DELAWARE GROUP PREMIUM FUND INC, 497, 1998-10-30

DELAWARE GROUP PREMIUM FUND INC
497, 1998-10-30

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<PAGE>

PROSPECTUS
MAY 1, 1998
(as revised November 1, 1998)

DELAWARE GROUP PREMIUM FUND, INC.
1818 Market Street, Philadelphia, PA 19103

Delaware Group Premium Fund, Inc. (the "Fund") is an open-end management
investment company which is intended to meet a wide range of investment
objectives with its various separate Portfolios. Each Portfolio ("Series") is in
effect a separate fund issuing its own shares. The shares of the Fund are sold
only to separate accounts of life insurance companies ("life companies"). The
separate accounts are used in conjunction with variable annuity contracts and
variable life insurance policies ("variable contracts"). The separate accounts
invest in shares of the various Series in accordance with allocation
instructions received from contract owners. The investment objectives and
principal policies of the Series are described below. See Inves tment Objectives
and Policies. Although each Series will constantly strive to attain its
objective, there can be no assurance that it will be attained.
This Prospectus sets forth information that you should read and consider
before you invest. Please retain it for future reference. A Statement of
Additional Information ("Part B" of the Fund's registration statement), dated
May 1, 1998, as revised November 1, 1998 and as it may be amended from time to
time, contains additional information about the Fund and has been filed with the
Securities and Exchange Commission ("SEC"). Part B is incorporated by reference
into this Prospectus and is available, without charge, by writing to Delaware
Distributors, L.P. at the above address or by calling 1-800-523-1918. The SEC
also maintains a Web site (http://www.sec.gov) that contains Part B, material
incorporated by reference into the Fund's registration statement, and other
information regarding registrants that electronically file with the SEC. The
Series' financial statements appear in the Fund's Annual Report, which will
accompany any response to requests for Part B.

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

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

Decatur Total Return Series--seeks the highest possible total rate of return
by selecting issues that exhibit the potential for capital appreciation while
providing higher than average dividend income. This Series has the same
objective and investment disciplines as Decatur Total Return Fund of Delaware
Group Equity Funds II, Inc., a separate fund in the Delaware Investments family,
in that it invests generally, but not exclusively, in common stocks and
income-producing securities convertible into common stocks, consistent with the
Series' objective.
Delchester Series--seeks as high a current income as possible by investing
in rated and unrated corporate bonds (including high-yield bonds commonly known
as junk bonds), U.S. government securities and commercial paper. This Series has
the same objective and investment disciplines as Delchester Fund of Delaware
Group Income Funds, Inc., a separate fund in the Delaware Investments family. An
investment in this Series may involve greater risks than an investment in a
portfolio comprised primarily of investment grade 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. This Series has the
same objective and investment disciplines as International Equity Series of
Delaware Group Global & International Funds, Inc., a separate fund in the
Delaware Investments family, in that it invests in a broad range of equity
securities of foreign issuers, including common stocks, preferred stocks,
convertible securities and warrants, consistent with the Series' objective.

1
<PAGE>

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. Emphasis will also be
placed on securities of companies that may be temporarily out of favor or whose
value is not yet recognized by the market. This Series, formerly known as Value
Series, has the same objective and investment disciplines as Small Cap Value
Fund of Delaware Group Equity Funds V, Inc., a separate fund in the Delaware
Investments family.
Trend Series--seeks long-term capital appreciation by investing primarily in
small-cap common stocks and convertible securities of emerging and other
growth-oriented companies. These securities will have been judged to be
responsive to changes in the market place and to have fundamental
characteristics to support growth. Income is not an objective. This Series has
the same objective and investment disciplines as Trend Fund of Delaware Group
Equity Funds III, Inc., a separate fund in the Delaware Investments family.
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. Under normal
circumstances, the Series will invest at least 65% of its total assets in
dividend paying common stocks. This Series has the same objective and investment
disciplines as Devon Fund of Delaware Group Equity Funds I, Inc., a separate
fund in the Delaware Investments family.
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. The Series is
an international fund. As such, under normal market conditions, at least 65% of
the Series' assets will be invested in equity securities of issuers organized or
having a majority of their assets or deriving a majority of their operating
income in at least three countries that are considered to be emerging or
developing. This Series has the same objective and investment disciplines as
Emerging Markets Series of Delaware Group Global & International Funds, Inc., a
separate fund in the Delaware Investments family.
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. This Series, formerly known as
Quantum Series, has the same objective and investment disciplines as Social
Awareness Fund of Delaware Group Equity Funds II, Inc., a separate fund in the
Delaware Investments family.
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. This Series has the same objective and investment discipline as The
Real Estate Investment Trust Portfolio and The Real Estate Investment Trust
Portfolio II of Delaware Pooled Trust, Inc., separate funds in the Delaware
Investments family, which also invest in securities of companies primarily
engaged in the real estate industry.

2
<PAGE>

TABLE OF CONTENTS

Cover Page.....................................................................1
Summary Information............................................................4
Financial Highlights...........................................................6
Investment Objectives and Policies............................................11
Introduction..............................................................11
Decatur Total Return Series...............................................11
Delchester Series.........................................................11
International Equity Series...............................................12
Small Cap Value Series....................................................14
Trend Series..............................................................15
Devon Series..............................................................16
Emerging Markets Series...................................................16
Social Awareness Series...................................................17
REIT Series...............................................................18
Purchase and Redemption.......................................................21
Dividends and Distributions...................................................21
Taxes.........................................................................21
Calculation of Offering Price and Net Asset Value Per Share...................21
Management of the Fund........................................................22
Performance Information...................................................25
Distribution and Service..................................................26
Expenses..................................................................26
Description of Fund Shares................................................27
Other Considerations..........................................................27
Appendix A--Ratings...........................................................36

3
<PAGE>

SUMMARY INFORMATION
Investment Objectives and Policies
Each Series has a different investment objective and seeks to achieve its
objective by pursuing different investment strategies. See Cover Page of this
Prospectus and Investment Objectives and Policies.

Special Considerations and Risk Factors
Prospective investors should consider a number of factors depending upon the
Series in which they propose to invest:
1. The International Equity and Emerging Markets Series invest primarily in
securities issued by non-United States companies. Each of the other Series may
also invest a portion of their assets in securities of such issuers and
companies. Investing in securities of non-United States companies which are
generally denominated in foreign currencies, and utilization of forward foreign
currency exchange contracts in connection with transactions in such securities
involve certain risk and opportunity considerations not typically associated
with investing in the securities of United States companies and issuers. See
Foreign Currency Transactions under International Equity Series a nd Foreign
Securities and Foreign Currency Transactions and Special Risk Considerations
under Other Considerations.
2. Each Series has the right to engage in certain options transactions for
hedging purposes to counterbalance portfolio volatility. The Series do not
engage in such activities for speculative purposes, but there are certain risks
associated with the use of options which a prospective investor should consider.
See Options under Other Considerations.
3. The International Equity, Small Cap Value, Trend, Devon, Emerging
Markets, Social Awareness and REIT Series also may engage in certain hedging
transactions involving futures contracts and options on such contracts, and in
connection with such activities will maintain certain collateral in special
accounts established with or on behalf of futures commission merchants. While
the Series do not engage in such transactions for speculative purposes, there
are risks which result from the use of these instruments which an investor
should consider. The Fund is not registered as a commodity pool operator nor is
Delaware International, Delaware Management or the Sub-Advisers registered as
commodities trading advisers in reliance upon various exemptive rules. See
Futures Contracts and Options on Future Contracts and Risk Factors under
International Equity Series and Futures Contracts and Options on Futures
Contracts under Other Considerations.

<PAGE>

4. The assets of Delchester Series may be invested primarily in high-yield
securities (junk bonds) and Emerging Markets Series may invest up to 35% of its
net assets in high-yield, high risk fixed income securities, and greater risks
may be involved in an investment in these Series than in an investment in a
mutual fund comprised primarily of investment grade bonds. See Risk Factors
under Delchester Series.
5. While Emerging Markets and REIT Series intend to seek to qualify as
"diversified" investment companies under provisions of Subchapter M of the
Internal Revenue Code, as amended (the "Code"), the Series will not be
diversified under the 1940 Act. Thus, while at least 50% of a Series' total
assets will be represented by cash, cash items, U.S. government securities and
other securities limited in respect of any one issuer to an amount not greater
than 5% of the Series' total assets, it will not satisfy the 1940 Act
requirement in this respect, which applies that test to 75% of the Series'
assets. A nondiversified portfolio is believed to be subject to greater risk
because adverse effects on the portfolio's security holdings may affect a larger
portion of the overall assets.
6. The International Equity Series may invest in issuers located or
operating in markets of emerging countries, and the Emerging Markets Series will
invest primarily in such issuers. The securities markets in these countries may
be subject to a greater degree of economic, political or social instability than
is the case in the United States, Western Europe and other developed markets.
See Special Risk Considerations under Other Considerations.
7. The REIT Series concentrates its investments in the real estate industry,
so its net asset value can be expected to fluctuate in light of factors
affecting that industry and may fluctuate more widely than a portfolio that
invests in a broader range of industries. By investing primarily in securities
of REITs, the Series is also subject to interest rate risk.

4
<PAGE>

Investment Managers and Sub-Advisers
Delaware Management Company ("Delaware Management") furnishes investment
management services to the Decatur Total Return, Delchester, Small Cap Value,
Trend, Devon, Social Awareness and REIT Series, subject to the supervision and
direction of the Fund's Board of Directors. See Management of the Fund for
information about Delaware Management and the fees payable under each Series'
Investment Management Agreement.
Delaware International Advisers Ltd. ("Delaware International") furnishes
investment management services to the International Equity and Emerging Markets
Series, subject to the supervision and direction of the Fund's Board of
Directors. See Management of the Fund for information about Delaware
International and the fees payable under each Series' Investment Management
Agreement.
Vantage Global Advisors, Inc. ("Vantage") serves as Sub-Adviser to Social
Awareness Series. Lincoln Investment Management, Inc. ("Lincoln") serves as
Sub-Adviser to REIT Series. See Management of the Fund f or information about
the Sub-Advisers and the fees payable under the Sub-Advisory Agreements.

Purchase and Redemption
Shares of the Series are sold only to separate accounts of life insurance
companies. Purchases and redemptions are made at the net asset value
calculated after receipt of the purchase or redemption order. None of the
Series nor Delaware Distributors, L.P. (the "Distributor"), assesses a charge
for purchases or redemptions. See Purchase and Redemption.

Open-End Investment Company
The Fund, which was organized as a Maryland corporation in 1987, is an
open-end registered management investment company. With the exception of
Emerging Markets and REIT Series, each Series operates as a diversified fund as
defined by the Investment Company Act of 1940 (the "1940 Act"). Emerging Markets
and REIT Series operate as nondiversified funds as defined by the 1940 Act.

5
<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights are derived from the financial statements of
Delaware Group Premium Fund, Inc. and have been audited by Ernst & Young LLP,
independent auditors. The data should be read in conjunction with the financial
statements, related notes, and the report of Ernst & Young LLP, all of which are
incorporated by reference into Part B. Further information about each Series'
performance is contained in the Fund's Annual Report to shareholders. A copy of
the Fund's Annual Report (including the report of Ernst & Young LLP) may be
obtained from the Fund upon request at no charge. REIT Series commenced
operations after the close of the Fund's most recent fiscal year; consequently,
no financial highlights are presented for this Series.
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Decatur Total Return Series
------------------------------------------------------------------------

Year Ended
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............. $15.980 $14.830 $11.480 $12.510 $11.220 $10.750
Income From Investment Operations:
Net investment income............................ 0.324 0.377 0.416 0.412 0.434 0.416
Net realized and unrealized gain (loss)
on investments.................................. 4.216 2.398 3.574 (0.422) 1.266 0.504
------- ------- ------- ------- ------- -------
Total from investment operations................. 4.540 2.775 3.990 (0.010) 1.700 0.920
------- ------- ------- ------- ------- -------
Less Dividends and Distributions:
Dividends from net investment income............. (0.370) (0.420) (0.430) (0.420) (0.410) (0.450)
Distributions from net realized gain
on investment transaction...................... (1.350) (1.205) (0.210) (0.600) none none
------- ------- ------- ------- ------- -------
Total dividends and distributions................ (1.720) (1.625) (0.640) (1.020) (0.410) (0.450)
------- ------- ------- ------- ------- -------
Net asset value, end of period................... $18.800 $15.980 $14.830 $11.480 $12.510 $11.220
======= ======= ======= ======= ======= =======
- -----------------------------------------------------------------------------------------------------------------------------------
Total return(2).................................. 31.00% 20.72% 36.12% (0.20%) 15.45%(3) 8.82%(3)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data:
Net assets, end of period (000 omitted).......... $401,402 $166,647 $109,003 $72,725 $65,519 $38,278
Ratio of expenses to average net assets.......... 0.71% 0.67% 0.69% 0.71% 0.75% 0.79%
Ratio of expenses to average net assets
prior to expense limitation.................... 0.71% 0.67% 0.69% 0.71% 0.76% 0.81%
Ratio of net investment income to
average net assets............................. 2.02% 2.66% 3.24% 3.63% 3.95% 3.86%
Ratio of net investment income to average
net assets prior to expense limitation......... 2.02% 2.66% 3.24% 3.63% 3.94% 3.84%
Portfolio turnover............................... 54% 81% 85% 91% 67% 72%
Average commission rate paid(4).................. $0.0600 $0.0600 N/A N/A N/A N/A

<PAGE>

Decatur Total Return Series
--------------------------------------------
7/28/88(1)
through
12/31/91 12/31/90 12/31/89 12/31/88
<S> <C> <C> <C> <C>
Net asset value, beginning of period............. $ 9.240 $11.400 $10.160 $10.000
Income From Investment Operations:
Net investment income............................ 0.450 0.449 0.281 0.093
Net realized and unrealized gain (loss)
on investments.................................. 1.550 (1.919) 1.034 0.067
------- ------- ------- -------
Total from investment operations................. 2.000 (1.470) 1.315 0.160
------- ------- ------- -------
Less Dividends and Distributions:
Dividends from net investment income............. (0.490) (0.560) (0.075) none
Distributions from net realized gain
on investment transaction...................... none (0.130) none none
------- ------- ------- -------
Total dividends and distributions................ (0.490) (0.690) (0.075) none
------- ------- ------- -------
Net asset value, end of period................... $10.750 $ 9.240 $11.400 $10.160
======= ======= ======= =======
- --------------------------------------------------------------------------------------------------------
Total return(2).................................. 22.32% (13.31%) 13.04% 3.77%
- --------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data:
Net assets, end of period (000 omitted).......... $34,840 $29,598 $12,959 $1,873
Ratio of expenses to average net assets.......... 0.85% 0.96% 1.31% 2.00%
Ratio of expenses to average net assets
prior to expense limitation.................... 0.85% 0.96% 1.31% 2.00%
Ratio of net investment income to
average net assets............................. 4.46% 5.80% 5.06% 6.40%
Ratio of net investment income to average
net assets prior to expense limitation......... 4.46% 5.80% 5.06% 6.40%
Portfolio turnover............................... 79% 34% 26% -
Average commission rate paid(4).................. N/A N/A N/A N/A

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

(2) Total return does not reflect expenses that apply to the Separate Accounts
or to the related insurance policies and inclusion of these charges would
reduce total return figures for all periods shown.

(3) Total return reflects the expense limitation referenced in Expenses under
Management of the Fund.

(4) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.

6
<PAGE>

<TABLE>
<CAPTION>
Delchester Series
---------------------------------------------------------------------

Year Ended
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period................... $9.170 $8.940 $8.540 $9.770 $9.290 $9.130
Income From Investment Operations:
Net investment income.................................. 0.863 0.853 0.872 0.962 0.976 1.022
Net realized and unrealized gain (loss)
on investments........................................ 0.332 0.230 0.400 (1.230) 0.480 0.160
------ ------ ------ ------ ------ ------
Total from investment operations..................... 1.195 1.083 1.272 (0.268) 1.456 1.182
------ ------ ------ ------ ------ ------
Less Dividends and Distributions:
Dividends from net investment income................... (0.855) (0.853) (0.872) (0.962) (0.976) (1.022)
Distributions from net realized gain
on investment transactions........................... none none none none none none
------ ------ ------ ------ ------ ------
Total dividends and distributions...................... (0.855) (0.853) (0.872) (0.962) (0.976) (1.022)
------ ------ ------ ------ ------ ------
Net asset value, end of period......................... $9.510 $9.170 $8.940 $8.540 $9.770 $9.290
====== ====== ====== ====== ====== ======
- --------------------------------------------------------------------------------------------------------------------------------
Total return(2)........................................ 13.63% 12.79% 15.50% (2.87%) 16.36%(3) 13.44%(3)
- --------------------------------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data:
Net assets, end of period (000 omitted)................ $98,875 $67,665 $56,605 $43,686 $34,915 $11,311
Ratio of expenses to average net assets................ 0.70% 0.70% 0.69% 0.72% 0.80% 0.80%
Ratio of expenses to average net assets
prior to expense limitation.......................... 0.70% 0.70% 0.69% 0.72% 0.82% 0.94%
Ratio of net investment income to
average net assets................................... 9.24% 9.54% 9.87% 10.56% 10.05% 10.93%
Ratio of net investment income to average
net assets prior to expense limitation............... 9.24% 9.54% 9.87% 10.56% 10.03% 10.79%
Portfolio turnover..................................... 121% 93% 74% 47% 43% 73%

<PAGE>

Delchester Series
---------------------------------------------
7/28/88(1)
through
12/31/91 12/31/90 12/31/89 12/31/88
<S> <C> <C> <C> <C>
Net asset value, beginning of period................... $7.480 $9.200 $9.860 $10.000
Income From Investment Operations:
Net investment income.................................. 1.032 1.114 1.085 0.475
Net realized and unrealized gain (loss)
on investments........................................ 1.650 (1.720) (0.635) (0.140)
------ ------ ------ -------
Total from investment operations..................... 2.682 (0.606) 0.450 0.335
------ ------ ------ -------
Less Dividends and Distributions:
Dividends from net investment income................... (1.032) (1.114) (1.085) (0.475)
Distributions from net realized gain
on investment transactions........................... none none (0.025) none
------ ------ ------ -------
Total dividends and distributions...................... (1.032) (1.114) (1.110) (0.475)
------ ------ ------ -------
Net asset value, end of period......................... $9.130 $7.480 $9.200 $9.860
====== ====== ====== =======
- --------------------------------------------------------------------------------------------------------
Total return(2)........................................ 37.53%(3) (7.13%)(3) 4.62%(3) 8.15%(3)
- --------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data:
Net assets, end of period (000 omitted)................ $5,918 $5,092 $4,427 $2,425
Ratio of expenses to average net assets................ 0.80% 0.80% 0.80% 0.80%
Ratio of expenses to average net assets
prior to expense limitation.......................... 1.06% 1.17% 1.50% 1.21%
Ratio of net investment income to
average net assets................................... 12.05% 13.30% 11.21% 11.00%
Ratio of net investment income to average
net assets prior to expense limitation............... 11.80% 12.93% 10.50% 10.58%
Portfolio turnover..................................... 70% 115% 19% 31%

</TABLE>

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

(3) Total return reflects the expense limitation referenced in Expenses under
Management of the Fund.

7
<PAGE>

<TABLE>
<CAPTION>
International Equity Series
----------------------------------------------------------------------
10/29/92(1)
Year Ended through
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $15.110 $13.120 $11.840 $11.620 $10.030 $10.000
Income From Investment Operations:
Net investment income(2)..................... 0.359 0.557 0.419 0.220 0.052 0.015
Net realized and unrealized gain (loss)
on investments and foreign currencies....... 0.596 1.966 1.191 0.080 1.548 0.015
------- ------- ------- ------- ------- -------
Total from investment operations............. 0.955 2.523 1.610 0.300 1.600 0.030
------- ------- ------- ------- ------- -------
Less Dividends and Distributions:
Dividends from net investment income......... (0.545) (0.420) (0.240) (0.070) (0.010) none
------- ------- ------- ------- ------- -------
Distributions from net realized gain
on investment transactions................. none (0.113) (0.090) (0.010) none none
------- ------- ------- ------- ------- -------
Total dividends and distributions............ (0.545) (0.533) (0.330) (0.080) (0.010) none
------- ------- ------- ------- ------- -------
Net asset value, end of period............... $15.520 $15.110 $13.120 $11.840 $11.620 $10.030
======= ======= ======= ======= ======= =======
- --------------------------------------------------------------------------------------------------------------------------
Total return(3).............................. 6.60%(4) 20.03%(4) 13.98%(4) 2.57%(4) 15.97%(4) 1.73%(4)
- --------------------------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data:
Net assets, end of period (000 omitted)...... $198,863 $131,428 $81,548 $57,649 $16,664 $177
Ratio of expenses to average net assets...... 0.85% 0.80% 0.80% 0.80% 0.80% (5)
Ratio of expenses to average net assets
prior to expense limitation................ 0.90% 0.91% 0.89% 1.01% 1.85% (5)
Ratio of net investment income to
average net assets......................... 2.28% 4.71% 3.69% 2.63% 1.85% (5)
Ratio of net investment income to average
net assets prior to expense limitation..... 2.23% 4.60% 3.60% 2.42% 0.80% (5)
Portfolio turnover........................... 7% 8% 19% 13% 9% (5)
Average commission rate paid(6).............. $0.0150 $0.0100 N/A N/A N/A N/A

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

(2) Per share information for the period ended December 31, 1997 was based on
the average shares outstanding method.

(3) Total return does not reflect expenses that apply to the Separate Accounts
or to the related insurance policies and inclusion of these charges would
reduce total return figures for all periods shown.

(4) Total return reflects the expense limitation referenced in Expenses under
Management of the Fund.

(5) The ratios of expenses and net investment income to average net assets and
portfolio turnover have been omitted as management believes that such ratios
are not meaningful due to the limited net assets of this Series.

(6) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.

8
<PAGE>

<TABLE>
<CAPTION>
Trend Series
-------------------------------------------------------
7/23/93(1)
Year Ended through
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $14.560 $14.020 $10.160 $10.200 $10.000
Income From Investment Operations:
Net investment income........................ 0.019 0.050 0.098 0.079 none
Net realized and unrealized gain (loss)
on investments.............................. 3.031 1.380 3.852 (0.119) 0.200
------- ------- ------- ------- -------
Total from investment operations............. 3.050 1.430 3.950 (0.040) 0.200
------- ------- ------- ------- -------
Less Dividends and Distributions:
Dividends from net investment income......... (0.050) (0.090) (0.090) none none
Distributions from net realized gain
on investment transactions................. (0.180) (0.800) none none none
------- ------- ------- ------- -------
Total dividends and distributions............ (0.230) (0.890) (0.090) none none
------- ------- ------- ------- -------
Net asset value, end of period............... $17.380 $14.560 $14.020 $10.160 $10.200
======= ======= ======= ======= =======
- -------------------------------------------------------------------------------------------------------------
Total return(2).............................. 21.37%(3) 11.00%(3) 39.21%(3) (0.39%)(3) 2.00%(3)
- -------------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data:
Net assets, end of period (000 omitted)...... $118,276 $56,423 $20,510 $7,087 $204
Ratio of expenses to average net assets...... 0.80% 0.80% 0.80% 0.80% (4)
Ratio of expenses to average net assets
prior to expense limitation................ 0.88% 0.92% 0.96% 1.47% (4)
Ratio of net investment income to
average net assets......................... 0.16% 0.56% 1.03% 1.63% (4)
Ratio of net investment income to average
net assets prior to expense limitation..... 0.08% 0.44% 0.87% 0.96% (4)
Portfolio turnover........................... 125% 112% 76% 59% (4)
Average commission rate paid(5).............. $0.0599 $0.0600 N/A N/A N/A

<PAGE>

Small Cap Value Series (formerly Value Series)
-------------------------------------------------------
7/23/93(1)
Year Ended through
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
Net asset value, beginning of period......... $14.500 $12.470 $10.290 $10.210 $10.000
Income From Investment Operations:
Net investment income........................ 0.122 0.112 0.192 0.148 none
Net realized and unrealized gain (loss)
on investments.............................. 4.338 2.548 2.208 (0.068) 0.210
------- ------- ------- ------- -------
Total from investment operations........... 4.460 2.660 2.400 0.080 0.210
------- ------- ------- ------- -------
Less Dividends and Distributions:
Dividends from net investment income......... (0.110) (0.180) (0.150) none none
Distributions from net realized gain
on investment transactions................. (0.930) (0.450) (0.070) none none
------- ------- ------- ------- -------
Total dividends and distributions............ (1.040) (0.630) (0.220) none none
------- ------- ------- ------- -------
Net asset value, end of period............... $17.920 $14.500 $12.470 $10.290 $10.210
======= ======= ======= ======= =======
- -------------------------------------------------------------------------------------------------------------
Total return(2).............................. 32.91%(3) 22.55%(3) 23.85%(3) 0.78%(3) 2.10%(3)
- -------------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data:
Net assets, end of period (000 omitted)...... $84,071 $23,683 $11,929 $6,291 $210
Ratio of expenses to average net assets...... 0.80% 0.80% 0.80% 0.80% (4)
Ratio of expenses to average net assets
prior to expense limitation................ 0.90% 0.99% 0.96% 1.41% (4)
Ratio of net investment income to
average net assets......................... 1.24% 1.28% 2.13% 2.62% (4)
Ratio of net investment income to average
net assets prior to expense limitation..... 1.14% 1.09% 1.97% 2.01% (4)
Portfolio turnover........................... 41% 84% 71% 26% (4)
Average commission rate paid(5).............. $0.0600 $0.0600 N/A N/A N/A

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

(3) Total return reflects the expense limitation referenced in Expenses under
Management of the Fund.

(4) The ratios of expenses and net investment income to average net assets and
portfolio turnover have been omitted as management believes that such ratios
are not meaningful due to the limited net assets of this Series.

(5) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.

9
<PAGE>

<TABLE>
<CAPTION>
Social Awareness
Series (formerly Emerging
Quantum Series) Devon Series Markets Series
------------------------------------------------
5/1/97(1) 5/1/97(1) 5/1/97(1)
through through through
12/31/97 12/31/97 12/31/97
<S> <C> <C> <C>
Net asset value, beginning of period......... $10.000 $10.000 $10.000
Income From Investment Operations:
Net investment income........................ 0.051 0.080 0.060(2)
Net realized and unrealized gain (loss)
on investments..............................
and foreign currencies..................... 2.789 2.650 (1.180)
------- ------- -------
Total from investment operations............. 2.840 2.730 (1.120)
------- ------- -------
Less Dividends and Distributions:
Dividends from net investment income......... none none none
Distributions from net realized gain
on investment transactions................. none none none
------- ------- -------
Total dividends and distributions............ none none none
------- ------- -------
Net asset value, end of period............... $12.840 $12.730 $8.880
======= ======= =======
Total return(3).............................. 28.40%(4) 27.30%(4) (11.20%)(4)
Ratios and Supplemental Data:
Net assets, end of period (000 omitted)...... $7,800 $16,653 $5,776
Ratio of expenses to average net assets...... 0.80% 0.80% 1.50%
Ratio of expenses to average net assets
prior to expense limitation................ 1.40% 0.91% 2.45%
Ratio of net investment income to
average net assets......................... 1.13% 2.01% 0.89%
Ratio of net investment income (loss)
to average net assets prior to
expense limitation......................... 0.53% 1.90% (0.06%)
Portfolio turnover........................... 52% 80% 48%
Average commission rate paid(5).............. $0.0334 $0.0568 $0.0036

</TABLE>
- ---------------------

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

(2) Per share information for the period ended December 31, 1997 was based on
the average shares outstanding method.

(4) Total return reflects the expense limitation referenced in Expenses under
Management of the Fund.

(5) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.

10
<PAGE>

INVESTMENT OBJECTIVES
AND POLICIES

INTRODUCTION
The Fund, a corporation organized in Maryland on February 19, 1987, is an
open-end management investment company offering various of shares.
The investment objective of each Series, other than the REIT Series, is a
fundamental policy and cannot be changed without approval by the holders of a
"majority" of that Series' outstanding shares, as defined in the 1940 Act.
Although each Series will constantly strive to attain its objective, there can
be no assurance that it will be attained. In addition to the objective and
investment techniques described below for each Series, see Other Considerations
for investment techniques available to various Series of the Fund. Part B
provides more information on the Series' investment policies and restrictions.

DECATUR TOTAL RETURN SERIES
The objective of Decatur Total Return Series is to seek to achieve long-term
growth by investing primarily in securities that provide the potential for
income and capital appreciation without undue risk to principal. The Series
seeks to provide shareholders with a current return while allowing them to
participate in the capital gains potential associated with equity investments.

Investment Strategy
The Series generally invests in common stocks and income-producing
securities that are convertible into common stocks. The portfolio manager looks
for securities having a better dividend yield than the average of the Standard &
Poor's ("S&P") 500 Stock Index, as well as capital gains potential.
All available types of appropriate securities are under continuous study.
The Series may invest in all classes of securities, bonds and preferred and
common stocks in any proportion deemed prudent under existing market and
economic conditions. In seeking to obtain its objective, the Series may hold
securities for any period of time. For temporary, defensive purposes, the Series
may hold a substantial portion of its assets in cash or short-term obligations.
Income-producing convertible securities include preferred stock and
debentures that pay a stated or variable interest rate or dividend and are
convertible into common stock at an established ratio. These securities, which
are usually priced at a premium to their conversion value, may allow the Series
to receive current income while participating to some extent in any appreciation
in the underlying common stock. The value of a convertible security tends to be
affected by changes in interest rates, as well as factors affecting the market
value of the underlying common stock.

<PAGE>

The Series may be suitable for the patient investor interested in long-term
growth. The investor should be willing to accept the risks associated with
investments in common stocks and income-producing securities, including those
that are convertible into common stocks. The Series is suitable for investors
who want a current return with the possibility of capital appreciation.
Naturally, the Series cannot assure a specific rate of return or that principal
will be protected. The value of the Series' shares can be expected to fluctuate
depending upon market conditions. However, through the cautious selection and
supervision of its portfolio, the Series will strive to achieve its objective of
long-term growth through both income and capital appreciation without undue risk
to principal.

DELCHESTER SERIES
The objective of the Delchester Series is to seek the highest current income
which Delaware Management believes is consistent with prudent investment
management. The strategy is to invest primarily in those securities having a
liberal and consistent yield and those tending to reduce the risk of market
fluctuations. The Series will invest at least 80% of its assets at the time of
purchase in:
(1) Corporate Bonds. The Series will invest in both rated and unrated bonds.
See Appendix A to this Prospectus for information concerning ratings. Unrated
bonds may be more speculative in nature than rated bonds;
(2) Government Securities. Securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities; and
(3) Commercial Paper. Commercial paper of companies rated A-1 or A-2 by S&P
or rated P-1 or P-2 by Moody's Investors Service, Inc. ("Moody's").

Investment Strategy
The Series expects to invest at least 80% of its assets in securities of the
types described above. The Series must invest the remaining assets, if any, in
income-producing securities, including common stocks and preferred stocks, some
of which may have convertible features or attached warrants. For temporary
defensive purposes, the Series may hold a substantial portion of its assets in
cash or short-term obligations. In the long run, the Series' assets are expected
to be invested primarily in unrated corporate bonds and bonds rated BBB or lower
by S&P.

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

11
<PAGE>

Volatility of the High-Yield Market. Although the market for high-yield
bonds has been in existence for many years, including periods of economic
downturns, the high-yield market grew rapidly during the long economic expansion
which took place in the United States during the 1980s. During that economic
expansion, the use of high-yield debt securities to fund highly leveraged
corporate acquisitions and restructurings increased dramatically. As a result,
the high-yield market grew substantially during that economic expansion.
Although experts disagree on the impact recessionary periods have had and will
have on the high-yield market, some analysts believe a protracted economic
downturn would severely disrupt the market for high-yield bonds, would adversely
affect the value of outstanding bonds and would adversely affect the ability of
high-yield issuers to repay principal and interest. Those analysts cite
volatility experienced in the high-yield market in the past as evidence for
their position. It is likely that protracted periods of economic uncertainty
would result in increased volatility in the market prices of high-yield bonds,
an increase in the number of high-yield bond defaults and corresponding
volatility in the Series' net asset value. At times in the past, uncertainty and
volatility in the high-yield market resulted in volatility in the Series' net
asset value.
Redemptions. If, as a result of volatility in the high-yield market or other
factors, the Series experiences substantial net redemptions of the Series'
shares for a sustained period of time (i.e., more shares of the Series are
redeemed than are purchased), the Series may be required to sell securities
without regard to the investment merits of the securities to be sold. If the
Series sells a substantial number of securities to generate proceeds for
redemptions, the asset base of the Series will decrease and the Series' expense
ratio may increase.
Liquidity and Valuation. The secondary market for high-yield securities is
currently dominated by institutional investors, including mutual funds and
certain financial institutions. There is generally no established retail
secondary market for high-yield securities. As a result, the secondary market
for high-yield securities is more limited and less liquid than other secondary
securities markets. The high-yield secondary market is particularly susceptible
to liquidity problems when the institutions which dominate it temporarily cease
buying bonds for regulatory, financial or other reasons, such as the savings and
loan crisis. A less liquid secondary market may have an adverse affect on the
Series' ability to dispose of particular issues, when necessary, to meet the
Series' liquidity needs or in response to a specific economic event, such as the
deterioration in the creditworthiness of the issuer. In addition, a less liquid
secondary market makes it more difficult for the Series to obtain precise
valuations of the high-yield securities in its portfolio. During periods
involving such liquidity problems, judgment plays a greater role in valuing
high-yield securities than is normally the case. The secondary market for
high-yield securities is also generally considered to be more likely to be
disrupted by adverse publicity and investor perceptions than the more
established secondary securities markets. The Series' privately placed
high-yield securities are particularly susceptible to the liquidity and
valuation risks outlined above.

<PAGE>

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

INTERNATIONAL EQUITY SERIES
The objective of the International Equity Series is to seek long-term growth
without undue risk to principal. The Series seeks to achieve this objective by
investing primarily in securities that provide the potential for capital
appreciation and income. The Series is an international fund. As such, it may
invest in securities issued in any currency and may hold foreign currency. Under
normal circumstances, at least 65% of the Series' assets will be invested in the
securities of issuers organized or having a majority of their assets in or
deriving a majority of their operating income in at least three different
countries outside of the United States. Securities of issuers within a given
country may be denominated in the currency of another country or in
multinational currency units such as the European Currency Unit ("ECU"). The
Series will operate as a diversified fund for purposes of the 1940 Act.

12
<PAGE>

Investment Strategy
The Series will attempt to achieve its objective by investing in a broad
range of equity securities including common stocks, preferred stocks,
convertible securities and warrants. The Series may also invest in sponsored or
unsponsored American Depositary Receipts, European Depositary Receipts or Global
Depositary Receipts. Delaware International will employ a dividend discount
analysis across country boundaries and will also use a purchasing power parity
approach to identify currencies and markets that are overvalued or undervalued
relative to the U.S. dollar. With a dividend discount analysis, Delaware
International looks at future anticipated dividends and discounts the value of
those dividends back to what they would be worth if they were being paid today.
Delaware International uses this technique to attempt to compare the value of
different investments. With a purchasing power parity approach, Delaware
International attempts to identify the amount of goods and services that a
dollar will buy in the United States and compare that to the amount of a foreign
currency required to buy the same amount of goods and services in another
country. When the dollar buys less, the foreign currency may be considered to be
overvalued. When the dollar buys more, the currency may be considered to be
undervalued. Eventually, currencies should trade at levels that should make it
possible for the dollar to buy the same amount of goods and services overseas as
in the United States.
While the Series may purchase securities in any foreign country, developed
and developing, or emerging market countries, it is currently anticipated that
the countries in which the Series may invest will include, but not be limited
to, Canada, Germany, the United Kingdom, France, the Netherlands, New Zealand,
Philippines, Belgium, Spain, Switzerland, Japan, Australia, Hong Kong, and
Singapore and Malaysia. In certain countries, investments may only be made by
purchasing shares of closed-end investment com panies that in turn are
authorized to invest in the securities of such countries. Any investment the
Series may make in other investment companies is limited in amount by the 1940
Act and would involve the indirect payment of a portion of the expenses,
including advisory fees, of such other investment companies.

<PAGE>

For temporary, defensive purposes, the Series may invest all or a
substantial portion of its assets in high quality debt instruments issued by
foreign governments, their agencies, instrumentalities or political
subdivisions, the U.S. government, its agencies or instrumentalities and which
are backed by the full faith and credit of the U.S. government, or issued by
foreign or U.S. companies. Any corporate debt obligations will be rated AA or
better by S&P, or Aa or better by Moody's or, if unrated, will be determined to
be of comparable quality by Delaware International. For example, the Series may
enter the global fixed-income markets when Delaware International believes that
the global equity markets are excessively volatile or overvalued so that the
Series' objective cannot be achieved in such markets. In addition, the Series
may invest in the U.S. fixed-income markets for temporary, defensive purposes
when Delaware International believes that the international equity and
fixed-income markets are evidencing such excessive volatility or overvaluation.
The Series may also invest in the securities listed for defensive investing
pending investment of proceeds from new sales of Series shares and to maintain
sufficient cash to meet redemption requests.
The Series may be suitable for the patient investor interested in long-term
growth through investments that provide the potential for capital appreciation
and income. The investor should be willing to accept the risks associated with
investments in foreign equity securities in which the Series may invest, as well
as the special investment techniques in which the Series may engage. Naturally,
the Series cannot assure a specific rate of return or that principal will be
protected. The value of the Series' shares can be expected to fluctuate
depending upon market conditions. However, through the cautious selection and
supervision of its portfolio, the Series will strive to achieve its objective of
long- term growth. See Other Considerations.

Foreign Currency Transactions
Although the Fund values its assets daily in terms of U.S. dollars, it does
not intend to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. The Series 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 Series 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 Series will convert currency on a
spot basis from time to time, and investors should be aware of the costs of
currency conversion.

13
<PAGE>

The Series 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 Series 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 Series' investment manager believes that the currency of a
particular country may suffer a significant decline against the U.S. dollar or
against another currency, the Series 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 Series' securities denominated in such foreign currency.
The Series will not enter into forward contracts or maintain a net exposure
to such contracts where the consummation of the contracts would obligate the
Series to deliver an amount of foreign currency in excess of the value of the
Series' securities or other assets denominated in that currency.
At the maturity of a forward contract, the Series 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 Series may realize a gain or loss from currency
transactions.
The Series 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 Series and against increases in the U.S. dollar cost of
such securities to be acquired. Call options on foreign currency written by the
Series will be covered, which means that the Series will own the underlying
foreign currency. With respect to put options on foreign currency written by the
Series, the Series 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 Series will be required to pay
upon exercise of the put. See Futures Contracts and Options on Futures Contracts
under Other Considerations.

<PAGE>

Futures Contracts and Options on Futures Contracts
The Series may enter into contracts for the purchase or sale for future
delivery of securities or foreign currencies. The principal purpose of the
purchase or sale of futures contracts for the Series is to protect the Series
against the fluctuations in interest or exchange rates which otherwise might
adversely affect the value of the Series' portfolio securities or adversely
affect the prices of securities which the Series intends to purchase at a later
date without actually buying or selling such securities. See Other
Considerations--Futures Contracts and Options on Futures Contracts.

SMALL CAP VALUE SERIES
The objective of the Series is capital appreciation. The strategy will be to
invest primarily in common stocks and issues convertible into common stocks
which, in the opinion of Delaware Management, have market values which appear
low relative to their underlying value or future earnings and growth potential.
Securities will be purchased that Delaware Management believes to be
undervalued in relation to asset value or long-term earning power of the
companies. Delaware Management may also invest in securities of companies where
current or anticipated favorable changes within a company provide an opportunity
for capital appreciation. Delaware Management's emphasis will be on securities
of companies that may be temporarily out of favor or whose value is not yet
recognized by the market.
While not a fundamental policy, under normal market conditions the Fund
intends to invest 65% of its net assets in securities issued by small cap
companies, defined as those currently having a market capitalization generally
of less than $1.5 billion at the time of purchase. As a general matter, small
cap companies may have more limited product lines, markets and financial
resources than large cap companies. In addition, securities of small cap
companies, generally, may trade less frequently (and with a lesser volume), may
be more volatile and may be somewhat less liquid than securities issued by
larger capitalization companies.
Delaware Management will consider the financial strength of the company, the
nature of its management and any developments affecting the security, the
company or the industry. Securities may be out of favor due to a variety of
factors, such as lack of an institutional following, or unfavorable developments
affecting the issuer of the securities, such as poor earning reports, dividend
reductions or cyclical economic or business conditions. Other securities
considered by Delaware Management would include those of companies where current
or anticipated favorable changes such as a new product or service, technological
breakthrough, management change, projected takeovers, changes in capitalization
or redefinition of future corporate operations provide an opportunity for
capital appreciation. Delaware Management will also consider securities where
trading patterns suggest that significant positions are being accumulated by
officers of the company, outside investors or the company itself. Delaware
Management feels it may uncover situations where those who have a vested
interest in the company feel the securities are undervalued and have
appreciation potential.

14
<PAGE>

Although the Series will constantly strive to attain the objective of
long-term growth, there can be no assurance that it will be attained. If
Delaware Management believes that market conditions warrant, the Series may
employ options strategies. Also, on a temporary, defensive basis, the Series may
invest in fixed-income obligations. The objective of the Series may not be
changed without shareholder approval.

Investment Strategy
While management believes that the Series' objective may best be attained by
investing in common stocks, the Series may also invest in other securities
including, but not limited to, convertible securities, warrants, preferred
stocks, bonds and foreign securities. Although it is expected to receive
relatively less emphasis, the Series may also invest in fixed-income securities
without regard to a minimum grade level in pursuit of its objective where there
are favorable changes in a company's earnings or growth potential or where
general economic conditions and the interest rate environment provide an
opportunity for declining interest rates and consequent appreciation in these
securities. The strategies employed are dependent upon the judgment of Delaware
Management.
In investing for capital appreciation, the Series may hold securities for
any period of time. The degree of portfolio activity will affect brokerage costs
of the Series.
Should the market warrant a temporary, defensive approach, the Series may
also invest in fixed-income obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities, as well as money market
instruments, and corporate bonds rated A or above by Moody's or S&P.
The Series may write covered call options on individual issues as well as
write call options on stock indices. The Series may also purchase put options on
individual issues and on stock indices. Delaware Management will employ these
techniques in an attempt to protect appreciation attained, to offset capital
losses and to take advantage of the liquidity available in the option markets.
The ability to hedge effectively using options on stock indices will depend, in
part, on the correlation between the composition of the index and the Series'
portfolio as well as the price movement of individual securities. The Series
does not currently intend to write or purchase stock index options.
While there is no limit on the amount of the Series' assets which may be
invested in covered call options, the Series will not invest more than 2% of its
net assets in put options. The Series will only use Exchange-traded options. See
Other Considerations--Options, below.
The Series may enter into futures contracts and buy and sell options on
futures contracts relating to securities, securities indices or interest rates.
See Other Considerations--Futures Contracts and Options on Futures Contracts,
below.

<PAGE>

Risk Factors
The Series may be suitable for the patient investor interested in long-term
capital appreciation. The investor should be willing to accept the risks
associated with investments in domestic and international securities (and
currency hedging transactions in connection therewith), as these investments may
be speculative and subject the Series to an additional risk. See Foreign
Securities and Foreign Currency Transactions under Other Considerations.
Investing in a company temporarily out of favor may involve the risk that the
anticipated favorable change may not occur and, as a result, that security may
decline in value or not appreciate as expected. Although it will receive
relatively minor emphasis in pursuit of its objective, the Series may also
purchase, at times, lower rated or unrated corporate bonds without regard to a
grade minimum, which may be considered speculative and may increase the
portfolio's credit risk. Although the Series will not ordinarily purchase bonds
rated below B by Moody's or S&P (i.e., high-yield, high-risk fixed-income
securities), it may do so if Delaware Management believes that capital
appreciation is likely. The Series will not invest more than 25% of its net
assets in bonds rated below B. Investing in such lower rated debt securities may
involve certain risks not typically associated with higher rated securities.
Such bonds are considered very speculative and may possibly be in default or
have interest payments in arrears. See Delchester Series for additional
information on the risks associated with such securities.
Net asset value may fluctuate at times in response to market conditions and,
as a result, the Series is not appropriate for a short-term investor.
This Series is designed primarily for capital appreciation. Providing
current income is not an objective of the Series. Any income produced is
expected to be minimal.

TREND SERIES

Investment Strategy
The objective of the Series is long-term capital appreciation. The strategy
is to invest primarily in the common stocks and securities convertible into
common stocks of emerging and other growth-oriented companies that, in the
judgment of Delaware Management, are responsive to changes within the
marketplace and have the fundamental characteristics to support growth.
The Series will seek to identify changing and dominant trends within the
economy, the political arena and our society. The Series will purchase
securities which it believes will benefit from these trends and which have the
fundamentals to exploit them. The fundamentals include managerial skills,
product development and sales and earnings.
In investing for capital appreciation, the Series may hold securities for
any period of time. The Series may invest in repurchase agreements, but will not
normally do so except to invest excess cash balances. The Series may also invest
in foreign securities.

15
<PAGE>

The Series may purchase privately placed securities the resale of which is
restricted under applicable securities laws. Such securities may offer a higher
return than comparably registered securities but involve some additional risk as
they can be resold only in privately negotiated transactions, in accordance with
an exemption from the registration requirements under applicable securities laws
or after registration.
Income is not an objective of the Series. However, should the market warrant
a temporary defensive approach, the Series may also invest in cash equivalents,
and fixed-income obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities, as well as corporate bonds.
Although the Series will constantly strive to attain the objective of
long-term capital growth, there can be no assurance that it will be attained.
The objective of the Series may not be changed without shareholder approval. P
art B provides more information on the Series' investment policies and
restrictions.
The Series may be suitable for the patient investor interested in long-term
capital appreciation. The prices of common stock, especially those of smaller
companies, tend to fluctuate, particularly in the short-term. The investor
should be willing to accept the risks associated with investments in
growth-oriented securities, some of which may be speculative and subject the
Series to an additional risk.
Net asset value may fluctuate in response to market conditions and, as a
result, the Series is not appropriate for a short-term investor.
This Series is designed primarily for capital appreciation. Providing
current income is not an objective of the Series. Any income produced is
expected to be minimal. An investor should not consider a purchase of Series
shares as equivalent to a complete investment program.
For hedging purposes, the Series may engage in options activity and enter
into futures contracts and options on futures contracts. For a discussion on
these instruments, see Options and Futures Contracts and Options on Futures
Contracts under Other Considerations.

DEVON SERIES
The objective of Devon Series is to seek current income and capital
appreciation.
The Series may be suitable for investors interested in long-term capital
appreciation with a greater emphasis on common stocks and securities convertible
into common stocks. Investors in the Series should be willing to accept the
risks associated with investments in equity securities. Investors in the Devon
Series should also be willing to accept the risks associated with investments in
fixed-income securities. Net asset values may fluctuate in response to market
conditions and, as a result, the Series is not appropriate for a short-term
investor.

Investment Strategy
Devon Series will seek to achieve its objective by investing primarily in
income-producing common stocks, with a focus on common stocks that Delaware
Management believes have the potential for above average dividend increases over
time. Under normal circumstances, the Series will generally invest at least 65%
of its total assets in dividend paying common stocks.

<PAGE>

In selecting stocks for the Series, Delaware Management will focus primarily
on dividend paying common stocks issued by companies with market capitalizations
in excess of $100 million, but is not precluded from purchasing shares of
companies with market capitalizations of less than $100 million. In seeking
stocks with potential for above average dividend increases, Delaware Management
will consider such factors as the historical growth rate of a dividend, the
frequency of prior dividend increases, the issu ing company's potential to
generate cash flows, and the price/earnings multiple of the stock relative to
the market. Delaware Management will generally avoid stocks that it believes are
overvalued and may select stocks with current dividend yields that are lower
than the current yield of the Standard & Poor's 500 Stock Index in exchange for
anticipated dividend growth.
While Delaware Management believes that the Series' objective may best be
attained by investing in common stocks, the Series may also invest in other
securities including, but not limited to, convertible and preferred securities,
rights and warrants to purchase common stock, and various types of fixed-income
securities, such as U.S. government and government agency securities, corporate
debt securities and bank obligations, and may also engage in futures
transactions. The Series may invest in foreign securities.
For additional information about the Series' investment policies and
certain risks associated with investments in certain types of securities, see
Other Considerations.

EMERGING MARKETS SERIES
The objective of Emerging Markets Series is to seek long-term capital
appreciation. The Series seeks to achieve this objective by investing primarily
in equity securities of issuers located or operating in emerging countries. The
Series is an international fund. Under normal circumstances, at least 65% of the
Series' assets will be invested in equity securities of issuers organized or
having a majority of their assets or deriving a majority of their operating
income in at least three different emerging market countries. The Series will
attempt to achieve its objective by investing in a broad range of equity
securities, including common stocks, preferred stocks, convertible securities
and warrants issued by companies located or operating in emerging countries or
the principal securities trading market for which is in an emerging country.
The Series considers an "emerging country" to be any country which is
generally recognized to be an emerging or developing country by the
international financial community, including the World Bank and the
International Finance Corporation, as well as countries that are classified by
the United Nations or otherwise regarded by their authorities as developing. In
addition, any country that is included in the IFC Free Index or MSCI EMF Index
will be considered to be an "emerging country." As of the date of this
Prospectus, there are more than 130 countries which, in Delaware International's
judgment, are generally considered to be emerging or developing countries by the
international financial community, approximately 40 of which currently have
stock markets. Within this group of developing or emerging countries are
included almost every nation in the world, except the United States, Canada,
Japan, Australia, New Zealand and most nations located in Western and Northern
Europe.

16
<PAGE>

Currently, investing in many emerging countries is not feasible, or may, in
Delaware International's opinion, involve unacceptable political risks. The
Series will focus its investments in those emerging countries where Delaware
International considers the economies to be developing strongly and where the
markets are becoming more sophisticated. Delaware International believes that
investment opportunities may result from an evolving long-term international
trend favoring more market-oriented economies, a trend that may particularly
benefit certain countries having developing markets. This trend may be
facilitated by local or international political, economic or financial
developments that could benefit the capital markets in such countries.
In considering possible emerging countries in which the Series may invest,
Delaware International will place particular emphasis on certain factors, such
as economic conditions (including growth trends, inflation rates and trade
balances), regulatory and currency controls, accounting standards and political
and social conditions. It is currently anticipated that the countries in which
the Series may invest will include, but not be limited to, Argentina, Botswana,
Brazil, Chile, China, Colombia, Czech Republi c, Egypt, Estonia, Ghana, Greece,
Hong Kong, Hungary, India, Indonesia, Israel, Ivory Coast, Jamaica, Jordan,
Kenya, Korea, Latvia, Lithuania, Malaysia, Mauritius, Mexico, Morocco, Nigeria,
Pakistan, Peru, the Philippines, Poland, Portugal, Russia, Slovenia, South
Africa, Sri Lanka, Taiwan, Thailand, Turkey, Venezuela and Zimbabwe. As markets
in other emerging countries develop, Delaware International expects to expand
and further diversify the countries in which the Series invests.
Although not an exclusive list of criteria to be considered by Delaware
International, an emerging country equity security is one issued by a company
that, in the opinion of Delaware International, exhibits one or more of the
following characteristics: (i) its principal securities trading market is an
emerging country, as defined above; (ii) while traded in any market, alone or on
a consolidated basis, the company derives 50% or more of its annual revenues
from either goods produced, sales made or services performed in emerging
countries; or (iii) it is organized under the laws of, and has a principal
office in, an emerging country. Determinations as to eligibility will be made by
Delaware International based on publicly available information and inquiries
made of the companies.
The Series may invest in Depositary Receipts, and in both open-end and,
listed or unlisted, closed-end investment companies, as well as unregistered
investment companies. See Investment Company Securities under Other
Considerations. The Series may also invest in convertible preferred stocks that
offer enhanced yield features, such as Preferred Equity Redemption Cumulative
Stock, and certain other non-traditional equity securities.

<PAGE>

The Series may invest up to 35% of its net assets in fixed-income securities
issued by emerging country companies, and foreign governments, their agencies,
instrumentalities or political subdivisions, all of which may be high yield,
high risk fixed-income securities rated lower than BBB by S&P and Baa by Moody's
or, if unrated, are considered by Delaware International to be of equivalent
quality and which present special investment risks. See Risk Factors under
Delchester Series. The Series may also invest in Brady Bonds and zero coupon
securities. See Foreign Securities and Foreign Currency Transactions under Other
Considerations. The Series' investments in such securities generally did not
exceed 5% of its assets during the past fiscal year, although the percentage of
the Series' assets allocated to such investments may vary from year to year.
For temporary defensive purposes, the Series may invest all or a
substantial portion of its assets in the high quality debt instruments in
which International Equity Series may invest. See Investment Strategy under In
ternational Equity Series.

SOCIAL AWARENESS SERIES
The objective of Social Awareness Series is 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.
Medium to large-size compani es generally are those having a market
capitalization of greater than $1 billion at the time of investment. Vantage
will invest in substantially all of the assets of the Series equity securities
that it believes exhibit growth potential that significantly exceeds the average
anticipated growth rate of companies included in the S&P 500 and meet the
Series' "Social Criteria" strategy.

Investment Strategy
The Series will adhere to a Social Criteria strategy, which can be changed
by action of the Fund's Board of Directors. Vantage will utilize the Social
Investment Database published by Kinder, Lydenberg, Domini & Co. Inc. ("KLD") in
determining whether a company is engaged in any activity precluded by the
Series' Social Criteria. KLD specializes in providing the financial community
with social research on publicly traded U.S. corporations. The Series will not
purchase securities of any company for which the Social Investment Database
indicates a concern or a major concern relating to one or more of the Social
Criteria. See Social Criteria, below.
Because of the Social Criteria strategy, the Series may be underexposed in
certain sectors which may at times outperform the market.
While it is anticipated that the Series, under normal market conditions,
will invest principally in common stock, the Series may invest in all available
types of equity securities, including without limitation, preferred stock,
warrants and securities convertible into common stock. Such investments may be
made in any proportion deemed prudent under existing market and economic
conditions. See Other Considerations.
Up to 20% of the Series' total assets may be invested directly or indirectly
in securities of issuers domiciled in foreign countries, including investments
in American, European or Global Depositary Receipts. See Foreign Securities and
Foreign Currency Transactions under Other Considerations.

17
<PAGE>

The Series may enter into options and futures transactions for hedging
purposes to counterbalance portfolio volatility. See Op tions and Futures
Contracts and Options on Futures Contracts under Other Considerations.
The Series may hold cash or invest in short-term debt securities and other
money market instruments when, in Vantage's opinion, such holdings are prudent
given then prevailing market conditions. The Series may also invest in such
instruments pending investment by the Series of proceeds from the sale of
portfolio securities or proceeds from new sales of Series shares pending
investment in other types of securities for the Series as to maintain sufficient
liquidity to meet redemptions. All such short-term investments will be of the
highest quality as determined by a nationally-recognized statistical rating
organization (e.g., S&P or Aaa by Moody's) or, if unrated, judged to be of
comparable quality as determined by Vantage.
The Series will constantly strive to achieve its objective and, in investing
to do so, may hold securities for any period of time. To the extent the Series
engages in short-term trading in attempting to achieve its objective, it may
increase the turnover rate and incur larger brokerage commissions and other
expenses than might otherwise be the case.
For additional information on the Series' investment policies and certain
risks associated with investments in certain types of securities, see Other
Considerations.

Social Criteria
Social Awareness Series will adhere to a Social Criteria strategy, which may
be changed by action of the Board of Directors. Vantage will utilize the Social
Investment Database published by KLD in determining whether a company is engaged
in any activity precluded by the Fund's Social Criteria. The Social Investment
Database reflects KLD's determination of the extent to which a company's
involvement in the activities prohibited by the Social Criteria is significant
enough to merit a concern or a major concern. Significance may be determined on
the basis of percentage of revenue generated by, or the size of the operations
attributable to, activities related to such Social Criteria, or other factors
selected by KLD. The social screening undergoes continual refinement and
modification.
Pursuant to the Social Criteria presently in effect, the Series will not
knowingly invest in or hold securities of companies which engage in:
1. Activities which result or likely to result in damage to the natural
environment;
2. The production of nuclear power, the design or construction of nuclear
power plants, or the manufacture of equipment for the production of nuclear
power;
3. The manufacture of, or contracting for, military weapons; or
4. The alcoholic beverage, tobacco or gambling industries.
5. The testing on animals in the development of cosmetic or personal care
products.
Because of its Social Criteria, the Series may not be able to take the same
advantage of certain investment opportunities as do funds which do not have
Social Criteria. Only securities of companies not excluded by any of the Social
Criteria will be eligible for consideration for purchase by the Series according
to its objective and policies described in this Prospectus.

<PAGE>

When Vantage determines that a company no longer adheres to the Social
Criteria, it will cause the Series to commence an orderly sale of the company's
securities, that is, a selling program which, in Vantage's judgment, will
minimize any adverse affect on the Series' assets. Typically, such sales will be
made within 90 days from the date of the Vantage's determination, unless a sale
within the 90 day period would produce a significant loss to the overall value
of the Series' assets.

REIT SERIES
The objective of the Series is to seek 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. The Series is considered a nondiversified investment company
under the 1940 Act and may be subject to greater risks than if the Series were
diversified. A nondiversified portfolio of securitiesis believed to be subject
to greater risk because adverse effects on the portfolio's security holdings may
affect a larger portion of its overall assets.
The Series may be suitable for the patient investor interested in long-term
capital appreciation with the potential for current income. Investors should be
willing to accept the risks associated with investments in a portfolio of equity
securities and convertible securities issued by domestic and foreign issuers
concentrated in the real estate industry. Because current income is a secondary
objective of the Series, the Series is not suitable as an investment vehicle for
investors whose primary investment goal is current income.
The risks associated with an investment in the Series are discussed below
under Special Risk Factors.
The investment objective of the Series is described below, together with the
policies the Series employs in its efforts to achieve its objective. There is no
assurance that the Series will attain its objective. The investment objective of
the Series is nonfundamental and may be changed without approval of
shareholders. Unless otherwise noted, the investment policies described below
are not fundamental policies and may be changed without shareholder approval.
Part B provides more information on the Series' investment policies and
restrictions.

Investment Strategy
The investment objective of the Series is to achieve maximum long-term total
return. Capital appreciation is a secondary objective. The Series seeks to
achieve its objectives by investing in securities of companies principally
engaged in the real estate industry. Under normal circumstances, at least 65% of
the Series' total assets will be invested in equity securities of real estate
investment trusts ("REITs"). The Series will operate as a nondiversified fund as
defined by the 1940 Act.

18
<PAGE>

As a fundamental policy, the Series will concentrate its investments in the
real estate industry. The Series invests in equity securities of REITs and other
real estate industry operating companies ("REOCs"). For purposes of the Series'
investments, a REOC is a company that derives at least 50% of its gross revenues
or net profits from either (1) the ownership, development, construction,
financing, management or sale of commercial, industrial or residential real
estate, or (2) products or services related to the real estate industry, such as
building supplies or mortgage servicing. The Series' investments in equity
securities of REITs and REOCs may include, from time to time, sponsored or
unsponsored American Depositary Receipts ("ADRs") actively traded in the United
States. Equity securities for this purpose include common stocks, securities
convertible into common stocks and securities having common stock
characteristics, such as rights and warrants to purchase common stocks. The
Series may also purchase preferred stock. The Series may invest up to 10% of its
assets in foreign securities (not including ADRs), and in convertible
securities. See Foreign Securities and Foreign Currency Transactions and
Convertible, Debt and Non-Traditional Equity Securities under Other
Considerations for further discussion of these investment policies. The Series
may also invest in mortgage-backed securities. See Mortgage-Backed Securities
under Other Considerations for more detailed information about this investment
policy.
The Series may hold cash or invest in short-term debt securities and other
money market instruments when, in Delaware Management's opinion, such holdings
are prudent given then prevailing market conditions. Except when Delaware
Management believes a temporary defensive approach is appropriate, the Series
will not hold more than 5% of its total assets in cash or such short-term
investments. All these short-term investments will be of the highest quality as
determined by a nationally-recognized statistical rating organization (e.g. AAA
by S&P or Aaa by Moody's) or be of comparable quality as determined by Delaware
Management. See Other Considerations for further details concerning these and
other investment policies.
Although as a fundamental policy the Series does not invest directly in real
estate, the Series does invest primarily in REITs, and may purchase equity
securities of REOCs, as well as own real estate directly as a result of a
default on securities the Series owns. Thus, because the Series concentrates its
investments in the real estate industry, an investment in the Series may be
subject to certain risks associated with direct ownership of real estate and
with the real estate industry in general. These risks include, among others:
possible declines in the value of real estate; risks related to general and
local economic conditions; possible lack of availability of mortgage funds;
overbuilding; extended vacancies of properties; increases in competition;
property taxes and operating expenses; changes in zoning laws; costs resulting
from the clean-up of, and liability to third parties resulting from,
environmental problems; casualty for condemnation losses, uninsured damages from
floods, earthquakes or other natural disasters; limitations on and variations in
rents; and changes in interest rates.

<PAGE>

The Series may invest without limitation in shares of 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 the Series, REITs are not taxed on income distributed to
shareholders provided they comply with several requirements in the Internal
Revenue Code of 1986, as amended (the "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 Code, and/or to
maintain exemptions from the 1940 Act. By investing in REITs indirectly through
the Series, a shareholder bears not only a proportionate share of the expenses
of the Series, but also, indirectly, similar expenses of the REITs. For a
further discussion of the risks presented by investing in REITs, see Other
Considerations--REITs.
While the Series does not intend to invest directly in real estate, the
Series could, under certain circumstances, own real estate directly as a result
of a default on securities that it owns. In addition, if the Series has rental
income or income from the direct disposition of real property, the receipt of
such income may adversely affect the Series' ability to retain its tax status as
a regulated investment company.
The Series may also, to a limited extent, enter into futures contracts on
stocks, purchase or sell options on such futures, engage in certain options
transactions on stocks and enter into closing transactions with respect to those
activities. However, these activities will not be entered into for speculative
purposes, but rather to hedge uninvested cash against movements in the prices of
securities in which the Series intends to invest. Such positions will generally
be eliminated when it becomes possible to invest in such securities. See Other
Considerations--Futures Contracts and Options on Futures Contracts and Options
for a further discussion of these investment policies.
In connection with the Series' ability to invest up to 10% of its total
assets in the securities of foreign issuers, currency considerations may present
risks if the Series holds international securities. Currency considerations
carry a special risk for a portfolio of international securities. In this
regard, the Series may actively carry on hedging activities, and may invest in
forward foreign currency exchange contracts to hedge currency risks associated
with the purchase of individual securities denominated in a particular currency.
See Other Considerations--Foreign Securities AND Foreign Currency Transactions.

19
<PAGE>

Delaware Management does not normally intend to respond to short-term market
fluctuations or to acquire securities for the purpose of short-term trading;
however, Delaware Management may take advantage of short-term opportunities that
are consistent with the Series' investment objectives. It is anticipated that
the annual turnover rate of the Series, under normal circumstances, will
generally not exceed 100%. See Portfo lio Trading Practices under Management of
the Fund.

Special Risk Factors
An investment in the Series entails certain risks and considerations about
which an investor should be aware.
The Series may invest up to 10% of its total assets in securities of foreign
issuers which normally are denominated in foreign currencies, and may hold
foreign currency directly. Investments in securities of non-United States
issuers which are generally denominated in foreign currencies involve certain
risk and opportunity considerations not typically associated with investing in
United States companies. Consequently, the Series may be affected by changes in
currency rates and exchange control regulations and may incur costs in
connection with conversions between currencies. To hedge this currency risk
associated with investments in non-U.S. dollar denominated securities, the
Series may invest in forward foreign currency contracts. Those activities pose
special risks which do not typically arise in connection with investments in
U.S. securities. In addition, the Series may engage in foreign currency options
and futures transactions. For a discussion of the risks associated with foreign
securities see Foreign Securities and Foreign Currency Transactions and for
those concerning these hedging instruments see Risks of Transactions in Options,
Futures and Forward Contracts, both of which references appear under the heading
Other Considerations.
The Series may commit its assets eligible for foreign investment to
securities of issuers located in emerging markets. Investments in securities of
companies in emerging markets present a greater degree of risk than tends to be
the case for foreign investments in Western Europe and other developed markets.
Among other things, there is a greater possibility of expropriation,
nationalization, confiscatory taxation, income earned or other special taxes,
foreign exchange restrictions, limitations on the repatriation of income and
capital from investments, defaults in foreign government debt, and economic,
political or social instability. In addition, in many emerging markets, there is
substantially less publicly available information about issuers and the
information that is available tends to be of a lesser quality. Economic markets
and structures tend to be less mature and diverse and the securities markets
which are subject to less government regulation or supervision may also be
smaller, less liquid and subject to greater price volatility. See Othe r
Considerations--Foreign Securities and Foreign Currency Transactions for a more
extensive discussion of these and other factors.

<PAGE>

The foreign securities in which the Series may invest from time to time may
be listed primarily on foreign exchanges which trade on days when the New York
Stock Exchange is closed (such as Saturday). As a result, the net asset value of
the Series may be significantly affected by such trading on days when
shareholders will have no access to the Series. See Calculation of Offering
Price and Net Asset Value Per Share.
The Series also may, under certain circumstances, use certain futures
contracts and options on futures contracts, as well as options on stock. The
Series will only enter into these transactions for hedging purposes. See Futur
es Contracts and Options on Futures Contracts and Risks of Transactions in
Options, Futures and Forward Contracts, both of which references appear under
the heading Other Considerations.
As a fundamental policy, the Series concentrates its investments in the real
estate industry. As a consequence, the net asset value of the Series can be
expected to fluctuate in light of the factors affecting that industry, and may
fluctuate more widely than a portfolio that invests in a broader range of
industries. The Series may be more susceptible to any single economic, political
or regulatory occurrence affecting the real estate industry.
The Series, by investing primarily in securities of real estate investment
trusts, is subject to interest rate risk, in that as interest rates decline, the
value of the Series' investments in REITs holding fixed rate obligations can be
expected to rise. Conversely, when interest rates rise, the value of the Series'
investments in REITs holding fixed rate obligations can be expected to decline.
See Other Considerations--REITs.
The Series may lend its portfolio securities, may invest in repurchase
agreements and may purchase securities on a when-issued basis.
While the Series intends to seek to qualify as a "diversified" investment
company under provisions of Subchapter M of the Code, it will not be diversified
under the 1940 Act. Thus, while at least 50% of the Series' total assets will be
represented by cash, cash items, certain qualifying securities and other
securities limited in respect of any one issuer to an amount not greater than 5%
of the Series' total assets, it will not satisfy the 1940 Act requirement in
this respect, which applies that test to 75% of the Series' assets. A
nondiversified portfolio is believed to be subject to greater risk because
adverse effects on the portfolio's security holdings may affect a larger portion
of the overall assets.
Each of the investment strategies identified above involves special risks
which are described under Other Considerations in this Prospectus and Investme
nt Objectives and Policies in Part B.

* * *

Part B contains other more specific investment restrictions and Appendix A
to this Prospectus contains descriptions of Moody's and S&P ratings.

20
<PAGE>

PURCHASE AND REDEMPTION

Shares are sold only to separate accounts of life companies at net asset
value. (See Calculation of Offering Price and Net Asset Value Per Share.)
Redemptions will be effected by the separate accounts at the net asset value
next determined after receipt of the order to meet obligations under the
variable contracts. Contract owners do not deal directly with the Fund with
respect to the acquisition or redemption of Fund shares.

DIVIDENDS AND DISTRIBUTIONS

Dividends for the Delchester Series are declared daily and paid monthly.
Short-term capital gains distributions, if any, may be paid with the dividend;
otherwise, any distributions from net realized securities profits normally will
be distributed following the close of the fiscal year. The Fund's fiscal year
ends on December 31.
For the Decatur Total Return and Devon Series, the Fund will make payments
from the Series' net investment income quarterly. Distributions from the
respective Series' net realized securities profits, if any, normally will be
made following the close of the fiscal year.
For the International Equity, Small Cap Value, Trend, Emerging Markets,
Social Awareness and REIT Series, the Fund will make payments from the Series'
net income and net realized securities profits, if any, once a year.
All dividends and distributions are automatically reinvested in additional
Series shares.

TAXES

Each Series, other than Devon, Emerging Markets, Social Awareness and REIT
Series, has qualified, and intends to continue to qualify, as a regulated
investment company under Subchapter M of the Internal Revenue Code (the "Code").
Devon, Emerging Markets, Social Awareness and REIT Series intend to qualify as
regulated investment companies under the Code. As such, a Series will not be
subject to federal income tax to the extent its earnings are distributed. The
Fund intends to distribute substantially all of the respective Series' net
investment income and net capital gains. Shareholders may be proportionately
liable for taxes on income and gains of the Series but shareholders not subject
to tax on their income will not be required to pay tax on amounts distributed to
them, and the Fund will inform shareholders of the amount and nature of such
income or gains.

<PAGE>

CALCULATION OF OFFERING
PRICE AND NET ASSET VALUE
PER SHARE

The offering price is the net asset value ("NAV") per share next determined
after an order is received. The 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.
A Series' NAV per share is computed by adding the value of all securities
and other assets in that Series' portfolio, deducting any liabilities of that
Series (expenses and fees are accrued daily) and dividing by the number of that
Series' shares outstanding. The valuation criteria set forth below apply equally
to securities purchased in reliance upon Rule 144A of the 1933 Act. In
determining each Series' total net assets, portfolio securities listed or traded
on a national securities exchange, except for bonds, are valued at the last sale
price on the exchange upon which such securities are primarily traded.
Securities not traded on a particular day, over-the-counter securities and
government and agency securities are valued at the mean value between bid and
asked prices. Foreign securities expressed in foreign currency values will be
converted into U.S. dollar values at the mean between the currencies' bid and
offered quotations. Debt securities (other than short-term investments and, in
some cases, convertible securities) are priced at fair value by an independent
pricing service using methods approved by the Fund's Board of Directors.
Short-term investments having a maturity of less than 60 days are valued at
amortized cost, which approximates market value. All other securities are valued
at their fair value as determined in good faith and in a method approved by the
Fund's Board of Directors.
The International Equity and Emerging Markets Series' portfolio will be
comprised primarily of foreign securities. From time to time, those securities
may be listed primarily on foreign exchanges which trade on days when the New
York Stock Exchange is closed (such as U.S. Holidays and Saturdays). As a
result, the NAV of that Series may be significantly affected by such trading on
days when shareholders have no access to that Series. To the extent other Series
hold foreign securities which are so listed, the net asset value of those Series
also could be affected by trading on days when shareholders have no access to
those Series.

21
<PAGE>

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

Investment Managers and Sub-Advisers
Delaware Management furnishes investment management services to each Series
of the Fund, other than International Equity and Emerging Markets Series.
Delaware International, an affiliate of Delaware Management, furnishes
investment management services to the International Equity and Emerging Markets
Series.
Delaware Management and its predecessors have been managing the funds in
Delaware Investments since 1938. On July 31, 1998, Delaware Management and its
affiliates within Delaware Investments, including Delaware International, were
managing in the aggregate more than $44 billion in assets in the various
institutional or separately managed (approximately $26,604,750,000) and
investment company (approximately $17,876,100,000) accounts.
Delaware Management is a series of Delaware Management Business Trust.
Delaware Management changed its form of organization from a corporation to a
business trust on March 1, 1998. Delaware Management is an indirect, wholly
owned subsidiary of Delaware Management Holdings, Inc. ("DMH"). Delaware
International is also controlled by DMH through several subsidiaries. On April
3, 1995, a merger between DMH and a wholly owned subsidiary of Lincoln National
Corporation ("Lincoln National") was completed. DMH, Delaware Management and
Delaware International are now indirect, wholly owned subsidiaries, and subject
to the ultimate control, of Lincoln National. Lincoln National, with
headquarters in Fort Wayne, Indiana, is a diversified organization with
operations in many aspects of the financial services industry, including
insurance and investment management. Delaware Management's address is One
Commerce Square, 2005 Market Street, Philadelphia, PA 19103. Delaware
International's address is Third Floor, 80 Cheapside, London, England EC2V 6EE.
Delaware Management manages each of the Series' (other than International
Equity and Emerging Markets Series) portfolios and makes investment decisions
which are implemented by the Fund's Trading Department. For these services,
Delaware Management is paid an annual fee equal to the following percentage
rates of the average daily net assets of the Series, less, in the case of
Decatur Total Return and Delchester Series, a proportionate share of all
directors' fees paid to the unaffiliated directors of the Fund:

<PAGE>

Decatur Total Return Series 0.60%
Delchester Series 0.60%
Small Cap Value Series 0.75%
Trend Series 0.75%
Devon Series 0.60%
Social Awareness Series 0.75%
REIT Series 0.75%*

*Assets up to $500 million: 0.75% of average daily net assets
Assets over $500 million - $1,000 million: 0.70% of average
daily net assets
Assets over $1,000 million - $2,500 million: 0.65% of
average daily net assets
Assets over $2,500 million: 0.60% of average daily net assets

See Expenses for a discussion of a voluntary waiver of its management fee
undertaken by Delaware Management. The investment management fee, as a
percentage of average daily net assets, incurred by each of the Series below for
the fiscal year ended December 31, 1997 was as follows:

Before After
Voluntary Waiver Voluntary Waiver
Decatur Total Return Series 0.60% 0.60%
Delchester Series 0.60% 0.60%
Small Cap Value Series 0.75% 0.65%
Trend Series 0.75% 0.67%
Devon Series 0.60%* 0.32%*
Social Awareness Series 0.75%* 0.14%*

*Annualized.

Pursuant to the terms of Sub-Advisory Agreements with Delaware Management,
Vantage participates in the management of Social Awareness Series' assets.
Vantage is an indirect, wholly-owned subsidiary of Lincoln National and an
affiliate of Delaware Management. Founded in 1979, it provides investment advice
to pension plans, endowments, insurance and commingled products and had assets
under management, as of July 31, 1998, of approximately $5.5 billion. Vantage is
responsible for day-to-day investment management of the Series, makes investment
decisions for the Series in accordance with the Series' investment objectives
and stated policies and places orders on behalf of the Series to effect the
investment decisions made. Delaware Management continues to have ultimate
responsibility for all investment advisory services in connection with the
management of the Series pursuant to the Investment Management Agreement and
supervises Vantage's performance of such services. For the services provided to
Delaware Management, Delaware Management pays Vantage an annual fee equal to (i)
0.25% of average daily net assets up to $20 million; (ii) 0.35% of average daily
net assets between $20 million and $50 million; and (iii) 0.40% of average daily
net assets over $50 million. Vantage's address is 630 Fifth Avenue, New York, NY
10111.

22
<PAGE>

Lincoln, a wholly owned subsidiary of Lincoln National Corporation ("Lincoln
National"), 200 E. Berry Street, Fort Wayne, Indiana 46802, acts as sub-adviser
to Delaware Management with respect to REIT Series. In its capacity as
sub-adviser, Lincoln furnishes Delaware Management with investment
recommendations, asset allocation advice, research, economic analysis and other
investment services with respect to the securities in which the Series may
invest. As of July 31, 1998, Lincoln had assets under management of
approximately $39 billion. Lincoln receives 30% of the advisory fee paid to
Delaware Management for acting as sub-adviser to Delaware Management with
respect to the Series.
Delaware International manages the International Equity and Emerging Markets
Series' portfolios and implements investment decisions on behalf of each of
these Series. For these services, Delaware International is paid an annual fee
equal to the following percentage rates of the average daily net assets of the
Series, less, in the case of the International Equity Series, a proportionate
share of all directors' fees paid to the unaffiliated directors of the Fund:

International Equity Series 0.75%
Emerging Markets Series 1.25%

See Expenses for a discussion of a voluntary waiver of its management fee
undertaken by Delaware International. The investment management fee, as a
percentage of average daily net assets, incurred by each of the below Series for
the fiscal year ended December 31, 1997 was as follows:

Before After
Voluntary Waiver Voluntary Waiver
International Equity Series 0.75% 0.69%
Emerging Markets Series 1.25%* 0.29%*

*Annualized.

The directors of the Fund annually review fees paid to the investment
managers and sub-advisers.

<PAGE>

John B. Fields, Vice President/Senior Portfolio Manager of the Fund, has
primary responsibility for making day-to-day investment decisions for the
Decatur Total Return Series. He has been the senior portfolio manager of this
Series since 1992. Mr. Fields, who has 27 years' experience in investment
management, earned a bachelor's degree and an MBA from Ohio State University.
Before joining Delaware Investments in 1992, he was Director of Domestic Equity
Risk Management at DuPont. Prior to that, he was Director of Equity Research at
Comerica Bank. Mr. Fields is a member of the Financial Analysts Society. In
making investment decisions for the Decatur Total Return Series, Mr. Fields
works with a team of 12 portfolio managers and analysts, each of whom
specializes in a different industry sector and makes recommendations
accordingly. Mr. Fields also regularly consults with Wayne A. Stork and Richard
G. Unruh, Jr. Mr. Stork, Chairman of Delaware Management and the Fund's Board of
Directors, is a graduate of Brown University and attended New York University's
Graduate School of Business Administration. Mr. Stork joined Delaware
Investments in 1962 and has served in various executive capacities at different
times within the Delaware organization. Mr. Unruh is a graduate of Brown
University and received his MBA from the University of Pennsylvania's Wharton
School. He joined Delaware Investments in 1982 after 19 years of investment
management experience with Kidder, Peabody & Co. Inc. Mr. Unruh was named an
Executive Vice President of the Fund in 1994. He is also a member of the Board
of Directors of the Delaware Management and Delaware International and was named
an Executive Vice President of Delaware Management in 1994.
Paul A. Matlack and Gerald T. Nichols, each a Vice President/Senior
Portfolio Manager of the Fund, have primary responsibility for making day-to-day
investment decisions for the Delchester Series. Mr. Matlack and Mr. Nichols have
been members of this Series' management team since 1990, and were named
co-managers of this Series in January 1993. A CFA charterholder, Mr. Matlack is
a graduate of the University of Pennsylvania with an MBA in Finance from George
Washington University. He began his career at Mellon Bank as a credit
specialist, and later served as a corporate loan officer for Mellon Bank and
then Provident National Bank. Mr. Nichols is a graduate of the University of
Kansas, where he received a BS in Business Administration and an MS in Finance.
Prior to joining Delaware Investments, he was a high-yield credit analyst at
Waddell & Reed, Inc. and subsequently the investment officer for a private
merchant banking firm. He is a CFA charterholder. In making investment decisions
for Delchester Series, Mr. Matlack and Mr. Nichols regularly consult with Paul
E. Suckow. Mr. Suckow is Delaware Management's Chief Investment Officer for
Fixed-Income. A CFA charterholder, he is a graduate of Bradley University with
an MBA from Western Illinois University. Mr. Suckow was a fixed-income portfolio
manager at Delaware Investments from 1981 to 1985. He returned to Delaware
Investments in 1993 after eight years with Oppenheimer Management Corporation,
where he served as Executive Vice President and Director of Fixed Income.

23
<PAGE>

Gerald S. Frey, Vice President/Senior Portfolio Manager of the Fund, has
primary responsibility for making day-to-day investment decisions for the Trend
Series. Mr. Frey has been senior portfolio manager of the Series since March
1997 and was Co-Manager from June 1996 to March 1997. Mr. Frey has 21 years'
experience in the money management business and 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. In making investment decisions for the
Fund, Mr. Frey regularly consults with Wayne A. Stork, Marshall T. Bassett, John
A. Heffern, Jeffrey W. Hynoski and Lori P. Wachs. Mr. Bassett, Vice President,
joined Delaware Investments in 1997. In his most recent position, he served as
Vice President in Morgan Stanley Asset Management's Emerging Growth Group, where
he analyzed small growth companies. Prior to that, he was a trust officer at
Sovran Bank and Trust Company. He received his bachelor's degree and MBA from
Duke University. Mr. Heffern, Vice President, holds a bachelor's degree and an
MBA from the University of North Carolina at Chapel Hill. He joined Delaware
Investments in 1997. Previously, he was a Senior Vice President, Equity Research
at NatWest Securities Corporation's Specialty Finance Services unit. Prior to
that, he was a Principal and Senior Regional Bank Analyst at Alex. Brown & Sons.
Mr. Hynoski is a Vice President. He joined Delaware Investments in 1998.
Previously he served as a Vice President at Bessemer Trust Company in the mid
and large capitalization growth group, where he specialized in the areas of
science, technology, and telecommunications. Prior to that, Mr. Hynoski held
positions at Lord Abbett & Co. and Cowen Asset Management. Mr. Hynoski holds a
BS in Finance from the University of Delaware and an MBA with a concentration in
Investments/Portfolio Management and Financial Economics from Pace University.
Ms. Wachs is a Vice President. She joined Delaware Investments in 1992 from
Goldman Sachs, where she was an equity analyst for two years. She is a graduate
of the University of Pennsylvania's Wharton School, where she majored in Finance
and Oriental Studies.
George H. Burwell, Vice President/Senior Portfolio Manager of the Fund, has
primary responsibility for making day-to-day investment decisions for the Devon
Series. Mr. Burwell, who has been Devon Series' senior portfolio manager since
its inception, holds a BA from the University of Virginia. Prior to joining
Delaware Investments in 1992, Mr. Burwell was a portfolio manager for Midlantic
Bank in Edison, New Jersey, where he managed an equity mutual fund and three
commingled funds. Mr. Burwell is a CFA charterholder. In making investment
decisions for the Devon Series, Mr. Burwell regularly consults with Wayne A.
Stork and Richard G. Unruh, Jr.

<PAGE>

Beginning in May, 1997, Christopher S. Beck, Vice President/Senior Portfolio
Manager of the Fund, assumed primary responsibility for making day-to-day
investment decisions for the Small Cap Value Series. Mr. Beck has been in the
investment business for 17 years, starting with Wilmington Trust in 1981. Later,
he became Director of Research at Cypress Capital Management in Wilmington and
Chief Investment Officer of the University of Delaware Endowment Fund. Prior to
joining Delaware Investments in May 1997, he had managed the Small Cap Fund from
October 1995 at Pitcairn Trust Company. He holds a B.S. from the University of
Delaware, an M.B.A. from Lehigh University and is a CFA charterholder. In making
investment decisions for the Small Cap Value Series, Mr. Beck regularly consults
with Wayne A. Stork, Richard G. Unruh, Jr. and Andrea Giles. Ms. Giles, Research
Analyst for the Fund, holds a BSAD from the Massachusetts Institute of
Technology and an MBA in Finance from Columbia University. Prior to joining the
Delaware Investments in 1996, she was an account officer in the Leveraged
Capital Group with Citibank.
Clive A. Gillmore and Nigel A. May have primary responsibility for making
day-to-day investment decisions for the International Equity Series. Mr.
Gillmore has been the senior portfolio manager for the Series since its
inception, and Mr. May joined Mr. Gillmore as Co-Manager of the Series on
December 22, 1997. Mr. Gillmore is a graduate of the University of Warwick
and began his career at Legal and General Investment Management, which is the
asset management division of Legal and General Assurance Society Ltd., a
large U.K. life and pension company. Mr. Gillmore joined Delaware
International in 1990 after eight years of investment experience. His most
recent position prior to joining Delaware International was as a Pacific
Basin equity analyst and senior portfolio manager for Hill Samuel Investment
Advisers Ltd. Mr. Gillmore completed the London Business School Investment
program. Mr. May is a graduate of Sidney Sussex College, Cambridge. He joined
Delaware International in 1991, assuming portfolio management
responsibilities and sharing analytical responsibilities for continental
Europe. He previously had been with Hill Samuel Investment Management Group
for five years. In making investment decisions for the Series, Mr. Gillmore
and Mr. May regularly consult with an international equity team of fourteen
members. Mr. Gillmore and Mr. May also regularly consult with David G.
Tilles. Mr. Tilles, who is Chief Investment Officer for Delaware
International, is a graduate of the University of Warwick with a BS in
management sciences. Before joining Delaware International in 1990, he was
Chief Investment Officer of Hill Samuel Investment Advisers Ltd. He is a
member of the Institute of Investment Management & Research and the
Operational Research Society.

24
<PAGE>

Mr. Gillmore also has primary responsibility for making day-to-day
investment decisions for Emerging Markets Series. He has been the senior
portfolio manager for this Series since its inception. In making investment
decisions for Emerging Markets Series, Mr. Gillmore regularly consults with an
international equity team of fourteen members. Mr. Gillmore also regularly
consults with David G. Tilles, Robert Akester and Joshua A. Brooks. Prior to
joining Delaware International in 1996 as a Senior Portfolio Manager, Mr.
Akester, who began his investment career in 1969, was most recently a Director
of Hill Samuel Investment Advisers Ltd., which he joined in 1985. His prior
experience included working as a Senior Analyst and head of the South-East Asian
Research team at James Capel, and as a Fund Manager at Prudential Assurance Co.,
Ltd. Mr. Akester holds a BS in Statistics and Economics from University College,
London and is an associate of the Institute of Actuaries, with a certificate in
Finance and Investment. Mr. Brooks holds a bachelor's degree from Yale
University and has undertaken graduate studies at The London Business School. He
began his investment career with Delaware Investments in 1991. Prior to joining
the emerging markets team in London, he was based in Philadelphia with
responsibilities that included equity market analysis and liaison with Delaware
International.
Babak Zenouzi, Vice President/Senior Portfolio Manager of the Fund and
Delaware Management, has had primary responsibility for making day-to-day
investment decisions for the REIT Series since its inception. In making
investment decisions for the Series, Mr. Zenouzi regularly consults with Wayne
A. Stork and Richard G. Unruh.
T. Scott Wittman, President and Chief Investment Officer of Vantage, has
primary responsibility for making day-to-day investment decisions for the Social
Awareness Series. He has had such responsibility for this Series since its
inception. His responsibilities include both business administration and equity
portfolio management. A CFA charterholder, Mr. Wittman received both graduate
and undergraduate degrees in business administration from Indiana University. He
has spent his entire professional career in quantitative investment firms,
including TSA Capital Management, where he was a managing director, and Mellon
Bank, where he was Vice President and Manager of Quantitative Analysis and
Systems.

<PAGE>

Portfolio Trading Practices
The Series normally will not invest for short-term trading purposes.
However, the Series may sell securities without regard to the length of time
they have been held. Given the respective Series' investment objectives, the
annual portfolio turnover rates are not expected to exceed 100% for the Decatur
Total Return, Delchester, International Equity, Emerging Markets, Devon, Social
Awareness and REIT Series, and may exceed 100% for the Small Cap Value and Trend
Series. A 100% turnover rate would occur if all of the securities in a Series
were sold and replaced within one year. The rate of portfolio turnover is not a
limiting factor when the investment manager deems it desirable to purchase or
sell securities. High portfolio turnover (over 100%) involves correspondingly
greater brokerage commissions and other transaction costs and may affect taxes
payable by the Series' shareholders that are subject to federal income taxes.
The turnover rate may also be affected by cash requirements from redemptions and
repurchases of the Series' shares. The degree of portfolio activity may affect
brokerage costs of the Series and taxes payable by shareholders that are subject
to federal income taxes.
Best efforts are used to obtain the best available price and most favorable
execution for portfolio transactions. Orders may be placed with brokers or
dealers who provide brokerage and research services to the respective investment
manager or their respective advisory clients. These services may be used by the
respective investment manager in servicing any of their respective accounts.
Subject to best price and execution, the respective investment manager may
consider a broker/dealer's sales of shares o f funds in the Delaware Investments
family in placing portfolio orders, and may place orders with broker/dealers
that have agreed to defray certain expenses of such funds, such as custodian
fees.

PERFORMANCE INFORMATION
From time to time, the Fund may quote each Series' total return performance
in advertising and other types of literature. Total return will be based on a
hypothetical $1,000 investment, reflecting the reinvestment of all distributions
at net asset value. Each presentation will include the average annual total
return for one-, five- and ten-year (or life of Series, if applicable) periods.
The Fund may also advertise aggregate and average total return information
concerning the Series over additional periods of time.
From time to time, the Fund may also quote the Delchester Series yield
performance in advertising and other types of literature. The current yield for
these Series will be calculated by dividing the annualized net investment income
earned by the Series during a recent 30-day period by the maximum offering price
per share on the last day of the period. The yield formula provides for
semi-annual compounding which assumes that net investment income is earned and
reinvested at a constant rate and annualized at the end of a six-month period.
Because securities' prices fluctuate, investment results of the Series will
fluctuate and past performance should not be considered as a representation of
future results.

25
<PAGE>

DISTRIBUTION AND SERVICE
The Distributor, Delaware Distributors, L.P., serves as the Fund's national
distributor under Distribution Agreements dated April 3, 1995 for all Series
other than Devon, Emerging Markets, Social Awareness and REIT Series. The Devon,
Emerging Markets and Social Awareness Series' Distribution Agreements are dated
as of May 1, 1997. The REIT Series' Distribution Agreement is dated as of May 1,
1998. The Distributor bears all of the costs of promotion and distribution.
Delaware Service Company, Inc. (the "Transfer Agent") is the shareholder
servicing, dividend disbursing and transfer agent for all Series under the
Amended and Restated Shareholders Services Agreement dated May 1, 1998. The
Transfer Agent also provides accounting services to each Series pursuant to the
terms of a separate Fund Accounting Agreement. The directors of the Fund
annually review service fees paid to the Transfer Agent.
The Distributor and the Transfer Agent are indirect, wholly owned
subsidiaries of DMH.

* * *

As with other mutual funds, financial and business organizations and
individuals around the world, each Series could be adversely affected if the
computer systems used by its service providers do not properly process and
calculate date-related information from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Fund is taking steps to obtain
satisfactory assurances that the Series' major service providers are taking
steps reasonably designed to address the Year 2000 Problem with respect to the
computer systems that such service providers use. There can be no assurances
that these steps will be sufficient to avoid any adverse impact on the business
of any of the Series.
Several European countries are participating in the European Economic and
Monetary Union, which will establish a common European currency for
participating countries. This currency will commonly be known as the "Euro." It
is anticipated that each such participating country will replace its existing
currency with the Euro on January 1, 1999. Additional European countries may
elect to participate after that date. Each Series investing in securities of
participating countries could be adversely affected if the computer systems used
by its major service providers are not properly prepared to handle the
implementation of this single currency or the adoption of the Euro by additional
countries in the future. The Fund is taking steps to obtain satisfactory
assurances that the major service providers of affected Series are taking steps
reasonably designed to address these matters with respect to the computer
systems that such service providers use. There can be no assurances that these
steps will be sufficient to avoid any adverse impact on the business of any
Series.

EXPENSES
Each Series is responsible for all of its own expenses other than those
borne by the respective investment manager under the Investment Management
Agreements and those borne by the Distributor under the Distribution Agreements.

<PAGE>

Beginning May 1, 1998, Delaware Management elected voluntarily to waive its
fee and pay the expenses of a Series to the extent necessary to ensure that a
Series' annual operating expenses, exclusive of taxes, interest, brokerage
commissions and extraordinary expenses, do not exceed the following percentage
of average daily net assets through October 31, 1998:

Decatur Total Return Series 0.80%
Delchester Series 0.80%
Small Cap Value Series 0.85%
Trend Series 0.85%
Devon Series 0.80%
Social Awareness Series 0.85%
REIT Series 0.85%

Beginning May 1, 1998, Delaware International elected voluntarily to waive
its fee and pay the expenses of the International Equity and the Emerging
Markets Series to the extent necessary to ensure that a Series' annual operating
expenses, exclusive of taxes, interest, brokerage commissions and extraordinary
expenses, do not exceed the following percentage of average daily net assets
through October 31, 1998:

International Equity Series 0.95%
Emerging Markets Series 1.50%

Prior to May 1, 1998, Delaware Management elected voluntarily to waive its
fee and pay the expenses of a Series to the extent necessary to ensure that a
Series' annual operating expenses, exclusive of taxes, interest, brokerage
commissions and extraordinary expenses, did not exceed 0.80% of average daily
net assets from the commencement of operations through April 30, 1998 for the
Delchester, Small Cap Value, Trend, Devon and Social Awareness Series. For the
fiscal year ended December 31, 1997, the Delchester, Small Cap Value, Trend,
Devon and Social Awareness Series' ratios of expenses to average daily net
assets were as follows:

With Without
Voluntary Waiver Voluntary Waiver

Delchester Series 0.70% 0.70%
Small Cap Value Series 0.80% 0.90%
Trend Series 0.80% 0.88%
Devon Series 0.80%* 0.91%*
Social Awareness Series 0.80%* 1.40%*

*Annualized.

Prior to May 1, 1998, Delaware Management elected voluntarily to waive its
fee and pay the expenses of Decatur Total Return Series to the extent necessary
to ensure that the Series' annual operating expenses, exclusive of taxes,
interest, brokerage commissions and extraordinary expenses, did not exceed 0.80%
of average daily net assets for the period July 1, 1992 through April 30, 1998.
For the fiscal year ended December 31, 1997, the Decatur Total Return Series'
ratios of expenses to average daily net assets was 0.71%.

26
<PAGE>

Prior to May 1, 1998, Delaware International elected voluntarily to waive
its fee and pay the expenses of International Equity Series to the extent
necessary to ensure that the Series' annual operating expenses, exclusive of
taxes, interest, brokerage commissions and extraordinary expenses, did not
exceed 0.80% of average daily net assets from the commencement of operations
through June 30, 1997. Beginning July 1, 1997, Delaware International elected
voluntarily to waive its fee and pay the expenses of International Equity Series
to the extent necessary to ensure that the Series' annual operating expenses,
exclusive of taxes, interest, brokerage commissions and extraordinary expenses,
did not exceed 0.95% of average daily net assets through April 30, 1998. For the
fiscal year ended December 31, 1997, the International Equity Series' ratio of
expenses to average daily net assets was 0.85%, reflecting the waiver and
payment described in this paragraph. Without the voluntary waivers and payments,
the ratio of expenses to average daily net assets for International Equity
Series would have been 0.90%.
Prior to May 1, 1998, Delaware International elected voluntarily to waive
its fee and pay the expenses of the Emerging Markets Series to the extent
necessary to ensure that the Series' annual operating expenses, exclusive of
taxes, interest, brokerage commissions and extraordinary expenses, did not
exceed 1.50% of average daily net assets from the commencement of operations
through April 30, 1998. For the fiscal year ended December 31, 1997, the
Emerging Markets Series' ratio of expenses to average daily net assets was
1.50%, annualized, reflecting the waiver and payment described in this
paragraph. Without the voluntary waivers and payments, the ratio of expenses to
average daily net assets would have been 2.45%, annualized.

DESCRIPTION OF FUND SHARES
Shares of the Fund are sold only to separate accounts of life companies.
Currently, the shares of the Fund are sold only to Variable Annuity Account C
and Flexible Premium Variable Life Account K of Lincoln National Life Insurance
Company, Variable Accounts A and B of American International Life Assurance
Company of New York, Variable Accounts I and II of AIG Life Insurance Company,
Separate Accounts VA-K, VEL II and Inheiritage of First Allmerica Life Insurance
Company and Separate Accounts VA-K, VEL, VEL II and Inheiritage of Allmerica
Life and Annuity Insurance Company. In the future, shares of the Fund may be
sold to separate accounts of other affiliated or unaffiliated life companies to
fund variable contracts. The Fund's Board of Directors will monitor events in
order to identify any material irreconcilable conflicts which may possibly arise
and to determine what action, if any, should be taken in response thereto. An
irreconcilable conflict that is not resolved might result in the withdrawal of a
substantial amount of assets, causing a negative impact on net asset value.
As a "series" type of mutual fund, the Fund issues separate classes or
series of stock, currently 16 series. Additional series may be established in
the future. An interest in the Fund is limited to the assets of the particular
Series in which shares are held, and shareholders of each Series are entitled to
a pro-rata share of all dividends and distributions arising from an investment
in such Series.

<PAGE>

The Fund was organized as a Maryland corporation on February 19, 1987. The
authorized capital stock of the Fund consists of one billion shares of common
stock, $.01 par value. Each of the Series is currently allocated fifty million
shares. The Fund may establish additional series and may allocate its shares
either to such new classes or to any of the 16 existing series.
Each Series' shares have equal voting rights and are equal in all other
respects. Each Series will vote separately on any matter which affects only that
Series. Shareholders get one vote for each share held; fractional shares are
voted. The Fund will hold annual meetings as necessary for shareholder matters
to be voted under the 1940 Act or otherwise. Shares of each Series will have a
priority over shares of any other Series of the Fund in the assets and income of
that Series.
Because of current federal securities law requirements, the Fund expects
that its life company shareholders will offer their contract owners the
opportunity to instruct them as to how Series shares allocable to their variable
contracts will be voted with respect to certain matters, such as approval of
investment advisory agreements. An insurance company will vote all Series shares
held in a separate account in the same proportion as it receives instructions
from contract owners in that separate account. Under certain circumstances,
which are described more fully in the accompanying prospectuses for the separate
accounts which invest in the Fund, the voting instructions received from
contract owners may be disregarded.

OTHER CONSIDERATIONS

When-Issued and Delayed Delivery Securities
Consistent with their respective objectives, each Series may invest in U.S.
government securities and corporate debt obligations on a when-issued or delayed
delivery basis. Such transactions involve commitments to buy a new issue with
settlement up to 60 days later. The average settlement date for when-issued or
delayed delivery securities purchased by the Series is generally between 30 and
45 days. During the time between the commitment and settlement, the Series do
not accrue interest, but the market value of the bonds may fluctuate. This can
result in a Series' share value increasing or decreasing. The Series will not
ordinarily sell when-issued or delayed delivery securities prior to settlement.
If a Series invests in securities of this type, it will maintain a segregated
account to pay for them and mark the account to market daily.

Mortgage-Backed Securities
The Devon and REIT Series may invest in mortgage-backed securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities or
government sponsored corporations or those issued by certain private,
non-government corporations, such as financial institutions. Two principal types
of mortgage-backed securities are collateralized mortgage obligations (CMOs) and
real estate mortgage investment conduits (REMICs).

27
<PAGE>

CMOs are debt securities issued by U.S. government agencies or by financial
institutions and other mortgage lenders and collateralized by a pool of
mortgages held under an indenture. CMOs are issued in a number of classes or
series with different maturities. The classes or series are retired in sequence
as the underlying mortgages are repaid. Prepayment may shorten the stated
maturity of the obligation and can result in a loss of premium, if any has been
paid. Certain of these securities may have variable or floating interest rates
and others may be stripped (securities which provide only the principal or
interest feature of the underlying security).
REMICs, which were authorized under the Tax Reform Act of 1986, are private
entities formed for the purpose of holding a fixed pool of mortgages secured by
an interest in real property. REMICs are similar to CMOs in that they issue
multiple classes of securities.
CMOs and REMICs issued by private entities are not government securities and
are not directly guaranteed by any government agency. They are secured by the
underlying collateral of the private issuer. The Series may invest in such
private-backed securities, but the REIT Series will do so (i) only if the
securities are 100% collateralized at the time of issuance by securities issued
or guaranteed by the U.S. government, its agencies or instrumentalities and (ii)
currently, only if they are rated at the time of purchase in the two highest
grades by a nationally-recognized statistical rating agency.
The Devon Series may invest up to 20% of its total assets in CMOs and REMICs
issued by private entities which are not collateralized by securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities, so-called
non-agency mortg age-backed securities. Investments in these securities may be
made only if the securities (i) are rated at the time of purchase in the four
top rating categories by a nationally-recognized statistical rating organization
(e.g., BBB or better by S&P or Baa or better by Moody's) and (ii) represent
interests in whole-loan mortgages, multi-family mortgages, commercial mortgages
and other mortgage collateral supported by a first mortgage lien on real estate.
Non-agency mortgage-backed securities are subject to the interest rate and
prepayment risks, described above, to which other CMOs and REMICs issued by
private issuers are subject. Non-agency mortgage-backed securities may also be
subject to a greater risk of loss of interest and principal because they are not
collateralized by securities issued or guaranteed by the U.S. government. In
addition, timely information concerning the loans underlying these securities
may not be as readily available and the market for these securities may be less
liquid than other CMOs and REMICs.

<PAGE>

Asset-Backed Securities
The Devon Series may invest in securities which are backed by assets such as
receivables on home equity and credit loans, receivables regarding automobile,
mobile home and recreational vehicle loans, wholesale dealer floor plans and
leases or other loans or financial receivables currently available or which may
be developed in the future. All such securities must be rated in one of the four
highest rating categories by a reputable rating agency (e.g., BBB or better by
S&P or Baa or better by Moody's).
Such receivables are securitized in either a pass-through or a pay-through
structure. Pass-through securities provide investors with an income stream
consisting of both principal and interest payments in respect of the receivables
in the underlying pool. Pay-through asset-backed securities are debt obligations
issued usually by a special purpose entity, which are collateralized by the
various receivables and in which the payments on the underlying receivables
provide the funds to pay the debt service on the debt obligations issued.
The rate of principal payment on asset-backed securities generally depends
on the rate of principal payments received on the underlying assets. Such rate
of payments may be affected by economic and various other factors such as
changes in interest rates or the concentration of collateral in a particular
geographic area. Therefore, the yield may be difficult to predict and actual
yield to maturity may be more or less than the anticipated yield to maturity.
Due to the shorter maturity of the collateral backing such securities, there
tends to be less of a risk of substantial prepayment than with mortgage-backed
securities but the risk of such a prepayment does exist. See Mortgage-Backed
Securities, above. Such asset-backed securities do, however, involve certain
risks not associated with mortgage-backed securities, including the risk that
security interests cannot be adequately or in many cases ever established, and
other risks which may be peculiar to particular classes of collateral. For
example, with respect to credit card receivables, a number of state and federal
consumer credit laws give debtors the right to set off certain amounts owed on
the credit cards, thereby reducing the outstanding balance. In the case of
automobile receivables, there is a risk that the holders may not have either a
proper or first security interest in all of the obligations backing such
receivables due to the large number of vehicles involved in a typical issuance
and technical requirements under state laws. Therefore, recoveries on
repossessed collateral may not always be available to support payments on the
securities.

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REITs
The REIT Series invests in, and the Devon Series may invest in, 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, REITs are not taxed on income distributed to shareholders provided
they comply with several requirements in the 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
Code, and/or to maintain exemptions from the 1940 Act.
The Series' investments in REITs present certain further risks that are
unique and in addition to the risks associated with investing in the real estate
industry in general. Equity REITs may be affected by changes in the value of the
underlying property owned by the REITs, while mortgage REITs may be affected by
the quality of any credit extended. REITs are dependent on management skills,
are not diversified, and are subject to the risks of financing projects. REITs
whose underlying assets include long-term health care properties, such as
nursing, retirement and assisted living homes, may be impacted by federal
regulations concerning the health care industry.
REITs (especially mortgage REITs) are also subject to interest rate
risks--when interest rates decline, the value of a REIT's investment in fixed
rate obligations can be expected to rise. Conversely, when interest rates rise,
the value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will gradually
align themselves to reflect changes in market interest rates, causing the value
of such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
REITs may have limited financial resources, may trade less frequently and in
a limited volume, and may be subject to more abrupt or erratic price movements
than other securities.

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Foreign Securities and Foreign Currency Transactions
As noted above, the International Equity and Emerging Markets Series
intend to invest their assets primarily in securities of foreign issuers. Each
of the other Series may invest a portion of its assets in securities of issuers
organized or having a majority of their assets in or deriving a majority of
their operating income outside the United States. In connection with investments
in foreign securities, a Series may, from time to time, conduct 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 Series will engage in these foreign
currency transactions in order to expedite settlement of portfolio transactions
and to minimize currency value fluctuations. Investing in foreign securities
and, in conjunction therewith, engaging in foreign currency transactions present
special considerations not presented by investments in securities issued by
United States companies. See Foreign Currency Transactions under International
Equity Series for a discussion of these considerations.
The risks involved in investing in foreign securities include the
possibility of expropriation, nationalization or confiscatory taxation, taxation
of income earned in foreign nations or other taxes imposed with respect to
investments in foreign nations, foreign exchange control (which may include
suspension of the ability to transfer currency from a given country), default in
foreign government securities, political or social instability or diplomatic
developments which could affect investments in secur ities of issuers in those
nations. In addition, in many countries, there is less publicly available
information about issuers than is available in reports about companies in the
United States, and the information that is available is often of lesser quality
than information available on U.S. companies. Foreign companies are not subject
to uniform accounting, auditing and financial reporting standards, and auditing
practices and requirements may not be comparable to those applicable to United
States companies. Further, a Series may encounter difficulty or be unable to
pursue legal remedies and obtain judgments in foreign courts. Commission rates
on securities transactions in foreign countries, which are sometimes fixed
rather than subject to negotiation as in the United States, are likely to be
higher. Moreover, the settlement period of securities transactions in foreign
markets may be longer than in domestic markets. In many foreign countries, there
is less government supervision and regulation of business and industry
practices, stock exchanges, brokers and listed companies than in the United
States. The foreign securities markets of many of the countries in which a
Series may invest may also be smaller, less liquid and subject to greater price
volatility than those in the United States.

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Emerging Markets. Compared to the United States and other developed
countries, emerging countries may have relatively unstable governments,
economies based on only a few industries, and securities markets that trade a
small number of securities. Prices on these exchanges tend to be volatile and,
in the past, securities in these countries have offered greater potential for
gain (as well as loss) than securities of companies located in developed
countries. Further, investments by foreign investors (such as the Series) are
subject to a variety of restrictions in many emerging countries. These
restrictions may take the form of prior governmental approval, limits on the
amount or type of securities held by foreigners, and limits on the types of
companies in which foreigners may invest. Additional restrictions may be imposed
at any time by these or other countries in which a Series invests. In addition,
the repatriation of both investment income and capital from several foreign
countries is restricted and controlled under certain regulations, including, in
some cases, the need for certain governmental consents. Although these
restrictions may in the future make it undesirable to invest in emerging
countries, Delaware International does not believe that any current repatriation
restrictions would affect its decision to invest in such countries. Countries
such as those in which a Series may invest have historically experienced and may
continue to experience, high rates of inflation, high interest rates, exchange
rate fluctuations or currency depreciation, large amounts of external debt,
balance of payments and trade difficulties and extreme poverty and unemployment.
Additional factors which may influence the ability or willingness to service
debt include, but are not limited to, a country's cash flow situation, the
availability of sufficient foreign exchange on the date a payment is due, the
relative size of its debt service burden to the economy as a whole, its
government's policy towards the International Monetary Fund, the World Bank and
other international agencies and the political constraints to which a government
debtor may be subject.
With respect to investment in debt issues of foreign governments, including
Brady Bonds, the ability of a foreign government or government-related issuer to
make timely and ultimate payments on its external debt obligations will also be
strongly influenced by the issuer's balance of payments, including export
performance, its access to international credits and investments, fluctuations
in interest rates and the extent of its foreign reserves. A country whose
exports are concentrated in a few commodities or whose economy depends on
certain strategic imports could be vulnerable to fluctuations in international
prices of these commodities or imports. To the extent that a country receives
payment for its exports in currencies other than dollars, its ability to make
debt payments denominated in dollars could be adversely affected.

<PAGE>

The issuers of the emerging market country government and government-related
high yield securities in which a Series may invest have in the past experienced
substantial difficulties in servicing their external debt obligations, which
have led to defaults on certain obligations and the restructuring of certain
indebtedness. Restructuring arrangements have included, among other things,
reducing and rescheduling interest and principal payments by negotiating new or
amended credit agreements or converting outstanding principal and unpaid
interest to Brady Bonds, and obtaining new credit to finance interest payments.
Holders of certain foreign government and government-related high yield
securities may be requested to participate in the restructuring of such
obligations and to extend further loans to their issuers. There can be no
assurance that the Brady Bonds and other foreign government and
government-related high yield securities in which a Series may invest will not
be subject to similar defaults or restructuring arrangements which may adversely
affect the value of such investments. Furthermore, certain participants in the
secondary market for such debt may be directly involved in negotiating the terms
of these arrangements and may therefore have access to information not available
to other market participants.
Foreign Currency Transactions. Series which invest in foreign securities may
also purchase options and forward contracts in foreign currency for hedging
purposes in connection with such foreign securities transactions. 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 a
Series 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 a Series' position, the Series may forfeit the entire amount of the premium
plus related transaction costs.
With respect to forward foreign currency contracts, the precise matching of
forward contract amounts and the value of the securities involved is generally
not possible since the future value of such securities in foreign currencies
will change as a consequence of market movements in the value of those
securities between the date the forward contract is entered into and the date it
matures. The projection of short-term currency strategy is highly uncertain.
It is impossible to forecast the market value of portfolio securities at the
expiration of the contract. Accordingly, it may be necessary for the Series to
purchase additional foreign currency on the spot market (and bear the expense of
such purchase) if the market value of the security is less than the amount of
foreign currency the Series is obligated to deliver (and if a decision is made
to sell the security and make delivery of the foreign currency). Conversely, it
may be necessary to sell on the spot market some of the foreign currency
received upon the sale of the portfolio security if its market value exceeds the
amount of foreign currency the Series is obligated to deliver.

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

Options
To achieve the Series' objectives, the Series intend to use certain hedging
techniques which might not be conveniently available to individuals.
These techniques will be used at the respective investment manager's
discretion to protect a Series' principal value.
The Series may purchase put options, write covered call options and enter
into closing transactions in connection therewith in respect of securities in
which they may invest. The International Equity, Emerging Markets and REIT
Series may also purchase call options and enter into related closing
transactions. In purchasing put and call options, the premium paid by the
Series, plus any transaction costs, will reduce any benefit realized by the
Series upon exercise of the option.
Purchasing a put option gives a Series the right to sell one of its
securities for an agreed price up to an agreed date. The advantage is that the
Series can be protected should the market value of the security decline.
However, the Series must pay a premium for this right, whether it exercises it
or not.
Writing a covered call option obligates a Series to sell one of its
securities for an agreed price up to an agreed date. The advantage is that the
Series receives premium income, which may offset the cost of purchasing put
options. However, the Series may lose the potential market appreciation of the
security if the respective investment manager's judgment is wrong and interest
rates fall or stock prices rise.
A call option enables the purchaser, in return for the premium paid, to
purchase securities from the writer of the option at an agreed upon date. The
advantage is that the purchaser may hedge against an increase in the price of
securities it ultimately wishes to buy.
Closing transactions essentially let a Series offset a put option or call
option prior to its exercise or expiration. If it cannot effect a closing
transaction, it may have to hold a security it would otherwise sell with a
potential decline in net asset value, or deliver a security it might want to
hold.

<PAGE>

Each Series, other than the International Equity, Devon, Emerging Markets,
Social Awareness and REIT Series, will use Exchange-traded options, but reserve
the right to use over-the-counter options upon written notice to shareholders.
The International Equity, Devon, Emerging Markets, Social Awareness and REIT
Series may use both Exchange-traded and over-the-counter options. Certain
over-the-counter options may be illiquid. The International Equity, Devon,
Emerging Markets, Social Awareness and REIT Series will only invest in such
options to the extent consistent with its 10% limit on investments in illiquid
securities (15% in the case of REIT Series).
The International Equity, Small Cap Value, Trend, Devon, Emerging Markets,
Social Awareness and REIT Series also may write call options and purchase put
options on stock indices and enter into closing transactions in connection
therewith. The International Equity, Devon, Emerging Markets, Social Awareness
and REIT Series also may purchase call options on stock indices and enter into
closing transactions in connection therewith. No Series will engage in
transactions on stock indices for speculative purposes. Writing or purchasing a
call option on stock indices is similar to the writing or purchasing of a call
option on an individual stock. Purchasing a protective put option on stock
indices is similar to the purchase of protective puts on an individual stock.
Stock indices used will include, but will not be limited to, the S&P 100 and the
S&P Over-the-Counter 250. The ability to hedge effectively using options on
stock indices will depend on the degree to which price movements in the
underlying index correlate with price movements in the portfolio securities of,
as the case may be, the applicable Series.

Futures Contracts and Options on Futures Contracts
For hedging purposes, each of the International Equity, Small Cap Value,
Trend, Devon, Emerging Markets, Social Awareness and REIT Series may enter into
futures contracts relating to securities, securities indices or interest rates.
In addition, the International Equity, Devon, Emerging Markets and Social
Awareness Series may enter into futures transactions relating to foreign
currency.
A futures contract is a bilateral agreement providing for the purchase and
sale of a specified type and amount of a financial instrument or foreign
currency, 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, in the case of the majority of interest rate
and foreign currency futures contracts, the fixed-income securities or currency
underlying the contract are delivered by the seller and paid for by the
purchaser, or on which, in the case of securities index futures contracts and
certain interest rate and foreign currency 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.

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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 or on behalf of the broker as "initial margin" as a good faith deposit.
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 contract more or
less valuable, a process known as "marking to the market."
A futures contract may be purchased or sold only on an exchange, known as a
"contract market," designated by the Commodity Futures Trading Commission for
the trading of such contract, and only through a registered futures commission
merchant which is a member of such contract market. A commission must be paid on
each completed purchase and sale transaction. The contract market clearing house
guarantees the performance of each party to a futures contract, by in effect
taking the opposite side of such contract. 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. At that time, a final determination of variation
margin is made and any loss experienced by the trader is required to be paid to
the contract market clearing house while any profit due to the trader must be
delivered to it.
Interest rate futures contracts currently are traded on a variety of
fixed-income securities, including long-term U.S. Treasury Bonds, U.S. Treasury
Notes, GNMA modified pass-through mortgage-backed securities, U.S. Treasury
Bills, bank certificates of deposit and commercial paper. In addition, interest
rate futures contracts include contracts on indexes of municipal securities.
Foreign currency futures contracts currently are traded on the British pound,
Canadian dollar, Japanese yen, Swiss franc, German mark and on Eurodollar
deposits.
A securities index or municipal bond index futures contract provides for the
making and acceptance of a cash settlement in much the same manner as the
settlement of an option on a securities index. The types of indexes underlying
securities index futures contracts are essentially the same as those underlying
securities index options, as described above. The index underlying a municipal
bond index futures contract is a broad based index of municipal securities
designed to reflect movements in the municipal securities market as a whole. The
index assigns weighted values to the securities included in the index and its
composition is changed periodically.
Each Series may also purchase and write options on the types of futures
contracts that Series could invest in.

<PAGE>

A call option on a futures contract provides the holder with the right to
purchase, or enter into a "long" position in, the underlying futures contract. A
put option on a futures contract provides the holder with the right to sell, or
enter into a "short" position in, the underlying futures contract. In both
cases, the option provides for a fixed exercise price up to a stated expiration
date. Upon exercise of the option by the holder, the contract market clearing
house establishes a corresponding short position for the writer of the option,
in the case of a call option, or a corresponding long position in the case of a
put option and the writer delivers to the holder the accumulated balance in the
writer's margin account which represents the amount by which the market price of
the futures contract at exercise exceeds, in the case of a call, or is less
than, in the case of a put, the exercise price of the option on the futures
contract. In the event that an option written by a Series is exercised, the
Series will be subject to all the risks associated with the trading of futures
contracts, such as payment of variation market 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.
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 the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
An option, whether based on a futures contract, a securities index, a
security or foreign currency, becomes worthless to the holder when it expires.
Upon exercise of an option, the exchange or contract market clearing house
assigns exercise notices on a random basis to those of its members which have
written options of the same series and with the same expiration date. A
brokerage firm receiving such notices then assigns them on a random basis to
those of its customers which have written options of the same series and
expiration date. A writer therefore has no control over whether an option will
be exercised against it, nor over the timing of such exercise.
To the extent that interest or exchange rates or securities prices move in
an unexpected direction, the Series may not achieve the anticipated benefits of
investing in futures contracts and options thereon, or may realize a loss. To
the extent that the Series 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
Series from closing out its positions relating to futures.

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Risks of Transactions in Options, Futures
and Forward Contracts
The use of futures contracts, options on futures contracts, forward
contracts and certain options for hedging and other non-speculative purposes as
described above involves certain risks. For example, a lack of correlation
between price changes of an option or futures contract and the assets being
hedged could render the Series' hedging strategy unsuccessful and could result
in losses. The same results could occur if movements of foreign currencies do
not correlate as expected by the investment adviser at a time when the Series is
using a hedging instrument denominated in one foreign currency to protect the
value of a security denominated in a second foreign currency against changes
caused by fluctuations in the exchange rate for the dollar and the second
currency. If the direction of securities prices, interest rates or foreign
currency prices is incorrectly predicted, the Series will be in a worse position
than if such transactions had not been entered into. In addition, since there
can be no assurance that a liquid secondary market will exist for any contract
purchased or sold, the Series may be required to maintain a position (and in the
case of written options may be required to continue to hold the securities used
as cover) until exercise or expiration, which could result in losses. Further,
options and futures contracts on foreign currencies and forward contracts entail
particular risks related to conditions affecting the underlying currency.
Over-the-counter transactions in options and forward contracts also involve
risks arising from the lack of an organized exchange trading environment.

Borrowings
Each Series may borrow money as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Series will not borrow money in
excess of one-third of the value of their net assets. See PART B for additional
possible restrictions on borrowing. The Series have no intention of increasing
their 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 the Series' net
assets, asset coverage of at least 300% is required. In the event that such
asset coverage shall at any time fall below 300%, the Series shall, within three
days thereafter (not including Sunday or holidays) or such longer period as the
U.S. Securities and Exchange Commission may prescribe by rules and regulations,
reduce the amount of their borrowings to an extent that the asset coverage of
such borrowings shall be at least 300%. Except for the International Equity
Series, no Series will pledge more than 15% of their net assets, or issue senior
securities as defined in the 1940 Act, except for notes to banks. The
International Equity Series will not pledge more than 10% of its net assets or
issue senior securities as defined in the 1940 Act, except for notes to banks.
Investment securities will not be purchased while the Series has an outstanding
borrowing.

<PAGE>

Repurchase Agreements
The Series may also use repurchase agreements which are at least 102%
collateralized by U.S. government securities except that the International
Equity and Emerging Markets Series may accept as collateral any securities in
which such Series may invest. Each Series may enter into repurchase agreements
with broker/dealers or banks which are deemed creditworthy by the respective
investment manager under guidelines approved by the Board of Directors. A
repurchase agreement is a short-term investment in which the purchaser (i.e.,
the Series) acquires ownership of a security and the seller agrees to repurchase
the security at a future time and set price, thereby determining the yield
during the purchaser's holding period. The value of the securities subject to
the repurchase agreement is marked to market daily. In the event of a bankruptcy
or other default of the seller, the Series could experience delays and expenses
in liquidating the underlying securities.
The funds in Delaware Investments have obtained an exemption from the
joint-transaction prohibitions of Section 17(d) of the 1940 Act to allow the
funds in the Delaware Investments family jointly to invest cash balances. Each
Series may invest cash balances in joint repurchase agreements in accordance
with the terms of the Order and subject to the conditions described above.

Portfolio Loan Transactions
Each Series may, from time to time, lend securities (but not in excess of
25% of its assets) from its portfolio to brokers, dealers and financial
institutions and receive collateral in cash or short-term U.S. government
securities. While the loan is outstanding, this collateral will be maintained at
all times in an account equal to at least 100% of the current market value of
the loaned securities plus accrued interest. Such cash collateral will be
invested in short-term securities, the income from which will increase the
return of the Series.
The major risk to which a Series would be exposed on a loan transaction is
the risk that the borrower would go bankrupt at a time when the value of the
security goes up. Therefore, a Series will only enter into loan arrangements
after a review of all pertinent facts by the respective investment manager,
subject to overall supervision by the Board of Directors, including the
creditworthiness of the borrowing broker, dealer or institution and then only if
the consideration to be received from such loans would justify the risk.
Credit-worthiness will be monitored on an ongoing basis by the respective
investment manager.

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Liquidity and Rule 144A Securities
In order to assure that each Series has sufficient liquidity, no Series may
invest more than 10% of its net assets in illiquid assets (except REIT Series,
which may invest up to 15% of its net assets in illiquid securities). For the
Decatur Total Return, Delchester, Social Awareness and Devon Series, this policy
shall extend to all restricted securities, including securities eligible for
resale without registration pursuant to Rule 144A ("Rule 144A Securities")
(described below), and repurchase agreements maturing in more than seven days.
With respect to the International Equity, Small Cap Value, Trend, Emerging
Markets and REIT Series and subject to the following paragraphs, this policy
shall not limit the acquisition of securities purchased in reliance upon Rule
144A of the Securities Act of 1933 ("1933 Act"). Rule 144A permits many
privately placed and legally restricted securities to be freely traded among
certain institutional buyers such as the Series. Investing in Rule 144A
Securities could have the effect of increasing the level of illiquidity of a
Series to the extent that qualified institutional buyers become uninterested,
for a time, in purchasing these securities.
While maintaining oversight, the Board of Directors has delegated to the
respective investment manager the day-to-day functions of determining whether or
not individual Rule 144A Securities are liquid for purposes of the 10%
limitation on investments in illiquid assets (15% in the case of REIT Series).
The Board has instructed the managers to consider the following factors in
determining the liquidity of a Rule 144A Security: (i) the frequency of trades
and trading volume for the security; (ii) whether at least three dealers are
willing to purchase or sell the security and the number of potential purchasers;
(iii) whether at least two dealers are making a market in the security; (iv) the
nature of the security and the nature of the marketplace trades (e.g., the time
needed to dispose of the security, the method of soliciting offers, and the
mechanics of transfer).
If the respective manager determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
applicable Series' holdings of illiquid securities exceed the Series' 10%
limit on investment in such securities (15% in the case of REIT Series), the
respective manager will determine what action shall be taken to ensure that
the Series continues to adhere to such limitation.

Investment Company Securities
Any investments that the International Equity and Emerging Markets Series
make in either closed-end or open-end (in the case of Emerging Markets Series)
investment companies will be limited by the 1940 Act, and would involve an
indirect payment of a portion of the expenses, including advisory fees, of such
other investment companies. The limitations under the 1940 Act also apply to
Emerging Markets Series' investments in unregistered investment companies.

<PAGE>

Convertible, Debt and Non-Traditional Equity Securities
Devon, Social Awareness and REIT Series may invest in convertible and
debt securities of issuers in any industry. A convertible security is a security
which may be converted at a stated price within a specified period of time into
a certain quantity of the common stock of the same or a different issuer.
Convertible and debt securities are senior to common stocks in a corporation's
capital structure, although convertible securities are usually subordinated to
similar nonconvertible securities. Convertible and debt securities provide a
fixed-income stream and the opportunity, through its conversion feature, to
participate in the capital appreciation resulting from a market price advance in
the convertible security's underlying common stock. Just as with debt
securities, convertible securities tend to increase in market value when
interest rates decline and tend to decrease in value when interest rates rise.
However, the price of a convertible security is also influenced by the market
value of the security's underlying common stock and tends to increase as the
market value of the underlying stock rises, whereas it tends to decrease as the
market value of the underlying stock declines.
These Series may invest in convertible preferred stocks that offer enhanced
yield features, such as Preferred Equity Redemption Cumulative Stock ("PERCS"),
which provide an investor 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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The Series 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.

Zero Coupon Bonds
REIT Series may invest in zero coupon bonds. The market prices of zero
coupon securities are generally more volatile than the market prices of
securities that pay interest periodically and are likely to respond to changes
in interest rates to a greater degree than do non-zero coupon securities having
similar maturities and credit quality. Current federal income tax law requires
that a holder of a taxable zero coupon security report as income each year the
portion of the original issue discount of such security that accrues that year,
even though the holder receives no cash payments of interest during the year.
The Series have qualified as regulated investment companies under the Code.
Accordingly, during periods when the Series receive no interest payments on
their zero coupon securities, they will be required, in order to maintain their
desired tax treatment, to distribute cash approximating the income attributable
to such securities. Such distribution may require the sale of portfolio
securities to meet the distribution requirements and such sales may be subject
to the risk factor discussed above.

Special Risk Considerations
Shareholders should understand that all investments involve risk and there
can be no guarantee against loss resulting from an investment in a Series, nor
can there be any assurance that the Series' investment objective will be
attained.

<PAGE>

While the Emerging Markets and REIT Series intend to seek to qualify as
"diversified" investment companies under provisions of Subchapter M of the Code,
they will not be diversified for purposes of the 1940 Act. Thus, while at least
50% of each Series' total assets will be represented by cash, cash items, and
other securities limited in respect of any one issuer to an amount not greater
than 5% of the Series' total assets, it will not satisfy the 1940 Act
requirement in this respect, which applies that test to 75% of the Series'
assets. A nondiversified portfolio is believed to be subject to greater risk
because adverse effects on the portfolio's security holdings may affect a larger
portion of the overall assets.

* * *

Each Series' investment objective (except REIT Series), the Fund's
designation as an open-end investment company, each Series' (other than the
Emerging Markets and REIT Series) designation as a diversified fund, and certain
other policies of the Series may not be changed unless authorized by the vote of
a majority of the Series' outstanding voting securities. A "majority vote of the
outstanding voting securities" is the vote by the holders of the lesser of (a)
67% or more of a Series' voting securities present in person or represented by
proxy if the holders of more than 50% of the outstanding voting securities of
such Series are present or represented by proxy; or b) more than 50% of a
Series' outstanding voting securities. Part B lists other more specific
investment restrictions of the Series which may not be changed without a
majority shareholder vote. A brief discussion of those factors that materially
affected the Series' performance during its most recently completed fiscal year
appears in the Series' Annual Report. The remaining investment policies are not
fundamental and may be changed by the Board of Directors of the Fund without a
shareholder vote.

Diversification
The Fund was established as the underlying investment for variable contracts
issued by life companies. Section 817(h) of the Internal Revenue Code of 1986,
as amended (the "Code"), imposes certain diversification standards on the
underlying assets of variable contracts held in the Portfolios of the Fund. The
Code provides that a variable contract shall not be treated as an annuity
contract or life insurance for any period (and any subsequent period) for which
the investments are not, in accordance with regulations prescribed by the United
States Treasury Department ("Treasury Department"), adequately diversified.
Disqualification of the variable contract would result in the imposition of
federal income tax to the contract owner with respect to earnings allocable to
the contract prior to distributions under the contract (e.g., withdrawals). The
Code contains a safe harbor provision which provides that variable contracts
meet the diversification requirements if, as of the close of each quarter, the
underlying assets meet the diversification standards for a regulated investment
company and no more than 55 percent of the total assets consist of cash, cash
items, U.S. government securities and securities of other regulated investment
companies.

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Treasury Department Regulations (Treas. Reg. Section 1.817-5) provide that a
fund will be deemed to be considered adequately diversified if (i) no more than
55 percent of the value of the total assets of the fund is represented by any
one investment; (ii) no more than 70 percent of such value is represented by any
two investments; (iii) no more than 80 percent of such value is represented by
any three investments; and (iv) no more than 90 percent of such value is
represented by any four investments.
The Technical and Miscellaneous Revenue Act of 1988 provides that for
purposes of determining whether or not the diversification standards imposed on
the underlying assets of variable contracts by Section 817(h) of the Code have
been met, "each United States government agency or instrumentality shall be
treated as a separate issuer."
Each Series of the Fund will be managed in such a manner as to comply
with these diversification requirements.

Ratings
Appendix A of Part B describes the ratings of S&P, Moody's, Duff and Phelps,
Inc. and Fitch, four of the better-known statistical rating organizations.
Appendix A to this Prospectus includes additional information concerning the
ratings of high-yield, high-risk securities in which the certain Series may
invest.

APPENDIX A-RATINGS

The Delchester Series' assets may be invested primarily in and the Small Cap
Value Series may invest in, bonds rated BBB or lower by S&P or Baa or lower by
Moody's and in unrated corporate bonds. These credit ratings evaluate only the
safety of principal and interest and do not consider the market value risk
associated with high-yield securities. The table set forth below shows the
percentage of the Delchester Series' fixed-income securities included in each of
the specified rating categories and shows the percentage of the Series' assets
held in United States government securities. Certain securities may not be rated
because the rating agencies were either not asked to provide ratings (e.g., many
issuers of privately placed bonds do not seek ratings) or because the rating
agencies declined to provide a rating for some reason, such as insufficient
data. The table below shows the percentage of the Series' securities which are
not rated. The information contained in the table was prepared based on a dollar
weighted average of the Series' portfolio composition based on month end data
for the Series' year ended December 31, 1997. The paragraphs following the table
contain excerpts from Moody's and S&P's ratings descriptions.

Average Weighted
Rating Moody's Percentage of
and/or Delchester
S&P Portfolio
-----------------------------------------
United States
Treasury Obligations 12.50%
Aaa/AAA --
Aa/AA --
A/A --
Baa/BBB --
Ba/BB 3.73%
B/B 75.18%
Caa/CCC 1.51%
Not Rated 7.08%

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General Rating Information

Bonds
Excerpts from Moody's description of its bond ratings: Aaa--judged to be
the best quality. They carry the smallest degree of investment risk; Aa--judged
to be of high quality by all standards; A--possess favorable attributes and are
considered "upper medium" grade obligations; Baa--considered as medium grade
obligations. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time; Ba--judged to have
speculative elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class; B--generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small; Caa--are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest; Ca--represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings; C--the lowest
rated class of bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Excerpts from S&P's description of its bond ratings:
AAA--highest grade obligations. They possess the ultimate degree of protection
as to principal and interest; AA--also qualify as high grade obligations, and in
the majority of instances differ from AAA issues only in a small degree;
A--strong ability to pay interest and repay principal although more susceptible
to changes in circumstances; BBB--regarded as having an adequate capacity to pay
interest and repay principal; BB, B, CCC, CC--regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions; C--reserved for income bonds on which no interest is being paid; D--
in default, and payment of interest and/or repayment of principal is in arrears.

Commercial Paper
Excerpts from Moody's description of its two highest commercial paper
ratings: P-1--the highest grade possessing greatest relative strength; P-2--seco
nd highest grade possessing less relative strength than the highest grade.
Excerpts from S&P's description of its two highest commercial paper ratings:
A-1--judged to be the highest investment grade category possessing the highest
relative strength; A-2--investment grade category possessing less relative
strength than the highest rating.