companies that can result from negative earnings reports or dividend
reductions. For a more complete discussion of risk, please turn to page 9.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors seeking an investment primarily in common stocks.
o Investors seeking exposure to the capital appreciation opportunities of
large-sized companies.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors whose primary goal is current income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
<PAGE>
How has the Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show how returns for the Fund's Institutional Class have varied
over the past two calendar years, as well as the average annual returns of these
shares for the past year and lifetime period. The Fund's past performance is not
necessarily an indication of how it will perform in the future. The returns
reflect voluntary expense caps. The returns would be lower without the voluntary
caps.
[bar chart]
Year-by-year total return (Institutional Class)
- -------------- ----------
1997 1998
- -------------- ----------
17.53% 10.10%
- -------------- ----------
The Fund`s Institutional Class had a calendar year-to-date return of 0.88% as of
September 30, 1999. During the periods illustrated in this bar chart, the Class'
highest quarterly return was 14.51% for the quarter ended December 31, 1998 and
its lowest quarterly return was 11.95% for the quarter ended September 30, 1998.
Average annual returns for periods ending 12/31/98
- ---------------------------------------------------------------
Institutional S&P 500 Composite
Class Stock Index
- ---------------------------------------------------------------
- ---------------------------------------------------------------
1 year 10.10% 28.60%
- ---------------------------------------------------------------
Lifetime (inception
(12/2/96) 12.39% 28.36%
- ---------------------------------------------------------------
The Fund's returns above are compared to the performance of the S&P 500
Composite Stock Index. You should remember that unlike the Fund, the Index is
unmanaged and doesn't include the costs of operating a mutual fund, such as the
costs of buying, selling and holding the securities.
<PAGE>
What are the Fund's fees and expenses?
You do not pay sales charges directly from your investments when you buy or sell
shares of the Institutional Class.
- -------------------------------------------------------------- ------------
Maximum sales charge (load) imposed on
Purchases as a percentage of offering price none
- -------------------------------------------------------------- ------------
Maximum contingent deferred sales charge (load)
as a percentage of original purchase price or
redemption price, whichever is lower none
- -------------------------------------------------------------- ------------
Maximum sales charge (load) imposed on
Reinvested dividends none
- -------------------------------------------------------------- ------------
Redemption fees none
- -------------------------------------------------------------- ------------
Exchange Fees(1) none
- -------------------------------------------------------------- ------------
Annual fund operating expenses are deducted from the Fund's assets.
- -------------------------------------------------------- -----------
Management fees 0.65%
- -------------------------------------------------------- -----------
Distribution and service (12b-1) fees none
- -------------------------------------------------------- -----------
Other expenses 0.27%
- -------------------------------------------------------- -----------
Total operating expenses(2) 0.92%
- -------------------------------------------------------- -----------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown. (3)This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
------------ -----------
1 year $94
------------ -----------
3 years $293
------------ -----------
(1) Exchanges are subject to the requirements of each fund in the Delaware
Investments family. A front-end sales charge may apply if you exchange
your shares into a fund that has a front-end sales charge.
(2) The investment manager has agreed to waive fees and pay expenses
through May 31, 2000, in order to prevent total operating expenses
(excluding any taxes, interest, brokerage fees, extraordinary expenses
and 12b-1 fees) from exceeding 0.75% of average daily net assets. The
following table shows the Fund's expenses including the investment
manager's voluntary expense cap.
--------------------------------------------------------------------------
Fund operating expenses including voluntary expense caps in effect until
May 31, 2000
------------------------------------------------------------ -------------
Management fees 0.48%
------------------------------------------------------------ -------------
Distribution and service (12b-1) fees None
------------------------------------------------------------ -------------
Other expenses 0.27%
------------------------------------------------------------ -------------
Total operating expenses 0.75%
------------------------------------------------------------ -------------
(3) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods
we show. This example does not reflect the voluntary expense cap
described in footnote (3).
<PAGE>
How we manage the Fund
Our investment strategies
We evaluate individual companies and analyze economic and market conditions,
seeking to identify the securities that we believe are the best investments for
the Fund. Following is a description of how the portfolio manager pursues the
Fund's investment goals.
We take a disciplined approach to investing, combining investment strategies and
risk management techniques that can help shareholders meet their goals.
For Delaware Diversified Growth Fund, we strive to identify stocks of
large-sized companies that appear to have greater growth potential than the
average of the companies in the S&P 500. We typically evaluate a company in
relation to the overall stock market as represented by the S&P 500.
In striving to identify such companies, we combine two distinct investment
strategies. We first conduct a quantitative analysis and then a qualitative
analysis. Our quantitative analysis uses a computer program to rank a broad
universe of companies based on a number of pre-determined factors including:
o higher expected earnings growth;
o improving earning estimates; or
o stronger balance sheet.
These characteristics are generally considered growth characteristics and
suggest that the company could experience capital appreciation because it may
grow faster than the overall market. Our computer program also compares each
individual company against others in its industry. To do this, we evaluate other
characteristics such as a lower price to earnings ratio, and lower price to
cashflow. These are considered "value" characteristics which suggest that the
company is undervalued relative to similar companies and could experience price
appreciation if that value is recognized.
This quantitative computer analysis creates a ranking of all companies in our
universe. This ranking attempts to identify mispriced securities in relation to
their underlying business fundamentals based on the criteria we set.
We then move on to the second phase of our analysis--qualitative assessment. We
conduct hands on research to evaluate other aspects of a company including the
quality of management, the outlook for its industry, new product lines and
competitive pressures. In making the final selection of companies for Delaware
Diversified Growth Fund we rely on the findings of both our quantitative and
qualitative analysis; however, we weight the portfolio more towards securities
that are highly ranked by our quantitative model.
Delaware Diversified Growth Fund's investment objective - to seek capital
appreciation - is non-fundamental. This means that the Board of Trustees may
change the objective without obtaining shareholder approval. If the objective
were changed, we would notify shareholders before the change in the objective
became effective.
<PAGE>
The securities we typically invest in
Stocks generally offer investors the potential for capital appreciation, and may
pay dividends as well.
<TABLE>
<CAPTION>
- ------------------------------------------------------------- ----------------------------------------------------------------------
Securities How we use them
<S> <C>
- ------------------------------------------------------------- ----------------------------------------------------------------------
Common stocks: Securities that represent shares of Generally, we invest 85% to 100% of net assets in common stock.
ownership in a corporation. Stockholders participate in the We will generally invest in companies of at least $3 billion in
corporation's profits and losses, proportionate to the market capitalization, but may also invest in smaller companies.
number of shares they own.
- ------------------------------------------------------------- ----------------------------------------------------------------------
Foreign Stocks and Depositary Receipts: Foreign stocks are We may invest up to 20% of the Fund's net assets in foreign
those issued by a company that is located in a foreign companies directly or indirectly through American, Global or
country, has the majority of its assets in a foreign European Depositary Receipts. We would typically hold Depositary
company or generates the majority of its operating income Receipts when we believe they offer greater appreciation potential
in a foreign country. Depositary receipts are issued by a than U.S. securities. Investing directly in international securities
U.S. or foreign bank holdings of a stated number of is not typically a significant component of our strategy.
and represent the bank's shares of a foreign corporation.
A Depositary Receipt entitles the holder to all dividends
and capital gains earned by the underlying foreign shares.
ADRs are bought and sold the same as U.S. securities.
- ------------------------------------------------------------- ----------------------------------------------------------------------
Repurchase agreements: An agreement between a buyer, such Typically, we use repurchase agreements as a short-term investment
as the Fund, and a seller of securities in which the seller for the Fund's cash position. In order to enter into these
agrees to buy the securities back within a specified time repurchase agreements, the Fund must have collateral of at least
at the same price the buyer paid for them, plus an amount 102% of the repurchase price. The Fund will only enter into
equal to an agreed upon interest rate. Repurchase repurchase agreements in which the collateral is comprised of U.S.
agreements are often viewed as equivalent to cash. government securities.
- ------------------------------------------------------------- ----------------------------------------------------------------------
Restricted securities: Privately placed securities whose We may invest in privately placed securities that are eligible for
resale is restricted under securities law. resale only among certain institutional buyers without registration,
including Rule 144A Securities.
- ------------------------------------------------------------- ----------------------------------------------------------------------
Options and Futures: Options represent a right to buy or If we have stocks that have unrealized gains because of past
sell a security or a group of securities at an agreed upon appreciation, we may want to protect those gains when we anticipate
price at a future date. The purchaser of an option may or adverse conditions. We might use options or futures to neutralize
may not choose to go through with the transaction. the effect of any price declines, without selling the security. We
may also use options and futures to quickly invest excess cash so
Futures contracts are agreements for the purchase or sale that the portfolio is generally fully invested.
of a security or a group of securities at a specified
price, on a specified date. Unlike an option, a futures
contract must be executed unless it is sold before the Use of these strategies can increase the operating costs of the Fund
settlement date. and can lead to loss of principal.
Options and futures are generally considered to be
derivative securities.
- ------------------------------------------------------------- ----------------------------------------------------------------------
Illiquid securities: Securities that do not have a ready We may invest up to 15% of net assets in illiquid securities.
market, and cannot be easily sold within seven days at
approximately the price that a fund has valued them.
- ------------------------------------------------------------- ----------------------------------------------------------------------
</TABLE>
<PAGE>
The Fund may also invest in other securities, including preferred stock, real
estate investment trusts, warrants and either equity or debt securities that are
convertible into stocks. Please see the Statement of Additional Information for
additional descriptions on these securities as well as those listed in the table
above. You can find additional information about the investments in the Fund's
portfolio in the annual or semi-annual shareholder report.
Lending securities
The Fund may lend up to 25% of its assets to qualified dealers and institutional
investors for their use in security transactions.
Purchasing securities on a when-issued or delayed delivery basis
The Fund may buy or sell securities on a when-issued or delayed delivery basis;
that is, paying for securities before delivery or taking delivery at a later
date. The Fund will designate cash or securities in amounts sufficient to cover
its obligations, and will value the designated assets daily.
Borrowing from banks
The Fund may borrow money as a temporary measure for extraordinary purposes or
to facilitate redemptions. Borrowing money could result in the Fund being unable
to meet its investment objective.
Temporary defensive positions
In response to unfavorable market conditions, the Fund may make temporary
investments in bonds, cash or cash equivalents. These investments may not be
consistent with the Fund's investment objective.
Portfolio turnover
We anticipate that the Fund's annual portfolio turnover may be greater than
100%. A turnover rate of 100% would occur if the Fund sold and replaced
securities valued at 100% of its net assets within one year. High turnover can
result in increased transaction costs and tax liability for the Fund.
<PAGE>
The risks of investing in the Fund
Investing in any mutual fund involves risk, including the risk that you may
receive little or no return on your investment, and the risk that you may lose
part or all of the money you invest. Before you invest in the Fund you should
carefully evaluate the risks. An investment in the Fund typically provides the
best results when held for a number of years. The following are the chief risks
you assume when investing in the Fund. Please see the Statement of Additional
Information for further discussion of these risks and other risks not discussed
here.
<TABLE>
<CAPTION>
- ------------------------------------------------- --------------------------------------------------------------------
Risks How we strive to manage them
- ------------------------------------------------- --------------------------------------------------------------------
<S> <C>
- ------------------------------------------------- --------------------------------------------------------------------
Market risk is the risk that all or a majority We maintain a long-term investment approach and focus on stocks we
of the securities in a certain market -- like believe can appreciate over an extended time frame regardless of
the stock or bond market -- will decline in interim market fluctuations. We do not try to predict overall
value because of factors such as economic stock market movements and though we may hold securities for any
conditions, future expectations or investor amount of time, we typically do not trade for short-term purposes.
confidence.
We may hold a substantial part of the Fund's assets in cash or
securities that are considered equivalent to cash as a temporary,
defensive strategy.
- ------------------------------------------------- --------------------------------------------------------------------
Industry and security risk is the risk that the We limit the amount of the Fund's assets invested in any one
value of securities in a particular industry or industry and in any individual security. We also follow a rigorous
the value of an individual stock or bond will selection process before choosing securities and continuously
decline because of changing expectations for monitor them while they remain in the portfolio.
the performance of that industry or for the
individual company issuing the stock.
- ------------------------------------------------- --------------------------------------------------------------------
Futures and options risk is the possibility We will not use futures and options for speculative reasons. We
that a fund may experience a loss if it may use options and futures to protect gains in the portfolio
employs an options or futures strategy related without actually selling a security. We may also use options and
to a security or a market index and that futures to quickly invest excess cash so that the portfolio is
security or index moves in the opposite generally fully invested.
direction from what the manager anticipated.
Futures and options also involve additional
expenses, which could reduce any benefit or
increase any loss that a fund gains from
using the strategy.
- ------------------------------------------------- --------------------------------------------------------------------
Foreign risk is the risk that foreign Investing in foreign securities is not a significant part of our
securities may be adversely affected by strategy. We may not invest more than 20% of net assets in direct
political instability, changes in currency and indirect holdings of foreign securities.
exchange rates, foreign economic conditions or
inadequate regulatory and accounting standards.
- ------------------------------------------------- --------------------------------------------------------------------
Liquidity risk is the possibility that We limit exposure to illiquid securities.
securities cannot be readily sold within seven
days at approximately the price that a
fund has valued them.
- ------------------------------------------------- --------------------------------------------------------------------
</TABLE>
<PAGE>
Who manages the Fund
Investment manager
The Fund is managed by Delaware Management Company, a series of Delaware
Management Business Trust which is an indirect, wholly owned subsidiary of
Delaware Management Holdings, Inc. Delaware Management Company makes investment
decisions for the Fund, manages the Fund's business affairs and provides daily
administrative services. For these services, the manager was paid 0.48% as a
percentage of average daily net assets for the last fiscal year, after giving
effect to voluntary waivers by the manager.
Portfolio managers
J. Paul Dokas, Vice President/Senior Portfolio Manager, is primarily responsible
for making investment decisions for the Fund. He is responsible for producing
quantitative research used to develop new global investment services, refine
existing services, and make asset-allocation decisions. He joined Delaware
Investments in 1997. He previously was director of trust investment management
at Bell Atlantic Corporation. He earned a bachelors degree at Loyola College in
Baltimore and an MBA degree at the University of Maryland. He is a chartered
financial analyst. In making investment decisions for the Fund, Mr. Dokas is
assisted by Robert E. Ginsberg.
Robert E. Ginsberg, Assistant Vice President/Equity Analyst, graduated magna cum
laude from the Wharton School of Business at the University of Pennsylvania with
a degree in Economics with a concentration in Finance. Prior to joining Delaware
Investments in September of 1997, he was a Consultant at Andersen Consulting
working primarily with financial services companies. At Delaware Investments,
Mr. Ginsberg handles diverse analytical responsibilities involving large
capitalization stocks. He is a CFA Level III candidate.
<PAGE>
Who's who?
This shows the various organizations involved with managing, administering, and
servicing the Delaware Investments funds.
Board of Trustees
<TABLE>
<S> <C> <C> <C>
Investment manager The Fund Custodian
Delaware Management Company The Chase Manhattan Bank
One Commerce Square 4 Chase Metrotech Center
Philadelphia, PA 19103 Brooklyn, NY 11245
Portfolio managers Distributor Service agent
(see page 10 for details) Delaware Distributors, L.P. Delaware Service Company, Inc.
1818 Market Street 1818 Market Street
Philadelphia, PA 19103 Philadelphia, PA 19103
</TABLE>
Shareholders
Board of Trustees A mutual fund is governed by a Board of Trustees which has
oversight responsibility for the management of the fund's business affairs.
Trustees establish procedures and oversee and review the performance of the
investment manager, the distributor and others that perform services for the
fund. At least 40% of the Board of Trustees must be independent of the fund's
investment manager and distributor. These independent fund trustees, in
particular, are advocates for shareholder interests.
Investment manager An investment manager is a company responsible for selecting
portfolio investments consistent with the objective and policies stated in the
mutual fund's prospectus. The investment manager places portfolio orders with
broker/dealers and is responsible for obtaining the best overall execution of
those orders. A written contract between a mutual fund and its investment
manager specifies the services the manager performs. Most management contracts
provide for the manager to receive an annual fee based on a percentage of the
fund's average daily net assets. The manager is subject to numerous legal
restrictions, especially regarding transactions between itself and the funds it
advises.
Portfolio managers Portfolio managers are employed by the investment manager to
make investment decisions for individual portfolios on a day-to-day basis.
Custodian Mutual funds are legally required to protect their portfolio
securities and most funds place them with a qualified bank custodian who
segregates fund securities from other bank assets.
Distributor Most mutual funds continuously offer new shares to the public
through distributors who are regulated as broker-dealers and are subject to NASD
Regulation, Inc. (NASD) rules governing mutual fund sales practices.
Service agent Mutual fund companies employ service agents (sometimes called
transfer agents) to maintain records of shareholder accounts, calculate and
disburse dividends and capital gains and prepare and mail shareholder statements
and tax information, among other functions. Many service agents also provide
customer service to shareholders.
Shareholders Like shareholders of other companies, mutual fund shareholders
have specific voting rights, including the right to elect trustees. Material
changes in the terms of a fund's management contract must be approved by a
shareholder vote, and funds seeking to change fundamental investment objectives
or policies must also seek shareholder approval.
<PAGE>
About your account
Investing in the Fund
Institutional Class shares are available for purchase only by the following:
o 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;
o tax-exempt employee benefit plans of the manager or its affiliates and
securities dealer firms with a selling agreement with the distributor;
o institutional advisory accounts of the manager, or its affiliates and those
having client relationships with Delaware Investment Advisers, an affiliate
of the manager, or its affiliates and their corporate sponsors, as well as
subsidiaries and related employee benefit plans and rollover individual
retirement accounts from such institutional advisory accounts;
o a bank, trust company and similar financial institution investing for its
own account or for the account of its trust customers for whom such
financial institution is exercising investment discretion in purchasing
shares of the Class, except where the investment is part of a program that
requires payment to the financial institution of a Rule 12b-1 Plan fee; and
o 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.
<PAGE>
How to buy shares
By mail
Complete an investment slip and mail it with your check, made payable to the
fund and class of shares you wish to purchase, to Delaware Investments, 1818
Market Street, Philadelphia, PA 19103-3682. If you are making an initial
purchase by mail, you must include a completed investment application (or an
appropriate retirement plan application if you are opening a retirement account)
with your check.
By wire
Ask your bank to wire the amount you want to invest to First Union Bank, ABA
#031201467, Bank Account number 2014128934013. Include your account number and
the name of the fund in which you want to invest. If you are making an initial
purchase by wire, you must call us at 800.510.4015 so we can assign you an
account number.
By exchange
You can exchange all or part of your investment in one or more funds in the
Delaware Investments family for shares of other funds in the family. Please keep
in mind, however, that you may not exchange your shares for Class B or Class C
shares. To open an account by exchange, call your Client Services Representative
at 800.510.4015.
Through your financial adviser
Your financial adviser can handle all the details of purchasing shares,
including opening an account. Your adviser may charge a separate fee for this
service.
<PAGE>
About your account (continued)
How to buy shares (continued)
The price you pay for shares will depend on when we receive your purchase order.
If we or an authorized agent receive your order before the close of regular
trading on the New York Stock Exchange (normally 4:00 p.m. Eastern Time) on a
business day, you will pay that day's closing share price which is based on a
Fund's net asset value. If we receive your order after the close of regular
trading, you will pay the next business day's price. A business day is any day
that the New York Stock Exchange is open for business. We reserve the right to
reject any purchase order.
We determine the Fund's net asset value (NAV) per share at the close of regular
trading of the New York Stock Exchange each business day that the Exchange is
open. We calculate this value by adding the market value of all the securities
and assets in each Fund's portfolio, deducting all liabilities, and dividing the
resulting number by the number of shares outstanding. The result is the net
asset value per share. We price securities and other assets for which market
quotations are available at their market value. We price fixed-income securities
on the basis of valuations provided to us by an independent pricing service that
uses methods approved by the Board of Trustees. Any fixed-income securities
that have a maturity of less than 60 days we price at amortized cost. For all
other securities, we use methods approved by the Board of Trustees that are
designed to price securities at their fair market value.
<PAGE>
How to redeem shares
By mail
You can redeem your shares (sell them back to the fund) by mail by writing to:
Delaware Investments, 1818 Market Street, Philadelphia, PA 19103-3682. All
owners of the account must sign the request, and for redemptions of more than
$50,000, you must include a signature guarantee for each owner. You can also fax
your written request to 215.255.8864. Signature guarantees are also required
when redemption proceeds are going to an address other than the address of
record on an account.
By telephone
You can redeem up to $50,000 of your shares by telephone. You may have the
proceeds sent to you by check, or, if you redeem at least $1,000 of shares, you
may have the proceeds sent directly to your bank by wire. Bank information must
be on file before you request a wire redemption.
By wire
You can redeem $1,000 or more of your shares and have the proceeds deposited
directly to your bank account the next business day after we receive your
request. Bank information must be on file before you request a wire redemption.
Through your financial adviser
Your financial adviser can handle all the details of redeeming your shares. Your
adviser may charge a separate fee for this service.
<PAGE>
About your account (continued)
How to redeem shares (cont.)
If you hold your shares in certificates, you must submit the certificates with
your request to sell the shares. We recommend that you send your certificates by
certified mail.
When you send us a properly completed request to redeem or exchange shares
before the close of regular trading on the New York Stock Exchange (normally
4:00 p.m. Eastern Time), you will receive the net asset value as determined on
the business day we receive your request. You may have to pay taxes on the
proceeds from your sale of shares. We will send you a check, normally the next
business day, but no later than seven days after we receive your request to sell
your shares. If you purchased your shares by check, we will wait until your
check has cleared, which can take up to 15 days, before we send your redemption
proceeds.
Account minimum
If you redeem shares and your account balance falls below $250, your Fund may
redeem your account after 60 days' written notice to you.
Exchanges
You can exchange all or part of your shares for shares of the same class in
another Delaware Investments fund. If you exchange shares to a fund that has a
sales charge you will pay any applicable sales charges on your new shares. You
don't pay sales charges on shares that are acquired through the reinvestment of
dividends. You may have to pay taxes on your exchange. When you exchange shares,
you are purchasing shares in another fund so you should be sure to get a copy of
the fund's prospectus and read it carefully before buying shares through an
exchange. You may not exchange your shares for Class B and Class C shares of the
funds in the Delaware Investments family.
Dividends, distributions and taxes
Dividends and capital gains, if any, are paid annually. We automatically
reinvest all dividends and any capital gains.
Tax laws are subject to change, so we urge you to consult your tax adviser about
your particular tax situation and how it might be affected by current tax law.
The tax status of your dividends from the Fund is the same whether you reinvest
your dividends or receive them in cash. Distributions from the Fund's long-term
capital gains are taxable as capital gains, while distributions from short-term
capital gains and net investment income are generally taxable as ordinary
income. Any capital gains may be taxable at different rates depending on the
length of time the Fund held the assets. In addition, you may be subject to
state and local taxes on distributions.
We will send you a statement each year by January 31 detailing the amount and
nature of all dividends and capital gains that you were paid for the prior year.
<PAGE>
Certain management considerations
Year 2000
As with other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by its service providers do not properly process and calculate date-related
information from and after January 1, 2000. This is commonly known as the "Year
2000 Problem." The Fund is taking steps to obtain satisfactory assurances that
its major service providers are taking steps reasonably designed to address the
Year 2000 Problem on the computer systems that the service providers use. There
can be no assurance that these steps will be sufficient to avoid any adverse
impact on the business of the Fund. The Year 2000 Problem may also adversely
affect the issuers of securities in which the Fund invests. The portfolio
managers and investment professionals of the Fund consider Year 2000 compliance
(including, but not limited to, any or all of the following: impact on business,
cost of compliance plan review and contingency planning, and vendor compliance)
in the securities selection and investment process. However, there can be no
guarantee that, even with their due diligence efforts, they will be able to
predict the effect of Year 2000 on any company or the performance of its
securities.
Investments by fund of funds
The Fund accepts investments from the series portfolios of Delaware Group
Foundation Funds, a fund of funds. From time to time, the Fund may experience
large investments or redemptions due to allocations or rebalancings by
Foundation Funds. While it is impossible to predict the overall impact of these
transactions over time, there could be adverse effects on portfolio management.
For example, the Fund may be required to sell securities or invest cash at times
when it would not otherwise do so. These transactions could also have tax
consequences if sales of securities result in gains, and could also increase
transaction costs or portfolio turnover. The manager will monitor transactions
by Foundation Funds and will attempt to minimize any adverse effects on both the
Fund and Foundation Funds as a result of these transactions.
<PAGE>
Financial highlights
The financial highlights table is intended to help you understand the Fund's
financial performance. All "per share" information reflects financial results
for a single Fund share. This information has been audited by Ernst & Young LLP,
whose report, along with the Fund's financial statements, is included in the
Fund's annual report, which is available upon request by calling 800.523.1918.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------- ----------------------------------------
Delaware Diversified Growth Fund Institutional Class
- ------------------------------------------------------------------------------- ----------------------------------------
Period
Year Ended Year Ended 12/2/96(1)
9/30 9/30 through
1999 1998 9/30/97
- ------------------------------------------------------------------------------- ------------- ------------ -------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Net asset value, beginning of period $8.990 $10.160 $8.500
- ------------------------------------------------------------------------------- ------------- ------------ -------------
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Income (loss) from investment operations:
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Net investment income 0.036(2) 0.082(2) 0.067
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Net realized and unrealized gain (loss) on investments 1.354 (0.755) 1.601
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Total from investment operations 1.390 (0.673) 1.668
- ------------------------------------------------------------------------------- ------------- ------------ -------------
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Less dividends and distributions:
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Dividends from net investment income (0.080) (0.076) (0.008)
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Distributions from net realized gain on investments --- (0.421) ---
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Total dividends and distributions (0.080) (0.497) (0.008)
- ------------------------------------------------------------------------------- ------------- ------------ -------------
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Net asset value, end of period $10.300 $8.990 $10.160
- ------------------------------------------------------------------------------- ------------- ------------ -------------
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Total return(3) 15.52% (6.91%) 19.64%
- ------------------------------------------------------------------------------- ------------- ------------ -------------
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Ratios and supplemental data:
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Net assets, end of period (000 omitted) $10,886 $2,227 $2,393
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Ratio of expenses to average net assets 0.75% 0.75% 0.75%
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Ratio of expenses to average net assets prior to expense limitation and
expenses paid indirectly 0.98% 1.98% 1.40%
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Ratio of net investment income to average net assets 0.36% 0.83% 0.91%
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Ratio of net investment income (loss) to average net assets prior to expense
limitation and expenses paid indirectly 0.13% (0.40%) 0.27%
- ------------------------------------------------------------------------------- ------------- ------------ -------------
Portfolio turnover 120% 163% 84%
- ------------------------------------------------------------------------------- ------------- ------------ -------------
</TABLE>
(1) Date of initial public offering; ratios have been annualized and total
return has not been annualized.
(2) Computed based on the average shares outstanding method.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and an expense waiver by the manager.
<PAGE>
How to read the financial highlights
Net investment income (loss)
Net investment income (loss) includes dividend and interest income earned from a
fund's investments; it is after expenses have been deducted.
Net realized and unrealized gain (loss) on investments
A realized gain occurs when we sell an investment at a profit, while a realized
loss occurs when we sell an investment at a loss. When an investment increases
or decreases in value but we do not sell it, we record an unrealized gain or
loss. The amount of realized gain per share that we pay to shareholders is
listed under "Less distributions-Distributions from net realized gain on
investments."
Net asset value (NAV)
This is the value of a mutual fund share, calculated by dividing the net assets
by the number of shares outstanding.
Total return
This represents the rate that an investor would have earned or lost on an
investment in a fund. In calculating this figure for the financial highlights
table, we include applicable fee waivers and assume the shareholder has
reinvested all dividends and realized gains.
Net assets
Net assets represent the total value of all the assets in a fund's portfolio,
less any liabilities, that are attributable to that class of a fund.
Ratio of expenses to average net assets
The expense ratio is the percentage of net assets that a fund pays annually for
operating expenses and management fees. These expenses include accounting and
administration expenses, services for shareholders, and similar expenses.
Ratio of net investment income (loss) to average net assets
We determine this ratio by dividing net investment income by average net assets.
Portfolio turnover rate
This figure tells you the amount of trading activity in a fund's portfolio. For
example, a fund with a 50% turnover rate has bought and sold half of the value
of its total investment portfolio during the stated period.
<PAGE>
Glossary
How to use this glossary
The glossary includes definitions of investment terms used throughout the
Prospectus. If you would like to know the meaning of an investment term that is
not explained in the text please check the glossary.
Amortized cost
Amortized cost is a method used to value a fixed-income security that starts
with the face value of the security and then adds or subtracts from that value
depending on whether the purchase price was greater or less than the value of
the security at maturity. The amount greater or less than the par value is
divided equally over the time remaining until maturity.
Capital
The amount of money you invest.
Capital appreciation
An increase in the value of an investment.
Capital gains distributions
Payments to mutual fund shareholders of profits (realized gains) from the sale
of a fund's portfolio securities. Usually paid once a year; may be either
short-term gains or long-term gains.
Commission
The fee an investor pays to a financial adviser for investment advice and help
in buying or selling mutual funds, stocks, bonds or other securities.
Compounding
Earnings on an investment's previous earnings.
Consumer Price Index (CPI)
Measurement of U.S. inflation; represents the price of a basket of commonly
purchased goods.
Cost basis
The original purchase price of an investment, used in determining capital gains
and losses.
Currency exchange rates
The price at which one country's currency can be converted into another's. This
exchange rate varies almost daily according to a wide range of political,
economic and other factors.
Depreciation
A decline in an investment's value.
Diversification
The process of spreading investments among a number of different securities,
asset classes or investment styles to reduce the risks of investing.
Dividend distribution
Payments to mutual fund shareholders of dividends passed along from the fund's
portfolio of securities.
Expense ratio
A mutual fund's total operating expenses, expressed as a percentage of its total
net assets. Operating expenses are the costs of running a mutual fund, including
management fees, offices, staff, equipment and expenses related to maintaining
the fund's portfolio of securities and distributing its shares. They are paid
from the fund's assets before any earnings are distributed to shareholders.
<PAGE>
Inflation
The increase in the cost of goods and services over time. U.S. inflation is
frequently measured by changes in the Consumer Price Index (CPI).
Investment goal
The objective, such as long-term capital growth or high current income, that a
mutual fund pursues.
Management fee
The amount paid by a mutual fund to the investment adviser for management
services, expressed as an annual percentage of the fund's average daily net
assets.
Market capitalization
The value of a corporation determined by multiplying the current market price of
a share of common stock by the number of shares held by shareholders. A
corporation with one million shares outstanding and the market price per share
of $10 has a market capitalization of $10 million.
NASD Regulation, Inc. (NASD)
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the actions of
its members.
Net asset value (NAV)
The daily dollar value of one mutual fund share. Equal to a fund's net assets
divided by the number of shares outstanding.
Preferred stock
Preferred stock has preference over common stock in the payment of dividends and
liquidation of assets. Preferred stocks also often pay dividends at a fixed rate
and are sometimes convertible into common stock.
Price-to-earnings ratio
A measure of a stock's value calculated by dividing the current market price of
a share of stock by its annual earnings per share. A stock selling for $100 per
share with annual earnings per share of $5 has a P/E of 20.
Principal
Amount of money you invest (also called capital). Also refers to a bond's
original face value, due to be repaid at maturity.
Prospectus
The official offering document that describes a mutual fund, containing
information required by the SEC, such as investment objectives, policies,
services and fees.
Redeem
To cash in your shares by selling them back to the mutual fund.
Risk
Generally defined as variability of value; also credit risk, inflation risk,
currency and interest rate risk. Different investments involve different types
and degrees of risk.
S&P 500 Composite Stock Index
The Standard & Poor's 500 Composite Stock Index; an unmanaged index of 500
widely held common stocks that is often used to represent performance of the
U.S. stock market.
<PAGE>
SEC (Securities and Exchange Commission)
Federal agency established by Congress to administer the laws governing the
securities industry, including mutual fund companies.
Share classes
Different classifications of shares; mutual fund share classes offer a variety
of sales charge choices.
Signature guarantee
Certification by a bank, brokerage firm or other financial institution that a
customer's signature is valid; signature guarantees can be provided by members
of the STAMP program.
Standard deviation
A measure of an investment's volatility; for mutual funds, measures how much a
fund's total return varies from its historical average.
Statement of Additional Information (SAI)
The document serving as "Part B" of a fund's prospectus that provides more
detailed information about the fund's organization, investments, policies and
risks.
Stock
An investment that represents a share of ownership (equity) in a corporation.
Stocks are often referred to as "equities."
Total return
An investment performance measurement, expressed as a percentage, based on the
combined earnings from dividends, capital gains and change in price over a given
period.
Volatility
The tendency of an investment to go up or down in value by different magnitudes.
Investments that generally go up or down in value in relatively small amounts
are considered "low volatility" investments, whereas those investments that
generally go up or down in value in relatively large amounts are considered
"high volatility" investments.
<PAGE>
Delaware Diversified Growth Fund
Additional information about the Fund's investments will be available in the
Fund's annual and semi-annual reports to shareholders. In the Fund's shareholder
reports, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during the report
period. You can find more detailed information about the Fund in the current
Statement of Additional Information, which we have filed electronically with the
Securities and Exchange Commission (SEC) and which is legally a part of this
Prospectus. If you want a free copy of the Statement of Additional Information,
the annual or semi-annual report, or if you have any questions about investing
in the Fund, you can write to us at 1818 Market Street, Philadelphia, PA 19103,
or call toll-free 800.523.1918. You may also obtain additional information about
the Fund from your financial adviser.
You can find reports and other information about the Fund on the SEC web site
(http://www.sec.gov), or you can get copies of this information, after payment
of a duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-6009. Information about the Fund, including its Statement
of Additional Information, can be reviewed and copied at the Securities and
Exchange Commission's Public Reference Room in Washington, D.C. You can get
information on the public reference room by calling the SEC at 1.800.SEC.0330.
Web site
www.delawareinvestments.com
E-mail
[email protected]
Client Services Representative
800.510.4015
Delaphone Service
800.362.FUND (800.362.3863)
For convenient access to account information or current performance information
on all Delaware Investments Funds seven days a week, 24 hours a day, use this
Touch-Tone service.
Investment Company Act file number: 811-4413
- -----------------------------------------------------------------------------
Diversified Growth Fund Symbols CUSIP
- -----------------------------------------------------------------------------
Institutional Class 24610A406
- -----------------------------------------------------------------------------
DELAWARE
INVESTMENTS
Philadelphia * London
P-002 [--] PP 12/99
