<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
File No. 33-442
File No. 811-4413
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ______ [ ]
Post-Effective Amendment No. __27__ [X]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. __27__
DELAWARE GROUP EQUITY FUNDS IV
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
One Commerce Square, Philadelphia, Pennsylvania 19103
--------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (800) 523-1918
--------------
Richelle S. Maestro, Esquire, One Commerce Square, Philadelphia, PA 19103
--------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Approximate Date of Public Offering: January 26, 2001
----------------
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b)
_____ on (date) pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(1)
__X__ on January 26, 2001 pursuant to paragraph (a)(1)
_____ 75 days after filing pursuant to paragraph (a)(2) on (date)
_____ pursuant to paragraph (a)(2) of Rule 485
If appropriate:
____ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
<PAGE>
--- C O N T E N T S ---
This Post-Effective Amendment No. 27 to Registration File No. 33-442 includes
the following:
1. Facing Page
2. Contents Page
3. Part A - Prospectuses
4. Part B - Statement of Additional Information
5. Part C - Other Information
6. Signatures
7. Exhibits
<PAGE>
DELAWARE
INVESTMENTS
-----------
Philadelphia * London
Delaware Growth Opportunities Fund
(formerly Delaware DelCap Fund)
Class A * Class B * Class C
Prospectus
January 26, 2001
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.
1
<PAGE>
Table of contents
Fund profile page
Delaware Growth Opportunities 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
Choosing a share class
How to reduce your sales charge
How to buy shares
Retirement plans
How to redeem shares
Account minimums
Special services
Dividends, distributions and taxes
Certain management considerations page
Financial highlights page
2
<PAGE>
Profile: Delaware Growth Opportunities Fund
What is the Fund's goal?
Delaware Growth Opportunities Fund seeks long-term capital growth. Although the
Fund will strive to meet its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
We invest primarily in common stocks of medium-size companies. These are
generally considered to be stocks with market capitalizations between $2 billion
and $10 billion. We may also invest in securities that are convertible into
common stock. In selecting stocks for the portfolio, we typically look for
companies that have established themselves within their industry, but still have
growth potential.
We use a bottom-up approach to select stocks, evaluating individual companies
rather than trends in the economy or the investment markets. Researching each
company, its products, services, competitors and management team helps us to
select stocks of companies that we think will provide high and consistent
earnings growth with a reasonable level of risk.
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 could be caused by a drop in the stock market or poor performance from
particular companies or industries. In addition, Delaware Growth Opportunities
Fund invests in medium-size or small companies. These companies may involve
greater risk due to their size, narrow product lines and limited financial
resources.
For a more complete discussion of risk, please see "The risks of investing in
the Fund" on page ___.
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
medium-size, growth-oriented 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.
3
<PAGE>
How has the Fund performed?
This bar chart and table can help you evaluate the risks of investing in the
Fund. We show how returns for the Fund's Class A shares have varied over the
past ten calendar years as well as the average annual returns of all shares for
one-, five-, and ten-year or lifetime periods, as applicable. The Fund's past
performance does not necessarily indicate how it will perform in the future.
Returns for 1999 were unusually high and may not be sustained. Investors should
be aware that returns were primarily achieved during favorable conditions,
especially within the technology sector.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN]
Year-by-year total return (Class A)
<TABLE>
<CAPTION>
-------------- ----------- ----------- ------------ ----------- ----------- ------------ ----------- ----------- ------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
-------------- ----------- ----------- ------------ ----------- ----------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-3.52% 42.33% 1.88% 11.87% -5.32% 29.78% 13.77% 14.04% 17.72% 64.69%
-------------- ----------- ----------- ------------ ----------- ----------- ------------ ----------- ----------- ------------
</TABLE>
As of September 30, 2000, the Fund`s Class A had a calendar year-to-date return
of [0.00%]. During the periods illustrated in this bar chart, Class A's highest
quarterly return was [0.00%] for the quarter ended [_____________] and its
lowest return was [0.00%] for the quarter ended [____________________].
The maximum Class A sales charge of 5.75%, which is normally deducted when you
purchase shares, is not reflected in the total returns in the previous paragraph
or in the bar chart. If this fee were included, the returns would be less than
those shown. The average annual returns shown in the table on page __ do include
the sales charge.
<TABLE>
<CAPTION>
Average annual returns for the periods ending 12/31/99
CLASS A B (if redeemed)* C (if redeemed)* Russell Midcap Growth
(Inception10/3/68) (Inception 9/6/94) (Inception 11/29/95) Index
<S> <C> <C> <C> <C>
1 year 55.19% 58.55% 62.51% 38.67%
5 years 25.21% 25.67% N/A 23.51%
10 years or Lifetime** 16.38% 23.37% 25.01% 22.18%
</TABLE>
The Fund's returns above are compared to the performance of the Russell Midcap
Growth 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 securities.
* If shares were not redeemed, the returns for Class B would be 63.55%,
25.83% and 23.44%, respectively, for the one-year, five-year and lifetime
periods. Returns for Class C would be 63.51% and 25.01%, respectively,
for the one-year and lifetime periods.
** Lifetime returns are shown if the Fund or Class existed for less than 10
years. Russell Midcap Growth Index returns are for 10 years. Index
returns for Class B and Class C lifetime periods were 22.93% and 22.85%,
respectively. Maximum sales charges are included in the Fund returns
shown in the table above.
4
<PAGE>
What are the Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
<TABLE>
<CAPTION>
------------------------------------------------------- ----------- ---------- ----------
CLASS A B C
------------------------------------------------------- ----------- ---------- ----------
<S> <C> <C> <C>
Maximum sales charge (load) imposed on purchases as a 5.75% none none
percentage of offering price
------------------------------------------------------- ----------- ---------- ----------
Maximum contingent deferred sales charge (load) as a none(1) 5%(2) 1%(3)
percentage of original purchase price or redemption
price, whichever is lower
------------------------------------------------------- ----------- ---------- ----------
Maximum sales charge (load) imposed on reinvested none none none
dividends
------------------------------------------------------- ----------- ---------- ----------
Redemption fees none none none
------------------------------------------------------- ----------- ---------- ----------
</TABLE>
Annual fund operating expenses are deducted from the Fund's assets.
<TABLE>
<CAPTION>
------------------------------------------------------- ----------- ---------- ----------
<S> <C> <C> <C>
Management fees [0.00%] [0.00%] [0.00%]
------------------------------------------------------- ----------- ---------- ----------
Distribution and service (12b-1) fees [0.00%] [1.00%] [1.00%]
------------------------------------------------------- ----------- ---------- ----------
Other expenses [0.00%] [0.00%] [0.00%]
------------------------------------------------------- ----------- ---------- ----------
Total operating expenses [0.00%] [0.00%] [0.00%]
------------------------------------------------------- ----------- ---------- ----------
</TABLE>
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.(4) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
<TABLE>
<CAPTION>
---------------- -------------- ---------------- ------------------ ----------- -----------------
CLASS(5) A B B C C
(if redeemed) (if redeemed)
---------------- -------------- ---------------- ------------------ ----------- -----------------
<S> <C> <C> <C> <C> <C>
1 year [$000] [$000] [$000] [$000] [$000]
---------------- -------------- ---------------- ------------------ ----------- -----------------
3 years [$000] [$000] [$000] [$000] [$000]
---------------- -------------- ---------------- ------------------ ----------- -----------------
5 years [$000] [$000] [$000] [$000] [$000]
---------------- -------------- ---------------- ------------------ ----------- -----------------
10 years [$000] [$000] [$000] [$000] [$000]
---------------- -------------- ---------------- ------------------ ----------- -----------------
</TABLE>
(1) A purchase of Class A shares of $1 million or more may be made at net
asset value. However, if you buy the shares through a financial adviser
who is paid a commission, a contingent deferred sales charge will apply
to redemptions made within two years of purchase. Additional Class A
purchase options that involve a contingent deferred sales charge may be
permitted from time to time and will be disclosed in the Prospectus if
they are available.
(2) If you redeem Class B shares during the first year after you buy them,
you will pay a contingent deferred sales charge of 5%, which declines
to 4% during the second year, 3% during the third and fourth years, 2%
during the fifth year, 1% during the sixth year, and 0% thereafter.
(3) Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(4) 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.
(5) The Class B example reflects the conversion of Class B shares to Class
A shares after approximately eight years. Information for the ninth and
tenth years reflects expenses of the Class A shares.
5
<PAGE>
How we manage the Fund
We take a disciplined approach to investing, combining investment strategies and
risk management techniques.
Our investment strategies
We research individual companies and analyze economic and market conditions,
seeking to identify the securities or market sectors that we believe are the
best investments for the Fund. Following are descriptions of how the portfolio
management team pursues the Fund's investment goals.
We strive to identify companies of medium market capitalization that offer
above-average opportunities for long-term capital growth because they are poised
to provide high and consistent earnings growth. Medium-size companies are
generally considered to be those with market capitalizations between $2 billion
and $10 billion.
Companies in the early stages of their development often offer the greatest
opportunities for rising share prices. However, the smallest companies generally
involve the most risk because they may have very limited resources, less
management experience and narrower product lines. We believe that medium-size
companies can provide many of the growth opportunities of small companies, but
with less risk. Medium-size companies may be more established in their industry
and have greater financial resources. Yet, they may still have the flexibility
and growth potential of a smaller company.
We use a bottom-up approach to stock selection, carefully evaluating the
characteristics of individual companies. We rely heavily on our own research in
selecting companies for the portfolio. That research might include one-on-one
meetings with executives, company competitors, industry experts and customers.
Our first step in identifying promising companies is to pinpoint stocks that
exhibit one or more of the following characteristics:
o A history of high earnings-per-share growth;
o Expectations for future earnings growth that are either high or accelerating;
o A price to earnings ratio that is low relative to other stocks - indicating
that the stock might be undervalued;
o A discounted cash flow that is high relative to other stocks; or
o A special situation that has caused the stock to fall out of favor, but which
we believe creates potential for even greater long-term price appreciation.
Once we have narrowed our search to companies with these characteristics, we
then conduct even more thorough hands-on research, evaluating a wide variety of
factors, including:
o The financial strength of the company;
o The expertise of its management;
o The growth potential of the company within its industry; and
o The growth potential of the industry.
Our goal is to select companies that are likely to perform well over an extended
time frame.
In order to reduce the inherent risks of equity investing, we maintain a
diversified portfolio, typically holding a mix of different stocks, representing
a wide array of industries.
The Fund's investment objective is non-fundamental. This means 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.
6
<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
ownership in a corporation. Stockholders participate in the common stock with an emphasis on medium-size companies.
corporation's profits and losses, proportionate to the
number of shares they own.
------------------------------------------------------------- -------------------------------------------------------------
American Depositary Receipts: ADRs are issued by a U.S. We may hold ADRs when we believe they offer greater
bank and represent the bank's holdings of a stated number appreciation potential than U.S. securities.
of shares of a foreign corporation. An ADR 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 of Typically, we use repurchase agreements as a short-term
securities, such as the Fund, and a seller of securities, investment for the Fund's cash position. In order to enter
in which the seller agrees to buy the securities back into these repurchase agreements, the Fund must have
within a specified time at the same price the buyer paid collateral of at least 102% of the repurchase price. The
for them, plus an amount equal to an agreed upon interest Fund will only enter into repurchase agreements in which
rate. Repurchase agreements are often viewed as equivalent the collateral is comprised of U.S. government securities.
to cash.
------------------------------------------------------------- -------------------------------------------------------------
Restricted securities: Privately placed securities whose We may invest in privately placed securities including
resale is restricted under securities law. those that are eligible for resale only among certain
institutional buyers without registration, which are commonly
known as Rule 144A Securities.
------------------------------------------------------------- -------------------------------------------------------------
Options and Futures: Options represent a right to buy or If we have stocks that appreciated in price, we may want to
sell a security or group of securities at an agreed upon protect those gains when we anticipate adverse conditions.
price at a future date. The purchaser of an option may or We might use options or futures to neutralize the effect of
may not choose to go through with the transaction. any price declines, without selling the security. We might
also use options or futures to gain exposure to a
Writing a covered call option on a security obligates the particular market segment without purchasing individual
owner of the security to sell it at an agreed upon price on securities in that segment. We might use this approach if
an agreed upon date (usually no more than nine months in we had excess cash that we wanted to invest quickly.
the future.) The owner of the security receives a premium
payment from the purchaser of the call, but if the security We might use covered call options if we believe that doing
appreciates to a price greater than the agreed upon selling so would help the Fund to meet its investment objective.
price, the fund would lose out on those gains.
Futures contracts are agreements for the purchase or sale Use of these strategies can increase the operating costs of
of securities at a specified price, on a specified date. the Fund and can lead to loss of principal.
Unlike an option, a futures contract must be executed
unless it is sold before the settlement date.
Options and futures are generally considered to be
derivative securities.
------------------------------------------------------------- -------------------------------------------------------------
Illiquid securities: Securities that do not have a ready We may invest up to 10% of net assets in illiquid
market and cannot be easily sold within seven days at securities.
approximately the price that a fund has valued them.
------------------------------------------------------------- -------------------------------------------------------------
</TABLE>
7
<PAGE>
The Fund may also invest in other securities, including convertible securities,
warrants, preferred stocks, and bonds. Please see the Statement of Additional
Information for additional descriptions on these securities as well as those
listed in the table above.
Lending securities
The Fund may lend up to 25% of its assets to qualified brokers, dealers and
institutional investors for their use in securities transactions. These
transactions, if any, may generate additional income for the Fund.
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
For temporary defensive purposes, we may hold a substantial part of the Fund's
assets in cash or cash equivalents. To the extent that the Fund holds these
securities, it may be unable to achieve its investment objective.
Portfolio turnover
The Fund's annual portfolio turnover may exceed 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 investors.
8
<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. Because of the nature of the Fund, you should
consider your investment to be a long-term investment that typically provides
the best results when held for a number of years. 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 of the We maintain a long-term investment approach and focus on
securities in a certain market -- like the stock or bond stocks we believe can appreciate over an extended time
market -- will decline in value because of factors such as frame regardless of interim market fluctuations. We do
economic conditions, future expectations or investor not try to predict overall stock market movements and
confidence. though we may hold securities for any amount of time, we
generally do not trade for short-term purposes.
--------------------------------------------------------------- -----------------------------------------------------------
Industry and security risk is the risk that the value of We limit the amount of the Fund's assets invested in any
securities in a particular industry or the value of an one industry and in any individual security. We also
individual stock or bond will decline because of changing follow a rigorous selection process before choosing
expectations for the performance of that industry or for the securities and continuously monitor them while they
individual company issuing the stock. remain in the portfolio.
--------------------------------------------------------------- -----------------------------------------------------------
Small company risk is the risk that prices of smaller Though the Fund may invest in small companies, our focus
companies may be more volatile than larger companies because is on medium-size companies. We believe medium-size
of limited financial resources or dependence on narrow companies, in general, are more stable than smaller
product lines. companies and involve less risk due to their larger size,
greater experience and more extensive financial resources. In
addition, the Fund maintains a well-diversified portfolio,
selects stocks carefully and monitors them continuously.
--------------------------------------------------------------- -----------------------------------------------------------
Interest rate risk is the risk that securities will decrease We analyze each company's financial situation and its
in value if interest rates rise. The risk is generally cash flow to determine the company's ability to finance
associated with bonds; however, because smaller companies future expansion and operations. The potential effect
often borrow money to finance their operations, they may be that rising interest rates might have on a stock is taken
adversely affected by rising interest rates. into consideration before the stock is purchased.
--------------------------------------------------------------- -----------------------------------------------------------
Futures and options risk is the possibility that a fund may We will not use futures and options for speculative
experience a loss if it employs an options or futures reasons. We may use options and futures to protect gains
strategy related to a security or a market index and that in the portfolio without actually selling a security. We
security or index moves in the opposite direction from what may also use options and futures to quickly invest excess
the manager anticipated. Futures and options also involve cash so that the portfolio is generally fully invested.
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 securities may be We typically invest only a small portion of the Fund's
adversely affected by political instability, changes in portfolio in foreign corporations indirectly through
currency exchange rates, foreign economic conditions or American Depositary Receipts. When we do purchase ADRs,
inadequate regulatory and accounting standards. they are generally denominated in U.S. dollars and traded
on a U.S. exchange.
--------------------------------------------------------------- -----------------------------------------------------------
Liquidity risk is the possibility that securities cannot be We limit exposure to illiquid securities.
readily sold within seven days at approximately the price
that a fund has valued them.
--------------------------------------------------------------- -----------------------------------------------------------
</TABLE>
9
<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 [0.00%] as a
percentage of average daily net assets for the last fiscal year.
Portfolio managers
Gerald S. Frey has primary responsibility for making day-to-day investment
decisions for the Fund. In making investment decisions for the Fund, Mr. Frey
regularly consults with Marshall T. Basset, John A. Heffern, Jeffrey W. Hynoski,
Steven T. Lampe and Lori P. Wachs.
Gerald S. Frey, Senior Vice President/Senior Portfolio Manager, has 23 years'
experience in the money management business. He holds a BA in Economics from
Bloomsburg University and attended Wilkes College and New York University. Prior
to joining Delaware Investments in 1996, he was a Senior Director with Morgan
Grenfell Capital Management in New York. Mr. Frey has been Senior Portfolio
Manager for the Fund since March 1997 and was co-manager from June 1996 to March
1997.
Marshall T. Bassett, Vice President/Portfolio Manager, holds a bachelor's degree
and an MBA from Duke University. Mr. Bassett joined Delaware Investments in
1997, he served as Vice President in Morgan Stanley Asset Management's Emerging
Growth Group, where he analyzed small growth companies and as a trust officer at
Sovran Bank and Trust Company.
John A. Heffern, Vice President/Portfolio Manager, holds a bachelor's degree and
an MBA from the University of North Carolina at Chapel Hill. He joined Delaware
Investments in 1997. Previously, he was a Senior Vice President, Equity Research
at NatWest Securities Corporation's Specialty Finance Services unit and a
Principal and Senior Regional Bank Analyst at Alex. Brown & Sons.
Jeffrey W. Hynoski, Vice President/Portfolio Manager, joined Delaware
Investments in 1998. Previously he served as a Vice President at Bessemer Trust
Company in the mid and large capitalization growth group. Prior to that, Mr.
Hynoski held positions at Lord Abbett & Co. and Cowen Asset Management. Mr.
Hynoski holds a BS in Finance from the University of Delaware and an MBA from
Pace University.
Steven T. Lampe, Vice President/Portfolio Manager, received a bachelor's degree
in Economics and an MBA with a concentration in Finance from the University of
Pennsylvania's Wharton School. He joined Delaware Investments in 1995. He
previously served as a tax/audit manager at Price Waterhouse, specializing in
financial services firms. Mr. Lampe is a Certified Public Accountant.
Lori P. Wachs, Vice President/Portfolio Manager, joined Delaware Investments in
1992 from Goldman Sachs, where she was an equity analyst for two years. She is a
graduate of the University of Pennsylvania's Wharton School, where she majored
in Finance and Oriental Studies.
10
<PAGE>
Who's who?
This diagram shows the various organizations involved with managing,
administering, and servicing the Delaware Investments Funds. [GRAPHIC OMITTED:
DIAGRAM SHOWING THE VARIOUS ORGANIZATIONS INVOLVED WITH MANAGING, ADMINISTERING,
AND SERVICING THE DELAWARE INVESTMENTS FUNDS]
<TABLE>
<CAPTION>
Board of Trustees
<S> <C> <C> <C>
Investment Manager Custodian
Delaware Management Company The Chase Manhattan Bank
One Commerce Square 4 Chase Metrotech Center
Philadelphia, PA 19103 The Fund Brooklyn, NY 11245
Distributor Service agent
Delaware Distributors, L.P. Delaware Service Company, Inc.
One Commerce Square One Commerce Square
Philadelphia, PA 19103 Philadelphia, PA 19103
Portfolio managers
(see page __ for details)
Financial Advisers
Shareholders
</TABLE>
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. (NASDR(SM)) 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.
11
<PAGE>
Financial advisers Financial advisers provide advice to their clients, analyzing
their financial objectives and recommending appropriate funds or other
investments. Financial advisers are compensated for their services, generally
through sales commissions, and through 12b-1 and/or service fees deducted from
the fund's assets.
Shareholders Like shareholders of other companies, mutual fund shareholders have
specific voting rights, including the right to elect 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.
12
<PAGE>
About your account
Investing in the Fund
You can choose from a number of share classes for the Fund. Because each share
class has a different combination of sales charges, fees, and other features,
you should consult your financial adviser to determine which class best suits
your investment goals and time frame.
Choosing a share class
Class A
o Class A shares have an up-front sales charge of up to 5.75% that you pay
when you buy the shares. The offering price for Class A shares includes the
front-end sales charge.
o If you invest $50,000 or more, your front-end sales charge will be reduced.
o You may qualify for other reduced sales charges, as described in "How to
reduce your sales charge," and under certain circumstances the sales charge
may be waived; please see the Statement of Additional Information.
o Class A shares are also subject to an annual 12b-1 fee no greater than
0.30% of average daily net assets, which is lower than the 12b-1 fee for
Class B and Class C shares.
o Class A shares generally are not subject to a contingent deferred sales
charge except in the limited circumstances described in the table below.
Class A sales charges
<TABLE>
<CAPTION>
---------------------------------------- --------------------------- ----------------------------- ---------------------------------
Sales charge as % Sales charge as % of amount Dealer's commission as % of
Amount of purchase of offering price invested offering price
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
------------------------------------------------------------------------------------------------------------------------------------
$50,000 but under $100,000 4.75% 4.99% 4.00%
------------------------------------------------------------------------------------------------------------------------------------
$100,000 but under $250,000 3.75% 3.90% 3.00%
------------------------------------------------------------------------------------------------------------------------------------
$250,000 but under $500,000 2.50% 2.56% 2.00%
------------------------------------------------------------------------------------------------------------------------------------
$500,000 but under $1 million 2.00% 2.04% 1.60%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As shown below, there is no front-end sales charge when you purchase $1 million
or more of Class A shares. However, if your financial adviser is paid a
commission on your purchase, you will have to pay a limited contingent deferred
sales charge of 1% if you redeem these shares within the first year after your
purchase and 0.50% if you redeem them within the second year after your
purchase, unless a specific waiver of the charge applies.
<TABLE>
<CAPTION>
---------------------------------------- ------------------------- ------------------------------ ----------------------------------
Amount of purchase Sales charge as % Sales charge as % of amount Dealer's commission as % of
of offering price invested offering price
---------------------------------------- ------------------------- ------------------------------ ----------------------------------
<S> <C> <C> <C>
$1 million up to $5 million none none 1.00%
---------------------------------------- ------------------------- ------------------------------ ----------------------------------
Next $20 million
Up to $25 million none none 0.50%
---------------------------------------- ------------------------- ------------------------------ ----------------------------------
Amount over $25 million none none 0.25%
---------------------------------------- ------------------------- ------------------------------ ----------------------------------
</TABLE>
13
<PAGE>
Class B
o Class B shares have no up-front sales charge, so the full amount of your
purchase is invested in the Fund. However, you will pay a contingent
deferred sales charge if you redeem your shares within six years after you
buy them.
o If you redeem Class B shares during the first year after you buy them, the
shares will be subject to a contingent deferred sales charge of 5%. The
contingent deferred sales charge is 4% during the second year, 3% during
the third and fourth years, 2% during the fifth year, 1% during the sixth
year, and 0% thereafter.
o Under certain circumstances the contingent deferred sales charge may be
waived; please see the Statement of Additional Information.
o For approximately eight years after you buy your Class B shares, they are
subject to annual 12b-1 fees no greater than 1% of average daily net
assets, of which 0.25% are service fees paid to the distributor, dealers or
others for providing services and maintaining accounts.
o Because of the higher 12b-1 fees, Class B shares have higher expenses and
any dividends paid on these shares are lower than dividends on Class A
shares.
o Approximately eight years after you buy them, Class B shares automatically
convert into Class A shares with a 12b-1 fee of no more than 0.30%.
Conversion may occur as late as three months after the eighth anniversary
of purchase, during which time Class B's higher 12b-1 fees apply.
o You may purchase up to $250,000 of Class B shares at any one time. The
limitation on maximum purchases varies for retirement plans.
Class C
o Class C shares have no up-front sales charge, so the full amount of your
purchase is invested in the Fund. However, you will pay a contingent
deferred sales charge of 1% if you redeem your shares within 12 months
after you buy them.
o Under certain circumstances the contingent deferred sales charge may be
waived; please see the Statement of Additional Information.
o Class C shares are subject to an annual 12b-1 fee which may not be greater
than 1% of average daily net assets, of which 0.25% are service fees paid
to the distributor, dealers or others for providing services and
maintaining shareholder accounts.
o Because of the higher 12b-1 fees, Class C shares have higher expenses and
pay lower dividends than Class A shares.
o Unlike Class B shares, Class C shares do not automatically convert into
another class.
o You may purchase any amount less than $1,000,000 of Class C shares at any
one time. The limitation on maximum purchases varies for retirement plans.
Each share class of the Fund has adopted a separate 12b-1 plan that allows it to
pay distribution fees for the sales and distribution of its shares. Because
these fees are paid out of the Fund's assets on an ongoing basis, over time
these fees will increase the cost of your investment and may cost you more than
paying other types of sales charges.
14
<PAGE>
About your account (continued)
How to reduce your sales charge
We offer a number of ways to reduce or eliminate the sales charge on shares.
Please refer to the Statement of Additional Information for detailed information
and eligibility requirements. You can also get additional information from your
financial adviser. You or your financial adviser must notify us at the time you
purchase shares if you are eligible for any of these programs.
<TABLE>
<CAPTION>
----------------------------- ------------------------------------- ----------------------------------------------------------------
Program How it works Share class
A B C
----------------------------- ------------------------------------- --------------- ------------------------------------------------
<S> <C> <C> <C>
Letter of Intent Through a Letter of Intent you X Although the Letter of Intent and Rights of
agree to invest a certain amount Accumulation do not apply to the purchase of
in Delaware Investments Funds Class B and Class C shares, you can combine
(except money market funds with your purchase of Class A shares with your
no sales charge) over a 13-month purchase of Class B and Class C shares to
period to qualify for reduced fulfill your Letter of Intent or qualify for
front-end sales charges. Rights of Accumulation.
----------------------------- ------------------------------------- --------------- ------------------------------------------------
Rights of Accumulation You can combine your holdings or X
purchases of all funds in the
Delaware Investments family
(except money market funds with
no sales charge) as well as the
holdings and purchases of your
spouse and children under 21 to
qualify for reduced front-end
sales charges.
----------------------------- ------------------------------------- --------------- --------------------------------- --------------
Reinvestment of Redeemed Up to 12 months after you redeem For Class For Class B, your account Not
Shares shares, you can reinvest the A, you will will be credited with the available.
proceeds without paying a sales not have to contingent deferred sales
charge as noted to the right. pay an charge you previously paid on
additional the amount you are
front-end reinvesting. Your schedule
sales for contingent deferred sales
charge. charges and conversion to
Class A will not start over
again; it will pick up from
the point at which you redeemed
your shares.
----------------------------- ------------------------------------- --------------- ------------------------------------------------
SIMPLE IRA, SEP IRA, These investment plans may X There is no reduction in sales charges for
SARSEP, Prototype Profit qualify for reduced sales charges Class B or Class C shares for group purchases
Sharing, Pension, 401(k), by combining the purchases of all by retirement plans.
SIMPLE 401(k), 403(b)(7), members of the group. Members of
and 457 Retirement Plans these groups may also qualify to
purchase shares without a front-end
sales charge and may qualify for a
waiver of any contingent deferred
sales charges.
----------------------------- ------------------------------------- --------------- ------------------------------------------------
</TABLE>
15
<PAGE>
How to buy shares
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of purchasing shares,
including opening an account. Your adviser may charge a separate fee for this
service.
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
Complete an investment slip and mail it with your check, made payable to the
fund and class of shares you wish to purchase, to Delaware Investments, One
Commerce Square, Philadelphia, PA 19103-7042. If you are making an initial
purchase by mail, you must include a completed investment application (or an
appropriate retirement plan application if you are opening a retirement account)
with your check.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
Ask your bank to wire the amount you want to invest to Bank of New York, ABA
#021000018, Bank Account number 8900403748. Include your account number and the
name of the fund in which you want to invest. If you are making an initial
purchase by wire, you must call us so we can assign you an account number.
[GRAPHIC OMITTED: ILLUSTRATION OF AN EXCHANGE SYMBOL]
By exchange
You can exchange all or part of your investment in one or more funds in the
Delaware Investments family for shares of other funds in the family. Please keep
in mind, however, that under most circumstances you are allowed to exchange only
between like classes of shares. To open an account by exchange, call the
Shareholder Service Center at 800.523.1918.
[GRAPHIC OMITTED: ILLUSTRATION OF A KEYPAD]
Through automated shareholder services
You can purchase or exchange shares through Delaphone, our automated telephone
service, or through our web site, www.delawareinvestments.com. For more
information about how to sign up for these services, call our Shareholder
Service Center at 800.523.1918.
16
<PAGE>
About your account (continued)
How to buy shares (continued)
Once you have completed an application, you can open an account with an initial
investment of $1,000 and make additional investments at any time for as little
as $100. If you are buying shares in an IRA or Roth IRA, under the Uniform Gifts
to Minors Act or the Uniform Transfers to Minors Act, or through an Automatic
Investing Plan, the minimum purchase is $250, and you can make additional
investments of only $25. The minimum for an Education IRA is $500. The minimums
vary for retirement plans other than IRAs, Roth IRAs or Education IRAs.
The price you pay for shares will depend on when we receive your purchase order.
If we or an authorized agent receives your order before the close of 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 the
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 the Fund's portfolio, deducting all liabilities, and dividing the
resulting number by the number of shares outstanding. The result is the net
asset value per share. We price securities and other assets for which market
quotations are available at their market value. We price 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.
Retirement plans
In addition to being an appropriate investment for your Individual Retirement
Account (IRA), Roth IRA and Education IRA, shares in the Fund may be suitable
for group retirement plans. You may establish your IRA account even if you are
already a participant in an employer-sponsored retirement plan. For more
information on how shares in the Fund can play an important role in your
retirement planning or for details about group plans, please consult your
financial adviser, or call 800.523.1918.
17
<PAGE>
How to redeem shares
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of redeeming your shares. Your
adviser may charge a separate fee for this service.
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
You can redeem your shares (sell them back to the fund) by mail by writing to:
Delaware Investments, One Commerce Square, Philadelphia, PA 19103-7042. 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. Signature
guarantees are also required when redemption proceeds are going to an address
other than the address of record on an account.
[GRAPHIC OMITTED: ILLUSTRATION OF A TELEPHONE]
By telephone
You can redeem up to $50,000 of your shares by telephone. You may have the
proceeds sent to you by check, or if you redeem at least $1,000 of shares, you
may have the proceeds sent directly to your bank by wire. Bank information must
be on file before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
You can redeem $1,000 or more of your shares and have the proceeds deposited
directly to your bank account the next business day after we receive your
request. If you request a wire deposit, a bank wire fee may be deducted from
your proceeds. Bank information must be on file before you request a wire
redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A KEYPAD]
Through automated shareholder services
You can redeem shares through Delaphone, our automated telephone service, or
through our web site, www.delawareinvestments.com. For more information about
how to sign up for these services, call our Shareholder Service Center at
800.523.1918.
18
<PAGE>
About your account (continued)
How to redeem shares (continued)
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 next determined
after we receive your request. If we receive your request after the close of
regular trading on the New York Stock Exchange, you will receive the net asset
value next determined on the next business day. We will deduct any applicable
contingent deferred sales charges. You may also have to pay taxes on the
proceeds from your sale of shares. We will send you a check, normally the next
business day, but no later than seven days after we receive your request to sell
your shares. If you purchased your shares by check, we will wait until your
check has cleared, which can take up to 15 days, before we send your redemption
proceeds.
If you are required to pay a contingent deferred sales charge when you redeem
your shares, the amount subject to the fee will be based on the shares' net
asset value when you purchased them or their net asset value when you redeem
them, whichever is less. This arrangement assures that you will not pay a
contingent deferred sales charge on any increase in the value of your shares.
You also will not pay the charge on any shares acquired by reinvesting dividends
or capital gains. If you exchange shares of one fund for shares of another, you
do not pay a contingent deferred sales charge at the time of the exchange. If
you later redeem those shares, the purchase price for purposes of the contingent
deferred sales charge formula will be the price you paid for the original
shares, not the exchange price. The redemption price for purposes of this
formula will be the NAV of the shares you are actually redeeming.
Account minimums
If you redeem shares and your account balance falls below the required account
minimum of $1,000 ($250 for IRAs and Roth IRAs, Uniform Gift to Minors Act and
Uniform Transfers to Minors Act accounts or accounts with automatic investing
plans and $500 for Education IRAs) for three or more consecutive months, you
will have until the end of the current calendar quarter to raise the balance to
the minimum. If your account is not at the minimum by the required time, you
will be charged a $9 fee for that quarter and each quarter after that until your
account reaches the minimum balance. If your account does not reach the minimum
balance, your Fund may redeem your account after 60 days' written notice to you.
19
<PAGE>
Special services
To help make investing with us as easy as possible, and to help you build your
investments, we offer the following special services.
Automatic Investing Plan
The Automatic Investing Plan allows you to make regular monthly or quarterly
investments directly from your checking account.
Direct Deposit
With Direct Deposit you can make additional investments through payroll
deductions, recurring government or private payments such as Social Security or
direct transfers from your bank account.
Wealth Builder Option
With the Wealth Builder Option you can arrange automatic monthly exchanges
between your shares in one or more Delaware Investments funds. Wealth Builder
exchanges are subject to the same rules as regular exchanges (see below) and
require a minimum monthly exchange of $100 per fund.
Dividend Reinvestment Plan
Through our Dividend Reinvestment Plan, you can have your distributions
reinvested in your account or the same share class in another fund in the
Delaware Investments family. The shares that you purchase through the Dividend
Reinvestment Plan are not subject to a front-end sales charge or to a contingent
deferred sales charge. Under most circumstances, you may reinvest dividends only
into like classes of shares.
Exchanges
You can exchange all or part of your shares for shares of the same class in
another Delaware Investments Fund without paying a front-end sales charge or
contingent deferred sales charge at the time of the exchange. However, if you
exchange shares from a money market fund that does not have a sales charge you
will pay any applicable sales charges on your new shares. When exchanging Class
B and Class C shares of one fund for the same class of shares in other funds,
your new shares will be subject to the same contingent deferred sales charge as
the shares you originally purchased. The holding period for the contingent
deferred sales charge will also remain the same, with the amount of time you
held your original shares being credited toward the holding period of your new
shares. You don't pay sales charges on shares that you acquired through the
reinvestment of dividends. You may have to pay taxes on your exchange. When you
exchange shares, you are purchasing shares in another fund so you should be sure
to get a copy of the fund's Prospectus and read it carefully before buying
shares through an exchange.
20
<PAGE>
About your account (continued)
Special services (continued)
MoneyLine(SM) On Demand Service
Through our MoneyLine(SM) On Demand Service, you or your financial adviser may
transfer money between your Fund account and your predesignated bank account by
telephone request. This service is not available for retirement plans. MoneyLine
has a minimum transfer of $25 and a maximum transfer of $50,000, except for
purchases into IRAs. Delaware Investments does not charge a fee for this
service; however, your bank may assess one.
MoneyLine Direct Deposit Service
Through our MoneyLine Direct Deposit Service you can have $25 or more in
dividends and distributions deposited directly to your bank account. Delaware
Investments does not charge a fee for this service; however, your bank may
assess one. This service is not available for retirement plans.
Systematic Withdrawal Plan
Through our Systematic Withdrawal Plan you can arrange a regular monthly or
quarterly payment from your account made to you or someone you designate. If the
value of your account is $5,000 or more, you can make withdrawals of at least
$25 monthly, or $75 quarterly. You may also have your withdrawals deposited
directly to your bank account through our MoneyLine Direct Deposit Service.
Dividends, distributions and taxes
Dividends and capital gains, if any, are paid annually. We automatically
reinvest all dividends and any capital gains, unless you tell us otherwise.
Tax laws are subject to change, so we urge you to consult your tax adviser about
your particular tax situation and how it might be affected by current tax law.
The tax status of your dividends from 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.
21
<PAGE>
Certain management considerations
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.
22
<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>
------------------------------------------------------------------ ------------------------------------------------------------
Class A
Year Ended 9/30
Delaware Growth Opportunities Fund ------------------------------------------------------------
(formerly Delaware DelCap Fund) 2000 1999 1998 1997 1996
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period [$0.000] $22.470 $30.450 $30.740 $28.870
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
Income (loss) from investment operations:
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
Net investment loss(2) [0.000] (0.204) (0.237) (0.234) (0.208)
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
Net realized and unrealized gain (loss) on investments [0.000] 8.014 (1.873) 3.534 5.618
------- ----- ------- ----- -----
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
Total from investment operations [0.000] 7.810 (2.110) 3.300 5.410
------- ----- ------- ----- -----
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
Less distributions:
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
Distributions from net realized gain on investments [0.000] (3.930) (5.870) (3.590) (3.540)
------- ------- ------- ------- -------
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
Total distributions [0.000] (3.930) (5.870) (3.590) (3.540)
------- ------- ------- ------- -------
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
Net asset value, end of period [$0.000] $26.350 $22.470 $30.450 $30.740
======== ======= ======= ======= =======
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
Total return(3) [0.00%] 38.64% (8.28%) 12.44% 21.09%
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
Ratios and supplemental data:
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
Net assets, end of period (000 omitted) [$0] $649,052 $566,734 $770,207 $923,248
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
Ratio of expenses to average net assets [0.000%] 1.37% 1.40% 1.36% 1.35%
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
Ratio of net investment income (loss) to average net assets [0.000%] (0.83%) (0.92%) (0.86%) (0.74%)
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
Portfolio turnover [0%] 114% 115% 105% 72%
------------------------------------------------------------------ ----------- ----------- ----------- ------------ -----------
</TABLE>
(1) Date of initial public offering; ratios have been annualized but total
return has not been annualized.
(2) The average shares outstanding method has been applied for per share
information.
(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 does not reflect the impact of a sales charge.
23
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------- ------------------------------------------------------
Class B
Year Ended 9/30
Delaware Growth Opportunities Fund ------------------------------------------------------
(formerly Delaware DelCap Fund) 2000 1999 1998 1997 1996
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period [$0.000] $21.680 $29.750 $30.300 $28.680
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net investment loss(2) [0.000] (0.367) (0.408) (0.418) (0.400)
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net realized and unrealized gain (loss) on investments [0.000] 7.677 (1.792) 3.458 5.560
------- ----- ------- ----- -----
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Total from investment operations [0.000] 7.310 (2.200) 3.040 5.160
------- ----- ------- ----- -----
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Less distributions:
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Distributions from net realized gain on investments [0.000] (3.930) (5.870) (3.590) (3.540)
------- ------- ------- ------- -------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Total distributions [0.000] (3.930) (5.870) (3.590) (3.540)
------- ------- ------- ------- -------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period [$0.000] $25.060 $21.680 $29.750 $30.300
======== ======= ======= ======= =======
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Total return(3) [0.00%] 37.67% (8.92%) 11.64% 20.27%
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Ratios and supplemental data:
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net assets, end of period (000 omitted) [$0] $26,941 $18,470 $20,706 $13,239
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Ratio of expenses to average net assets [0.00%] 2.07% 2.10% 2.06% 2.05%
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Ratio of net investment income (loss) to average net
assets [0.00%] (1.53%) (1.62%) (1.56%) (1.44%)
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Portfolio turnover [0%] 114% 115% 105% 72%
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
</TABLE>
<PAGE>
[RESTUB TABLE]
<TABLE>
<CAPTION>
------------------------------------------------------- ------------------------------------------- ----------
Delaware Growth Opportunities Fund
(formerly Delaware DelCap Fund) Class C Period
Year Ended 9/30 11/29/95(1)
------------------------------------------- through
2000 1999 1998 1997 9/30/96
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period [$0.000] $21.950 $30.050 $30.570 $28.880
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net investment loss(2) [0.000] (0.369) (0.411) (0.421) (0.359)
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net realized and unrealized gain (loss) on investments [0.000] 7.789 (1.819) 3.491 5.589
------- ----- ------- ----- -----
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Total from investment operations [0.000] 7.420 (2.230) 3.070 5.230
------- ----- ------- ----- -----
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Less distributions:
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Distributions from net realized gain on investments [0.000] (3.930) (5.870) (3.590) (3.540)
------- ------- ------- ------- -------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Total distributions [0.000] (3.930) (5.870) (3.590) (3.540)
------- ------- ------- ------- -------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period [$0.000] $25.440 $21.950 $30.050 $30.570
======== ======= ======= ======= =======
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Total return(3) [0.00%] 37.65% (8.89%) 11.64% 20.38%
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Ratios and supplemental data:
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net assets, end of period (000 omitted) [$0] $5,945 $3,576 $3,385 $1,947
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Ratio of expenses to average net assets [0.00%] 2.07% 2.10% 2.06% 2.05%
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Ratio of net investment income (loss) to average net
assets [0.00%] (1.53%) (1.62%) (1.56%) (1.44%)
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Portfolio turnover [0%] 114% 115% 105% 72%
------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
</TABLE>
24
<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, if any,
would be listed under "Less dividends and 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, exclude front-end and contingent
deferred sales charges, and assume the shareholder has reinvested all dividends
and realized gains.
Net assets
Net assets represent the total value of all the assets in a fund's portfolio,
less any liabilities, that are attributable to that class of the 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 loss to average net assets
We determine this ratio by dividing net investment income by average net assets.
Portfolio turnover
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.
25
<PAGE>
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.
Contingent deferred sales charge (CDSC)
Fee charged by some mutual funds when shares are redeemed (sold back to the
fund) within a set number of years; an alternative method for investors to
compensate a financial adviser for advice and service, rather than an up-front
commission.
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.
26
<PAGE>
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.
Financial adviser
Financial professional (e.g., broker, banker, accountant, planner or insurance
agent) who analyzes clients' finances and prepares personalized programs to meet
objectives.
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. (NASDR(SM))
The independent subsidiary of the National Association of Securities Dealers,
Inc. responsible for regulating the securities industry.
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.
27
<PAGE>
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.
Russell Midcap Growth Index
The Russell Midcap Growth Index; an unmanaged market-weighted total return index
that measures the performance of U.S. companies having higher price-to-book
ratios and higher forecasted growth values.
Sales charge
Charge on the purchase or redemption of fund shares sold through financial
advisers. May vary with the amount invested. Typically used to compensate
advisers for advice and service provided.
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.
Uniform Gift to Minors Act and Uniform Transfers to Minors Act Federal and state
laws that provide a simple way to transfer property to a minor with special tax
advantages.
Volatility
The tendency of an investment to go up or down in value by different magnitudes.
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.
28
<PAGE>
Delaware Growth Opportunities Fund
Additional information about the Fund's investments is 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 One Commerce Square, Philadelphia, PA
19103-7042, 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 EDGAR Database
on the SEC web site (http://www.sec.gov). You can also get copies of this
information, after payment of a duplicating fee, by e-mailing the SEC at
[email protected] or by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-0102. Information about the Fund, including its Statement
of Additional Information, can be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. You can get information on the Public
Reference Room by calling the SEC at 202.942.8090.
Web site
www.delawareinvestments.com
E-mail
[email protected]
Shareholder Service Center
800.523.1918
Call the Shareholder Service Center Monday to Friday, 8 a.m. to 8 p.m. Eastern
time:
o For fund information, literature, price, yield and performance figures.
o For information on existing regular investment accounts and retirement plan
accounts including wire investments, wire redemptions, telephone
redemptions and telephone exchanges.
Delaphone Service
800.362.FUND (800.362.3863)
o 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(R) service.
Investment Company Act file number: 811-4413
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Fund Symbols CUSIP NASDAQ
----------------------------------------------------------------------------------------------------
<S> <C> <C>
Delaware Growth Opportunities Class A 245906102 DFCIX
----------------------------------------------------------------------------------------------------
Delaware Growth Opportunities Class B 245906300 DFBIX
----------------------------------------------------------------------------------------------------
Delaware Growth Opportunities Class C 245906409 DEEVX
----------------------------------------------------------------------------------------------------
</TABLE>
DELAWARE
INVESTMENTS
-----------
Philadelphia * London
P-016 [--] PP 11/00
29
<PAGE>
DELAWARE
INVESTMENTS
---------------------
Philadelphia * London
Delaware Growth Opportunities Fund
(formerly Delaware DelCap Fund)
Institutional Class
Prospectus
January 26, 2001
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.
1
<PAGE>
Table of contents
Fund profile page
Delaware Growth Opportunities 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 page
Financial highlights page
2
<PAGE>
Profile: Delaware Growth Opportunities Fund
What is the Fund's goal?
Delaware Growth Opportunities Fund seeks long-term capital growth. Although the
Fund will strive to meet its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
We invest primarily in common stocks of medium-size companies. These are
generally considered to be stocks with market capitalizations between $2 billion
and $10 billion. We may also invest in securities that are convertible into
common stock. In selecting stocks for the portfolio, we typically look for
companies that have established themselves within their industry, but still have
growth potential.
We use a bottom-up approach to select stocks, evaluating individual companies
rather than trends in the economy or the investment markets. Researching each
company, its products, services, competitors and management team helps us to
select stocks of companies that we think will provide high and consistent
earnings growth with a reasonable level of risk.
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 could be caused by a drop in the stock market or poor performance from
particular companies or industries. In addition, Delaware Growth Opportunities
Fund invests in medium-size or small companies. These companies may involve
greater risk due to their size, narrow product lines and limited financial
resources.
For a more complete discussion of risk, please see "The risks of investing in
the Fund" on page ___.
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
medium-size, growth-oriented 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.
3
<PAGE>
How has the Fund performed?
This bar chart and table can help you evaluate the risks of investing in the
Fund. We show how returns for the Fund's Institutional Class shares have varied
over the past ten calendar years as well as the average annual returns for one-,
five-, and ten-year periods. Delaware Growth Opportunities Fund's Institutional
Class commenced operations on November 9, 1992. Return information for the Class
prior to that date is calculated by taking the performance of Delaware Growth
Opportunities Fund A Class and eliminating all sales charges that apply to Class
A shares. However, for those periods, Class A 12b-1 payments were not
eliminated, and performance would have been affected if this adjustment had been
made. The Fund's past performance does not necessarily indicate how it will
perform in the future. Returns for 1999 were unusually high and may not be
sustained. Investors should be aware that returns were primarily achieved during
favorable conditions, especially within the technology sector.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN]
Year-by-year total return (Institutional Class)
<TABLE>
<CAPTION>
------------- ------------ ----------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------- ------------ ----------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
-3.52% 42.33% 1.92% 12.20% -5.03% 30.19% 14.08% 14.39% 18.09% 65.17%
------------- ------------ ----------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
</TABLE>
As of September 30, 2000, the Fund`s Institutional Class had a calendar
year-to-date return of [0.00%]. During the periods illustrated in this bar
chart, Institutional Class' highest quarterly return was [0.00%] for the quarter
ended [_______________] and its lowest return was [0.00%] for the quarter ended
[__________________].
Average annual returns for periods ending 12/31/99
Institutional Class Russell Midcap Growth Index
1 year 65.17% 38.67%
5 years 27.07% 23.51%
10 years 17.32% 22.18%
The Fund's returns above are compared to the performance of the Russell Midcap
Growth 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 securities.
4
<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 none
percentage of offering price
------------------------------------------------------- ----------
Maximum contingent deferred sales charge (load) as a none
percentage of original purchase price or redemption
price, whichever is lower
------------------------------------------------------- ----------
Maximum sales charge (load) imposed on reinvested none
dividends
------------------------------------------------------- ----------
Redemption fees none
------------------------------------------------------- ----------
Exchange fees(1) none
------------------------------------------------------- ----------
Annual fund operating expenses are deducted from the Fund's assets.
------------------------------------------------------- ----------
Management fees [0.00%]
------------------------------------------------------- ----------
Distribution and service (12b-1) fees none
------------------------------------------------------- ----------
Other expenses [0.00%]
------------------------------------------------------- ----------
Total operating expenses [0.00%]
------------------------------------------------------- ----------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(2) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
---------------- ------------
1 year [$000]
---------------- ------------
3 years [$000]
---------------- ------------
5 years [$000]
---------------- ------------
10 years [$000]
---------------- ------------
(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 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.
5
<PAGE>
How we manage the Fund
We take a disciplined approach to investing, combining investment strategies and
risk management techniques.
Our investment strategies
We research individual companies and analyze economic and market conditions,
seeking to identify the securities or market sectors that we believe are the
best investments for the Fund. Following are descriptions of how the portfolio
management team pursues the Fund's investment goals.
We strive to identify companies of medium market capitalization that offer
above-average opportunities for long-term capital growth because they are poised
to provide high and consistent earnings growth. Medium-size companies are
generally considered to be those with market capitalizations between $2 billion
and $10 billion.
Companies in the early stages of their development often offer the greatest
opportunities for rising share prices. However, the smallest companies generally
involve the most risk because they may have very limited resources, less
management experience and narrower product lines. We believe that medium-size
companies can provide many of the growth opportunities of small companies, but
with less risk. Medium-size companies may be more established in their industry
and have greater financial resources. Yet, they may still have the flexibility
and growth potential of a smaller company.
We use a bottom-up approach to stock selection, carefully evaluating the
characteristics of individual companies. We rely heavily on our own research in
selecting companies for the portfolio. That research might include one-on-one
meetings with executives, company competitors, industry experts and customers.
Our first step in identifying promising companies is to pinpoint stocks that
exhibit one or more of the following characteristics:
o A history of high earnings-per-share growth;
o Expectations for future earnings growth that are either high or accelerating;
o A price to earnings ratio that is low relative to other stocks - indicating
that the stock might be undervalued;
o A discounted cash flow that is high relative to other stocks; or
o A special situation that has caused the stock to fall out of favor, but which
we believe creates potential for even greater long-term price appreciation.
Once we have narrowed our search to companies with these characteristics, we
then conduct even more thorough hands-on research, evaluating a wide variety of
factors, including:
o The financial strength of the company;
o The expertise of its management;
o The growth potential of the company within its industry; and
o The growth potential of the industry.
Our goal is to select companies that are likely to perform well over an extended
time frame.
In order to reduce the inherent risks of equity investing, we maintain a
diversified portfolio, typically holding a mix of different stocks, representing
a wide array of industries.
The Fund's investment objective is non-fundamental. This means 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.
6
<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
ownership in a corporation. Stockholders participate stock with an emphasis on medium-size companies.
in the corporation's profits and losses, proportionate
to the number of shares they own.
------------------------------------------------------------- -------------------------------------------------------------
American Depositary Receipts: ADRs are issued by a U.S. We may hold ADRs when we believe they offer greater
bank and represent the bank's holdings of a stated number appreciation potential than U.S. securities.
of shares of a foreign corporation. An ADR 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 of Typically, we use repurchase agreements as a short-term
securities, such as the Fund, and a seller of investment for the Fund's cash position. In order to enter
securities, in which the seller agrees to buy the into these repurchase agreements, the Fund must have
securities back within a specified time at the same collateral of at least 102% of the repurchase price. The Fund
price the buyer paid for them, plus an amount equal to will only enter into repurchase agreements in which the
an agreed upon interest rate. Repurchase agreements collateral is comprised of U.S. government securities.
are often viewed as equivalent to cash.
------------------------------------------------------------- -------------------------------------------------------------
Restricted securities: Privately placed securities whose We may invest in privately placed securities including those
resale is restricted under securities law. that are eligible for resale only among certain institutional
buyers without registration, which are commonly known as Rule
144A Securities.
------------------------------------------------------------- -------------------------------------------------------------
Options and Futures: Options represent a right to buy or If we have stocks that appreciated in price, we may want to
sell a security or group of securities at an agreed upon protect those gains when we anticipate adverse conditions.
price at a future date. The purchaser of an option may or We might use options or futures to neutralize the effect of
may not choose to go through with the transaction. any price declines, without selling the security. We might
also use options or futures to gain exposure to a
Writing a covered call option on a security obligates particular market segment without purchasing individual in
the owner of the security to sell it at an agreed upon that segment. We might use this approach if we had excess
price on securities an agreed upon date (usually no cash that we wanted to invest quickly.
more than nine months in the future.) The owner of the
security receives a premium payment from the purchaser We might use covered call options if we believe that doing so
of the call, but if the security appreciates to a would help the Fund to meet its investment objective.
price greater than the agreed upon selling price, the
fund would lose out on those gains.
Futures contracts are agreements for the purchase or Use of these strategies can increase the operating costs of
sale of securities at a specified price, on a the Fund and can lead to loss of principal.
specified date. Unlike an option, a futures contract
must be executed unless it is sold before the
settlement date.
Options and futures are generally considered to be
derivative securities.
------------------------------------------------------------- -------------------------------------------------------------
Illiquid securities: Securities that do not have a ready We may invest up to 10% of net assets in illiquid
market and cannot be easily sold within seven days at securities.
approximately the price that a fund has valued them.
------------------------------------------------------------- -------------------------------------------------------------
</TABLE>
The Fund may also invest in other securities, including convertible securities,
warrants, preferred stocks, and bonds. Please see the Statement of Additional
Information for additional descriptions on these securities as well as those
listed in the table above.
7
<PAGE>
Lending securities
The Fund may lend up to 25% of its assets to qualified brokers, dealers and
institutional investors for their use in securities transactions. These
transactions, if any, may generate additional income for the Fund.
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
For temporary defensive purposes, we may hold a substantial part of the Fund's
assets in cash or cash equivalents. To the extent that the Fund holds these
securities, it may be unable to achieve its investment objective.
Portfolio turnover
The Fund's annual portfolio turnover may exceed 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 investors.
8
<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. Because of the nature of the Fund, you should
consider your investment to be a long-term investment that typically provides
the best results when held for a number of years. 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 of the We maintain a long-term investment approach and focus on
securities in a certain market -- like the stock or bond stocks we believe can appreciate over an extended time
market -- will decline in value because of factors such as frame regardless of interim market fluctuations. We do not
economic conditions, future expectations or investor try to predict overall stock market movements and though
confidence. we may hold securities for any amount of time, we
generally do not trade for short-term purposes.
---------------------------------------------------------------- ----------------------------------------------------------
Industry and security risk is the risk that the value of We limit the amount of the Fund's assets invested in any
securities in a particular industry or the value of an one industry and in any individual security. We also
individual stock or bond will decline because of changing follow a rigorous selection process before choosing
expectations for the performance of that industry or for the securities and continuously monitor them while they remain
individual company issuing the stock. in the portfolio.
---------------------------------------------------------------- ----------------------------------------------------------
Small company risk is the risk that prices of smaller Though the Fund may invest in small companies, our focus
companies may be more volatile than larger companies because is on medium-size companies. We believe medium-size in
of limited financial resources or dependence on narrow general, are more stable than smaller companies and
product companies, lines. involve less risk due to their larger size, greater
experience and more extensive financial resources. In
addition, the Fund maintains a well-diversified portfolio,
selects stocks carefully and monitors them continuously.
---------------------------------------------------------------- ----------------------------------------------------------
Interest rate risk is the risk that securities will decrease We analyze each company's financial situation and its cash
in value if interest rates rise. The risk is generally flow to determine the company's ability to finance future
associated with bonds; however, because smaller companies expansion and operations. The potential effect that rising
often borrow money to finance their operations, they may be interest rates might have on a stock is taken into
adversely affected by rising interest rates. consideration before the stock is purchased.
---------------------------------------------------------------- ----------------------------------------------------------
Futures and options risk is the possibility that a fund may We will not use futures and options for speculative
experience a loss if it employs an options or futures reasons. We may use options and futures to protect gains
strategy related to a security or a market index and that in the portfolio without actually selling a security. We
security or index moves in the opposite direction from what may also use options and futures to quickly invest excess
the manager anticipated. Futures and options also involve cash so that the portfolio is generally fully invested.
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 securities may be We typically invest only a small portion of the Fund's
adversely affected by political instability, changes in portfolio in foreign corporations indirectly through
currency exchange rates, foreign economic conditions or American Depositary Receipts. When we do purchase ADRs,
inadequate regulatory and accounting standards. they are generally denominated in U.S. dollars and traded
on a U.S. exchange.
---------------------------------------------------------------- ----------------------------------------------------------
Liquidity risk is the possibility that securities cannot be We limit exposure to illiquid securities.
readily sold within seven days at approximately the price
that a fund has valued them.
---------------------------------------------------------------- ----------------------------------------------------------
</TABLE>
9
<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 [0.00%] as a
percentage of average daily net assets for the last fiscal year.
Portfolio managers
Gerald S. Frey has primary responsibility for making day-to-day investment
decisions for the Fund. In making investment decisions for the Fund, Mr. Frey
regularly consults with Marshall T. Basset, John A. Heffern, Jeffrey W. Hynoski,
Steven T. Lampe and Lori P. Wachs.
Gerald S. Frey, Senior Vice President/Senior Portfolio Manager, has 23 years'
experience in the money management business. He holds a BA in Economics from
Bloomsburg University and attended Wilkes College and New York University. Prior
to joining Delaware Investments in 1996, he was a Senior Director with Morgan
Grenfell Capital Management in New York. Mr. Frey has been Senior Portfolio
Manager for the Fund since March 1997 and was co-manager from June 1996 to March
1997.
Marshall T. Bassett, Vice President/Portfolio Manager, holds a bachelor's degree
and an MBA from Duke University. Mr. Bassett joined Delaware Investments in
1997, he served as Vice President in Morgan Stanley Asset Management's Emerging
Growth Group, where he analyzed small growth companies and as a trust officer at
Sovran Bank and Trust Company.
John A. Heffern, Vice President/Portfolio Manager, holds a bachelor's degree and
an MBA from the University of North Carolina at Chapel Hill. He joined Delaware
Investments in 1997. Previously, he was a Senior Vice President, Equity Research
at NatWest Securities Corporation's Specialty Finance Services unit and a
Principal and Senior Regional Bank Analyst at Alex. Brown & Sons.
Jeffrey W. Hynoski, Vice President/Portfolio Manager, joined Delaware
Investments in 1998. Previously he served as a Vice President at Bessemer Trust
Company in the mid and large capitalization growth group. Prior to that, Mr.
Hynoski held positions at Lord Abbett & Co. and Cowen Asset Management. Mr.
Hynoski holds a BS in Finance from the University of Delaware and an MBA from
Pace University.
Steven T. Lampe, Vice President/Portfolio Manager, received a bachelor's degree
in Economics and an MBA with a concentration in Finance from the University of
Pennsylvania's Wharton School. He joined Delaware Investments in 1995. He
previously served as a tax/audit manager at Price Waterhouse, specializing in
financial services firms. Mr. Lampe is a Certified Public Accountant.
Lori P. Wachs, Vice President/Portfolio Manager, joined Delaware Investments in
1992 from Goldman Sachs, where she was an equity analyst for two years. She is a
graduate of the University of Pennsylvania's Wharton School, where she majored
in Finance and Oriental Studies.
10
<PAGE>
Who's who?
This diagram shows the various organizations involved with managing,
administering, and servicing the Delaware Investments Funds.
[GRAPHIC OMITTED: DIAGRAM SHOWING THE VARIOUS ORGANIZATIONS INVOLVED
WITH MANAGING, ADMINISTERING, AND SERVICING THE DELAWARE INVESTMENTS
FUNDS]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Board of Trustees
Investment Manager Custodian
Delaware Management Company The Chase Manhattan Bank
One Commerce Square 4 Chase Metrotech Center
Philadelphia, PA 19103 The Funds Brooklyn, NY 11245
Distributor Service agent
Delaware Distributors, L.P. Delaware Service Company, Inc.
One Commerce Square One Commerce Square
Philadelphia, PA 19103 Philadelphia, PA 19103
Portfolio managers
(see page __ for details)
Shareholders
</TABLE>
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. (NASDR(SM)) 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.
11
<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 Fund's manager or its affiliates and
securities dealer firms with a selling agreement with the distributor;
o institutional advisory accounts of the Fund's 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. Use of
Institutional Class shares is restricted to advisers who are not affiliated
or associated with a broker or dealer and who derive compensation for their
services exclusively from their advisory clients.
12
<PAGE>
How to buy shares
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
Complete an investment slip and mail it with your check, made payable to the
fund and class of shares you wish to purchase, to Delaware Investments, One
Commerce Square, Philadelphia, PA 19103-7042. If you are making an initial
purchase by mail, you must include a completed investment application (or an
appropriate retirement plan application if you are opening a retirement account)
with your check.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
Ask your bank to wire the amount you want to invest to Bank of New York, ABA
#021000018, Bank Account number 8900403748. 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.
[GRAPHIC OMITTED: ILLUSTRATION OF AN EXCHANGE SYMBOL]
By exchange
You can exchange all or part of your investment in one or more funds in the
Delaware Investments family for shares of other funds in the family. Please keep
in mind, however, that you may not exchange your shares for Class B or Class C
shares. To open an account by exchange, call your Client Services Representative
at 800.510.4015.
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of purchasing shares,
including opening an account. Your adviser may charge a separate fee for this
service.
13
<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 receives 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 the
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 the Fund's portfolio, deducting all liabilities, and dividing the
resulting number by the number of shares outstanding. The result is the net
asset value per share. We price securities and other assets for which market
quotations are available at their market value. We price 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.
14
<PAGE>
How to redeem shares
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
You can redeem your shares (sell them back to the fund) by mail by writing to:
Delaware Investments, One Commerce Square, Philadelphia, PA 19103-7042. 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.
[GRAPHIC OMITTED: ILLUSTRATION OF A TELEPHONE]
By telephone
You can redeem up to $50,000 of your shares by telephone. You may have the
proceeds sent to you by check, or, if you redeem at least $1,000 of shares, you
may have the proceeds sent directly to your bank by wire. Bank information must
be on file before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
You can redeem $1,000 or more of your shares and have the proceeds deposited
directly to your bank account the next business day after we receive your
request. Bank information must be on file before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
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.
15
<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 next determined
after we receive your request. If we receive you request after the close of
regular trading on the New York Stock Exchange, you will receive the net asset
value next determined on the next business day. 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 this 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.
16
<PAGE>
Certain management considerations
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.
17
<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>
------------------------------------------------------------ -----------------------------------------------------------
Institutional Class
Year Ended 9/30
Delaware Growth Opportunities Fund -----------------------------------------------------------
(formerly Delaware DelCap Fund) 2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period [$0.000] $23.070 $31.010 $31.160 $29.130
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
Income (loss) from investment operations:
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
Net investment loss(1) [0.000] (0.131) (0.160) (0.152) (0.123)
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
Net realized and unrealized gain (loss) on investments [0.000] 8.251 (1.910) 3.592 5.693
------- ------ ------- ------- -------
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
Total from investment operations [0.000] 8.120 (2.070) 3.440 5.570
------- ------ ------- ------- -------
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
Less distributions:
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
Distributions from net realized gain on investments [0.000] (3.930) (5.870) (3.590) (3.540)
------- ------ ------- ------- -------
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
Total distributions [0.000] (3.930) (5.870) (3.590) (3.540)
------- ------ ------- ------- -------
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
Net asset value, end of period [$0.000] $27.260 $23.070 $31.010 $31.160
======= ======= ======= ======= =======
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
Total return(2) [0.00%] 39.08% (7.99%) 12.75% 21.44%
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
Ratios and supplemental data:
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
Net assets, end of period (000 omitted) [$0] $19,645 $95,200 $131,319 $178,197
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
Ratio of expenses to average net assets [0.000%] 1.07% 1.10% 1.06% 1.05%
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
Ratio of net investment income (loss) to average net assets [0.000%] (0.53%) (0.62%) (0.56%) (0.44%)
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
Portfolio turnover [0%] 114% 115% 105% 72%
------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
</TABLE>
(1) The average shares outstanding method has been applied for per share
information.
(2) 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.
18
<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, if any,
would be listed under "Less dividends and distributions-Distributions from
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 the 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 loss to average net assets
We determine this ratio by dividing net investment income by average net assets.
Portfolio turnover
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.
19
<PAGE>
[begin 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.
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.
Financial adviser
Financial professional (e.g., broker, banker, accountant, planner or insurance
agent) who analyzes clients' finances and prepares personalized programs to meet
objectives.
20
<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. (NASDR(SM))
The independent subsidiary of the National Association of Securities Dealers,
Inc. responsible for regulating the securities industry.
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.
Russell Midcap Growth Index
The Russell Midcap Growth Index; an unmanaged market-weighted total return index
that measures the performance of U.S. companies having higher price-to-book
ratios and higher forecasted growth values.
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.
21
<PAGE>
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 has typically varied 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.
22
<PAGE>
Delaware Growth Opportunities Fund
Additional information about the Fund's investments is 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 One Commerce Square, Philadelphia, PA
19103-7042, 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 EDGAR Database
on the SEC web site (http://www.sec.gov). You can also get copies of this
information, after payment of a duplicating fee, by e-mailing the SEC at
[email protected] or by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-0102. Information about the Fund, including its Statement
of Additional Information, can be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. You can get information on the Public
Reference Room by calling the SEC at 202.942.8090.
Web site
www.delawareinvestments.com
E-mail
[email protected]
Client Services Representative
800.510.4015
Delaphone Service
800.362.FUND (800.362.3863)
o 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(R) service.
Investment Company Act file number: 811-4413
--------------------------------------------------------------------------------
Fund Symbol CUSIP NASDAQ
--------------------------------------------------------------------------------
Delaware Growth Opportunities Institutional Class 245906201 DFDIX
--------------------------------------------------------------------------------
DELAWARE
INVESTMENTS
---------------------
Philadelphia * London
P-045 [--] PP 11/00
23
<PAGE>
DELAWARE
INVESTMENTS
-----------
Philadelphia * London
Delaware Diversified Growth Fund
Class A * Class B* Class C
Prospectus
January 26, 2001
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.
1
<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
Choosing a share class
How to reduce your sales charge
How to buy shares
How to redeem shares
Retirement plans
Account minimums
Special services
Exchanges
Dividends, distributions and taxes
Certain management considerations page
Financial highlights page
Glossary page
2
<PAGE>
Profile: Delaware Diversified Growth Fund
What is the Fund's goal?
Delaware Diversified Growth Fund seeks capital appreciation. Although the Fund
will strive to meet its goal, 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 see The risks of investing in the
Fund" on page ___.
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.
3
<PAGE>
How has the Fund performed?
This bar chart and table can help you evaluate the risks of investing in the
Fund. We show how returns for the Fund's Class A shares have varied over the
past three calendar years, as well as the average annual returns of these shares
for one-year and lifetime periods. The Fund's past performance is not
necessarily an indication of how it will perform in the future. The returns
reflect voluntary expense caps and a waiver of 12b-1 fees. The returns would be
lower without the voluntary caps and 12b-1 fee waiver.
Year-by-year total return (Class A)
1997 1998 1999
----- ------ ------
17.53% 10.10% 26.12%
As of September 30, 2000, the Fund`s Class A had a calendar year-to-date return
of [0.00%]. During the periods illustrated in this bar chart, Class A's highest
quarterly return was [0.00%] for the quarter ended [______________] and its
lowest return was [0.00%] for the quarter ended [___________________].
The maximum Class A sales charge of 5.75%, which is normally deducted when you
purchase shares, is not reflected in the previous paragraph or in the bar chart.
If this fee were included, the returns would be less than those shown. The
average annual returns shown in the table on page __ include the sales charge.
Average annual returns for periods ending 12/31/99
--------------------------------------------------------------------------------
CLASS A S&P 500 Composite Stock Index
--------------------------------------------------------------------------------
1 year 18.90% 6.08%
--------------------------------------------------------------------------------
Lifetime (inception 12/2/96) 14.45% 21.01%
--------------------------------------------------------------------------------
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 securities.
4
<PAGE>
What are the Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
CLASS A B C
------------------------------------------------------------- ------------ ---------- ----------
<S> <C> <C> <C>
Maximum sales charge (load) imposed on purchases as a
percentage of offering price 5.75% none none
------------------------------------------------------------- ------------ ---------- ----------
Maximum contingent deferred sales charge (load)
as a percentage of original purchase price or redemption
price, whichever is lower none(1) 5%(2) 1%(3)
------------------------------------------------------------- ------------ ---------- ----------
Maximum sales charge (load) imposed on reinvested dividends none none none
------------------------------------------------------------- ------------ ---------- ----------
Redemption fees none none none
------------------------------------------------------------------------------------------------
Annual fund operating expenses are deducted from the Fund's assets.
------------------------------------------------------------- ------------ ---------- ----------
Management fees [0.00]% [0.00%] [0.00%]
------------------------------------------------------------- ------------ ---------- ----------
Distribution and service (12b-1) fees(4) [0.00]% 1.00% 1.00%
------------------------------------------------------------- ------------ ---------- ----------
Other expenses [0.00]% [0.00%] [0.00%]
------------------------------------------------------------- ------------ ---------- ----------
Total operating expenses(5) [0.00]% [0.00%] [0.00%]
------------------------------------------------------------- ------------ ---------- ----------
</TABLE>
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(6) This is
an sexample only, and does not represent future expenses, which may be greater
or less than those shown here.
<TABLE>
<CAPTION>
-------------- ---------- ------------- -------------------- ------------ ---------------------
<S> <C> <C> <C> <C> <C>
CLASS(7) A B B (if redeemed) C C (if redeemed)
-------------- ---------- ------------- -------------------- ------------ ---------------------
1 year [0.00%] [0.00%] [0.00%] [0.00%] [0.00%]
-------------- ---------- ------------- -------------------- ------------ ---------------------
3 years [0.00%] [0.00%] [0.00%] [0.00%] [0.00%]
-------------- ---------- ------------- -------------------- ------------ ---------------------
5 years [0.00%] [0.00%] [0.00%] [0.00%] [0.00%]
-------------- ---------- ------------- -------------------- ------------ ---------------------
10 years [0.00%] [0.00%] [0.00%] [0.00%] [0.00%]
-----------------------------------------------------------------------------------------------
</TABLE>
(1) A purchase of Class A shares of $1 million or more may be made at net
asset value. However, if you buy the shares through a financial adviser
who is paid a commission, a contingent deferred sales charge will apply
to redemptions made within two years of purchase. Additional Class A
purchase options that involve a contingent deferred sales charge may be
permitted from time to time and will be disclosed in the Prospectus if
they are available.
(2) If you redeem Class B shares during the first year after you buy them,
you will pay a contingent deferred sales charge of 5%, which declines
to 4% during the second year, 3% during the third and fourth years, 2%
during the fifth year, 1% during the sixth year, and 0% thereafter.
(3) Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(4) The Class A shares are subject to a 12b-1 fee of 0.30% of average daily
net assets and Class B and C shares are each subject to a 12b-1 fee of
1.00% of average daily net assets. The distributor has agreed to waive
these 12b-1 fees through May 31, [2001].
5
<PAGE>
(5) The investment manager has agreed to waive fees and pay expenses
through May 31, [2001], 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 and distributor's voluntary expense caps.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Fund operating expenses including voluntary expense caps in effect until May 31,[2001]
--------------------------------- ----------------- ------------------ ----------------
<S> <C> <C> <C>
CLASS A B C
--------------------------------- ----------------- ------------------ ----------------
Management fees [0.00%] [0.00%] [0.00%]
--------------------------------- ----------------- ------------------ ----------------
Distribution and service
(12b-1) fees [0.00%] [0.00%] [0.00%]
--------------------------------- ----------------- ------------------ ----------------
Other expenses [0.00%] [0.00%] [0.00%]
--------------------------------- ----------------- ------------------ ----------------
Total operating expenses [0.00%] [0.00%] [0.00%]
---------------------------------------------------------------------------------------
</TABLE>
(6) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods
we show. This example does not reflect the voluntary expense caps
described in footnotes 4 and 5.
(7) The Class B example reflects the conversion of Class B shares to Class
A shares after approximately eight years. Information for the ninth and
tenth years reflects expenses of the Class A shares.
6
<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.
The Fund's investment objective is non-fundamental. This means 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.
7
<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
ownership in a corporation. Stockholders participate in the common stock. We will generally invest in companies of
corporation's profits and losses, proportionate to the at least $3 billion in market capitalization, but may also
number of shares they own. invest in smaller companies.
-------------------------------------------------------------- -----------------------------------------------------------
Foreign Stocks and Depositary Receipts: Foreign stocks are We may invest up to 20% of the Fund's net assets in
those issued by a company that is located in a foreign foreign companies directly or indirectly through
country, has the majority of its assets in a foreign company American, Global or European Depositary Receipts. We
or generates the majority of its operating income in a would typically hold Depositary Receipts when we believe
foreign country. they offer greater appreciation potential than U.S.
Depositary receipts are issued by a U.S. or foreign bank and securities. Investing directly in international
represent the bank's holdings of a stated number of shares securities is not typically a significant component of
of a foreign corporation. A Depositary Receipt entitles the our strategy.
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 Typically, we use repurchase agreements as a short-term
of securities, such as the Fund, and a seller of securities in investment for the Fund's cash position. In order to enter
which the seller agrees to buy the securities back within a into these repurchase agreements, the Fund must have
specified time at the same price the buyer paid for them, collateral of at least 102% of the repurchase price. The
plus an amount equal to an agreed upon interest rate. Fund will only enter into repurchase agreements in which
Repurchase agreements are often viewed as equivalent to the collateral is comprised of U.S. government securities.
cash.
-------------------------------------------------------------- -----------------------------------------------------------
Restricted securities: Privately placed securities whose We may invest in privately placed securities including
resale is restricted under securities law. those that are eligible for resale only among certain
institutional buyers without registration, which are
commonly known as Rule 144A Securities.
-------------------------------------------------------------- -----------------------------------------------------------
Options and Futures: Options represent a right to buy or If we have stocks that have unrealized gains because of
sell a security or a group of securities at an agreed upon past appreciation, we may want to protect those gains when
price at a future date. The purchaser of an option may or we anticipate adverse conditions. We might use options or
may not choose to go through with the transaction. futures to neutralize the effect of any price declines,
without selling the security. We may also use options and
Futures contracts are agreements for the purchase or sale futures to quickly invest excess cash so that the portfolio is
of a security or a group of securities at a specified price, generally fully invested.
on a specified date. Unlike an option, a futures contract must
be executed unless it is sold before the settlement date. Use of these strategies can increase the operating costs
of the Fund 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
market, and cannot be easily sold within seven days at securities.
approximately the price that a fund has valued them.
-------------------------------------------------------------- -----------------------------------------------------------
</TABLE>
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.
8
<PAGE>
Lending securities
The Fund may lend up to 25% of its assets to qualified brokers, dealers and
institutional investors for their use in security transactions. These
transactions, if any, may generate additional income for the Fund.
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
For temporary defensive purposes, we may hold a substantial part of the Fund's
assets in bonds, cash or cash equivalents. To the extent that the Fund holds
these securities, it may be unable to achieve its 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 investors.
9
<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. Because of the nature of the Fund, you should
consider your investment to be a long-term investment that typically provides
the best results when held for a number of years. 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 of the We maintain a long-term investment approach and focus
securities in a certain market -- like the stock or bond on stocks we believe can appreciate over an extended
market -- will decline in value because of factors such as time frame regardless of interim market fluctuations. We
economic conditions, future expectations or investor do not try to predict overall stock market movements and
confidence. though we may hold securities for any amount of time, we
generally do not trade for short-term purposes.
-------------------------------------------------------------- ----------------------------------------------------------
Industry and security risk is the risk that the value of We limit the amount of the Fund's assets invested in any
securities in a particular industry or the value of an one industry and in any individual security. We also
individual stock or bond will decline because of changing follow a rigorous selection process before choosing
expectations for the performance of that industry or for the securities and continuously monitor them while they
individual company issuing the stock. remain in the portfolio.
-------------------------------------------------------------- ----------------------------------------------------------
Futures and options risk is the possibility that a fund may We will not use futures and options for speculative
experience a loss if it employs an options or futures reasons. We may use options and futures to protect gains
strategy related to a security or a market index and that in the portfolio without actually selling a security. We
security or index moves in the opposite direction from may also use options and futures to quickly invest excess
what the manager anticipated. Futures and options also cash so that the portfolio is generally fully invested.
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 securities may be Investing in foreign securities is not a significant
adversely affected by political instability, changes in part of our strategy. We may not invest more than 20% of
currency exchange rates, foreign economic conditions or net assets in direct and indirect holdings of foreign
inadequate regulatory and accounting standards. securities.
-------------------------------------------------------------- ----------------------------------------------------------
Liquidity risk is the possibility that securities cannot be We limit exposure to illiquid securities.
readily sold within seven days at approximately the price
that a fund has valued them.
-------------------------------------------------------------- ----------------------------------------------------------
</TABLE>
10
<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 [0.00%] 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, Vice President/Senior 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.
11
<PAGE>
Who's who?
This shows the various organizations involved with managing, administering, and
servicing the Delaware Investments funds.
<TABLE>
<CAPTION>
<S> <C> <C>
Board of Trustees
Investment Manager Custodian
Delaware Management Company The Chase Manhattan Bank
One Commerce Square 4 Chase Metrotech Center
Philadelphia, PA 19103 The Fund Brooklyn, NY 11245
Distributor Service agent
Delaware Distributors, L.P. Delaware Service Company, Inc.
One Commerce Square One Commerce Square
Philadelphia, PA 19103 Philadelphia, PA 19103
Portfolio managers
(see page __ for details)
Financial Advisers
Shareholders
</TABLE>
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. (NASDR(SM)) 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.
Financial advisers Financial advisers provide advice to their clients, analyzing
their financial objectives and recommending appropriate funds or other
investments. Financial advisers are compensated for their services, generally
through sales commissions, and through 12b-1 and/or service fees deducted from
the fund's assets.
Shareholders Like shareholders of other companies, mutual fund shareholders have
specific voting rights, including the right to elect 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.
12
<PAGE>
About your account
Investing in the Fund
You can choose from a number of share classes for the Fund. Because each share
class has a different combination of sales charges, fees, and other features,
you should consult your financial adviser to determine which class best suits
your investment goals and time frame.
Choosing a share class
Class A
o Class A shares have an up-front sales charge of up to 5.75% that you pay
when you buy the shares. The offering price for Class A shares includes the
front-end sales charge.
o If you invest $50,000 or more, your front-end sales charge will be reduced.
o You may qualify for other reduced sales charges, as described in "How to
reduce your sales charge," and under certain circumstances the sales charge
may be waived; please see the Statement of Additional Information.
o Absent 12b-1 fee waivers, Class A shares are also subject to an annual
12b-1 fee no greater than 0.30% of average daily net assets, which is lower
than the 12b-1 fee for Class B and Class C shares.
o Class A shares generally are not subject to a contingent deferred sales
charge except in the limited circumstances described in the table below.
Class A sales charges
<TABLE>
<CAPTION>
------------------------------- ------------------------------- -------------------------------- --------------------------------
Sales charge
as % of Sales charge as % of amount Dealer's commission as %
Amount of purchase offering price invested of offering price
------------------------------- ------------------------------- -------------------------------- --------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
------------------------------- ------------------------------- -------------------------------- --------------------------------
$50,000 but under $100,000 4.75% 4.99% 4.00%
------------------------------- ------------------------------- -------------------------------- --------------------------------
$100,000 but under $250,000 3.75% 3.90% 3.00%
------------------------------- ------------------------------- -------------------------------- --------------------------------
$250,000 but under $500,000 2.50% 2.56% 2.00%
------------------------------- ------------------------------- -------------------------------- --------------------------------
$500,000 but under $1 million 2.00% 2.04% 1.60%
------------------------------- ------------------------------- -------------------------------- --------------------------------
</TABLE>
As shown below, there is no front-end sales charge when you purchase $1 million
or more of Class A shares. However, if your financial adviser is paid a
commission on your purchase, you will have to pay a limited contingent deferred
sales charge of 1% if you redeem these shares within the first year after your
purchase and 0.50% if you redeem them within the second year after your
purchase, unless a specific waiver of the charge applies.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Sales charge as % Sales charge as % of Dealer's commission as % of
Amount of purchase of offering price amount invested offering price
------------------------------- ------------------------------- -------------------------------- --------------------------------
<S> <C> <C> <C>
$1,000,000 up to $5 million none none 1.00%
------------------------------- ------------------------------- -------------------------------- --------------------------------
next $20 million
up to $25 million none none 0.50%
------------------------------- ------------------------------- -------------------------------- --------------------------------
amount over $25 million none none 0.25%
------------------------------- ------------------------------- -------------------------------- --------------------------------
</TABLE>
13
<PAGE>
Class B
o Class B shares have no up-front sales charge, so the full amount of your
purchase is invested in the Fund. However, you will pay a contingent
deferred sales charge if you redeem your shares within six years after you
buy them.
o If you redeem Class B shares during the first year after you buy them, the
shares will be subject to a contingent deferred sales charge of 5%. The
contingent deferred sales charge is 4% during the second year, 3% during
the third and fourth years, 2% during the fifth year, 1% during the sixth
year, and 0% thereafter.
o Under certain circumstances the contingent deferred sales charge may be
waived; please see the Statement of Additional Information.
o For approximately eight years after you buy your Class B shares, absent
12b-1 fee waivers, they are subject to annual 12b-1 fees no greater than 1%
of average daily net assets, of which 0.25% are service fees paid to the
distributor, dealers or others for providing services and maintaining
accounts.
o Because of the higher 12b-1 fees, Class B shares have higher expenses and
any dividends paid on these shares are lower than dividends on Class A
shares.
o Approximately eight years after you buy them, Class B shares automatically
convert into Class A shares with a 12b-1 fee of no more than 0.30%, which
is currently being waived. Conversion may occur as late as three months
after the eighth anniversary of purchase, during which time Class B's
higher 12b-1 fees apply.
o You may purchase up to $250,000 of Class B shares at any one time. The
limitation on maximum purchases varies for retirement plans.
Class C
o Class C shares have no up-front sales charge, so the full amount of your
purchase is invested in the Fund. However, you will pay a contingent
deferred sales charge of 1% if you redeem your shares within 12 months
after you buy them.
o Under certain circumstances the contingent deferred sales charge may be
waived; please see the Statement of Additional Information.
o Absent 12b-1 fee waivers, Class C shares are subject to an annual 12b-1 fee
which may not be greater than 1% of average daily net assets, of which
0.25% are service fees paid to the distributor, dealers or others for
providing services and maintaining shareholder accounts.
o Because of the higher 12b-1 fees, Class C shares have higher expenses and
pay lower dividends than Class A shares.
o Unlike Class B shares, Class C shares do not automatically convert into
another class.
o You may purchase any amount less than $1,000,000 of Class C shares at any
one time. The limitation on maximum purchases varies for retirement plans.
Each share class of the Fund has adopted a separate 12b-1 plan that allows it to
pay distribution fees for the sales and distribution of its shares. Because
these fees are paid out of the Fund's assets on an ongoing basis, over time
these fees will increase the cost of your investment and may cost you more than
paying other types of sales charges.
14
<PAGE>
How to reduce your sales charge
We offer a number of ways to reduce or eliminate the sales charge on shares.
Please refer to the Statement of Additional Information for detailed information
and eligibility requirements. You can also get additional information from your
financial adviser. You or your financial adviser must notify us at the time you
purchase shares if you are eligible for any of these programs.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Program How it works Share class
A B C
-------------------------- ------------------------------------------- -------------------------------------------------------------
<S> <C> <C> <C>
Letter of Intent Through a Letter of Intent you agree to X Although the Letter of Intent and Rights of
invest a certain amount in Delaware Accumulation do not apply to the purchase of
Investments Funds (except money market Class B and Class C shares, you can combine
funds with no sales charge) over a your purchase of Class A shares with your
13-month period to qualify for reduced purchase of Class B and Class C shares to
front-end sales charges. fulfill your Letter of Intent or qualify for
Rights of Accumulation.
-------------------------- ------------------------------------------- ------------- -----------------------------------------------
Rights of Accumulation You can combine your holdings or X
purchases of all funds in the Delaware
Investments family (except money market
funds with no sales charge) as well as
the holdings and purchases of your
spouse and children under 21 to qualify
for reduced front-end sales charges
-------------------------- ------------------------------------------- ------------- -----------------------------------------------
Reinvestment of Up to 12 months after you redeem shares, For Class A, For Class B, your account Not available.
Redeemed Shares you can reinvest the proceeds without you will not will be credited with the
paying a sales charge as noted have to pay contingent deferred sales
to the right. an additional charge you previously paid
front-end on the amount you are
sales charge. reinvesting. Your schedule
for contingent deferred sales
charges and conversion to
Class A will not start over
again; it will pick up from
the point at which you
redeemed your shares.
-------------------------- ------------------------------------------- ------------- -----------------------------------------------
SIMPLE IRA, SEP IRA, These investment plans may qualify for X There is no reduction in sales charges for
SARSEP, Prototype Profit reduced sales charges by combining the Class B or Class C shares for group purchases
Sharing, Pension, 401(k), purchases of all members of the group. by retirement plans.
SIMPLE 401(k), 403(b)(7), Members of these groups may also
and 457 Retirement Plans qualify to purchase shares without a
front-end sales charge and may qualify
for a waiver of any contingent deferred
sales charges.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
How to buy shares
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.
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, One
Commerce Square, Philadelphia, PA 19103-7042. 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 Bank of New York, ABA
#021000018, Bank Account number 8900403748. Include your account number and the
name of the fund in which you want to invest. If you are making an initial
purchase by wire, you must call us so we can assign 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 under most circumstances you are allowed to exchange only
between like classes of shares. To open an account by exchange, call the
Shareholder Service Center at 800.523.1918.
Through automated shareholder services
You can purchase or exchange shares through Delaphone, our automated telephone
service. For more information about how to sign up for this service, call our
Shareholder Service Center at 800.523.1918.
Once you have completed an application, you can open an account with an initial
investment of $1,000 and make additional investments at any time for as little
as $100. If you are buying shares in an IRA or Roth IRA, under the Uniform Gifts
to Minors Act or the Uniform Transfers to Minors Act; or through an Automatic
Investing Plan, the minimum purchase is $250, and you can make additional
investments of only $25. The minimum for an Education IRA is $500. The minimums
vary for retirement plans other than IRAs, Roth IRAs or Education IRAs.
The price you pay for shares will depend on when we receive your purchase order.
If we or an authorized agent receives your order before the close of 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 the
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 the Fund's portfolio, deducting all liabilities, and dividing the
resulting number by the number of shares outstanding. The result is the net
asset value per share. We price securities and other assets for which market
quotations are available at their market value. We price 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.
Retirement plans
In addition to being an appropriate investment for your Individual Retirement
Account (IRA), Roth IRA and Education IRA, shares in the Fund may be suitable
for group retirement plans. You may establish your IRA account even if you are
already a participant in an employer-sponsored retirement plan. For more
information on how shares in the Fund can play an important role in your
retirement planning or for details about group plans, please consult your
financial adviser, or call 800.523.1918.
16
<PAGE>
About your account (continued)
How to redeem shares
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.
By mail
You can redeem your shares (sell them back to the fund) by mail by writing to:
Delaware Investments, One Commerce Square, Philadelphia, PA 19103-7042. 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. 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. If you request a wire deposit, a bank wire fee may be deducted from
your proceeds. Bank information must be on file before you request a wire
redemption.
Through automated shareholder services
You can redeem shares through Delaphone, our automated telephone service. For
more information about how to sign up for this service, call our Shareholder
Service Center at 800.523.1918.
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 next determined
after we receive your request. If we receive your request after the close of
regular trading on the New York Stock Exchange, you will receive the net asset
determined on the next business day. We will deduct any applicable contingent
deferred sales charges. You may also have to pay taxes on the proceeds from your
sale of shares. We will send you a check, normally the next business day, but no
later than seven days after we receive your request to sell your shares. If you
purchased your shares by check, we will wait until your check has cleared, which
can take up to 15 days, before we send your redemption proceeds.
If you are required to pay a contingent deferred sales charge when you redeem
your shares, the amount subject to the fee will be based on the shares' net
asset value when you purchased them or their net asset value when you redeem
them, whichever is less. This arrangement assures that you will not pay a
contingent deferred sales charge on any increase in the value of your shares.
You also will not pay the charge on any shares acquired by reinvesting dividends
or capital gains. If you exchange shares of one fund for shares of another, you
do not pay a contingent deferred sales charge at the time of the exchange. If
you later redeem those shares, the purchase price for purposes of the contingent
deferred sales charge formula will be the price you paid for the original
shares, not the exchange price. The redemption price for purposes of this
formula will be the NAV of the shares you are actually redeeming.
17
<PAGE>
About your account (continued)
Account minimums
If you redeem shares and your account balance falls below the required account
minimum of $1,000 ($250 for IRAs and Roth IRAs, Uniform Gift to Minors Act and
Uniform Transfers to Minors Act accounts or accounts with automatic investing
plans and $500 for Education IRAs) for three or more consecutive months, you
will have until the end of the current calendar quarter to raise the balance to
the minimum. If your account is not at the minimum by the required time, you
will be charged a $9 fee for that quarter and each quarter after that until your
account reaches the minimum balance. If your account does not reach the minimum
balance, your Fund may redeem your account after 60 days' written notice to you.
Special services
To help make investing with us as easy as possible, and to help you build your
investments, we offer the following special services.
Automatic Investing Plan
The Automatic Investing Plan allows you to make regular monthly or quarterly
investments directly from your checking account.
Direct Deposit
With Direct Deposit you can make additional investments through payroll
deductions, recurring government or private payments such as Social Security or
direct transfers from your bank account.
Wealth Builder Option
With the Wealth Builder Option you can arrange automatic monthly exchanges
between your shares in one or more Delaware Investments funds. Wealth Builder
exchanges are subject to the same rules as regular exchanges (see below) and
require a minimum monthly exchange of $100 per fund.
Dividend Reinvestment Plan
Through our Dividend Reinvestment Plan, you can have your distributions
reinvested in your account or the same share class in another fund in the
Delaware Investments family. The shares that you purchase through the Dividend
Reinvestment Plan are not subject to a front-end sales charge or to a contingent
deferred sales charge. Under most circumstances, you may reinvest dividends only
into like classes of shares.
Exchanges
You can exchange all or part of your shares for shares of the same class in
another Delaware Investments fund without paying a front-end sales charge or a
contingent deferred sales charge at the time of the exchange. However, if you
exchange shares from a money market fund that does not have a sales charge you
will pay any applicable sales charges on your new shares. When exchanging Class
B and Class C shares of one fund for the same class of shares in other funds,
your new shares will be subject to the same contingent deferred sales charge as
the shares you originally purchased. The holding period for the contingent
deferred sales charge will also remain the same, with the amount of time you
held your original shares being credited toward the holding period of your new
shares. You don't pay sales charges on shares that you acquired through the
reinvestment of dividends. You may have to pay taxes on your exchange. When you
exchange shares, you are purchasing shares in another fund so you should be sure
to get a copy of the fund's Prospectus and read it carefully before buying
shares through an exchange.
18
<PAGE>
About your account (continued)
Dividends, distributions and taxes
Dividends and capital gains, if any, are paid twice a year. 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.
19
<PAGE>
Certain management considerations
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.
20
<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.
Financial highlights for Class B and Class C shares are not shown because these
shares have not commenced operations as of the close of fiscal year.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
Delaware Diversified Growth Fund Class A Period
Year Ended 9/30 12/2/96(1)
----------- ------------ ----------- through
2000 1999 1998 9/30/97
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period [$0.000] $8.990 $10.160 $8.500
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Income (loss) from investment operations:
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Net investment income [0.000] 0.0362 0.0822 0.067
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Net realized and unrealized gain (loss) on investments [0.000] 1.354 (0.755) 1.601
------- ----- ------- -----
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Total from investment operations [0.000] 1.390 (0.673) 1.668
------- ----- ------- -----
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Less dividends and distributions:
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Dividends from net investment income [0.000] (0.080) (0.076) (0.008)
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Distributions from net realized gain on investments [0.000] --- (0.421) ---
------- ------- ------- ---
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Total dividends and distributions [0.000] (0.080) (0.497) (0.008)
------- ------- ------- -------
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Net asset value, end of period [$0.000] $10.300 $8.990 $10.160
======== ======= ====== =======
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Total return(3) [0.00%] 15.52% (6.91%) 19.64%
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Ratios and supplemental data:
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Net assets, end of period (000 omitted) [$0] $10 $12 $8
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Ratio of expenses to average net assets [0.00%] 0.75% 0.75% 0.75%
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Ratio of expenses to average net assets prior to expense limitation [0.00%] 1.28% 2.28% 1.70%
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Ratio of net investment income to average net assets [0.00%] 0.36% 0.83% 0.91%
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Ratio of net investment income (loss) to average net assets prior to expense
limitation [0.00%] (0.17%) (0.70%) (0.03%)
------------------------------------------------------------------------------- ----------- ------------ ----------- ----------
Portfolio turnover [0%] 120% 163% 84%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Date of initial public offering; ratios have been annualized but 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, expense waivers by the manager and distributor and does not
reflect the impact of a sales charge.
21
<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, if any,
would be listed under "Less dividends and 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, exclude front-end and contingent
deferred sales charges, and assume the shareholder has reinvested all dividends
and realized gains.
Net assets
Net assets represent the total value of all the assets in 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.
22
<PAGE>
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.
Contingent deferred sales charge (CDSC)
Fee charged by some mutual funds when shares are redeemed (sold back to the
fund) within a set number of years; an alternative method for investors to
compensate a financial adviser for advice and service, rather than an up-front
commission.
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.
23
<PAGE>
Financial adviser
Financial professional (e.g., broker, banker, accountant, planner or insurance
agent) who analyzes clients' finances and prepares personalized programs to meet
objectives.
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. (NASDR(SM))
The independent subsidiary of the National Association of Securities Dealers,
Inc. responsible for regulating the securities industry.
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.
Sales charge
Charge on the purchase or redemption of fund shares sold through financial
advisers. May vary with the amount invested. Typically used to compensate
advisers for advice and service provided.
24
<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.
Uniform Gift to Minors Act and Uniform Transfers to Minors Act
Federal and state laws that provide a simple way to transfer property to a minor
with special tax advantages.
Volatility
The tendency of an investment to go up or down in value by different magnitudes.
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.
25
<PAGE>
Delaware Diversified Growth Fund
Additional information about the Fund's investments is 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 One Commerce Square, Philadelphia, PA
19103-7042, 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 EDGAR Database
on the SEC web site (http://www.sec.gov). You can also get copies of this
information, after payment of a duplicating fee, by e-mailing the SEC at
[email protected] or by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-0102. Information about the Fund, including its Statement
of Additional Information, can be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. You can get information on the Public
Reference Room by calling the SEC at 202.942.8090.
Web site
www.delawareinvestments.com
---------------------------
E-mail
[email protected]
Shareholder Service Center
800.523.1918
Call the Shareholder Service Center Monday to Friday, 8 a.m. to 8 p.m.
Eastern time:
o For fund information, literature, price, yield and performance figures.
o For information on existing regular investment accounts and retirement plan
accounts including wire investments, wire redemptions, telephone
redemptions and telephone exchanges.
Delaphone Service
800.362.FUND (800.362.3863)
o 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(R) service.
Investment Company Act file number: 811-4413
----------------------------------------------------------------
Fund Symbol CUSIP
----------------------------------------------------------------
Delaware Diversified Growth Class A 24610A109
----------------------------------------------------------------
DELAWARE
INVESTMENTS
-----------
Philadelphia * London
P-133 [--] PP 11/00
26
<PAGE>
DELAWARE
INVESTMENTS
---------------------
Philadelphia * London
Delaware Diversified Growth Fund
Institutional Class
Prospectus
January 26, 2001
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.
1
<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 page
Financial highlights page
Glossary page
2
<PAGE>
Profile: Delaware Diversified Growth Fund
What is the Fund's goal?
Delaware Diversified Growth Fund seeks capital appreciation. Although the Fund
will strive to meet its goal, 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 see "The risks of investing in
the Fund" on page ____.
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.
3
<PAGE>
How has the Fund performed?
This bar chart and table can help you evaluate the risks of investing in the
Fund. We show how returns for the Fund's Institutional Class have varied over
the past three calendar years, as well as the average annual returns of these
shares for one-year and lifetime periods. 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.
Year-by-year total return (Institutional Class)
1997 1998 1999
---- ---- ----
17.53% 10.10% 26.12%
As of September 30, 2000, the Fund's Institutional Class had a calendar
year-to-date return of [0.00%]. During the periods illustrated in this bar
chart, the Class' highest quarterly return was [0.00%] for the quarter ended
[________________] and its lowest return was [0.00%] for the quarter ended
[________].
Average annual returns for periods ending 12/31/99
--------------------------------------------------------------------------------
Institutional Class S&P 500 Composite Stock Index
--------------------------------------------------------------------------------
1 year 26.02% 6.08%
--------------------------------------------------------------------------------
Lifetime (inception 12/2/96) 16.64% 21.01%
--------------------------------------------------------------------------------
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 securities.
4
<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 [0.00%]
------------------------------------------------------------- ------------
Distribution and service (12b-1) fees none
------------------------------------------------------------- ------------
Other expenses [0.00%]
------------------------------------------------------------- ------------
Total operating expenses(2) [0.00%]
------------------------------------------------------------- ------------
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 [$000]
------------ --------
3 years [$000]
------------ --------
5 years [$000]
------------ --------
10 years [$000]
------------ --------
(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, [2001], in order to prevent total operating expenses (excluding any
taxes, interest, brokerage fees and extraordinary expenses) 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.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Fund operating expenses including voluntary expense caps in effect until May 31, [2001]
<S> <C>
------------------------------------------------------- -------------------------------
Management fees [0.00%]
------------------------------------------------------- -------------------------------
Distribution and service (12b-1) fees none
------------------------------------------------------- -------------------------------
Other expenses [0.00%]
------------------------------------------------------- -------------------------------
Total operating expenses [0.00%]
------------------------------------------------------- -------------------------------
</TABLE>
(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 2.
5
<PAGE>
How we manage the Fund
We take a disciplined approach to investing, combining investment strategies and
risk management techniques.
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.
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.
The Fund's investment objective is non-fundamental. This means 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.
6
<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 ownership Generally, we invest 85% to 100% of net assets in common
in a corporation. Stockholders participate in the stock. We will generally invest in companies of at least $3
corporation's profits and losses, proportionate to the billion in market capitalization, but of shares they own.
number may also invest in smaller companies.
--------------------------------------------------------------- ----------------------------------------------------------
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
country, has the majority of its assets in a foreign company or European Depositary Receipts. We would typically hold
or generates the majority of its operating income in a Depositary Receipts when we believe they offer greater
foreign country. appreciation potential than U.S. securities. Investing
Depositary receipts are issued by a U.S. or foreign bank and directly in international securities is not typically a
represent the bank's holdings of a stated number of shares of significant component of our strategy.
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 of Typically, we use repurchase agreements as a short-term
securities, such as the Fund, and a seller of securities in investment for the Fund's cash position. In order to enter
which the seller agrees to buy the securities back within a into these repurchase agreements, the Fund must have
specified time at the same price the buyer paid for them, collateral of at least 102% of the repurchase price. The
plus an amount equal to an agreed upon interest rate. Fund will only enter into repurchase agreements in which
Repurchase agreements are often viewed as equivalent to the collateral is comprised of U.S. government securities.
cash.
--------------------------------------------------------------- ----------------------------------------------------------
Restricted securities: Privately placed securities whose We may invest in privately placed securities including
resale is restricted under securities law. those that are eligible for resale only among certain
institutional buyers without registration, which are
commonly known as Rule 144A Securities.
--------------------------------------------------------------- ----------------------------------------------------------
Options and Futures: Options represent a right to buy or If we have stocks that have unrealized gains because of
sell a security or a group of securities at an agreed upon past appreciation, we may want to protect those gains when
price at a future date. The purchaser of an option may or we anticipate adverse conditions. We might use options or
may not choose to go through with the transaction. futures to neutralize the effect of any price declines,
without selling the security. We may also use options and
Futures contracts are agreements for the purchase or sale of futures to quickly invest excess cash so that the portfolio
a security or a group of securities at a specified price, on is generally fully invested.
a specified date. Unlike an option, a futures contract must
be executed unless it is sold before the settlement date.
Use of these strategies can increase the operating costs of
Options and futures are generally considered to be the Fund and can lead to loss of principal.
derivative securities.
--------------------------------------------------------------- ----------------------------------------------------------
Illiquid securities: Securities that do not have a ready We may invest up to 15% of net assets in illiquid
market, and cannot be easily sold within seven days at securities.
approximately the price that a fund has valued them.
--------------------------------------------------------------- ----------------------------------------------------------
</TABLE>
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.
Lending securities
The Fund may lend up to 25% of its assets to qualified brokers, dealers and
institutional investors for their use in security transactions. These
transactions, if any, may generate additional income for the Fund.
7
<PAGE>
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
For temporary defensive purposes, we may hold a substantial part of the Fund's
assets in bonds, cash or cash equivalents. To the extent that the Fund holds
these securities, it may be unable to achieve its 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 investors.
8
<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. Because of the nature of the Fund, you should
consider your investment to be a long-term investment that typically provides
the best results when held for a number of years. 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 of the We maintain a long-term investment approach and focus on
securities in a certain market -- like the stock or bond stocks we believe can appreciate over an extended time
market -- will decline in value because of factors such as frame regardless of interim market fluctuations. We do not
economic conditions, future expectations or investor try to predict overall stock market movements and though we
confidence. may hold securities for any amount of time, we generally do
not trade for short-term purposes.
--------------------------------------------------------------- ----------------------------------------------------------
Industry and security risk is the risk that the value of We limit the amount of the Fund's assets invested in any
securities in a particular industry or the value of an one industry and in any individual security. We also follow
individual stock or bond will decline because of changing a rigorous selection process before choosing securities and
expectations for the performance of that industry or for the continuously monitor them while they remain in the
individual company issuing the stock. portfolio.
--------------------------------------------------------------- ----------------------------------------------------------
Futures and options risk is the possibility that a fund may We will not use futures and options for speculative
experience a loss if it employs an options or futures reasons. We may use options and futures to protect gains in
strategy related to a security or a market index and that the portfolio without actually selling a security. We may
security or index moves in the opposite direction from what also use options and futures to quickly invest excess cash
the manager anticipated. Futures and options also involve so that the portfolio is generally fully invested.
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 securities may be Investing in foreign securities is not a significant part
adversely affected by political instability, changes in of our strategy. We may not invest more than 20% of net
currency exchange rates, foreign economic conditions or assets in direct and indirect holdings of foreign
inadequate regulatory and accounting standards. securities.
--------------------------------------------------------------- ----------------------------------------------------------
Liquidity risk is the possibility that securities cannot be We limit exposure to illiquid securities.
readily sold within seven days at approximately the price
that a fund has valued them.
--------------------------------------------------------------- ----------------------------------------------------------
</TABLE>
9
<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 [0.00%] 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, Vice President/Senior 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.
10
<PAGE>
Who's who?
This shows the various organizations involved with managing, administering, and
servicing the Delaware Investments funds.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Board of Trustees
Investment Manager Custodian
Delaware Management Company The Chase Manhattan Bank
One Commerce Square 4 Chase Metrotech Center
Philadelphia, PA 19103 The Fund Brooklyn, NY 11245
Distributor Service agent
Delaware Distributors, L.P. Delaware Service Company, Inc.
One Commerce Square One Commerce Square
Philadelphia, PA 19103 Philadelphia, PA 19103
Portfolio managers
(see page __ for details)
Shareholders
</TABLE>
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. (NASDR(SM)) 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.
11
<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 Fund's manager or its affiliates and
securities dealer firms with a selling agreement with the distributor;
o institutional advisory accounts of the Fund's 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. Use of
Institutional Class shares is restricted to advisers who are not affiliated
or associated with a broker or dealer and who derive compensation for their
services exclusively from their advisory clients.
12
<PAGE>
About your account (continued)
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, One
Commerce Square, Philadelphia, PA 19103-7042. 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 Bank of New York, ABA
#021000018, Bank Account number 8900403748. 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.
The price you pay for shares will depend on when we receive your purchase order.
If we or an authorized agent receives your order before the close of 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.
13
<PAGE>
About your account (continued)
How to redeem shares
By mail
You can redeem your shares (sell them back to the fund) by mail by writing to:
Delaware Investments, One Commerce Square, Philadelphia, PA 19103-7042. 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.
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 next determined
after we receive your request. If we receive your request offer the close of
regular trading on the New York Stock Exchange, you will receive the net asset
value next determined on the next business day. 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.
14
<PAGE>
About your account (continued)
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.
15
<PAGE>
Certain management considerations
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.
16
<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 12/2/96(1)
--------------------------------- through
9/30/00 9/30/99 9/30/98 9/30/97
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Net asset value, beginning of period [$0.000] $8.990 $10.160 $8.500
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Income (loss) from investment operations:
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Net investment income [0.000] 0.036(2) 0.082(2) 0.067
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Net realized and unrealized gain (loss) on investments [0.000] 1.354 (0.755) 1.601
------- ------ ------ ------
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Total from investment operations [0.000] 1.390 (0.673) 1.668
------- ------ ------ ------
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Less dividends and distributions:
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Dividends from net investment income [0.000] (0.080) (0.076) (0.008)
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Distributions from net realized gain on investments [0.000] --- (0.421) ---
------- ------ ------ ------
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Total dividends and distributions [0.000] (0.080) (0.497) (0.008)
------- ------ ------ ------
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Net asset value, end of period [$0.000] $10.300 $8.990 $10.160
------- ------ ------ ------
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Total return(3) [0.00%] 15.52% (6.91%) 19.64%
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Ratios and supplemental data:
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Net assets, end of period (000 omitted) [$0] $10,886 $2,227 $2,393
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Ratio of expenses to average net assets [0.00%] 0.75% 0.75% 0.75%
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Ratio of expenses to average net assets prior to expense limitation and
expenses paid indirectly [0.00%] 0.98% 1.98% 1.40%
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Ratio of net investment income to average net assets [0.00%] 0.36% 0.83% 0.91%
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Ratio of net investment income (loss) to average net assets prior to expense
limitation [0.00%] 0.13% (0.40%) 0.27%
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
Portfolio turnover [0%] 120% 163% 84%
------------------------------------------------------------------------------- ---------- ----------- ---------- ----------
</TABLE>
(1) Date of initial public offering; ratios have been annualized but 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.
17
<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, if any,
would be listed under "Less dividends and 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
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.
18
<PAGE>
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.
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.
19
<PAGE>
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. (NASDR(SM))
The independent subsidiary of the National Association of Securities Dealers,
Inc. responsible for regulating the securities industry.
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.
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.
20
<PAGE>
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.
21
<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 One Commerce Square, Philadelphia, PA
19103-7042, 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 EDGAR Database
on the SEC web site (http://www.sec.gov). You can also get copies of this
information, after payment of a duplicating fee, by e-mailing the SEC at
[email protected] or by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-0102. Information about the Fund, including its Statement
of Additional Information, can be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. You can get information on the Public
Reference Room by calling the SEC at 202.942.8090.
Web site
www.delawareinvestments.com
E-mail
[email protected]
Client Services Representative
800.510.4015
Delaphone Service
800.362.FUND (800.362.3863)
o 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(R) service.
Investment Company Act file number: 811-4413
-----------------------------------------------------------------------------
Fund Symbol CUSIP
-----------------------------------------------------------------------------
Delaware Diversified Growth Institutional Class 24610A406
-----------------------------------------------------------------------------
DELAWARE
INVESTMENTS
---------------------
Philadelphia * London
P-136 [--] PP 11/00
22
<PAGE>
Delaware Investments includes funds with a wide range of investment objectives.
Stock funds, income funds, national and state-specific tax-exempt funds, money
market funds, global and international funds and closed-end funds give investors
the ability to create a portfolio that fits their personal financial goals. For
more information, shareholders of the Class A, Class B and Class C Shares should
contact their financial adviser or call Delaware Investments at 800- 523-1918
and shareholders of the Institutional Classes should contact Delaware
Investments at 800-828-5052.
INVESTMENT MANAGER
Delaware Management Company
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
One Commerce Square
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc.
One Commerce Square
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
<PAGE>
--------------------------------------------------------------------------------
DELAWARE GROUP EQUITY FUNDS IV
--------------------------------------------------------------------------------
DELAWARE GROWTH OPPORTUNITIES FUND
(formerly Delaware DelCap Fund)
DELAWARE DIVERSIFIED GROWTH FUND
A CLASS
B CLASS
C CLASS
INSTITUTIONAL CLASS
--------------------------------------------------------------------------------
PART B
STATEMENT OF ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
January 26, 2001
DELAWARE(SM)
INVESTMENTS
------------
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
January 26, 2001
DELAWARE GROUP EQUITY FUNDS IV
Delaware Growth Opportunities Fund
Delaware Diversified Growth Fund
One Commerce Square
Philadelphia, PA 19103
For more information about the Institutional Classes: 800-510-4015
For Prospectus, Performance and Information on Existing Accounts of
Class A Shares, Class B Shares and Class C Shares: Nationwide 800-523-1918
Dealer Services: (BROKER/DEALERS ONLY) Nationwide 800-362-7500
Delaware Group Equity Funds IV ("Equity Funds IV") is a
professionally-managed mutual fund of the series type which currently offers two
series of shares: Delaware Growth Opportunities Fund and Delaware Diversified
Growth Fund. Each Fund is referred to individually as the "Fund" and
collectively as the "Funds."
Each Fund offers Class A Shares, Class B Shares and Class C Shares
(together referred to as the "Fund Classes"). Each Fund also offers an
Institutional Class (the "Institutional Class"). All references to "shares" in
this Part B refer to all Classes of shares of Equity Funds IV, except where
noted.
This Statement of Additional Information ("Part B" of the registration
statement) supplements the information contained in the current Prospectuses for
the Fund Classes dated January 26, 2001 and the current Prospectuses for the
Institutional Classes dated January 26, 2001, 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. Prospectuses relating to
the Fund Classes and Prospectuses relating to the Institutional Classes may be
obtained by writing or calling your investment dealer or by contacting the
Funds' national distributor, Delaware Distributors, L.P. (the "Distributor"), at
the above address or by calling the above phone numbers. Each Fund's financial
statements, the notes relating thereto, the financial highlights and the report
of independent auditors are incorporated by reference from the Annual Reports
into this Part B. The Annual Reports will accompany any request for Part B. The
Annual Reports can be obtained, without charge, by calling 800-523-1918.
<TABLE>
<CAPTION>
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TABLE OF CONTENTS Page Page
<S> <C> <C>
Cover Page Distributions and Taxes
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Investment Policies Investment Management Agreement
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Performance Information Officers and Trustees
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Trading Practices and Brokerage General Information
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Purchasing Shares Financial Statements
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Investment Plans Appendix A - Investment Objectives of the Funds
--------------------------------------------------- in the Delaware Investments Family
Determining Offering Price and Net Asset Value
---------------------------------------------------
Redemption and Exchange
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</TABLE>
1
<PAGE>
INVESTMENT POLICIES
Investment Restrictions
Fundamental Investment Restrictions - Each Fund has adopted the
following restrictions which cannot be changed without approval by the holders
of a "majority" of a 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.
Each Fund may not:
1. Make investments that will result in the concentration (as that term
may be defined in the Investment Company Act of 1940 ("1940 Act"), any rule or
order thereunder, or U.S. Securities and Exchange Commission ("SEC") staff
interpretation thereof) of its investments in the securities of issuers
primarily engaged in the same industry, provided that this restriction does not
limit the Fund from investing in obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities, or in tax-exempt securities or
certificates of deposit.
2. Borrow money or issue senior securities, except as the 1940 Act, any
rule or order thereunder, or SEC staff interpretation thereof, may permit.
3. Underwrite the securities of other issuers, except that the Funds may
engage in transactions involving the acquisition, disposition or resale of its
portfolio securities, under circumstances where it may be considered to be an
underwriter under the Securities Act of 1933 (the "1933 Act").
4. Purchase or sell real estate, unless acquired as a result of
ownership of securities or other instruments and provided that this restriction
does not prevent the Funds from investing in issuers which invest, deal or
otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests therein.
5. Purchase or sell physical commodities, unless acquired as a result of
ownership of securities or other instruments and provided that this restriction
does not prevent the Funds from engaging in transactions involving futures
contracts and options thereon or investing in securities that are secured by
physical commodities.
6. Make loans, provided that this restriction does not prevent a Fund
from purchasing debt obligations, entering into repurchase agreements, loaning
its assets to broker/dealers or institutional investors and investing in loans,
including assignments and participation interests.
Non-Fundamental Investment Restrictions - In addition to the fundamental
policies and investment restrictions described above, and the various general
investment policies described in the Prospectuses, each Fund will be subject to
the following investment restrictions, which are considered non-fundamental and
may be changed by the Board of Trustees without shareholder approval.
1. A Fund is permitted to invest in other investment companies,
including open-end, closed-end or unregistered investment companies, either
within the percentage limits set forth in the 1940 Act, any rule or order
thereunder, or SEC staff interpretation thereof, or without regard to percentage
limits in connection with a merger, reorganization, consolidation or other
similar transaction. However, a Fund may not operate as a "fund of funds" which
invests primarily in the shares of other investment companies as permitted by
Section 12(d)(1)(F) or (G) of the 1940 Act, if its own shares are utilized as
investments by such a "fund of funds."
2
<PAGE>
2. A Fund may not invest more than 15% of its net assets in securities
which it cannot sell or dispose of in the ordinary course of business within
seven days at approximately the value at which the Fund has valued the
investment.
The following are additional non-fundamental investment restrictions:
Delaware Growth Opportunities Fund may 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) with respect to 75%
of the portfolio.
2. Make loans, except to the extent that purchases of debt obligations
(including repurchase agreements), in accordance with Delaware Growth
Opportunities Fund's investment objective and policies, are considered loans and
except that Delaware Growth Opportunities 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 Delaware
Growth Opportunities Fund from investing in securities secured by real estate or
interests therein.
4. 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.
5. Engage in the underwriting of securities of other issuers, except
that in connection with the disposition of a security, Delaware Growth
Opportunities Fund may be deemed to be an "underwriter" as that term is defined
in the Securities Act of 1933.
6. 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.
7. Write or purchase puts, calls or combinations thereof, except that
Delaware Growth Opportunities Fund may write covered call options with respect
to any or all parts of its portfolio securities and purchase put options if
Delaware Growth Opportunities 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. Delaware Growth Opportunities Fund may
sell put options previously purchased and enter into closing transactions with
respect to covered call and put options. In addition, Delaware Growth
Opportunities Fund may write call options and purchase put options on stock
indices and enter into closing transactions with respect to such options.
8. Purchase securities on margin, make short sales of securities or
maintain a net short position.
9. Invest in warrants valued at lower of cost or market exceeding 5% of
Delaware Growth Opportunities Fund's net assets. Included in that amount, but
not to exceed 2% of the Fund's net assets, may be warrants not listed on the New
York Stock Exchange or American Stock Exchange.
10. Purchase or retain the securities of any issuer which has an
officer, trustee or security holder who is a trustee or officer of Equity Funds
IV or of its investment manager if or so long as the trustees and officers of
Equity Funds IV and of its investment manager together own beneficially more
than 5% of any class of securities of such issuer.
3
<PAGE>
11. Invest in interests in oil, gas or other mineral exploration or
development programs.
12. Invest more than 10% of Delaware Growth Opportunities Fund's total
assets in repurchase agreements maturing in more than seven days and other
illiquid assets.
13. 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. Delaware Growth Opportunities 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 Delaware Growth
Opportunities 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%, Delaware
Growth Opportunities 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%. Delaware Growth Opportunities Fund will not pledge more than 10%
of its net assets. Delaware Growth Opportunities Fund will not issue senior
securities as defined in the 1940 Act, except for notes to banks. Investment
securities will not normally be purchased while Delaware Growth Opportunities
Fund has an outstanding borrowing.
Although not a fundamental investment restriction, Delaware Growth
Opportunities Fund currently does not invest its assets in real estate limited
partnerships.
Delaware Diversified Growth Fund may 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).
2. Make loans, except to the extent that purchases of debt obligations
or other securities (including repurchase agreements), in accordance with
Delaware Diversified Growth Fund's investment objective and policies, are
considered loans and except that 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.
3. Purchase or sell real estate, but this shall not prevent Delaware
Diversified Growth 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 Delaware Diversified Growth Fund may acquire restricted or not readily
marketable securities under circumstances where, if such securities are sold,
Delaware Diversified Growth 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 Delaware Diversified Growth 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.
4
<PAGE>
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. Delaware Diversified Growth 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 Delaware Diversified
Growth 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%, Delaware
Diversified Growth 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%. Delaware Diversified Growth 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 Delaware Diversified
Growth Fund has an outstanding borrowing.
9. Buy or sell commodities or commodity contracts, except that Delaware
Diversified Growth Fund may engage into futures and related option transactions.
10. Invest in companies for the purpose of exercising control or
management.
11. Invest in interests in oil, gas or other mineral exploration or
development programs.
12. Invest in securities of other investment companies, except that
Delaware Diversified Growth Fund may invest in securities of open-end,
closed-end and unregulated investment companies in compliance with the
limitations contained in the 1940 Act at the time of the investment.
13. Purchase or retain securities of a company which has an officer or
trustee who is an officer or trustee of Equity Funds IV, or an officer, trustee
or partner of the Manager if, to the knowledge of Delaware Diversified Growth
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.
14. 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 Delaware Diversified Growth Fund's investment in the securities of real
estate investment trusts.
15. Invest in warrants valued at lower of cost or market exceeding 5% of
Delaware Diversified Growth Fund's net assets. Included in that amount, but not
to exceed 2% of Delaware Diversified Growth Fund's net assets, may be warrants
not listed on the New York Stock Exchange or American Stock Exchange.
16. Write or purchase puts, calls or combinations thereof, except that
Delaware Diversified Growth 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. Delaware Diversified
Growth Fund may sell put options previously purchased and enter into closing
transactions with respect to covered call and put options. In addition, Delaware
Diversified Growth Fund may write call options and purchase put options on stock
indices and enter into closing transactions with respect to such options.
5
<PAGE>
17. Invest more than 15% of Delaware Diversified Growth Fund's total
assets in repurchase agreements maturing in more than seven days and other
illiquid assets.
Although not a fundamental investment restriction, Delaware Diversified
Growth 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 Investments family have obtained an exemption
from the joint-transaction prohibitions of Section 17(d) of the 1940 Act to
allow certain Delaware Investments 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.
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 (the "Manager")
under the guidelines of the Board of Trustees, determines to present minimal
credit risks and which are of high quality. In addition, each Fund must have
collateral of at least 102% 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. Delaware
Growth Opportunities Fund will not invest more than 10% of its assets in
illiquid securities, and Delaware Diversified Growth 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, a 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.
6
<PAGE>
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.
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. Delaware Growth Opportunities 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.
7
<PAGE>
Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or make
delivery of the underlying stock at a specified price. A stock index option
gives the holder the right to receive a cash "exercise settlement amount" equal
to (i) the amount by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing value of
the underlying index on the date of exercise, multiplied by (ii) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the stock index upon which the option is based being greater than (in the case
of a call) or less than (in the case of a put) the exercise price of the option.
The amount of cash received will be equal to such difference between the closing
price of the index and exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. Gain or loss to the Fund on
transactions in stock index options will depend on price movements in the stock
market generally (or in a particular industry or segment of the market) rather
than price movements of individual securities.
As with stock options, 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,
Delaware Growth Opportunities Fund and Delaware Diversified Growth 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.
8
<PAGE>
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
Each Fund may make foreign investments through the purchase and sale of
sponsored or unsponsored American Depositary Receipts ("ADRs"), and Delaware
Diversified Growth 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.
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 trustees
of Equity Funds IV 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 trustees to vote
the proxy.
The major risk to which a Fund would be exposed on a portfolio loan
transaction is the risk that the borrower would go bankrupt at a time when the
value of the security goes up. Therefore, 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 Trustees, including the creditworthiness of the
borrowing broker, dealer or institution and then only if the consideration to be
received from such loans would justify the risk. Creditworthiness will be
monitored on an ongoing basis by the Manager.
Restricted and Illiquid Securities
Each 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 a Fund. Delaware Growth
Opportunities Fund may invest no more than 10% of the value of its net assets in
illiquid securities and Delaware Diversified Growth Fund may invest no more than
15% of the value of its net assets in illiquid securities.
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While maintaining oversight, the Board of Trustees has delegated to the
Manager the day-to-day function of determining whether or not individual Rule
144A Securities are liquid for purposes of a Fund's 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, a Fund's holdings
of illiquid securities exceed a Fund's 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.
Small to Medium-Sized Companies
Delaware Growth Opportunities 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. In
addition, these companies are typically subject to a greater degree of change in
their earnings and prospects. 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.
Non-Traditional Equity Securities
Delaware Diversified Growth 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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Delaware Diversified Growth 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.
Investment Company Securities
Any investments that Delaware Diversified Growth 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.
When-Issued and Delayed Delivery Securities
Each 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. A Fund will designate cash or securities in amounts
sufficient to cover its obligations, and will value the designated assets daily.
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.
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REITs
Delaware Diversified Growth 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, 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.
Foreign Currency Transactions
Although Delaware Diversified Growth 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 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.
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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.
Futures Contracts
Delaware Growth Opportunities Fund and Delaware Diversified Growth 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 a 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 particular 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, a 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 a 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.
Each 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. A 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 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, a 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.
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Conversely, a 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 a 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.
A 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 a 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. A 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 a 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.
Concentration
In applying a Fund's fundamental policy concerning concentration that is
described above, it is a matter of non-fundamental policy that: (i) utility
companies will be divided according to their services, for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry; (ii) financial service companies will be classified according to the
end users of their services, for example, automobile finance, bank finance and
diversified finance will each be considered a separate industry; and (iii) asset
backed securities will be classified according to the underlying assets securing
such securities.
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.
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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--Each Fund has qualified, and intends to continue
to qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). As such, a Fund will not be
subject to federal income tax, or to any excise tax, to the extent its earnings
are distributed as provided in the Code and it satisfies other requirements
relating to the sources of its income and diversification of its assets.
In order to qualify as a regulated investment company for federal income
tax purposes, each Fund must meet certain specific requirements, including:
(i) The Fund must maintain a diversified portfolio of securities,
wherein no security (other than U.S. government securities and securities of
other regulated investment companies) can exceed 25% of the Fund's total assets,
and, with respect to 50% of the Fund's total assets, no investment (other than
cash and cash items, U.S. Government securities and securities of other
regulated investment companies) can exceed 5% of the Fund's total assets;
(ii) The Fund must derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or disposition of stock and securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities, or currencies;
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(iii) The Fund must distribute to its shareholders at least 90% of its
net investment income and net tax- exempt income for each of its fiscal years.
The Code requires the Funds to distribute at least 98% of its taxable
ordinary income earned during the calendar year and 98% of its capital gain net
income earned during the 12 month period ending October 31 (in addition to
amounts from the prior year that were neither distributed nor taxed to a Fund)
to you by December 31 of each year in order to avoid federal excise taxes. The
Funds intend as a matter of policy to declare and pay sufficient dividends in
December or January (which are treated by you as received in December) but does
not guarantee and can give no assurances that its distributions will be
sufficient to eliminate all such taxes.
The straddle rules of Section 1092 may apply. Generally, the straddle
provisions require the deferral of losses to the extent of unrecognized gains
related to the offsetting positions in the straddle. Excess losses, if any, can
be recognized in the year of loss. Deferred losses will be carried forward and
recognized in the year that unrealized losses exceed unrealized gains.
The 1997 Act has also added new provisions for dealing with transactions
that are generally called "Constructive Sale Transactions." Under these rules,
the Fund must recognize gain (but not loss) on any constructive sale of an
appreciated financial position in stock, a partnership interest or certain debt
instruments. The Fund will generally be treated as making a constructive sale
when it: 1) enters into a short sale on the same or substantially identical
property; 2) enters into an offsetting notional principal contract; or 3) enters
into a futures or forward contract to deliver the same or substantially
identical property. Other transactions (including certain financial instruments
called collars) will be treated as constructive sales as provided in Treasury
regulations to be published. There are also certain exceptions that apply for
transactions that are closed before the end of the 30th day after the close of
the taxable year.
Investment in Foreign Currencies and Foreign Securities--The Funds are
authorized to invest certain limited amounts in foreign securities. Such
investments, if made, will have the following additional tax consequences to
each Fund:
Under the Code, gains or losses attributable to fluctuations in foreign
currency exchange rates which occur between the time a Fund accrues income
(including dividends), or accrues expenses which are denominated in a foreign
currency, and the time a Fund actually collects such income or pays such
expenses generally are treated as ordinary income or loss. Similarly, on the
disposition of debt securities denominated in a foreign currency and on the
disposition of certain options, futures, forward contracts, gain or loss
attributable to fluctuations in the value of foreign currency between the date
of acquisition of the security or contract and the date of its disposition are
also treated as ordinary gain or loss. These gains or losses, referred to under
the Code as "Section 988" gains or losses, may increase or decrease the amount
of a Fund's net investment company taxable income, which, in turn, will affect
the amount of income to be distributed to you by a Fund.
If a Fund's Section 988 losses exceed a Fund's other net investment
company taxable income during a taxable year, a Fund generally will not be able
to make ordinary dividend distributions to you for that year, or distributions
made before the losses were realized will be recharacterized as return of
capital distributions of federal income tax purposes, rather than as an ordinary
dividend or capital gain distribution. If a distribution is treated as a return
of capital, your tax basis in your Fund shares will be reduced by a like amount
(to the extent of such basis), and any excess of the distribution over your tax
basis in your Fund shares will be treated as capital gain to you.
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The 1997 Act generally requires that foreign income be translated into
U.S. dollars at the average exchange rate for the tax year in which the
transactions are conducted. Certain exceptions apply to taxes paid more than two
years after the taxable year to which they relate. This new law may require a
Fund to track and record adjustments to foreign taxes paid on foreign securities
in which it invests. Under the new law, a Fund is required to record a fiscal
year end (and at calendar year end for excise tax purposes) an adjustment that
reflects the difference between the spot rates recorded for each transaction and
the year-end average exchange rate for all of a Fund's foreign securities
transactions. There is a possibility that the mutual fund industry will be given
relief from this new provision, in which case no year-end adjustments will be
required.
The Funds may be subject to foreign withholding taxes on income from
certain of its foreign securities. If more than 50% of the total assets of a
Fund at the end of its fiscal year are invested in securities of foreign
corporations, a Fund may elect to pass-through to you your pro rata share of
foreign taxes paid by a Fund. If this election is made, you will be: (i)
required to include in your gross income your pro rata share of foreign source
income (including any foreign taxes paid by a Fund); and (ii) entitled to either
deduct your share of such foreign taxes in computing your taxable income or to
claim a credit for such taxes against your U.S. income tax, subject to certain
limitations under the Code. You will be informed by a Fund at the end of each
calendar year regarding the availability of any such foreign tax credits and the
amount of foreign source income (including any foreign taxes paid by a Fund). If
a Fund elects to pass-through to you the foreign income taxes that it has paid,
you will be informed at the end of the calendar year of the amount of foreign
taxes paid and foreign source income that must be included on your federal
income tax return. If a Fund invests 50% or less of its total assets in
securities of foreign corporations, it will not be entitled to pass-through to
you your pro-rata shares of foreign taxes paid by a Fund. In this case, these
taxes will be taken as a deduction by a Fund, and the income reported to you
will be the net amount after these deductions. The 1997 Act also simplifies the
procedures by which investors in funds that invest in foreign securities can
claim tax credits on their individual income tax returns for the foreign taxes
paid by a Fund. These provisions will allow investors who pay foreign taxes of
$300 or less on a single return or $600 or less on a joint return during any
year (all of which must be reported on IRS Form 1099-DIV from a Fund to the
investor) to claim a tax credit against their U.S. federal income tax for the
amount of foreign taxes paid by a Fund. This process will allow you, if you
qualify, to bypass the burdensome and detailed reporting requirements on the
foreign tax credit schedule (Form 1116) and report your foreign taxes paid
directly on page 2 of Form 1040.
Investment in Passive Foreign Investment Company securities--The Funds
may invest in shares of foreign corporations which may be classified under the
Code as passive foreign investment companies ("PFICs"). In general, a foreign
corporation is classified as a PFIC if at least one-half of its assets
constitute investment-type assets or 75% or more of its gross income is
investment-type income. If a Fund receives an "excess distribution" with respect
to PFIC stock, the Fund itself may be subject to U.S. federal income tax on a
portion of the distribution, whether or not the corresponding income is
distributed by a Fund to you. In general, under the PFIC rules, an excess
distribution is treated as having been realized ratably over the period during
which a Fund held the PFIC shares. A Fund itself will be subject to tax on the
portion, if any, of an excess distribution that is so allocated to prior Fund
taxable years, and an interest factor will be added to the tax, as if the tax
had been payable in such prior taxable years. In this case, you would not be
permitted to claim a credit on your own tax return for the tax paid by a Fund.
Certain distributions from a PFIC as well as gain from the sale of PFIC shares
are treated as excess distributions. Excess distributions are characterized as
ordinary income even though, absent application of the PFIC rules, certain
distribution might have been classified as capital gain. This may have the
effect of increasing Fund distributions to you that are treated as ordinary
dividends rather than long-term capital gain dividends.
A Fund may be eligible to elect alternative tax treatment with respect
to PFIC shares. Under an election that currently is available in some
circumstances, a Fund generally would be required to include in its gross income
its share of the earnings of a PFIC on a current basis, regardless of whether
distributions are received from the PFIC during such period. If this election
were made, the special rules, discussed above, relating to the taxation of
excess distributions, would not apply. In addition, the 1997 Act provides for
another election that would involve marking-to- market the Fund's PFIC shares at
the end of each taxable year (and on certain other dates as prescribed in the
Code), with the result that unrealized gains would be treated as though they
were realized. The Fund would also be allowed an ordinary deduction for the
excess, if any, of the adjusted basis of its investment in the PFIC stock over
its fair market value at the end of the taxable year. This deduction would be
limited to the amount of any net mark-to-market gains previously included with
respect to that particular PFIC security. If a Fund were to make this second
PFIC election, tax at the Fund level under the PFIC rules would generally be
eliminated.
17
<PAGE>
The application of the PFIC rules may affect, among other things, the
amount of tax payable by a Fund (if any), the amounts distributable to you by a
Fund, the time at which these distributions must be made, and whether these
distributions will be classified as ordinary income or capital gain
distributions to you.
You should be aware that it is not always possible at the time shares of
a foreign corporation are acquired to ascertain that the foreign corporation is
a PFIC, and that there is always a possibility that a foreign corporation will
become a PFIC after a Fund acquires shares in that corporation. While a Fund
will generally seek to avoid investing in PFIC shares to avoid the tax
consequences detailed above, there are no guarantees that it will do so and it
reserves the right to make such investments as a matter of its fundamental
investment policy.
Most foreign exchange gains are classified as ordinary income which will
be taxable to you as such when distributed. Similarly, you should be aware that
any foreign exchange losses realized by a Fund, including any losses realized on
the sale of foreign debt securities, are generally treated as ordinary losses
for federal income tax purposes. This treatment could increase or reduce a
Fund's income available for distribution to you, and may cause some or all of a
Fund's previously distributed income to be classified as a return of capital.
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.
18
<PAGE>
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 Redemption and Exchange 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.
The performance of the Classes, as shown below, is the average annual
total return quotations through September 30, 2000. The average annual total
return for Class A Shares at offer reflects the maximum front-end sales charge
of 5.75% paid on the purchase of shares. The average annual total return for
Class A Shares at net asset value (NAV) does not reflect the payment of any
front-end sales charge. Pursuant to applicable regulation, total return shown
for the Delaware Growth Opportunities Fund Institutional Class for the periods
prior to the commencement of operations of such Class is calculated by taking
the performance of Delaware Growth Opportunities 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. The
average annual total return for Class B and C Shares including CDSC reflects the
deduction of the applicable CDSC that would be paid if the shares were redeemed
at September 30, 2000. The average annual total return for Class B and C Shares
excluding CDSC assumes the shares were not redeemed at September 30, 2000 and
therefore does not reflect the deduction of a CDSC. Securities prices fluctuated
during the periods covered and past results should not be considered as
representative of future performance. Performance is not shown for the Class B
and C Shares of Delaware Diversified Growth Fund because these shares have not
commenced operations as of the date of this Part B.
19
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return
-------------------------------------------------------------------------------------------------------------------------
Class B Class B Class C Class C
Delaware Growth Class A Class A Institutional Shares Shares Shares Shares
Opportunities Fund Shares Shares Class (including (excluding (including (excluding
(at offer)(2) (at NAV) Shares CDSC)(3) CDSC) CDSC) CDSC)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year ended 9/30/00 66.82% 77.02% 77.55% 70.81% 75.81% 74.77% 75.77%
-------------------------------------------------------------------------------------------------------------------------
3 years ended 9/30/00 28.49% 31.05% 31.46% 29.55% 30.15% 30.15% 30.15%
-------------------------------------------------------------------------------------------------------------------------
5 years ended 9/30/00 23.63% 25.10% 25.48% 24.07% 24.24% N/A N/A
-------------------------------------------------------------------------------------------------------------------------
10 years ended 9/30/00 20.04% 20.75% 21.04% N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------------------------
Life of Fund(1) 23.00% 23.50% 23.71% 23.76% 23.76% 25.16% 25.16%
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Class A Shares commenced operations on March 27, 1986. Institutional Class
Shares commenced operations on November 9, 1992. Class B Shares commenced
operation on September 6, 1994. Class C Shares commenced operations on
November 29, 1995.
(2) Prior to November 2, 1998, the maximum front-end sales charge was 4.75%.
Effective November 2, 1998, the maximum front-end sales charge was increased
to 5.75% and the above performance numbers are calculated using 5.75% as the
applicable sales charge.
(3) Effective November 2, 1998, the CDSC schedule for Class B Shares increased
as follows: (i) 5% if shares are redeemed within one year of purchase (ii)
4% if shares are redeemed with two years of purchase; (iii) 3% if shares are
redeemed during the third or fourth year following purchase; (iv) 2% if
shares are redeemed during the fifth year following purchase; (v) 1% if
shares are redeemed during the sixth year following purchase; and (v) 0%
thereafter. The above figures have been calculated using this new schedule.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Delaware Diversified Growth Class A Shares Class A Shares
Fund(1) (at offer)(2/3) (at NAV)(3) Institutional Class Shares
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 year ended 9/30/00 17.43% 24.61% 24.61%
-------------------------------------------------------------------------------------------------------------------------
3 years ended 9/30/00 8.09% 10.25% 10.25%
-------------------------------------------------------------------------------------------------------------------------
Life of Fund(4) 11.38% 13.12% 13.12%
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Returns reflect the voluntary waiver of fees and payments of expenses by the
Manager. See Investment Management Agreement. In the absence of such
voluntary fee waivers and expense payments, performance would have been
affected negatively.
(2) Prior to November 30, 1998, the maximum front-end sales charge was 4.75%.
Effective November 30, 1998, the maximum front-end sales charge was
increased to 5.75% and the above performance numbers are calculated using
5.75% as the applicable sales charge.
(3) Returns reflect the voluntary waiver of 12b-1 fees by the Distributor. See
Distribution and Service under Investment Management Agreement. In the
absence of such voluntary waiver, performance would have been affected
negatively.
(4) Class A shares and Institutional Class shares commenced operations on
December 2, 1996.
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. This information may be compared to
that of other mutual funds with similar investment objectives and to stock, bond
and other relevant indices or to rankings prepared by independent services or
other financial or industry publications that monitor the performance of mutual
funds. For example, the performance of a Fund (or Fund Class) may be compared to
data prepared by Lipper Analytical Services, Inc., Morningstar, Inc. or to the
S&P 500 Index or the Dow Jones Industrial Average.
<PAGE>
Lipper Analytical Services, Inc. maintains statistical performance
databases, as reported by a diverse universe of independently-managed mutual
funds. Morningstar, Inc. is a mutual fund rating service that rates mutual funds
on the basis of risk-adjusted performance. Rankings that compare a Fund's
performance to another fund in appropriate categories over specific time periods
also may be quoted in advertising and other types of literature. The S&P 500
Stock Index and the Dow Jones Industrial Average are industry-accepted unmanaged
indices of generally-conservative securities used for measuring general market
performance. The Russell 2000 Index TR is a total return weighted index which is
comprised of 2,000 of the smallest stocks (on the basis of capitalization) in
the Russell 3000 Index and is calculated on a monthly basis. The NASDAQ
Composite Index is a market capitalization price only index that tracks the
performance of domestic common stocks traded on the regular NASDAQ market as
well as National Market System traded foreign common stocks and American
Depository Receipts. The total return performance reported for these indices
will reflect the reinvestment of all distributions on a quarterly basis and
market price fluctuations. The indices do not take into account any sales charge
or other fees. A direct investment in an unmanaged index is not possible.
20
<PAGE>
In addition, the performance of multiple indices compiled and maintained
by statistical research firms, such as Salomon Brothers and Lehman Brothers may
be combined to create a blended performance result for comparative performances.
Generally, the indices selected will be representative of the types of
securities in which a Fund may invest and the assumptions that were used in
calculating the blended performance will be described.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides
historical returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury bills,
the U.S. rate of inflation (based on the Consumer Price Index), and combinations
of various capital markets. The performance of these capital markets is based on
the returns of different indices. A Fund may use the performance of these
capital markets in order to demonstrate general risk-versus-reward investment
scenarios. Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with the
security types in any capital market may or may not correspond directly to those
of a Fund. A Fund may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
Each Fund may include discussions or illustrations of the potential
investment goals of a prospective investor (including materials that describe
general principles of investing, such as asset allocation, diversification, risk
tolerance, and goal setting, questionnaires designed to help create a personal
financial profile, worksheets used to project savings needs based on assumed
rates of inflation and hypothetical rates of return and action plans offering
investment alternatives), investment management techniques, policies or
investment suitability of the Fund (such as value investing, market timing,
dollar cost averaging, asset allocation, constant ratio transfer, automatic
account rebalancing, the advantages and disadvantages of investing in
tax-deferred and taxable investments), economic and political conditions, the
relationship between sectors of the economy and the economy as a whole, the
effects of inflation and historical performance of various asset classes,
including but not limited to, stocks, bonds and Treasury bills. From time to
time advertisements, sales literature, communications to shareholders or other
materials may summarize the substance of information contained in shareholder
reports (including the investment composition of a Fund), as well as the views
as to current market, economic, trade and interest rate trends, legislative,
regulatory and monetary developments, investment strategies and related matters
believed to be of relevance to the Fund. In addition, selected indices may be
used to illustrate historic performance of selected asset classes. Each Fund may
also include in advertisements, sales literature, communications to shareholders
or other materials, charts, graphs or drawings which illustrate the potential
risks and rewards of investment in various investment vehicles, including but
not limited to, stocks, bonds, treasury bills and shares of the Fund. In
addition, advertisements, sales literature, communications to shareholders or
other materials may include a discussion of certain attributes or benefits to be
derived by an investment in a Fund and/or other mutual funds, shareholder
profiles and hypothetical investor scenarios, timely information on financial
management, tax and retirement planning (such as information on Roth IRAs and
Education IRAs) and investment alternative to certificates of deposit and other
financial instruments. Such sales literature, communications to shareholders or
other materials may include symbols, headlines or other material which highlight
or summarize the information discussed in more detail therein.
Materials may refer to the CUSIP numbers of a Fund and may illustrate
how to find the listings of the Fund in newspapers and periodicals. Materials
may also include discussions of other funds, products, and services.
Each Fund may quote various measures of volatility and benchmark
correlation in advertising. In addition, a Fund may compare these measures to
those of other funds. Measures of volatility seek to compare the historical
share price fluctuations or total returns to those of a benchmark. Measures of
benchmark correlation indicate how valid a comparative benchmark may be.
Measures of volatility and correlation may be calculated using averages of
historical data. Each Fund may advertise its current interest rate sensitivity,
duration, weighted average maturity or similar maturity characteristics.
Advertisements and sales materials relating to the Fund may include information
regarding the background and experience of its portfolio managers.
21
<PAGE>
The following tables are an example, for purposes of illustration only,
of cumulative total return performance for the Classes through September 30,
2000. 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.
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
------------------------------------------------------------------------------------------------------------------------------------
Class B Class B Class C Class C
Delaware Growth Class A Class A Institutional Shares Shares Shares Shares
Opportunities Fund Shares Shares Class (including (excluding (including (excluding
(at offer)(2) (at NAV) Shares CDSC)(3) CDSC) CDSC) CDSC)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3 months ended 9/30/00 5.00% 11.40% 11.50% 6.20% 11.20% 10.22% 11.22%
------------------------------------------------------------------------------------------------------------------------------------
6 months ended 9/30/00 -8.10% -2.48% -2.36% -7.68% -2.82% -3.82% -2.85%
------------------------------------------------------------------------------------------------------------------------------------
9 months ended 9/30/00 12.62% 19.51% 19.80% 13.89% 18.89% 17.90% 18.90%
------------------------------------------------------------------------------------------------------------------------------------
1 year ended 9/30/00 66.82% 77.02% 77.55% 70.81% 75.81% 74.77% 75.77%
------------------------------------------------------------------------------------------------------------------------------------
3 years ended 9/30/00 112.12% 125.07% 127.20% 117.44% 120.44% 120.46% 120.46%
------------------------------------------------------------------------------------------------------------------------------------
5 years ended 9/30/00 188.82% 206.42% 211.10% 193.99% 195.99% N/A N/A
------------------------------------------------------------------------------------------------------------------------------------
10 years ended 9/30/00 521.42% 559.16% 575.08% N/A N/A N/A N/A
------------------------------------------------------------------------------------------------------------------------------------
Life of Fund(1) 1918.54% 2041.37% 2093.10% 264.56% 264.56% 196.26% 196.26%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Class A Shares commenced operations on March 27, 1986. Institutional Class
Shares commenced operations on November 9, 1992. Pursuant to applicable
regulation, total return shown for the Delaware Growth Opportunities Fund
Institutional Class for the periods prior to the commencement of operations
of such Class is calculated by taking the performance of Delaware Growth
Opportunities 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. Class B Shares commenced
operation on September 6, 1994. Class C Shares commenced operations on
November 29, 1995.
(2) Prior to November 2, 1998, the maximum front-end sales charge was 4.75%.
Effective November 2, 1998, the maximum front-end sales charge was increased
to 5.75% and the above performance numbers are calculated using 5.75% as the
applicable sales charge.
(3) Effective November 2, 1998, the CDSC schedule for Class B Shares increased
as follows: (i) 5% if shares are redeemed within one year of purchase (ii)
4% if shares are redeemed with two years of purchase; (iii) 3% if shares are
redeemed during the third or fourth year following purchase; (iv) 2% if
shares are redeemed during the fifth year following purchase; (v) 1% if
shares are redeemed during the sixth year following purchase; and (v) 0%
thereafter. The above figures have been calculated using this new schedule.
22
<PAGE>
<TABLE>
<CAPTION>
Cumulative Total Return
------------------------------------------------------------------------------------------------------------------------
Delaware Diversified Growth Class A Shares Class A Shares
Fund(1) (at offer)(2/3) (at NAV)(3) Institutional Class Shares
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3 months ended 9/30/00 -10.83% -5.36% -5.36%
------------------------------------------------------------------------------------------------------------------------
6 months ended 9/30/00 -13.09% -7.77% -7.77%
------------------------------------------------------------------------------------------------------------------------
9 months ended 9/30/00 -6.08% -0.32% -0.24%
------------------------------------------------------------------------------------------------------------------------
1 year ended 9/30/00 17.43% 24.61% 24.61%
------------------------------------------------------------------------------------------------------------------------
Life of Fund(4) 51.09% 60.33% 60.33%
------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Returns reflect the voluntary waiver of fees and payments of expenses by the
Manager. See Investment Management Agreement. In the absence of such
voluntary fee waivers and expense payments, performance would have been
affected negatively.
(2) Prior to November 30, 1998, the maximum front-end sales charge was 4.75%.
Effective November 30, 1998, the maximum front-end sales charge was
increased to 5.75% and the above performance numbers are calculated using
5.75% as the applicable sales charge.
(3) Returns reflect the voluntary waiver of 12b-1 fees by the Distributor. See
Distribution and Service under Investment Management Agreement. In the
absence of such voluntary waiver, performance would have been affected
negatively.
(4) Class A Shares and Institutional Class shares commenced operations on
December 2, 1996.
Because every investor's goals and risk threshold are different, the
Distributor, as distributor for each Fund and other mutual funds in Delaware
Investments, will provide general information about investment alternatives and
scenarios that will allow investors to assess their personal goals. This
information will include general material about investing as well as materials
reinforcing various industry-accepted principles of prudent and responsible
financial planning. One typical way of addressing these issues is to compare an
individual's goals and the length of time the individual has to attain these
goals to his or her risk threshold. In addition, the Distributor will provide
information that discusses the Manager's overriding investment philosophy and
how that philosophy impacts a Fund's, and other Delaware Investments funds',
investment disciplines employed in seeking their objectives. The Distributor may
also from time to time cite general or specific information about the
institutional clients of the Manager, including the number of such clients
serviced by the Manager.
Dollar-Cost Averaging
For many people, deciding when to invest can be a difficult decision.
Security prices tend to move up and down over various market cycles and logic
says to invest when prices are low. However, even experts can't always pick the
highs and the lows. By using a strategy known as dollar-cost averaging, you
schedule your investments ahead of time. If you invest a set amount on a regular
basis, that money will always buy more shares when the price is low and fewer
when the price is high. You can choose to invest at any regular interval--for
example, monthly or quarterly--as long as you stick to your regular schedule.
Dollar-cost averaging looks simple and it is, but there are important things to
remember.
Dollar-cost averaging works best over longer time periods, and it
doesn't guarantee a profit or protect against losses in declining markets. If
you need to sell your investment when prices are low, you may not realize a
profit no matter what investment strategy you utilize. That's why dollar-cost
averaging can make sense for long-term goals. Since the potential success of a
dollar-cost averaging program depends on continuous investing, even through
periods of fluctuating prices, you should consider your dollar-cost averaging
program a long-term commitment and invest an amount you can afford and probably
won't need to withdraw. You also should consider your financial ability to
continue to purchase shares during periods of low fund share prices. Delaware
Investments offers three services -- Automatic Investing Program, Direct Deposit
Program and the Wealth Builder Option -- that can help to keep your regular
investment program on track. See Investing by Electronic Fund Transfer - Direct
Deposit Purchase Plan, Automatic Investing Plan 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.
23
<PAGE>
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
------------------------------------------------------------------------
Total $400 $37.50 48
Total Amount Invested: $400
Total Number of Shares Purchased: 48
Average Price Per Share: $9.38 ($37.50/4)
Average Cost Per Share: $8.33 ($400/48 shares)
This example is for illustration purposes only. It is not intended to
represent the actual performance of the Funds or any stock or bond fund in the
Delaware Investments family. Dollar-cost averaging can be appropriate for
investments in shares of funds that tend to fluctuate in value. Please obtain
the prospectus of any fund in the Delaware Investments family in which you plan
to invest through a dollar-cost averaging program. The prospectus contains
additional information, including charges and expenses. Please read it carefully
before you invest or send money.
THE POWER OF COMPOUNDING
When you opt to reinvest your current income for additional Fund shares,
your investment is given yet another opportunity to grow. It's called the Power
of Compounding. The Funds may include illustrations showing the power of
compounding in advertisements and other types of literature.
TRADING PRACTICES AND BROKERAGE
Equity Funds IV 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 execution. Best 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 the
Manager'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, 1998, 1999 and 2000, the
aggregate dollar amounts of brokerage commissions paid by Delaware Growth
Opportunities Fund were $2,027,792, $1,561,580 and [$000,000], respectively.
During the fiscal years ended September 30, 1998, 1999 and 2000 the aggregate
dollar amounts of brokerage commissions paid by Delaware Diversified Growth Fund
were $6,662, $10,492 and [$000,000], 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.
24
<PAGE>
During the fiscal year ended September 30, 2000, portfolio transactions
of Delaware Growth Opportunities Fund in the amount of [$000,000,000], resulting
in brokerage commissions of [$000,000], were directed to brokers for brokerage
and research services provided. For the fiscal year ended September 30, 2000,
portfolio transactions of Delaware Diversified Growth Fund in the amount of
[$000,000], resulting in brokerage commissions of [$0,000], were directed to
brokers for brokerage and research services provided.
As provided in the Securities Exchange Act of 1934 (the "1934 Act") and
each Fund's Investment Management Agreement, higher commissions are permitted to
be paid to broker/dealers who provide brokerage and research services than to
broker/dealers who do not provide such services if such higher commissions are
deemed reasonable in relation to the value of the brokerage and research
services provided. Although transactions are directed to broker/dealers who
provide such brokerage and research services, Equity Funds IV believes that the
commissions paid to such broker/dealers are not, in general, higher than
commissions that would be paid to broker/dealers not providing such services and
that such commissions are reasonable in relation to the value of the brokerage
and research services provided. In some instances, services may be provided to
the Manager which constitute in some part brokerage and research services used
by the Manager in connection with its investment decision-making process and
constitute in some part services used by the Manager in connection with
administrative or other functions not related to its investment decision-making
process. In such cases, the Manager will make a good faith allocation of
brokerage and research services and will pay out of its own resources for
services used by the Manager in connection with administrative or other
functions not related to its investment decision-making process. In addition, so
long as no fund is disadvantaged, portfolio transactions which generate
commissions or their equivalent are allocated to broker/dealers who provide
daily portfolio pricing services to a Fund and to other funds in Delaware
Investments. Subject to best 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
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's Board of Trustees
that the advantages of combined orders outweigh the possible disadvantages of
separate transactions.
Consistent with NASD Conduct Rules, and subject to seeking best
execution, a Fund may place orders with broker/dealers that have agreed to
defray certain expenses of the funds in the Delaware Investments family, such as
custodian fees, and may, at the request of the Distributor, give consideration
to sales of shares of such funds 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 1940 Act, 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.
25
<PAGE>
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.
Under certain market conditions, each Fund may experience a high rate of
portfolio turnover which could exceed 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, Delaware Growth Opportunities Fund's
portfolio turnover rates were 114% and [000%] for 1999 and 2000, respectively.
Delaware Diversified Growth Fund's portfolio turnover rates for the past two
fiscal years were 120% and [000%] for 1999 and 2000, respectively.
PURCHASING SHARES
The Distributor serves as the national distributor for each Fund's
shares and has agreed to use its best efforts to sell shares of each Fund. See
the Prospectuses for information on how to invest. Shares of a Fund are offered
on a continuous basis and may be purchased through authorized investment dealers
or directly by contacting Equity Funds IV or the Distributor.
The minimum initial investment generally is $1,000 for Class A Shares,
Class B Shares and Class C Shares. Subsequent purchases of such Classes
generally must be at least $100. The initial and subsequent investment minimums
for Class A Shares will be waived for purchases by officers, trustees and
employees of any Delaware Investments fund, the Manager or any of the Manager's
affiliates if the purchases are made pursuant to a payroll deduction program.
Shares purchased pursuant to the Uniform Gifts to Minors Act or Uniform
Transfers to Minors Act and shares purchased in connection with an Automatic
Investing Plan are subject to a minimum initial purchase of $250 and a minimum
subsequent purchase of $25. Accounts opened under the Delaware Investments Asset
Planner service are subject to a minimum initial investment of $2,000 per Asset
Planner Strategy selected. There are no minimum purchase requirements for the
Institutional Classes, but certain eligibility requirements must be satisfied.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that is less than $1,000,000. See Investment Plans for purchase limitations
applicable to retirement plans. Equity Funds IV will reject any purchase order
for more than $250,000 of Class B Shares and $1,000,000 or more of Class C
Shares. An investor may exceed these limitations by making cumulative purchases
over a period of time. In doing so, an investor should keep in mind, however,
that reduced front- end sales charges apply to investments of $50,000 or more in
Class A Shares, and that Class A Shares are subject to lower annual 12b-1 Plan
expenses than Class B Shares and Class C Shares and generally are not subject to
a CDSC.
Selling dealers are responsible for transmitting orders promptly. Equity
Funds IV reserves the right to reject any order for the purchase of its shares
of a Fund if in the opinion of management such rejection is in the Fund's best
interest. If a purchase is canceled because your check is returned unpaid, you
are responsible for any loss incurred. A Fund can redeem shares from your
account(s) to reimburse itself for any loss, and you may be restricted from
making future purchases in any of the funds in the Delaware Investments family.
Each Fund reserves the right to reject purchase orders paid by third-party
checks or checks that are not drawn on a domestic branch of a United States
financial institution. If a check drawn on a foreign financial institution is
accepted, you may be subject to additional bank charges for clearance and
currency conversion.
26
<PAGE>
A Fund also reserves the right, following shareholder notification, to
charge a service fee on non-retirement accounts that, as a result of redemption,
have remained below the minimum stated account balance for a period of three or
more consecutive months. Holders of such accounts may be notified of their
insufficient account balance and advised that they have until the end of the
current calendar quarter to raise their balance to the stated minimum. If the
account has not reached the minimum balance requirement by that time, a Fund
will charge a $9 fee for that quarter and each subsequent calendar quarter until
the account is brought up to the minimum balance. The service fee will be
deducted from the account during the first week of each calendar quarter for the
previous quarter, and will be used to help defray the cost of maintaining
low-balance accounts. No fees will be charged without proper notice, and no CDSC
will apply to such assessments.
Each Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under the minimum initial purchase
amount as a result of redemptions. An investor making the minimum initial
investment may be subject to involuntary redemption without the imposition of a
CDSC or Limited CDSC if he or she redeems any portion of his or her account.
The NASD has adopted amendments to its Conduct Rules, as amended,
relating to investment company sales charges. Equity Funds IV and the
Distributor intend to operate in compliance with these rules.
Class A Shares are purchased at the offering price which reflects a
maximum front-end sales charge of 5.75%; however, lower front-end sales charges
apply for larger purchases. Class A Shares, absent any applicable fee waiver,
are also subject to annual 12b-1 Plan expenses. See the table in the Fund
Classes' Prospectuses.
Class B Shares are purchased at net asset value and are subject to a
CDSC of: (i) 5% if shares are redeemed within one year of purchase; (ii) 4% if
shares are redeemed during the second year after purchase; (iii) 3% if shares
are redeemed during the third or fourth year following purchase; (iv) 2% if
shares are redeemed during the fifth year following purchase; and (v) 1% if
shares are redeemed during the sixth year following purchase. Class B Shares are
also subject to annual 12b-1 Plan expenses which, 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, below.
Class C Shares are purchased at net asset value and are subject to a
CDSC of 1% if shares are redeemed within 12 months following purchase. Class C
Shares, 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 Delaware Diversified Growth Fund from the commencement of the
public offering through May 31, 2000. The Distributor has extended this waiver
through May 31, [2001].
Institutional Class shares are purchased at the net asset value per
share without the imposition of a front-end or contingent deferred sales charge
or 12b-1 Plan expenses.
See Plans Under Rule 12b-1 for the Fund Classes under Purchasing Shares,
and Determining Offering Price and Net Asset Value in this Part B.
27
<PAGE>
Certificates representing shares purchased are not ordinarily issued
unless, in the case of Class A Shares or Institutional Class shares, a
shareholder submits a specific request. Certificates are not issued in the case
of Class B Shares or Class C Shares or in the case of any retirement plan
account including self-directed IRAs. However, purchases not involving the
issuance of certificates are confirmed to the investor and credited to the
shareholder's account on the books maintained by Delaware Service Company, Inc.
(the "Transfer Agent"). The investor will have the same rights of ownership with
respect to such shares as if certificates had been issued. An investor that is
permitted to obtain a certificate may receive a certificate representing full
share denominations purchased by sending a letter signed by each owner of the
account to the Transfer Agent requesting the certificate. No charge is assessed
by Equity Funds IV for any certificate issued. A shareholder may be subject to
fees for replacement of a lost or stolen certificate, under certain conditions,
including the cost of obtaining a bond covering the lost or stolen certificate.
Please contact your Fund for further information. Investors who hold
certificates representing any of their shares may only redeem those shares by
written request. The investor's certificate(s) must accompany such request.
Alternative Purchase Arrangements
The alternative purchase arrangements of Class A Shares, Class B Shares
and Class C Shares permit investors to choose the method of purchasing shares
that is most suitable for their needs given the amount of their purchase, the
length of time they expect to hold their shares and other relevant
circumstances. Investors should determine whether, given their particular
circumstances, it is more advantageous to purchase Class A Shares and incur a
front-end sales charge and annual 12b-1 Plan expenses of up to a maximum of
0.30% of the average daily net assets of Class A Shares, or to purchase either
Class B or Class C Shares and have the entire initial purchase amount invested
in a Fund with the investment thereafter subject to a CDSC and annual 12b-1 Plan
expenses. Class B Shares are subject to a CDSC if the shares are redeemed within
six years of purchase, and Class C Shares are subject to a CDSC if the shares
are redeemed within 12 months of purchase. Class B and Class C Shares are each
subject to annual 12b-1 Plan expenses of up to a maximum of 1% (0.25% of which
are service fees to be paid to the Distributor, dealers or others for providing
personal service and/or maintaining shareholder accounts) of average daily net
assets of the respective Class. Class B Shares will automatically convert to
Class A Shares at the end of approximately eight years after purchase and,
thereafter, be subject to annual 12b-1 Plan expenses of up to a maximum of 0.30%
of average daily net assets of such shares. Unlike Class B Shares, Class C
Shares do not convert to another Class.
The higher 12b-1 Plan expenses on Class B Shares and Class C Shares will
be offset to the extent a return is realized on the additional money initially
invested upon the purchase of such shares. However, there can be no assurance as
to the return, if any, that will be realized on such additional money. In
addition, the effect of any return earned on such additional money will diminish
over time. In comparing Class B Shares to Class C Shares, investors should also
consider the duration of the annual 12b-1 Plan expenses to which each of the
classes is subject and the desirability of an automatic conversion feature,
which is available only for Class B Shares.
For the distribution and related services provided to, and the expenses
borne on behalf of, a Fund, the Distributor and others will be paid, in the case
of Class A Shares, from the proceeds of the front-end sales charge and 12b-1
Plan fees and, in the case of Class B Shares and Class C Shares, from the
proceeds of the 12b-1 Plan fees and, if applicable, the CDSC incurred upon
redemption. Financial advisers may receive different compensation for selling
Class A Shares, Class B Shares and Class C Shares. Investors should understand
that the purpose and function of the respective 12b-1 Plans and the CDSCs
applicable to Class B Shares and Class C Shares are the same as those of the
12b-1 Plan and the front-end sales charge applicable to Class A Shares in that
such fees and charges are used to finance the distribution of the respective
Classes. See Plans Under Rule 12b-1 for the Fund Classes.
Dividends, if any, paid on Class A Shares, Class B Shares and Class C
Shares will be calculated in the same manner, at the same time and on the same
day and will be in the same amount, except that the additional amount of 12b-1
Plan expenses relating to Class B Shares and Class C Shares will be borne
exclusively by such shares. See Determining Offering Price and Net Asset Value.
28
<PAGE>
Class A Shares
Purchases of $50,000 or more of Class A Shares at the offering price
carry reduced front-end sales charges as shown in the table in the Fund Classes'
Prospectuses, and may include a series of purchases over a 13-month period under
a Letter of Intention signed by the purchaser. See Special Purchase Features -
Class A Shares, below for more information on ways in which investors can avail
themselves of reduced front-end sales charges and other purchase features.
From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during which the
Distributor may reallow to dealers up to the full amount of the front-end sales.
In addition, certain dealers who enter into an agreement to provide extra
training and information on Delaware Investments products and services and who
increase sales of Delaware Investments funds may receive an additional
commission of up to 0.15% of the offering price in connection with sales of
Class A Shares. Such dealers must meet certain requirements in terms of
organization and distribution capabilities and their ability to increase sales.
The Distributor should be contacted for further information on these
requirements as well as the basis and circumstances upon which the additional
commission will be paid. Participating dealers may be deemed to have additional
responsibilities under the securities laws. Dealers who receive 90% or more of
the sales charge may be deemed to be underwriters under the 1933 Act.
Dealer's Commission
As described in the Prospectuses, for initial purchases of Class A
Shares of $1,000,000 or more, a dealer's commission may be paid by the
Distributor to financial advisers through whom such purchases are effected.
For accounts with assets over $1 million, the dealer commission resets
annually to the highest incremental commission rate on the anniversary of the
first purchase. In determining a financial adviser's eligibility for the
dealer's commission, purchases of Class A Shares of other Delaware Investments
funds as to which a Limited CDSC applies (see Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange) may be aggregated with those of the Class A Shares of a
Fund. Financial advisers also may be eligible for a dealer's commission in
connection with certain purchases made under a Letter of Intention or pursuant
to an investor's Right of Accumulation. Financial advisers should contact the
Distributor concerning the applicability and calculation of the dealer's
commission in the case of combined purchases.
An exchange from other Delaware Investments funds will not qualify for
payment of the dealer's commission, unless a dealer's commission or similar
payment has not been previously paid on the assets being exchanged. The schedule
and program for payment of the dealer's commission are subject to change or
termination at any time by the Distributor at its discretion.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B Shares and Class C Shares are purchased without a front-end
sales charge. Class B Shares redeemed within six years of purchase may be
subject to a CDSC at the rates set forth above, and Class C Shares redeemed
within 12 months of purchase may be subject to a CDSC of 1%. CDSCs are charged
as a percentage of the dollar amount subject to the CDSC. The charge will be
assessed on an amount equal to the lesser of the net asset value at the time of
purchase of the shares being redeemed or the net asset value of those shares at
the time of redemption. No CDSC will be imposed on increases in net asset value
above the initial purchase price, nor will a CDSC be assessed on redemptions of
shares acquired through reinvestment of dividends or capital gains
distributions. For purposes of this formula, the "net asset value at the time of
purchase" will be the net asset value at purchase of Class B Shares or Class C
Shares of a Fund, even if those shares are later exchanged for shares of another
Delaware Investments fund. In the event of an exchange of the shares, the "net
asset value of such shares at the time of redemption" will be the net asset
value of the shares that were acquired in the exchange. See Waiver of Contingent
Deferred Sales Charge--Class B Shares and Class C Shares under Redemption and
Exchange for the Fund Classes for a list of the instances in which the CDSC is
waived.
29
<PAGE>
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares, Class B Shares will still be subject to the
annual 12b-1 Plan expenses of up to 1% of average daily net assets of those
shares. At the end of approximately eight years after purchase, the investor's
Class B Shares will be automatically converted into Class A Shares of that Fund.
See Automatic Conversion of Class B Shares below. Investors are reminded that
the Class A Shares into which Class B Shares will convert are subject to ongoing
annual 12b-1 Plan expenses of up to a maximum of 0.30% of average daily net
assets of such shares.
In determining whether a CDSC applies to a redemption of Class B Shares,
it will be assumed that shares held for more than six years are redeemed first,
followed by shares acquired through the reinvestment of dividends or
distributions, and finally by shares held longest during the six-year period.
With respect to Class C Shares, it will be assumed that shares held for more
than 12 months are redeemed first followed by shares acquired through the
reinvestment of dividends or distributions, and finally by shares held for 12
months or less.
All investments made during a calendar month, regardless of what day of
the month the investment occurred, will age one month on the last day of that
month and each subsequent month.
Deferred Sales Charge Alternative - Class B Shares
Class B Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently compensates
dealers or brokers for selling Class B Shares at the time of purchase from its
own assets in an amount equal to no more than 5% of the dollar amount purchased.
In addition, from time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during which the
Distributor may pay additional compensation to dealers or brokers for selling
Class B Shares at the time of purchase. As discussed below, however, Class B
Shares are subject to annual 12b-1 Plan expenses and, if redeemed within six
years of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class B Shares. These
payments support the compensation paid to dealers or brokers for selling Class B
Shares. Payments to the Distributor and others under the Class B 12b-1 Plan may
be in an amount equal to no more than 1% annually. The combination of the CDSC
and the proceeds of the 12b-1 Plan fees makes it possible for a Fund to sell
Class B Shares without deducting a front-end sales charge at the time of
purchase.
Holders of Class B Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for Class B Shares
described in this Part B, even after the exchange. Such CDSC schedule may be
higher than the CDSC schedule for Class B Shares acquired as a result of the
exchange. See Redemption and Exchange.
Automatic Conversion of Class B Shares
Class B Shares, other than shares acquired through reinvestment of
dividends, held for eight years after purchase are eligible for automatic
conversion into Class A Shares. Conversions of Class B Shares into Class A
Shares will occur only four times in any calendar year, on the 18th day or next
business day 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.
30
<PAGE>
Class B Shares of a Fund acquired through a reinvestment of dividends
will convert to the corresponding Class A Shares of the Fund (or, in the case of
Delaware Group Cash Reserve, the Delaware Cash Reserve Fund Consultant Class)
pro-rata with Class B Shares of the Fund not acquired through dividend
reinvestment.
All such automatic conversions of Class B Shares will constitute
tax-free exchanges for federal income tax purposes. See Taxes.
Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently compensates
dealers or brokers for selling Class C Shares at the time of purchase from its
own assets in an amount equal to no more than 1% of the dollar amount purchased.
As discussed below, Class C Shares are subject to annual 12b-1 Plan expenses
and, if redeemed within 12 months of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class C Shares. These
payments support the compensation paid to dealers or brokers for selling Class C
Shares. Payments to the Distributor and others under the Class C 12b-1 Plan may
be in an amount equal to no more than 1% annually.
Holders of Class C Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for Class C Shares as
described in this Part B. See Redemption and Exchange.
Plans Under Rule 12b-1 for the Fund Classes
Pursuant to Rule 12b-1 under the 1940 Act, Equity Funds IV 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 a 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.
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's Board of Trustees 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 Delaware
Diversified Growth Fund during the commencement of the public offering of the
Fund through May 31, 2000. The Distributor has extended this waiver through May
31, [2001.]
31
<PAGE>
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 Trustees of Equity Funds IV, including a majority of
the Trustees who are not "interested persons" (as defined in the 1940 Act) of
Equity Funds IV 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
Trustees in the same manner as specified above.
Each year, the Trustees 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 Trustees 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 Trustees 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 Class B. Also, any other material amendment to
the Plans must be approved by a majority vote of the Trustees including a
majority of the noninterested Trustees of Equity Funds IV having no interest in
the Plans. In addition, in order for the Plans to remain effective, the
selection and nomination of Trustees who are not "interested persons" of Equity
Funds IV must be effected by the Trustees 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 Trustees for their review.
For the fiscal year ended September 30, 2000, payments from the Class A
Shares, Class B Shares and Class C Shares of Delaware Growth Opportunities Fund
pursuant to their respective 12b-1 Plans amounted to $2,795,154, $527,922 and
$106,886, respectively. Such amounts were used for the following purposes:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Delaware Growth Delaware Growth Delaware Growth
Opportunities Fund A Class Opportunities Fund B Class Opportunities Fund C Class
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Advertising $120 ----- -----
----------------------------------------------------------------------------------------------------------------------------------
Annual/Semi-Annual Reports $14,861 ----- -----
----------------------------------------------------------------------------------------------------------------------------------
Broker Trails $2,334,478 $259,468 $66,616
----------------------------------------------------------------------------------------------------------------------------------
Broker Sales Charges ----- $271,423 $29,209
----------------------------------------------------------------------------------------------------------------------------------
Dealer Service Expenses ----- ----- -----
----------------------------------------------------------------------------------------------------------------------------------
Interest on Broker Sales Charges ----- $85,420 $983
----------------------------------------------------------------------------------------------------------------------------------
Commissions to Wholesalers $137,856 $22,611 $12,186
----------------------------------------------------------------------------------------------------------------------------------
Promotional-Broker Meetings $27,626 ----- -----
----------------------------------------------------------------------------------------------------------------------------------
Promotional-Other $127,697 ----- -----
----------------------------------------------------------------------------------------------------------------------------------
Prospectus Printing $19,804 ----- -----
----------------------------------------------------------------------------------------------------------------------------------
Telephone ----- ----- -----
----------------------------------------------------------------------------------------------------------------------------------
Wholesaler Expenses $132,712 ----- $892
----------------------------------------------------------------------------------------------------------------------------------
Other ----- ----- -----
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
Other Payments to Dealers - Class A Shares, Class B Shares and Class C Shares
From time to time, at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of Fund Classes exceed certain limits as
set by the Distributor, may receive from the Distributor an additional payment
of up to 0.25% of the dollar amount of such sales. The Distributor may also
provide additional promotional incentives or payments to dealers that sell
shares of the Delaware Investments family of funds. In some instances, these
incentives or payments may be offered only to certain dealers who maintain, have
sold or may sell certain amounts of shares. The Distributor may also pay a
portion of the expense of preapproved dealer advertisements promoting the sale
of Delaware Investments fund shares.
Special Purchase Features - Class A Shares
Buying Class A Shares at Net Asset Value
Class A Shares of a Fund may be purchased at net asset value under the
Delaware Investments Dividend Reinvestment Plan and, under certain
circumstances, the Exchange Privilege and the 12-Month Reinvestment Privilege.
Current and former officers, trustees/directors and employees of Equity
Funds IV, any other fund in the Delaware Investments family, the Manager, or any
of the Manager's current affiliates and those that may in the future be created,
legal counsel to the funds and registered representatives and employees of
broker/dealers who have entered into Dealer's Agreements with the Distributor
may purchase Class A Shares and any such class of shares of any of the other
funds in the Delaware Investments family, including any fund that may be
created, at the net asset value per share. Family members (regardless of age) of
such persons at their direction, and any employee benefit plan established by
any of the foregoing funds, corporations, counsel or broker/dealers may also
purchase Class A Shares at net asset value. Class A Shares may also be purchased
at net asset value by current and former officers, directors and employees (and
members of their families) of the Dougherty Financial Group LLC.
Purchases of Class A Shares may also be made by clients of registered
representatives of an authorized investment dealer at net asset value within 12
months after the registered representative changes employment, if the purchase
is funded by proceeds from an investment where a front-end sales charge,
contingent deferred sales charge or other sales charge has been assessed.
Purchases of Class A Shares may also be made at net asset value by bank
employees who provide services in connection with agreements between the bank
and unaffiliated brokers or dealers concerning sales of shares of funds in the
Delaware Investments family. Officers, trustees 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 a Fund may reasonably require to establish eligibility for
purchase at net asset value. Investors may be charged a fee when effecting
transactions in Class A Shares through a broker or agent that offers these
special investment products.
Purchases of Class A Shares at net asset value may also be made by the
following: financial institutions investing for the account of their trust
customers if they are not eligible to purchase shares of the Institutional Class
of a Fund; any group retirement plan (excluding defined benefit pension plans),
or such plans of the same employer, for which plan participant records are
maintained on the Retirement Financial Services, Inc. (RFS) proprietary record
keeping system that (i) has in excess of $500,000 of plan assets invested in
Class A Shares of a fund in the Delaware Investments family and any stable value
account available to investment advisory clients of the Manager or its
affiliates; or (ii) is sponsored by an employer that has at any point after May
1, 1997 had more than 100 employees
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while such plan has held Class A Shares of a fund in the Delaware Investments
family and such employer has properly represented in writing to RFS that it has
the requisite number of employees and received written confirmation back from
RFS. See Group Investment Plans for information regarding the applicability of
the Limited CDSC.
Purchases of Class A Shares at net asset value may also be made by bank
sponsored retirement plans that are no longer eligible to purchase Institutional
Class Shares or purchase interests in a collective trust as a result of a change
in distribution arrangements.
Purchases of Class A Shares at net asset value may also be made by any
group retirement plan (excluding defined benefit pension plans) that purchases
shares through a retirement plan alliance program that requires shares to be
available at net asset value, provided RFS either is the sponsor of the alliance
program or has a product participation agreement with the sponsor of the
alliance program.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from such
accounts will be made at net asset value. Loan repayments made to a Fund account
in connection with loans originated from accounts previously maintained by
another investment firm will also be invested at net asset value.
Equity Funds IV must be notified in advance that the trade qualifies
for purchase at net asset value.
Allied Plans
Class A Shares are available for purchase by participants in certain
401(k) Defined Contribution Plans ("Allied Plans") which are made available
under a joint venture agreement between the Distributor and another institution
through which mutual funds are marketed and which allow investments in Class A
Shares of designated Delaware Investments funds ("eligible Delaware Investments
fund shares"), as well as shares of designated classes of non-Delaware
Investments funds ("eligible non-Delaware Investments fund shares"). Class B
Shares and Class C Shares are not eligible for purchase by Allied Plans.
With respect to purchases made in connection with an Allied Plan, the
value of eligible Delaware Investments and eligible non-Delaware Investments
fund shares held by the Allied Plan may be combined with the dollar amount of
new purchases by that Allied Plan to obtain a reduced front-end sales charge on
additional purchases of eligible Delaware Investments fund shares. See Combined
Purchases Privilege, below.
Participants in Allied Plans may exchange all or part of their eligible
Delaware Investments fund shares for other eligible Delaware Investments fund
shares or for eligible non-Delaware Investments fund shares at net asset value
without payment of a front-end sales charge. However, exchanges of eligible fund
shares, both Delaware Investments and non-Delaware Investments, which were not
subject to a front end sales charge, will be subject to the applicable sales
charge if exchanged for eligible Delaware Investments fund shares to which a
sales charge applies. No sales charge will apply if the eligible fund shares
were previously acquired through the exchange of eligible shares on which a
sales charge was already paid or through the reinvestment of dividends. See
Investing by Exchange.
A dealer's commission may be payable on purchases of eligible Delaware
Investments fund shares under an Allied Plan. In determining a financial
adviser's eligibility for a dealer's commission on net asset value purchases of
eligible Delaware Investments fund shares in connection with Allied Plans, all
participant holdings in the Allied Plan will be aggregated. See Class A Shares.
The Limited CDSC is applicable to redemptions of net asset value
purchases from an Allied Plan on which a dealer's commission has been paid.
Waivers of the Limited CDSC, as described under Waiver of Limited Contingent
Deferred Sales Charge - Class A Shares under Redemption and Exchange, apply to
redemptions by participants in Allied Plans except in the case of exchanges
between eligible Delaware Investments and non-Delaware Investments fund shares.
When eligible Delaware Investments fund shares are exchanged into eligible
non-Delaware Investments
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fund shares, the Limited CDSC will be imposed at the time of the exchange,
unless the joint venture agreement specifies that the amount of the Limited CDSC
will be paid by the financial adviser or selling dealer. See Contingent Deferred
Sales Charge for Certain Redemptions of Class A Shares Purchased at Net Asset
Value under Redemption and Exchange.
Letter of Intention
The reduced front-end sales charges described above with respect to
Class A Shares are also applicable to the aggregate amount of purchases made by
any such purchaser previously enumerated within a 13-month period pursuant to a
written Letter of Intention provided by the Distributor and signed by the
purchaser, and not legally binding on the signer or Equity Funds IV which
provides for the holding in escrow by the Transfer Agent, of 5% of the total
amount of Class A Shares intended to be purchased until such purchase is
completed within the 13-month period. A Letter of Intention may be dated to
include shares purchased up to 90 days prior to the date the Letter is signed.
The 13-month period begins on the date of the earliest purchase. If the intended
investment is not completed, except as noted below, the purchaser will be asked
to pay an amount equal to the difference between the front-end sales charge on
Class A Shares purchased at the reduced rate and the front-end sales charge
otherwise applicable to the total shares purchased. If such payment is not made
within 20 days following the expiration of the 13-month period, the Transfer
Agent will surrender an appropriate number of the escrowed shares for redemption
in order to realize the difference. Those purchasers may include the value (at
offering price at the level designated in their Letter of Intention) of all
Classes of shares of a Fund and of the other mutual funds in Delaware
Investments previously purchased and still held as of the date of their Letter
of Intention toward the completion of such Letter, except as described below.
Those purchasers cannot include shares that did not carry a front-end sales
charge, CDSC or Limited CDSC, unless the purchaser acquired those shares through
an exchange from a Delaware Investments fund that did carry a front-end sales
charge, CDSC or Limited CDSC.
Employers offering a Delaware Investments retirement plan may also
complete a Letter of Intention to obtain a reduced front-end sales charge on
investments of Class A Shares made by the plan. The aggregate investment level
of the Letter of Intention will be determined and accepted by the Transfer Agent
at the point of plan establishment. The level and any reduction in front-end
sales charge will be based on actual plan participation and the projected
investments in Delaware Investments funds that are offered with a front-end
sales charge, CDSC or Limited CDSC for a 13-month period. The Transfer Agent
reserves the right to adjust the signed Letter of Intention based on this
acceptance criteria. The 13-month period will begin on the date this Letter of
Intention is accepted by the Transfer Agent. If actual investments exceed the
anticipated level and equal an amount that would qualify the plan for further
discounts, any front-end sales charges will be automatically adjusted. In the
event this Letter of Intention is not fulfilled within the 13-month period, the
plan level will be adjusted (without completing another Letter of Intention) and
the employer will be billed for the difference in front-end sales charges due,
based on the plan's assets under management at that time. Employers may also
include the value (at offering price at the level designated in their Letter of
Intention) of all their shares intended for purchase that are offered with a
front-end sales charge, CDSC or Limited CDSC of any class. Class B Shares and
Class C Shares of a Fund and other Delaware Investments funds which offer
corresponding classes of shares may also be aggregated for this purpose.
Combined Purchases Privilege
When you determine the availability of the reduced front-end sales
charges on Class A Shares, you can include, subject to the exceptions described
below, the total amount of any Class of shares you own of a Fund and all other
Delaware Investments mutual funds. In addition, if you are an investment
advisory client of the Manager's affiliates you may include assets held in a
stable value account in the total amount. However, you cannot include mutual
fund shares that do not carry a front-end sales charge, CDSC or Limited CDSC,
unless you acquired those shares through an exchange from a Delaware Investments
mutual fund that did carry a front-end sales charge, CDSC or Limited CDSC.
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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
When you determine the availability of the reduced front-end sales
charges on Class A Shares, you can include, subject to the exceptions described
below, the total amount of any Class of shares you own of a Fund and all other
Delaware Investments mutual funds. However, you cannot include mutual fund
shares that do not carry a front-end sales charge, CDSC or Limited CDSC, unless
you acquired those shares through an exchange from a Delaware Investments mutual
fund that did carry a front-end sales charge, CDSC or Limited CDSC. If, for
example, any such purchaser has previously purchased and still holds Class A
Shares and/or shares of any other of the classes described in the previous
sentence with a value of $40,000 and subsequently purchases $10,000 at offering
price of additional shares of Class A Shares, the charge applicable to the
$10,000 purchase would currently be 4.75%. For the purpose of this calculation,
the shares presently held shall be valued at the public offering price that
would have been in effect were the shares purchased simultaneously with the
current purchase. Investors should refer to the table of sales charges for Class
A Shares to determine the applicability of the Right of Accumulation to their
particular circumstances.
12-Month Reinvestment Privilege
Holders of Class A Shares and Class B 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 Investments family 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 the same
Class of the Fund or in the same Class of any of the other funds in the Delaware
Investments family. In the case of Class A Shares, the reinvestment will not be
assessed a front-end sales charge and in the case of Class B Shares, the amount
of the CDSC previously charged on the redemption will be reimbursed by the
Distributor. The reinvestment will be subject to applicable eligibility and
minimum purchase requirements and must be in states where shares of such other
funds may be sold. This reinvestment privilege does not extend to Class A Shares
where the redemption of the shares triggered the payment of a Limited CDSC.
Persons investing redemption proceeds from direct investments in mutual funds in
the Delaware Investments family, offered without a front-end sales charge will
be required to pay the applicable sales charge when purchasing Class A Shares.
The reinvestment privilege does not extend to a redemption of 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. In the case of
Class B Shares, the time that the previous investment was held will be included
in determining any applicable CDSC due upon redemptions as well as the automatic
conversion into Class A Shares.
A redemption and reinvestment of Class B Shares could have income tax
consequences. Shareholders will receive from the Distributor the amount of the
CDSC paid at the time of redemption as part of the reinvested shares, which may
be treated as a capital gain to the shareholder for tax purposes. 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 the 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 each Fund's shareholder servicing agent, about the
applicability of the Class A Limited CDSC 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 Class may also benefit from the reduced front-end sales charges
for investments in Class A Shares, based on total plan assets. If a company has
more than one plan investing in the Delaware Investments family of funds, then
the total amount invested in all plans would be used in determining the
applicable front-end sales charge reduction upon each purchase, both initial and
subsequent, upon notification to your Fund at the time of each such purchase.
Employees participating in such Group Investment Plans may also combine the
investments made in their plan account when determining the applicable front-end
sales charge on purchases to non-retirement Delaware Investments investment
accounts if they so notify the Fund in which they are investing in connection
with each purchase. See Retirement Plans for the Fund Classes under Investment
Plans for information about Retirement Plans.
The Limited CDSC is generally applicable to any redemptions of net
asset value purchases made on behalf of a group retirement plan on which a
dealer's commission has been paid only if such redemption is made pursuant to a
withdrawal of the entire plan from a fund in the Delaware Investments family.
See Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value under Redemption and Exchange. Notwithstanding the
foregoing, the Limited CDSC for Class A Shares on which a dealer's commission
has been paid will be waived in connection with redemptions by certain group
defined contribution retirement plans that purchase shares through a retirement
plan alliance program which requires that shares will be available at net asset
value, provided that RFS either is the sponsor of the alliance program or has a
product participation agreement with the sponsor of the alliance program that
specifies that the Limited CDSC will be waived.
Institutional Classes
The Institutional Class of each Fund is available for purchase only by:
(a) retirement plans introduced by persons not associated with brokers or
dealers that are primarily engaged in the retail securities business and
rollover individual retirement accounts from such plans; (b) tax-exempt employee
benefit plans of the Manager or its affiliates and securities dealer firms with
a selling agreement with the Distributor; (c) institutional advisory accounts of
the Manager or its affiliates and those having client relationships with
Delaware Investment Advisers, an affiliate of the Manager, or its other
affiliates and their corporate sponsors, as well as subsidiaries and related
employee benefit plans and rollover individual retirement accounts from such
institutional advisory accounts; (d) a bank, trust company and similar financial
institution investing for its own account or for the account of its trust
customers for whom such financial institution is exercising investment
discretion in purchasing shares of the Class, except where the investment is
part of a program that requires payment of the financial institution of a Rule
12b-1 Plan fee; and (e) registered investment advisers investing on behalf of
clients that consist solely of institutions and high net-worth individuals
having at least $1,000,000 entrusted to the adviser for investment purposes, but
only if the adviser is not affiliated or associated with a broker or dealer and
derives compensation for its services exclusively from its clients for such
advisory services.
Shares of 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.
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 Delaware Growth Opportunities 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 Delaware Diversified
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Growth 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
Class in which shares are being purchased. Such purchases, which must meet the
minimum subsequent purchase requirements set forth in the Prospectuses and this
Part B, are made for Class A Shares at the public offering price, and for Class
B Shares, Class C Shares and Institutional Class at the net asset value, at the
end of the day of receipt. A reinvestment plan may be terminated at any time.
This plan does not assure a profit nor protect against depreciation in a
declining market.
Reinvestment of Dividends in Other Delaware Investments Family of Funds
Subject to applicable eligibility and minimum initial purchase
requirements and the limitations set forth below, holders of Class A Shares,
Class B Shares and Class C Shares may automatically reinvest dividends and/or
distributions in any of the mutual funds in the Delaware Investments, including
the Funds, in states where their shares may be sold. Such investments will be at
net asset value at the close of business on the reinvestment date without any
front-end sales charge or service fee. The shareholder must notify the Transfer
Agent in writing and must have established an account in the fund into which the
dividends and/or distributions are to be invested. Any reinvestment directed to
a fund in which the investor does not then have an account will be treated like
all other initial purchases of the fund shares. Consequently, an investor should
obtain and read carefully the prospectus for the fund in which the investment is
intended to be made before investing or sending money. The prospectus contains
more complete information about the fund, including charges and expenses.
Subject to the following limitations, dividends and/or distributions
from other funds in Delaware Investments may be invested in shares of a Fund,
provided an account has been established. Dividends from Class A Shares may not
be directed to Class B Shares or Class C Shares. Dividends from Class B Shares
may only be directed to other Class B Shares and dividends from Class C Shares
may only be directed to other Class C Shares.
Capital gains and/or dividend distributions for participants in the
following retirement plans are automatically reinvested into the same Delaware
Investments fund in which their investments are held: SAR/SEP, SEP/IRA, SIMPLE
IRA, SIMPLE 401(k), Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, or 403(b)(7) or 457 Deferred Compensation Plans.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware
Investments family, you may write and authorize an exchange of part or all of
your investment into shares of a Fund. If you wish to open an account by
exchange, call the Shareholder Service Center for more information. All
exchanges are subject to the eligibility and minimum purchase requirements set
forth in each fund's prospectus. See Redemption and Exchange for more complete
information concerning your exchange privileges.
Holders of Class A Shares of a Fund may exchange all or part of their
shares for certain of the shares of other funds in the Delaware Investments
family, including other Class A Shares, but may not exchange their Class A
Shares for Class B Shares or Class C Shares of a Fund or of any other fund in
the Delaware Investments family. Holders of Class B Shares of a Fund are
permitted to exchange all or part of their Class B Shares only into Class B
Shares of other Delaware Investments funds. Similarly, holders of Class C Shares
of a Fund are permitted to exchange all or part of their Class C Shares only
into Class C Shares of other Delaware Investments funds. Class B Shares of a
Fund and Class C Shares of a Fund acquired by exchange will continue to carry
the CDSC and, in the case of Class B Shares, the automatic conversion schedule
of the fund from which the exchange is made. The holding period of Class
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B Shares of a Fund acquired by exchange will be added to that of the shares that
were exchanged for purposes of determining the time of the automatic conversion
into Class A Shares of the Fund.
Permissible exchanges into Class A Shares of a Fund will be made
without a front-end sales charge, except for exchanges of shares that were not
previously subject to a front-end sales charge (unless such shares were acquired
through the reinvestment of dividends). Permissible exchanges into Class B
Shares or Class C Shares of each Fund will be made without the imposition of a
CDSC by the fund from which the exchange is being made at the time of the
exchange.
Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan--Investors may arrange for their Fund to
accept for investment in Class A Shares, Class B Shares or Class C Shares,
through an agent bank, preauthorized government or private recurring payments.
This method of investment assures the timely credit to the shareholder's account
of payments such as social security, veterans' pension or compensation benefits,
federal salaries, Railroad Retirement benefits, private payroll checks,
dividends, and disability or pension fund benefits. It also eliminates lost,
stolen and delayed checks.
Automatic Investing Plan--Shareholders of Class A Shares, Class B
Shares and Class C Shares may make automatic investments by authorizing, in
advance, monthly payments directly from their checking account for deposit into
their Fund account. This type of investment will be handled in either of the
following ways. (1) If the shareholder's bank is a member of the National
Automated Clearing House Association ("NACHA"), the amount of the investment
will be electronically deducted from his or her account by Electronic Fund
Transfer ("EFT"). The shareholder's checking account will reflect a debit each
month at a specified date although no check is required to initiate the
transaction. (2) If the shareholder's bank is not a member of NACHA, deductions
will be made by preauthorized checks, known as Depository Transfer Checks.
Should the shareholder's bank become a member of NACHA in the future, his or her
investments would be handled electronically through EFT.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or 457 Deferred
Compensation Plans.
* * *
Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent investments
under such plans must be for $25 or more. An investor wishing to take advantage
of either service must complete an authorization form. Either service can be
discontinued by the shareholder at any time without penalty by giving written
notice.
Payments to a Fund from the federal government or its agencies on
behalf of a shareholder may be credited to the shareholder's account after such
payments should have been terminated by reason of death or otherwise. Any such
payments are subject to reclamation by the federal government or its agencies.
Similarly, under certain circumstances, investments from private sources may be
subject to reclamation by the transmitting bank. In the event of a reclamation,
a Fund may liquidate sufficient shares from a shareholder's account to reimburse
the government or the private source. In the event there are insufficient shares
in the shareholder's account, the shareholder is expected to reimburse a 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 for proper
instructions.
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MoneyLine (SM) On Demand
You or your investment dealer may request purchases of Fund shares by
phone using MoneyLine (SM) On Demand. When you authorize a Fund to accept such
requests from you or your investment dealer, funds will be withdrawn from (for
share purchases) your predesignated bank account. Your request will be processed
the same day if you call prior to 4 p.m., Eastern time. There is a $25 minimum
and $50,000 maximum limit for MoneyLine (SM) On Demand transactions.
It may take up to four business days for the transactions to be
completed. You can initiate this service by completing an Account Services form.
If your name and address are not identical to the name and address on your Fund
account, you must have your signature guaranteed. The Funds do not charge a fee
for this service; however, your bank may charge a fee.
Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in the Fund
Classes through regular liquidations of shares in their accounts in other mutual
funds in the Delaware Investments family. Shareholders of the Fund Classes may
elect to invest in one or more of the other mutual funds in Delaware Investments
family through the Wealth Builder Option. If in connection with the election of
the Wealth Builder Option, you wish to open a new account to receive the
automatic investment, such new account must meet the minimum initial purchase
requirements described in the prospectus of the fund that you select. All
investments under this option are exchanges and are therefore subject to the
same conditions and limitations as other exchanges noted above.
Under this automatic exchange program, shareholders can authorize
regular monthly investments (minimum of $100 per fund) to be liquidated from
their account and invested automatically into other mutual funds in the Delaware
Investments family, subject to the conditions and limitations set forth in the
Fund Classes' 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 Redemption and Exchange for a brief summary of the tax consequences
of exchanges. Shareholders can terminate their participation in Wealth Builder
at any time by giving written notice to the fund from which exchanges are made.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or 457 Deferred
Compensation Plans. This option also is not available to shareholders of the
Institutional Class.
Asset Planner
To invest in Delaware Investments funds using the Asset Planner asset
allocation service, you should complete an Asset Planner Account Registration
Form, which is available only from a financial adviser or investment dealer.
Effective September 1, 1997, the Asset Planner Service is only available to
financial advisers or investment dealers who have previously used this service.
The Asset Planner service offers a choice of four predesigned asset allocation
strategies (each with a different risk/reward profile) in predetermined
percentages in Delaware Investments funds. With the help of a financial adviser,
you may also design a customized asset allocation strategy.
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The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. Exchanges from existing Delaware
Investments accounts into the Asset Planner service may be made at net asset
value under the circumstances described under Investing by Exchange. Also see
Buying Class A Shares at Net Asset Value. The minimum initial investment per
Strategy is $2,000; subsequent investments must be at least $100. Individual
fund minimums do not apply to investments made using the Asset Planner service.
Class A, Class B and Class C Shares are available through the Asset Planner
service. Generally, only shares within the same class may be used within the
same Strategy. However, Class A Shares of a Fund and of other funds in the
Delaware Investments family may be used in the same Strategy with consultant
class shares that are offered by certain other Delaware Investments funds.
An annual maintenance fee, currently $35 per Strategy, is due at the
time of initial investment and by September 30 of each subsequent year. The fee,
payable to Delaware Service Company, Inc. to defray extra costs associated with
administering the Asset Planner service, will be deducted automatically from one
of the funds within your Asset Planner account if not paid by September 30.
However, effective November 1, 1996, the annual maintenance fee is waived until
further notice. Investors who utilize the Asset Planner for an IRA will continue
to pay an annual IRA fee of $15 per Social Security number. Investors will
receive a customized quarterly Strategy Report summarizing all Asset Planner
investment performance and account activity during the prior period.
Confirmation statements will be sent following all transactions other than those
involving a reinvestment of distributions.
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
Retirement Plans for the Fund Classes
An investment in either Fund may be suitable for tax-deferred
retirement plans. Delaware Investments offers a full spectrum of retirement
plans, including the 401(k) Defined Contribution Plan, Individual Retirement
Account ("IRA") and the new Roth IRA and Education IRA.
Among the retirement plans that Delaware Investments offers, Class B
Shares are available only by Individual Retirement Accounts, SIMPLE IRAs, Roth
IRAs, Education IRAs, Simplified Employee Pension Plans, Salary Reduction
Simplified Employee Pension Plans, and 403(b)(7) and 457 Deferred Compensation
Plans. The CDSC may be waived on certain redemptions of Class B Shares and Class
C Shares. See Waiver of Contingent Deferred Sales Charge - Class B Shares and
Class C Shares under Redemption and Exchange for a list of the instances in
which the CDSC is waived.
Purchases of Class B Shares are subject to a maximum purchase
limitation of $250,000 for retirement plans. Purchases of Class C Shares must be
in an amount that is less than $1,000,000 for such plans. The maximum purchase
limitations apply only to the initial purchase of shares by the retirement plan.
Minimum investment limitations generally applicable to other investors
do not apply to retirement plans other than Individual Retirement Accounts, for
which there is a minimum initial purchase of $250 and a minimum subsequent
purchase of $25, regardless of which Class is selected. Retirement plans may be
subject to plan establishment fees, annual maintenance fees and/or other
administrative or trustee fees. Fees are based upon the number of participants
in the plan as well as the services selected. Additional information about fees
is included in retirement plan materials. Fees are quoted upon request. Annual
maintenance fees may be shared by Delaware Management Trust Company, the
Transfer Agent, other affiliates of the Manager and others that provide services
to such Plans.
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Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders. Certain
retirement plans may qualify to purchase shares of the Institutional Class
shares. See Institutional Classes, above. For additional information on any of
the plans and Delaware's retirement services, call the Shareholder Service
Center telephone number.
It is advisable for an investor considering any one of the retirement
plans described below to consult with an attorney, accountant or a qualified
retirement plan consultant. For further details, including applications for any
of these plans, contact your investment dealer or the Distributor.
Taxable distributions from the retirement plans described below may be
subject to withholding.
Please contact your investment dealer or the Distributor for the
special application forms required for the Plans described below.
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Prototype Profit Sharing or Money Purchase Pension Plans
Prototype Plans are available for self-employed individuals,
partnerships, corporations and other eligible forms of organizations. These
plans can be maintained as Section 401(k), profit sharing or money purchase
pension plans. Contributions may be invested only in Class A Shares and Class C
Shares.
Individual Retirement Account ("IRA")
A document is available for an individual who wants to establish an IRA
and make contributions which may be tax-deductible, even if the individual is
already participating in an employer-sponsored retirement plan. Even if
contributions are not deductible for tax purposes, as indicated below, earnings
will be tax-deferred. In addition, an individual may make contributions on
behalf of a spouse who has no compensation for the year; however, participation
may be restricted based on certain income limits.
IRA Disclosures
The Taxpayer Relief Act of 1997 provides new opportunities for
investors. Individuals have five types of tax-favored IRA accounts that can be
utilized depending on the individual's circumstances. A new Roth IRA and
Education IRA are available in addition to the existing deductible IRA and
non-deductible IRA.
Deductible and Non-deductible IRAs
An individual can contribute up to $2,000 in his or her IRA each year.
Contributions may or may not be deductible depending upon the taxpayer's
adjusted gross income ("AGI") and whether the taxpayer is an active participant
in an employer sponsored retirement plan. Even if a taxpayer is an active
participant in an employer sponsored retirement plan, the full $2,000 is still
available if the taxpayer's AGI is below $33,000 ($53,000 for taxpayers filing
joint returns) for years beginning after December 31, 1997. A partial deduction
is allowed for married couples with income between $53,000 and $63,000, and for
single individuals with incomes between $33,000 and $43,000. These income
phase-out limits reach $80,000-$100,000 in 2007 for joint filers and
$50,000-$60,000 in 2005 for single filers. No deductions are available for
contributions to IRAs by taxpayers whose AGI after IRA deductions exceeds the
maximum income limit established for each year and who are active participants
in an employer sponsored retirement plan.
Taxpayers who are not allowed deductions on IRA contributions still can
make non-deductible IRA contributions of as much as $2,000 for each working
spouse and defer taxes on interest or other earnings from the IRAs.
Under the new law, a married individual is not considered an active
participant in an employer sponsored retirement plan merely because the
individual's spouse is an active participant if the couple's combined AGI is
below $150,000. The maximum deductible IRA contribution for a married individual
who is not an active participant, but whose spouse is, is phased out for
combined AGI between $150,000 and $160,000.
Conduit (Rollover) IRAs
Certain individuals who have received or are about to receive eligible
rollover distributions from an employer-sponsored retirement plan or another IRA
may rollover the distribution tax-free to a Conduit IRA. The rollover of the
eligible distribution must be completed by the 60th day after receipt of the
distribution; however, if the rollover is in the form of a direct
trustee-to-trustee transfer without going through the distributee's hand, the
60-day limit does not apply.
A distribution qualifies as an "eligible rollover distribution" if it
is made from a qualified retirement plan, a 403(b) plan or another IRA and does
not constitute one of the following:
(1) Substantially equal periodic payments over the employee's life or
life expectancy or the joint lives or life expectancies of the employee and
his/her designated beneficiary;
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(2) Substantially equal installment payments for a period certain of 10
or more years;
(3) A distribution, all of which represents a required minimum
distribution after attaining age 70 1/2;
(4) A distribution due to a Qualified Domestic Relations Order to an
alternate payee who is not the spouse (or former spouse) of the employee; and
(5) A distribution of after-tax contributions which is not includable
in income.
Roth IRAs
For taxable years beginning after December 31, 1997, non-deductible
contributions of up to $2,000 per year can be made to a new Roth IRA. As a
result of the Internal Revenue Service Restructuring and Reform Act of 1998 (the
"1998 Act"), the $2,000 annual limit will not be reduced by any contributions to
a deductible or nondeductible IRA for the same year. The maximum contribution
that can be made to a Roth IRA is phased out for single filers with AGI between
$95,000 and $110,000, and for couples filing jointly with AGI between $150,000
and $160,000. Qualified distributions from a Roth IRA would be exempt from
federal taxes. Qualified distributions are distributions (1) made after the
five-taxable year period beginning with the first taxable year for which a
contribution was made to a Roth IRA and (2) that are (a) made on or after the
date on which the individual attains age 59 1/2, (b) made to a beneficiary on or
after the death of the individual, (c) attributed to the individual being
disabled, or (d) for a qualified special purpose (e.g., first time homebuyer
expenses).
Distributions that are not qualified distributions would always be
tax-free if the taxpayer is withdrawing contributions, not accumulated earnings.
Taxpayers with AGI of $100,000 or less are eligible to convert an
existing IRA (deductible, nondeductible and conduit) to a Roth IRA. Earnings and
contributions from a deductible IRA are subject to a tax upon conversion;
however, no 10% excise tax for early withdrawal would apply. If the conversion
was done before January 1, 1999, then the income from the conversion can be
included in income ratably over a four-year period beginning with the year of
conversion.
Education IRAs
For taxable years beginning after December 31, 1997, an Education IRA
has been created exclusively for the purpose of paying qualified higher
education expenses. Taxpayers can make non-deductible contributions up to $500
per year per beneficiary. The $500 annual limit is in addition to the $2,000
annual contribution limit applicable to IRAs and Roth IRAs. Eligible
contributions must be in cash and made prior to the date the beneficiary reaches
age 18. Similar to the Roth IRA, earnings would accumulate tax-free. There is no
requirement that the contributor be related to the beneficiary, and there is no
limit on the number of beneficiaries for whom one contributor can establish
Education IRAs. In addition, multiple Education IRAs can be created for the same
beneficiaries, however, the contribution limit of all contributions for a single
beneficiary cannot exceed $500 annually.
This $500 annual contribution limit for Education IRAs is phased out
ratably for single contributors with modified AGI between $95,000 and $110,000,
and for couples filing jointly with modified AGI of between $150,000 and
$160,000. Individuals with modified AGI above the phase-out range are not
allowed to make contributions to an Education IRA established on behalf of any
other individual.
Distributions from an Education IRA are excludable from gross income to
the extent that the distribution does not exceed qualified higher education
expenses incurred by the beneficiary during the year the distribution is made
regardless of whether the beneficiary is enrolled at an eligible educational
institution on a full-time, half-time, or less than half-time basis.
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Any balance remaining in an Education IRA at the time a beneficiary
becomes 30 years old must be distributed, and the earnings portion of such a
distribution will be includable in gross income of the beneficiary and subject
to an additional 10% penalty tax if the distribution is not for qualified higher
education expenses. Tax-free (and penalty-free) transfers and rollovers of
account balances from one Education IRA benefiting one beneficiary to another
Education IRA benefiting a different beneficiary (as well as redesignations of
the named beneficiary) is permitted, provided that the new beneficiary is a
member of the family of the old beneficiary and that the transfer or rollover is
made before the time the old beneficiary reaches age 30 and the new beneficiary
reaches age 18.
A company or association may establish a Group IRA or Group Roth IRA
for employees or members who want to purchase shares of a Fund.
Investments generally must be held in the IRA until age 59 1/2 in order
to avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in which
the participant reaches age 70 1/2. Individuals are entitled to revoke the
account, for any reason and without penalty, by mailing written notice of
revocation to Delaware Management Trust Company within seven days after the
receipt of the IRA Disclosure Statement or within seven days after the
establishment of the IRA, except, if the IRA is established more than seven days
after receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the year
received. Excess contributions removed after the tax filing deadline, plus
extensions, for the year in which the excess contributions were made are subject
to a 6% excise tax on the amount of excess. Premature distributions
(distributions made before age 59 1/2, except for death, disability and certain
other limited circumstances) will be subject to a 10% excise tax on the amount
prematurely distributed, in addition to the income tax resulting from the
distribution. For information concerning the applicability of a CDSC upon
redemption of Class B Shares and Class C Shares, see Contingent Deferred Sales
Charge - Class B Shares and Class C Shares.
Effective January 1, 1997, the 10% premature distribution penalty will
not apply to distributions from an IRA that are used to pay medical expenses in
excess of 7.5% of adjusted gross income or to pay health insurance premiums by
an individual who has received unemployment compensation for 12 consecutive
weeks. In addition, effective January 1, 1998, the new law allows for premature
distribution without a 10% penalty if (i) the amounts are used to pay qualified
higher education expenses (including graduate level courses) of the taxpayer,
the taxpayer's spouse or any child or grandchild of the taxpayer or the
taxpayer's spouse, or (ii) used to pay acquisition costs of a principle
residence for the purchase of a first-time home by the taxpayer, taxpayer's
spouse or any child or grandchild of the taxpayer or the taxpayer's spouse. A
qualified first-time homebuyer is someone who has had no ownership interest in a
residence during the past two years. The aggregate amount of distribution for
first-time home purchases cannot exceed a lifetime cap of $10,000.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Classes are available for investment by a
SEP/IRA.
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Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
Although new SAR/SEP plans may not be established after December 31,
1996, existing plans may continue to be maintained by employers having 25 or
fewer employees. An employer may elect to make additional contributions to such
existing plans.
Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers to establish qualified
plans based on salary deferral contributions. Effective January 1, 1997,
non-governmental tax-exempt organizations may establish 401(k) plans. Plan
documents are available to enable employers to establish a plan. An employer may
also elect to make profit sharing contributions and/or matching contributions
with investments in only Class A Shares and Class C Shares or certain other
funds in the Delaware Investments family. Purchases under the Plan may be
combined for purposes of computing the reduced front-end sales charge applicable
to Class A Shares as set forth in the table the Prospectuses for the Fund
Classes.
Deferred Compensation Plan for Public Schools and Non-Profit Organizations
("403(b)(7)") Section 403(b)(7) of the Code permits public school
systems and certain non-profit organizations to use mutual fund shares held in a
custodial account to fund deferred compensation arrangements for their
employees. A custodial account agreement is available for those employers who
wish to purchase shares of any of the Classes in conjunction with such an
arrangement. Purchases under the Plan may be combined for purposes of computing
the reduced front-end sales charge applicable to Class A Shares as set forth in
the table the Prospectuses for the Fund Classes.
Deferred Compensation Plan for State and Local Government Employees ("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation plan
for their employees who wish to participate. This enables employees to defer a
portion of their salaries and any federal (and possibly state) taxes thereon.
Such plans may invest in shares of a Fund. Although investors may use their own
plan, there is available a Delaware Investments 457 Deferred Compensation Plan.
Interested investors should contact the Distributor or their investment dealers
to obtain further information. Purchases under the Plan may be combined for
purposes of computing the reduced front-end sales charge applicable to Class A
Shares as set forth in the table in the Prospectuses for the Fund Classes.
SIMPLE IRA
A SIMPLE IRA combines many of the features of an IRA and a 401(k) Plan
but is easier to administer than a typical 401(k) Plan. It requires employers to
make contributions on behalf of their employees and also has a salary deferral
feature that permits employees to defer a portion of their salary into the plan
on a pre-tax basis. A SIMPLE IRA is available only to plan sponsors with 100 or
fewer employees.
SIMPLE 401(k)
A SIMPLE 401(k) is like a regular 401(k) except that it is available
only to plan sponsors 100 or fewer employees and, in exchange for mandatory plan
sponsor contributions, discrimination testing is no longer required. Class B
Shares are not available for purchase by such plans.
DETERMINING OFFERING PRICE AND NET ASSET VALUE
Orders for purchases of Class A Shares are effected at the offering
price next calculated by the Fund in which shares are being purchased after
receipt of the order by the Fund, its agent or certain other authorized persons.
See Distribution and Service under Investments Management Agreement. 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
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order by the Fund, its agent or certain other authorized persons. Selling
dealers are responsible for transmitting orders promptly.
The offering price for Class A Shares consists of the net asset value
per share plus any applicable sales charges. Offering price and net asset value
are computed as of the close of regular trading on the New York Stock Exchange
(ordinarily, 4 p.m., Eastern time) on days when the Exchange is open. The New
York Stock Exchange is scheduled to be open Monday through Friday throughout the
year except for days when the following holidays are observed: New Year's Day,
Martin Luther King, Jr.'s Birthday, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. When the New York Stock
Exchange is closed, the Funds will generally be closed, pricing calculations
will not be made and purchase and redemption orders will not be processed.
An example showing how to calculate the net asset value per share and,
in the case of Class A Shares, the offering price per share, is included in each
Fund's financial statements which are incorporated by reference into this Part
B.
Each Fund's net asset value per share is computed by adding the value
of all 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
currencies and foreign securities denominated in foreign currency values will be
converted into U.S. dollars values at the mean between the bid and offered
quotations of such currencies against U.S. dollars based on rates in effect that
day. Securities not traded on a particular day, over-the-counter securities, and
government and agency securities are valued at the mean value between bid and
asked prices. Money market instruments having a maturity of less than 60 days
are valued at amortized cost. Debt securities (other than short-term
obligations) are valued on the basis of valuations provided by a pricing service
when such prices are believed to reflect the fair value of such securities. Use
of a pricing service has been approved by the Board of Trustees. 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 Trustees.
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 such Classes,
except that the Institutional Classes will not incur any of the expenses under
Equity Funds IV'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 Delaware Growth
Opportunities 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 Delaware Diversified Growth Fund remain
applicable, no such variance shall arise.
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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. 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. An exchange constitutes, for tax purposes, the sale of one fund and the
purchase of another. The sale may involve a capital gain or loss to the
shareholder for federal tax purposes. You may want to consult your financial
adviser or investment dealer to discuss which funds in Delaware Investments will
best meet your changing objectives, and the consequences of any exchange
transaction. You may also call the Delaware Investments directly for fund
information.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after a Fund receives your request in good order,
subject, in the case of a redemption, to any applicable CDSC or Limited CDSC.
For example, redemption or exchange requests received in good order after the
time the offering price and net asset value of shares are determined will be
processed on the next business day. See the Prospectuses. A shareholder
submitting a redemption request may indicate that he or she wishes to receive
redemption proceeds of a specific dollar amount. In the case of such a request,
and in the case of certain redemptions from retirement plan accounts, a Fund
will redeem the number of shares necessary to deduct the applicable CDSC in the
case of Class B Shares and Class C Shares, and, if applicable, the Limited CDSC
in the case of Class A Shares and tender to the shareholder the requested
amount, assuming the shareholder holds enough shares in his or her account for
the redemption to be processed in this manner. Otherwise, the amount tendered to
the shareholder upon redemption will be reduced by the amount of the applicable
CDSC or Limited CDSC. Redemption proceeds will be distributed promptly, as
described below, but not later than seven days after receipt of a redemption
request.
Except as noted below, for a redemption request to be in "good order,"
you must provide your account number, account registration, and the total number
of shares or dollar amount of the transaction. For exchange requests, you must
also provide the name of the fund in which you want to invest the proceeds.
Exchange instructions and redemption requests must be signed by the record
owner(s) exactly as the shares are registered. You may request a redemption or
an exchange by calling the Shareholder Service Center at 800-523-1918. A Fund
may suspend, terminate, or amend the terms of the exchange privilege upon 60
days' written notice to shareholders.
In addition to redemption of Fund shares, the Distributor, acting as
agent of a Fund, offers to repurchase Fund shares from broker/dealers acting on
behalf of shareholders. The redemption or repurchase price, which may be more or
less than the shareholder's cost, is the net asset value per share next
determined after receipt of the request in good order by a Fund, its agent, or
certain authorized persons, subject to applicable CDSC or Limited CDSC. This is
computed and effective at the time the offering price and net asset value are
determined. See Determining Offering Price and Net Asset Value. The Funds and
the Distributor end their business days at 5 p.m., Eastern time. This offer is
discretionary and may be completely withdrawn without further notice by the
Distributor.
Orders for the repurchase of Fund shares which are submitted to the
Distributor prior to the close of its business day will be executed at the net
asset value per share computed that day (subject to the applicable CDSC or
Limited CDSC), if the repurchase order was received by the broker/dealer from
the shareholder prior to the time the offering price and net asset value are
determined on such day. The selling dealer has the responsibility of
transmitting orders to the Distributor promptly. Such repurchase is then settled
as an ordinary transaction with the broker/dealer (who may make a charge to the
shareholder for this service) delivering the shares repurchased.
Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later than seven days, after receipt of a redemption request
in good order by a Fund or certain other authorized persons (see
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Distribution and Service under Investment Management Agreement); provided,
however, that each commitment to mail or wire redemption proceeds by a certain
time, as described below, is modified by the qualifications described in the
next paragraph.
Each Fund will process written and 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 the Fund will not mail or wire the proceeds until
it is reasonably satisfied that the purchase check has cleared, which may take
up to 15 days from the purchase date. You can avoid this potential delay if you
purchase shares by wiring Federal Funds. Each Fund reserves the right to reject
a written or telephone redemption request or delay payment of redemption
proceeds if there has been a recent change to the shareholder's address of
record.
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason, a
Fund will automatically redeem from the shareholder's account the shares
purchased by the check plus any dividends earned thereon. Shareholders may be
responsible for any losses to their Fund or to the Distributor.
In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result of
which disposal by a Fund of securities owned by it is not reasonably practical,
or it is not reasonably practical for a Fund fairly to value its assets, or in
the event that the SEC has provided for such suspension for the protection of
shareholders, a Fund may postpone payment or suspend the right of redemption or
repurchase. In such case, the shareholder may withdraw the request for
redemption or leave it standing as a request for redemption at the net asset
value next determined after the suspension has been terminated.
Payment for shares redeemed or repurchased may be made either in cash
or kind, or partly in cash and partly in kind. Any portfolio securities paid or
distributed in kind would be valued as described in Determining Offering Price
and Net Asset Value. Subsequent sale by an investor receiving a distribution in
kind could result in the payment of brokerage commissions. However, Equity Funds
IV has elected to be governed by Rule 18f-1 under the 1940 Act pursuant to which
a 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 their Fund may sustain either a gain or
loss, depending upon the price paid and the price received for such shares.
Certain redemptions of Class A Shares purchased at net asset value may
result in the imposition of a Limited CDSC. See Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value, below.
Class B Shares are subject to a CDSC of: (i) 5% if shares are redeemed within
one year of purchase; (ii) 4% if shares are redeemed during the second year
after purchase (iii) 3% if shares are redeemed during the third or fourth year
following purchase; (iv) 2% if shares are redeemed during the fifth year
following purchase; and (v) 1% if shares are redeemed during the sixth year
following purchase. Class C Shares are subject to a CDSC of 1% if shares are
redeemed within 12 months following purchase. See Contingent Deferred Sales
Charge - Class B Shares and Class C Shares under Purchasing Shares. Except for
the applicable CDSC or Limited CDSC and, with respect to the expedited payment
by wire described below for which, in the case of the Fund Classes, there may be
a bank wire fee, neither the Funds nor the Distributor charges a fee for
redemptions or repurchases, but such fees could be charged at any time in the
future.
Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for shares of other funds in the Delaware Investments (in
each case, "New Shares") in a permitted exchange, will not be subject to a CDSC
that might otherwise be due upon redemption of the Original Shares. However,
such shareholders will continue
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to be subject to the CDSC and, in the case of Class B Shares, the automatic
conversion schedule of the Original Shares as described in this Part B and any
CDSC assessed upon redemption will be charged by the fund from which the
Original Shares were exchanged. In an exchange of Class B Shares from the Funds,
a Fund's CDSC schedule may be higher than the CDSC schedule relating to the New
Shares acquired as a result of the exchange. For purposes of computing the CDSC
that may be payable upon a disposition of the New Shares, the period of time
that an investor held the Original Shares is added to the period of time that an
investor held the New Shares. With respect to Class B Shares, the automatic
conversion schedule of the Original Shares may be longer than that of the New
Shares. Consequently, an investment in New Shares by exchange may subject an
investor to the higher 12b-1 fees applicable to Class B Shares of a Fund for a
longer period of time than if the investment in New Shares were made directly.
Written Redemption
You can write to your Fund at One Commerce Square, 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, a Fund requires a signature by all owners of the account
and a signature guarantee for each owner. A signature guarantee can be obtained
from a commercial bank, a trust company or a member of a Securities Transfer
Association Medallion Program ("STAMP"). Each Fund reserves the right to reject
a signature guarantee supplied by an eligible institution based on its
creditworthiness. A Fund may require further documentation from corporations,
executors, retirement plans, administrators, trustees or guardians.
Payment is normally mailed the next business day after receipt of your
redemption request. If your Class A Shares or Institutional Class shares are in
certificate form, the certificate(s) must accompany your request and also be in
good order. Certificates are issued for Class A Shares and Institutional Class
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 your Fund (at One Commerce Square, Philadelphia,
PA 19103) to request an exchange of any or all of your shares into another
mutual fund in Delaware Investments, subject to the same conditions and
limitations as other exchanges noted above.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your Class A Shares or Institutional Class shares in
certificate form, you may redeem or exchange only by written request and you
must return your certificates.
The Telephone Redemption - Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in which you have your account
in writing that you do not wish to have such services available with respect to
your account. Each Fund reserves the right to modify, terminate or suspend these
procedures upon 60 days' written notice to shareholders. It may be difficult to
reach a Fund by telephone during periods when market or economic conditions lead
to an unusually large volume of telephone requests.
Neither the Funds nor their Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, a Fund will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, such Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Telephone instructions received by the
Fund Classes are generally tape recorded, and a written confirmation will be
provided for all purchase, exchange and redemption transactions initiated by
telephone. By
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exchanging shares by telephone, you are acknowledging prior receipt of a
prospectus for the fund into which your shares are being exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption proceeds of
$50,000 or less mailed to you at your address of record. Checks will be payable
to the shareholder(s) of record. Payment is normally mailed the next business
day after receipt of the redemption request. This service is only available to
individual, joint and individual fiduciary-type accounts.
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must complete an Authorization Form and have your signature
guaranteed. For your protection, your authorization must be on file. If you
request a wire, your funds will normally be sent the next business day. If the
proceeds are wired to the shareholder's account at a bank which is not a member
of the Federal Reserve System, there could be a delay in the crediting of the
funds to the shareholder's bank account. A bank wire fee be deducted from Fund
Class redemption proceeds. If you ask for a check, it will normally be mailed
the next business day after receipt of your redemption request to your
predesignated bank account. There are no separate fees for this redemption
method, but the mail time may delay getting funds into your bank account. Simply
call the Shareholder Service Center prior to the time the offering price and net
asset value are determined, as noted above.
Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to
adjust your investment holdings as your liquidity requirements and investment
objectives change. You or your investment dealer of record can exchange your
shares into other funds in Delaware Investments under the same registration,
subject to the same conditions and limitations as other exchanges noted above.
As with the written exchange service, telephone exchanges are subject to the
requirements of a Fund, as described above. Telephone exchanges may be subject
to limitations as to amounts or frequency.
The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on short-term
swings in the securities market through frequent transactions in and out of the
funds in the Delaware Investments family. Telephone exchanges may be subject to
limitations as to amounts or frequency. The Transfer Agent and the Fund reserve
the right to record exchange instructions received by telephone and to reject
exchange requests at any time in the future.
MoneyLine (SM) On Demand
You or your investment dealer may request redemptions of Fund shares by
phone using MoneyLine (SM) On Demand. When you authorize a Fund to accept such
requests from you or your investment dealer, funds will be deposited to (for
share redemptions) your predesignated bank account. Your request will be
processed the same day if you call prior to 4 p.m., Eastern time. There is a $25
minimum and $50,000 maximum limit for MoneyLine (SM) On Demand transactions. See
MoneyLine (SM) On Demand under Investment Plans.
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Timing Accounts
Right to Refuse Timing Accounts--With regard to accounts that are
administered by market timing services ("Timing Firms") to purchase or redeem
shares based on changing economic and market conditions ("Timing Accounts"), the
Funds will refuse any new timing arrangements, as well as any new purchases (as
opposed to exchanges) in Delaware Investments funds from Timing Firms. A Fund
reserves the right to temporarily or permanently terminate the exchange
privilege or reject any specific purchase order for any person whose
transactions seem to follow a timing pattern who: (i) makes an exchange request
out of the Fund within two weeks of an earlier exchange request out of the Fund,
or (ii) makes more than two exchanges out of the Fund per calendar quarter, or
(iii) exchanges shares equal in value to at least $5 million, or more than 1/4
of 1% of the Fund's net assets. Accounts under common ownership or control,
including accounts administered so as to redeem or purchase shares based upon
certain predetermined market indicators, will be aggregated for purposes of the
exchange limits.
Redemptions of Timing Accounts--Redemption requests made from Timing
Accounts will be made only by check. Redemption proceeds from these accounts
will not be wired to shareholder bank accounts. Such checks will be sent no
later than seven days after receipt of a redemption request in good order.
Restrictions on Timed Exchanges--Timing Accounts operating under
existing timing agreements may only execute exchanges between the following
eight Delaware Investments funds: (1) Delaware Decatur Equity Income Fund, (2)
Delaware Growth and Income Fund, (3) Delaware Balanced Fund, (4) Delaware
Limited-Term Government Fund, (5) Delaware Tax-Free USA Fund, (6) Delaware Cash
Reserve Fund, (7) Delaware Delchester Fund and (8) Delaware Tax-Free
Pennsylvania Fund. No other Delaware Investments funds are available for timed
exchanges. Assets redeemed or exchanged out of Timing Accounts in Delaware
Investments funds not listed above may not be reinvested back into that Timing
Account. Each Fund reserves the right to apply these same restrictions to the
account(s) of any person whose transactions seem to follow a time pattern (as
described above).
Each Fund also reserves the right to refuse the purchase side of an
exchange request by any Timing Account, person, or group if, in the Manager's
judgment, the Fund would be unable to invest effectively in accordance with its
investment objectives and policies, or would otherwise potentially be adversely
affected. A shareholder's purchase exchanges may be restricted or refused if a
Fund receives or anticipates simultaneous orders affecting significant portions
of the Fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a Fund and therefore may be
refused.
Except as noted above, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.
Systematic Withdrawal Plans
Shareholders of Class A Shares, Class B Shares and Class C Shares who
own or purchase $5,000 or more of shares at the offering price, or net asset
value, as applicable, for which certificates have not been issued may establish
a Systematic Withdrawal Plan for monthly withdrawals of $25 or more, or
quarterly withdrawals of $75 or more, although the Funds do not recommend any
specific amount of withdrawal. This is particularly useful to shareholders
living on fixed incomes, since it can provide them with a stable supplemental
amount. This $5,000 minimum does not apply for a Fund's prototype retirement
plans. Shares purchased with the initial investment and through reinvestment of
cash dividends and realized securities profits distributions will be credited to
the shareholder's account and sufficient full and fractional shares will be
redeemed at the net asset value calculated on the third business day preceding
the mailing date.
Checks are dated either the 1st or the 15th of the month, as selected
by the shareholder (unless such date falls on a holiday or a weekend), and are
normally mailed within two business days. Both ordinary income dividends and
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realized securities profits distributions will be automatically reinvested in
additional shares of the Class at net asset value. This plan is not recommended
for all investors and should be started only after careful consideration of its
operation and effect upon the investor's savings and investment program. To the
extent that withdrawal payments from the plan exceed any dividends and/or
realized securities profits distributions paid on shares held under the plan,
the withdrawal payments will represent a return of capital, and the share
balance may in time be depleted, particularly in a declining market.
Shareholders should not purchase additional shares while participating in a
Systematic Withdrawal Plan.
The sale of shares for withdrawal payments constitutes a taxable event
and a shareholder may incur a capital gain or loss for federal income tax
purposes. This gain or loss may be long-term or short-term depending on the
holding period for the specific shares liquidated. Premature withdrawals from
retirement plans may have adverse tax consequences.
Withdrawals under this plan made concurrently with the purchases of
additional shares may be disadvantageous to the shareholder. Purchases of Class
A Shares through a periodic investment program in a Fund managed by the Manager
must be terminated before a Systematic Withdrawal Plan with respect to such
shares can take effect, except if the shareholder is a participant in one of our
retirement plans or is investing in Delaware Investments funds which do not
carry a sales charge. Redemptions of Class A Shares pursuant to a Systematic
Withdrawal Plan may be subject to a Limited CDSC if the purchase was made at net
asset value and a dealer's commission has been paid on that purchase. The
applicable Limited CDSC for Class A Shares and CDSC for Class B and C Shares
redeemed via a Systematic Withdrawal Plan will be waived if the annual amount
withdrawn in each year is less than or equal to 12% of the account balance on
the date that the Plan is established. If the annual amount withdrawn in any
year exceeds 12% of the account balance on the date that the Systematic
Withdrawal Plan is established, all redemptions under the Plan will be subjected
to the applicable contingent deferred sales charge, including an assessment for
previously redeemed amounts under the Plan. Whether a waiver of the contingent
deferred sales charge is available or not, the first shares to be redeemed for
each Systematic Withdrawal Plan payment will be those not subject to a
contingent deferred sales charge because they have either satisfied the required
holding period or were acquired through the reinvestment of distributions. See
Waiver of Contingent Deferred Sales Charges, below.
An investor wishing to start a Systematic Withdrawal Plan must complete
an authorization form. If the recipient of Systematic Withdrawal Plan payments
is other than the registered shareholder, the shareholder's signature on this
authorization must be guaranteed. Each signature guarantee must be supplied by
an eligible guarantor institution. Each 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.
Systematic Withdrawal Plan payments are normally made by check. In the
alternative, you may elect to have your payments transferred from your Fund
account to your predesignated bank account through the MoneyLine (SM) Direct
Deposit Service. Your funds will normally be credited to your bank account up to
four business days after the payment date. There are no separate fees for this
redemption method. It may take up to four business days for the transactions to
be completed. You can initiate this service by completing an Account Services
form. If your name and address are not identical to the name and address on your
Fund account, you must have your signature guaranteed. The Funds do not charge a
fee for any this service; however, your bank may charge a fee. This service is
not available for retirement plans.
The Systematic Withdrawal Plan is not available for the Institutional
Classes or, currently, any of the Fund Classes of Delaware Diversified Growth
Fund.
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Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value
For purchases of $1,000,000 or more made on or after July 1, 1998, a
Limited CDSC will be imposed on certain redemptions of Class A Shares (or shares
into which such Class A Shares are exchanged) according to the following
schedule: (1) 1.00% if shares are redeemed during the first year after the
purchase; and (2) 0.50% if such shares are redeemed during the second year after
the purchase, if such purchases were made at net asset value and triggered the
payment by the Distributor of the dealer's commission described above.
The Limited CDSC will be paid to the Distributor and will be assessed
on an amount equal to the lesser of : (1) the net asset value at the time of
purchase of the Class A Shares being redeemed or (2) the net asset value of such
Class A Shares at the time of redemption. For purposes of this formula, the "net
asset value at the time of purchase" will be the net asset value at purchase of
the Class A Shares even if those shares are later exchanged for shares of
another Delaware Investments fund and, in the event of an exchange of Class A
Shares, the "net asset value of such shares at the time of redemption" will be
the net asset value of the shares acquired in the exchange.
Redemptions of such Class A Shares held for more than two years will
not be subjected to the Limited CDSC and an exchange of such Class A Shares into
another Delaware Investments fund will not trigger the imposition of the Limited
CDSC at the time of such exchange. The period a shareholder owns shares into
which Class A Shares are exchanged will count towards satisfying the two-year
holding period. The Limited CDSC is assessed if such two year period is not
satisfied irrespective of whether the redemption triggering its payment is of
Class A Shares of a Fund or Class A Shares acquired in the exchange.
In determining whether a Limited CDSC is payable, it will be assumed
that shares not subject to the Limited CDSC are the first redeemed followed by
other shares held for the longest period of time. The Limited CDSC will not be
imposed upon shares representing reinvested dividends or capital gains
distributions, or upon amounts representing share appreciation. All investments
made during a calendar month, regardless of what day of the month the investment
occurred, will age one month on the last day of that month and each subsequent
month.
Waivers of Contingent Deferred Sales Charges
Waiver of Limited Contingent Deferred Sales Charge - Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission has
been paid will be waived in the following instances: (i) redemptions that result
from a Fund's right to liquidate a shareholder's account if the aggregate net
asset value of the shares held in the account is less than the then-effective
minimum account size; (ii) distributions to participants from a retirement plan
qualified under section 401(a) or 401(k) of the Internal Revenue Code of 1986,
as amended (the "Code"), or due to death of a participant in such a plan; (iii)
redemptions pursuant to the direction of a participant or beneficiary of a
retirement plan qualified under section 401(a) or 401(k) of the Code with
respect to that retirement plan; (iv) periodic distributions from an IRA, SIMPLE
IRA, or 403(b)(7) or 457 Deferred Compensation Plan due to death, disability, or
attainment of age 59 1/2, and IRA distributions qualifying under Section 72(t)
of the Internal Revenue Code; (v) returns of excess contributions to an IRA;
(vi) distributions by other employee benefit plans to pay benefits; (vii)
distributions described in (ii), (iv), and (vi) above pursuant to a systematic
withdrawal plan; (viii) distributions form an account if the redemption results
from a death of a registered owner, or a registered joint owner, 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 disability (as defined in Section 72
of the Code) of all registered owners occurring after the purchase of the shares
being redeemed; (ix) redemptions by certain group defined contribution
retirement plans that purchase shares through a retirement plan alliance program
which requires that shares will be available at net asset value, provided that
RFS either is the sponsor of the alliance program or has a product participation
agreement with the sponsor of the alliance program that specifies that the
Limited CDSC will be waived; and (x) redemptions by the classes of shareholders
who are permitted to purchase shares at net asset value, regardless of the size
of the purchase (see Buying Class A Shares at Net Asset Value under Purchasing
Shares).
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Waiver of Contingent Deferred Sales Charge - Class B Shares and Class C Shares
The CDSC is waived on certain redemptions of Class B Shares in
connection with the following redemptions: (i) redemptions that result from a
Fund's right to liquidate a shareholder's account if the aggregate net asset
value of the shares held in the account is less than the then-effective minimum
account size; (ii) returns of excess contributions to an IRA, SIMPLE IRA,
SEP/IRA, or 403(b)(7) or 457 Deferred Compensation Plan; (iii) periodic
distributions from an IRA, SIMPLE IRA, SAR/SEP, SEP/IRA, or 403(b)(7) or 457
Deferred Compensation Plan due to death, disability or attainment of age 59 1/2,
and IRA distributions qualifying under Section 72(t) of the Internal Revenue
Code; and (iv) distributions from an account if the redemption results from the
death of a registered owner, or a registered joint owner, of the account (in the
case of accounts established under the Uniform Gifts to Minors or Uniform
Transfers to Minors Acts or trust accounts, the waiver applies upon the death of
all beneficial owners) or a total and permanent disability (as defined in
Section 72 of the Code) of all registered owners occurring after the purchase of
the shares being redeemed.
The CDSC on Class C Shares is waived in connection with the following
redemptions: (i) redemptions that result from a Fund's right to liquidate a
shareholder's account if the aggregate net asset value of the shares held in the
account is less than the then-effective minimum account size; (ii) returns of
excess contributions to an IRA, SIMPLE IRA, 403(b)(7) or 457 Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan, or 401(k)
Defined Contribution plan; (iii) periodic distributions from a 403(b)(7) or 457
Deferred Compensation Plan upon attainment of age 59 1/2, Profit Sharing Plan,
Money Purchase Plan, 401(k) Defined Contribution Plan upon attainment of age
70 1/2, and IRA distributions qualifying under Section 72(t) of the Internal
Revenue Code; (iv) distributions from a 403(b)(7) or 457 Deferred Compensation
Plan, Profit Sharing Plan, or 401(k) Defined Contribution Plan, under hardship
provisions of the plan; (v) distributions from a 403(b)(7) or 457 Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan or a 401(k)
Defined Contribution Plan upon attainment of normal retirement age under the
plan or upon separation from service; (vi) periodic distributions from an IRA or
SIMPLE IRA on or after attainment of age 59 1/2; and (vii) distributions from an
account if the redemption results from the death of a registered owner, or a
registered joint owner, 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 A Shares, Class B Shares
and Class C Shares redeemed in accordance with a Systematic Withdrawal Plan if
the annual amount selected to be withdrawn under the Plan does not exceed 12% of
the value of the account on the date that the Systematic Withdrawal Plan was
established or modified.
DISTRIBUTIONS AND TAXES
Each Fund has qualified, and intends to continue 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 Delaware Growth Opportunities 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
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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 described below. 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.
Under the Taxpayer Relief Act of 1997, as revised by the Internal
Revenue Service Restructuring and Reform Act of 1998 (the "1998 Act") and the
Omnibus Consolidated and Emergency Supplemental Appropriations Act, a Fund is
required to track its sales of portfolio securities and to report its capital
gain distributions to you according to the following categories of holding
periods:
"Long-term capital gains": gains on securities sold after December 31,
1997 and held for more than 12 months as capital assets in the hands of the
holders are taxed at the 20% rate when distributed to shareholders (10% for
individual investors in the 15% tax bracket).
"Short-term capital gains": gains on securities sold by a Fund that do
not meet the long-term holding period are considered short-term capital gains
and are taxed as ordinary income.
"Qualified 5-year gains": For individuals in the 15% bracket, qualified
five-year gains are net gains on securities held for more than 5 years which are
sold after December 31, 2000. For individuals who are subject to tax at higher
rate brackets, qualified five-year gains are net gains on securities which are
purchased after December 31, 2000 and are held for more than five years.
Taxpayers subject to tax at a higher rate brackets may also make an election for
shares held on January 1, 2001 to recognize gain on their shares in order to
qualify such shares as qualified five-year property. These gains will be taxable
to individual investors at a maximum rate of 18% for investors in the 28% or
higher federal income tax brackets, and at a maximum rate of 8% for investors in
the 15% federal income tax bracket when sold after the five-year holding period.
Any loss incurred on the redemption or exchange of shares held for six
months or less will be disallowed to the extent of any exempt-interest dividends
distributed to you with respect to your Fund shares and any remaining loss will
be treated as a long-term capital loss to the extent of any long-term capital
gains distributed to you by the Fund on those shares.
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All or a portion of any loss that you realize upon the redemption of
your Fund shares will be disallowed to the extent that you buy other shares in
the Fund (through reinvestment of dividends or otherwise) within 30 days before
or after your share redemption. Any loss disallowed under these rules will be
added to your tax basis in the new shares you buy.
If you redeem some or all of yours shares in a Fund, and then reinvest
the sales proceeds in such Fund or in another Delaware Investments fund within
90 days of buying the original shares, the sales charge that would otherwise
apply to your reinvestment may be reduced or eliminated. The IRS will require
you to report gain or loss on the redemption of your original shares in a Fund.
In doing so, all or a portion of the sales charge that you paid for your
original shares in a Fund will be excluded from your tax basis in the shares
sold (for the purpose of determining gain or loss upon the sale of such shares).
The portion of the sales charge excluded will equal the amount that the sales
charge is reduced on your reinvestment. Any portion of the sales charge excluded
from your tax basis in the shares sold will be added to the tax basis of the
shares you acquire from your reinvestment.
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. 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. Under the 1997 Act, the amount that the Fund may
designate as eligible for the dividends-received deduction will be reduced or
eliminated if the shares on which the dividends earned by the Fund were
debt-financed or held by the Fund for less than a 46-day period during a 90-day
period beginning 45 days before the ex-dividend date and ending 45 days after
the ex-dividend date. Similarly, if your Fund shares are debt-financed or held
by you for less than a 46-day period during a 90-day period beginning 45 days
before the ex-dividend date and ending 45 days after the ex-dividend date, then
the dividends-received deduction for Fund dividends on your shares may also be
reduced or eliminated. Even if designated as dividends eligible for the
dividends-received deduction, all dividends (including any deducted portion)
must be included in your alternative minimum taxable income calculation. For the
fiscal year ended September 30, 2000, [0%] of Delaware Growth Opportunities
Fund's dividends from net investment income qualified for the dividends-received
deduction to corporations and [00%] of Delaware Diversified Growth Fund's
dividends from net investment income qualified for the dividends-received
deduction to corporations.
Shareholders will be notified annually by Equity Funds IV as to the
federal income tax status of dividends and distributions paid by their Fund.
In addition to the federal taxes described above, shareholders may or
may not be subject to various state and local taxes. Because shareholders' state
and local taxes may be different than the federal taxes described above,
shareholders should consult their own tax advisers.
See also Other Tax Requirements under Accounting and Tax Issues in this
Part B.
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INVESTMENT MANAGEMENT AGREEMENT
The Manager, located at One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to the Fund, subject to the supervision
and direction of Equity Funds IV's Board of Trustees.
The Manager and its predecessors have been managing the funds in the
Delaware Investments family since 1938. On September 30, 2000, the Manager and
its affiliates within Delaware Investments, including Delaware International
Advisers Ltd., were managing in the aggregate more than [$00 billion] in assets
in various institutional or separately managed (approximately [$00,000,000,000])
and investment company (approximately [$00,000,000,000]) accounts.
The Investment Management Agreement for the Funds is dated December 17,
1999 and was approved by the initial shareholder on the same date. The Agreement
has an initial term of two years and may be renewed only so long as such renewal
and continuance are specifically approved at least annually by the Board of
Trustees or by vote of a majority of the outstanding voting securities of the
Fund, and only if the terms and the renewal thereof have been approved by the
vote of a majority of the trustees of Equity Funds IV who are not parties
thereto or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. The Agreement is terminable
without penalty on 60 days' notice by the trustees of Equity Funds IV or by the
Manager. The Agreement will terminate automatically in the event of its
assignment.
The annual compensation paid by each Funds for investment management
services is equal to the following fee rate which is based on the average daily
net assets of a Fund.
------------------------------------- ------------------------------------------
Delaware Growth Opportunities Fund 0.75% on first $500 million;
0.70% on next $500 million;
0.65% on next $1.5 billion;
0.60% on assets in excess of $2.5 million
------------------------------------- ------------------------------------------
Delaware Diversified Growth Fund 0.65% on the first $500 million;
0.60% on the next $500 million;
0.55% on the next $1.5 billion;
0.50% on assets in excess of $2.5 billion.
------------------------------------- ------------------------------------------
Under the general supervision of the Board of Trustees, the Manager
makes all investment decisions which are implemented by each Fund. The Manager
pays the salaries of all trustees, directors, officers and employees who are
affiliated with both the Manager and Equity Funds IV.
On September 30, 2000, the total net assets of Delaware Growth
Opportunities Fund were [$000,000,000]. The investment management fees paid by
Delaware Growth Opportunities Fund for the fiscal years ended September 30,
1998, 1999 and 2000 were $6,278,318, $5,542,943 and [$0,000,000], respectively.
On September 30, 2000, the total net assets of Delaware Diversified
Growth Fund were [$00,000,000]. For the fiscal year ended September 30, 1998,
the investment management fee incurred by the Fund was $18,019 and no fees were
paid as a result of the voluntary waiver of fees by the Manager. For the fiscal
year ended September 30, 1999, the investment management fee incurred by the
Fund was $35,016 and $10,766 was paid as a result of the voluntary waiver of
fees by the Manager. For the fiscal year ended September 30, 2000, the
investment management fee incurred by the Fund was [$0,000] and [$0,000] was
paid as a result of the voluntary waiver of fees by the Manager.
The Manager has elected voluntarily to waive that portion, if any, of
the annual management fees payable by Delaware Diversified Growth 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,
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extraordinary expenses and 12b-1 expenses) during the commencement of the public
offering of the Fund through May 31, 2000. The Manager has extended this waiver
through May 31, [2001].
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.
Distribution and Service
The Distributor, Delaware Distributors, L.P., located at One Commerce
Square, Philadelphia, PA 19103, serves as the national distributor of each
Fund's shares under separate Distribution Agreement dated December 17, 1999. The
Distributor is an affiliate of the Manager and bears all of the costs of
promotion and distribution, except for payments by each Fund on behalf of Class
A Shares, Class B Shares and Class C Shares under their respective 12b-1 Plans.
The Distributor 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 Delaware
Diversified Growth Fund during the commencement of the public offering of the
Fund through May 31, [2001].
Except for those expenses borne by the Manager under the Investment
Management Agreement and the Distributor under the Distribution Agreement, the
Fund is responsible for all of its own expenses. Among others, these include the
Fund's proportionate share of rent and certain other administrative expenses;
the investment management fees; transfer and dividend disbursing agent fees and
costs; custodian expenses; federal and state securities registration fees; proxy
costs; and the costs of preparing prospectuses and reports sent to shareholders.
The Transfer Agent, Delaware Service Company, Inc., another affiliate
of the Manager located at One Commerce Square, Philadelphia, PA 19103, serves as
the Fund's shareholder servicing, dividend disbursing and transfer agent
pursuant to a Shareholders Services Agreement dated December 17, 1999. The
Transfer Agent also provides accounting services to the Fund pursuant to the
terms of a separate Fund Accounting Agreement. The Transfer Agent is also an
indirect, wholly owned subsidiary of Delaware Management Holdings, Inc.
The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders in addition to the Transfer Agent. Such brokers
are authorized to designate other intermediaries to accept purchase and
redemption orders on the behalf of the Fund. For purposes of pricing, the Fund
will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Investors may be charged a fee when effecting transactions through a
broker or agent.
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OFFICERS AND TRUSTEES
The business and affairs of Equity Funds IV are managed under the
direction of its Board of Trustees.
Certain officers and trustees of Equity Funds IV hold identical
positions in each of the other funds in the Delaware Investments family. On
October 31, 2000, Equity Funds IV's officers and trustees owned approximately
about 33% of the outstanding shares of Delaware Diversified Growth Fund Class A
Shares and less than 1% of the outstanding shares of Class B Shares, Class C
Shares and the Institutional Class. As of the same date, Equity Funds IV
officers and trustees owned less than 1% of the outstanding shares of Delaware
Growth Opportunities Fund Class A Shares, Class B Shares, Class C Shares and the
Institutional Class.
As of October 31, 2000, management believes the following accounts held
5% or more of the outstanding shares of a Class of the Fund. With the exception
of DMC Profit Sharing Plans, the Fund has no knowledge of beneficial ownership.
<TABLE>
<CAPTION>
-------------------------------------------- --------------------------------------------- ----------------- ------------------
Class Name and Address of Account Share Amount Percentage
-------------------------------------------- --------------------------------------------- ----------------- ------------------
<S> <C> <C> <C>
Delaware Growth Opportunities Fund A Class MLPF&S for the Sole Benefit of its Customers 3,238,482.080 12.05%
Attention: Fund Administration Sec #974N2
4800 Deer Lake Drive East - 2nd Floor
Jacksonville, FL 32246
-------------------------------------------- --------------------------------------------- ----------------- ------------------
Delaware Growth Opportunities Fund B Class MLPF&S for the Sole Benefit of its 218,424.160 10.24%
Customers
Attention: Fund Administration Sec #97E99
4800 Deer Lake Drive East - 2nd Floor
Jacksonville, FL 32246
-------------------------------------------- --------------------------------------------- ----------------- ------------------
Delaware Growth Opportunities Fund C Class MLPF&S for the Sole Benefit of its 37,298.140 8.93%
Customers
Attention: Fund Administration Sec #97HY4
4800 Deer Lake Drive East - 2nd Floor
Jacksonville, FL 32246
-------------------------------------------- --------------------------------------------- ----------------- ------------------
Delaware Growth Opportunities Fund RS 401(k) Plan 203,570.290 18.99%
Institutional Class Waterfield Group 401(k) Plan
Attn: Rebecca Teagarden
7500 West Jefferson
Fort Wayne, IN 46804
-------------------------------------------- --------------------------------------------- ----------------- ------------------
RS DMTC 401(k) Plan 138,513.500 12.92%
Aloha Air 401k IAM Cleric
Attn: Marion Kanemori
371 Aokea Place
Honolulu International Airport
Honolulu, HI 96820
-------------------------------------------- --------------------------------------------- ----------------- ------------------
RS DMC Employee Profit Sharing Plan 130,831.120 12.20%
Delaware Management Company
Employee Profit Sharing Trust
c/o Rick Seidel
One Commerce Square
Philadelphia, PA 19103
-------------------------------------------- --------------------------------------------- ----------------- ------------------
RS DMTC 401(k) Plan 95,623.730 8.92%
Aloha Air 401k IAM M/D
Attn: Marion Kanemori
371 Aokea Place
Honolulu International Airport
Honolulu, HI 96820
-------------------------------------------- --------------------------------------------- ----------------- ------------------
Federated Life Insurance Company 93,374.880 8.71%
Separate Account A
Attn: Debbie Miller
P.O. Box 328
Owatonna, MN 55060
-------------------------------------------- --------------------------------------------- ----------------- ------------------
</TABLE>
60
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------- --------------------------------------------- ----------------- ------------------
Class Name and Address of Account Share Amount Percentage
-------------------------------------------- --------------------------------------------- ----------------- ------------------
<S> <C> <C> <C>
RS DMTC 401(k) Plan 92,917.440 8.66%
Long John Silver, Inc. 401(k) Plan
Attn: Jeannie Metcalf
PO Box 11988
Lexington, KY 40579
-------------------------------------------- --------------------------------------------- ----------------- ------------------
RS DMTC 401(k) Plan 78,117.170 7.28%
Aloha Airlines 401(k) Plan
for Non-Represented Employees
Attn: Marion Kanemori
371 Aokea Place
Honolulu International Airport
Honolulu, HI 96820
-------------------------------------------- --------------------------------------------- ----------------- ------------------
RS DMTC 401(k) Plan 68,467.270 6.38%
Aloha Airlines Flight Attendants
Attn: Marion Kanemori
371 Aokea Place
Honolulu International Airport
Honolulu, HI 96820
-------------------------------------------- --------------------------------------------- ----------------- ------------------
RS DMTC 457 Deferred Comp Plan 62,102.010 5.79%
PGW 457 Plan
Attn: William Ambrose
800 West Montgomery Avenue
Philadelphia, PA 19122
-------------------------------------------- --------------------------------------------- ----------------- ------------------
Delaware Diversified Growth Fund A Class Janice K. Burchfield 1,615.510 42.02%
5 Indian Hill Road
Pittsburgh, PA 15238
-------------------------------------------- --------------------------------------------- ----------------- ------------------
Robert E. Ginsberg and Laura B. Frank 811.030 21.09%
JT WROS
900 Pine Street Apt 1F
Philadelphia, PA 19107
-------------------------------------------- --------------------------------------------- ----------------- ------------------
Tmothy G. Connors and Susan L. Connors 583.170 15.16%
637 Vassar Road
Strafford, PA 19087
-------------------------------------------- --------------------------------------------- ----------------- ------------------
Christopher S. Adams and Stefanie G. Adams 439.630 11.43%
JT WROS
619 Greythorne Road
Wynnewood, PA 19096
-------------------------------------------- --------------------------------------------- ----------------- ------------------
Douglas W. Degenhardt 328.940 8.55%
237 Marple Rd.
Haverford, PA 19041
-------------------------------------------- --------------------------------------------- ----------------- ------------------
Delaware Diversified Growth Fund Chase Manhattan Bank Custodian 444,662.710 37.68%
Institutional Class For Delaware Group Foundation Funds -
Balanced Portfolio
Attn: Marisol Gordan Global Inv. Ser.
3 Metrotech Center, 8th Floor
Brooklyn, NY 11201
-------------------------------------------- --------------------------------------------- ----------------- ------------------
Chase Manhattan Bank Custodian 286,589.410 24.28%
For Delaware Group Foundation Funds -
Growth Portfolio
Attn: Marisol Gordan Global Inv. Ser.
3 Metrotech Center, 8th Floor
Brooklyn, NY 11201
-------------------------------------------- --------------------------------------------- ----------------- ------------------
Chicago Trust Co. 259,649.360 22.00%
FBO Lincoln National Corp.
Empl. Ret. Pln
c/o Marshall & Ilsley Trust Co.
P.O. Box 2977
Milwaukee, WI 53201
-------------------------------------------- --------------------------------------------- ----------------- ------------------
Chase Manhattan Bank Custodian 189,081.570 16.02%
For Delaware Group Foundation Funds -
Income Portfolio
Attn: Marisol Gordan Global Inv. Ser.
3 Metrotech Center, 8th Floor
Brooklyn, NY 11201
-------------------------------------------- --------------------------------------------- ----------------- ------------------
</TABLE>
61
<PAGE>
DMH Corp., Delvoy, Inc., Delaware Management Business Trust, Delaware
Management Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust), Delaware Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc., Delaware Management Trust Company,
Delaware International Holdings Ltd., Founders Holdings, Inc., Delaware
International Advisers Ltd., Delaware Capital Management, Inc., Delaware General
Management, Inc. and Retirement Financial Services, Inc. are direct or indirect,
wholly owned subsidiaries of Delaware Management Holdings, Inc. ("DMH"). On
April 3, 1995, a merger between DMH and a wholly owned subsidiary of Lincoln
National Corporation ("Lincoln National") was completed. DMH and the Manager are
now indirect, wholly owned subsidiaries, and subject to the ultimate control, of
Lincoln National. Lincoln National, with headquarters in Philadelphia,
Pennsylvania, is a diversified organization with operations in many aspects of
the financial services industry, including insurance and investment management.
Certain officers and trustees of Equity Funds IV hold identical
positions in each of the other funds in the Delaware Investments family.
Trustees and principal officers of the Equity Funds IV 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 trustee is One Commerce Square,
Philadelphia, PA 19103.
<TABLE>
<CAPTION>
------------------------------------------- ------------------------------------------------------------------------------------
Trustee/Officer Business Experience
------------------------------------------- ------------------------------------------------------------------------------------
<S> <C>
*Wayne A. Stork (63) Chairman, Trustee/Director of Equity Funds IV and each of the other 32 investment
companies in the Delaware Investments family
Prior to January 1, 1999, Mr. Stork was Director of Delaware Capital Management,
Inc.; Chairman, President and Chief Executive Officer and Director/Trustee of DMH
Corp., Delaware Distributors, Inc. and Founders Holdings, Inc.; Chairman,
President, Chief Executive Officer, Chief Investment Officer and Director/Trustee
of Delaware Management Company, Inc. and Delaware Management Business Trust;
Chairman, President, Chief Executive Officer and Chief Investment Officer of
Delaware Management Company (a series of Delaware Management Business Trust);
Chairman, Chief Executive Officer and Chief Investment Officer of Delaware
Investment Advisers (a series of Delaware Management Business Trust); Chairman
and Chief Executive Officer of Delaware International Advisers Ltd.; Chairman,
Chief Executive Officer and Director of Delaware International Holdings Ltd.;
Chief Executive Officer of Delaware Management Holdings, Inc.; President and
Chief Executive Officer of Delvoy, Inc.; Chairman of Delaware Distributors, L.P.;
Director of Delaware Service Company, Inc. and Retirement Financial Services,
Inc.
Prior to January 1, 2000, Mr. Stork was Chairman and Director of Delaware
Management Holdings, Inc. and a Director of Delaware International Advisers Ltd.
In addition, during the five years prior to January 1, 2000, Mr. Stork has served
in various executive capacities at different times within Delaware Investments.
--------------------------------------------------------------------------------------------------------------------------------
*Trustee affiliated with Equity Funds IV's investment manager and considered an "interested person" as defined in the 1940
Act.
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
62
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------- ------------------------------------------------------------------------------------
Trustee/Officer Business Experience
------------------------------------------- ------------------------------------------------------------------------------------
<S> <C>
*David K. Downes (60) President, Chief Executive Officer, Chief Financial Officer and Trustee/Director
of Equity Funds IV and each of the other 32 investment companies in the Delaware
Investments family
President and Director of Delaware Management Company, Inc.
President of Delaware Management Company (a series of Delaware Management
Business Trust)
President, Chief Executive Officer and Director of Delaware Capital Management,
Inc.
Chairman, President, Chief Executive Officer and Director of Delaware Service
Company, Inc.
President, Chief Operating Officer, Chief Financial Officer and Director of
Delaware International Holdings Ltd.
President, Chief Operating Officer and Director of Delaware General Management,
Inc.
Chairman and Director of Delaware Management Trust Company and Retirement
Financial Services, Inc.
Executive Vice President, Chief Operating Officer and Chief Financial Officer of
Delaware Management Holdings, Inc., Founders CBO Corporation, Delaware
Distributors, L.P. and Delaware Investment Advisers (a series of Delaware
Management Business Trust)
Executive Vice President, Chief Financial Officer, Chief Operating Officer and
Trustee of Delaware Management Business Trust
Executive Vice President, Chief Operating Officer, Chief Financial Officer and
Director of DMH Corp., Delaware Distributors, Inc., Founders Holdings, Inc. and
Delvoy, Inc.
Director of Delaware International Advisers Ltd.
Executive Vice President, Chief Operating Officer, Chief Financial Officer and
Director of Vantage Global Advisors, Inc.
During the past five years, Mr. Downes has served in various executive capacities
at different times within Delaware Investments.
------------------------------------------- ------------------------------------------------------------------------------------
Walter P. Babich (73) Trustee/Director of Equity Funds IV and each of the other 32 investment companies
in the Delaware Investments family
460 North Gulph Road, King of Prussia, PA 19406
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and from 1988 to
1991, he was a partner of I&L Investors.
--------------------------------------------------------------------------------------------------------------------------------
*Trustee affiliated with Equity Funds IV's investment manager and considered an "interested person" as defined in the 1940
Act.
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
63
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------- ------------------------------------------------------------------------------------
Trustee/Officer Business Experience
------------------------------------------- ------------------------------------------------------------------------------------
<S> <C>
John H. Durham (63) Trustee/Director of Equity Funds IV and each of the other 32 investment companies
in the Delaware Investments family
Private Investor.
P.O. Box 819, Gwynedd Valley, PA 19437
Mr. Durham served as Chairman of the Board of each fund in the Delaware Investments
family from 1986 to 1991; President of each fund from 1977 to 1990; and Chief
Executive Officer of each fund from 1984 to 1990. Prior to 1992, with respect to
Delaware Management Holdings, Inc., Delaware Management Company, Delaware
Distributors, Inc. and Delaware Service Company, Inc., Mr. Durham served as a
director and in various executive capacities at different times. He was also a
Partner of Complete Care Services from 1995 to 1999.
------------------------------------------- ------------------------------------------------------------------------------------
Anthony D. Knerr (61) Trustee/Director of Equity Funds IV and each of the other 32 investment companies
in the Delaware Investments family.
500 Fifth Avenue, New York, NY 10110
Founder and Managing Director, Anthony Knerr & Associates
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and Treasurer of
Columbia University, New York. From 1987 to 1989, he was also a lecturer in
English at the University. In addition, Mr. Knerr was Chairman of The Publishing
Group, Inc., New York, from 1988 to 1990. Mr. Knerr founded The Publishing Group,
Inc. in 1988.
------------------------------------------- ------------------------------------------------------------------------------------
Ann R. Leven (60) Trustee/Director of Tax-Free Fund and Voyageur Mutual Funds and each of the other
31 investment companies in the Delaware Investments family
785 Park Avenue, New York, NY 10021
Retired Treasurer, National Gallery of Art
From 1994 to 1999, Ms. Leven was the Treasurer of the National Gallery of Art and
from 1990 to 1994, Ms. Leven was Deputy Treasurer of the National Gallery of Art.
In addition, 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.
------------------------------------------- -------------------------------------------------------------------------------
Thomas F. Madison (64) Trustee/Director of Equity Funds IV and each of the other 32 investment
companies in the Delaware Investments family
200 South Fifth Street, Suite 2100, Minneapolis, Minnesota 55402
President and Chief Executive Officer, MLM Partners, Inc.
From 1996 to 1999, Mr. Madison was Chairman of the Board of Communications
Holdings, Inc. From February to September 1994, Mr. Madison served as Vice
Chairman--Office of the CEO of The Minnesota Mutual Life Insurance Company and
from 1988 to 1993, he was President of U.S. WEST Communications-Markets.
------------------------------------------- -------------------------------------------------------------------------------
</TABLE>
64
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------- -------------------------------------------------------------------------------
Trustee/Officer Business Experience
<S> <C>
------------------------------------------- -------------------------------------------------------------------------------
Charles E. Peck (74) Trustee/Director of Equity Funds IV and each of the other 32 investment
companies in the Delaware Investments family
P.O. Box 1102, Columbia, MD 21044
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive Officer of The
Ryland Group, Inc., Columbia, MD.
------------------------------------------- -------------------------------------------------------------------------------
Janet L. Yeomans (52) Trustee/Director of Equity Funds IV and each of the other 32 investment
companies in the Delaware Investments family.
Building 220-13W-37, St. Paul, MN 55144
Vice President and Treasurer, 3M Corporation.
From 1987-1994, Ms. Yeomans was Director of Benefit Funds and Financial
Markets for the 3M Corporation; Manager of Benefit Fund Investments for the 3M
Corporation, 1985-1987; Manager of Pension Funds for the 3M Corporation,
1983-1985; Consultant--Investment Technology Group of Chase Econometrics,
1982-1983; Consultant for Data Resources, 1980-1982; Programmer for the
Federal Reserve Bank of Chicago, 1970-1974.
------------------------------------------- -------------------------------------------------------------------------------
William E. Dodge (51) Executive Vice President and Chief Investment Officer, Equity of Equity Funds
IV and each of the other 32 investment companies in the Delaware Investments
family and Delaware Management Company (a series of Delaware Management
Business Trust)
Executive Vice President of Delaware Management Business Trust and Delaware
Capital Management, Inc.
President and Chief Investment Officer, Equity of Delaware Investment Advisers
(a series of Delaware Management Business Trust)
Executive Vice President, Equity and Director of Vantage Global Advisors, Inc.
Prior to joining Delaware Investments in 1999, Mr. Dodge was President,
Director of Marketing, and Senior Portfolio Manager for Marvin & Palmer
Associates.
------------------------------------------- -------------------------------------------------------------------------------
Jude T. Driscoll (37) Executive Vice President/Head of Fixed-Income of Equity Funds IV and each of
the other 32 investment companies in the Delaware Investments family,
Delaware Management Company (a series of Delaware Management Business Trust)
and Delaware Investment Advisers (a series of Delaware Management Business
Trust)
Executive Vice President of Delaware Management Business Trust and Delaware
Capital Management, Inc.
Before joining Delaware Investments in 2000, Mr. Driscoll was Senior Vice
President, Director of Fixed Income Process at Conseco Capital Management
from June 1998 to August 2000. Prior to that, he was Managing Director for
NationsBanc Capital Markets from 1996 to 1998, Vice President of Goldman
Sachs from 1991-1995 and Assistant Vice President of Conseco Capital
Management from 1989 to 1990.
------------------------------------------- -------------------------------------------------------------------------------
</TABLE>
65
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------- -------------------------------------------------------------------------------
Officer Business Experience
------------------------------------------- -------------------------------------------------------------------------------
<S> <C>
Richard J. Flannery (43) Executive Vice President/General Counsel of Equity Funds IV and each of the
other 32 investment companies in the Delaware Investments family, Delaware
Management Holdings, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust), Delaware Distributors, L.P. and Founders CBO
Corporation
Executive Vice President/General Counsel and Director of Delaware
International Holdings Ltd., Founders Holdings, Inc., Delvoy, Inc., DMH Corp.,
Delaware Management Company, Inc., Delaware Service Company, Inc., Delaware
Capital Management, Inc., Retirement Financial Services, Inc., Delaware
Distributors, Inc., Delaware General Management, Inc. and Delaware Management
Business Trust Company
Executive Vice President/General Counsel and Trustee of Delaware Management
Business Trust
Director of Delaware International Advisers Ltd.
Director of HYPPCO Finance Company Ltd.
Executive Vice President/General Counsel and Director of Vantage Global
Advisors, Inc.
During the past five years, Mr. Flannery has served in various executive
capacities at different times within Delaware Investments.
------------------------------------------- -------------------------------------------------------------------------------
Richelle S. Maestro (43) Senior Vice President/Deputy General Counsel and Secretary of Equity Funds IV
and each of the other 32 investment companies in the Delaware Investments
family, Delaware Management Company (a series of Delaware Management Business
Trust), Delaware Management Holdings, Inc., DMH Corp., Delvoy, Inc., Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Investment Advisers (a series of Delaware Management Business Trust),
Delaware Service Company, Inc., Delaware Capital Management, Inc., Retirement
Financial Services, Inc., Delaware Distributors, Inc., Delaware Distributors,
L.P., Delaware Management Trust Company, Delaware General Management, Inc.,
Delaware International Holdings Ltd., Founders Holdings, Inc.
Secretary of Founders CBO Corporation
During the past five years, Ms. Maestro has served in various executive
capacities at different times within Delaware Investments.
------------------------------------------- -------------------------------------------------------------------------------
</TABLE>
66
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------- -------------------------------------------------------------------------------
Officer Business Experience
------------------------------------------- -------------------------------------------------------------------------------
<S> <C>
Joseph H. Hastings (50) Senior Vice President/Corporate Controller of Equity Funds IV and each of the
other 32 investment companies in the Delaware Investments family and Delaware
Investment Advisers (a series of Delaware Management Business Trust)
Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Holdings, Inc., DMH Corp., Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware Management Business Trust),
Delaware Distributors, L.P., Delaware Distributors, Inc., Delaware Service
Company, Inc., Delaware Capital Management, Inc., Delaware International
Holdings Ltd., Delvoy, Inc., Founders Holdings, Inc., Delaware General
Management, Inc. and Delaware Management Business Trust
Chief Financial Officer of Retirement Financial Services, Inc.
Executive Vice President, Chief Financial Officer and Treasurer of Delaware
Management Trust Company
Senior Vice President/Assistant Treasurer of Founders CBO Corporation
Senior Vice President/Corporate Controller of Vantage Global Advisors, Inc.
During the past five years, Mr. Hastings has served in various executive
capacities at different times within Delaware Investments.
------------------------------------------- -------------------------------------------------------------------------------
Michael P. Bishof (38) Senior Vice President and Treasurer of Equity Funds IV and each of the other
32 investment companies in the Delaware Investments family
Senior Vice President/Investment Accounting of Delaware Service Company,
Inc., Delaware Capital Management, Inc., Delaware Distributors, L.P.,
Delaware Management Company (a series of Delaware Management Business Trust)
and Founders Holdings, Inc.
Senior Vice President/Investment Accounting and Treasurer of Delaware
Investment Advisers (a series of Delaware Management Business Trust)
Senior Vice President/Manager of Investment Accounting of Delaware
International Holdings Ltd.
Senior Vice President and Assistant Treasurer of Founders CBO Corporation
Senior Vice President/Investment Accounting of Vantage Global Advisors, Inc.
Before joining Delaware Investments in 1995, Mr. Bishof was a Vice President
for Bankers Trust, New York, NY from 1994 to 1995, a Vice President for CS
First Boston Investment Management, New York, NY from 1993 to 1994 and an
Assistant Vice President for Equitable Capital Management Corporation, New
York, NY from 1987 to 1993.
------------------------------------------- -------------------------------------------------------------------------------
Gerald S. Frey (54) Vice President/Senior Portfolio Manager of Equity Funds IV and each of the
other 32 investment companies in the Delaware Investments family, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and
Delaware Capital Management, Inc.
Before joining Delaware Investments in 1996, Mr. Frey was a Senior Trustee
with Morgan Grenfell Capital Management, New York, NY from 1986 to 1995.
------------------------------------------- -------------------------------------------------------------------------------
</TABLE>
67
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------- -------------------------------------------------------------------------------
Officer Business Experience
------------------------------------------- -------------------------------------------------------------------------------
<S> <C>
J. Paul Dokas (41) Vice President/Senior Portfolio Manager of Equity Funds IV and each of the
other 32 investment companies in the Delaware Investments family, Delaware
Management Company (a series of Delaware Management Business Trust) and
Delaware Investment Advisers (a series of Delaware Management Business Trust)
Managing Director of Vantage Global Advisors, Inc.
Before joining Delaware Investments in 1997, Mr. Dokas was a Director of Trust
Investments for Bell Atlantic Corporation in Philadelphia.
------------------------------------------- -------------------------------------------------------------------------------
Marshall T. Bassett (46) Vice President/Portfolio Manager of Equity Funds IV and each of the other 32
investment companies in the Delaware Investments family, Delaware Management
Company (a series of Delaware Management Business Trust) and Delaware
Investment Advisers (a series of series of Delaware Management Business Trust)
Prior to joining Delaware Investments in 1997, Mr. Basset served as Vice
President in Morgan Stanley Asset Management's Emerging Growth Group, where
he analyzed small growth companies. Prior to that, he was a trust officer at
Sovran Bank and Trust Company.
------------------------------------------- -------------------------------------------------------------------------------
John A. Heffern (39) Vice President/Portfolio Manager of Equity Funds IV and each of the other 32
investment companies in the Delaware Investments family, Delaware Management
Company (a series of Delaware Management Business Trust) and Delaware
Investment Advisers (a series of series of Delaware Management Business Trust)
Prior to joining Delaware Investments in 1997, Mr. Heffern was a Senior Vice
President, Equity Research at NatWest Securities Corporation's Specialty
Finance Services unit. Prior to that, he was a Principal and Senior Regional
Bank Analyst at Alex. Brown & Sons.
------------------------------------------- -------------------------------------------------------------------------------
Jeffrey W. Hynoski (38) Vice President/Portfolio Manager of Equity Funds IV and each of the other 32
investment companies in the Delaware Investments family, Delaware Management
Company (a series of Delaware Management Business Trust) and Delaware
Investment Advisers (a series of series of Delaware Management Business Trust)
Prior to joining Delaware Investments in 1998, Mr. Hynoski served as a Vice
President at Bessemer Trust Company in the mid and large capitalization
growth group, where he specialized in the areas of science, technology, and
telecommunications. Prior to that, Mr. Hynoski held positions at Lord Abbett
& Co. and Cowen Asset Management.
------------------------------------------- -------------------------------------------------------------------------------
Lori P. Wachs (32) Vice President/Portfolio Manager of Equity Funds IV and the other 32
investment companies in the Delaware Investments family, Delaware Management
Company (a series of Delaware Management Business Trust) and Delaware
Investment Advisers (a series of series of Delaware Management Business Trust)
During the past five years, Ms. Wachs has served in various capacities at
different times within the Delaware organization.
------------------------------------------- -------------------------------------------------------------------------------
Steven T. Lampe (32) Vice President/Portfolio Manager of Equity Funds IV and each of the other 32
investment companies in the Delaware Investments family, Delaware Management
Company (a series of Delaware Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business Trust) and Delaware
Capital Management, Inc.
Prior to joining Delaware Investments in 1995, Mr. Lampe served as a manager
at Price Waterhouse.
------------------------------------------- -------------------------------------------------------------------------------
</TABLE>
68
<PAGE>
The following is a compensation table listing for each trustee entitled
to receive compensation, the aggregate compensation received from Equity Funds
IV and the total compensation received from all investment companies in the
Delaware Investments family for which he or she serves as a trustee or director
for the fiscal year ended September 30, 2000 and an estimate of annual benefits
to be received upon retirement under the Delaware Investments Retirement Plan
for Trustees/Directors as of September 30, 2000. Only the independent trustees
of Equity Funds IV receive compensation from the Fund.
<TABLE>
<CAPTION>
------------------------- ------------------------ ------------------------ ------------------------ -------------------------
Name Aggregate Compensation Pension or Retirement Estimated Annual Total Compensation from
Benefits Accrued the Investment
from as Part of Benefits Upon Companies in Delaware
Equity Funds IV Fund Expenses Retirement(1) Investments(2)
------------------------- ------------------------ ------------------------ ------------------------ -------------------------
<S> <C> <C> <C> <C>
Walter P. Babich [$000] none $50,000 [$000]
------------------------- ------------------------ ------------------------ ------------------------ -------------------------
John H. Durham [$000] none $50,000 [$000]
------------------------- ------------------------ ------------------------ ------------------------ -------------------------
Anthony D. Knerr [$000] none $50,000 [$000]
------------------------- ------------------------ ------------------------ ------------------------ -------------------------
Ann R Leven [$000] none $50,000 [$000]
------------------------- ------------------------ ------------------------ ------------------------ -------------------------
Thomas F. Madison [$000] none $50,000 [$000]
------------------------- ------------------------ ------------------------ ------------------------ -------------------------
Charles E. Peck [$000] none $50,000 [$000]
------------------------- ------------------------ ------------------------ ------------------------ -------------------------
Janet L. Yeomans [$000] none $50,000 [$000]
------------------------- ------------------------ ------------------------ ------------------------ -------------------------
</TABLE>
(1) Under the terms of the Delaware Group Retirement Plan for
Trustees/Directors, each disinterested trustee/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 investment company in the Delaware Investments family
for which he or she serves as a trustee or director for a period equal to
the lesser of the number of years that such person served as a trustee or
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 trustees/directors of each investment company at
the time of such person's retirement. If an eligible trustee/director
retired as of September 30, 2000, he or she would be entitled to annual
payments totaling the amount noted above, in the aggregate, from all of the
investment companies in the Delaware Investments family for which he or she
served as trustee or director, based on the number of investment companies
in the Delaware Investments family as of that date.
(2) Each independent trustee/director receives a total annual retainer fee of
$50,000 for serving as a trustee/director for all 33 investment companies
in Delaware Investments, plus $3,145 for each Board Meeting attended.
Members of the audit committee receive additional compensation of $5,000
plus $1,000 for each meeting in excess of five in any calendar year from
all investment companies, in the aggregate, with the exception of the
chairperson, who receives $8,000 plus $1,000 for each meeting in excess of
five in any calendar year. Members of the nominating committee receive
additional compensation of $1,000 from all investment companies, in the
aggregate, for each committee meeting. In addition, the chairperson of the
nominating committee receives an annual retainer of $500. The Coordinating
Trustee/Director of the Delaware Investments funds receives an additional
retainer of $8,000 from all investment companies.
GENERAL INFORMATION
Equity Funds IV, which was organized as a Maryland corporation in 1985
and subsequently as a Delaware business trust on December 17, 1999, is an
open-end management investment company. Each Fund's portfolio of assets is
diversified as defined by the 1940 Act.
The Manager is the investment manager of each Fund. The Manager and its
affiliate, Delaware International Advisers Ltd., also provide investment
management services to certain of the other funds available from the Delaware
Investments family. An affiliate of the Manager manages private investment
accounts. While investment decisions of a Fund are made independently from those
of the other funds and accounts, investment decisions for such other funds and
accounts may be made at the same time as investment decisions for a Fund.
Delaware or Delaware International Advisers Ltd. also manages the
investment options for Delaware-Lincoln ChoicePlus and Delaware Medallion (SM)
III Variable Annuities. ChoicePlus is issued and distributed by Lincoln National
Life Insurance Company. ChoicePlus offers a variety of different investment
styles managed by leading money managers. Medallion is issued by Allmerica
Financial Life Insurance and Annuity Company (First Allmerica Financial Life
Insurance Company in New York and Hawaii). Delaware Medallion offers various
investment series ranging from domestic equity funds, international equity and
bond funds and domestic fixed income funds. Each investment series available
through ChoicePlus and Medallion utilizes an investment strategy
69
<PAGE>
and discipline the same as or similar to one of the Delaware Investments mutual
funds available outside the annuity, although actual performance will differ due
to such factors as different expense levels, asset size and its timing of
purchases and redemptions. See Delaware Group Premium Fund in Appendix A.
The Delaware Investments Family of Funds, the Manager and the
Distributor, in compliance with SEC Rule 17j-1 under the 1940 Act, have adopted
Codes of Ethics which govern personal securities transactions. Under the Codes
of Ethics, persons subject to the Codes are permitted to engage in personal
securities transactions, including securities that may be purchased or held by
the Portfolios, subject to the requirements set forth in Rule 17j-1 and certain
other procedures set forth in the applicable Code of Ethics. The Codes of Ethics
for the Delaware Investments Family of Funds, the Manager and the Distributor
are on public file with, and are available from, the SEC.
The Distributor acts as national distributor for the Fund and for the
other mutual funds in the Delaware Investments family. The Distributor ("DDLP")
received net commissions from the Fund on behalf of the Class A Shares, after
reallowances to dealers, as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Delaware Growth Opportunities Fund
------------------------------------------------------------------------------------------
Total
Amounts Amount of Net
Reallowed Underwriting Commission
Fiscal Year Ended to Dealers Commission to Distributor
------------------------------ ----------------- -------------------- --------------------
<S> <C> <C> <C>
September 30, 2000 [$000] [$000] [$000]
------------------------------ ----------------- -------------------- --------------------
September 30, 1999 529,323 455,643 73,680
------------------------------ ----------------- -------------------- --------------------
September 30, 1998 581,650 477,907 103,743
------------------------------ ----------------- -------------------- --------------------
-----------------------------------------------------------------------------------------
Delaware Diversified Growth Fund
-----------------------------------------------------------------------------------------
Total
Amounts Amount of Net
Reallowed Underwriting Commission
Fiscal Year Ended to Dealers Commission to Distributor
------------------------------ ------------------ -------------------- ------------------
September 30, 2000 [$000] [$000] [$000]
------------------------------ ------------------ -------------------- ------------------
September 30, 1999 --- --- ---
------------------------------ ------------------ -------------------- ------------------
September 30, 1998 --- --- ---
------------------------------ ------------------ -------------------- ------------------
</TABLE>
70
<PAGE>
The Distributor received contingent deferred sales charge payments with
respect to Delaware Growth Opportunities Fund and Delaware Diversified Growth
Fund A Class as follows:
<TABLE>
<CAPTION>
--------------------------- ----------------------------------------------------------------------------------
Contingent Deferred Sales Charge Payments
--------------------------- ------------------ -------------------- ------------------- ----------------------
Delaware Growth Delaware Delaware Growth Delaware Growth
Opportunities Diversified Growth Opportunities Opportunities
Fiscal Year Ended Fund A Class Fund A Class* Fund B Class Fund C Class
--------------------------- ------------------ -------------------- ------------------- ----------------------
<S> <C> <C> <C> <C>
September 30, 2000 $635 --- $88,409 $3,140
--------------------------- ------------------ -------------------- ------------------- ----------------------
September 30, 1999 --- --- 74,429 819
--------------------------- ------------------ -------------------- ------------------- ----------------------
September 30, 1998 --- --- 70,190 679
--------------------------- ------------------ -------------------- ------------------- ----------------------
</TABLE>
* Commenced operations on December 2, 1997.
The Transfer Agent, an affiliate of the Manager, acts as shareholder
servicing, dividend disbursing and transfer agent for the Fund and for the other
mutual funds in the Delaware Investments family. The Transfer Agent is paid a
fee by the Fund for providing these services consisting of an annual per account
charge of $5.50 plus transaction charges for particular services according to a
schedule. Compensation is fixed each year and approved by the Board of Trustees,
including a majority of the disinterested trustees. The Transfer Agent also
provides accounting services to the Fund. Those services include performing all
functions related to calculating the Fund's net asset value and providing all
financial reporting services, regulatory compliance testing and other related
accounting services. For its services, the Transfer Agent is paid a fee based on
total assets of all funds in the Delaware Investments family for which it
provides such accounting services. Such fee is equal to 0.25% multiplied by the
total amount of assets in the complex for which the Transfer Agent furnishes
accounting services, where such aggregate complex assets are $10 billion or
less, and 0.20% of assets if such aggregate complex assets exceed $10 billion.
The fees are charged to the Fund, including the Fund, on an aggregate pro-rata
basis. The asset-based fee payable to the Transfer Agent is subject to a minimum
fee calculated by determining the total number of investment portfolios and
associated classes.
The Manager and its affiliates own the name "Delaware Group." Under
certain circumstances, including the termination of Equity Funds IV's advisory
relationship with the Manager or its distribution relationship with the
Distributor, the Manager and its affiliates could cause Equity Funds IV to
delete the words "Delaware Group" from Equity Funds IV's name.
Chase Manhattan Bank ("Chase"), 4 Chase Metrotech Center, Brooklyn, NY
11245, is custodian of the Fund's securities and cash. As custodian for the
Fund, Chase maintains a separate account or accounts for the Fund; receives,
holds and releases portfolio securities on account of the Fund; receives and
disburses money on behalf of the Fund; and collects and receives income and
other payments and distributions on account of the Fund's portfolio securities.
Capitalization
Equity Funds IV has a present unlimited authorized number of shares of
beneficial interest with no par value allocated to each Class. Each Class
represents a proportionate interest in the assets of the Fund, and each has the
same voting and other rights and preferences as the other classes of the Fund,
except that shares of the Institutional Class may not vote on any matter that
affects the Fund Classes' Distribution Plans under Rule 12b-1. Similarly, as a
general matter, shareholders of Class A Shares, Class B Shares and Class C
Shares may vote only on matters affecting the 12b-1 Plan that relates to the
class of shares that they hold. However, Class B Shares may vote on any proposal
to increase materially the fees to be paid by the Fund under the Rule 12b-1 Plan
relating to Class A Shares. General expenses of the Fund will be allocated on a
pro-rata basis to the classes according to asset size, except that expenses of
the Plans of Class A Shares, Class B Shares and Class C Shares will be allocated
solely to those classes.
All shares have no preemptive rights, are fully transferable and, when
issued, are fully paid and nonassessable and, except as described above, have
equal voting rights.
71
<PAGE>
Beginning November 9, 1992, Delaware Growth Opportunities Fund began
offering Institutional Class shares; beginning September 6, 1994, the Fund began
offering the Class B Shares; and beginning November 29, 1995, the Fund began
offering Class C Shares.
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.
Effective May 11, 1999, the name of Capital Appreciation Fund changed
to Delaware Diversified Growth Fund and effective August 16, 1999, the name of
DelCap Fund changed to Delaware DelCap Fund. Corresponding changes were also
made to the class names.
Effective December 17, 1999, Delaware Group Equity Funds IV, Inc.
changed its name to Delaware Group Equity Funds IV.
Noncumulative Voting
Equity Funds IV shares have noncumulative voting rights which means
that the holders of more than 50% of the shares of Equity Funds IV voting for
the election of trustees can elect all the trustees if they choose to do so,
and, in such event, the holders of the remaining shares will not be able to
elect any trustees.
This Part B does not include all of the information contained in the
Registration Statement which is on file with the SEC.
FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditors for Delaware Group
Equity Funds IV and, in its capacity as such, audits the financial statements
contained in the Funds' Annual Reports. Each Fund's Statement of Net Assets,
Statement of Operations, Statement of Changes in Net Assets, Financial
Highlights and Notes to Financial Statements, as well as the report of Ernst &
Young LLP, independent auditors, for the fiscal year ended September 30, 2000
are included in its Annual Report to shareholders. The financial statements, the
notes relating thereto, the financial highlights and the reports of Ernst &
Young LLP listed above are incorporated by reference from the Annual Reports
into this Part B.
72
<PAGE>
APPENDIX A--INVESTMENT OBJECTIVES OF THE FUNDS IN THE DELAWARE INVESTMENTS
FAMILY
Following is a summary of the investment objectives of the funds in the
Delaware Investments family:
Delaware Balanced Fund seeks long-term growth by a balance of capital
appreciation, income and preservation of capital. As a balanced fund, the fund
invests at least 25% of its assets in fixed-income securities and the remaining
in equity securities. Delaware 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.
Delaware Trend Fund seeks capital appreciation by investing in common
stocks issued by emerging growth companies exhibiting strong capital
appreciation potential. Delaware Technology and Innovation Fund seeks to provide
long-term capital growth by investing primarily in stocks the investment adviser
believes will benefit from technological advances and improvements.
Delaware Small Cap Value Fund seeks capital appreciation by investing
primarily in common stocks whose market values appear low relative to their
underlying value or future potential.
Delaware Growth Opportunities Fund seeks long-term capital growth by
investing in common stocks and securities convertible into common stocks of
companies that have a demonstrated history of growth and have the potential to
support continued growth.
Delaware Decatur Equity 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. Delaware Growth
and Income Fund seeks long-term growth by investing primarily in securities that
provide the potential for income and capital appreciation without undue risk to
principal. Delaware Blue Chip Fund seeks to achieve long-term capital
appreciation. Current income is a secondary objective. It seeks to achieve these
objectives by investing primarily in equity securities and any securities that
are convertible into equity securities. Delaware Social Awareness Fund seeks to
achieve long-term capital appreciation. It seeks to achieve this objective by
investing primarily in equity securities of medium- to large-sized companies
expected to grow over time that meet the Fund's "Social Criteria" strategy.
Delaware 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. Delaware 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. Delaware High-Yield Opportunities Fund seeks to provide
investors with total return and, as a secondary objective, high current income.
Delaware Corporate Bond Fund seeks to provide investors with total return by
investing primarily in corporate bonds. Delaware Extended Duration Bond Fund
seeks to provide investors with total return by investing primarily in corporate
bonds
Delaware American Government Bond 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.
Delaware 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.
73
<PAGE>
Delaware Cash Reserve Fund seeks the highest level of income consistent
with the preservation of capital and liquidity through investments in short-term
money market instruments, while maintaining a stable net asset value.
REIT Fund seeks to achieve maximum long-term total return with capital
appreciation as a secondary objective. It seeks to achieve its objectives by
investing in securities of companies primarily engaged in the real estate
industry.
Delaware 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.
Delaware Tax-Free USA Fund seeks high current income exempt from
federal income tax by investing in municipal bonds of geographically-diverse
issuers. Delaware 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. Delaware 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.
Delaware 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.
Delaware Tax-Free New Jersey Fund seeks a high level of current interest income
exempt from federal income tax and New Jersey state and local taxes, consistent
with preservation of capital.
Foundation Funds are "fund of funds" which invest in other funds in the
Delaware Investments family (referred to as "Underlying Funds"). Foundation
Funds Delaware Income Portfolio seeks a combination of current income and
preservation of capital with capital appreciation by investing primarily in a
mix of fixed income and domestic equity securities, including fixed income and
domestic equity Underlying Funds. Foundation Funds Delaware Balanced Portfolio
seeks capital appreciation with current income as a secondary objective by
investing primarily in domestic equity and fixed income securities, including
domestic equity and fixed income Underlying Funds. Foundation Funds Delaware
Growth Portfolio seeks long-term capital growth by investing primarily in equity
securities, including equity Underlying Funds, and, to a lesser extent, in fixed
income securities, including fixed-income Underlying Funds.
Delaware 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.
Delaware 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.
Delaware Global Equity Fund seeks to achieve long-term total return by investing
in global securities that provide the potential for capital appreciation and
income. Delaware Emerging Markets Fund seeks long-term capital appreciation by
investing primarily in equity securities of issuers located or operating in
emerging countries.
Delaware 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. Delaware Overseas Equity Fund seeks to maximize total return (capital
appreciation and income), principally through investments in an internationally
diversified portfolio of equity securities. Delaware New Pacific Fund seeks
long-term capital appreciation by investing primarily in companies which are
domiciled in or have their principal business activities in the Pacific Basin.
Delaware Group Premium Fund offers various funds available exclusively
as funding vehicles for certain insurance company separate accounts. Balanced
Series seeks a balance of capital appreciation, income and preservation of
capital. As a "balanced" fund, the Series invests at least 25% of its assets in
fixed-income
74
<PAGE>
securities and the remainder primarily in equity securities. Capital Reserves
Series seeks a high stable level of current income while minimizing fluctuations
in principal by investing in a diversified portfolio of short- and
intermediate-term securities. Cash Reserve Series is a money market fund which
seeks the highest level of income consistent with preservation of capital and
liquidity through investments in short-term money market instruments.
Convertible Securities Series--seeks a high level of total return on its assets
through a combination of capital appreciation and current income. The Series
intends to pursue its investment objective by investing primarily in convertible
securities. Devon Series seeks current income and capital appreciation. The
Series will seek to achieve its objective by investing primarily in
income-producing common stocks, with a focus on common stocks that the
investment manager believes have the potential for above-average dividend
increases over time. Emerging Markets Series seeks to achieve long-term capital
appreciation. The Series seeks to achieve its objective by investing primarily
in equity securities of issuers located or operating in emerging countries.
Global Bond Series seeks current income consistent with preservation of
principal by investing primarily in fixed-income securities that may also
provide the potential for capital appreciation. The Series will invest in
fixed-income securities of issuers from at least three different countries, one
of which may be the United States. Growth and 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. Growth
Opportunities Series seeks long-term capital appreciation by investing its
assets in a diversified portfolio of securities exhibiting the potential for
significant growth. High Yield Series seeks total return and, as a secondary
objective, high current income. It seeks to achieve its objective by investing
primarily in high-yield corporate bonds. International Equity Series seeks
long-term growth without undue risk to principal by investing primarily in
equity securities of foreign issuers providing the potential for capital
appreciation and income. REIT Series seeks to achieve maximum long-term total
return. Capital appreciation is a secondary objective. It seeks to achieve its
objectives by investing in securities of companies primarily engaged in the real
estate industry. Select Growth Series seeks long-term capital appreciation. The
Series attempts to achieve its investment objective by investing primarily in
equity securities of companies of all sizes which the manager believes have the
potential for high earnings growth. Small Cap Value Series seeks capital
appreciation by investing primarily in small cap common stocks whose market
value appears low relative to their underlying value or future earnings and
growth potential. Social Awareness Series seeks to achieve long-term capital
appreciation. The Series seeks to achieve its objective by investing primarily
in equity securities of medium- to large-sized companies expected to grow over
time that meet the Series' "Social Criteria" strategy. Strategic Income Series
seeks high current income and total return. The Series seeks to achieve its
objective by using a multi-sector investment approach, investing primarily in
three sectors of the fixed-income securities markets: high-yield, higher risk
securities; investment grade fixed-income securities; and foreign government and
other foreign fixed-income securities. Technology and Innovation Series seeks to
provide long-term capital growth. The Series invest primarily in stocks that the
manager believes will benefit from technological advances and improvements.
Trend Series seeks long-term capital appreciation by investing primarily in
small cap common stocks and convertible securities of emerging and other
growth-oriented companies. U.S. Growth Series seeks to maximize capital
appreciation. The Series seeks to achieve its objective by investing primarily
in stocks of companies of all sizes. We look for stocks with low dividend
yields, strong balance sheets and high expected earnings growth rates as
compared to other companies in the same industry.
Delaware U.S. Government Securities Fund seeks to provide a high level
of current income consistent with the prudent investment risk by investing in
U.S. Treasury bills, notes, bonds, and other obligations issued or
unconditionally guaranteed by the full faith and credit of the U.S. Treasury,
and repurchase agreements fully secured by such obligations.
Delaware Tax-Free Arizona Insured Fund seeks to provide a high level of
current income exempt from federal income tax and the Arizona personal income
tax, consistent with the preservation of capital. Delaware Minnesota Insured
Fund seeks to provide a high level of current income exempt from federal income
tax and the Minnesota personal income tax, consistent with the preservation of
capital.
75
<PAGE>
Delaware Tax-Free Minnesota Intermediate Fund seeks to provide a high
level of current income exempt from federal income tax and the Minnesota
personal income tax, consistent with preservation of capital. The Fund seeks to
reduce market risk by maintaining an average weighted maturity from five to ten
years.
Delaware Tax-Free California Insured Fund seeks to provide a high level
of current income exempt from federal income tax and the California personal
income tax, consistent with the preservation of capital. Delaware Tax-Free
Florida Insured Fund seeks to provide a high level of current income exempt from
federal income tax, consistent with the preservation of capital. The Fund will
seek to select investments that will enable its shares to be exempt from the
Florida intangible personal property tax. Delaware Tax-Free Florida Fund seeks
to provide a high level of current income exempt from federal income tax,
consistent with the preservation of capital. The Fund will seek to select
investments that will enable its shares to be exempt from the Florida intangible
personal property tax. Delaware Tax-Free Kansas Fund seeks to provide a high
level of current income exempt from federal income tax, the Kansas personal
income tax and the Kansas intangible personal property tax, consistent with the
preservation of capital. Delaware Tax-Free Missouri Insured Fund seeks to
provide a high level of current income exempt from federal income tax and the
Missouri personal income tax, consistent with the preservation of capital.
Delaware Tax-Free New Mexico Fund seeks to provide a high level of current
income exempt from federal income tax and the New Mexico personal income tax,
consistent with the preservation of capital. Delaware Tax-Free Oregon Insured
Fund seeks to provide a high level of current income exempt from federal income
tax and the Oregon personal income tax, consistent with the preservation of
capital.
Delaware Tax-Free Arizona Fund seeks to provide a high level of current
income exempt from federal income tax and the Arizona personal income tax,
consistent with the preservation of capital. Delaware Tax-Free California Fund
seeks to provide a high level of current income exempt from federal income tax
and the California personal income tax, consistent with the preservation of
capital. Delaware Tax-Free Iowa Fund seeks to provide a high level of current
income exempt from federal income tax and the Iowa personal income tax,
consistent with the preservation of capital. Delaware Tax-Free Idaho Fund seeks
to provide a high level of current income exempt from federal income tax and the
Idaho personal income tax, consistent with the preservation of capital. Delaware
Minnesota High-Yield Municipal Bond Fund seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal income
tax primarily through investment in medium and lower grade municipal
obligations. Delaware National High-Yield Municipal Fund seeks to provide a high
level of income exempt from federal income tax, primarily through investment in
medium and lower grade municipal obligations. Delaware Tax-Free New York Fund
seeks to provide a high level of current income exempt from federal income tax
and the personal income tax of the state of New York and the city of New York,
consistent with the preservation of capital. Delaware Tax-Free Wisconsin Fund
seeks to provide a high level of current income exempt from federal income tax
and the Wisconsin personal income tax, consistent with the preservation of
capital. Delaware Montana Municipal Bond Fund seeks as high a level of current
income exempt from federal income tax and from the Montana personal income tax,
as is consistent with preservation of capital.
Delaware Tax-Free Colorado Fund seeks to provide a high level of
current income exempt from federal income tax and the Colorado personal income
tax, consistent with the preservation of capital.
Delaware Select Growth Fund seeks long-term capital appreciation, which
the Fund attempts to achieve by investing primarily in equity securities
believed to have the potential for high earnings growth. Although the Fund, in
seeking its objective, may receive current income from dividends and interest,
income is only an incidental consideration in the selection of the Fund's
investments. Delaware Growth Stock Fund has an objective of long-term capital
appreciation. The Fund seeks to achieve its objective from equity securities
diversified among individual companies and industries. Delaware Tax-Efficient
Equity Fund seeks to obtain for taxable investors a high total return on an
after-tax basis. The Fund will attempt to achieve this objective
76
<PAGE>
by seeking to provide a high long-term after-tax total return through managing
its portfolio in a manner that will defer the realization of accrued capital
gains and minimize dividend income.
Delaware Tax-Free Minnesota Fund seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal income
tax, consistent with the preservation of capital. Delaware Tax-Free North Dakota
Fund seeks to provide a high level of current income exempt from federal income
tax and the North Dakota personal income tax, consistent with the preservation
of capital.
Each of the summaries above is qualified in its entirety by the
information contained in the Funds' prospectus(es). For more complete
information about any of the funds in the Delaware Investments family, including
charges and expenses, you can obtain a prospectus from the Distributor. Read it
carefully before you invest or forward funds.
77
<PAGE>
PART C
Other Information
Item 23. Exhibits
(a) Agreement and Declaration of Trust.
(1) Agreement and Declaration of Trust
(December 17, 1998) incorporated into
this filing by reference to
Post-Effective Amendment No. 25 filed
October 18, 1999.
(2) Certificate of Trust (December 17,
1998) incorporated into this filing by
reference to Post-Effective Amendment
No. 25 filed October 18, 1999.
(b) By-Laws. By-Laws (December 17, 1998)
incorporated into this filing by reference to
Post-Effective Amendment No. 25 filed October
18, 1999.
(c) Copies of All Instruments Defining the Rights
of Holders.
(1) Agreement and Declaration of Trust.
Articles III, IV, V and VI of
Agreement and Declaration of Trust
incorporated into this filing by
reference to Post-Effective Amendment
No. 25 filed October 18, 1999.
(2) By-Laws. Article II of By-Laws
incorporated into this filing by
reference to Post-Effective Amendment
No. 25 filed October 18, 1999.
(d) Investment Management Agreement.
(1) Executed Investment Management
Agreement (December 17, 1999) between
Delaware Management Company and the
Registrant attached as Exhibit.
(e) (1) Distribution Agreement.
(i) Executed Distribution
Agreement (April 3, 1995)
between Delaware Distributors,
L.P. and the Registrant on
behalf of Delaware Growth
Opportunities Fund (formerly
DelCap Fund) incorporated into
this filing by reference to
Post-Effective Amendment No.
21 filed November 27, 1996.
(ii) Executed Amendment No. 1 to
Distribution Agreement
(November 29, 1995) between
Delaware Distributors, L.P.
and the Registrant on behalf
of Delaware Growth
Opportunities Fund (formerly
DelCap Fund) incorporated into
this filing by reference to
Post-Effective Amendment No.
21 filed November 27, 1996.
(iii) Executed Distribution
Agreement (November 29, 1996)
between Delaware Distributors,
L.P. and the Registrant on
behalf of Delaware Diversified
Growth Fund (formerly Capital
Appreciation Fund)
incorporated into this filing
by reference to Post-Effective
Amendment No. 22 filed April
30, 1997.
<PAGE>
(iv) Executed Adoption Agreement
(December 17, 1999) relating
to Distribution Agreements
between the Registrant and
Delaware Distributors, L.P.
attached as Exhibit.
(2) 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.
(3) Dealer's Agreement. Attached as
Exhibit.
(4) 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.
(f) Inapplicable.
(g) Custodian Agreement.
(1) Executed Custodian Agreement (May 1,
1996) (Module) between The Chase
Manhattan Bank and the Registrant
incorporated into this filing by
reference to Post-Effective Amendment
No. 21 filed November 27, 1996.
(i) Executed Letter to add
Delaware Diversified Growth
Fund (formerly Capital
Appreciation Fund) to
Custodian Agreement (November
29, 1996) between The Chase
Manhattan Bank and the
Registrant incorporated into
this filing by reference to
Post-Effective Amendment No.
22 filed April 30, 1997.
(ii) Executed Amendment to
Custodian Agreement (November
20, 1997) between the Chase
Manhattan Bank and the
Registrant on behalf of each
Fund incorporated into this
filing by reference to
Post-Effective Amendment No.
24 filed November 30, 1998.
(2) Executed Securities Lending Agreement
(December 22, 1998) with The Chase
Manhattan Bank attached as Exhibit.
(h) Other Material Contracts.
(1) Executed Amended and Restated
Shareholders Services Agreement
(November 29, 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. 22 filed April 30, 1997.
(2) Executed Adoption Agreement (December
17, 1999) relating to Shareholders
Services Agreement between the
Registrant and Delaware Service
Company, Inc. attached as Exhibit.
(3) Executed Schedule A (April 20, 2000)
to the Shareholders Services Agreement
between the Registrant and Delaware
Service Company, Inc. attached as
Exhibit.
(4) Executed Fund Accounting Agreement
(August 19, 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. 22 filed April 30, 1997.
<PAGE>
(i) Opinion of Counsel. Incorporated into this
filing by reference to Post-Effective Amendment
No. 25 filed October 18, 1999.
(j) Consent and Report of Auditors. To be filed by
Amendment.
(k) Inapplicable.
(l) Investment Letter of Initial Shareholder.
Incorporated into this filing by reference to
Pre-Effective Amendment No. 2 filed March 26,
1986.
(m) Plans under Rule 12b-1.
(1) Plan under Rule 12b-1 for Delaware
Growth Opportunities Fund (formerly
DelCap Fund) A Class (November 29,
1995) incorporated into this filing by
reference to Post-Effective Amendment
No. 21 filed November 27, 1996.
(2) Plan under Rule 12b-1 for Delaware
Growth Opportunities Fund (formerly
DelCap Fund) B Class (November 29,
1995) incorporated into this filing by
reference to Post-Effective Amendment
No. 21 filed November 27, 1996.
(3) Plan under Rule 12b-1 for Delaware
Growth Opportunities Fund (formerly
DelCap Fund) C Class (November 29,
1995) incorporated into this filing by
reference to Post-Effective Amendment
No. 21 filed November 27, 1996.
(4) Plan under Rule 12b-1 for Delaware
Diversified Growth Fund (formerly
Capital Appreciation Fund) A Class
(November 29, 1996) incorporated into
this filing by reference to
Post-Effective Amendment No. 22 filed
April 30, 1997.
(5) Plan under Rule 12b-1 for Delaware
Diversified Growth Fund (formerly
Capital Appreciation Fund) B Class
(November 29, 1996) incorporated into
this filing by reference to
Post-Effective Amendment No. 22 filed
April 30, 1996.
(6) Plan under Rule 12b-1 for Delaware
Diversified Growth Fund (formerly
Capital Appreciation Fund) C Class
(November 29, 1996) incorporated into
this filing by reference to
Post-Effective Amendment No. 22 filed
April 30, 1996.
(n) Plan under Rule 18f-3. Plan under Rule 18f-3
attached as Exhibit.
(o) Inapplicable.
(p) Codes of Ethics. Codes of Ethics for the
Registrant, Delaware Management Company, a
series of Delaware Management Business Trust,
and Delaware Distributors, L.P. attached as
Exhibit.
(q) Power of Attorney. Incorporated into this
filing by reference to Post-Effective Amendment
No. 25 filed October 18, 1999.
<PAGE>
Item 24. Persons Controlled by or under Common Control with Registrant.
None.
Item 25. Indemnification. Article VI of the By-Laws incorporated into
this filing by reference to Post-Effective Amendment No. 58 filed
June 25, 1999.
Item 26. Business and Other Connections of Investment Adviser.
Delaware Management Company, a series of Delaware Management Business Trust,
(the "Manager") serves as investment manager to the Registrant and also serves
as investment manager or sub-adviser to certain of the other funds in the
Delaware Investments family (Delaware Group Equity Funds I, Delaware Group
Equity Funds II, Delaware Group Equity Funds III, Delaware Group Equity Funds V,
Delaware Group Government Fund, Delaware Group Income Funds, Delaware Group
Limited-Term Government Funds, Delaware Group Cash Reserve, Delaware Group
Tax-Free Fund, Delaware Group State Tax-Free Income Trust, Delaware Group
Tax-Free Money Fund, Delaware Group Premium Fund, Delaware Group Global &
International Funds, Delaware Pooled Trust, Delaware Group Adviser Funds,
Delaware Group Dividend and Income Fund, Inc., Delaware Group Global Dividend
and Income Fund, Inc., Delaware Group Foundation Funds, Voyageur Intermediate
Tax-Free Funds, Voyageur Tax-Free Funds, Voyageur Funds, Voyageur Insured Funds,
Voyageur Investment Trust, Voyageur Mutual Funds, Voyageur Mutual Funds II,
Voyageur Mutual Funds III, Voyageur Arizona Municipal Income Fund, Inc.,
Voyageur Colorado Insured Municipal Income Fund, Inc., Voyageur Florida Insured
Municipal Income Fund, Voyageur Minnesota Municipal Fund, Inc., Voyageur
Minnesota Municipal Fund II, Inc. and Voyageur Minnesota Municipal Fund III,
Inc.) as well as to certain non-affiliated registered investment companies. In
addition, certain officers of the Manager also serve as trustees of the other
Delaware Investments funds, and certain officers are also officers of these
other funds. A company indirectly owned by the Manager's parent company acts as
principal underwriter to the mutual funds in the Delaware Investments family
(see Item 27 below) and another such company acts as the shareholder services,
dividend disbursing, accounting servicing and transfer agent for all of the
mutual funds in the Delaware Investments family.
The following persons serving as directors or officers of the Manager have
held the following positions during the past two years:
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
Charles E. Haldeman, Jr. (1) Chief Executive Officer of Delaware Management Company (a series of Delaware
Management Business Trust); President, Chief Executive Officer and Director of
Delaware Management Holdings, Inc.; Chief Executive Officer and Director of
DMH Corp.; Chief Executive Officer and Director of Delvoy, Inc.; Chief
Executive Officer and Director of Delaware Management Company, Inc.; Chief
Executive Officer and Trustee of Delaware Management Business Trust, Director
of Delaware Service Company, Inc.; Director of Delaware Capital Management,
Inc.; Director of Retirement Financial Services, Inc.; Director of Delaware
Distributors, Inc.; Chief Executive Officer and Director of Delaware
International Holdings Ltd.; Chairman and Director of Delaware International
Advisers Ltd.; Chief Executive Officer of Delaware General Management, Inc.
Chairman, Chief Executive Officer and Director of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
David K. Downes President of Delaware Management Company (a series of Delaware
Management Business Trust); President and Director of Delaware Management
Company, Inc.; President, Chief Executive Officer and Director of Delaware
Capital Management, Inc.; Chairman, President, Chief Executive Officer and
Director of Delaware Service Company, Inc.; President, Chief Operating Officer,
Chief Financial Officer and Director of Delaware International Holdings Ltd.;
President, Chief Operating Officer and Director of Delaware General Management,
Inc.; Chairman and Director of Delaware Management Trust Company; Chairman and
Director of Retirement Financial Services, Inc.; Executive Vice President, Chief
Operating Officer, Chief Financial Officer of Delaware Management Holdings,
Inc.; Executive Vice President, Chief Operating Officer, Chief Financial Officer
of Founders CBO Corporation; Executive Vice President, Chief Operating Officer,
Chief Financial Officer of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Executive Vice President, Chief Operating Officer,
Chief Financial Officer and Director of DMH Corp.; Executive Vice President,
Chief Operating Officer, Chief Financial Officer and Director of Delaware
Distributors, Inc.; Executive Vice President, Chief Operating Officer, Chief
Financial Officer of Delaware Distributors, L.P.; Executive Vice President,
Chief Operating Officer, Chief Financial Officer and Director of Founders
Holdings, Inc.; Executive Vice President, Chief Operating Officer, Chief
Financial Officer and Director of Delvoy, Inc.; Executive Vice President, Chief
Operating Officer, Chief Financial Officer and Trustee of Delaware Management
Business Trust; Director of Delaware International Advisers Ltd.; President,
Chief Executive Officer, Chief Financial Officer and Trustee/Director of each
fund in the Delaware Investments family
Executive Vice President, Chief Operating Officer, Chief Financial Officer and
Director of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
John C. E. Campbell Executive Vice President/Global Marketing & Client Services of Delaware
Management Company (a series of Delaware Management Business Trust); Executive
Vice President/Global Marketing & Client Services of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Executive Vice
President/Global Marketing & Client Services of Retirement Financial Services,
Inc.; Director of Delaware International Advisers Ltd.
Executive Vice President/Marketing & Client Services of Vantage Global
Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
William E. Dodge (2) Executive Vice President and Chief Investment Officer, Equity of Delaware
Management Company (a series of Delaware Management Business Trust); Executive
Vice President of Delaware Management Business Trust; President and Chief
Investment Officer, Equity of Delaware Investment Advisers (a series of
Delaware Management Business Trust); Executive Vice President of Delaware
Capital Management, Inc.; Executive Vice President and Chief Investment
Officer, Equity of each fund in the Delaware Investments family.
Executive Vice President/Equities and Director of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
Jude T. Driscoll (3) Executive Vice President/Head of Fixed-Income of Delaware Management Company
(a series of Delaware Management Business Trust); Executive Vice
President/Head of Fixed-Income of Delaware Investment Advisers (a series of
Delaware Management Business Trust); Executive Vice President of Delaware
Management Business Trust; Executive Vice President of Delaware Capital
Management, Inc.; Executive Vice President/Head of Fixed-Income of each fund
in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
Richard J. Flannery Executive Vice President/General Counsel of Delaware Management Company (a
series of Delaware Management Business Trust); Executive Vice
President/General Counsel of Delaware Management Holdings, Inc.; Executive
Vice President/General Counsel of Delaware Investment Advisers (a series of
Delaware Management Business Trust); Executive Vice President/General Counsel
of Founders CBO Corporation; Executive Vice President/General Counsel and
Director of Delaware International Holdings Ltd.; Executive Vice
President/General Counsel and Director of Founders Holdings, Inc.; Executive
Vice President/General Counsel and Director of Delvoy, Inc.; Executive Vice
President/General Counsel and Director of DMH Corp.; Executive Vice
President/General Counsel and Director of Delaware Management Company, Inc.;
Executive Vice President/General Counsel and Trustee of Delaware Management
Business Trust; Executive Vice President/General Counsel and Director of
Delaware Service Company, Inc.; Executive Vice President/General Counsel and
Director of Delaware Capital Management, Inc.; Executive Vice
President/General Counsel and Director of Retirement Financial Services, Inc.;
Executive Vice President/General Counsel and Director of Delaware
Distributors, Inc.; Executive Vice President/General Counsel of Delaware
Distributors, L.P.; Executive Vice President/General Counsel and Director of
Delaware Management Trust Company; Executive Vice President/General Counsel
and Director of Delaware General Management, Inc.; Director of Delaware
International Advisers Ltd.; Director of HYPPCO Finance Company Ltd.;
Executive Vice President and General Counsel of each fund in the Delaware
Investments family
Executive Vice President/General Counsel and Director of Vantage Global
Advisors, Inc.
Limited Partner of Stonewall Links, L.P. since 1991, Bulltown Rd., Elverson,
PA; Director and Member of Executive Committee; Membership Officer of
Stonewall Links, Inc. since 1991, Bulltown Rd., Elverson, PA
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
Richard G. Unruh, Jr. Executive Vice President and Chief Investment Officer of Delaware Management
Company (a series of Delaware Management Business Trust); Director of Delaware
International Advisers Ltd.; Chief Executive Officer and Chief Investment
Officer of Delaware Investment Advisers (a series of Delaware Management
Business Trust); Executive Vice President of Delaware Management Holdings,
Inc.; Executive Vice President of Delaware Capital Management, Inc.; Executive
Vice President and Trustee of Delaware Management Business Trust; Executive
Vice President and Chief Investment Officer, Fixed-Income of each fund in the
Delaware Investments family
Board of Directors, Chairman of Finance Committee, Keystone Insurance Company
since 1989, 2040 Market Street, Philadelphia, PA; Board of Directors, Chairman
of Finance Committee, AAA Mid Atlantic, Inc. since 1989, 2040 Market Street,
Philadelphia, PA; Board of Directors, Metron, Inc. since 1995, 11911 Freedom
Drive, Reston, VA
------------------------------------------------- --------------------------------------------------------------------------------
Douglas L. Anderson Senior Vice President/Operations of Delaware Management Company (a series of
Delaware Management Business Trust); Senior Vice President/Operations of
Delaware Service Company, Inc.; Senior Vice President/Operations of Retirement
Financial Services, Inc.; Senior Vice President/Operations and Director of
Delaware Management Trust Company; Senior Vice President/Operations of
Delaware Distributors, L.P.
------------------------------------------------- --------------------------------------------------------------------------------
Michael P. Bishof Senior Vice President/Investment Accounting of Delaware Management Company (a
series of Delaware Management Business Trust); Senior Vice
President/Investment Accounting of Delaware Service Company, Inc.; Senior Vice
President/Investment Accounting of Delaware Capital Management, Inc.; Senior
Vice President/Investment Accounting of Delaware Distributors L.P.; Senior
Vice President/Investment Accounting of Founders Holdings, Inc.; Senior Vice
President/Treasurer/ Investment Accounting of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Senior Vice President/Manager
of Investment Accounting of Delaware International Holdings, Inc.; Senior Vice
President/Assistant Treasurer of Founders CBO Corporation; Senior Vice
President/Treasurer of each fund in the Delaware Investments family
Senior Vice President/Investment Accounting of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
Lisa O. Brinkley Senior Vice President/Compliance Director of Delaware Management Company (a
series of Delaware Management Business Trust); Senior Vice
President/Compliance Director of Delaware Management Holdings, Inc.; Senior
Vice President/Compliance Director of DMH Corp.; Senior Vice
President/Compliance Director of Delvoy, Inc.; Senior Vice
President/Compliance Director of Delaware Management Company, Inc.; Senior
Vice President/Compliance Director of Delaware Management Business Trust;
Senior Vice President/Compliance Director of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Senior Vice
President/Compliance Director of Delaware Service Company, Inc.; Senior Vice
President/Compliance Director of Delaware Capital Management, Inc.; Senior
Vice President/Compliance Director of Retirement Financial Services, Inc.;
Senior Vice President/Compliance Director/Assistant Secretary of Delaware
Management Trust Company; Senior Vice President/Compliance Director of
Delaware Distributors, Inc.; Senior Vice President/Compliance Director of
Delaware Distributors, L.P.; Senior Vice President/Compliance Director of
Delaware General Management, Inc.; Senior Vice President/Compliance Director
of each fund in the Delaware Investments family
Senior Vice President of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
Joshua Brooks Senior Vice President/Deputy To Chief Executive Officer of Delaware Management
Company (a series of Delaware Management Business Trust); Senior Vice
President/Deputy To Chief Executive Officer of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Senior Vice President/Deputy To
Chief Executive Officer of Delaware Management Holdings, Inc.
Managing Director of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
Robert J. DiBraccio Senior Vice President/Head of Equity Trading of Delaware Management Company
(a series of Delaware Management Business Trust); Senior Vice President/Head of
Equity Trading of Delaware Investment Advisers (a series of Delaware Management
Business Trust); Senior Vice President/Head of Equity Trading of Delaware
Capital Management, Inc.
Senior Vice President/Equity Trading of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
Roger A. Early Senior Vice President/Senior Portfolio Manager of Delaware Management Company
(a series of Delaware Management Business Trust); Senior Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Senior Vice President/Senior Portfolio Manager of
each fund in the Delaware Investments family
Vice President of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
John B. Fields Senior Vice President/Senior Portfolio Manager of Delaware Management Company
(a series of Delaware Management Business Trust); Trustee of Delaware
Management Business Trust; Senior Vice President/Senior Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Senior Vice President/Senior Portfolio Manager of Delaware Capital Management,
Inc.; Senior Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
Gerald S. Frey Senior Vice President/Senior Portfolio Manager of Delaware Management Company
(a series of Delaware Management Business Trust); Senior Vice President/Senior
Portfolio Manager of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Senior Vice President/Senior Portfolio Manager of
Delaware Capital Management, Inc.; Senior Vice President/Senior Portfolio
Manager of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Susan L. Hanson Senior Vice President/Global Marketing & Client Services of Delaware
Management Company (a series of Delaware Management Business Trust); Senior
Vice President/Global Marketing & Client Services of Delaware Investment
Advisers (a series of Delaware Management Business Trust)
------------------------------------------------- --------------------------------------------------------------------------------
Joseph H. Hastings Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Company (a series of Delaware Management Business Trust); Senior
Vice President/Corporate Controller and Treasurer of Delaware Management
Holdings, Inc.; Senior Vice President/Corporate Controller and Treasurer of
DMH Corp.; Senior Vice President/Corporate Controller and Treasurer of
Delaware Management Company, Inc.; Senior Vice President/Corporate Controller
and Treasurer of Delaware Distributors, L.P.; Senior Vice President/Corporate
Controller and Treasurer of Delaware Distributors, Inc.; Senior Vice
President/Corporate Controller and Treasurer of Delaware Service Company,
Inc.; Senior Vice President/Corporate Controller and Treasurer of Delaware
Capital Management, Inc.; Senior Vice President/Corporate Controller and
Treasurer of Delaware International Holdings Ltd.; Senior Vice
President/Corporate Controller and Treasurer of Delvoy, Inc.; Senior Vice
President/Corporate Controller and Treasurer of Founders Holdings, Inc.;
Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Business Trust; Senior Vice President/Corporate Controller and
Treasurer of Delaware General Management, Inc.; Executive Vice President/Chief
Financial Officer/Treasurer of Delaware Management Trust Company; Chief
Financial Officer of Retirement Financial Services, Inc.; Senior Vice
President/Assistant Treasurer of Founders CBO Corporation; Senior Vice
President/Corporate Controller of Delaware Investment Advisers (a series of
Delaware Management Business Trust); Senior Vice President/Corporate
Controller of each fund in the Delaware Investments family
Senior Vice President/Corporate Controller of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
Joanne O. Hutcheson Senior Vice President/Human Resources of Delaware Management Company (a
series of Delaware Management Business Trust); Senior Vice President/Human
Resources of Delaware Management Holdings, Inc.; Senior Vice President/Human
Resources of DMH Corp.; Senior Vice President/Human Resources of Delvoy, Inc.;
Senior Vice President/Human Resources of Delaware Management Company, Inc.;
Senior Vice President/Human Resources of Delaware Management Business Trust;
Senior Vice President/Human Resources of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Senior Vice President/Human
Resources of Delaware Service Company, Inc.; Senior Vice President/Human
Resources of Delaware Capital Management, Inc.; Senior Vice President/Human
Resources of Retirement Financial Services, Inc.; Senior Vice President/Human
Resources of Delaware Management Trust Company; Senior Vice President/Human
Resources of Delaware Distributors, Inc.; Senior Vice President/Human
Resources of Delaware Distributors, L.P.; Senior Vice President/Human
Resources of Delaware General Management, Inc.; Senior Vice President/Human
Resources of each fund in the Delaware Investments family
Senior Vice President/Human Resources of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
Richelle S. Maestro Senior Vice President, Secretary and Deputy General Counsel of Delaware
Management Company (a series of Delaware Management Business Trust); Senior
Vice President, Secretary and Deputy General Counsel of Delaware Management
Holdings, Inc.; Senior Vice President, Secretary and Deputy General Counsel of
DMH Corp.; Senior Vice President, Secretary and Deputy General Counsel of
Delvoy, Inc.; Senior Vice President, Secretary and Deputy General Counsel of
Delaware Management Company, Inc.; Senior Vice President, Secretary and Deputy
General Counsel of Delaware Management Business Trust; Senior Vice President,
Secretary and Deputy General Counsel of Delaware Investment Advisers (a series
of Delaware Management Business Trust); Senior Vice President, Secretary and
Deputy General Counsel of Delaware Service Company, Inc.; Senior Vice
President, Secretary and Deputy General Counsel of Delaware Capital
Management, Inc.; Senior Vice President, Secretary and Deputy General Counsel
of Retirement Financial Services, Inc.; Senior Vice President, Secretary and
Deputy General Counsel of Delaware Distributors, Inc.; Senior Vice President,
Secretary and Deputy General Counsel of Delaware Distributors, L.P.; Senior
Vice President and Secretary of Delaware International Holdings Ltd.; Senior
Vice President, Secretary and Deputy General Counsel of Founders Holdings,
Inc.; Secretary of Founders CBO Corporation; Senior Vice President, Secretary
and Deputy General Counsel of Delaware Management Trust Company; Senior Vice
President, Secretary and Deputy General Counsel of Delaware General
Management, Inc.; Senior Vice President, Secretary and Deputy General Counsel
of each fund in the Delaware Investments family
General Partner of Tri-R Associates since 1989, 10001 Sandmeyer Lane,
Philadelphia, PA.
------------------------------------------------- --------------------------------------------------------------------------------
Paul M. Ross Senior Vice President/Global Marketing & Client Services of Delaware
Management Company (a series of Delaware Management Business Trust); Senior
Vice President/Global Marketing & Client Services of Delaware Investment
Advisers (a series of Delaware Management Business Trust)
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
James L. Shields Senior Vice President/Chief Information Officer of Delaware Management Company
(a series of Delaware Management Business Trust); Senior Vice President/Chief
Information Officer of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Senior Vice President/Chief Information Officer of
Delaware Service Company, Inc.; Senior Vice President/Chief Information
Officer of Delaware Capital Management Company, Inc.; Senior Vice
President/Chief Information Officer of Retirement Financial Services, Inc.;
Senior Vice President/Chief Information Officer of Delaware Distributors, L.P.
Senior Vice President/Chief Information Officer of Vantage Global Advisors,
Inc.
------------------------------------------------- --------------------------------------------------------------------------------
Frank M. Staves Senior Vice President/Client Services of Delaware Management Company (a series
of Delaware Management Business Trust); Senior Vice President/Client Services
of Delaware Investment Advisers (a series of Delaware Management Business
Trust)
------------------------------------------------- --------------------------------------------------------------------------------
Gary T. Abrams Vice President/Equity Trader of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Equity Trader of Delaware
Investment Advisers (a series of Delaware Management Business Trust)
Vice President/Equity Trading of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
Christopher S. Adams Vice President/Senior Equity Analyst of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Equity Analyst
of Delaware Investment Advisers (a series of Delaware Management Business
Trust)
Vice President of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
Peter C. Andersen (4) Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust; Vice President/Senior Portfolio
Manager of Delaware Investment Advisers (a series of Delaware Management
Business Trust); Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Damon J. Andres Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Vice President/Portfolio Manager of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Robert L. Arnold Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior Portfolio
Manager of Delaware Investment Advisers (a series of Delaware Management
Business Trust); Vice President/Senior Portfolio Manager of Delaware Capital
Management, Inc., Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Marshall T. Bassett Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Vice President/Portfolio Manager of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
Joseph Baxter (5) Vice President/Senior Municipal Bond Trader of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior Municipal
Bond Trader of Delaware Investment Advisers (a series of Delaware Management
Business Trust)
------------------------------------------------- --------------------------------------------------------------------------------
Christopher S. Beck Vice President/Senior Portfolio Manager of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Portfolio Manager
of Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Senior Portfolio Manager of each fund in the Delaware
Investments family
Trustee of New Castle County Pension Board since October 1992, Wilmington, DE
------------------------------------------------- --------------------------------------------------------------------------------
Richard E. Biester Vice President/Equity Trader of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Equity Trader of Delaware
Investment Advisers (a series of Delaware Management Business Trust)
Vice President/Equity Trading of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
Vincent A. Brancaccio Vice President/Senior Equity Trader of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Equity Trader of
Delaware Investment Advisers (a series of Delaware Management Business Trust)
------------------------------------------------- --------------------------------------------------------------------------------
Ryan K. Brist (6) Vice President/Head of Fixed-Income Trading of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/head of
Fixed-Income Trading of Delaware Investment Advisers (a series of Delaware
Management Business Trust)
------------------------------------------------- --------------------------------------------------------------------------------
Michael P. Buckley Vice President/Portfolio Manager and Senior Municipal Bond Analyst of Delaware
Management Company (a series of Delaware Management Business Trust); Vice
President/Portfolio Manager and Senior Municipal Bond Analyst of Delaware
Investment Advisers (a series of Delaware Management Business Trust); Vice
President/Portfolio Manager and Senior Municipal Bond Analyst of each fund in
the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
MaryEllen M. Carrozza Vice President/Client Services of Delaware Management Company (a series of
Delaware Management Business Trust);Vice President/Client Services of Delaware
Investment Advisers (a series of Delaware Management Business Trust); Vice
President/Client Services of Delaware Distributors, Inc.; Vice
President/Client Services of Delaware General Management, Inc.; Vice
President/Client Services of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Stephen R. Cianci Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Vice President/Portfolio Manager of Capital Management, Inc.; Vice
President/Portfolio Manager of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Donald M. Cobin (7) Vice President/Director of Research of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Director of Research of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Vice President/Director of Research of each funds in the Delaware Investments
family
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
Mitchell L. Conery Vice President/Senior Portfolio Manager of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Portfolio Manager
of Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Senior Portfolio Manager of each fund in the Delaware
Investments family
------------------------------------------------- --------------------------------------------------------------------------------
David F. Connor (8) Vice President/Deputy General Counsel/Assistant Secretary of Delaware
Management Company (a series of Delaware Management Business Trust); Vice
President/Deputy General Counsel/Assistant Secretary of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Deputy General Counsel/Assistant Secretary of Delaware Management
Business Trust; Vice President/Deputy General Counsel/Assistant Secretary of
Delaware Service Company, Inc.; Vice President/Deputy General
Counsel/Assistant Secretary of Delaware Capital Management, Inc.; Vice
President/Deputy General Counsel/Assistant Secretary of Delaware Management
Trust Company; Vice President/Deputy General Counsel/Assistant Secretary of
Delaware Distributors, L.P.; Vice President/Deputy General Counsel/Assistant
Secretary of Retirement Financial Services, Inc.; Vice President/Deputy
General Counsel/Assistant Secretary of each fund in the Delaware Investments
family
------------------------------------------------- --------------------------------------------------------------------------------
Timothy G. Connors Vice President/Senior Portfolio Manager of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Portfolio Manager
of Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Senior Portfolio Manager for each fund in the Delaware
Investments family
Managing Director of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior Portfolio
Manager of Delaware Investment Advisers (a series of Delaware Management
Business Trust); Vice President/Senior Portfolio Manager of Delaware Capital
Management, Inc.; Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
George E. Deming Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior Portfolio
Manager of Delaware Investment Advisers (a series of Delaware Management
Business Trust); Director of Delaware International Advisers Ltd.; Vice
President/Senior Portfolio Manager of each fund in the Delaware Investments
family
------------------------------------------------- --------------------------------------------------------------------------------
James Paul Dokas Vice President/Senior Portfolio Manager of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Portfolio Manager
of Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Senior Portfolio Manager of each fund in the Delaware
Investments family
Managing Director of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
Michael J. Dugan Vice President/Senior Portfolio Manager of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Portfolio Manager
of Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Senior Portfolio Manager of each fund in the Delaware
Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Joel A. Ettinger Vice President/Taxation of Delaware Management Company (a series of Delaware
Management Business Trust);Vice President/Taxation of Delaware Management
Holdings, Inc.; Vice President/Taxation of DMH Corp.; Vice President/Taxation
of Delvoy, Inc.; Vice President/Taxation of Delaware Management Company, Inc.;
Vice President/Taxation of Delaware Management Business Trust; Vice
President/Taxation of Delaware Investment Advisers (a series of Delaware
Management Business Trust);Vice President/Taxation of Delaware Service
Company, Inc.; Vice President/Taxation of Delaware Capital Management, Inc.;
Vice President/Taxation of Retirement Financial Services, Inc.; Vice
President/Taxation of Delaware Distributors, Inc.; Vice President/Taxation of
Delaware Distributors, L.P.; Vice President/Taxation of Founders Holdings,
Inc.; Vice President/Taxation of Founders CBO Corporation; Vice
President/Taxation of Delaware General Management, Inc.; Vice
President/Taxation of each fund in the Delaware Investments family
Vice President/Taxation and Assistant Secretary of Vantage Global Advisors,
Inc.
------------------------------------------------- --------------------------------------------------------------------------------
Phoebe W. Figland Vice President/Investment Accounting of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Investment Accounting
of Delaware Service Company, Inc.; Vice President/Investment Accounting of
each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
John P. Finnegan Vice President/Investment Accounting of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Investment Accounting
of Delaware Service Company, Inc.; Vice President/Investment Accounting of
each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Joseph Fiorilla Vice President/Trading Operations of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Trading Operations of
Delaware Investment Advisers (a series of Delaware Management Business Trust)
------------------------------------------------- --------------------------------------------------------------------------------
Charles E. Fish Vice President/Senior Equity Trader of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Equity Trader of
Delaware Investment Advisers (a series of Delaware Management Business Trust)
------------------------------------------------- --------------------------------------------------------------------------------
James A. Furgele Vice President/Investment Accounting of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Investment Accounting
of Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Investment Accounting of Delaware Service Company,
Inc.; Vice President/Investment Accounting of each fund in the Delaware
Investments family.
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
Stuart M. George Vice President/Equity Trader of Delaware Management Company (a series of
Delaware Management Business Trust);Vice President/Equity Trader of Delaware
Investment Advisers (a series of Delaware Management Business Trust)
Vice President/Equity Trading of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
Andrea Giles Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Vice President/Portfolio Manager of Delaware Capital Management, Inc.; Vice
President/Portfolio Manager of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Robert E. Ginsberg Vice President/Senior Equity Analyst of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Equity Analyst
of Delaware Investment Advisers (a series of Delaware Management Business
Trust)
------------------------------------------------- --------------------------------------------------------------------------------
Barry Gladstein Vice President/Equity Analyst of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Equity Analyst of Delaware
Investment Advisers (a series of Delaware Management Business Trust); Vice
President/Equity Analyst of Delaware Capital Management, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
Paul Grillo Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Vice President/Portfolio Manager of Delaware Capital Management, Inc.; Vice
President/Portfolio Manager of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Brian T. Hannon Vice President/Equity Analyst of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Equity Analyst of Delaware
Investment Advisers (a series of Delaware Management Business Trust)
------------------------------------------------- --------------------------------------------------------------------------------
John A. Heffern Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Vice President/Portfolio Manager of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Stuart N. Hosansky Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Vice President/Portfolio Manager of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Francis J. Houghton, Jr. (9) Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior Portfolio
Manager of Delaware Investment Advisers (a series of Delaware Management
Business Trust); Vice President of Delaware Distributors, Inc.; Vice
President/Senior Portfolio Manager of each fund in the Delaware Investments
family; Executive Vice President of Delaware General Management, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
Elizabeth H. Howell Vice President/Senior Portfolio Manager of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Portfolio Manager
of Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Senior Portfolio Manager of each fund in the Delaware
Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Christian Hyldahl (10) Vice President/Senior Equity Analyst of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Equity Analyst
of Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Senior Equity Analyst of each fund in the Delaware
Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Jeffrey W. Hynoski Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Vice President/Portfolio Manager of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Cynthia Isom Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Vice President/Portfolio Manager of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
John B. Jares (11) Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior Portfolio
Manager of Delaware Investment Advisers (a series of Delaware Management
Business Trust); Vice President/Senior Portfolio Manager of each fund in the
Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Audrey E. Kohart Vice President/Assistant Controller, Corporate Accounting of Delaware
Management Company (a series of Delaware Management Business Trust); Vice
President/Assistant Controller, Corporate Accounting of Delaware Investment
Advisers (a series of Delaware Management Business Trust)
------------------------------------------------- --------------------------------------------------------------------------------
Steven T. Lampe Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Vice President/Portfolio Manager of Delaware Capital Management, Inc.; Vice
President/Portfolio Manager of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
SooHee Lee Vice President/Client Services of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Client Services of
Delaware Investment Advisers (a series of Delaware Management Business Trust)
------------------------------------------------- --------------------------------------------------------------------------------
Michael E. Leverone (12) Vice President/Client Services of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Client Services of
Delaware Investment Advisers (a series of Delaware Management Business Trust)
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
Philip Y. Lin Vice President, Assistant Secretary and Associate General Counsel of Delaware
Management Company (a series of Delaware Management Business Trust); Vice
President, Assistant Secretary and Associate General Counsel of Delaware
Investment Advisers (a series of Delaware Management Business Trust);Vice
President, Assistant Secretary and Associate General Counsel of Delaware
Service Company, Inc.; Vice President, Assistant Secretary and Associate
General Counsel of Delaware Capital Management, Inc.; Vice President,
Assistant Secretary and Associate General Counsel of Retirement Financial
Services, Inc.; Vice President, Assistant Secretary and Associate General
Counsel of Delaware Management Trust Company; Vice President, Assistant
Secretary and Associate General Counsel of Delaware Distributors, L.P.; Vice
President, Assistant Secretary and Associate General Counsel of each fund in
the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Andrew M. McCullagh, Jr. Vice President/Senior Portfolio Manager of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Portfolio Manager
of Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Senior Portfolio Manager of each fund in the Delaware
Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Francis X. Morris Vice President/Senior Portfolio Manager of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Portfolio Manager
of Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Senior Portfolio Manager of each fund in the Delaware
Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Michael Morris (13) Vice President/Senior Equity Analyst of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Equity Analyst
of Delaware Investment Advisers (a series of Delaware Management Business
Trust)
------------------------------------------------- --------------------------------------------------------------------------------
Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior Portfolio
Manager of Delaware Investment Advisers (a series of Delaware Management
Business Trust); Vice President/Senior Portfolio Manager of Founders Holdings,
Inc., Treasurer, Assistant Secretary and Director of Founders CBO
Corporation; Director of HYPPCO Finance Company Ltd.; Vice President/Senior
Portfolio Manager of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Robert A. Norton, Jr. Vice President/Equity Analyst of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Equity Analyst of Delaware
Investment Advisers (a series of Delaware Management Business Trust)
------------------------------------------------- --------------------------------------------------------------------------------
Patrick J. O'Brien (14) Vice President/Senior Equity Analyst of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Equity Analyst
of Delaware Investment Advisers (a series of Delaware Management Business
Trust)
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
David P. O'Connor Vice President, Assistant Secretary and Associate General Counsel of Delaware
Management Company (a series of Delaware Management Business Trust); Vice
President, Assistant Secretary and Associate General Counsel of Delaware
Management Holdings, Inc.; Vice President, Assistant Secretary and Associate
General Counsel of Delvoy, Inc.; Vice President, Assistant Secretary and
Associate General Counsel of Delaware Investment Advisers (a series of
Delaware Management Business Trust);Vice President, Assistant Secretary and
Associate General Counsel of Delaware Service Company, Inc.; Vice President,
Assistant Secretary and Associate General Counsel of Delaware Capital
Management, Inc.; Vice President, Assistant Secretary and Associate General
Counsel of Retirement Financial Services, Inc.; Vice President, Assistant
Secretary and Associate General Counsel of Delaware Distributors, L.P.; Vice
President, Assistant Secretary and Associate General Counsel of DMH Corp.;
Vice President, Assistant Secretary and Associate General Counsel of Delaware
Management Company, Inc.; Vice President, Assistant Secretary and Associate
General Counsel of Delaware Management Business Trust; Vice President,
Assistant Secretary and Associate General Counsel of each fund in the Delaware
Investments family
Vice President, Assistant Secretary and Associate General Counsel of Vantage
Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
John J. O'Connor Vice President/Investment Accounting of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Investment
Accounting/Assistant Treasurer of Delaware Investment Advisers (a series of
Delaware Management Business Trust); Vice President/Investment Accounting of
Delaware Service Company, Inc.; Vice President/Assistant Treasurer of each
fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Tim Rabe (15) Vice President/High-Yield Trader of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/High-Yield Trader of
Delaware Investment Advisers (a series of Delaware Management Business Trust)
------------------------------------------------- --------------------------------------------------------------------------------
Richard Salus Vice President/Assistant Controller of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Assistant Controller of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Vice President/Assistant Controller of Delvoy, Inc.; Vice President/Assistant
Controller of Delaware Management Company, Inc.; Vice President/Assistant
Controller of Delaware Management Trust Company; Vice President/Assistant
Controller of Delaware Management Business Trust; Vice President/Assistant
Controller of Delaware Service Company, Inc.; Vice President/Assistant
Controller of Delaware Capital Management, Inc.; Vice President/Assistant
Controller of Retirement Financial Services, Inc.; Vice President/Assistant
Controller of Delaware Distributors, L.P.; Vice President/Assistant Controller
of Delaware Distributors, Inc.; Vice President/Assistant Controller of
Delaware International Holdings Ltd.; Vice President/Assistant Controller of
Delaware General Management, Inc.; Vice President/Assistant Controller of
Delaware Management Holdings, Inc.; Vice President/Assistant Controller of DMH
Corp.
Vice President/Assistant Controller of Vantage Global Advisors, Inc.
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------- --------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Delaware Management Company and its affiliates and
other Positions and Offices Held
------------------------------------------------- --------------------------------------------------------------------------------
<S> <C>
Robert D. Schwartz (16) Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Vice President/Assistant Secretary of Delaware General Management, Inc.; Vice
President for Delaware Distributors, Inc.; Vice President/ Portfolio Manager
of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Richard D. Seidel Vice President/Assistant Controller/Manager, Payroll of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Assistant Controller/Manager, Payroll of Delaware Investment
Advisers (a series of Delaware Management Business Trust)
------------------------------------------------- --------------------------------------------------------------------------------
Michael T. Taggart Vice President/Facilities and Administrative Services of Delaware Management
Company (a series of Delaware Management Business Trust);Vice
President/Facilities and Administrative Services of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Facilities and Administrative Services of Delaware Service Company,
Inc.; Vice President/Facilities and Administrative Services of Delaware
Distributors, L.P.
------------------------------------------------- --------------------------------------------------------------------------------
Ward W. Tatge (17) Vice President/Senior Research Analyst of Delaware Management Company (a
series of Delaware Management Business Trust); Vice President/Senior Research
Analyst of Delaware Investment Advisers (a series of Delaware Management
Business Trust); Vice President/Senior Research Analyst of each fund in the
Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Thomas J. Trotman Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Vice President/Portfolio Manager of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Lori P. Wachs Vice President/Portfolio Manager of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President/Portfolio Manager of
Delaware Investment Advisers (a series of Delaware Management Business Trust);
Vice President/Portfolio Manager of each fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
Laura Wagner Vice President/Investment Accounting of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Investment Accounting of
Delaware Service Company, Inc.; Vice President/Investment Accounting of each
fund in the Delaware Investments family
------------------------------------------------- --------------------------------------------------------------------------------
James J. Wright (18) Vice President/Senior Equity Analyst of Delaware Management Company (a series
of Delaware Management Business Trust); Vice President/Senior Equity Analyst
of Delaware Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Senior Equity Analyst of each fund in the Delaware
Investments family
------------------------------------------------- --------------------------------------------------------------------------------
</TABLE>
*Business Address is One Commerce Square, Philadelphia, PA 19103.
--------------------------------------------------------------------------------
(1) PRESIDENT, CHIEF OPERATING OFFICER AND DIRECTOR, United Asset
Management, Boston, MA March 1998-January 2000.
(2) PRESIDENT, DIRECTOR OF MARKETING AND SENIOR PORTFOLIO MANAGER, Marvin &
Palmer Associates, Wilmington, DE 1996-1998.
(3) SENIOR VICE PRESIDENT AND DIRECTOR, Conseco Capital Management,
Indianapolis, IN, June 1998 to August 2000.
(4) PORTFOLIO MANAGER Conseco Capital Management, Indianapolis, IN,
December 1997-July 2000.
(5) VICE PRESIDENT/PORTFOLIO MANAGER, First Union National Bank,
Philadelphia, PA, May 1982-August 1999.
(6) SENIOR TRADER/CORPORATE SPECIALIST, Conseco Capital Management,
Indianapolis, IN, August 1995-August 2000.
(7) ASSISTANT VICE PRESIDENT/SENIOR SECURITIES ANALYST, Conseco Capital
Management, Indianapolis, IN, 1997 to August 2000.
<PAGE>
(8) ASSISTANT GENERAL COUNSEL, Prudential Investments, Newark, NJ, March
1998-July 2000.
(9) PRESIDENT AND PORTFOLIO MANAGER, Lynch and Mayer, Inc., New York, NY
January 1990-February 2000.
(10) REGIONAL CONSULTANT/SUMMER INTERN, Merrill Lynch, Los Angeles, CA,
1994-1997. STUDENT 1994-1999.
(11) VICE PRESIDENT/PORTFOLIO MANAGER, Berger Funds, LLC, Denver, CO,
1997-February 2000.
(12) VICE PRESIDENT, State Street Bank, Boston, MA, August 1996-February
2000.
(13) FINANCIAL ANALYST, Walnut Street Association, Wyomissing, PA, December
1998-June 1999.
(14) ANALYST, Schneider Capital Management, Wayne, PA, January 1997-January
1999. SENIOR ANALYST, Prudential Insurance Company, Newark, NJ,
February 1999-May 2000.
(15) PORTFOLIO MANAGER, Conseco Capital Management, Indianapolis, IN, June
1996-July 2000.
(16) VICE PRESIDENT, Lynch and Mayer, Inc., New York, NY, February 1993 to
February 2000.
(17) HIGH-YIELD ANALYST, Credit Suisse First Boston, 1997 to 1998.
HIGH-YIELD ANALYST, Conseco Capital Management, Indianapolis, IN 1999
to 2000.
(18) MANAGING DIRECTOR/RESEARCH, Schuylkill Capital Management,
Philadelphia, PA, 1997-May 2000.
--------------------------------------------------------------------------------
Item 27. Principal Underwriters.
(a) Delaware Distributors, L.P. serves as principal
underwriter for all the mutual funds in the Delaware
Investments family.
(b) Information with respect to each officer or partner of
principal underwriter:
<TABLE>
<CAPTION>
------------------------------------------ -------------------------------------------- --------------------------------------------
Name and Principal Business Address* Positions and Offices with Underwriter Positions and Offices with Registrant
------------------------------------------ -------------------------------------------- --------------------------------------------
<S> <C> <C>
Delaware Distributors, Inc. General Partner None
------------------------------------------ -------------------------------------------- --------------------------------------------
Delaware Investment Advisers Limited Partner None
------------------------------------------ -------------------------------------------- --------------------------------------------
Delaware Capital Management, Inc. Limited Partner None
------------------------------------------ -------------------------------------------- --------------------------------------------
Westley V. Thompson Vice Chairman None
------------------------------------------ -------------------------------------------- --------------------------------------------
Bruce D. Barton President/Chief Executive Office None
------------------------------------------ -------------------------------------------- --------------------------------------------
David K. Downes Executive Vice President/Chief Operating President/Chief Executive Officer/Chief
Officer/Chief Financial Officer Financial Officer
------------------------------------------ -------------------------------------------- --------------------------------------------
Richard J. Flannery Executive Vice President/General Counsel Executive Vice President/General Counsel
------------------------------------------ -------------------------------------------- --------------------------------------------
Diane M. Anderson Senior Vice President/Retirement Operations None
------------------------------------------ -------------------------------------------- --------------------------------------------
Douglas L. Anderson Senior Vice President/Operations None
------------------------------------------ -------------------------------------------- --------------------------------------------
Michael P. Bishof Senior Vice President/Investment Accounting Senior Vice President/Treasurer
------------------------------------------ -------------------------------------------- --------------------------------------------
Lisa O. Brinkley Senior Vice President/Compliance Director Senior Vice President/Compliance Director
------------------------------------------ -------------------------------------------- --------------------------------------------
Larry Carr Senior Vice President/Variable Annuity None
Sales Director
------------------------------------------ -------------------------------------------- --------------------------------------------
Terrence P. Cunningham Senior Vice President/National Sales None
Director, Financial Institutions
------------------------------------------ -------------------------------------------- --------------------------------------------
Darryl S. Grayson Senior Vice President/Director, Internal None
Sales
------------------------------------------ -------------------------------------------- --------------------------------------------
Joseph H. Hastings Senior Vice President/Treasurer/ Corporate Senior Vice President/Corporate Controller
Controller
------------------------------------------ -------------------------------------------- --------------------------------------------
Joanne O. Hutcheson Senior Vice President/Human Resources Senior Vice President/Human Resources
------------------------------------------ -------------------------------------------- --------------------------------------------
Karina J. Istvan Senior Vice President/Retail Product None
Management
------------------------------------------ -------------------------------------------- --------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------ -------------------------------------------- --------------------------------------------
Name and Principal Business Address* Positions and Offices with Underwriter Positions and Offices with Registrant
------------------------------------------ -------------------------------------------- --------------------------------------------
<S> <C> <C>
Mark R. Kiniry Senior Vice President/Western Sales None
Manager/Wirehouse Regional
------------------------------------------ -------------------------------------------- --------------------------------------------
Stephen W. Long Senior Vice President/National Sales None
Director, Wirehouse & Wrap Channel
------------------------------------------ -------------------------------------------- --------------------------------------------
Richelle S. Maestro Senior Vice President/Deputy General Senior Vice President/Deputy General
Counsel/Secretary Counsel/ Secretary
------------------------------------------ -------------------------------------------- --------------------------------------------
Mac McAuliffe Senior Vice President/Sales Manager None
Director
------------------------------------------ -------------------------------------------- --------------------------------------------
Doff Meyer Senior Vice President/Retail Investor None
Management
------------------------------------------ -------------------------------------------- --------------------------------------------
J. Chris Meyer Senior Vice President/Director, Product None
Management
------------------------------------------ -------------------------------------------- --------------------------------------------
Stephen C. Nell Senior Vice President/National Retirement None
Sales
------------------------------------------ -------------------------------------------- --------------------------------------------
Henry W. Orvin Senior Vice President/Sales Manager None
Director
------------------------------------------ -------------------------------------------- --------------------------------------------
Scott P. Passias Senior Vice President/Regional Consultant None
Director
------------------------------------------ -------------------------------------------- --------------------------------------------
Christopher H. Price Senior Vice President/Insurance Products None
------------------------------------------ -------------------------------------------- --------------------------------------------
Philip G. Rickards Senior Vice President/Regional Consultant None
Director
------------------------------------------ -------------------------------------------- --------------------------------------------
Linda D. Schulz Senior Vice President/Regional Consultant None
Director
------------------------------------------ -------------------------------------------- --------------------------------------------
James L. Shields Senior Vice President/Chief Information None
Officer
------------------------------------------ -------------------------------------------- --------------------------------------------
Steven Sorenson Senior Vice President/Director of None
Independent Planner & Insurance and
Registered Investment Adviser Channels
------------------------------------------ -------------------------------------------- --------------------------------------------
Andrew J. Whitaker Senior Vice President/Regional Consultant None
Director
------------------------------------------ -------------------------------------------- --------------------------------------------
Richard P. Allen Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Patrick A. Bearss Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Larry Bridwell Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
William S. Carroll Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Elisa C. Colkitt Vice President/Broker Dealer Operations & None
Service Support
------------------------------------------ -------------------------------------------- --------------------------------------------
David F. Connor Vice President/Deputy General Vice President/Deputy General
Counsel/Assistant Secretary Counsel/Assistant Secretary
------------------------------------------ -------------------------------------------- --------------------------------------------
Thomas J. Durkin Vice President/Intermediary Sales-Midwest None
Region
------------------------------------------ -------------------------------------------- --------------------------------------------
Donald A. Edmunds Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Joel A. Ettinger Vice President/Taxation Vice President/Taxation
------------------------------------------ -------------------------------------------- --------------------------------------------
Edward A. Foley Vice President/Marketing None
------------------------------------------ -------------------------------------------- --------------------------------------------
Susan T. Friestedt Vice President/Retirement Services None
------------------------------------------ -------------------------------------------- --------------------------------------------
John L. Greico Vice President/Senior Key Account Manager None
------------------------------------------ -------------------------------------------- --------------------------------------------
Ronald A. Haimowitz Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Edward J. Hecker Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------ -------------------------------------------- --------------------------------------------
Name and Principal Business Address* Positions and Offices with Underwriter Positions and Offices with Registrant
------------------------------------------ -------------------------------------------- --------------------------------------------
<S> <C> <C>
John R. Herron Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Dinah J. Huntoon Vice President/Product Manager, Equities None
------------------------------------------ -------------------------------------------- --------------------------------------------
Thomas Intoccia Vice President/Independent Planner & None
Insurance Key Accounts
------------------------------------------ -------------------------------------------- --------------------------------------------
Alan L. Ireton Vice President/Retirement Marketing None
------------------------------------------ -------------------------------------------- --------------------------------------------
Christopher L. Johnston Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Jeffrey M. Kellogg Vice President/Product Manager, None
Fixed-Income & International
------------------------------------------ -------------------------------------------- --------------------------------------------
Carolyn Kelly Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Richard M. Koerner Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Ellen M. Krott Vice President/Marketing None
------------------------------------------ -------------------------------------------- --------------------------------------------
John LeBoeuf Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Philip Y. Lin Vice President/Associate General Vice President/Associate General
Counsel/Assistant Secretary Counsel/Assistant Secretary
------------------------------------------ -------------------------------------------- --------------------------------------------
John R. Logan Vice President/ Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Joseph R. Long Vice President/Retirement Sales None
------------------------------------------ -------------------------------------------- --------------------------------------------
Theodore T. Malone Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Raymond G. McCarthy Vice President/National Accounts, None
Independent Planner & Insurance Channels
------------------------------------------ -------------------------------------------- --------------------------------------------
Joanne C. McCranie Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Scott L. Metzger Vice President/Business Development None
------------------------------------------ -------------------------------------------- --------------------------------------------
Jamie L. Meyer Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Christopher W. Moore Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Andrew F. Morris Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Scott E. Naughton Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Nancy Nawn Vice President/Senior Wrap Product Manager None
------------------------------------------ -------------------------------------------- --------------------------------------------
Julie A. Nye Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Daniel J. O'Brien Vice President/Insurance Products None
------------------------------------------ -------------------------------------------- --------------------------------------------
James L. O'Brien Vice President/Wirehouse/Regional Key None
Accounts
------------------------------------------ -------------------------------------------- --------------------------------------------
David P. O'Connor Vice President/Associate General Vice President/Associate General
Counsel/Assistant Secretary Counsel/Assistant Secretary
------------------------------------------ -------------------------------------------- --------------------------------------------
Joseph T. Owczarek Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Otis S. Page Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Robinder Pal Vice President/Retail Investor Services None
Planning & Budgeting
------------------------------------------ -------------------------------------------- --------------------------------------------
John Register Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Laura E. Roman Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Robert A. Rosso Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Richard Salus Vice President/Assistant Controller None
------------------------------------------ -------------------------------------------- --------------------------------------------
Gordon E. Searles Vice President/Client Services None
------------------------------------------ -------------------------------------------- --------------------------------------------
Catherine A. Seklecki Vice President/Retirement Sales None
------------------------------------------ -------------------------------------------- --------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------ -------------------------------------------- --------------------------------------------
Name and Principal Business Address* Positions and Offices with Underwriter Positions and Offices with Registrant
------------------------------------------ -------------------------------------------- --------------------------------------------
<S> <C> <C>
John C. Shalloe Vice President/Wrap Fee Senior Regional None
Consultant
------------------------------------------ -------------------------------------------- --------------------------------------------
Darren Smith Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Kimberly M. Spangler Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Michael T. Taggart Vice President/Facilities & Administrative None
Services
------------------------------------------ -------------------------------------------- --------------------------------------------
Bryon Townsend Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
James R. Van Deventer Vice President/Defined Contribution Sales- None
South
------------------------------------------ -------------------------------------------- --------------------------------------------
Julia R. Vander Els Vice President/Retirement Plan None
Communications
------------------------------------------ -------------------------------------------- --------------------------------------------
Jeffrey Vankuelen Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Scott Whitehouse Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
Wesley Williams Vice President/Senior Regional Consultant None
------------------------------------------ -------------------------------------------- --------------------------------------------
</TABLE>
* Business address of each is One Commerce Square, Philadelphia, PA 19103.
(c) Inapplicable.
Item 28. Location of Accounts and Records.
All accounts and records are maintained in Philadelphia at One
Commerce Square, Philadelphia, PA 19103.
Item 29. Management Services. None.
Item 30. Undertakings. Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
this City of Philadelphia, Commonwealth of Pennsylvania on this 16th day of
November, 2000.
DELAWARE GROUP EQUITY FUNDS IV
By /s/ David K. Downes
-----------------------------------
David K. Downes
President and Chief Executive Officer
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>
President/Chief Executive Officer/ November 16, 2000
/s/ David K. Downes Chief Financial Officer (Principal
------------------------------------------ Executive Officer/Principal Accounting
David K. Downes Officer) and Trustee
/s/ Walter P. Babich Trustee November 16, 2000
------------------------------------------
Walter P. Babich
/s/ John H. Durham Trustee November 16, 2000
------------------------------------------
John H. Durham
/s/ Anthony D. Knerr Trustee November 16, 2000
------------------------------------------
Anthony D. Knerr
/s/ Ann R. Leven Trustee November 16, 2000
------------------------------------------
Ann R. Leven
/s/ Thomas F. Madison Trustee November 16, 2000
------------------------------------------
Thomas F. Madison
/s/ Charles E. Peck Trustee November 16, 2000
------------------------------------------
Charles E. Peck
/s/ Wayne A. Stork Trustee November 16, 2000
------------------------------------------
Wayne A. Stork
/s/ janet L. Yeomans Trustee November 16, 2000
------------------------------------------
Janet L. Yeomans
</TABLE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Exhibits
to
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
----------- -------
EX-99.D1 Investment Management Agreement (December 17, 1999)
EX-99.E1IV Adoption Agreement (December 17, 1999) Relating to
Distribution Agreements
EX-99.E3 Dealer's Agreement
EX-99.G2 Securities Lending Agreement (December 22, 1998)
EX-99.H2 Adoption Agreement (December 17, 1999) Relating to
Shareholders Services Agreement
EX-99.H3 Schedule A (April 20, 2000) to Shareholders Services
Agreement
EX-99.N Plan under Rule 18f-3
EX-99.P Codes of Ethics
