<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
File No. 33-41034
File No. 811-6324
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ____
[ ]
Post-Effective Amendment No. 23 [X]
----
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 23
----
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 255-1255
--------------
Eric E. Miller, 1818 Market Street, Philadelphia, PA 19103
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Approximate Date of Public Offering: January 31, 2000
----------------
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b)
___ on (date) pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
_X_ on January 31, 2000 pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
--- C O N T E N T S ---
This Post-Effective Amendment No. 23 to Registration File No. 33-41034 includes
the following:
1. Facing Page
2. Contents Page
3. Part A - Prospectuses*
4. Part B - Statement of Additional Information*
5. Part C - Other Information*
6. Signatures
- -------------------
* This Registration Statement contains the Prospectuses and Statement of
Additional Information for two registrants, Delaware Group Global &
International Funds (the "Registrant") and Delaware Group Adviser Funds, which
offer their shares in one or more series. This Registration Statement contains
one Part C for the Registrant. A separate Registration Statement that
incorporates by reference the Prospectuses and Statement of Additional
Information for the Delaware New Pacific Fund and Delaware Overseas Equity
Fund of Delaware Group Adviser Funds and includes its own Part C, is also
being filed for Delaware Group Adviser Funds.
<PAGE>
DELAWARE
INVESTMENTS
---------------------
Philadelphia * London
Delaware International Equity Fund
Delaware Global Equity Fund
Delaware Overseas Equity Fund
Delaware Emerging Markets Fund
Delaware New Pacific Fund
Delaware Global Bond Fund
Class A o Class B o Class C
Prospectus
January 31, 2000
International and Global Funds
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy of this Prospectus, and any
representation to the contrary is a criminal offense.
<PAGE>
Table of contents
Fund profiles page 1
Delaware International Equity Fund
Delaware Global Equity Fund
Delaware Overseas Equity Fund
Delaware Emerging Markets Fund
Delaware New Pacific Fund
Delaware Global Bond Fund
How we manage the Funds page
Our investment strategies
The securities we typically invest in
The risks of investing in the Funds
Who manages the Funds page
Investment managers and sub-advisers
Portfolio managers
Fund administration (Who's who)
About your account page
Investing in the Funds
Choosing a share class
How to reduce your sales charge
How to buy shares
Retirement plans
How to redeem shares
Account minimums
Special services
Dividends, distributions and taxes
Certain management considerations page
Financial highlights page
3
<PAGE>
Profile: Delaware International Equity Fund
What are the Fund's goals?
Delaware International Equity Fund seeks long-term growth without undue risk to
principal. Although the Fund will strive to achieve its goal, there is no
assurance that it will.
What are the Fund's main investment strategies?
The Fund invests primarily in foreign equity securities that provide the
potential for capital appreciation and income. At least 65% of the Fund's total
assets will be invested in equity securities of issuers from at least three
foreign countries. An issuer is considered to be from the country where it is
located, where the majority of its assets are located or where it generates the
majority of its operating income.
In selecting investments for the Fund,
o We strive to identify well managed companies that are undervalued based on
such factors as assets, earnings, dividends or growth potential.
o In order to compare the value of different stocks, we consider whether the
future dividends on a stock are expected to increase faster than, slower
than, or in line with the level of inflation. We then estimate what we
think the value of those anticipated future dividends would be worth if
they were being paid today. We believe this gives us an estimate of the
stock's true value.
o We generally prefer to purchase securities in countries where the currency
is undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine
whether a particular currency is overvalued or undervalued by comparing the
amount of goods and services that a dollar will buy in the United States to
the amount of 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 overvalued, and when the dollar buys more, the foreign
currency may be undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease according to changes in the value of the Fund's investments. This Fund
will be affected primarily by declines in stock prices, which can be caused by a
drop in foreign stock markets or poor performance in specific industries or
companies. Because the Fund invests in international securities in both
established and developing countries, it will be affected by international
investment risks related to currency valuations, political instability, economic
instability, and lax accounting and regulatory standards. For a more complete
discussion of risk, please turn to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for a portfolio of equity securities from foreign
countries.
o Investors seeking a measure of capital appreciation and income.
2
<PAGE>
Who should not invest in the Fund
o Investors with short-term financial goals or whose primary goal is current
income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors who are unwilling to accept the risks of investing in foreign
securities.
How has the Delaware International Equity Fund performed?
This bar chart and table can help you evaluate the risks of investing in the
Fund. We show how returns for the Fund's Class A shares have varied over the
past eight calendar years, as well as the average annual returns of all shares
for the one-and five-year periods and since inception. The Fund's past
performance is not necessarily an indication of how it will perform in the
future. The returns reflect voluntary expense caps, if any, in effect during the
periods. The returns would be lower without the voluntary caps. There is no
longer a voluntary expense cap in place for this Fund.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN (CLASS A)]
Year-by-year total return (Class A)
1992 -1.46%
1993 28.20%
1994 1.65%
1995 11.52%
1996 20.23%
1997 4.26%
1998 9.03%
1999
During the periods illustrated in this bar chart, Class A's highest quarterly
return was 0.00% for the quarter _______________ and its lowest quarterly return
was -00.00% for the quarter ended ______________.
The maximum Class A sales charge of 5.75%, which is normally deducted when you
purchase shares, is not reflected in the total returns above. If this fee were
included, the returns would be less than those shown. The average annual returns
shown in the table below do include the sales charge.
How has the Delaware International Equity Fund performed?
Average annual returns for periods ending 12/31/99
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Morgan Stanley Capital
International EAFE
CLASS A B C Index **
- --------------------------------------------------------------------------------------------
(if redeemed)* (if redeemed)*
- --------------------------------------------------------------------------------------------
(inception 10/31/91) (inception 9/6/94) (inception 11/29/95)
<S> <C> <C>
1 year
- --------------------------------------------------------------------------------------------
5 years N/A
- --------------------------------------------------------------------------------------------
Lifetime
- --------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
The Fund's returns are compared to the performance of the Morgan Stanley Capital
International EAFE (Europe, Australia, Far East) Index. You should remember that
unlike the Fund, the index is unmanaged and doesn't reflect the costs of
operating a mutual fund, such as the costs of buying, selling and holding the
securities.
* If shares were not redeemed, the returns for Class B would be 0.00%, 0.00%
and 0.00%, respectively, for the one-year, five-year and lifetime periods.
Returns for Class C would be 0.00% and 0.00% respectively, for the one-year
and lifetime periods.
** The Morgan Stanley Capital International EAFE Index return shown is for the
A Class lifetime period. The Index returns for Class B and Class C lifetime
periods were 0.00% and 0.00% respectively. Maximum sales charges are
included in the Fund returns above.
4
<PAGE>
What are Delaware International Equity Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
Purchases as a percentage of offering price 5.75% none none
- --------------------------------------------------------------------------------
Maximum contingent deferred sales charge (load)
as a percentage of original purchase price or
redemption price, whichever is lower none(1) 5%(2) 1%(3)
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
reinvested dividends none none none
- --------------------------------------------------------------------------------
Redemption fees none none none
- --------------------------------------------------------------------------------
Annual fund
operating expenses are deducted from the Fund's assets.
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Management fees
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
- --------------------------------------------------------------------------------
Other expenses
- --------------------------------------------------------------------------------
Total operating expenses
- --------------------------------------------------------------------------------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown. (4) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
CLASS(5) A B B C C
- --------------------------------------------------------------------------------
(if redeemed) (if redeemed)
- --------------------------------------------------------------------------------
1 year
- --------------------------------------------------------------------------------
3 years
- --------------------------------------------------------------------------------
5 years
- --------------------------------------------------------------------------------
10 years
- --------------------------------------------------------------------------------
1. A purchase of Class A shares of $1 million or more may be made at net asset
value. However, if you buy the shares through a financial adviser who is
paid a commission, a contingent deferred sales charge will apply to certain
redemptions. Additional Class A purchase options that involve a contingent
deferred sales charge may be permitted from time to time and will be
disclosed in the Prospectus if they are available.
2. If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 5%, which declines to 4%
during the second year, 3% during the third and fourth years, 2% during the
fifth year, 1% during the sixth year, and 0% thereafter.
3. Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
4. The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show.
5. The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expenses of the Class A shares.
5
<PAGE>
Profile: Delaware Global Equity Fund
What are the Fund's goals?
Delaware Global Equity Fund seeks long-term total return. Although, the Fund
will strive to achieve its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
The Fund invests primarily in U.S. and foreign equity securities that provide
the potential for capital appreciation and income. Under normal circumstances,
we will invest at least 65% of the Fund's total assets in equity securities from
at least three different countries, one of which may be the United States. An
issuer is considered to be from the country where it is located, where the
majority of its assets are located or where it generates the majority of its
operating income.
To determine how much of the Fund's assets to allocate to international stocks
and how much to U.S. stocks, we compare the potential total return of each asset
class in the context of our expectations for inflation, economic growth and
political stability in various regions.
In selecting investments for the Fund,
o We strive to identify well managed companies that are undervalued based on
such factors as assets, earnings, dividends or growth potential.
o In order to compare the value of different stocks, we consider whether the
future dividends on a stock are expected to increase faster than, slower
than, or in line with the level of inflation. We then estimate what we
think the value of those anticipated future dividends would be worth if
they were being paid today. We believe this gives us an estimate of the
stock's true value.
o We generally prefer to purchase securities in countries where the currency
is undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine
whether a particular currency is overvalued or undervalued by comparing the
amount of goods and services that a dollar will buy in the United States to
the amount of 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 overvalued, and when the dollar buys more, the foreign
currency may be undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease according to changes in the value of the Fund's investments. This Fund
will be affected primarily by declines in stock prices, which can be caused by a
drop in the stock market or poor performance in specific industries or
companies. Because the Fund invests in foreign securities, it will be affected
by international investment risks related to currency valuations, political
instability, economic instability and lax accounting and regulatory standards.
The Fund is considered "non-diversified" under federal laws that regulate mutual
funds. Thus, adverse effects on the Fund's investments may affect a larger
portion of its overall assets and subject the Fund to greater risks. For a more
complete discussion of risk, please turn to page __.
<PAGE>
The Fund is considered "non-diversified" under federal laws that regulate mutual
funds. Thus, adverse effects on the Fund's investments may affect a larger
portion of its overall assets and subject the Fund to greater risks. For a more
complete discussion of risk, please turn to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for a portfolio of equity securities from both U.S. and
foreign countries.
o Investors willing to accept the risks associated with foreign investing.
o Investors seeking a measure of capital appreciation and income.
Who should not invest in the Fund
o Investors with short-term financial goals or whose primary goal is current
income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors who are unwilling to accept the risks of investing in foreign
securities.
6
<PAGE>
How has Delaware Global Equity Fund performed?
This bar chart and table can help you evaluate the risks of investing in the
Fund. We show how returns for the Fund's Class A shares have varied over the
past five calendar years, as well as the average annual returns of all shares
for the one-and five-year periods and since inception. The Fund's past
performance is not necessarily an indication of how it will perform in the
future. The returns reflect voluntary expense caps. The returns would be lower
without the voluntary caps. On July 21, 1998, the Fund's name was changed from
Global Assets Fund to Global Equity Fund and the Fund's investment focus changed
from a mix of foreign and U.S. stocks and bonds to primarily foreign and U.S.
stocks.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN (CLASS A) ]
Year-by-year total return (Class A)
1995 24.73%
1996 15.50%
1997 11.04%
1998 8.54%
1999
During the periods illustrated in this bar chart, Class A's highest quarterly
return was 00.00%% for the quarter ended _______________and its lowest quarterly
return was -0.00% for the quarter ended ___________.
The maximum Class A sales charge of 5.75%, which is normally deducted when you
purchase shares, is not reflected in the total returns above. If this fee were
included, the returns would be less than those shown. The average annual returns
in the table shown below do include the sales charge.
How has Delaware Global Equity Fund performed? (continued)
Average annual returns for periods ending 12/31/99
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Morgan Stanley
Capital International
CLASS A B C World Index**
- -----------------------------------------------------------------------------------------------------------------
(if redeemed)* (if redeemed)*
- -----------------------------------------------------------------------------------------------------------------
(Inception 12/27/94) (Inception 12/27/94) (Inception 11/29/95)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year
- -----------------------------------------------------------------------------------------------------------------
5 years N/A
- -----------------------------------------------------------------------------------------------------------------
Lifetime
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The Fund's returns are compared to the performance of the Morgan Stanley Capital
International World Index. You should remember that unlike the Fund, the index
is unmanaged and doesn't reflect the costs of operating a mutual fund, such as
the costs of buying, selling, and holding the securities.
* If shares were not redeemed, the returns for Class B would be 0.00%, 0.00%
and 0.00%, respectively, for the one-year, five-year and lifetime periods.
Returns for Class C would be 0.00% and 0.00% respectively, for the one-year
and lifetime periods.
** The Morgan Stanley Capital International World Index return shown is for
the A Class and B Class lifetime period. The Index return for Class C
lifetime period was 00.00%. Maximum sales charges are included in the Fund
returns above.
7
<PAGE>
What are the Global Equity Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
Purchases as a percentage of offering price 5.75% none none
- --------------------------------------------------------------------------------
Maximum contingent deferred sales charge (load)
As a percentage of original purchase price or
Redemption price, whichever is lower none(1) 5%(2) 1%(3)
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
Reinvested dividends none none none
- --------------------------------------------------------------------------------
Redemption fees none none none
- --------------------------------------------------------------------------------
Annual fund operating expenses are deducted from the Fund's assets.
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Management fees
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
- --------------------------------------------------------------------------------
Other expenses
- --------------------------------------------------------------------------------
Total operating expenses(4)
- --------------------------------------------------------------------------------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(5) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
- --------------------------------------------------------------------------------
CLASS(6) A B B C C
- --------------------------------------------------------------------------------
(if redeemed) (if redeemed)
- --------------------------------------------------------------------------------
1 year
- --------------------------------------------------------------------------------
3 year
- --------------------------------------------------------------------------------
5 year
- --------------------------------------------------------------------------------
10 year
- --------------------------------------------------------------------------------
1. A purchase of Class A shares of $1 million or more may be made at net asset
value. However, if you buy the shares through a financial adviser who is
paid a commission, a contingent deferred sales charge will apply to certain
redemptions. Additional Class A purchase options that involve a contingent
deferred sales charge may be permitted from time to time and will be
disclosed in the Prospectus if they are available.
2. If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 5%, which declines to 4%
during the second year, 3% during the third and fourth years, 2% during the
fifth year, 1% during the sixth year, and 0% thereafter.
3. Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
8
<PAGE>
4. The investment manager has agreed to waive fees and pay expenses from June
1, 1998 through ___________ in order to prevent total operating expenses
(excluding any taxes, interest, brokerage fees, extraordinary expenses and
12b-1 fees) from exceeding 1.55% of average daily net assets. The fees and
expenses shown in the table above do not reflect this voluntary expense
cap. The following table shows operating expenses, reflecting the manager's
current fee waivers and payments.
- --------------------------------------------------------------------------------
Fund expenses including voluntary expense caps
in effect through ___________.
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Management fees 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
- --------------------------------------------------------------------------------
Other expenses 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------
Total operating expenses 1.85% 2.55% 2.55%
- --------------------------------------------------------------------------------
5. The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show. This example does not reflect the voluntary expense cap described in
footnote (4).
6. The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expenses of the Class A shares.
9
<PAGE>
Profile: Delaware Overseas Equity Fund
What is the Fund's goal?
Delaware Overseas Equity Fund seeks to maximize total return. Although the Fund
will strive to achieve its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
We invest primarily in foreign equity securities which we believe offer capital
appreciation potential. We may invest in companies that are located in
established or developing countries; however we limit our investments in
companies located in developing countries.
In determining what portion of Delaware Overseas Equity Fund's assets should be
allocated to a particular country, we consider: how weak or strong the country's
currency is, the country's prospects for economic growth compared to other
countries, expected levels of inflation, political environment and the range of
investment opportunities available in the country.
In selecting investments for the Fund,
o We strive to identify well managed companies that are undervalued based on
such factors as assets, earnings, dividends or growth potential.
o In order to compare the value of different stocks, we consider whether the
future dividends on a stock are expected to increase faster than, slower
than, or in line with the level of inflation. We then estimate what we
think the value of those anticipated future dividends would be worth if
they were being paid today. We believe this gives us an estimate of the
stock's true value.
o We generally prefer to purchase securities in countries where the currency
is undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine
whether a particular currency is overvalued or undervalued by comparing the
amount of goods and services that a dollar will buy in the United States to
the amount of 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 overvalued, and when the dollar buys more, the foreign
currency may be undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease, sometimes rapidly and unpredictably, according to changes in the value
of the Fund's investments. These fluctuations can be even more pronounced for
funds like Delaware Overseas Equity Fund, which invests in developing countries.
This Fund will be affected primarily by declines in stock prices, which can be
caused by a drop in foreign stock markets or poor performance in specific
industries or companies. Because the Fund invests in international securities in
both established and developing countries, it will be affected by international
investment risks related to changes in currency valuations, political
instability, economic instability, and lax accounting and regulatory standards.
For a more complete discussion of risk, please turn to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
10
<PAGE>
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for capital growth potential.
o Investors willing to accept the sometimes sharp and unpredictable
fluctuations in value that a foreign fund can experience.
Who should not invest in the Fund
o Investors with short-term financial goals or whose primary goal is to
receive current income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors who do not understand the significant risks associated with
foreign investing.
11
<PAGE>
How has the Delaware Overseas Equity Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show how returns for the Fund's Class A shares have varied over
the past six calendar years, as well as average annual returns of all shares for
the one- and five-years and since inception. The Fund's past performance does
not necessarily indicate how it will perform in the future. The Class' returns
reflect voluntary expense caps. The returns would be lower without the voluntary
caps.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN (CLASS A)]
Year-by-year total return (Class A)
1994 4.21%
1995 11.10%
1996 9.53%
1997 1.76%
1998 -6.74%
1999
During the periods illustrated in this bar chart, Class A's highest quarterly
return was 00.00%% for the quarter ended _______________and its lowest quarterly
return was -0.00% for the quarter ended ___________.
The maximum Class A sales charge of 5.75%, which is normally deducted when you
purchase shares, is not reflected in the total returns above. If this fee were
included, the returns would be less than those shown. The average annual returns
in the table shown on page __ do include the sales charge.
12
<PAGE>
Average annual returns for periods ending 12/31/99
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Morgan Stanley
CLASS A B C Capital
(if redeemed)* (if redeemed)* International
(Inception 12/3/93) (Inception 3/29/94) (Inception 5/10/94) EAFE Index**
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year
- -----------------------------------------------------------------------------------------------
5 years
- -----------------------------------------------------------------------------------------------
Lifetime**
- -----------------------------------------------------------------------------------------------
</TABLE>
The table above shows the Fund's average annual returns over various time
periods compared to the performance of the Morgan Stanley Capital International
EAFE Index. You should remember that unlike the Fund, the index is unmanaged and
doesn't reflect the actual costs of operating a mutual fund, such as the costs
of buying, selling, and holding the securities.
* If shares were not redeemed, the returns for Class B would be 0.00%, 0.00%
and 0.00%, respectively, for the one-year, five-year and lifetime periods,
respectively. Returns for Class C would be 0.00%, 0.00%, and 0.00% for the
one-year, five-year and lifetime periods, respectively.
** Lifetime returns are shown if the Fund or Class existed for less than 10
years. Index returns are for Class A lifetime. Index returns for Class B
and Class C lifetimes were 0.00% and 0.00%, respectively. Maximum sales
charges are included in the Fund returns above.
13
<PAGE>
What are the Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
- --------------------------------------------------------------------------------
purchases as a percentage of offering price 5.75% none none
- --------------------------------------------------------------------------------
Maximum contingent deferred sales charge
(load) as a percentage of original purchase
price or redemption price, whichever is lower none(1) 5%(2) 1%(3)
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
reinvested dividends none none none
- --------------------------------------------------------------------------------
Redemption fees none none none
- --------------------------------------------------------------------------------
Annual fund operating expenses are deducted from the Fund's assets.
- --------------------------------------------------------------------------------
Management fees
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.30%(4) 1.00% 1.00%
- --------------------------------------------------------------------------------
Other expenses
- --------------------------------------------------------------------------------
Total operating expenses(5)
- --------------------------------------------------------------------------------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(6) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
14
<PAGE>
- --------------------------------------------------------------------------------
CLASS(7) A B B C C
(if redeemed) (if redeemed)
- --------------------------------------------------------------------------------
1 year
- --------------------------------------------------------------------------------
3 years
- --------------------------------------------------------------------------------
5 years
- --------------------------------------------------------------------------------
10 year
- --------------------------------------------------------------------------------
1. A purchase of Class A shares of $1 million or more may be made at net asset
value. However, if you buy the shares through a financial adviser who is paid a
commission, a contingent deferred sales charge will apply to certain
redemptions. Additional Class A purchase options that involve a contingent
deferred sales charge may be permitted from time to time and will be disclosed
in the Prospectus if they are available.
2. If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 5%, which declines to 4% during
the second year, 3% during the third and fourth years, 2% during the fifth year,
1% during the sixth year, and 0% thereafter.
3. Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
4. Prior to May 6, 1996, 12b-1 Plan expenses for Class A shares were 0.35%.
Beginning May 6, 1996, those expenses were reduced to 0.30%.
5. The investment manager has agreed to waive fees and pay expenses from
November ___ , 1999 through April 30, 2000 in order to prevent total operating
expenses (excluding any taxes, interest, brokerage fees, extraordinary expenses
and 12b-1 fees) from exceeding 1.55% of average daily net assets. The fees and
expenses shown in the table above do not reflect this voluntary expense cap. The
following table shows operating expenses, reflecting the manager's current fee
waivers and payments.
Fund expenses including voluntary expense caps
in effect through April 30, 2000
15
<PAGE>
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Management fees 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
- --------------------------------------------------------------------------------
Other expenses 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------
Total operating expenses 1.85% 2.55% 2.55%
- --------------------------------------------------------------------------------
6. The Fund's actual rate of return may be greater or less than the hypothetical
5% return we use here. Also, this example assumes that the Fund's total
operating expenses remain unchanged in each of the periods we show. In addition,
the example does not assume the voluntary expense limitation discussed in
footnote (5).
7. The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expenses of the Class A shares.
16
<PAGE>
Profile: Delaware Emerging Markets Fund
What are the Fund's goals?
Delaware Emerging Markets Fund seeks long-term capital appreciation. Although
the Fund will strive to achieve its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
The Fund invests primarily in equity securities of issuers from emerging foreign
countries. Under normal market conditions, at least 65% of the Fund's total
assets will be invested in equity securities of issuers from at least three
different countries whose economies are considered to be emerging or developing.
We may invest up to 35% of the Fund's net assets in fixed-income securities
issued by companies in emerging countries or by foreign governments, their
agents, instrumentalities or political sub-divisions. We may invest in
fixed-income securities that are denominated in the currencies of emerging
market countries. All of these may be high-yield, high risk fixed-income
securities.
In selecting investments for the Fund,
o We strive to identify well managed companies that are undervalued based on
such factors as assets, earnings, dividends or growth potential.
o In order to compare the value of different stocks, we consider whether the
future dividends on a stock are expected to increase faster than, slower
than, or in line with the level of inflation. We then estimate what we
think the value of those anticipated future dividends would be worth if
they were being paid today. We believe this gives us an estimate of the
stock's true value. Because many of the countries in which the Fund invests
are emerging countries, there may be less information available for us to
use in making this analysis than is available for more developed countries.
o We generally prefer to purchase securities in countries where the currency
is undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine
whether a particular currency is overvalued or undervalued by comparing the
amount of goods and services that a dollar will buy in the United States to
the amount of 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 overvalued, and when the dollar buys more, the foreign
currency may be undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease, sometimes rapidly and unpredictably, according to changes in the value
of the Fund's investments. These fluctuations can be even more pronounced for
funds like Delaware Emerging Markets Fund, which invests in emerging countries.
This Fund will be affected primarily by declines in stock prices, which can be
caused by a drop in foreign stock markets or poor performance in specific
industries or companies. The value of the Fund's investments and, therefore, the
price of the Fund's shares may be more volatile than investments in more
developed markets. Because the Fund invests in international securities in
developing countries as well as established countries, it will be affected by
international investment risks related to currency valuations, political
instability, economic instability, or lax accounting and regulatory standards.
The Fund may invest up to 35% of its net assets in high-yield, high risk foreign
fixed-income securities, which are subject to substantial risks, particularly
during periods of economic downturns or rising interest rates.
The Fund is considered "non-diversified" under federal laws that regulate mutual
funds. Thus, adverse effects on the Fund's investments may affect a larger
portion of its overall assets and subject the Fund to greater risks. For a more
complete discussion of risk, please turn to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
20
<PAGE>
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for a portfolio of securities of emerging markets which
may offer high return potential but can be substantially more risky than
investments in either the U.S. or established foreign countries.
Who should not invest in the Fund
o Investors with short-term financial goals or whose primary goal is to
receive current income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors who do not understand or are unwilling to accept the
significant risks associated with investing in emerging markets.
21
<PAGE>
How has Delaware Emerging Markets Fund performed?
This bar chart and table can help you evaluate the risks of investing in the
Fund. We show how returns for the Fund's Class A shares have varied over the
past three calendar years, as well as the average annual returns of all shares
for the one-year period and since inception. The Fund's past performance is not
necessarily an indication of how it will perform in the future. The returns
reflect voluntary expense caps in effect during the periods. The returns would
be lower without the voluntary caps.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN (CLASS A)]
Year-by-year total return (Class A)
1997 1.33%
1998 -36.40%
1999
During the periods illustrated in this bar chart, Class A's highest quarterly
return was 00.00%% for the quarter ended _______________and its lowest quarterly
return was -0.00% for the quarter ended ___________.
The maximum Class A sales charge of 5.75%, which is normally deducted when you
purchase shares, is not reflected in the total returns above. If this fee were
included, the returns would be less than those shown. The average annual returns
in the table shown on page __ do include the sales charge.
How has Delaware Emerging Markets Fund performed? (continued)
<TABLE>
<CAPTION>
Average annual returns for periods ending 12/31/99
- ------------------------------------------------------------------------------------------------
CLASS Morgan Stanley Capital
International Emerging Markets
Free Index
A B C
- ------------------------------------------------------------------------------------------------
(if redeemed)* (if redeemed)*
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year
- ------------------------------------------------------------------------------------------------
Since Inception
(6/10/96)
- ------------------------------------------------------------------------------------------------
</TABLE>
The Fund's returns are compared to the performance of the Morgan Stanley Capital
International Emerging Markets Free Index. You should remember that unlike the
Fund, the index is unmanaged and doesn't reflect the costs of operating a mutual
fund, such as the costs of buying, selling, and holding the securities.
*If shares were not redeemed, the returns for Class B would be -00.00% and
- -00.00%, respectively, for the one-year and lifetime periods. Returns for Class
C would be -00.00% and -00.00%, respectively, for the one-year and lifetime
periods.
22
<PAGE>
What are the Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
purchases as a percentage of offering price 5.75% none none
- --------------------------------------------------------------------------------
Maximum contingent deferred sales charge (load)
as a percentage of original purchase price or
redemption price, whichever is lower none(1) 5%(2) 1%(3)
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
reinvested dividends none none none
- --------------------------------------------------------------------------------
Redemption fees none none none
- --------------------------------------------------------------------------------
Annual fund operating expenses are deducted from the Fund's assets.
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Management fees
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.30%(4) 1.00% 1.00%
- --------------------------------------------------------------------------------
Other expenses
- --------------------------------------------------------------------------------
Total operating expenses(5)
- --------------------------------------------------------------------------------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(6) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
23
<PAGE>
- --------------------------------------------------------------------------------
CLASS(7) A B B C C
(if redeemed) (if redeemed)
- --------------------------------------------------------------------------------
1 year
- --------------------------------------------------------------------------------
3 years
- --------------------------------------------------------------------------------
5 years
- --------------------------------------------------------------------------------
10 years
- --------------------------------------------------------------------------------
1. A purchase of Class A shares of $1 million or more may be made at net asset
value. However, if you buy the shares through a financial adviser who is paid
a commission, a contingent deferred sales charge will apply to certain
redemptions. Additional Class A purchase options that involve a contingent
deferred sales charge may be permitted from time to time and will be
disclosed in the Prospectus if they are available.
2. If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 5%, which declines to 4%
during the second year, 3% during the third and fourth years, 2% during the
fifth year, 1% during the sixth year, and 0% thereafter.
3. Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
4. The distributor has agreed to waive a portion of 12b-1 fees from February 1,
1998 through May 31, 2000 in order to prevent these fees from exceeding 0.25%
of average daily net assets.
24
<PAGE>
5. The investment manager has agreed to waive fees and pay expenses through
____________, in order to prevent total operating expenses (excluding any
taxes, interest, brokerage fees, extraordinary expenses and 12b-1 fees) from
exceeding 1.70% of average daily net assets. The fees and expenses shown in
the table do not reflect this voluntary expense cap. The following table
shows operating expenses, reflecting the manager's and distributor's current
fee caps.
- --------------------------------------------------------------------------------
Fund expenses including voluntary expense caps
in effect through _________
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Management fees
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.25% 1.00% 1.00%
- --------------------------------------------------------------------------------
Other expenses
- --------------------------------------------------------------------------------
Total operating expenses 1.95% 2.70% 2.70%
- --------------------------------------------------------------------------------
6. The Fund's actual rate of return may be greater or less than the hypothetical
5% return we use here. Also, this example assumes that the Fund's total
operating expenses remain unchanged in each of the periods in this example.
This example does not reflect the voluntary expense caps described in
footnotes 4 and 5.
7. The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expenses of the Class A shares.
25
<PAGE>
Profile: Delaware New Pacific Fund
What is the Fund's goal?
Delaware New Pacific Fund seeks to maximize long-term capital appreciation.
Although the Fund will strive to achieve its goal, there is no assurance that it
will.
What are the Fund's main investment strategies?
The Fund invests primarily in stocks of companies of all sizes that are located
in or have their principal business activities in countries located in the
Pacific Basin, such as Australia, China, Hong Kong, Japan, Korea, Malaysia,
Philippines, Singapore and Taiwan. The Fund may invest in both established and
developing countries. Under normal circumstances we will invest at least 65% of
the Fund's net assets in Pacific Basin countries.
In selecting stocks for the portfolio, we look for companies that can benefit
from future economic growth in the region. We evaluate both individual companies
and individual countries to determine how much of the portfolio should be
allocated to companies located there. When evaluating individual companies, we
consider the growth prospects for the company and its industry, the financial
strength of the company and the quality of its management. We also consider
whether the stock appears overvalued or undervalued compared to other stocks in
the market or in its industry.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease, sometimes rapidly and unpredictably, according to changes in the value
of the Fund's investments. These fluctuations can be even more pronounced for
funds like Delaware New Pacific Fund that invests in developing countries. This
Fund will be affected primarily by declines in stock prices, which can be caused
by a drop in foreign stock markets or poor performance in specific industries or
companies. Because the Fund invests in international securities in both
established and developing countries, it will be affected by international
investment risks related to changes in currency valuations, political
instability, economic instability, and lax accounting and regulatory standards.
For a more complete discussion of risk, please turn to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for capital growth potential.
o Investors willing to accept the sometimes sharp and unpredictable
fluctuations in value that a foreign fund can experience.
Who should not invest in the Fund
o Investors with short-term financial goals or whose primary goal is to
receive current income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors who do not understand or are unwilling to accept the
significant risks associated with foreign investing.
26
<PAGE>
How has Delaware New Pacific Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show how returns for the Fund's Class A shares have varied over
the past six calendar years, as well as average annual returns of all shares for
the one- and five-year periods since inception. The Fund's past performance does
not necessarily indicate how it will perform in the future. The returns reflect
voluntary expense caps. The returns would be lower without the voluntary caps.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN (CLASS A)]
Year-by-year total return (Class A)
1994 -11.02%
1995 -3.75%
1996 7.72%
1997 -31.85%
1998 -22.24%
1999
During the periods illustrated in this bar chart, Class A's highest quarterly
return was 00.00%% for the quarter ended _______________and its lowest quarterly
return was -0.00% for the quarter ended ___________.
The maximum Class A sales charge of 5.75%, which is normally deducted when you
purchase shares, is not reflected in the total returns above. If this fee were
included, the returns would be less than those shown. The average annual returns
in the table shown on page __ do include the sales charge.
<TABLE>
<CAPTION>
Average annual returns for periods ending 12/31/99
- ---------------------------------------------------------------------------------------
CLASS A B C Morgan Stanley
(if redeemed)* (if redeemed)* Pacific Index**
(Inception (Inception (Inception
12/3/93) 3/29/94) 7/7/94)
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year
- ---------------------------------------------------------------------------------------
5 years
- ---------------------------------------------------------------------------------------
Lifetime**
- ---------------------------------------------------------------------------------------
</TABLE>
The Fund's returns are compared to the performance of the Morgan Stanley Pacific
Index. You should remember that unlike the Fund, the index is unmanaged and
doesn't reflect the costs of operating a mutual fund, such as the costs of
buying, selling, and holding the securities.
* If shares were not redeemed, the returns for Class B would be 0.00%, 0.00%,
0.00%, respectively, for the one-year, five-year and lifetime periods,
respectively. Returns for Class C would be 0.00%, 0.00% and 0.00% for the
one-year five-year and lifetime periods, respectively.
** The Morgan Stanley Pacific Index return is for Class A lifetime period. The
Index returns for Class B and Class C lifetime periods were 0.00% and 0.00%,
respectively. Maximum sales charges are included in the Fund returns above.
27
<PAGE>
What are the Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on 5.75% none none
purchases as a percentage of offering price
- --------------------------------------------------------------------------------
Maximum contingent deferred sales charge none(1) 5%(2) 1%(3)
(load) as a percentage of original purchase
price or redemption price, whichever is
lower
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on none none none
reinvested dividends
- --------------------------------------------------------------------------------
Redemption fees none none none
- --------------------------------------------------------------------------------
Annual fund operating expenses are deducted from the Fund's assets.
- --------------------------------------------------------------------------------
Management fees
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.30%(4) 1.00% 1.00%
- --------------------------------------------------------------------------------
Other expenses
- --------------------------------------------------------------------------------
Total operating expenses(5)
- --------------------------------------------------------------------------------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(6) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
- --------------------------------------------------------------------------------
CLASS(7) A B B C C
(if redeemed) (if redeemed)
- --------------------------------------------------------------------------------
1 year
- --------------------------------------------------------------------------------
3 years
- --------------------------------------------------------------------------------
5 years
- --------------------------------------------------------------------------------
10 years
- --------------------------------------------------------------------------------
1. A purchase of Class A shares of $1 million or more may be made at net asset
value. However, if you buy the shares through a financial adviser who is paid
a commission, a contingent deferred sales charge will apply to certain
redemptions. Additional Class A purchase options that involve a contingent
deferred sales charge may be permitted from time to time and will be
disclosed in the Prospectus if they are available.
2. If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 5%, which declines to 4%
during the second year, 3% during the third and fourth years, 2% during the
fifth year, 1% during the sixth year, and 0% thereafter.
3. Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
4. Prior to May 6, 1996, 12b-1 Plan expenses for Class A shares were 0.35%.
Beginning May 6, 1996, those expenses were reduced to 0.30%.
28
<PAGE>
5. The investment manager has agreed to waive fees and pay expenses from
November, 1999 through April 30, 2000 in order to prevent total operating
expenses (excluding any taxes, interest, brokerage fees, extraordinary
expenses and 12b-1 fees) from exceeding 2.00% of average daily net assets.
The fees and expenses shown in the table do not reflect this voluntary
expense cap. The following table shows operating expenses, reflecting the
manager's current fee waivers and payments.
- --------------------------------------------------------------------------------
Fund expenses including voluntary expense caps
in effect through April 30, 2000
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Management fees 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
- --------------------------------------------------------------------------------
Other expenses 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------
Total operating expenses 2.30% 3.00% 3.00%
- --------------------------------------------------------------------------------
6. The Fund's actual rate of return may be greater or less than the hypothetical
5% return we use here. Also, this example assumes that the Fund's total
operating expenses remain unchanged in each of the periods we show. The
example does not reflect the voluntary expense limitation discussed in
footnote 5.
7. The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expenses of the Class A shares.
29
<PAGE>
Profile: Delaware Global Bond Fund
What are the Fund's goals?
Delaware Global Bond Fund seeks to achieve current income consistent with
preservation of principal. Although the Fund will strive to achieve its goal,
there is no assurance that it will.
What are the Fund's main investment strategies?
Delaware Global Bond Fund invests primarily in fixed-income securities that may
also provide the potential for capital appreciation. The Fund is a global fund.
Therefore, at least 65% of the Fund's total assets will be invested in
fixed-income securities of issuers from at least three different countries, one
of which may be the United States. An issuer is considered to be from the
country where it is located, where the majority of its assets are or where it
generates the majority of its operating income.
In selecting investments for the Fund,
o We strive to identify fixed-income securities that provide high income
potential.
o In order to compare the value of different fixed-income securities, even
those issued in different countries, we look at the value of anticipated
future interest and principal payments, taking into consideration what we
think the inflation rate in that country will be. We then estimate what we
think the value of those anticipated future payments would be worth if they
were being paid today. We believe this gives us an estimate of a bond's true
value.
o We generally prefer to purchase securities in countries where the currency is
undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine
whether a particular currency is overvalued or undervalued by comparing the
amount of goods and services that a dollar will buy in the United States to
the amount of 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 overvalued, and when the dollar buys more, the foreign currency may be
undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease according to changes in the value of the Fund's investments. These
fluctuations can be even more pronounced for funds like Delaware Global Bond
Fund, which invests in developing countries. The Fund's investments normally
decrease when there are declines in bond prices, which can be caused by a drop
in the bond market, an adverse change in interest rates or an adverse situation
affecting the issuer of the bond. Because the Fund invests in international
securities in both established and developing countries, it will be affected by
international investment risks related to currency valuations, political
instability, economic instability, or lax accounting and regulatory standards.
The Fund may invest in high-yield, high risk foreign fixed-income securities,
which are subject to substantial risks, particularly during periods of economic
downturns or rising interest rates.
The Fund is considered "non-diversified" under federal laws that regulate mutual
funds. Thus, adverse effects on the Fund's investments may affect a larger
portion of its overall assets and subject the Fund to greater risks. For a more
complete discussion of risk, please turn to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with medium-to-longer term financial goals.
o Investors looking for current income from a portfolio that includes both
U.S. and foreign fixed-income securities.
o Investors seeking a measure of capital appreciation.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors who are unwilling to accept risks of investing in foreign
fixed-income securities.
o Investors who want monthly income from their investment.
30
<PAGE>
How has Delaware Global Bond Fund performed?
This bar chart and table can help you evaluate the risks of investing in the
Fund. We show how returns for the Fund's Class A shares have varied over the
past five calendar years, as well as the average annual returns of all shares
for the one-and five-year periods, and since inception, if applicable. The
Fund's past performance is not necessarily an indication of how it will perform
in the future. The returns reflect voluntary expense caps. The returns would be
lower without the voluntary caps.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN (CLASS A)]
Year-by-year total return (Class A)
1995 20.87%
1996 11.87%
1997 0.67%
1998 7.30%
1999
During the periods illustrated in this bar chart, Class A's highest quarterly
return was 00.00%% for the quarter ended _______________and its lowest quarterly
return was -0.00% for the quarter ended ___________.
The maximum Class A sales charge of 4.75%, which is normally deducted when you
purchase shares, is not reflected in the total returns above. If this fee were
included, the returns would be less than those shown. The average annual returns
in the table shown below do include the sales charge.
<TABLE>
<CAPTION>
Average annual returns for periods ending 12/31/99
- ---------------------------------------------------------------------------------------------------------
CLASS Salomon Smith Barney
World Government Bond
A B C Index**
- ---------------------------------------------------------------------------------------------------------
(if redeemed)* (if redeemed)*
- ---------------------------------------------------------------------------------------------------------
(Inception 12/27/94) (Inception 12/27/94) (Inception 11/29/95)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year
- ---------------------------------------------------------------------------------------------------------
5 years N/A
- ---------------------------------------------------------------------------------------------------------
Lifetime
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The Fund's returns are compared to the performance of the Salomon Smith Barney
World Government Bond Index. You should remember that unlike the Fund, the index
is unmanaged and doesn't reflect the costs of operating a mutual fund, such as
the costs of buying, selling, and holding the securities.
* If shares were not redeemed, the returns for Class B would be 0.00%, 0.00%
and 0.00% respectively, for the one-year, five-year and lifetime periods.
Returns for Class C would be 0.00% and 0.00%, respectively, for the one-year
and lifetime periods.
** The Salomon Smith Barney World Government Bond Index return shown is for
Class A and Class B lifetime period. The Index return for Class C lifetime
period was 0.00%. Maximum sales charges are included in the Fund returns
above.
31
<PAGE>
What are the Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
Purchases as a percentage of offering price 4.75% none none
- --------------------------------------------------------------------------------
Maximum contingent deferred sales charge (load)
As a percentage of original purchase price or
Redemption price, whichever is lower none(1) 4%(2) 1%(3)
- --------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
Reinvested dividends none none none
- --------------------------------------------------------------------------------
Redemption fees none none none
- --------------------------------------------------------------------------------
Annual fund operating expenses are deducted from the Fund's assets.
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Management fees
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
- --------------------------------------------------------------------------------
Other expenses
- --------------------------------------------------------------------------------
Total operating expenses(4)
- --------------------------------------------------------------------------------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(5) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
32
<PAGE>
- --------------------------------------------------------------------------------
CLASS(6) A B B C C
- --------------------------------------------------------------------------------
(if redeemed) (if redeemed)
- --------------------------------------------------------------------------------
1 year
- --------------------------------------------------------------------------------
3 years
- --------------------------------------------------------------------------------
5 years
- --------------------------------------------------------------------------------
10 years
- --------------------------------------------------------------------------------
1. A purchase of Class A shares at $1 million or more may be made at net asset
value. However, if you buy the shares through a financial adviser who is paid
a commission, a contingent deferred sales charge will apply to certain
redemptions. Additional Class A purchase options that involve a contingent
deferred sales charge may be permitted from time to time and will be
disclosed in the Prospectus if they are available.
2. If you redeem Class B shares within two years of purchase, you will pay a
contingent deferred sales charge of 4%, which declines to 3% during the third
and fourth years, 2% during the fifth year, 1% during the sixth year, and 0%
thereafter.
3. Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
33
<PAGE>
4. The investment manager has agreed to waive fees and pay expenses from
December 1, 1998 through __________, in order to prevent total operating
expenses (excluding any taxes, interest, brokerage fees, extraordinary
expenses and 12b-1 fees) from exceeding 1% of average daily net assets. The
fees and expenses shown in the table do not reflect this voluntary expense
cap. The following table shows operating expenses, reflecting the manager's
current fee waivers and payments.
- --------------------------------------------------------------------------------
Fund expenses including voluntary expense caps
in effect through _________
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Management fees
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.30% 1.00% 1.00%
- --------------------------------------------------------------------------------
Other expenses
- --------------------------------------------------------------------------------
Total operating expenses
- --------------------------------------------------------------------------------
5. The Fund's actual rate of return may be greater or less than the hypothetical
5% return we use here. Also, this example assumes that the Fund's total
operating expenses remain unchanged in each of the periods we show. This
example does not reflect the voluntary expense cap described in footnote 4.
6. The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expenses of the Class A shares.
34
<PAGE>
How we manage the Funds
Our investment strategies
We research individual companies and analyze economic and market conditions,
seeking to identify the securities or market sectors that we think are the best
investments for a particular Fund. Following are descriptions of how the
portfolio managers pursue the Funds' investment goals.
We take a disciplined approach to investing, combining investment
strategies and risk management techniques that can help shareholders
meet their goals.
The investment objective of each Fund described in this Prospectus is
non-fundamental. This means the Board of Trustees may change the objective
without obtaining shareholder approval. If any objective were changed, we would
notify shareholders before the change became effective.
Delaware International Equity Fund
Delaware International Equity Fund seeks long-term growth without undue risk to
principal. We invest primarily in equity securities, including common stocks,
which provide the potential for capital appreciation and income. Our strategy
would commonly be described as a value strategy. That is we strive to purchase
stocks that are selling for less than their true value. In order to estimate
what a security's true value is, we evaluate its future income potential, taking
into account the impact both currency fluctuations and inflation might have on
that income stream. We then determine what that income would be worth if paid
today. That helps us decide what we think the security is worth today. We then
compare our estimate of the security's value to its current price to determine
if it is a good value.
We use income as an indicator of value because we believe it allows us to
compare securities across different sectors and different countries--all using
one measurement standard. We can even use this analysis to compare stocks to
bonds.
We may purchase securities in any foreign country, developed or emerging;
however, we currently anticipate investing in Australia, Belgium, Canada,
Finland, France, Germany, Hong Kong, Italy, Japan, Malaysia, the Netherlands,
New Zealand, Singapore, Spain, Switzerland and the United Kingdom. This is a
representative list; the Fund may also invest in countries not listed here. More
than 25% of the Fund's total assets may be invested in the securities of issuers
located in the same country.
We generally maintain a long-term focus in the Fund, seeking companies that we
believe will perform well over the next three to five years.
Delaware Global Equity Fund
Delaware Global Equity Fund seeks long-term total return. We invest in U.S. and
foreign equity securities, including common stocks, that provide the potential
for capital appreciation and income. We invest primarily in developed markets;
however, we may purchase securities in emerging markets. More than 25% of the
Fund's total assets may be invested in the securities of issuers located in the
same country.
35
<PAGE>
To determine how much of the Fund's assets to allocate to international stocks
and how much to U.S. stocks, we compare the potential total return of each asset
class in the context of our expectations for inflation, economic growth and
political stability in various regions.
In selecting foreign stocks for the Fund, we follow the same investment strategy
as Delaware International Equity Fund. We generally look for securities that are
undervalued based on our analysis of their future income stream.
The Fund may also seek to achieve growth by investing up to 35% of its assets in
income producing debt securities such as U.S. or foreign government bonds or
corporate bonds. As a general policy, the Fund only invests in debt securities
when we believe they offer better long-term potential returns with less risk
than investments in equity securities. We apply our analysis of future income
potential to both stocks and bonds in order to decide whether any portion of the
portfolio should be allocated to bonds.
Delaware Overseas Equity Fund
Delaware Overseas Equity Fund's seeks to maximize total return. Under normal
circumstances, we will invest at least 65% of the value of Overseas Equity
Fund's total assets in securities of issuers located in at least three foreign
countries. However, more than 25% of the Fund's total assets may be invested in
the securities of issuers located in the same country.
The Fund will emphasize established companies, although it may invest in
companies of varying sizes as measured by assets, sales and market
capitalization. The Fund may invest in securities of issuers located in a
variety of different foreign countries including: Australia, Austria, Belgium,
Brazil, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, India,
Ireland, Italy, Japan, Luxembourg, Malaysia, Mexico, the Netherlands, New
Zealand, Norway, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland,
Thailand, the United Kingdom. This is a representative list; the Fund may also
invest in countries not listed here.
36
<PAGE>
Our strategy for Delaware Overseas Equity Fund can best be described as a value
strategy. We use the same income-oriented evaluation process to identify
attractive undervalued stocks in a variety of countries and regions. To increase
the Fund's return potential and also add further diversification opportunities,
we may invest up to 40% of the Fund's assets in securities of companies located
in emerging markets countries or in government securities of emerging market
countries.
In deciding how much of the portfolio to allocate to emerging markets, we
consider both the total return potential of those markets and the expected level
of risk.
We may invest up to 5% of the Fund's assets in securities of issuers that
have been in continuous operation for less than three years.
Delaware Emerging Markets Fund
Delaware Emerging Markets Fund seeks long-term capital appreciation. The Fund
may invest in a broad range of equity securities, including common stocks. Our
primary emphasis will be on the stocks of companies located in or having their
principal business in an emerging country.
We consider an "emerging country" to be any country that is
o generally recognized to be an emerging or developing country by the
international financial community, including the World Bank and the
International Finance Corporation,
o any country that is classified by the United Nations as developing, or
o any country that is included in the International Finance Corporation
Free Index or the Morgan Stanley Capital International Emerging Markets
Free Index.
Developing or emerging countries include almost every nation in the world except
the United States, Canada, Japan, Australia, New Zealand and most nations
located in Western and Northern Europe. A representative list of the countries
where we may invest includes: Argentina, Botswana, Brazil, Chile, China,
Colombia, Czech Republic, Estonia, Ghana, Greece, Hong Kong, Hungary, India,
Indonesia, 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. We may invest in other countries, particularly
as markets in other emerging countries develop. More than 25% of the Fund's
total assets may be invested in the securities of issuers located in the same
country.
In deciding whether a company is from an emerging country, we evaluate publicly
available information and question individual companies to determine if the
company meets one of the following criteria:
o the principal trading market for the company's securities is in a
country that is emerging;
o the company generates 50% or more of its annual revenue from operations
in emerging countries, even though the company's securities are traded
in an established market or in a combination of emerging and established
markets;
o the company is organized under the laws of an emerging market country
and has a principal office in an emerging country.
37
<PAGE>
Currently, investing in many emerging countries is not feasible or may involve
significant political risks. We focus our investments in emerging countries
where we consider the economies to be developing strongly and where the markets
are becoming more sophisticated.
In deciding where to invest we place particular emphasis on factors such as
economic conditions (including growth trends, inflation rates and trade
balances), regulatory and currency controls, accounting standards and political
and social conditions. We believe investment opportunities may result from an
evolving long-term trend favoring market-oriented economies, a trend that may
particularly benefit countries having developing markets.
When we evaluate individual companies we strive to apply a value-oriented
selection process, similar to what we use for Delaware International Equity
Fund, Delaware Global Equity Fund and Delaware Overseas Equity Fund. However, in
emerging markets, more of the return is expected to come from capital
appreciation rather than income. Thus, there is greater emphasis on the
manager's assessment of the company's future growth potential.
The Fund may invest up to 35% of its net assets in high yield, high risk
foreign fixed-income securities. This typically includes so-called Brady Bonds.
Delaware New Pacific Fund
Delaware New Pacific Fund seeks to maximize long-term capital appreciation. It
invests primarily in equity securities of companies domiciled or having their
principal business activities in countries located in the Pacific Basin.
The Fund will invest in companies of varying sizes, measured by assets, sales
and market capitalization. When we evaluate individual companies, we consider
the growth prospects for the company and its industry, the financial strength of
the company and the quality of its management. We also look at whether the stock
appears overvalued or undervalued compared to other stocks in the market or its
industry.
While the Fund will generally have investments in companies located in at least
three different countries or regions, the Fund may from time to time have
investments in only one or a few countries or regions. More than 25% of the
Fund's total assets may be invested in the securities of issuers located in the
same country.
38
<PAGE>
The Fund may invest up to 35% of its assets in securities of U.S. issuers. In
addition, the Fund may invest in short-term debt instruments to meet anticipated
day-to-day operating expenses and liquidity requirements.
The Fund may invest up to 5% of its assets in the securities of issuers that
have been in continuous operation for less than three years.
Delaware Global Bond Fund
Delaware Global Bond Fund seeks current income consistent with the preservation
of principal. We invest primarily in fixed-income securities that may also
provide the potential for capital appreciation.
We may invest in:
o foreign and U.S. government securities;
o debt obligations of foreign and U.S. companies;
o debt securities of supranational entities;
o securities of issuers in emerging markets countries, including Brady Bonds,
which tend to be of lower quality and more speculative than securities of
developed country issuers;
o zero-coupon bonds.
At the time this Prospectus was prepared we anticipated that for increased
safety, a large percentage of Global Bond Fund's assets would be invested in
securities of supranational entities and in U.S. and foreign government
securities.
While the Fund may purchase securities of issuers in any foreign country,
developed or emerging, we currently anticipate investing in Australia, Belgium,
Canada, France, Germany, Hong Kong, Japan, Malaysia, the Netherlands, Singapore,
Spain, Switzerland and the United Kingdom, as well as Indonesia, Korea, New
Zealand, the Philippines, South Africa, Taiwan, and Thailand. This is a
representative list; we may also invest in other countries. More than 25% of the
Fund's total assets may be invested in the securities of issuers located in the
same country.
Generally, the value of fixed-income securities rises when interest rates
decline and declines when interest rates rise. The value of your investment in
the Fund will be affected by changes in interest rates. We generally keep the
average weighted maturity of the portfolio in the five-to-ten year range. If we
anticipate a declining interest rate environment; however, we may extend the
average weighted maturity past ten years or if we anticipate a rising rate
environment, we may shorten the average weighted maturity to less than five
years.
39
<PAGE>
The securities we typically invest in
Stocks offer investors the potential for capital appreciation, and may pay
dividends as well. Fixed-income securities offer the potential for greater
income payments than stocks, and also may provide capital appreciation. The
following chart provides a brief description of the securities that the Funds
may invest in. The Funds can hold securities denominated in any currency. Please
see the Statement of Additional Information for additional descriptions of these
as well as other investments.
<TABLE>
<CAPTION>
- ----------------- -----------------------------------------------------------------------------------------------------------------
Securities How we use them
- ----------------- -----------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware Delaware New Delaware
International Global Equity Overseas Emerging Pacific Fund Global Bond
Equity Fund Fund Equity Fund Markets Fund Fund
- ----------------- ------------------- ----------------- ---------------- ----------------- ------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Common Delaware International Equity Fund, Delaware Global Equity Fund, Delaware Delaware
stocks: Overseas Equity Fund, Delaware Emerging Markets Fund and Delaware New Pacific Global Bond
Securities that Fund will invest their assets in common stocks, some of which will be Fund typically
represent dividend-paying stocks. does not
shares of invest in
ownership in a common
corporation. stocks
Stockholders
participate in
the
corporation's
profits and
losses,
proportionate
to the number
of shares they
own.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
- ----------------- -----------------------------------------------------------------------------------------------------------------
Securities How we use them
- ----------------- -----------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware Delaware Delaware
International Global Equity Overseas Emerging New Pacific Global Bond
Equity Fund Fund Equity Fund Markets Fund Fund Fund
- ----------------- ---------------- ------------------------- --------------- ---------------- ------------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Corporate Delaware Global Equity Delaware Delaware Delaware New Delaware
bonds: Debt Fund may seek to achieve Overseas Emerging Pacific Fund Global Bond
obligations growth by investing up Equity Fund Markets Fund generally does Fund may
issued by U.S. to 35% of its assets may invest up may invest in not invest in invest in
or foreign in debt securities, to 40% of its corporate corporate bonds. corporate
corporations. including corporate bonds. assets in obligations bonds,
Generally, Delaware Global developing issued by generally
Equity Fund will invest in country emerging those rated
debt securities when we corporate and country A or better
believe they offer better government companies. by S&P or
long-term potential returns bonds These bonds Moody's or
with less risk than although it may be high if unrated,
equity investments. generally risk, fixed- determined
does not income to be of
Although not a principal intend to do securities. comparable
strategy of the Funds, for so. See quality. The
temporary defensive purposes, "Foreign Although not a Fund may
Delaware International Equity government principal also invest
Fund and Delaware Global securities" strategy of the in high
Equity Fund may invest all or a below. Fund, for yield, high
substantial portion of their temporary risk
respective assets in corporate defensive emerging
obligations. purposes, the markets
Fund may invest corporate
All corporate debt will be rated all or a bonds.
AA or better by S&P and Aa substantial
or better by Moody's, or if portion of
unrated, determined to be of its assets in
comparable quality. corporate
obligations
rated AA or
better by S&P
and Aa or better
by Moody's, or
if unrated,
determined to be
of comparable
quality.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
- ----------------- -----------------------------------------------------------------------------------------------------------------
Securities How we use them
- ----------------- -----------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware Delaware Delaware
International Global Equity Overseas Emerging New Pacific Global Bond
Equity Fund Fund Equity Fund Markets Fund Fund Fund
- ----------------- ------------------- ----------------- ---------------- ----------------- ------------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Foreign Delaware Global Delaware We may invest Delaware New Delaware
government Equity Fund may Overseas a portion of Pacific Fund Global Bond
securities: seek to achieve Equity Fund Delaware generally Fund will
Debt growth by may invest up Emerging does not generally
obligations investing up to to 40% of its Markets Fund's invest in invest in
issued by a 35% of its assets assets in assets in foreign securities
government in foreign developing foreign government issued by
other than the governmental country governmental securities. foreign
United States debt securities. corporate and securities governments,
or by an Generally, government issued by their agencies,
agency, Delaware Global bonds emerging or instrumentalities
instrumentality Equity Fund will combined developing or political
or political invest in debt although it countries, which subdivisions
subdivision of securities when generally may be lower that are rated
such we beleive they does not rated, including AAA or AA by
governments. offer better intend to do securities rated S&P or Aaa or
long-term so. below Aa by Moody's
potential returns investment or, if unrated,
with less risk grade. considered to
than equity be of
invsetments. Although comparable
not a principal quality. We
Although not a principal strategy of the may invest a
strategy of the Funds, for Fund, for portion of the
temporary defensive purposes, temporary Fund's assets in
Delaware International Equity defensive foreign
Fund and Delaware Global purposes, the governmental
Equity Fund may invest all or a Fund may securities
substantial portion of their invest in high issued by
respective assets in high quality debt emerging
quality debt obligations of obligations of countries,
foreign governments, their foreign which may be
agencies, instrumentalities governments, lower rated,
and political sub- their agencies, including
divisions. instrumentalities securities
and political rated below
sub-divisions. investment
grade.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Securities How we use them
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware Delaware Delaware
International Global Equity Overseas Emerging New Pacific Global Bond
Equity Fund Fund Equity Fund Markets Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. government Although not a principal strategy of the Funds, for temporary Delaware New Delaware
securities: defensive purposes Delaware International Equity Fund, Pacific Fund Global Bond
Securities Delaware Global Equity Fund, Delaware Overseas Equity Fund generally does Fund may
issued or and Delaware Emerging Markets Fund may invest in U.S. not invest in invest a
guaranteed by government securities. U.S. significant
the U.S. government portion of its
government or securities assets in U.S.
issued by an government
agency or securities. It
instrumentality will invest only
of the U.S. in U.S.
government. government
obligations,
including bills,
notes and
bonds that are
issued or
guaranteed as
to the payment
of principal and
interest by the
U.S.
government and
securities of
U.S.
government
agencies or
instrumentalities
that are backed
by the full faith
and credit of the
United States.
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Each Fund may hold Delaware Delaware Delaware New Delaware
company investment company Overseas Emerging Pacific Fund Global Bond
securities: In securities if we believe the Equity Fund Markets Fund may not invest Fund may hold
some country offers good may not hold may hold in investment closed-end
countries, investment opportunities. investment open-end and company investment
investments by Both Funds would generally company closed-end securities. company
U.S. mutual hold closed-end investment securities. investment securities.
funds are companies, but Delaware company
generally made Global Equity Fund may also securities.
by purchasing hold open-end investment Please see
shares of companies. These investments Delaware
investment involve an indirect payment of International
companies that a portion of the expenses of Equity Fund
in turn invest the other investment and Delaware
in the companies, including their Global Equity
securities of advisory fees. Fund for a
such countries. complete
explanation.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Securities How we use them
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware Delaware Delaware
International Global Equity Overseas Emerging New Pacific Global Bond
Equity Fund Fund Equity Fund Markets Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Foreign Although the Funds value their assets daily in U.S. dollars, they do not intend to convert their holdings of
currency foreign currencies into U.S. dollars on a daily basis. Each Fund will, however, from time to time, purchase
transactions: or sell foreign currencies and/or engage in forward foreign currency exchange transactions. Each Fund may
A forward conduct its foreign currency transactions on a cash basis at the rate prevailing in the foreign currency
foreign currency exchange market or through a forward foreign currency exchange contract or forward contract.
exchange contract
involves an A Fund may use forward contracts for defensive hedging purposes to attempt to protect the value of the Fund's
obligation to current security or currency holdings. It may also use forward contracts if it has agreed to sell a security
purchase or sell and wants to "lock-in" the price of that security, in terms of U.S. dollars. Investors should be aware of the
a specific currency costs of currency conversion. The Funds will not use forward contracts for speculative purposes.
on a fixed future
date at a price that
is set at the time
of the contract. The
future date may be
any number of days
from the date of the
contract as agreed
by the parties
involved.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Securities How we use them
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware Delaware Delaware
International Global Equity Overseas Emerging New Pacific Global Bond
Equity Fund Fund Equity Fund Markets Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
American Depositary Each Fund may invest in sponsored and unsponsored ADRs, EDRs and GDRs, generally This is not a
Receipts (ADRs), focusing on those whose underlying securities are issued by foreign entities. principal strategy
European Depositary for Delaware
Receipts (EDRs), To determine whether to purchase a security in a foreign market or through depositary Global Bond
and Global Depositary receipts, we evaluate the price levels, the transaction costs, taxes and administrative Fund
Receipts (GDRs): costs involved with each security to identify the most efficient choice.
ADRs are receipts
issued by a U.S.
depositary (usually
a U.S. bank) and EDRs
and GDRs are receipts
issued by a
depositary outside
of the U.S.(usually
a non-U.S. bank or
trust company or a
foreign branch of a
U.S. bank).
Depositary receipts
represent an
ownership interest
in an underlying
security that is
held by the
depositary.
Generally, the
holder of the
depositary receipt
is entitled to all
payments of interest,
dividends or capital
gains that are made
on the underlying
security.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Securities How we use them
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Delaware Delaware Delaware Delaware Delaware Delaware
International Global Equity Overseas Emerging New Pacific Global Bond
Equity Fund Fund Equity Fund Markets Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Supranational The Funds do not invest in these entities. We anticipate
entities: Debt investing a
securities of large
supranational percentage of
entities may be Delaware Global
denominated in any Bond Fund's
currency. These assets in debt
securities are securities of
typically of supranational
high-grade quality. entities.
A supranational
entity is an entity
established or
financially
supported by the
national governments
of one or more
countries to promote
reconstruction or
development. The
International Bank
for Reconstruction
and Development
(more commonly known
as the World Bank)
would be one example
of a supranational
entity.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Securities How we use them
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Delaware Delaware Delaware Delaware Delaware Delaware
International Global Equity Overseas Emerging New Pacific Global Bond
Equity Fund Fund Equity Fund Markets Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Zero coupon bonds: Delaware Delaware Global Equity Fund and Delaware Delaware New Delaware Global
Zero coupon bonds International Delaware Overseas Equity Fund do Emerging Pacific Fund Bond Fund may
are debt obligations Equity Fund not invest in these securities. Markets Fund does not invest invest in zero
that do not entitle typically does may invest in in these coupon bonds.
the holder to any not invest in zero coupon securities.
periodic payments of these bonds.
interest before securities.
maturity or a
specified date when
the securities begin
paying current
interest. Therefore,
they are issued and
traded at a discount
from their face
amounts or par
value. The market
prices of zero
coupon bonds 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.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Securities How we use them
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Delaware Delaware Delaware Delaware Delaware Delaware
International Global Equity Overseas Emerging New Pacific Global Bond
Equity Fund Fund Equity Fund Markets Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Brady Bonds: These Delaware International Equity Fund, Delaware Global Delaware Delaware New Global Bond
are debt securities Equity Fund and Delaware Overseas Equity Fund do Emerging Pacific Fund Fund may invest
issued under the not invest in these securities. Markets Fund does not invest in Brady Bonds.
framework of the may invest in in Brady Bonds. Please see
Brady Plan, an Brady Bonds. We Delaware
initiative for believe that Emerging
debtor nations to the economic Markets Fund to
restructure their reforms the left for a
outstanding external undertaken by complete
indebtedness countries in explanation.
(generally, connection with
commercial bank the issuance of
debt). Brady Bonds Brady Bonds can
tend to be of lower make the debt
quality and more of countries
speculative than that have
securities of issued or have
developed country announced plans
issuers. to issue these
bonds a viable
opportunity for
investment.
- ------------------------------------------------------------------------------------------------------------------------------------
High-yield, high Delaware International Equity Fund, Delaware Emerging Delaware New Global Bond
risk fixed-income Global Equity Fund and Delaware Overseas Equity Markets Fund Pacific Fund Fund may invest
securities: Fund do not invest in these securities. may invest up does not invest a portion of
Securities that are to 35% of its in high-yield, its assets in
rated lower than BBB net assets, in high risk these
by S&P or Baa by high-yield, fixed-income securities.
Moody's, or if high risk securities.
unrated, of equal foreign
quality. These fixed-income
securities may be securities.
issued by companies
or governments of
emerging or
developing
countries, which may
be less
creditworthy. The
risk that these
companies or
governments may not
be able to make
interest or
principal payments
is substantial.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Securities How we use them
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware Delaware Delaware
International Global Equity Overseas Emerging New Pacific Global Bond
Equity Fund Fund Equity Fund Markets Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Restricted We may invest in privately placed securities that are eligible for resale only among certain institutional
securities are buyers without registration, including Rule 144A Securities.
privately placed
securities whose
resale is restricted
under securities
law.
- ------------------------------------------------------------------------------------------------------------------------------------
Illiquid securities Delaware International Equity, Delaware Global Equity Delaware Emerging Delaware New Pacific Fund and
are those that Fund and Delaware Overseas Equity Fund may invest up to Markets Fund may Delaware Global Bond Fund may
cannot be sold or 10% of net assets in illiquid securities. invest up to 15% invest up to 10% of net asses
disposed of in the of net assets in illiquid securities.
ordinary course of in illiquid
business, within securities.
seven days, at
approximately the
price at which a
fund has valued
them.
- ------------------------------------------------------------------------------------------------------------------------------------
Repurchase Typically, we use repurchase agreements as a short-term investment for a Fund's cash position. In order to
agreements: An enter into these repurchase agreements, a Fund must have collateral of at least 102% of the repurchase
agreement between a price. The Funds will only enter into repurchase agreements in which the collateral is comprised of U.S.
buyer, such as a government securities.
fund, and a seller
of securities in
which the seller
agrees to buy the
securities back
within a specified
time at the same
price the buyer
paid for them, plus
an amount equal
to an agreed upon
interest rate.
Repurchase
agreements are often
viewed as equivalent
to cash.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Securities How we use them
- ------------------------------------------------------------------------------------------------------------------------------------
Other Delaware Delaware Delaware Delaware Delaware Delaware
Securities International Global Equity Overseas Emerging New Pacific Global Bond
Equity Fund Fund Equity Fund Markets Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Each Fund is Delaware Delaware Delaware Delaware Delaware Delaware
permitted to invest International Global Equity Overseas Emerging New Pacific Global Bond
in other securities Equity Fund Fund Equity Fund Markets Funds Fund may invest Fund may also
that are listed may invest in may invest in may invest in may invest in in all types of invest in
here. More preferred stocks, preferred stocks, all types of preferred stocks, securities futures and
information about convertible convertible securities with convertible with equity options. The
these securities can securities, securities, equity securities, characteristics, Fund may also
be found in the warrants, futures warrants, characteristics, warrants, futures including trust invest in
Statement of and options. futures and including trust and options. or limited interest rate
Additional options. or limited partnership swaps.
Information. partnership interests,
interests, preferred stock,
preferred stock, rights and
rights, warrants warrants and
and convertible convertible
securities. The securities. The
Fund may also Fund may also
hold futures and hold futures and
options. The options. The Fund
Fund may also may also invest
invest in swaps. in swaps.
</TABLE>
53
<PAGE>
Portfolio turnover
Each Fund (other than Delaware New Pacific Fund) anticipates that its annual
portfolio turnover will be less than 100%. A turnover rate of 100% would occur
if a Fund sold and replaced securities valued at 100% of its net assets within
one year. High turnover in a Fund could result in additional brokerage
commissions to be paid by the Fund and higher tax liability for the Fund.
Borrowing from banks
Each Fund may borrow money as a temporary measure for extraordinary or emergency
purposes or to facilitate redemptions. A Fund will not borrow money in excess of
one-third of the value of its net assets.
Securities lending
Each Fund may loan up to one-quarter (one-third, in the case of Delaware New
Pacific Fund and Delaware Overseas Equity Fund) of its assets to qualified
broker/dealers or institutional investors to generate additional income for the
Fund. All such loans will be secured by collateral.
Purchasing securities on a when-issued or delayed delivery basis
Delaware New Pacific Fund and Delaware Overseas Equity Fund may buy or sell
securities on a when-issued or delayed delivery basis; that is, paying for
securities before delivery or taking delivery at a later date. A Fund will
designate cash or securities in amounts sufficient to cover its obligations, and
will value the designated assets daily.
Temporary defensive positions
For temporary defensive purposes, Delaware International Equity, Delaware Global
Equity and Delaware Emerging Markets Funds may each invest all or a substantial
portion of their assets in high quality debt instruments of foreign governments,
the U.S. government, or foreign or U.S. companies. Also, for temporary defensive
purposes, Delaware Overseas Equity Fund may invest a substantial portion of its
assets in cash or cash equivalent investments or in U.S. securities, and
Delaware New Pacific Fund may invest up to 100% of its assets in money market
instruments, cash or cash equivalents. To the extent that a Fund does so, the
Fund may be unable to meet its investment objective.
56
<PAGE>
The risks of investing in the Funds
Investing in any mutual fund involves risk, including the risk that you may
receive little or no return on your investment, and the risk that you may lose
part or all of the money you invest. Before you invest in a Fund you should
carefully evaluate the risks. An investment in the Funds typically provides the
best results when held for a number of years. The following are the chief risks
you assume when investing in the Funds. Please see the Statement of Additional
Information for further discussion of these risks and the other risks not
discussed here.
<TABLE>
<CAPTION>
Risks How we strive to manage them
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware Delaware Delaware
International Global Equity Overseas Emerging New Pacific Global Bond
Equity Fund Fund Equity Fund Markets Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Market risk is We maintain a long-term investment approach and focus on stocks we believe can appreciate over an
the risk that all extended time frame regardless of interim market fluctuations. In deciding what portion of a Fund's portfolio
or a majority of should be invested in any individual country, we evaluate a variety of factors, including
the securities opportunities and risks relative to other countries.
in a certain --------------------------------------------------------------------------------------------------------------
market--like In addition, for temporary For temporary Same as for For temporary As part of the
the stock or defensive purposes, defensive Delaware defensive Fund's
bond the Funds may invest all or a purposes International purposes New principal
market-- substantial portion of its assets in Delaware Equity Fund Pacific Fund investment
or in a certain high quality debt instruments Overseas and Delaware may invest up strategy, the
country or of foreign governments, the U.S. Equity Fund Global Equity to 100% of its Fund may
region will government, (including their may invest a Fund as assets in invest in
decline in value agencies and instrumentalities) substantial explained to money market securities that
because of or foreign or U.S. companies. portion of its the left. instruments, generally
factors such as assets in cash or cash have relatively
economic cash or cash equivalents. less market
conditions, equivalent risk.
future investments
expectations or or in U.S.
investor securities.
confidence.
- ------------------------------------------------------------------------------------------------------------------------------------
Industry and We typically hold a number of different securities in a variety of sectors in order to minimize the impact
security risk is that a poorly performing security would have on a Fund. This risk is more significant for Delaware Global
the risk that the Equity Fund, Delaware Emerging Markets Fund and Delaware Global Bond Fund, which are non-diversified funds.
value of
securities in a
particular
industry or the
value of an
individual stock
or bond will
decline
because of
changing
expectations
for the
performance of
that industry or
for the
individual
company
issuing the
stock or bond.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
Risks How we strive to manage them
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware Delaware New Delaware
International Global Equity Overseas Emerging Pacific Fund Global Bond
Equity Fund Fund Equity Fund Markets Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest rate risk Delaware International Equity Fund, Delaware Global Equity Fund, Delaware Overseas Interest rate risk
is the risk that Equity Fund, Delaware New Pacific Fund and Delaware Emerging Markets Fund are is a significant
securities, generally less affected by interest rate risk because they typically hold a smaller risk for Delaware
particularly bonds amount of fixed-income securities than the Delaware Global Bond Fund. Global Bond Fund. In
with longer an attempt to manage
maturities, will interest rate risk,
decrease in value if we adjust the Fund's
interest rates rise. average weighted
maturity based on
our view of interest
rates. The Fund's
average weighted
maturity will
generally be in the
five-to-ten year
range. When we
anticipate that
interest rates will
decline, we may
extend the average
maturity beyond ten
years and when we
anticipate that
interest rates will
rise, we may shorten
the average maturity
to less than five
years.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
Risks How we strive to manage them
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware Delaware Delaware
International Global Equity Overseas Emerging New Pacific Global Bond
Equity Fund Fund Equity Fund Markets Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Currency risk is the Each Fund may try to hedge its currency risk by purchasing foreign currency exchange contracts. If a
risk that the value Fund agrees to purchase or sell foreign securities at a pre-set price on a future date, the Fund
of a Fund's attempts to protect the value of a security they own from future changes in currency rates. If a Fund
investments may be has agreed to purchase or sell a security, it may also use foreign currency exchange contracts to "lock-in"
negatively affected the security's price in terms of U.S. dollars or another applicable currency. Each Fund may use forward
by changes in currency exchange contracts only for defensive or protective measures, not to enhance portfolio returns.
foreign currency However, there is no assurance that such a strategy will be successful.
exchange rates.
Adverse changes in
exchange rates may
reduce or eliminate
any gains produced
by investments that
are denominated in
foreign currencies
and may increase any
losses.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
Risks How we strive to manage them
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware Delaware Delaware
International Global Equity Overseas Emerging New Pacific Global Bond
Equity Fund Fund Equity Fund Markets Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Small company risk These funds typically focus These Funds may invest in small companies and Delaware Global Bond
is the risk that their investment in larger would be subject to this risk. We typically hold a Fund does not invest
prices of smaller companies. number of different stocks in order to reduce the in small companies.
companies may be impact that one small company stock would
more volatile than have on the Funds. This risk is more significant
larger companies for Delaware Emerging Markets Fund, which is a
because of limited non-diversified fund.
financial resources
or dependence on
narrow product
lines.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
60
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware Delaware Delaware
International Global Overseas Emerging New Pacific Global Bond
Equity Fund Equity Fund Equity Fund Markets Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Political We evaluate the political situations in the countries where we invest and take into account any potential
risk is the risk risks before we select securities for the portfolio. However, there is no way to eliminate political
that countries or risk when investing internationally.
the entire region
where we invest
may experience
political
instability. This
may cause
greater
fluctuation in the
value and
liquidity of our
investments due
to changes in
currency
exchange rates,
governmental
seizures or
nationalization
of assets.
- ------------------------------------------------------------------------------------------------------------------------------------
Emerging Delaware Delaware Overseas Equity Fund, Delaware Emerging Markets
market International Equity Fund and Fund, Delaware New Pacific Fund and Delaware Global Bond Fund
risk is the Delaware Global Equity Fund, are subject to this risk. Striving to manage this risk, the portfolio
possibility that to the limited extent that they managers carefully screen securities within emerging markets and
the risks invest in emerging attempt to consider material risks associated with an individual
associated with markets, are subject company or bond issuer. We cannot eliminate emerging market risk
international to the risk. and consequently encourage shareholders to invest in these Funds
investing will be only if they have a long-term time horizon, over which the potential of
greater in individual securities is more likely to be realized.
emerging
markets than in
more developed
foreign markets
because, among
other things,
emerging
markets may
have less stable
political and
economic environments.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware Delaware Delaware
International Global Overseas Emerging New Pacific Global Bond
Equity Fund Equity Fund Equity Fund Markets Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Inefficient The Funds will attempt to reduce these risks by investing in a number of different countries, and noting
market risk is trends in the economy, industries and financial markets.
the risk that
foreign markets
may be less Delaware Global
liquid, have Bond Fund will
greater price also perform
volatility, less credit
regulation and analysis in an
higher attempt to
transaction reduce these
costs than U.S. risks.
markets.
- ------------------------------------------------------------------------------------------------------------------------------------
Information We conduct fundamental research on the companies we invest in rather than relying solely on information
risk is the risk available through financial reporting. We believe this will help us to better uncover any potential
that foreign weaknesses in individual companies.
companies may
be subject to
different
accounting,
auditing and
financial
reporting
standards than
U.S. companies.
There may be
less information
available about
foreign issuers
than domestic
issuers.
Furthermore,
regulatory
oversight of
foreign issuers
may be less
stringent or less
consistently
applied than in
the United
States.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
62
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware Delaware Delaware
International Global Overseas Emerging New Pacific Global Bond
Equity Fund Equity Fund Equity Fund Markets Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Non-diversified Delaware Delaware Delaware Delaware Delaware New Delaware
fund risk. International Global Overseas Emerging Pacific Fund Global Bond
Non-diversified Equity Fund Equity Fund Equity Fund Markets Fund is a Fund
funds are is a is a is a is a non- diversified is a
subject to diversified non-diversified diversified diversified fund, and is non-diversified
greater risks fund, and is fund as defined fund, and is fund, the not subject fund, the same
because not subject by the not subject same as to this as Delaware
adverse effects to this risk. Investment to this risk. Delaware risk. Global Equity
on their Company Act of Global Fund. Please see
individual 1940 Act. That Equity Fund. the full
investments means the Fund Please see explanation
may affect a does not have the full under Delaware
larger portion to limit the explanation Global Equity
of their overall percentage of to the left Fund to the left.
assets. assets invested under
in an individual Delaware
security. Global
However Global Equity Fund.
Equity Fund, (as
well as
Delaware
Emerging
Markets Fund
and Global
Bond Fund)
does
intend to satisfy
the Internal
Revenue Code's
diversification
requirement,
which says that
for 50% of the
Fund's assets,
no more than 5%
of net assets can
be invested in
any single
security. This
means 50% of
the Fund's net
assets must be
spread among
various
securities, with
no more than 5%
of net assets
invested in any
single security.
The other 50%
can be more
concentrated
with up to 25%
invested in an
individual security.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
63
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware
Delaware Global Delaware Delaware
International Equity Overseas Emerging Delaware New Delaware Global
Equity Fund Fund Equity Fund Markets Fund Pacific Fund Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Foreign government This is not a significant risk for these Funds. The Fund is subject This is not a The Fund is
and supranational to this risk and significant risk subject
securities risks will attempt to for this Fund. to this risk
relate to the limit this risk by and will
ability of a foreign performing credit attempt to
government or analysis on the limit this
government related issuer of each risk by
issuer to make security purchased. performing
timely payments on credit
its external debt The Fund attempts to analysis on
obligations. reduce this risk by the issuer
limiting the portion of each
of net assets that security
may be invested in purchased.
these securities. The Fund
attempts to
The Fund also reduce the
compares the risks
risk-reward associated
potential of foreign with
government investing
securities being in foreign
considered to that governments
offered by equity by focusing
securities to on bonds
determine whether to rated within
allocate assets to the two
equity or fixed highest rating
income investments. categories.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
67
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware
Delaware Global Delaware Delaware
International Equity Overseas Emerging Delaware New Delaware Global
Equity Fund Fund Equity Fund Markets Fund Pacific Fund Bond Fund
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Credit risk of This is not a significant risk for Delaware Emerging This is not a Delaware Global
high-yield, high Delaware International Equity Fund, Delaware Markets Fund may significant Bond Fund may
risk fixed-income Global Equity Fund and Delaware Overseas Equity invest up to 35% of risk for invest a portion
securities: Fund. its net assets in Delaware New of its assets in
Securities rated high-yield, high Pacific Fund. these securities.
lower than BBB by risk foreign Please see
S&P and Baa by fixed-income complete
Moody's are securities. explanation
considered to be of under Delaware
poor standing and We intend to limit Emerging
predominantly our investment in Markets Fund to
speculative as to any single lower the left.
the issuer's ability rated bond, which
to repay interest can help to reduce
and principal. the effect of an
individual default
These bonds are on the Fund. We also
often issued by less intend to limit our
creditworthy overall holdings of
companies or by bonds in this
highly leveraged category. Such
(indebted) firms, limitations may not
which are generally protect the Funds
less able than more from widespread bond
financially stable defaults brought
firms to make about by a sustained
scheduled payments economic downturn or
of interest and from price declines
principal. The risks that might result
posed by bonds from changes in the
issued under such quality ratings of
circumstances are individual bonds.
substantial.
- ----------------------------------------------------------------------------------------------------------------------------------
Transaction costs Each of the Funds is subject to this risk. We strive to monitor transaction costs and to choose an
risk: Costs of efficient trading strategy for the Funds.
buying, selling and
holding foreign
securities,
including brokerage,
tax and custody
costs, may be higher
than those involved
in domestic
transactions
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
70
<PAGE>
Who manages the Funds
Delaware Investment managers and sub-advisers
Delaware International Advisers Ltd. makes investment decisions for Delaware
International Equity Fund, Delaware Global Equity Fund, Delaware Emerging
Markets Fund and Delaware Global Bond Fund, manages the Funds' business affairs
and provides daily administrative services. Delaware International Advisers is
affiliated with Delaware Management Company, a series of Delaware Management
Business Trust, which is an indirect, wholly owned subsidiary of Delaware
Management Holdings, Inc.
Delaware Management Company is the sub-adviser to Delaware Global Equity Fund.
Delaware Management Company manages the U.S. securities portion of Delaware
Global Equity Fund's portfolio under the overall supervision of Delaware
International Advisers and furnishes Delaware International Advisers with
investment recommendations, asset allocation advice, research and other
investment services regarding U.S. securities.
Delaware Overseas Equity Fund and Delaware New Pacific Fund are managed by
Delaware Management Company. Delaware International Advisers is Delaware
Overseas Equity Fund's sub-adviser and AIB Govett, Inc. is Delaware New Pacific
Fund's sub-adviser. The sub-advisers are responsible for day-to-day management
of the Fund's assets. Delaware Management Company administers the Fund's affairs
and has ultimate responsibility for all investment advisory services for the
Fund. Delaware Management Company also supervises the sub-adviser's performance.
For the services they provided, the manager and sub-advisers, where applicable,
were paid an aggregate fee by each Fund for the last fiscal year as follows:
Investment Management Fees
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Delaware Delaware Global Delaware Delaware Delaware New Delaware
International Equity Fund Overseas Equity Emerging Pacific Fund Global Bond
Equity Fund Fund Markets Fund Fund
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
As a percentage of
average daily net assets * * * * *
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Reflects a waiver of fees by the manager.
Portfolio managers
International Equity Fund
Clive A. Gillmore and Nigel G. May have primary responsibility for making
day-to-day investment decisions for Delaware International Equity Fund. In
making investment decisions for the Fund, Mr. Gillmore and Mr. May regularly
consult with a fourteen member international equity team.
Clive A. Gillmore, Senior Portfolio Manager and Director of Delaware
International Advisers, has been the senior portfolio manager for the Fund since
its inception. A graduate of the University of Warwick who began his career at
Legal and General Investment Management, Mr. Gillmore joined Delaware
International Advisers in 1990 after eight years of investment experience. His
most recent position prior to joining Delaware International Advisers was as a
Pacific Basin equity analyst and senior portfolio manager for Hill Samuel
Investment Management Ltd. Mr. Gillmore completed the London Business School
Investment Program.
<PAGE>
Nigel G. May, Senior Portfolio Manager and Director of Delaware International
Advisers, is a graduate of Sidney Sussex College, Cambridge. Mr. May joined Mr.
Gillmore as Co-Manager of the Fund on December 22, 1997. He joined Delaware
International Advisers in 1991, assuming portfolio-management responsibilities
and sharing analytical responsibilities for continental Europe. He previously
had been with Hill Samuel Investment Management Ltd. for five years.
Delaware Global Equity Fund
Elizabeth A. Desmond has primary responsibility for making day-to-day investment
decisions for Delaware Global Equity Fund. Robert L. Arnold makes investment
decisions for the U.S. equity portion of the Fund.
Elizabeth A. Desmond, Senior Portfolio Manager and Director of Delaware
International Advisers, has been the portfolio manager for the Fund since July
21, 1998. Ms. Desmond is a graduate of Wellesley College and the masters program
in East Asian studies at Stanford University. After working for the Japanese
government for two years, she began her investment career as a Pacific Basin
investment manager with Shearson Lehman Global Asset Management. Prior to
joining Delaware International Advisers in the spring of 1991, she was a Pacific
Basin equity analyst and senior portfolio manager at Hill Samuel Investment
Management Ltd. Ms. Desmond is a CFA charterholder.
Robert L. Arnold, Vice President/Portfolio Manager of the Fund, has been
managing the U.S. equity portion of the Fund since July 21, 1998. Prior to that
time he managed other Delaware Investments mutual funds and was a financial
analyst focusing on the financial services industry including banks, thrifts,
insurance companies and consumer finance companies. Mr. Arnold holds a BS from
Carnegie Mellon University and earned an MBA from the University of Chicago. He
began his investment career as a management consultant with Arthur Young in
Philadelphia. Prior to joining Delaware Investments in March 1992, Mr. Arnold
was a planning analyst with Chemical Bank in New York.
Delaware Overseas Equity Fund
Mr. Gillmore and Robert Akester have had primary responsibility for making
day-to-day investment decisions for Delaware Overseas Equity Fund since
September 15, 1997. Please see Delaware International Equity Fund for a
description of Mr. Gillmore's business experience.
Robert Akester, Senior Portfolio Manager of Delaware International Advisers,
joined Delaware International Advisers in 1996. Mr. Akester, who began his
investment career in 1969, was most recently a Director of Hill Samuel
Investment Management 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.
Delaware Emerging Markets Fund
Mr. Gillmore also has primary responsibility for making day-to-day investment
decisions for Emerging Markets Fund (please see Delaware International Equity
Fund for a description of Mr. Gillmore's business experience). In making
investment decisions for Emerging Markets Fund, Mr. Gillmore regularly consults
with a fourteen member international equity team, including co-managers Robert
Akester and Joshua H. Brooks. (Please see Delaware Overseas Equity Fund for a
description of Mr. Akester's business experience). Mr. Gillmore has been
managing the Fund since its inception and Mr. Akester and Mr. Brooks have been
Co-Managing the Fund since ________________.
Joshua H. Brooks, Senior Portfolio Manager of Delaware International Advisers,
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 acting as liaison with Delaware International Advisers.
<PAGE>
Delaware New Pacific Fund
Jane Pickard has had primary responsibility for making day-to-day investment
decisions for the Fund since November 12, 1997. Ms. Pickard graduated in law
from Edinburgh University. She joined Barclays de Zoete Wedd Securities Limited
in 1991, where she initially worked as a specialist in structured debt products,
moving into the Pacific Rim equity division in 1992. She remained there until
1995 when she moved to IAI International where she had responsibility for
Pacific Region investment for U.S. institutional and retail funds. Ms. Pickard
joined AIB Govett Asset Management, an affiliate of AIB Govett, Inc., in 1996.
Delaware Global Bond Fund
Christopher A. Moth and Joanna Bates have primary responsibility for making
day-to-day investment decisions for Delaware Global Bond Fund. In making
investment decisions for Delaware Global Bond Fund, Mr. Moth and Ms. Bates
regularly consult with David G. Tilles.
Christopher A. Moth, Senior Portfolio Manager - Investment Strategy of Delaware
International Advisers Ltd., is a graduate of The City University London. He
joined Delaware International in 1992. He previously worked at the Guardian
Royal Exchange where he was responsible for technical analysis, quantitative
models and projections. Mr. Moth has been awarded the certificate in Finance and
Investment from the Institute of Actuaries in London. Mr. Moth became Co-Manager
of the Fund in January 1997.
Joanna Bates, Senior Portfolio Manager - Credit and Emerging Markets of Delaware
International Advisers, is a graduate of London University. She joined the Fixed
Income team at Delaware International in June 1997. Prior to that she was
Associate Director, Fixed Interest at Hill Samuel Investment Management Ltd.
which she joined in 1990. She had previously worked at Fidelity International
and Save & Prosper as a fund manager and analyst for global bond markets. Ms.
Bates is an associate of the Institute of Investment Management and Research.
Ms. Bates became Co-Manager of the Fund in July 1999.
David G. Tilles, Managing Director and Chief Investment Officer of Delaware
International, was educated at the Sorbonne, Warwick University and Heidelberg
University. Prior to joining Delaware International in 1990 as Managing Director
and Chief Investment Officer, he spent 16 years with Hill Samuel Investment
Management Ltd. in London, serving in a number of investment capacities. His
most recent position prior to joining Delaware International was Chief
Investment Officer of Hill Samuel Investment Management Ltd.
<PAGE>
Who's who?
This diagram shows the various organizations involved with managing,
administering, and servicing the Delaware Investments funds.
[GRAPHIC OMITTED: DIAGRAM SHOWING THE VARIOUS ORGANIZATIONS INVOLVED
WITH MANAGING, ADMINISTERING, AND SERVICING THE DELAWARE INVESTMENTS
FUNDS]
Board of trustees
<TABLE>
<CAPTION>
<S> <C> <C>
Investment managers The Funds Custodian
Delaware International Advisers Ltd. The Chase Manhattan Bank
Third Floor 4 Chase Metrotech Center
80 Cheapside Brooklyn, NY 11245
London, England EC2V 6EE
Delaware Management Company
One Commerce Square
Philadelphia, PA 19103
Sub-advisers
Delaware Management Company
Delaware International Advisers Ltd.
AIB Govett, Inc.
250 Montgomery Street, Suite 1200
San Francisco, CA 94104
Portfolio managers Distributor Service agent
(see page __ for details) Delaware Distributors, L.P. Delaware Service Company, Inc.
1818 Market Street 1818 Market Street
Philadelphia, PA 19103 Philadelphia, PA 19103
</TABLE>
Financial advisers
Shareholders
Board of trustees A mutual fund is governed by a board of trustees which has
oversight responsibility for the management of the fund's business affairs.
Trustees establish procedures and oversee and review the performance of the
investment manager, the distributor and others that perform services for the
fund. At least 40% of the board of trustees must be independent of the fund's
investment manager and distributor. These independent fund trustees, in
particular, are advocates for shareholder interests.
Investment manager An investment manager is a company responsible for selecting
portfolio investments consistent with the objective and policies stated in the
mutual fund's prospectus. The investment manager places portfolio orders with
broker/dealers and is responsible for obtaining the best overall execution of
those orders. A written contract between a mutual fund and its investment
manager specifies the services the manager performs. Most management contracts
provide for the manager to receive an annual fee based on a percentage of the
fund's average daily net assets. The manager is subject to numerous legal
restrictions, especially regarding transactions between itself and the funds it
advises.
Sub-adviser A sub-adviser is a company generally responsible for the management
of the fund's assets. They are selected and supervised by the investment
manager.
<PAGE>
Portfolio managers Portfolio managers are employed by the investment manager or
sub-adviser to make investment decisions for individual portfolios on a
day-to-day basis.
Custodian Mutual funds are legally required to protect their portfolio
securities and most funds place them with a qualified bank custodian who
segregates fund securities from other bank assets.
Distributor Most mutual funds continuously offer new shares to the public
through distributors who are regulated as broker-dealers and are subject to NASD
Regulation, Inc. (NASD) rules governing mutual fund sales practices.
Service agent Mutual fund companies employ service agents (sometimes called
transfer agents) to maintain records of shareholder accounts, calculate and
disburse dividends and capital gains and prepare and mail shareholder statements
and tax information, among other functions. Many service agents also provide
customer service to shareholders.
Financial advisers Financial advisers provide advice to their clients--analyzing
their financial objectives and recommending appropriate funds or other
investments. Financial advisers are compensated for their services, generally
through sales commissions, and through 12b-1 and/or service fees deducted from
the fund's assets.
Shareholders Like shareholders of other companies, mutual fund shareholders have
specific voting rights, including the right to elect trustees. Material changes
in the terms of a fund's management contract must be approved by a shareholder
vote, and funds seeking to change fundamental investment objectives or policies
must also seek shareholder approval.
<PAGE>
About your account
Investing in the Funds
You can choose from a number of share classes for each Fund. Because each share
class has a different combination of sales charges, fees, and other features,
you should consult your financial adviser to determine which class best suits
your investment goals and time frame.
Choosing a share class:
Class A
o Class A shares have an up-front sales charge of up to 5.75% that you
pay when you buy the shares. Class A shares of Delaware Global
Bond Fund have an up-front sales charge of up to 4.75%. The offering
price for Class A shares includes the front-end sales charge.
o If you invest $50,000 or more ($100,000 for Delaware Global Bond Fund),
your front-end sales charge will be reduced.
o You may qualify for other reduced sales charges, as described in "How
to reduce your sales charge," and under certain circumstances the sales
charge may be waived; please see the Statement of Additional
Information.
o Class A shares are also subject to an annual 12b-1 fee no greater than
0.30% (0.35% for Delaware New Pacific Fund) of average daily net
assets, which is lower than the 12b-1 fee for Class B and Class C
shares.
o Class A shares generally are not subject to a contingent deferred sales
charge except in the limited circumstances described in the table
below.
<PAGE>
Class A sales charges
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Delaware International Equity, Delaware Delaware Global Bond
Global Equity, Delaware Overseas Equity,
Delaware Emerging Markets, Delaware New
Pacific
- -----------------------------------------------------------------------------------------------------------------
Amount of purchase Sales charge Sales charge Dealer's Sales charge Sales charge Dealer's
as % of as % of commission as % of as % of commission
offering price amount as % of offering amount as % of
invested offering price price invested offering price
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Less than $50,000 5.75% 5.00% 4.75% 4.00%
$50,000 but under 4.75% 4.00% 4.75% 4.00%
$100,000
$100,000 but under 3.75% 3.00% 3.75% 3.00%
$250,000
$250,000 but under 2.50% 2.00% 2.50% 2.00%
$500,000
$500,000 but under 2.00% 1.60% 2.00% 1.60%
$1,000,000
</TABLE>
As shown below, there is no front-end sales charge when you purchase $1 million
or more of Class A shares. However, if your financial adviser is paid a
commission on your purchase, you may have to pay a limited contingent deferred
sales charge of 1% if you redeem these shares within the first year after your
purchase and 0.50% if you redeem them within the second year.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Amount of purchase Sales charge as % of offering Sales charge as % of amount Dealer's commission as % of
price invested offering price
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$1 million up to $5 none none 1.00%
million
- --------------------------------------------------------------------------------------------------------------------------
Next $20 million none none 0.50%
Up to $25 million
- --------------------------------------------------------------------------------------------------------------------------
Amount over $25 none none 0.25%
million
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Class B
o Class B shares have no up-front sales charge, so the full amount of
your purchase is invested in the Fund. However, you will pay a
contingent deferred sales charge if you redeem your shares within six
years after you buy them.
o If you redeem Class B shares during the first year after you buy them,
the shares will be subject to a contingent deferred sales charge of 5%.
The contingent deferred sales charge is 4% during the second year, 3%
during the third and fourth years, 2% during the fifth year, 1% during
the sixth year, and 0% thereafter. For Delaware Global Bond Fund B
Class, the contingent deferred sales charge is 4% during the first two
years, 3% during the third and fourth years after your purchase, 2%
during the fifth year, 1% during the sixth year, and 0% thereafter.
o Under certain circumstances the contingent deferred sales charge may be
waived; please see the Statement of Additional Information.
o For approximately eight years after you buy your Class B shares, they
are subject to annual 12b-1 fees no greater than 1% of average daily
net assets, of which 0.25% are service fees paid to the distributor,
dealers or others for providing services and maintaining accounts.
o Because of the higher 12b-1 fees, Class B shares have higher expenses
and any dividends paid on these shares are lower than dividends on
Class A shares.
o Approximately eight years after you buy them, Class B shares
automatically convert into Class A shares with a 12b-1 fee of no more
than 0.30% (0.35% for Delaware New Pacific Fund). Conversion may occur
as late as three months after the eighth anniversary of purchase,
during which time Class B's higher 12b-1 fees apply.
o You may purchase up to $250,000 of Class B shares at any one time. The
limitation on maximum purchases varies for retirement plans.
Class C
o Class C shares have no up-front sales charge, so the full amount of
your purchase is invested in the Fund. However, you will pay a
contingent deferred sales charge of 1% if you redeem your shares within
12 months after you buy them.
o Under certain circumstances the contingent deferred sales charge may be
waived; please see the Statement of Additional Information.
o Class C shares are subject to an annual 12b-1 fee which may not be
greater than 1% of average daily net assets, of which 0.25% are service
fees paid to the distributor, dealers or others for providing services
and maintaining shareholder accounts.
o Because of the higher 12b-1 fees, Class C shares have higher expenses
and pay lower dividends than Class A shares.
o Unlike Class B shares, Class C shares do not automatically convert into
another class.
o You may purchase any amount less than $1,000,000 of Class C shares at
any one time. The limitation on maximum purchases varies for retirement
plans.
Each share class of the Funds has adopted a separate 12b-1 plan that allows it
to pay distribution fees for the sales and distribution of its shares. Because
these fees are paid out of the Fund's assets on an ongoing basis, over time
these fees will increase the cost of your investment and may cost you more than
paying other types of sales charges.
<PAGE>
How to reduce your sales charge
We offer a number of ways to reduce or eliminate the sales charge on shares.
Please refer to the Statement of Additional Information for detailed information
and eligibility requirements. You can also get additional information from your
financial adviser. You or your financial adviser must notify us at the time you
purchase shares if you are eligible for any of these programs.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Program How it works Share class
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A B C
Letter of Intent Through a Letter of Intent you X Although the Letter of Intent and
agree to invest a certain amount in Rights of Accumulation do not apply
Delaware Investment Funds (except to the purchase of Class B and C
money market funds with no sales shares, you can combine your
charge) over a 13-month period to purchase of Class A shares with
qualify for reduced front-end sales your purchase of B and C shares to
charges. fulfill your Letter of Intent or
qualify for Rights of Accumulation.
- ------------------------------------------------------------------------------------------------------------------
Rights of You can combine your holdings or X
Accumulation purchases of all funds in the
Delaware Investments family (except
money market funds with no sales
charge) as well as the holdings and
purchases of your spouse and
children under 21 to qualify for
reduced front-end sales charges.
- ------------------------------------------------------------------------------------------------------------------
Reinvestment of Up to 12 months after you redeem For Class For Class B, your Not
redeemed shares, you can reinvest the A, you will account will be available
shares proceeds with no additional sales not have credited with the
charge. to pay an contingent deferred
additional sales charge you
front-end previously paid on
sales the amount you are
charge. reinvesting. Your
schedule for
contingent deferred
sales charges and
conversion to Class
A will not start
over again; it will
pick up from the
point at which you
redeemed your
shares.
- ------------------------------------------------------------------------------------------------------------------
SIMPLE IRA, These investment plans may qualify X There is no reduction in sales
SEP IRA, for reduced sales charges by charges for Class B or Class C
SARSEP, combining the purchases of all shares for group purchases by
Prototype Profit members of the group. Members of retirement plans.
Sharing, these groups may also qualify to
Pension, 401(k), purchase shares without a front-end
SIMPLE 401(k), sales charge and a waiver of any
403(b)(7), and contingent deferred sales charges.
457 Retirement
Plans
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
How to buy shares
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of purchasing shares,
including opening an account. Your adviser may charge a separate fee for this
service.
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
Complete an investment slip and mail it with your check, made payable to the
fund and class of shares you wish to purchase, to Delaware Investments, 1818
Market Street, Philadelphia, PA 19103-3682. If you are making an initial
purchase by mail, you must include a completed investment application (or an
appropriate retirement plan application if you are opening a retirement account)
with your check.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
Ask your bank to wire the amount you want to invest to First Union Bank, ABA
#031201467, Bank Account number 2014 12893 4013. Include your account number and
the name of the fund in which you want to invest. If you are making an initial
purchase by wire, you must call us so we can assign you an account number.
[GRAPHIC OMITTED: ILLUSTRATION OF AN EXCHANGE SYMBOL]
By exchange
You can exchange all or part of your investment in one or more funds in the
Delaware Investments family for shares of other funds in the family. Please keep
in mind, however, that under most circumstances you are allowed to exchange only
between like classes of shares. To open an account by exchange, call the
Shareholder Service Center at 800.523.1918.
[GRAPHIC OMITTED: ILLUSTRATION OF A KEYPAD]
Through automated shareholder services
You can purchase or exchange shares through Delaphone, our automated telephone
service, or through our web site, www.delawareinvestments.com. For more
information about how to sign up for these services, call our Shareholder
Service Center at 800.523.1918.
<PAGE>
About your account (continued)
How to buy shares (continued)
Once you have completed an application, you can open an account with an initial
investment of $1,000 and make additional investments at any time for as little
as $100. If you are buying shares in an IRA or Roth IRA, under the Uniform Gifts
to Minors Act or the Uniform Transfers to Minors Act; or through an Automatic
Investing Plan, the minimum purchase is $250, and you can make additional
investments of only $25. The minimum for an Education IRA is $500. The minimums
vary for retirement plans other than IRAs, Roth IRAs or Education IRAs.
The price you pay for shares will depend on when we receive your purchase order.
If we or an authorized agent receive your order before the close of trading on
the New York Stock Exchange (normally 4:00 p.m. Eastern Time) on a business day,
you will pay that day's closing share price which is based on the Fund's net
asset value. If we receive your order after the close of trading, you will pay
the next business day's price. A business day is any day that the New York Stock
Exchange is open for business. We reserve the right to reject any purchase
order.
We determine the Funds' net asset value (NAV) per share at the close of trading
of the New York Stock Exchange each business day that the Exchange is open. We
calculate this value by adding the market value of all the securities and assets
in the Fund's portfolio, deducting all liabilities, and dividing the resulting
number by the number of shares outstanding. The result is the net asset value
per share. Foreign securities, currencies and other assets denominated in
foreign currencies are translated into U.S. dollars at the exchange rate of
these currencies against the U.S. dollar, as provided by an independent pricing
service. We price securities and other assets for which market quotations are
available at their market value. We price fixed-income securities on the basis
of valuations provided to us by an independent pricing service that uses methods
approved by the board of trustees. Any fixed-income securities that have a
maturity of less than 60 days we price at amortized cost. For all other
securities, we use methods approved by the board of trustees that are designed
to price securities at their fair market value.
Retirement plans
In addition to being an appropriate investment for your Individual Retirement
Account (IRA), Roth IRA and Education IRA, shares in the Funds may be suitable
for group retirement plans. You may establish your IRA account even if you are
already a participant in an employer-sponsored retirement plan. For more
information on how shares in these Funds can play an important role in your
retirement planning or for details about group plans, please consult your
financial adviser, or call 800.523.1918.
<PAGE>
How to redeem shares
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of redeeming your shares. Your
adviser may charge a separate fee for this service.
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
You can redeem your shares (sell them back to the fund) by mail by writing to:
Delaware Investments, 1818 Market Street, Philadelphia, PA 19103-3682. All
owners of the account must sign the request, and for redemptions of more than
$50,000, you must include a signature guarantee for each owner. Signature
guarantees are also required when redemption proceeds are going to an address
other than the address of record on an account.
[GRAPHIC OMITTED: ILLUSTRATION OF A TELEPHONE]
By telephone
You can redeem up to $50,000 of your shares by telephone. You may have the
proceeds sent to you by check, or, if you redeem at least $1,000 of shares, you
may have the proceeds sent directly to your bank by wire. Bank information must
be on file before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
You can redeem $1,000 or more of your shares and have the proceeds deposited
directly to your bank account the next business day after we receive your
request. If you request a wire deposit, the First Union Bank fee (currently
$7.50) will be deducted from your proceeds. Bank information must be on file
before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A KEYPAD]
Through automated shareholder services
You can redeem shares through Delaphone, our automated telephone service, or
through our web site, www.delawareinvestments.com. For more information about
how to sign up for these services, call our Shareholder Service Center at
800.523.1918.
<PAGE>
About your account (continued)
How to redeem shares (continued)
If you hold your shares in certificates, you must submit the certificates with
your request to sell the shares. We recommend that you send your certificates by
certified mail.
When you send us a properly completed request to redeem or exchange shares,
before the close of trading on the New York Stock Exchange (normally 4:00 p.m.
Eastern Time) you will receive the net asset value as determined on the business
day we receive your request. We will deduct any applicable contingent deferred
sales charges. You may also have to pay taxes on the proceeds from your sale of
shares. We will send you a check, normally the next business day, but no later
than seven days after we receive your request to sell your shares. If you
purchased your shares by check, we will wait until your check has cleared, which
can take up to 15 days, before we send your redemption proceeds.
If you are required to pay a contingent deferred sales charge when you redeem
your shares, the amount subject to the fee will be based on the shares' net
asset value when you purchased them or their net asset value when you redeem
them, whichever is less. This arrangement assures that you will not pay a
contingent deferred sales charge on any increase in the value of your shares.
You also will not pay the charge on any shares acquired by reinvesting dividends
or capital gains. If you exchange shares of one fund for shares of another, you
do not pay a contingent deferred sales charge at the time of the exchange. If
you later redeem those shares, the purchase price for purposes of the contingent
deferred sales charge formula will be the price you paid for the original
shares--not the exchange price. The redemption price for purposes of this
formula will be the NAV of the shares you are actually redeeming.
Account minimums
If you redeem shares and your account balance falls below the required account
minimum of $1,000 ($250 for IRAs, Uniform Gift to Minors Act accounts or
accounts with automatic investing plans, $500 for Education IRAs) for three or
more consecutive months, you will have until the end of the current calendar
quarter to raise the balance to the minimum. If your account is not at the
minimum by the required time, you will be charged a $9 fee for that quarter and
each quarter after that until your account reaches the minimum balance. If your
account does not reach the minimum balance, the Fund may redeem your account
after 60 days' written notice to you.
<PAGE>
Special services
To help make investing with us as easy as possible, and to help you build your
investments, we offer the following special services.
Automatic Investing Plan
The Automatic Investing Plan allows you to make regular monthly or quarterly
investments directly from your checking account.
Direct Deposit
With Direct Deposit you can make additional investments through payroll
deductions, recurring government or private payments such as social security or
direct transfers from your bank account.
Wealth Builder Option
With the Wealth Builder Option you can arrange automatic monthly exchanges
between your shares in one or more Delaware Investments funds. Wealth Builder
exchanges are subject to the same rules as regular exchanges (see below) and
require a minimum monthly exchange of $100 per fund.
Dividend Reinvestment Plan
Through our Dividend Reinvestment Plan, you can have your distributions
reinvested in your account or the same share class in another fund in the
Delaware Investments family. The shares that you purchase through the Dividend
Reinvestment Plan are not subject to a front-end sales charge or to a contingent
deferred sales charge. Under most circumstances, you may reinvest dividends only
into like classes of shares.
Exchanges
You can exchange all or part of your shares for shares of the same class in
another Delaware Investments fund without paying a sales charge and without
paying a contingent deferred sales charge at the time of the exchange. However,
if you exchange shares from a money market fund that does not have a sales
charge you will pay any applicable sales charges on your new shares. When
exchanging Class B and Class C shares of one fund for similar shares in other
funds, your new shares will be subject to the same contingent deferred sales
charge as the shares you originally purchased. The holding period for the CDSC
will also remain the same, with the amount of time you held your original shares
being credited toward the holding period of your new shares. You don't pay sales
charges on shares that you acquired through the reinvestment of dividends. You
may have to pay taxes on your exchange. When you exchange shares, you are
purchasing shares in another fund so you should be sure to get a copy of the
fund's prospectus and read it carefully before buying shares through an
exchange.
<PAGE>
About your account (continued)
Special services (continued)
MoneyLine(SM) On Demand Service
Through our MoneyLine(SM) On Demand Service, you or your financial adviser may
transfer money between your Fund account and your predesignated bank account by
telephone request. This service is not available for retirement plans, except
for purchases into IRAs. MoneyLine has a minimum transfer of $25 and a maximum
transfer of $50,000. Delaware Investments does not charge a fee for this
service; however, your bank may assess one.
MoneyLine Direct Deposit Service
Through our MoneyLine Direct Deposit Service you can have $25 or more in
dividends and distributions deposited directly to your bank account. Delaware
Investments does not charge a fee for this service; however, your bank may
assess one. This service is not available for retirement plans.
Systematic Withdrawal Plan
Through our Systematic Withdrawal Plan you can arrange a regular monthly or
quarterly payment from your account made to you or someone you designate. If the
value of your account is $5,000 or more, you can make withdrawals of at least
$25 monthly, or $75 quarterly. You may also have your withdrawals deposited
directly to your bank account through our MoneyLine Direct Deposit Service.
Dividends, distributions and taxes
Dividends, if any, are paid quarterly for Delaware International Equity Fund,
Delaware Global Equity Fund and Delaware Global Bond Fund and annually for
Delaware Overseas Equity Fund for New Pacific Fund and Delaware Emerging Markets
Fund. Any capital gains are distributed annually. We automatically reinvest all
dividends and any capital gains, unless you tell us otherwise.
Tax laws are subject to change, so we urge you to consult your tax adviser about
your particular tax situation and how it might be affected by current tax law.
The tax status of your dividends from these Funds is the same whether you
reinvest your dividends or receive them in cash. Distributions from a Fund's
long-term capital gains are taxable as capital gains, while distributions from
short-term capital gains and net investment income are generally taxable as
ordinary income. Any capital gains may be taxable at different rates depending
on the length of time the Fund held the assets. In addition, you may be subject
to state and local taxes on distributions.
We will send you a statement each year by January 31 detailing the amount and
nature of all dividends and capital gains that you were paid for the prior year.
Distributions declared in October, November or December but paid in January are
taxable as if they were paid in December.
The Funds are required to withhold 31% of your taxable distributions and
redemption proceeds if you do not provide your correct taxpayer identification
number (TIN) or certify that your TIN is correct, or if the IRS instructs us to
do so.
<PAGE>
Certain management considerations
Year 2000
As with other mutual funds, financial and business organizations and individuals
around the world, the Funds could be adversely affected if the computer systems
used by their 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." Each Fund is taking steps to obtain satisfactory
assurances that its major service providers are taking steps reasonably designed
to address the Year 2000 Problem on the computer systems that the service
providers use. However, there can be no assurance that these steps will be
sufficient to avoid any adverse impact on the business of the Funds. The Year
2000 Problem may also adversely affect the issuers of securities in which the
Funds invest. In the securities selection and investment process The portfolio
managers and investment professionals of the Fund consider Year 2000 compliance
(including, but not limited to, any or all of the following: impact on business;
cost of compliance plan review and contingency planning; and vendor compliance).
However, there can be no guarantees that, even with their due diligence efforts,
they will be able to predict the effect of Year 2000 on any company or the
performance of its securities.
Investments by fund of funds
Delaware International Equity Fund, Delaware Emerging Markets Fund, Delaware
Overseas Equity Fund and Delaware New Pacific Fund accept investments from the
series portfolios of Delaware Group Foundation Funds, a fund of funds. From time
to time, a Fund may experience large investments or redemptions due to
allocations or rebalancings by Foundation Funds. While it is impossible to
predict the overall impact of these transactions over time, there could be
adverse effects on portfolio management. For example, the Fund may be required
to sell securities or invest cash at times when it would not otherwise do so.
These transactions could also have tax consequences if sales of securities
result in gains, and could also increase transactions costs or portfolio
turnover. The manager will monitor transactions by Foundation Funds and will
attempt to minimize any adverse effects on each Fund and Foundation Funds as a
result of these transactions.
Fund Companies
The Funds are separate series of the investment companies shown below.
Delaware Group Global & International Funds
Delaware International Equity Fund
Delaware Global Equity Fund
Delaware Emerging Markets Fund
Delaware Global Bond Fund
Delaware Group Adviser Funds
Delaware Overseas Equity Fund
Delaware New Pacific Fund
<PAGE>
Financial highlights
The financial highlights table are intended to help you understand a Fund's
financial performance. All "per share" information reflects financial results
for a single Fund share. This information has been audited by Ernst & Young LLP,
whose report, along with each Fund's financial statements, is included in the
Fund's annual report, which is available upon request by calling 800.523.1918.
Information for Delaware Overseas Equity Fund and Delaware New Pacific Fund for
the fiscal periods ended on or before October 31, 1996 has been audited by the
Funds' previous independent auditors.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A shares Class B shares
- ------------------------------------------------------------------------------------------------------------------------------------
International Equity Fund Year Ended 11/30/ Year Ended 11/30/
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period 14.650 $14.640 $12.190 $11.920 $14.560 $14.560 $12.130 $11.900
Income (loss) from investment
operations
Net investment income(1) 0.273 0.220 0.490 0.297 0.168 0.114 0.398 0.278
Net realized and unrealized
gain (loss) on investments and
foreign currencies 0.957 0.245 2.385 0.628 0.962 0.246 2.377 0.567
------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations 1.230 0.465 2.875 0.925 1.130 0.360 2.775 0.845
------- ------- ------- ------- ------- ------- ------- -------
Less dividends and distributions
Dividends from net investment
income (0.395) (0.435) (0.280) (0.185) (0.255) (0.340) (0.200) (0.145)
Distributions from net realized
gain on investments (0.155) (0.020) (0.145) (0.470) (0.155) (0.020) (0.145) (0.470)
------- ------- ------- ------- ------- ------- ------- -------
Total dividends and
distributions (0.550) (0.455) (0.425) (0.655) (0.410) (0.360) (0.345) (0.615)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $15.330 $14.650 $14.640 $12.190 $15.280 $14.560 $14.560 $12.130
======= ======= ======= ======= ======= ======= ======= =======
Total return(4) 8.75% 3.27%(5) 24.22%(5) 8.17% 8.03% 2.54%(5) 23.38%(5) 7.46%
Ratios and supplemental
data
Net assets, end of period
(000 omitted) $122,609 $112,425 $89,177 $62,251 $37,775 $31,914 $10,878 $3,471
Ratio of expenses to average
net assets 1.70% 1.70% 1.85% 2.07% 2.40% 2.40% 2.55% 2.77%
Ratio of expenses to average
net assets prior to expense
limitation 1.70% 1.71% 1.95% 2.07% 2.40% 2.41% 2.65% 2.77%
Ratio of net investment income
to average net assets 1.80% 1.46% 3.70% 2.57% 1.10% 0.76% 3.00% 1.87%
Ratio of net investment income to
average net assets prior to
expense limitation 1.80 1.45% 3.60% 2.57% 1.10% 0.75% 2.90% 1.87%
Portfolio turnover 5% 8% 9% 21% 5% 8% 9% 21%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Class C shares
- ----------------------------------------------------------------------------------------------
International Equity Fund Year Ended 11/30/
- ----------------------------------------------------------------------------------------------
Period
11/29/95(3)
through
1999 1998 1997 1996 11/30/95
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $14.540 $14.540 $12.190 $12.240
Income (loss) from investment
operations
Net investment income(1) 0.167 0.114 0.400 none
Net realized and unrealized
gain (loss) on investments and
foreign currencies 0.963 0.246 2.375 (0.050)
------- ------- ------- -------
Total from investment operations 1.130 0.360 2.775 (0.050)
------- ------- ------- -------
Less dividends and distributions
Dividends from net investment
income (0.255) (0.340) (0.280) none
Distributions from net realized
gain on investments (0.155) (0.020) (0.145) none
------- ------- ------- -------
Total dividends and
distributions (0.410) (0.360) (0.425) none
------- ------- ------- -------
Net asset value, end of period $15.260 $14.540 $14.540 $12.190
======= ======= ======= =======
Total return(4) 8.04% 2.54%(5) 23.39%(5) (6)
Ratios and supplemental
data
Net assets, end of period
(000 omitted) $14,076 $11,811 $1,909 $5
Ratio of expenses to average
net assets 2.40% 2.40% 2.55% (6)
Ratio of expenses to average
net assets prior to expense
limitation 2.40% 2.41% 2.65% (6)
Ratio of net investment income
to average net assets 1.10% 0.76% 3.00% (6)
Ratio of net investment income to
average net assets prior to
expense limitation 1.10% 0.75% 2.90% (6)
Portfolio turnover 5% 8% 9% (6)
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) Per share information for the years ended November 30, 1997 and 1998 was
based on the average shares outstanding method.
(2) Date of commencement of trading; ratios have been annualized but total
return has not been annualized.
(3) Date of commencement of trading.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
(5) Total return reflects expense limitations in effect for the Fund.
(6) The ratios of expenses and net investment income to average net assets,
portfolio turnover and total return have been omitted as management believes
that such ratios and total return for this relatively short period are not
meaningful.
<PAGE>
<TABLE>
<CAPTION>
Class A shares Class B shares
Global Equity Fund Year Ended 11/30/ Year Ended 11/30/
Period Period
12/27/94(2) 2/27/94(2)
through through
1999 1998(3) 1997 1996 11/30/95 1999 1998(3) 1997 1996 11/30/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.050 $13.310 $11.900 $10.000 $14.040 $13.300 $11.880 $10.000
Income (loss) from investment operations
Net investment income(1) 0.289 0.437 0.493 0.301 0.197 0.342 0.379 0.212
Net realized and unrealized gain (loss)
on investments and foreign currencies 0.826 0.843 1.572 1.839 0.813 0.848 1.606 1.848
------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations 1.115 1.280 2.065 2.140 1.010 1.190 1.985 2.060
------- ------- ------- ------- ------- ------- ------- -------
Less dividends and distributions
Dividends from net investment income (0.335) (0.490) (0.385) (0.240) (0.220) (0.400) (0.295) (0.180)
Distributions from net realized gain
on investments (1.230) (0.050) (0.270) none (1.230) (0.050) (0.270) none
------- ------- ------- ------- ------- ------- ------- -------
Total dividends and distributions (1.565) (0.540) (0.655) (0.240) (1.450) (0.450) (0.565) (0.180)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $13.600 $14.050 $13.310 $11.900 $13.600 $14.040 $13.300 $11.880
======= ======= ======= ======= ======= ======= ======= =======
Total return(6) 8.83% 9.91% 18.17% 21.48% 7.97% 9.18% 17.32% 20.73%
Ratios and supplemental data
Net assets, end of period (000 omitted) $7,329 $6,939 $11,878 $3,122 $5,397 $4,445 $4,796 $613
Ratio of expenses to average net assets 1.55% 1.25% 1.25% 1.25% 2.25% 1.95% 1.95% 1.95%
Ratio of expenses to average net assets
prior to expense limitation 1.99% 2.16% 2.72% 7.55% 2.69% 2.86% 3.42% 8.25%
Ratio of net investment income to average net
assets 2.17% 3.24% 4.13% 4.75% 1.47% 2.54% 3.43% 4.05%
Ratio of net investment income (loss) to
average net assets prior to expense limitation 1.73% 2.33% 2.66% (1.55%) 1.03% 1.63% 1.96% (2.25%)
Portfolio turnover 90% 74% 34% 57% 90% 74% 34% 57%
</TABLE>
(1) Per share information for the years ended November 30, 1997 and 1998 was
based on the average shares outstanding method.
(2) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(3) On July 21, 1997, the Fund's name was changed to Global Equity Fund
(formerly Global Assets Fund), eliminating the Fund's bond component in
favor of stocks.
(4) Date of commencement of trading.
(5) The ratios of expenses and net investment income to average net assets,
portfolio turnover and total return have been omitted as management believes
that such ratios and total return for this relatively short period are not
meaningful.
(6) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge. Total return
reflects expense limitations in effect for the Fund.
<PAGE>
[RESTUBED FOR ABOVE]
<TABLE>
<CAPTION>
Class C shares
Global Equity Fund Year Ended 11/30/
Period
11/29/95(4)
through
1999 1998(3) 1997 1996 11/30/95
<S> <C> <C> <C> <C>
Net asset value, beginning of period $13.990 $13.250 $11.890 $11.940
Income (loss) from investment operations
Net investment income(1) 0.197 0.341 0.446 none
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Class A
Year Ended 10/31
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Overseas Equity Fund 1999 1998(5) 1997(5) 1996(6) 1995
- --------------------------------------------------------------------------------------------
Net asset value, beginning
of period $12.520 $12.390 $11.400 $11.000
- --------------------------------------------------------------------------------------------
Income (loss)from investment
operations
- --------------------------------------------------------------------------------------------
Net investment income (loss) 0.091 (0.060) (0.060) 0.010
- --------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments
and foreign currencies (1.501) 0.960 1.073 0.400
Total from investment
operations (1.410) 0.900 1.013 0.410
Less dividends and
distributions
- --------------------------------------------------------------------------------------------
Dividends from net investment
income (0.520) (0.440) (0.023) (0.010)
Distributions from net
realized gain on investments (1.640) (0.330) none none
Total dividends and distributions (2.160) (0.770) (0.023) (0.010)
- --------------------------------------------------------------------------------------------
Net asset value, end of period $8.950 $12.520 $12.390 $11.400
Total return(2) (12.95%)(3) 7.74% 8.90%(3) 3.81%(3)
Ratios and supplemental data
Net assets, end of period
(000 omitted) $2,034 $10,868 $14,886 $13,018
Ratio of expenses to average net
assets 1.83% 1.80% 1.82% 1.85%
Ratio of expenses to average net
assets prior to expense limitation 3.75% N/A 2.60% 2.96%
Ratio of net investment income
(loss) to average net assets 0.93% (0.45%) (0.51%) 0.00%
Ratio of net investment
loss to average net assets prior to
expense
- --------------------------------------------------------------------------------------------
Limitation (0.99%) N/A (1.29%) (1.11%)
- --------------------------------------------------------------------------------------------
Portfolio turnover 87% 18% 21% 9%
- --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Class B
Year Ended 10/31
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Overseas Equity Fund 1999 1998(5) 1997(5) 1996(6) 1995
- -------------------------------------------------------------------------------------------
Net asset value, beginning
of period $11.540 $11.560 $10.710 $10.400
- -------------------------------------------------------------------------------------------
Income (loss)from investment
operations
- -------------------------------------------------------------------------------------------
Net investment income (loss) 0.033 (0.140) (0.060) (0.020)
- -------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments
and foreign currencies (1.383) 0.890 0.930 0.350
Total from investment
operations (1.350) 0.750 0.870 0.330
Less dividends and
distributions
- -------------------------------------------------------------------------------------------
Dividends from net investment
income (0.520) (0.440) (0.020) (0.020)
Distributions from net
realized gain on investments (1.640) (0.330) none none
Total dividends and distributions (2.160) (0.770) (0.020) (0.020)
- -------------------------------------------------------------------------------------------
Net asset value, end of period $8.030 $11.540 $11.560 $10.710
Total return(2) (13.66%)(3) 6.95% 8.16%(3) 3.19%(3)
Ratios and supplemental data
Net assets, end of period
(000 omitted) $1,166 $1,450 $1,208 $1,183
Ratio of expenses to average net
assets 2.53% 2.50% 2.50% 2.50%
Ratio of expenses to average net
assets prior to expense limitation 4.45% N/A 3.28% 3.61%
Ratio of net investment income
(loss) to average net assets 0.23% (1.16%) (1.19%) (0.57%)
Ratio of net investment
loss to average net assets prior to
expense
- -------------------------------------------------------------------------------------------
Limitation (1.69%) N/A (1.97%) (1.68%)
- -------------------------------------------------------------------------------------------
Portfolio turnover 87% 18% 21% 9%
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Class C
Year Ended 10/31
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Overseas Equity Fund 1999 1998(5) 1997(5) 1996(6) 1995
- -----------------------------------------------------------------------------------------------
Net asset value, beginning
of period $11.550 $11.580 $10.730 $10.430
- -----------------------------------------------------------------------------------------------
Income (loss)from investment
operations
- -----------------------------------------------------------------------------------------------
Net investment income (loss) 0.033 (0.140) (0.060) (0.060)
- -----------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments
and foreign currencies (1.383) 0.880 0.930 0.390
Total from investment
operations (1.350) 0.740 0.870 0.330
Less dividends and
distributions
- -----------------------------------------------------------------------------------------------
Dividends from net investment
income (0.520) (0.440) (0.020) (0.030)
Distributions from net
realized gain on investments (1.640) (0.330) none none
Total dividends and distributions (2.160) (0.770) (0.020) (0.030)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $8.040 $11.550 $11.580 $10.730
Total return(2) (13.67%)(3) 6.85% 8.15%(3) 3.16%(3)
Ratios and supplemental data
Net assets, end of period
(000 omitted) $179 $159 $112 $43
Ratio of expenses to average net
assets 2.53% 2.50% 2.50% 2.50%
Ratio of expenses to average net
assets prior to expense limitation 4.45% N/A 3.28% 3.61%
Ratio of net investment income
(loss) to average net assets 0.23% (1.16%) (1.19%) (0.62%)
Ratio of net investment
loss to average net assets prior to
expense
- -----------------------------------------------------------------------------------------------
Limitation (1.69%) N/A (1.97%) (1.73%)
- -----------------------------------------------------------------------------------------------
Portfolio turnover 87% 18% 21% 9%
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Commencement of operations.
(2) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(3) Total returns reflect voluntary expense caps.
(4) Annualized.
(5) To calculate the net investment income per share, we have used the "average
shares outstanding method." This means that we have divided the total net
investment income by the average number of shares outstanding during the
period to determine the net investment income per share. (6) Commencing May
3, 1996, Delaware Management Company replaced Lincoln National Corporation
as the Fund's investment manager.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net realized and unrealized gain (loss)
on investments and foreign currencies 0.813 0.849 1.534 (0.050)
------- ------- ------- -------
Total from investment operations 1.010 1.190 1.980 (0.050)
------- ------- ------- -------
Less dividends and distributions
Dividends from net investment income (0.220) (0.400) (0.350) none
Distributions from net realized gain
on investments (1.230) (0.050) (0.270) none
------- ------- ------- -------
Total dividends and distributions (1.450) (0.450) (0.620) none
------- ------- ------- -------
Net asset value, end of period $13.550 $13.990 $13.250 $11.890
======= ======= ======= =======
Total return(6) 8.00% 9.21% 17.33% (5)
Ratios and supplemental data
Net assets, end of period (000 omitted) $3,391 $3,094 $1,185 $5
Ratio of expenses to average net assets 2.25% 1.95% 1.95% (5)
Ratio of expenses to average net assets
prior to expense limitation 2.69% 2.86% 3.42% (5)
Ratio of net investment income to average net
assets 1.47% 2.54% 3.43% (5)
Ratio of net investment income (loss) to
average net assets prior to expense limitation 1.03% 1.63% 1.96% (5)
Portfolio turnover 90% 74% 34% (5)
</TABLE>
92
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Class A
Year Ended 10/31
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Overseas Equity Fund 1999 1998(5) 1997(5) 1996(6) 1995
- --------------------------------------------------------------------------------------------
Net asset value, beginning
of period $12.520 $12.390 $11.400 $11.000
- --------------------------------------------------------------------------------------------
Income (loss)from investment
operations
- --------------------------------------------------------------------------------------------
Net investment income (loss) 0.091 (0.060) (0.060) 0.010
- --------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments
and foreign currencies (1.501) 0.960 1.073 0.400
Total from investment
operations (1.410) 0.900 1.013 0.410
Less dividends and
distributions
- --------------------------------------------------------------------------------------------
Dividends from net investment
income (0.520) (0.440) (0.023) (0.010)
Distributions from net
realized gain on investments (1.640) (0.330) none none
Total dividends and distributions (2.160) (0.770) (0.023) (0.010)
- --------------------------------------------------------------------------------------------
Net asset value, end of period $8.950 $12.520 $12.390 $11.400
Total return(2) (12.95%)(3) 7.74% 8.90%(3) 3.81%(3)
Ratios and supplemental data
Net assets, end of period
(000 omitted) $2,034 $10,868 $14,886 $13,018
Ratio of expenses to average net
assets 1.83% 1.80% 1.82% 1.85%
Ratio of expenses to average net
assets prior to expense limitation 3.75% N/A 2.60% 2.96%
Ratio of net investment income
(loss) to average net assets 0.93% (0.45%) (0.51%) 0.00%
Ratio of net investment
loss to average net assets prior to
expense
- --------------------------------------------------------------------------------------------
Limitation (0.99%) N/A (1.29%) (1.11%)
- --------------------------------------------------------------------------------------------
Portfolio turnover 87% 18% 21% 9%
- --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Class B
Year Ended 10/31
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Overseas Equity Fund 1999 1998(5) 1997(5) 1996(6) 1995
- -------------------------------------------------------------------------------------------
Net asset value, beginning
of period $11.540 $11.560 $10.710 $10.400
- -------------------------------------------------------------------------------------------
Income (loss)from investment
operations
- -------------------------------------------------------------------------------------------
Net investment income (loss) 0.033 (0.140) (0.060) (0.020)
- -------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments
and foreign currencies (1.383) 0.890 0.930 0.350
Total from investment
operations (1.350) 0.750 0.870 0.330
Less dividends and
distributions
- -------------------------------------------------------------------------------------------
Dividends from net investment
income (0.520) (0.440) (0.020) (0.020)
Distributions from net
realized gain on investments (1.640) (0.330) none none
Total dividends and distributions (2.160) (0.770) (0.020) (0.020)
- -------------------------------------------------------------------------------------------
Net asset value, end of period $8.030 $11.540 $11.560 $10.710
Total return(2) (13.66%)(3) 6.95% 8.16%(3) 3.19%(3)
Ratios and supplemental data
Net assets, end of period
(000 omitted) $1,166 $1,450 $1,208 $1,183
Ratio of expenses to average net
assets 2.53% 2.50% 2.50% 2.50%
Ratio of expenses to average net
assets prior to expense limitation 4.45% N/A 3.28% 3.61%
Ratio of net investment income
(loss) to average net assets 0.23% (1.16%) (1.19%) (0.57%)
Ratio of net investment
loss to average net assets prior to
expense
- -------------------------------------------------------------------------------------------
Limitation (1.69%) N/A (1.97%) (1.68%)
- -------------------------------------------------------------------------------------------
Portfolio turnover 87% 18% 21% 9%
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Class C
Year Ended 10/31
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Overseas Equity Fund 1999 1998(5) 1997(5) 1996(6) 1995
- -----------------------------------------------------------------------------------------------
Net asset value, beginning
of period $11.550 $11.580 $10.730 $10.430
- -----------------------------------------------------------------------------------------------
Income (loss)from investment
operations
- -----------------------------------------------------------------------------------------------
Net investment income (loss) 0.033 (0.140) (0.060) (0.060)
- -----------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments
and foreign currencies (1.383) 0.880 0.930 0.390
Total from investment
operations (1.350) 0.740 0.870 0.330
Less dividends and
distributions
- -----------------------------------------------------------------------------------------------
Dividends from net investment
income (0.520) (0.440) (0.020) (0.030)
Distributions from net
realized gain on investments (1.640) (0.330) none none
Total dividends and distributions (2.160) (0.770) (0.020) (0.030)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $8.040 $11.550 $11.580 $10.730
Total return(2) (13.67%)(3) 6.85% 8.15%(3) 3.16%(3)
Ratios and supplemental data
Net assets, end of period
(000 omitted) $179 $159 $112 $43
Ratio of expenses to average net
assets 2.53% 2.50% 2.50% 2.50%
Ratio of expenses to average net
assets prior to expense limitation 4.45% N/A 3.28% 3.61%
Ratio of net investment income
(loss) to average net assets 0.23% (1.16%) (1.19%) (0.62%)
Ratio of net investment
loss to average net assets prior to
expense
- -----------------------------------------------------------------------------------------------
Limitation (1.69%) N/A (1.97%) (1.73%)
- -----------------------------------------------------------------------------------------------
Portfolio turnover 87% 18% 21% 9%
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Commencement of operations.
(2) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(3) Total returns reflect voluntary expense caps.
(4) Annualized.
(5) To calculate the net investment income per share, we have used the "average
shares outstanding method." This means that we have divided the total net
investment income by the average number of shares outstanding during the
period to determine the net investment income per share. (6) Commencing May
3, 1996, Delaware Management Company replaced Lincoln National Corporation
as the Fund's investment manager.
<PAGE>
(5) To calculate the net investment income per share, we have used the "average
shares outstanding method." This means that we have divided the total net
investment income by the average number of shares outstanding during the
period to determine the net investment income per share.
(6) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Class A
Delaware Emerging Markets Fund Year Ended 11/30
- ----------------------------------------------------------------------------------------------------------------------
Period
6/10/96(2)
through
1999 1998 1997 11/30/96
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.200 $9.970 $10.000
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
- ----------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(1) 0.129 0.062 0.018
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and foreign currencies (3.174) 0.253 (0.048)
- ----------------------------------------------------------------------------------------------------------------------
Total from investment operations (3.045) 0.315 (0.030)
- ----------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
- ----------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (loss) (0.020) (0.010) None
- ----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain on
investments (0.605) (0.075) None
- ----------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (0.625) (0.085) None
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.530 $10.200 $9.970
- ----------------------------------------------------------------------------------------------------------------------
Total return(3) (31.66%) 3.19% (0.30%)
- ----------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $5,584 $9,665 $2,518
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.96% 2.00% 2.00%
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets
prior to expense limitation 3.91% 3.02%
- ----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net
assets 1.58% 0.52%
- ----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net
assets prior to expense limitation (0.37%) (0.50%)
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover 47% 65% 36%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Class B
Delaware Emerging Markets Fund Year Ended 11/30
- ----------------------------------------------------------------------------------------------------------------------
Period
6/10/96(2)
through
1999 1998 1997 11/30/96
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.000 $ 10.000
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations $9.970 $10.000
- ----------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(1) 0.018
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and foreign currencies 0.062 0.018 (0.048)
- ----------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.253 (0.048) (0.030)
0.315 (0.030)
- ----------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
- ----------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (loss) None
- ----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain on
investments (0.010) None None
- ----------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (0.075) None None
(0.085) None
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.970
- ----------------------------------------------------------------------------------------------------------------------
$10.200 $9.970
- ----------------------------------------------------------------------------------------------------------------------
Total return(3) (0.30%)
- ----------------------------------------------------------------------------------------------------------------------
3.19% (0.30%)
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $2,518
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets $9,665 2.00%
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets
prior to expense limitation 2.00% 4.10%
- ----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net
assets 3.02% 0.17%
- ----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net
assets prior to expense limitation 0.52% (1.93%)
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover 47% 47% 65% 36%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Class C
Delaware Emerging Markets Fund Year Ended 11/30
- ----------------------------------------------------------------------------------------------------------------------
Period
6/10/96(2)
through
1999 1998 1997 11/30/96
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.110 $9.940 $10.000
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations
- ----------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(1) 0.068 (0.019) (0.051)
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and foreign currencies (3.143) 0.264 (0.009)
- ----------------------------------------------------------------------------------------------------------------------
Total from investment operations (3.075) 0.245 (0.060)
- ----------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
- ----------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (loss) none none none
- ----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain on
investments (0.605) (0.075) none
- ----------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (0.605) (0.075) none
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.430 $10.110 $9.940
- ----------------------------------------------------------------------------------------------------------------------
Total return(3) (32.21%) 2.48% (0.60%)
- ----------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $884 $1,519 $199
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 2.70% 2.70% 2.70%
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets
prior to expense limitation 4.61% 3.72% 4.80%
- ----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net
assets 0.84% (0.18%) (0.53%)
- ----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net
assets prior to expense limitation (1.07%) (1.20%) (2.63%)
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover 47% 65% 36%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Per share information was based on the average shares outstanding method.
(2) Date of commencement of trading; ratios have been annualized but total
return has not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge. Total return
reflects expense limitations in effect for the Fund.
<PAGE>
<TABLE>
<CAPTION>
Delaware New Pacific Fund Class A Class B
Year ended 10/31 Year ended 10/31
- ---------------------------------- ---------------------------------------------- ----------------------------------------------
1999 1998(4) 1997(4) 1996(5) 1995 1999 1998(4) 1997(4) 1996(5) 1995
------ ------- ------- ------- ------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $7.320 $9.420 $8.710 $10.440 $7.470 $9.680 $10.660 $10.860
Income (loss) from investment
operations
Net investment income (loss) 0.008 (0.010) (0.050) (0.050) (0.031) (0.080) (0.080) (0.100)
Net realized and unrealized
gain (loss) on investments and
foreign currencies (2.683) (1.940) 0.769 (1.390) (2.724) (1.980) (1.460) (1.460)
Total from investment operations (2.675) (1.950) 0.719 (1.440) (2.755) (2.060) (1.540) (1.560)
Less dividends and distributions
Dividends from net investment
income (loss) (0.055) (0.150) (0.009) none (0.055) (0.150) none none
Distributions from net realized
gain on investments none none none (0.290) none none (0.290) (0.290)
Total dividends and distributions (0.055) (0.150) (0.009) (0.290) (0.055) (0.150) (0.290) (0.290)
Net asset value, end of period $4.590 7.320 9.420 8.710 $4.660 $7.470 $8.830 $9.010
Total return(2) (36.85%) (21.15%) 8.26% (13.99%) (37.05%) (21.72%) (14.57%) (14.56%)
Ratios and supplemental data
Net assets, end of period
(000 omitted) $5,887 7,144% $11,752 $10,353 $2,236 $2,534 $17 $573
Ratio of expenses to average
net assets 1.90% 1.80% 1.82% 1.85% 2.60% 2.50% 2.50% 2.50%
Ratio of expenses to average net
assets prior to expense
limitation 3.23% 1.86% 2.77% 3.73% 3.93% 2.56% 4.38% 4.38%
Ratio of net investment income
(loss) to average net assets 0.15% (0.08%) (0.41%) (0.60%) (0.55%) (0.77%) (1.02%) (1.20%)
Ratio of net investment income
(loss) to average net assets
prior to expense limitation (1.18%) (0.14%) (1.36%) (2.48%) (1.88%) (0.83%) (2.90%) (3.08%)
Portfolio turnover 188% 178% 163% 163% 188% 178% 163% 163%
</TABLE>
<PAGE>
[restubbed]
<TABLE>
<CAPTION>
Delaware New Pacific Fund Class C
Year ended 10/31
- ------------------------------------ ----------------------------------------------
1999 1998(4) 1997(4) 1996(5) 1995
------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $7.320 $9.490 $8.830 $10.660
Income (loss) from investment
operations
Net investment income (loss) (0.029) (0.080) (0.050) (0.080)
Net realized and unrealized
gain (loss) on investments and
foreign currencies (2.686) (1.940) 0.718 (1.460)
Total from investment operations (2.715) (2.020) 0.668 (1.540)
Less dividends and distributions
Dividends from net investment
income (loss) (0.055) (0.150) (0.008) none
Distributions from net realized
gain on investments none none none (0.290)
Total dividends and distributions (0.055) (0.150) (0.008) (0.290)
Net asset value, end of period $4.550 $7.320 $9.490 $8.830
Total return(2) (37.18%) (21.85%) 7.58% (14.57%)
Ratios and supplemental data
Net assets, end of period
(000 omitted) $130 $129 $44 $17
Ratio of expenses to average
net assets 2.60% 2.50% 2.50% 2.50%
Ratio of expenses to average net
assets prior to expense
limitation 3.93% 2.56% 3.45% 4.38%
Ratio of net investment income
(loss) to average net assets (0.55%) (0.77%) (1.09%) (1.02%)
Ratio of net investment income
(loss) to average net assets
prior to expense limitation (1.88%) (0.83%) (2.04%) (2.90%)
Portfolio turnover 188% 178% 163% 163%
</TABLE>
- ------------------
(1) Commencement of operations.
(2) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge. Total return
reflects expense limitations in effect for the Fund.
(3) Annualized.
(4) The average shares outstanding method has been applied for per share
information.
(5) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
<PAGE>
<TABLE>
<CAPTION>
Class A shares Class B shares
Year Ended 11/30/ Year Ended 11/30/
Global Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Period Period
12/27/94(2) 2/27/94(2)
through through
1999 1998 1997 1996 11/30/95 1999 1998 1997 1996 11/30/95
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.790 $11.480 $11.230 $10.000 $10.790 $11.490 $11.230 $10.000
Income (loss) from investment operations
Net investment income(1) 0.595 0.625 0.755 0.659 0.520 0.550 0.679 0.565
Net realized and unrealized gain (loss)
on investments and foreign currencies (0.015) (0.505) 0.730 1.171 (0.020) (0.511) 0.735 1.205
------- ------- ------- ------- ------- ------ ------ ------
Total from investment operations 0.580 0.120 1.485 1.830 0.500 0.039 1.414 1.770
------- ------- ------- ------- ------- ------ ------ ------
Less dividends and distributions
Dividends from net investment income (0.400) (0.770) (0.875) (0.600) (0.330) (0.699) (0.794) (0.540)
Distributions from net realized gain
on investments (0.030) (0.040) (0.360) none (0.030) (0.040) (0.360) none
======= ======= ======= ======= ------- ------ ------ ------
Total dividends and distributions (0.430) (0.810) (1.235) (0.600) (0.360) (0.739) (1.154) (0.540)
------- ------- ------- ------- ------- ------ ------ ------
Net asset value, end of period $10.940 $10.790 $11.480 $11.230 $10.930 $10.790 $11.490 $11.230
======= ======= ======= ======= ======= ======= ======= =======
Total return(4) 5.47% 1.24% 14.35% 18.79% 4.59% 0.48% 13.51% 18.23%
Ratios and supplemental data
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets $4,684 $4,567 $3,467 $889 $1,188 $1,081 $707 $115
Ratio of expenses to average net assets
prior to expense limitation 1.25% 1.25% 1.25% 1.25% 1.95% 1.95% 1.95% 1.95%
Ratio of net investment income to average
net assets 1.59% 2.04% 5.00% 12.34% 2.29% 2.74% 5.70% 13.04%
Ratio of net investment income (loss) to
average net assets prior to expense
limitation 5.58% 5.76% 6.82% 7.70% 4.88% 5.06% 6.12% 7.00%
Ratio of net investment income (loss) to
average net assets prior to expense
limitation 5.24% 4.97% 3.07% (3.39%) 4.54% 4.27% 2.37% (4.09%)
Portfolio turnover 93% 76% 42% 98% 93% 76% 42% 98%
=== === === === === === === ===
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class C shares
Year Ended 11/30/
Global Bond Fund
- ------------------------------------------------------------------------------------------------
Period
11/29/95(3)
through
1999 1998 1997 1996 11/30/95
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.740 $11.440 $11.240 $11.330
Income (loss) from investment operations
Net investment income(1) 0.521 0.551 0.680 none
Net realized and unrealized gain (loss)
on investments and foreign currencies (0.021) (0.512) 0.719 (0.036)
------- ------- ------- -------
Total from investment operations 0.500 0.039 1.399 (0.036)
------- ------- ------- -------
Less dividends and distributions
Dividends from net investment income (0.330) (0.699) (0.839) (0.054)
Distributions from net realized gain
on investments (0.030) (0.040) (0.360) none
------- ------- ------ -------
Total dividends and distributions (0.360) (0.739) (1.199) (0.054)
------- ------- ------ -------
Net asset value, end of period $10.880 $10.740 $11.440 $11.240
======= ======= ======= =======
Total return(4) 4.71% 0.49% 13.51% (5)
Ratios and supplemental data
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets $539 $703 $118 $5
Ratio of expenses to average net assets
prior to expense limitation 1.95% 1.95% 1.95% (5)
Ratio of net investment income to average
net assets 2.29% 2.74% 5.70% (5)
Ratio of net investment income (loss) to
average net assets prior to expense
limitation 4.88% 5.06% 6.12% (5)
Ratio of net investment income (loss) to
average net assets prior to expense
limitation 4.54% 4.27% 2.37% (5)
Portfolio turnover 93% 76% 42% (5)
=== === === ===
</TABLE>
- --------------------------
(1) Per share information for the years ended November 30,1996, 1997 and 1998
was based on the average shares outstanding method.
(2) Date of commencement of trading; ratios have been annualized but total
return has not been annualized.
(3) Date of commencement of trading.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge. Total return
reflects expense limitations in effect for the Fund.
(5) The ratios of expenses and net investment income to average net assets,
portfolio turnover and total return have been omitted as management believes
that such ratios and total return for this relatively short period of time.
<PAGE>
How to read the Financial highlights
Net investment income
Net investment income includes dividend and interest income earned from a fund's
securities; it is after expenses have been deducted.
Net realized and unrealized gain (loss) on investments and foreign currencies
A realized gain on investments occurs when we sell an investment at a profit,
while a realized loss on investments occurs when we sell an investment at a
loss. When an investment increases or decreases in value but we do not sell it,
we record an unrealized gain or loss. The amount of realized gain per share that
we pay to shareholders is listed under "Less dividends and
distributions-Distributions from net realized gain on investments." Realized and
unrealized gain (loss) on foreign currencies represent changes in the U.S.
dollar value of assets (including investments) and liabilities denominated in
foreign currencies as a result of changes in foreign currency exchange rates.
Net asset value (NAV)
This is the value of a mutual fund share, calculated by dividing the net assets
by the number of shares outstanding.
Total return
This represents the rate that an investor would have earned or lost on an
investment in a fund. In calculating this figure for the financial highlights
table, we include applicable fee waivers, exclude front-end and contingent
deferred sales charges, and assume the shareholder has reinvested all dividends
and realized gains.
Net assets
Net assets represent the total value of all the assets in a fund's portfolio,
less any liabilities, that are attributable to that class of the fund.
Ratio of expenses to average net assets
The expense ratio is the percentage of net assets that a fund pays annually for
operating expenses and management fees. These expenses include accounting and
administration expenses, services for shareholders, and similar expenses.
Ratio of net investment income to average net assets
We determine this ratio by dividing net investment income by average net assets.
Portfolio turnover rate
This figure tells you the amount of trading activity in a fund's portfolio. For
example, a fund with a 50% turnover has bought and sold half of the value of its
total investment portfolio during the stated period.
111
<PAGE>
[begin glossary runs along the bottom of the pages ]
How to use this glossary
Words found in the glossary are printed in boldface only the first time they
appear in the Prospectus. So if you would like to know the meaning of a word
that isn't in boldface, you might still find it in the glossary.
Amortized cost
Amortized cost is a method used to value a fixed income security that starts
with the face value of the security and then adds or subtracts from that value
depending on whether the purchase price was greater or less than the value of
the security at maturity. The amount greater or less than the par value is
divided equally over the time remaining until maturity.
Average maturity
An average of when the individual bonds and other debt securities held in a
portfolio will mature.
Bond
A debt security, like an IOU, issued by a company, municipality or government
agency. In return for lending money to the issuer, a bond buyer generally
receives fixed periodic interest payments and repayment of the loan amount on a
specified maturity date. A bond's price changes prior to maturity and is
inversely related to current interest rates. When interest rates rise, bond
prices fall, and when interest rates fall, bond prices rise.
Bond ratings
Independent evaluations of creditworthiness, ranging from Aaa/AAA (highest
quality) to D (lowest quality). Bonds rated Baa/BBB or better are considered
investment grade. Bonds rated Ba/BB or lower are commonly known as junk bonds.
See also Nationally recognized statistical rating organization. See also
Nationally recognized statistical rating organization.
Capital
The amount of money you invest.
Capital appreciation
An increase in the value of an investment.
Capital gains distributions
Payments to mutual fund shareholders of profits (realized gains) from the sale
of a fund's portfolio securities. Usually paid once a year; may be either
short-term gains or long-term gains.
Commission
The fee an investor pays to a financial adviser for investment advice and help
in buying or selling mutual funds, stocks, bonds or other securities.
Compounding
Earnings on an investment's previous earnings.
Consumer Price Index (CPI)
Measurement of U.S. inflation; represents the price of a basket of commonly
purchased goods.
112
<PAGE>
Contingent deferred sales charge (CDSC)
Fee charged by some mutual funds when shares are redeemed (sold back to the
fund) within a set number of years; an alternative method for investors to
compensate a financial adviser for advice and service, rather than an up-front
commission.
Corporate bond
A debt security issued by a corporation. See bond.
Currency exchange rates
The price at which one country's currency can be converted into another's. This
exchange rate varies almost daily according to a wide range of political,
economic, and other factors.
Depreciation
A decline in an investment's value.
Diversification
The process of spreading investments among a number of different securities,
asset classes or investment styles to reduce the risks of investing.
Dividend distribution
Payments to mutual fund shareholders of dividends passed along from the fund's
portfolio of securities.
Duration
A measurement of a fixed-income investment's price volatility. The larger the
number, the greater the likely price change for a given change in interest
rates.
Expense ratio
A mutual fund's total operating expenses, expressed as a percentage of its total
net assets. Operating expenses are the costs of running a mutual fund, including
management fees, offices, staff, equipment and expenses related to maintaining
the fund's portfolio of securities and distributing its shares. They are paid
from the fund's assets before any earnings are distributed to shareholders.
Financial adviser
Financial professional (e.g., broker, banker, accountant, planner or insurance
agent) who analyzes clients' finances and prepares personalized programs to meet
objectives.
Fixed-income securities
With fixed-income securities, the money you originally invested is paid back at
a pre-specified maturity date. These securities, which include government,
corporate or municipal bonds, as well as money market securities, typically pay
a fixed rate of return (often referred to as interest). See Bonds.
Inflation
The increase in the cost of goods and services over time. U.S. inflation is
frequently measured by changes in the Consumer Price Index (CPI).
Investment goal
The objective, such as long-term capital growth or high current income, that a
mutual fund pursues.
Management fee
The amount paid by a mutual fund to the investment adviser for management
services, expressed as an annual percentage of the fund's average daily net
assets.
113
<PAGE>
Market capitalization
The value of a corporation determined by multiplying the current market price of
a share of common stock by the number of shares held by shareholders. A
corporation with one million shares outstanding and the market price per share
of $10 has a market capitalization of $10 million.
Maturity
The length of time until a bond issuer must repay the underlying loan principal
to bondholders.
Morgan Stanley Capital International EAFE (Europe, Australia, Far East) Index
The Morgan Stanley Capital International EAFE Stock Index is an international
index including stocks traded on 16 exchanges in Europe, Australia and the Far
East, weighted by capitalization. The index is unmanaged and doesn't include the
actual costs of buying, selling, and holding securities.
Morgan Stanley Capital International Emerging Markets Free Index
The Morgan Stanley International Emerging Markets Free Index is a U.S. dollar
dominated index comprised of stocks of countries with below average per capita
GDP as defined by the World Bank, foreign ownership restrictions, a tax
regulatory environment, and greater perceived market risk than in the developed
countries. Within this index, MSCI aims to capture an aggregate of 60% of local
market capitalization.
Morgan Stanley Capital International World Index
The Morgan Stanley Capital International World Index is an international index
that includes stocks traded in Europe, Australia, the Far East, plus the U.S.,
and Canada, and South Africa, weighted by capitalization.
Morgan Stanley Pacific Index
A total return index, reported in U.S. dollars, based on share prices and
reinvested gross dividends of approximately 500 companies (only those securities
deemed sufficiently liquid for trading by investors) from the following 6
countries: Australia, Hong Kong, Japan, Malaysia, New Zealand, Singapore.
NASD Regulation, Inc. (NASD)
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the actions of
its members.
Nationally recognized statistical rating organization (NRSRO)
A company that assesses the credit quality of bonds, commercial paper, preferred
and common stocks and municipal short-term issues, rating the probability that
the issuer of the debt will meet the scheduled interest payments and repay the
principal. Ratings are published by such companies as Moody's Investors Service
(Moody's), Standard & Poor's Ratings Group (S&P), Duff & Phelps, Inc. (Duff),
and Fitch IBCA, Inc. (Fitch).
Net asset value (NAV)
The daily dollar value of one mutual fund share. Equal to a fund's net assets
divided by the number of shares outstanding.
Preferred stock
Preferred stock has preference over common stock in the payment of dividends and
liquidation of assets. Preferred stocks also often pay dividends at a fixed rate
and are sometimes convertible into common stock.
114
<PAGE>
Price/earnings ratio
A measure of a stock's value calculated by dividing the current market price of
a share of stock by its annual earnings per share. A stock selling for $100 per
share with annual earnings per share of $5 has a P/E of 20.
Principal
Amount of money you invest (also called capital). Also refers to a bond's
original face value, due to be repaid at maturity.
Prospectus
The official offering document that describes a mutual fund, containing
information required by the SEC, such as investment objectives, policies,
services and fees.
Redeem
To cash in your shares by selling them back to the mutual fund.
Risk
Generally defined as variability of value; also credit risk, inflation risk,
currency and interest rate risk. Different investments involve different types
and degrees of risk.
Sales charge
Charge on the purchase or redemption of fund shares sold through financial
advisers. May vary with the amount invested. Typically used to compensate
advisers for advice and service provided.
Salomon Smith Barney World Government Bond Index
The WGBI is a market-capitalization weighted benchmark that tracks the
performance of the 18 Government bond markets of Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, Portugal, Spain, Sweden, Switzerland, the United Kingdom, and the
United States.
SEC (Securities and Exchange Commission)
Federal agency established by Congress to administer the laws governing the
securities industry, including mutual fund companies.
Share classes
Different classifications of shares; mutual fund share classes offer a variety
of sales charge choices.
Signature guarantee
Certification by a bank, brokerage firm or other financial institution that a
customer's signature is valid; signature guarantees can be provided by members
of the STAMP program.
Standard deviation
A measure of an investment's volatility; for mutual funds, measures how much a
fund's total return has typically varied from its historical average.
Statement of Additional Information (SAI)
The document serving as "Part B" of a fund's prospectus that provides more
detailed information about the fund's organization, investments, policies and
risks.
Stock
An investment that represents a share of ownership (equity) in a corporation.
Stocks are often referred to as "equities."
115
<PAGE>
Total return
An investment performance measurement, expressed as a percentage, based on the
combined earnings from dividends, capital gains and change in price over a given
period.
Uniform Gift to Minors Act and Uniform Transfers to Minors Act
Federal and state laws that provide a simple way to transfer property to a minor
with special tax advantages.
Volatility
The tendency of an investment to go up or down in value by different magnitudes.
Investments that generally go up or down in value in relatively small amounts
are considered "low volatility" investments, whereas those investments that
generally go up or down in value in relatively large amounts are considered
"high volatility" investments.
[end glossary]
116
<PAGE>
[back cover]
Additional Information about the Funds
Additional information about the Funds' investments is available in the Funds'
annual and semi-annual reports to shareholders. In the Funds' shareholder
reports, you will find a discussion of the market conditions and investment
strategies that significantly affected the Funds' performance during the report
period. You can find more detailed information about the Funds in the current
Statement of Additional Information, which we have filed electronically with the
Securities and Exchange Commission (SEC) and which is legally a part of this
Prospectus. If you want a free copy of the Statement of Additional Information,
the annual or semi-annual report, or if you have any questions about investing
in these funds, you can write to us at 1818 Market Street, Philadelphia, PA
19103-3682, or call toll-free 800.523.1918. You may also obtain additional
information about each of the Funds from your financial adviser.
You can find reports and other information about each Fund on the SEC web site
(http://www.sec.gov), or you can get copies of this information, after payment
of a duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-6009. Information about the Funds, including their
Statement of Additional Information, can be reviewed and copied at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
You can get information on the public reference room by calling the SEC at
1.800.SEC.0330.
Web site
www.delawareinvestments.com
E-mail
[email protected]
Shareholder Service Center
800.523.1918
Call the Shareholder Service Center Monday to Friday, 8 a.m. to 8 p.m. Eastern
time:
o For fund information; literature; price, yield and performance figures.
o For information on existing regular investment accounts and retirement plan
accounts including wire investments; wire redemptions; telephone redemptions
and telephone exchanges.
Delaphone Service
800.362.FUND (800.362.3863)
o For convenient access to account information or current performance
information on all Delaware Investments Funds seven days a week, 24 hours a
day, use this Touch-Tone(R) service.
Delaware Group Global & International Funds, Investment Company Act file number:
811-6324
Delaware Group Adviser Funds, Investment Company Act file number: 811-7972
121
<PAGE>
Fund Symbols
CUSIP NASDAQ
International Equity Fund
Class A 245914106 DEGIX
Class B 245914700 DEIEX
Class C 245914858 DEGCX
Global Equity Fund
Class A 245914304 DEGAX
Class B 245914809 DGABX
Class C 245914874 DGACX
Overseas Equity Fund
Class A 245917885 DEWGX
Class B 245917877 DEWBX
Class C 245917869 DEWCX
New Pacific Fund
Class A 245917844 DENPX
Class B 245917836 DENBX
Class C 245917828 DENCX
Emerging Markets Fund
Class A 245914841 DEMAX
Class B 245914833 DEMBX
Class C 245914825 DEMCX
Global Bond Fund
Class A 245914205 DGBAX
Class B 245914882 DGBBX
Class C 245914866 DGBCX
122
<PAGE>
DELAWARE
INVESTMENTS
-----------
Philadelphia * London
Delaware International Equity Fund
Delaware Global Equity Fund
Delaware Overseas Equity Fund
Delaware Emerging Markets Fund
Delaware New Pacific Fund
Delaware Global Bond Fund
Institutional Class
Prospectus
January 31, 2000
International and Global Funds
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy of this Prospectus, and any
representation to the contrary is a criminal offense.
<PAGE>
Table of contents
Fund profiles page
Delaware International Equity Fund
Delaware Global Equity Fund
Delaware Overseas Equity Fund
Delaware Emerging Markets Fund
Delaware New Pacific Fund
Delaware Global Bond Fund
How we manage the Funds page
Our investment strategies
The securities we typically invest in
The risks of investing in the Funds
Who manages the Funds page
Investment manager
Portfolio managers
Fund administration (Who's who)
About your account page
Investing in the Funds
How to buy shares
How to redeem shares
Account minimum
Exchanges
Dividends, distributions and taxes
Certain management considerations
Financial highlights page
3
<PAGE>
Profile: Delaware International Equity Fund
What are the Fund's goals?
Delaware International Equity Fund seeks long-term growth without undue risk to
principal. Although the Fund will strive to achieve its goal, there is no
assurance that it will.
What are the Fund's main investment strategies?
The Fund invests primarily in foreign equity securities that provide the
potential for capital appreciation and income. At least 65% of the Fund's total
assets will be invested in equity securities of issuers from at least three
foreign countries. An issuer is considered to be from the country where it is
located, where the majority of its assets are located or where it generates the
majority of its operating income.
In selecting investments for the Fund,
o We strive to identify well managed companies that are undervalued based on
such factors as assets, earnings, dividends or growth potential.
o In order to compare the value of different stocks, we consider whether the
future dividends on a stock are expected to increase faster than, slower
than, or in line with the level of inflation. We then estimate what we
think the value of those anticipated future dividends would be worth if
they were being paid today. We believe this gives us an estimate of the
stock's true value.
o We generally prefer to purchase securities in countries where the currency
is undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine
whether a particular currency is overvalued or undervalued by comparing the
amount of goods and services that a dollar will buy in the United States to
the amount of 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 overvalued, and when the dollar buys more, the foreign
currency may be undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease according to changes in the value of the Fund's investments. This Fund
will be affected primarily by declines in stock prices, which can be caused by a
drop in foreign stock markets or poor performance in specific industries or
companies. Because the Fund invests in international securities in both
established and developing countries, it will be affected by international
investment risks related to currency valuations, political instability, economic
instability, and lax accounting and regulatory standards. For a more complete
discussion of risk, please turn to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for a portfolio of equity securities from foreign countries.
o Investors seeking a measure of capital appreciation and income.
4
<PAGE>
Who should not invest in the Fund
o Investors with short-term financial goals or whose primary goal is current
income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors who are unwilling to accept the risks of investing in foreign
securities.
5
<PAGE>
How has the Delaware International Equity Fund performed?
This bar chart and table can help you evaluate the risks of investing in the
Fund. We show how returns for the Fund's Institutional Class shares have varied
over the past eight calendar years, as well as the average annual returns of
these shares for the one- and five-year periods and since inception. Delaware
International Equity Fund's Institutional Class commenced operations on November
9, 1992. Return information for the Class for the periods prior to the time the
Class commenced operations is calculated by taking the performance of Delaware
International Equity Fund A Class and eliminating all sales charges that apply
to Class A shares. However, for those periods, Class A 12b-1 payments were not
eliminated, and performance would have been affected if this adjustment had been
made. The returns reflect voluntary expense caps, if any, in effect during the
periods. The returns would be lower without the voluntary caps. There is no
longer a cap in place for this Fund. The Fund's past performance is not
necessarily an indication of how it will perform in the future.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN (INSTITUTIONAL
CLASS)]
Year-by-year total return (Institutional Class)
1992 -1.36%
1993 24.80%
1994 2.03%
1995 11.75%
1996 20.61%
1997 4.61%
1998 9.35%
1999
During the periods illustrated in this bar chart, the Class' highest quarterly
return was 0.00% for the quarter _______________ and its lowest quarterly return
was -00.00% for the quarter ended ______________.
How has the Delaware International Equity Fund performed? (continued)
Average annual returns for periods ending 12/31/99
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
CLASS Institutional Morgan Stanley Capital
International EAFE Index
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
- ------------------------------------------------------------------------------------------------
1 year
- ------------------------------------------------------------------------------------------------
5 years
- ------------------------------------------------------------------------------------------------
Since 10/31/91
- ------------------------------------------------------------------------------------------------
</TABLE>
The Fund's returns are compared to the performance of the Morgan Stanley Capital
International EAFE (Europe, Australia, Far East) Index. You should remember that
unlike the Fund, the index is unmanaged and doesn't reflect the costs of
operating a mutual fund, such as the costs of buying, selling, and holding the
securities.
6
<PAGE>
What are the Delaware International Equity Fund's fees and expenses? You do not
pay sales charges directly from your investments when you buy or sell shares of
the Institutional Class.
------------------------------------------------------ ----------
Maximum sales charge (load) imposed on purchases as none
a percentage of offering price
------------------------------------------------------ ----------
------------------------------------------------------ ----------
Maximum contingent deferred sales charge (load) as a
none percentage of original purchase price or
redemption price, whichever is lower
------------------------------------------------------ ----------
------------------------------------------------------ ----------
Maximum sales charge (load) imposed on reinvested none
dividends
------------------------------------------------------ ----------
------------------------------------------------------ ----------
Redemption fees none
------------------------------------------------------ ----------
------------------------------------------------------ ----------
Exchange Fees(1) none
------------------------------------------------------ ----------
Annual fund operating expenses are deducted from the Fund's assets.
- ------------------------------------------------- -----------
Management fees
- ------------------------------------------------- -----------
Distribution and service (12b-1) fees none
- ------------------------------------------------- -----------
Other expenses
- ------------------------------------------------- -----------
Total operating expenses
- ------------------------------------------------- -----------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(2) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
- ----------------- -----------
1 year
- ----------------- -----------
3 years
- ----------------- -----------
5 years
- ----------------- -----------
10 years
- ----------------- -----------
(1) Exchanges are subject to the requirements of each fund in the Delaware
Investments family. A front-end sales charge may apply if you exchange your
shares into a fund that has a front-end sales charge.
(2) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show.
7
<PAGE>
Profile: Delaware Global Equity Fund
What are the Fund's goals?
Delaware Global Equity Fund seeks long-term total return. Although, the Fund
will strive to achieve its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
The Fund invests primarily in U.S. and foreign equity securities that provide
the potential for capital appreciation and income. Under normal circumstances,
we will invest at least 65% of the Fund's total assets in equity securities from
at least three different countries, one of which may be the United States. An
issuer is considered to be from the country where it is located, where the
majority of its assets are located or where it generates the majority of its
operating income.
To determine how much of the Fund's assets to allocate to international stocks
and how much to U.S. stocks, we compare the potential total return of each asset
class in the context of our expectations for inflation, economic growth and
political stability in various regions.
In selecting investments for the Fund,
o We strive to identify well managed companies that are undervalued based on
such factors as assets, earnings, dividends or growth potential.
o In order to compare the value of different stocks, we consider whether the
future dividends on a stock are expected to increase faster than, slower
than, or in line with the level of inflation. We then estimate what we think
the value of those anticipated future dividends would be worth if they were
being paid today. We believe this gives us an estimate of the stock's true
value.
o We generally prefer to purchase securities in countries where the currency
is undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine
whether a particular currency is overvalued or undervalued by comparing the
amount of goods and services that a dollar will buy in the United States to
the amount of 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 overvalued, and when the dollar buys more, the foreign currency may
be undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease according to changes in the value of the Fund's investments. This Fund
will be affected primarily by declines in stock prices, which can be caused by a
drop in the stock market or poor performance in specific industries or
companies. Because the Fund invests in foreign securities, it will be affected
by international investment risks related to currency valuations, political
instability, economic instability and lax accounting and regulatory standards.
The Fund is considered "non-diversified" under federal laws that regulate mutual
funds. Thus, adverse effects on the Fund's investments may affect a larger
portion of its overall assets and subject the Fund to greater risks. For a more
complete discussion of risk, please turn to page __.
The Fund is considered "non-diversified" under federal laws that regulate mutual
funds. Thus, adverse effects on the Fund's investments may affect a larger
portion of its overall assets and subject the Fund to greater risks. For a more
complete discussion of risk, please turn to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for a portfolio of equity securities from both U.S. and
foreign countries.
o Investors willing to accept the risks associated with foreign investing.
o Investors seeking a measure of capital appreciation and income.
Who should not invest in the Fund
o Investors with short-term financial goals or whose primary goal is current
income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors who are unwilling to accept the risks of investing in foreign
securities.
8
<PAGE>
How has the Delaware Global Equity Fund performed?
This bar chart and table can help you evaluate the risks of investing in the
Fund. We show how returns for the Fund's Institutional Class shares have varied
over the past five calendar years, as well as the average annual returns of
these shares for the one-year and five-year periods and since inception. The
Fund's past performance is not necessarily an indication of how it will perform
in the future. The returns reflect voluntary expense caps. The returns would be
lower without the voluntary caps. On July 21, 1998, the Fund's name was changed
from Global Assets Fund to Global Equity Fund and the Fund's investment focus
changed from a mix of foreign and U.S. stocks and bonds to primarily foreign and
U.S. stocks.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN (Institutional) ]
Year-by-year total return (Institutional Class)
1995 25.08%
1996 15.80%
1997 11.43%
1998 8.85%
1999
During the periods illustrated in this bar chart, the Class' highest quarterly
return was 00.00%% for the quarter ended _______________and its lowest quarterly
return was -0.00% for the quarter ended ___________.
How has the Delaware Global Equity Fund performed? (continued)
Average annual returns for periods ending 12/31/99
- --------------------------------------------------------------------------------
CLASS Institutional Morgan Stanley Capital
International World Index
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Inception 12/27/94)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1 year
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5 years
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lifetime
- --------------------------------------------------------------------------------
The Fund's returns are compared to the performance of the Morgan Stanley Capital
International World Index. You should remember that unlike the Fund, the index
is unmanaged and doesn't reflect the costs of operating a mutual fund, such as
the costs of buying, selling, and holding the securities.
9
<PAGE>
What are the Delaware Global Equity Fund's fees and expenses? You do not pay
sales charges directly from your investments when you buy or sell shares of the
Institutional Class.
------------------------------------------------------ ----------
Maximum sales charge (load) imposed on purchases as none
a percentage of offering price
------------------------------------------------------ ----------
Maximum contingent deferred sales charge (load) as a
none percentage of original purchase price or
redemption price, whichever is lower
------------------------------------------------------ ----------
Maximum sales charge (load) imposed on reinvested none
dividends
------------------------------------------------------ ----------
Redemption fees none
------------------------------------------------------ ----------
Exchange Fees(1) none
------------------------------------------------------ ----------
Annual fund operating expenses are deducted from the Fund's assets.
- ------------------------------------------------- -----------
Management fees
- ------------------------------------------------- -----------
Distribution and service (12b-1) fees none
- ------------------------------------------------- -----------
Other expenses
- ------------------------------------------------- -----------
Total operating expenses(2)
- ------------------------------------------------- -----------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(3) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
- ----------------- -----------
1 year
- ----------------- -----------
3 years
- ----------------- -----------
5 years
- ----------------- -----------
10 years
- ----------------- -----------
(1) Exchanges are subject to the requirements of each fund in the Delaware
Investments family. A front-end sales charge may apply if you exchange your
shares into a fund that
(2) The investment manager has agreed to waive fees and pay expenses from June
1, 1998 through ___________ in order to prevent total operating expenses
(excluding any taxes, interest, brokerage fees and extraordinary expenses)
from exceeding 1.55% of average daily net assets. The fees and expenses
shown in the table above do not reflect this voluntary expense cap. The
following table shows operating expenses, reflecting the manager's current
fee waivers and payments.
10
<PAGE>
---------------------------------------------------------------
Fund expenses including voluntary expense caps in
effect through ___________.
------------------------------------------------ --------------
Management fees
------------------------------------------------ --------------
Distribution and service (12b-1) fees none
------------------------------------------------ --------------
Other expenses
------------------------------------------------ --------------
Total operating expenses 1.55%
------------------------------------------------ --------------
(3) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show. This example does not reflect the voluntary expense cap described in
footnote 2.
Profile: Delaware Overseas Equity Fund
What is the Fund's goal?
Delaware Overseas Equity Fund seeks to maximize total return. Although the Fund
will strive to achieve its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
We invest primarily in foreign equity securities which we believe offer capital
appreciation potential. We may invest in companies that are located in
established or developing countries; however we limit our investments in
companies located in developing countries.
In determining what portion of Delaware Overseas Equity Fund's assets should be
allocated to a particular country, we consider: how weak or strong the country's
currency is, the country's prospects for economic growth compared to other
countries, expected levels of inflation, political environment and the range of
investment opportunities available in the country.
In selecting investments for the Fund,
o We strive to identify well managed companies that are undervalued based on
such factors as assets, earnings, dividends or growth potential.
o In order to compare the value of different stocks, we consider whether the
future dividends on a stock are expected to increase faster than, slower
than, or in line with the level of inflation. We then estimate what we think
the value of those anticipated future dividends would be worth if they were
being paid today. We believe this gives us an estimate of the stock's true
value.
o We generally prefer to purchase securities in countries where the currency
is undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine
whether a particular currency is overvalued or undervalued by comparing the
amount of goods and services that a dollar will buy in the United States to
the amount of 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 overvalued, and when the dollar buys more, the foreign currency may
be undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease, sometimes rapidly and unpredictably, according to changes in the value
of the Fund's investments. These fluctuations can be even more pronounced for
funds like Delaware Overseas Equity Fund, which invests in developing countries.
This Fund will be affected primarily by declines in stock prices, which can be
caused by a drop in foreign stock markets or poor performance in specific
industries or companies. Because the Fund invests in international securities in
both established and developing countries, it will be affected by international
investment risks related to changes in currency valuations, political
instability, economic instability, and lax accounting and regulatory standards.
For a more complete discussion of risk, please turn to page ___.
11
<PAGE>
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for capital growth potential.
o Investors willing to accept the sometimes sharp and unpredictable fluctuations
in value that a foreign fund can experience.
Who should not invest in the Fund
o Investors with short-term financial goals or whose primary goal is to receive
current income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors who do not understand the significant risks associated with
foreign investing.
12
<PAGE>
How has Delaware Overseas Equity Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show how returns for the Fund's Institutional Class shares have
varied over the past five calendar years, as well as average annual returns for
the one year and since inception. The Fund's past performance does not
necessarily indicate how it will perform in the future. The Class' returns
reflect voluntary expense caps. The returns would be lower without the voluntary
caps.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN
(Institutional Class)]
Year-by-year total return (Institutional Class)
- --------------- -------------
1995 10.19%
- --------------- -------------
1996 9.88%
- --------------- -------------
1997 2.02%
- --------------- -------------
1998 -6.59%
- --------------- -------------
1999
- --------------- -------------
During the periods illustrated in this bar chart, the Class' highest quarterly
return was 00.00%% for the quarter ended _______________and its lowest quarterly
return was -0.00% for the quarter ended ___________.
13
<PAGE>
Average annual returns for periods ending 12/31/99
- ------------------------- ------------------------ ----------------------------
Institutional Class Morgan Stanley EAFE Index
- ------------------------- ------------------------ ----------------------------
(Inception 2/3/94)
- ------------------------- ------------------------ ----------------------------
1 year
- ------------------------- ------------------------ ----------------------------
5 years
- ------------------------- ------------------------ ----------------------------
Lifetime
- ------------------------- ------------------------ ----------------------------
The table above shows the Fund's average annual returns over various time
periods compared to the performance of the Morgan Stanley EAFE Index. You should
remember that unlike the Fund, the index is unmanaged and doesn't reflect the
actual costs of operating a mutual fund, such as the costs of buying, selling,
and holding the securities.
14
<PAGE>
What are the Fund's fees and expenses?
You do not pay sales charges directly from your investments when you buy or sell
shares of the Institutional Class.
------------------------------------------------------ ----------
Maximum sales charge (load) imposed on purchases as none
a percentage of offering price
------------------------------------------------------ ----------
Maximum contingent deferred sales charge (load) as a none
percentage of original purchase price or
redemption price, whichever is lower
------------------------------------------------------ ----------
Maximum sales charge (load) imposed on reinvested none
dividends
------------------------------------------------------ ----------
Redemption fees none
------------------------------------------------------ ----------
Exchange Fees(1) none
------------------------------------------------------ ----------
Annual fund operating expenses are deducted from the Fund's assets.
------------------------------------------------------ -----------
Management fees
------------------------------------------------------ -----------
Distribution and service (12b-1) fees none
------------------------------------------------------ -----------
Other expenses
------------------------------------------------------ -----------
Total operating expenses(2)
------------------------------------------------------ -----------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(3) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
--------------- ------------
1 year
--------------- ------------
3 years
--------------- ------------
5 years
--------------- ------------
10 years
--------------- ------------
(1) Exchanges are subject to the requirements of each fund in the Delaware
Investments family. A front-end sales charge may apply if you exchange you
shares into a fund that has a front-end sales charge.
(2) The investment manager has agreed to waive fees and pay expenses from
November ___ , 1999 through April 30, 2000 in order to prevent total
operating expenses (excluding any taxes, interest, brokerage fees,
extraordinary expenses and 12b-1 fees) from exceeding 1.70% of average daily
net assets. The fees and expenses shown in the table above do not reflect
this voluntary expense cap. The following table shows operating expenses,
reflecting the manager's current fee waivers and payments.
----------------------------------------------------------------
Fund expenses including voluntary expense caps
in effect through April 30, 2000
----------------------------------------------------------------
Management fees
------------------------------------------------ ---------------
Distribution and service (12b-1) fees none
------------------------------------------------ ---------------
Other expenses
------------------------------------------------ ---------------
Total operating expenses 1.70%
------------------------------------------------ ---------------
15
<PAGE>
(3) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show. In addition, the example does not assume the voluntary expense
limitation discussed in footnote 2.
16
<PAGE>
Profile: Delaware Emerging Markets Fund
What are the Fund's goals?
Delaware Emerging Markets Fund seeks long-term capital appreciation. Although
the Fund will strive to achieve its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
The Fund invests primarily in equity securities of issuers from emerging foreign
countries. Under normal market conditions, at least 65% of the Fund's total
assets will be invested in equity securities of issuers from at least three
different countries whose economies are considered to be emerging or developing.
We may invest up to 35% of the Fund's net assets in fixed-income securities
issued by companies in emerging countries or by foreign governments, their
agents, instrumentalities or political sub-divisions. We may invest in
fixed-income securities that are denominated in the currencies of emerging
market countries. All of these may be high-yield, high risk fixed-income
securities.
In selecting investments for the Fund,
o We strive to identify well managed companies that are undervalued based on
such factors as assets, earnings, dividends or growth potential.
o In order to compare the value of different stocks, we consider whether the
future dividends on a stock are expected to increase faster than, slower
than, or in line with the level of inflation. We then estimate what we think
the value of those anticipated future dividends would be worth if they were
being paid today. We believe this gives us an estimate of the stock's true
value. Because many of the countries in which the Fund invests are emerging
countries, there may be less information available for us to use in making
this analysis than is available for more developed countries.
o We generally prefer to purchase securities in countries where the currency
is undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine
whether a particular currency is overvalued or undervalued by comparing the
amount of goods and services that a dollar will buy in the United States to
the amount of 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 overvalued, and when the dollar buys more, the foreign currency may
be undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease, sometimes rapidly and unpredictably, according to changes in the value
of the Fund's investments. These fluctuations can be even more pronounced for
funds like Delaware Emerging Markets Fund, which invests in emerging countries.
This Fund will be affected primarily by declines in stock prices, which can be
caused by a drop in foreign stock markets or poor performance in specific
industries or companies. The value of the Fund's investments and, therefore, the
price of the Fund's shares may be more volatile than investments in more
developed markets. Because the Fund invests in international securities in
developing countries as well as established countries, it will be affected by
international investment risks related to currency valuations, political
instability, economic instability, or lax accounting and regulatory standards.
The Fund may invest up to 35% of its net assets in high-yield, high risk foreign
fixed-income securities, which are subject to substantial risks, particularly
during periods of economic downturns or rising interest rates.
The Fund is considered "non-diversified" under federal laws that regulate mutual
funds. Thus, adverse effects on the Fund's investments may affect a larger
portion of its overall assets and subject the Fund to greater risks. For a more
complete discussion of risk, please turn to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for a portfolio of securities of emerging markets which
may offer high return potential but can be substantially more risky than
investments in either the U.S. or established foreign countries.
Who should not invest in the Fund
o Investors with short-term financial goals or whose primary goal is to
receive current income.
17
<PAGE>
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors who do not understand or are unwilling to accept the significant
risks associated with investing in emerging markets.
How has the Delaware Emerging Markets Fund performed?
This bar chart and table can help you evaluate the risks of investing in the
Fund. We show how returns for the Fund's Institutional Class shares have varied
over the past three calendar years, as well as the average annual returns of
these shares for the one-year period and since inception. The Fund's past
performance is not necessarily an indication of how it will perform in the
future. The returns reflect voluntary expense caps in effect during the periods.
The returns would be lower without the voluntary caps.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN (INSTITUTIONAL
CLASS) FPO] ear-by-year total return (Institutional Class)
1997 1.58%
1998 -36.19%
1999
During the periods illustrated in this bar chart, the Class' highest quarterly
return was 00.00%% for the quarter ended _______________and its lowest quarterly
return was -0.00% for the quarter ended ___________.
How has the Delaware Emerging Markets Fund performed? (continued)
Average annual returns for periods ending 12/31/99
- -------------------------------------------------------------------------------
CLASS Institutional Morgan Stanley Capital
International Emerging
Markets Free Index
- -------------------------------------------------------------------------------
(Inception 6/10/96)
- -------------------------------------------------------------------------------
1 year
- -------------------------------------------------------------------------------
Lifetime
- -------------------------------------------------------------------------------
The Fund's returns are compared to the performance of the Morgan Stanley Capital
International Emerging Markets Free Index. You should remember that unlike the
Fund, the index is unmanaged and doesn't reflect the costs of operating a mutual
fund, such as the costs of buying, selling, and holding the securities.
18
<PAGE>
What are the Delaware Emerging Markets Fund's fees and expenses?
You do not pay sales charges directly from your investments when you buy or sell
shares of the Institutional Class.
------------------------------------------------------ ----------
Maximum sales charge (load) imposed on purchases as none
a percentage of offering price
------------------------------------------------------ ----------
Maximum contingent deferred sales charge (load) as a none
percentage of original purchase price or
redemption price, whichever is lower
------------------------------------------------------ ----------
Maximum sales charge (load) imposed on reinvested none
dividends
------------------------------------------------------ ----------
Redemption fees none
------------------------------------------------------ ----------
Exchange Fees(1) none
------------------------------------------------------ ----------
Annual fund operating expenses are deducted from the Fund's assets.
- ------------------------------------------------- -----------
Management fees
- ------------------------------------------------- -----------
Distribution and service (12b-1) fees none
- ------------------------------------------------- -----------
Other expenses
- ------------------------------------------------- -----------
Total operating expenses(2)
- ------------------------------------------------- -----------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(3) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
- ----------------- -----------
1 year
- ----------------- -----------
3 year
- ----------------- -----------
5 year
- ----------------- -----------
10 year
- ----------------- -----------
(1) Exchanges are subject to the requirements of each fund in the Delaware
Investments family. A front-end sales charge may apply if you exchange your
shares into a fund that has a front-end sales charge.
(2) The investment manager has agreed to waive fees and pay expenses through
____________, in order to prevent total operating expenses (excluding any
taxes, interest, brokerage fees and extraordinary expenses) from exceeding
1.70% of average daily net assets. The fees and expenses shown in the table
do not reflect this voluntary expense cap. The following table shows
operating expenses, reflecting the manager's and distributor's current fee
caps.
---------------------------------------------------------------
Fund expenses including voluntary expense caps
in effect through _________
---------------------------------------------------------------
Management fees
------------------------------------------------ --------------
Distribution and service (12b-1) fees none
------------------------------------------------ --------------
Other expenses
------------------------------------------------ --------------
Total operating expenses 1.70%
------------------------------------------------ --------------
(3) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods in
this example. This example does not reflect the voluntary expenses cap
described in footnote 2.
19
<PAGE>
Profile: Delaware New Pacific Fund
What is the Fund's goal?
Delaware New Pacific Fund seeks to maximize long-term capital appreciation.
Although the Fund will strive to achieve its goal, there is no assurance that it
will.
What are the Fund's main investment strategies?
The Fund invests primarily in stocks of companies of all sizes that are located
in or have their principal business activities in countries located in the
Pacific Basin, such as Australia, China, Hong Kong, Japan, Korea, Malaysia,
Philippines, Singapore and Taiwan. The Fund may invest in both established and
developing countries. Under normal circumstances we will invest at least 65% of
the Fund's net assets in Pacific Basin countries.
In selecting stocks for the portfolio, we look for companies that can benefit
from future economic growth in the region. We evaluate both individual companies
and individual countries to determine how much of the portfolio should be
allocated to companies located there. When evaluating individual companies, we
consider the growth prospects for the company and its industry, the financial
strength of the company and the quality of its management. We also consider
whether the stock appears overvalued or undervalued compared to other stocks in
the market or in its industry.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease, sometimes rapidly and unpredictably, according to changes in the value
of the Fund's investments. These fluctuations can be even more pronounced for
funds like Delaware New Pacific Fund that invests in developing countries. This
Fund will be affected primarily by declines in stock prices, which can be caused
by a drop in foreign stock markets or poor performance in specific industries or
companies. Because the Fund invests in international securities in both
established and developing countries, it will be affected by international
investment risks related to changes in currency valuations, political
instability, economic instability, and lax accounting and regulatory standards.
For a more complete discussion of risk, please turn to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for capital growth potential.
o Investors willing to accept the sometimes sharp and unpredictable fluctuations
in value that a foreign fund can experience.
Who should not invest in the Fund
o Investors with short-term financial goals or whose primary goal is to receive
current income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors who do not understand or are unwilling to accept the significant
risks associated with foreign investing.
20
<PAGE>
How has Delaware New Pacific Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show how returns for the Fund's Institutional Class shares have
varied over the past five calendar years, as well as average annual returns for
one-year and five-year periods and since inception. The Fund's past performance
does not necessarily indicate how it will perform in the future. The Class'
returns reflect voluntary expense caps. The returns would be lower without the
voluntary caps.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN
(Institutional Class)]
Year-by-year total return (Institutional Class)
------------------------ ------------------
1995 -3.21%
------------------------ ------------------
1996 8.20%
------------------------ ------------------
1997 -31.53%
------------------------ ------------------
1998 -21.83%
------------------------ ------------------
1999
------------------------ ------------------
During the periods illustrated in this bar chart, the Class' highest
quarterly return was 00.00%% for the quarter ended _______________and its lowest
quarterly return was -0.00% for the quarter ended ___________.
Average annual returns for periods ending 12/31/99
- ------------------------- ---------------------------- ---------------------
Institutional Class Morgan Stanley
Pacific Index
- ------------------------- ---------------------------- ---------------------
(Inception 2/3/94)
- ------------------------- ---------------------------- ---------------------
1 year
- ------------------------- ---------------------------- ---------------------
5 years
- ------------------------- ---------------------------- ---------------------
Lifetime
- ------------------------- ---------------------------- ---------------------
The Fund's returns are compared to the performance of the Morgan Stanley Pacific
Index. You should remember that unlike the Fund, the index is unmanaged and
doesn't reflect the costs of operating a mutual fund, such as the costs of
buying, selling, and holding the securities.
21
<PAGE>
What are the Delaware New Pacific Fund's fees and expenses?
You do not pay sales charges directly from your investments when you buy or sell
shares of the Institutional Class.
------------------------------------------------------ ----------
Maximum sales charge (load) imposed on purchases as none
a percentage of offering price
------------------------------------------------------ ----------
Maximum contingent deferred sales charge (load) as a none
percentage of original purchase price or
redemption price, whichever is lower
------------------------------------------------------ ----------
Maximum sales charge (load) imposed on reinvested none
dividends
------------------------------------------------------ ----------
Redemption fees none
------------------------------------------------------ ----------
Exchange Fees(1) none
------------------------------------------------------ ----------
Annual fund operating expenses are deducted from the Fund's assets.
------------------------------------------------------ -----------
Management fees
------------------------------------------------------ -----------
Distribution and service (12b-1) fees none
------------------------------------------------------ -----------
Other expenses
------------------------------------------------------ -----------
Total operating expenses(2)
------------------------------------------------------ -----------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(3) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
--------------- ------------
1 year
--------------- ------------
3 years
--------------- ------------
5 years
--------------- ------------
10 years
--------------- ------------
(1) Exchanges are subject to the requirements of each fund in the Delaware
Investments family. A front-end sales charge may apply if you exchange you
shares into a fund that has a front-end sales charge.
(2) The investment manager has agreed to waive fees and pay expenses from
November, 1999 through April 30, 2000 in order to prevent total operating
expenses (excluding any taxes, interest, brokerage fees and extraordinary
expenses) from exceeding 2.00% of average daily net assets. The fees and
expenses shown in the table do not reflect this voluntary expense cap. The
following table shows operating expenses, reflecting the manager's current
fee waivers and payments.
---------------------------------------------------------------
Fund expenses including voluntary expense caps
in effect through April 30, 2000
---------------------------------------------------------------
------------------------------------------------ --------------
Management fees
------------------------------------------------ --------------
------------------------------------------------ --------------
Distribution and service (12b-1) fees none
------------------------------------------------ --------------
------------------------------------------------ --------------
Other expenses
------------------------------------------------ --------------
------------------------------------------------ --------------
Total operating expenses 2.00%
------------------------------------------------ --------------
(3) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show. This example does not reflect the voluntary expense limitation
discussed in footnote 2.
22
<PAGE>
Profile: Delaware Global Bond Fund
What are the Fund's goals?
Delaware Global Bond Fund seeks to achieve current income consistent with
preservation of principal. Although the Fund will strive to achieve its goal,
there is no assurance that it will.
What are the Fund's main investment strategies?
Delaware Global Bond Fund invests primarily in fixed-income securities that may
also provide the potential for capital appreciation. The Fund is a global fund.
Therefore, at least 65% of the Fund's total assets will be invested in
fixed-income securities of issuers from at least three different countries, one
of which may be the United States. An issuer is considered to be from the
country where it is located, where the majority of its assets are or where it
generates the majority of its operating income.
In selecting investments for the Fund,
o We strive to identify fixed-income securities that provide high income
potential.
o In order to compare the value of different fixed-income securities, even
those issued in different countries, we look at the value of anticipated
future interest and principal payments, taking into consideration what we
think the inflation rate in that country will be. We then estimate what we
think the value of those anticipated future payments would be worth if they
were being paid today. We believe this gives us an estimate of a bond's true
value.
o We generally prefer to purchase securities in countries where the currency
is undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine
whether a particular currency is overvalued or undervalued by comparing the
amount of goods and services that a dollar will buy in the United States to
the amount of 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 overvalued, and when the dollar buys more, the foreign currency may
be undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease according to changes in the value of the Fund's investments. These
fluctuations can be even more pronounced for funds like Delaware Global Bond
Fund, which invests in developing countries. The Fund's investments normally
decrease when there are declines in bond prices, which can be caused by a drop
in the bond market, an adverse change in interest rates or an adverse situation
affecting the issuer of the bond. Because the Fund invests in international
securities in both established and developing countries, it will be affected by
international investment risks related to currency valuations, political
instability, economic instability, or lax accounting and regulatory standards.
The Fund may invest in high-yield, high risk foreign fixed-income securities,
which are subject to substantial risks, particularly during periods of economic
downturns or rising interest rates.
The Fund is considered "non-diversified" under federal laws that regulate mutual
funds. Thus, adverse effects on the Fund's investments may affect a larger
portion of its overall assets and subject the Fund to greater risks. For a more
complete discussion of risk, please turn to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with medium-to-longer term financial goals.
o Investors looking for current income from a portfolio that includes both
U.S. and foreign fixed-income securities.
o Investors seeking a measure of capital appreciation.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors who are unwilling to accept risks of investing in foreign
fixed-income securities.
o Investors who want monthly income from their investment.
23
<PAGE>
How has the Delaware Global Bond Fund performed?
This bar chart and table can help you evaluate the risks of investing in the
Fund. We show how returns for the Fund's Institutional Class have varied over
the five calendar years, as well as the average annual returns of these shares
for the one-year and five-year periods and since inception. The Fund's past
performance is not necessarily an indication of how it will perform in the
future. The returns reflect voluntary expense caps. The returns would be lower
without the voluntary caps.
[GRAPHIC OMITTED: BAR CHART SHOWING YEAR BY YEAR TOTAL RETURN (Institutional) ]
Year-by-year total return (Institutional)
1995 21.23%
1996 12.20%
1997 0.91%
1998 7.61%
1999
During the periods illustrated in this bar chart, the Class' highest quarterly
return was 00.00%% for the quarter ended _______________and its lowest quarterly
return was -0.00% for the quarter ended ___________.
Average annual returns for periods ending 12/31/99
- ------------------------------------------------------------------------------
CLASS Institutional Salomon Smith Barney World
Government Bond Index
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Inception 12/27/94)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
1 year 7.61% 15.31%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
5 years
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Lifetime 10.21% 9.27%
- ------------------------------------------------------------------------------
The Fund's returns are compared to the performance of the Salomon Smith Barney
World Government Bond Index. You should remember that unlike the Fund, the index
is unmanaged and doesn't reflect the costs of operating a mutual fund, such as
the costs of buying, selling, and holding the securities.
24
<PAGE>
What are the Delaware Global Bond Fund's fees and expenses?
You do not pay sales charges directly from your investments when you buy or sell
shares of the Institutional Class.
------------------------------------------------------ ----------
Maximum sales charge (load) imposed on purchases as none
a percentage of offering price
------------------------------------------------------ ----------
Maximum contingent deferred sales charge (load) as a none
percentage of original purchase price or
redemption price, whichever is lower
------------------------------------------------------ ----------
Maximum sales charge (load) imposed on reinvested none
dividends
------------------------------------------------------ ----------
Redemption fees none
------------------------------------------------------ ----------
Exchange Fees(1) none
------------------------------------------------------ ----------
Annual fund operating expenses are deducted from the Fund's assets.
- ------------------------------------------------- -----------
Management fees
- ------------------------------------------------- -----------
Distribution and service (12b-1) fees none
- ------------------------------------------------- -----------
Other expenses
- ------------------------------------------------- -----------
Total operating expenses(2)
- ------------------------------------------------- -----------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(3) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
- ----------------- -----------
1 year
- ----------------- -----------
3 years
- ----------------- -----------
5 years
- ----------------- -----------
10 years
- ----------------- -----------
(1) Exchanges are subject to the requirements of each fund in the Delaware
Investments family. A front-end sales charge may apply if you exchange your
shares into a fund that has a front-end sales charge.
(2) The investment manager has agreed to waive fees and pay expenses from
December 1, 1998 through __________, in order to prevent total operating
expenses (excluding any taxes, interest, brokerage fees and extraordinary
expenses) from exceeding 1% of average daily net assets. The fees and
expenses shown in the table do not reflect this voluntary expense cap. The
following table shows operating expenses, reflecting the manager's current
fee waivers and payments.
---------------------------------------------------------------
Fund expenses including voluntary expense caps
in effect through _________
---------------------------------------------------------------
Management fees
------------------------------------------------ --------------
Distribution and service (12b-1) fees none
------------------------------------------------ --------------
Other expenses
------------------------------------------------ --------------
Total operating expenses 1.00%
------------------------------------------------ --------------
(3) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show. This example does not reflect the voluntary expense cap described in
footnote 2.
25
<PAGE>
How we manage the Funds
Our investment strategies
We research individual companies and analyze economic and market conditions,
seeking to identify the securities or market sectors that we think are the best
investments for a particular Fund. Following are descriptions of how the
portfolio managers pursue the Funds' investment goals.
We take a disciplined approach to investing, combining investment
strategies and risk management techniques that can help shareholders
meet their goals.
The investment objective of each Fund described in this Prospectus is
non-fundamental. This means the Board of Trustees may change the objective
without obtaining shareholder approval. If any objective were changed, we would
notify shareholders before the change became effective.
Delaware International Equity Fund
Delaware International Equity Fund seeks long-term growth without undue risk to
principal. We invest primarily in equity securities, including common stocks,
which provide the potential for capital appreciation and income. Our strategy
would commonly be described as a value strategy. That is we strive to purchase
stocks that are selling for less than their true value. In order to estimate
what a security's true value is, we evaluate its future income potential, taking
into account the impact both currency fluctuations and inflation might have on
that income stream. We then determine what that income would be worth if paid
today. That helps us decide what we think the security is worth today. We then
compare our estimate of the security's value to its current price to determine
if it is a good value.
We use income as an indicator of value because we believe it allows us to
compare securities across different sectors and different countries--all using
one measurement standard. We can even use this analysis to compare stocks to
bonds.
We may purchase securities in any foreign country, developed or emerging;
however, we currently anticipate investing in Australia, Belgium, Canada,
Finland, France, Germany, Hong Kong, Italy, Japan, Malaysia, the Netherlands,
New Zealand, Singapore, Spain, Switzerland and the United Kingdom. This is a
representative list; the Fund may also invest in countries not listed here. More
than 25% of the Fund's total assets may be invested in the securities of issuers
located in the same country.
We generally maintain a long-term focus in the Fund, seeking companies that we
believe will perform well over the next three to five years.
Delaware Global Equity Fund
Delaware Global Equity Fund seeks long-term total return. We invest in U.S. and
foreign equity securities, including common stocks, that provide the potential
for capital appreciation and income. We invest primarily in developed markets;
however, we may purchase securities in emerging markets. More than 25% of the
Fund's total assets may be invested in the securities of issuers located in the
same country.
26
<PAGE>
To determine how much of the Fund's assets to allocate to international stocks
and how much to U.S. stocks, we compare the potential total return of each asset
class in the context of our expectations for inflation, economic growth and
political stability in various regions.
In selecting foreign stocks for the Fund, we follow the same investment strategy
as Delaware International Equity Fund. We generally look for securities that are
undervalued based on our analysis of their future income stream.
The Fund may also seek to achieve growth by investing up to 35% of its assets in
income producing debt securities such as U.S. or foreign government bonds or
corporate bonds. As a general policy, the Fund only invests in debt securities
when we believe they offer better long-term potential returns with less risk
than investments in equity securities. We apply our analysis of future income
potential to both stocks and bonds in order to decide whether any portion of the
portfolio should be allocated to bonds.
Delaware Overseas Equity Fund
Delaware Overseas Equity Fund's seeks to maximize total return. Under normal
circumstances, we will invest at least 65% of the value of Delaware Overseas
Equity Fund's total assets in securities of issuers located in at least three
foreign countries. However, more than 25% of the Fund's total assets may be
invested in the securities of issuers located in the same country.
The Fund will emphasize established companies, although it may invest in
companies of varying sizes as measured by assets, sales and market
capitalization. The Fund may invest in securities of issuers located in a
variety of different foreign countries including: Australia, Austria, Belgium,
Brazil, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, India,
Ireland, Italy, Japan, Luxembourg, Malaysia, Mexico, the Netherlands, New
Zealand, Norway, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland,
Thailand, the United Kingdom. This is a representative list; the Fund may also
invest in countries not listed here.
27
<PAGE>
Our strategy for Delaware Overseas Equity Fund can best be described as a value
strategy. We use the same income-oriented evaluation process to identify
attractive undervalued stocks in a variety of countries and regions. To increase
the Fund's return potential and also add further diversification opportunities,
we may invest up to 40% of the Fund's assets in securities of companies located
in emerging markets countries or in government securities of emerging market
countries.
In deciding how much of the portfolio to allocate to emerging markets, we
consider both the total return potential of those markets and the expected level
of risk.
We may invest up to 5% of the Fund's assets in securities of issuers that have
been in continuous operation for less than three years.
Delaware Emerging Markets Fund
Delaware Emerging Markets Fund seeks long-term capital appreciation. The Fund
may invest in a broad range of equity securities, including common stocks. Our
primary emphasis will be on the stocks of companies located in or having their
principal business in an emerging country.
We consider an "emerging country" to be any country that is
o generally recognized to be an emerging or developing country by the
international financial community, including the World Bank and the
International Finance Corporation,
o any country that is classified by the United Nations as developing, or
o any country that is included in the International Finance Corporation Free
Index or the Morgan Stanley Capital International Emerging Markets Free
Index.
Developing or emerging countries include almost every nation in the world except
the United States, Canada, Japan, Australia, New Zealand and most nations
located in Western and Northern Europe. A representative list of the countries
where we may invest includes: Argentina, Botswana, Brazil, Chile, China,
Colombia, Czech Republic, Estonia, Ghana, Greece, Hong Kong, Hungary, India,
Indonesia, 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. We may invest in other countries, particularly
as markets in other emerging countries develop. More than 25% of the Fund's
total assets may be invested in the securities of issuers located in the same
country.
In deciding whether a company is from an emerging country, we evaluate publicly
available information and question individual companies to determine if the
company meets one of the following criteria:
o the principal trading market for the company's securities is in a country
that is emerging;
o the company generates 50% or more of its annual revenue from operations in
emerging countries, even though the company's securities are traded in an
established market or in a combination of emerging and established markets;
o the company is organized under the laws of an emerging market country and
has a principal office in an emerging country.
28
<PAGE>
Currently, investing in many emerging countries is not feasible or may involve
significant political risks. We focus our investments in emerging countries
where we consider the economies to be developing strongly and where the markets
are becoming more sophisticated. In deciding where to invest we place particular
emphasis on factors such as economic conditions (including growth trends,
inflation rates and trade balances), regulatory and currency controls,
accounting standards and political and social conditions. We believe investment
opportunities may result from an evolving long-term trend favoring
market-oriented economies, a trend that may particularly benefit countries
having developing markets.
When we evaluate individual companies we strive to apply a value-oriented
selection process, similar to what we use for Delaware International Equity
Fund, Delaware Global Equity Fund and Delaware Overseas Equity Fund. However, in
emerging markets, more of the return is expected to come from capital
appreciation rather than income. Thus, there is greater emphasis on the
manager's assessment of the company's future growth potential.
The Fund may invest up to 35% of its net assets in high yield, high risk
foreign fixed-income securities. This typically includes so-called Brady Bonds.
Delaware New Pacific Fund
Delaware New Pacific Fund seeks to maximize long-term capital appreciation. It
invests primarily in equity securities of companies domiciled or having their
principal business activities in countries located in the Pacific Basin.
The Fund will invest in companies of varying sizes, measured by assets, sales
and market capitalization. When we evaluate individual companies, we consider
the growth prospects for the company and its industry, the financial strength of
the company and the quality of its management. We also look at whether the stock
appears overvalued or undervalued compared to other stocks in the market or its
industry.
While the Fund will generally have investments in companies located in at least
three different countries or regions, the Fund may from time to time have
investments in only one or a few countries or regions. More than 25% of the
Fund's total assets may be invested in the securities of issuers located in the
same country.
The Fund may invest up to 35% of its assets in securities of U.S. issuers. In
addition, the Fund may invest in short-term debt instruments to meet anticipated
day-to-day operating expenses and liquidity requirements.
The Fund may invest up to 5% of its assets in the securities of issuers that
have been in continuous operation for less than three years.
Delaware Global Bond Fund
Delaware Global Bond Fund seeks current income consistent with the preservation
of principal. We invest primarily in fixed-income securities that may also
provide the potential for capital appreciation.
29
<PAGE>
We may invest in:
o foreign and U.S. government securities;
o debt obligations of foreign and U.S. companies;
o debt securities of supranational entities;
o securities of issuers in emerging markets countries, including Brady Bonds,
which tend to be of lower quality and more speculative than securities of
developed country issuers;
o zero-coupon bonds.
At the time this Prospectus was prepared we anticipated that for increased
safety, a large percentage of Delaware Global Bond Fund's assets would be
invested in securities of supranational entities and in U.S. and foreign
government securities.
While the Fund may purchase securities of issuers in any foreign country,
developed or emerging, we currently anticipate investing in Australia, Belgium,
Canada, France, Germany, Hong Kong, Japan, Malaysia, the Netherlands, Singapore,
Spain, Switzerland and the United Kingdom, as well as Indonesia, Korea, New
Zealand, the Philippines, South Africa, Taiwan, and Thailand. This is a
representative list; we may also invest in other countries. More than 25% of the
Fund's total assets may be invested in the securities of issuers located in the
same country.
Generally, the value of fixed-income securities rises when interest rates
decline and declines when interest rates rise. The value of your investment in
the Fund will be affected by changes in interest rates. We generally keep the
average weighted maturity of the portfolio in the five-to-ten year range. If we
anticipate a declining interest rate environment; however, we may extend the
average weighted maturity past ten years or if we anticipate a rising rate
environment, we may shorten the average weighted maturity to less than five
years.
The securities we typically invest in
Stocks offer investors the potential for capital appreciation, and may pay
dividends as well. Fixed-income securities offer the potential for greater
income payments than stocks, and also may provide capital appreciation. The
following chart provides a brief description of the securities that the Funds
may invest in. The Funds can hold securities denominated in any currency. Please
see the Statement of Additional Information for additional descriptions of these
as well as other investments.
30
<PAGE>
<TABLE>
<CAPTION>
- ------------------- ------------------------------------------------------------------------------------------------------------
Securities How we use them
- ------------------- ------------------------------------------------------------------------------------------------------------
- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
Delaware Delaware Global Delaware Delaware Delaware New Delaware Global
International Equity Fund Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Fund Markets Fund
- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Common stocks: Delaware International Equity Fund, Delaware Global Equity Fund, Delaware Overseas Delaware Global
Securities that Equity Fund, Delaware Emerging Markets Fund and Delaware New Pacific Fund will invest Bond Fund
represent shares their assets in common stocks, some of which will be dividend-paying stocks. typically does
of ownership in a not invest in
corporation. common stocks.
Stockholders
participate in
the corporation's
profits and
losses,
proportionate to
the number of
shares they own.
- ------------------- ----------------------------------------------------------------------------------------- ------------------
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
- ------------------- ------------------------------------------------------------------------------------------------------------
Securities How we use them
- ------------------- ------------------------------------------------------------------------------------------------------------
- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
Delaware Delaware Global Delaware Delaware Delaware New Delaware Global
International Equity Fund Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Fund Markets Fund
- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------- ----------------------------------- ----------------- ------------------ ---------------- ------------------
Corporate bonds: Delaware Global Delaware Delaware Delaware New Delaware Global
Debt obligations Equity Fund may Overseas Equity Emerging Markets Pacific Fund Bond Fund may
issued by U.S. or seek to achieve Fund may invest Fund may invest generally does invest in
foreign growth by up to 40% of in corporate not invest in corporate
corporations. investing up to its assets in obligations corporate bonds,
35% of its developing issued by bonds. generally those
assets in country emerging country rated A or
debt securities, corporate and companies. better by S&P or
including government These bonds may Moody's or if
corporate bonds. bonds although be high risk, unrated,
Generally, it generally fixed-income determined to be
Delaware Global does not intend securities. of comparable
Equity Fund will to do so. See quality. The
invest in debt "Foreign Although not a Fund may also
securities when government principal invest in high
we believe they securities" strategy of the yield, high risk
offer better below. Fund, for emerging markets
long-term temporary corporate bonds.
potential defensive
returns with purposes, the
less risk than Fund may invest
equity all or a
investments. substantial
portion of its
Although not a principal strategy assets in
of the Funds, for temporary corporate
defensive purposes, Delaware obligations
International Equity Fund and rated AA or
Delaware Global Equity Fund may better by S&P
invest all or a substantial and Aa or better
portion of their respective by Moody's, or
assets in corporate obligations. if unrated,
determined to be
All corporate debt will be rated of comparable
AA or better by S&P and Aa or quality.
better by Moody's, or if unrated,
determined to be of comparable
quality.
- ------------------- ----------------------------------- ----------------- ------------------ ---------------- ------------------
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
- ------------------- ------------------------------------------------------------------------------------------------------------
Securities How we use them
- ------------------- ------------------------------------------------------------------------------------------------------------
- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
Delaware Delaware Global Delaware Delaware Delaware New Delaware Global
International Equity Fund Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Fund Markets Fund
- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
- ------------------- ----------------------------------- ----------------- ------------------ ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Foreign Delaware Global Delaware We may invest a Delaware New Delaware Global
government Equity Fund may Overseas Equity portion of Pacific Fund Bond Fund will
securities: Debt seek to achieve Fund may invest Delaware generally does generally invest
obligations growth by up to 40% of Emerging Markets not invest in in securities
issued by a investing up to its assets in Fund's assets in foreign issued by
government other 35% of its developing foreign government foreign
than the United assets in country governmental securities. governments,
States or by an foreign corporate and securities their agencies,
agency, governmental government issued by instrumentalities
instrumentality debt securities. bonds combined emerging or or political
or political Generally, although it developing subdivisions
subdivision of Delaware Global generally does countries, which that are rated
such governments. Equity Fund will not intend to may be lower AAA or AA by S&P
invest in debt do so. rated, including or Aaa or Aa by
securities when securities rated Moody's or, if
we believe they below investment unrated,
offer better grade. considered to be
long-term of comparable
potential Although not a quality. We may
returns with principal invest a portion
less risk than strategy of the of the Fund's
equity Fund, for assets in
investments. temporary foreign
defensive governmental
Although not a principal purposes, the securities
strategy of the Funds, for Fund may invest issued by
temporary defensive purposes, in high quality emerging
Delaware International Equity debt obligations countries, which
Fund and Delaware Global Equity of foreign may be lower
Fund may invest all or a governments, rated, including
substantial portion of their their agencies, securities rated
respective assets in high quality instrumentalities below investment
debt obligations of foreign and political grade.
governments, their agencies, sub-divisions.
instrumentalities and political
sub-divisions.
- ------------------- ----------------------------------- ----------------- ------------------ ---------------- ------------------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
- -------------------- -----------------------------------------------------------------------------------------------------------
Securities How we use them
- -------------------- -----------------------------------------------------------------------------------------------------------
- -------------------- ----------------- ---------------- ----------------- ----------------- ----------------- ------------------
Delaware Delaware Delaware Delaware Delaware New Delaware Global
International Global Equity Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Fund Fund Markets Fund
- -------------------- ----------------- ---------------- ----------------- ----------------- ----------------- ------------------
- -------------------- ---------------------------------------------------------------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. government Although not a principal strategy of the Funds, for temporary Delaware New Delaware Global
securities: defensive purposes Delaware International Equity Fund, Delaware Pacific Fund Bond Fund may
Securities issued Global Equity Fund, Delaware Overseas Equity Fund and Delaware generally does invest a
or guaranteed by Emerging Markets Fund may invest in U.S. government securities. not invest in significant
the U.S. U.S. government portion of its
government or securities assets in U.S.
issued by an government
agency or securities. It
instrumentality of will invest only
the U.S. in U.S.
government. government
obligations,
including bills,
notes and bonds
that are issued
or guaranteed as
to the payment
of principal and
interest by the
U.S. government
and securities
of U.S.
government
agencies or
instrumentalities
that are backed
by the full
faith and credit
of the United
States.
- -------------------- ---------------------------------------------------------------------- ----------------- ------------------
- -------------------- ---------------------------------- ----------------- ----------------- ----------------- ------------------
Investment company Each Fund may hold investment Delaware Delaware Delaware New Delaware Global
securities: In company securities if we believe Overseas Equity Emerging Pacific Fund Bond Fund may
some countries, the country offers good Fund may not Markets Fund may not invest hold closed-end
investments by investment opportunities. Both hold investment may hold in investment investment
U.S. mutual funds Funds would generally hold company open-end and company company
are generally made closed-end investment companies, securities. closed-end securities. securities.
by purchasing but Delaware Global Equity Fund investment
shares of may also hold open-end company
investment investment companies. These securities.
companies that in investments involve an indirect Please see
turn invest in the payment of a portion of the Delaware
securities of such expenses of the other investment International
countries. companies, including their Equity Fund and
advisory fees. Delaware Global
Equity
Fund
for a
complete
explanation.
- -------------------- ---------------------------------- ----------------- ----------------- ----------------- ------------------
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
- -------------------- -----------------------------------------------------------------------------------------------------------
Securities How we use them
- -------------------- -----------------------------------------------------------------------------------------------------------
- -------------------- ---------------- ----------------- ----------------- ----------------- ----------------- ------------------
Delaware Delaware Global Delaware Delaware Delaware New Delaware Global
International Equity Fund Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Fund Markets Fund
- -------------------- ---------------- ----------------- ----------------- ----------------- ----------------- ------------------
- -------------------- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Foreign currency Although the Funds value their assets daily in U.S. dollars, they do not intend to convert their holdings
transactions: A of foreign currencies into U.S. dollars on a daily basis. Each Fund will, however, from time to time,
forward foreign purchase or sell foreign currencies and/or engage in forward foreign currency exchange transactions.
currency exchange Each Fund may conduct its foreign currency transactions on a cash basis at the rate prevailing in the
contract involves foreign currency exchange market or through a forward foreign currency exchange contract or forward
an obligation to contract.
purchase or sell a
specific currency A Fund may use forward contracts for defensive hedging purposes to attempt to protect the value of the
on a fixed future Fund's current security or currency holdings. It may also use forward contracts if it has agreed to sell
date at a price a security and wants to "lock-in" the price of that security, in terms of U.S. dollars. Investors should
that is set at the be aware of the costs of currency conversion. The Funds will not use forward contracts for speculative
time of the purposes.
contract. The
future date may be
any number of days
from the date of
the contract as
agreed by the
parties involved.
- -------------------- -----------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
- -------------------- -----------------------------------------------------------------------------------------------------------
Securities How we use them
- -------------------- -----------------------------------------------------------------------------------------------------------
- -------------------- ---------------- ----------------- ----------------- ----------------- ----------------- ------------------
Delaware Delaware Global Delaware Delaware Delaware New Delaware Global
International Equity Fund Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Fund Markets Fund
- -------------------- ---------------- ----------------- ----------------- ----------------- ----------------- ------------------
- -------------------- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------- -----------------------------------------------------------------------------------------------------------
American Each Fund may invest in sponsored and unsponsored ADRs, EDRs and GDRs, generally This is not a
Depositary focusing on those whose underlying securities are issued by foreign entities. principal
Receipts strategy for
(ADRs), European To determine whether to purchase a security in a foreign market or through depositary Delaware Global
Depositary receipts, we evaluate the price levels, the transaction costs, taxes and administrative Bond Fund.
Receipts (EDRs), costs involved with each security to identify the most efficient choice.
and Global
Depositary Receipts
(GDRs): ADRs are
receipts issued by a
U.S. depositary
(usually a U.S.
bank) and EDRs and
GDRs are receipts
issued by a
depositary outside
of the U.S. (usually
a non-U.S. bank or
trust company or a
foreign branch of a
U.S. bank).
Depositary receipts
represent an
ownership interest
in an underlying
security that is
held by the
depositary.
Generally, the
holder of the
depositary receipt
is entitled to all
payments of
interest, dividends
or capital gains
that are made on the
underlying security.
- -------------------- -----------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
- -------------------- -----------------------------------------------------------------------------------------------------------
Securities How we use them
- -------------------- -----------------------------------------------------------------------------------------------------------
- -------------------- ---------------- ----------------- ----------------- ----------------- ----------------- ------------------
Delaware Delaware Global Delaware Delaware Delaware New Delaware Global
International Equity Fund Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Fund Markets Fund
- -------------------- ---------------- ----------------- ----------------- ----------------- ----------------- ------------------
- -------------------- ---------------------------------------------------------------------------------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Supranational The Funds do not invest in these entities. We anticipate
entities: Debt investing a
securities of large percentage
supranational of Delaware
entities may be Global Bond
denominated in any Fund's assets in
currency. These debt securities
securities are of supranational
typically of entities.
high-grade
quality. A
supranational
entity is an
entity established
or financially
supported by the
national
governments of one
or more countries
to promote
reconstruction or
development. The
International Bank
for Reconstruction
and Development
(more commonly
known as the World
Bank) would be one
example of a
supranational
entity.
- -------------------- ---------------------------------------------------------------------------------------- ------------------
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
- -------------------- -----------------------------------------------------------------------------------------------------------
Securities How we use them
- -------------------- -----------------------------------------------------------------------------------------------------------
- -------------------- ----------------- ---------------- ----------------- ------------------ ---------------- ------------------
Delaware Delaware Delaware Delaware Delaware New Delaware Global
International Global Equity Overseas Equity Emerging Markets Pacific Fund Bond Fund
Equity Fund Fund Fund Fund
- -------------------- ----------------- ---------------- ----------------- ------------------ ---------------- ------------------
- -------------------- ----------------- ---------------------------------- ------------------ ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Zero coupon Delaware Delaware Global Equity Fund and Delaware Delaware New Delaware Global
bonds: Zero International Delaware Overseas Equity Fund do Emerging Markets Pacific Fund Bond Fund may
coupon bonds are Equity Fund not invest in these securities. Fund may invest does not invest in zero
debt obligations typically does in zero coupon invest in coupon bonds.
that do not not invest in bonds. these
entitle the holder these securities.
to any periodic securities.
payments of
interest before
maturity or a
specified date
when the
securities begin
paying current
interest. Therefore,
they are issued and
traded at a discount
from their face
amounts or par
value. The market
prices of zero
coupon bonds 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.
- -------------------- ----------------- ---------------------------------- ------------------ ---------------- ------------------
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
- -------------------- ----------------- ---------------- ----------------- ------------------ ---------------- ------------------
Delaware Delaware Delaware Delaware Delaware New Delaware Global
International Global Equity Overseas Equity Emerging Markets Pacific Fund Bond Fund
Equity Fund Fund Fund Fund
- -------------------- ----------------- ---------------- ----------------- ------------------ ---------------- ------------------
- -------------------- ---------------------------------------------------- ------------------ ---------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Brady Bonds: Delaware International Equity Fund, Delaware Delaware Delaware New Global Bond Fund
These are debt Global Equity Fund and Delaware Overseas Equity Emerging Markets Pacific Fund may invest in
securities issued Fund do not invest in these securities. Fund may invest does not Brady Bonds.
under the in Brady Bonds. invest in Please see
framework of the We believe that Brady Bonds. Delaware
Brady Plan, an the economic Emerging Markets
initiative for reforms Fund to the left
debtor nations to undertaken by for a complete
restructure their countries in explanation.
outstanding connection with
external the issuance of
indebtedness Brady Bonds can
(generally, make the debt of
commercial bank countries that
debt). Brady Bonds have issued or
tend to be of have announced
lower quality and plans to issue
more speculative these bonds a
than securities of viable
developed country opportunity for
issuers. investment.
- -------------------- ---------------------------------------------------- ------------------ ---------------- ------------------
- -------------------- ---------------------------------------------------- ------------------ ---------------- ------------------
High-yield, high Delaware International Equity Fund, Delaware Delaware Delaware New Global Bond Fund
risk fixed-income Global Equity Fund and Delaware Overseas Equity Emerging Markets Pacific Fund may invest a
securities: Fund do not invest in these securities. Fund may invest does not portion of its
Securities that up to 35% of its invest in assets in these
are rated lower net assets, in high-yield, securities.
than BBB by S&P or high-yield, high high risk
Baa by Moody's, or risk foreign fixed-income
if unrated, of fixed-income securities.
equal quality. securities.
These securities
may be issued by
companies or
governments of
emerging or
developing
countries, which
may be less
creditworthy. The
risk that these
companies or
governments may
not be able to
make interest or
principal payments
is substantial.
- -------------------- ---------------------------------------------------- ------------------ ---------------- ------------------
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
- -------------------- -----------------------------------------------------------------------------------------------------------
Securities How we use them
- -------------------- -----------------------------------------------------------------------------------------------------------
- -------------------- ---------------- ----------------- ----------------- ----------------- ----------------- ------------------
Delaware Delaware Global Delaware Delaware Delaware New Delaware Global
International Equity Fund Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Fund Markets Fund
- -------------------- ---------------- ----------------- ----------------- ----------------- ----------------- ------------------
- -------------------- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Restricted We may invest in privately placed securities that are eligible for resale only among certain
securities are institutional buyers without registration, including Rule 144A Securities.
privately placed
securities
whose resale is
restricted under
securities law.
- -------------------- -----------------------------------------------------------------------------------------------------------
- -------------------- ---------------------------------------------------- ------------------ ----------------------------------
Illiquid Delaware International Equity, Delaware Global Delaware Delaware New Pacific Fund and
securities are Equity Fund and Delaware Overseas Equity Fund may Emerging Markets Delaware Global Bond Fund may
those that cannot invest up to 10% of net assets in illiquid Fund may invest invest up to 10% of net asses in
be sold or securities. up to 15% of net illiquid securities.
disposed of in the assets in
ordinary course of illiquid
business, within securities.
seven days, at
approximately the
price at which a
fund has valued
them.
- -------------------- ---------------------------------------------------- ------------------ ----------------------------------
- -------------------- ----------------------------------------------------------------------------------------------------------
Repurchase Typically, we use repurchase agreements as a short-term investment for a Fund's cash position. In order
agreements: An to enter into these repurchase agreements, a Fund must have collateral of at least 102% of the
agreement between repurchase price. The Funds will only enter into repurchase agreements in which the collateral is comprised
a buyer, such as a of U.S. government securities.
fund, and a seller
of securities in
which the seller
agrees to buy the
securities back
within a specified
time at the same
price the buyer paid
for them, plus an
amount equal to an
agreed upon interest
rate. Repurchase
agreements are often
viewed as equivalent
to cash.
- -------------------- ----------------------------------------------------------------------------------------------------------
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
- -------------------- -----------------------------------------------------------------------------------------------------------
Securities How we use them
- -------------------- -----------------------------------------------------------------------------------------------------------
- -------------------- ----------------- ---------------- ----------------- ------------------ ---------------- ------------------
Delaware Delaware Delaware Delaware Delaware New Delaware Global
International Global Equity Overseas Equity Emerging Markets Pacific Fund Bond Fund
Equity Fund Fund Fund Fund
- -------------------- ----------------- ---------------- ----------------- ------------------ ---------------- ------------------
- -------------------- ----------------- ---------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Other Securities Delaware Delaware Delaware Delaware Delaware New Delaware Global
Each Fund is International Global Equity Overseas Equity Emerging Pacific Fund Bond Fund may
permitted to Equity Fund may Fund may may invest in Markets Fund may invest in also invest in
invest in other invest in invest in all types of may invest in all types of futures and
securities that preferred preferred securities with preferred securities with options. The
are listed here. stocks, stocks, equity stocks, equity Fund may also
More information convertible convertible characteristics, convertible characteristics, invest in
about these securities, securities, including trust securities, including trust interest rate
securities can be warrants, warrants, or limited warrants, or limited swaps.
found in the futures and futures and partnership futures and partnership
Statement of options. options. interests, options. interests,
Additional preferred preferred
Information. stock, rights, stock, rights
warrants and and warrants
convertible and convertible
securities. The securities. The
Fund may also Fund may also
hold futures hold futures
and options. and options.
The Fund may The Fund may
also invest in also invest in
swaps. swaps.
- -------------------- ----------------- ---------------- ----------------- ----------------- ----------------- -----------------
</TABLE>
41
<PAGE>
Portfolio turnover
Each Fund (other than Delaware New Pacific Fund) anticipates that its annual
portfolio turnover will be less than 100%. A turnover rate of 100% would occur
if a Fund sold and replaced securities valued at 100% of its net assets within
one year. High turnover in a Fund could result in additional brokerage
commissions to be paid by the Fund and higher tax liability for the Fund.
Borrowing from banks
Each Fund may borrow money as a temporary measure for extraordinary or emergency
purposes or to facilitate redemptions. A Fund will not borrow money in excess of
one-third of the value of its net assets.
Securities lending
Each Fund may loan up to one-quarter (one-third, in the case of Delaware New
Pacific Fund and Delaware Overseas Equity Fund) of its assets to qualified
broker/dealers or institutional investors to generate additional income for the
Fund. All such loans will be secured by collateral.
Purchasing securities on a when-issued or delayed delivery basis Delaware New
Pacific Fund and Delaware Overseas Equity Fund may buy or sell securities on a
when-issued or delayed delivery basis; that is, paying for securities before
delivery or taking delivery at a later date. A Fund will designate cash or
securities in amounts sufficient to cover its obligations, and will value the
designated assets daily.
Temporary defensive positions
For temporary defensive purposes, Delaware International Equity, Delaware Global
Equity and Delaware Emerging Markets Funds may each invest all or a substantial
portion of their assets in high quality debt instruments of foreign governments,
the U.S. government, or foreign or U.S. companies. Also, for temporary defensive
purposes, Delaware Overseas Equity Fund may invest a substantial portion of its
assets in cash or cash equivalent investments or in U.S. securities, and
Delaware New Pacific Fund may invest up to 100% of its assets in money market
instruments, cash or cash equivalents. To the extent that a Fund does so, the
Fund may be unable to meet its investment objective.
42
<PAGE>
The risks of investing in the Funds
Investing in any mutual fund involves risk, including the risk that you may
receive little or no return on your investment, and the risk that you may lose
part or all of the money you invest. Before you invest in a Fund you should
carefully evaluate the risks. An investment in the Funds typically provides the
best results when held for a number of years. The following are the chief risks
you assume when investing in the Funds. Please see the Statement of Additional
Information for further discussion of these risks and the other risks not
discussed here.
<TABLE>
<CAPTION>
- ------------------- ------------------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------- ------------------------------------------------------------------------------------------------------------
- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
Delaware Delaware Global Delaware Delaware Delaware New Delaware Global
International Equity Fund Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Fund Markets Fund
- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
- ------------------- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Market risk is We maintain a long-term investment approach and focus on stocks we believe can appreciate over an extended
the risk that all time frame regardless of interim market fluctuations. In deciding what portion of a Fund's portfolio
or a majority of should be invested in any individual country, we evaluate a variety of factors, including opportunities
the securities in and risks relative to other countries.
a certain
market--like the ------------------------------------------------------------------------------------------------------------
stock or bond In addition, for temporary For temporary Same as for For temporary As part of the
market-- or in a defensive purposes, the Funds may defensive Delaware defensive Fund's principal
certain country invest all or a substantial purposes International purposes New investment
or region will portion of its assets in high Delaware Equity Fund and Pacific Fund strategy, the
decline in value quality debt instruments of Overseas Equity Delaware Global may invest up Fund may invest
because of factors foreign governments, the U.S. Fund may invest Equity Fund as to 100% of its in securities
such as economic government, (including their a substantial explained to the assets in that generally
conditions, future agencies and instrumentalities) portion of its left. money market have relatively
expectations or or foreign or U.S. companies. assets in cash instruments, less market risk.
investor or cash cash or cash
confidence. equivalent equivalents.
investments or
in U.S.
securities.
- ------------------- ------------------------------------------------------------------------------------------------------------
Industry and We typically hold a number of different securities in a variety of sectors in order to minimize the impact
security risk is that a poorly performing security would have on a Fund. This risk is more significant for Delaware Global
the risk that the Equity Fund, Delaware Emerging Markets Fund and Delaware Global Bond Fund, which are non-diversified funds.
value of
securities in a
particular
industry or the
value of an
individual stock
or bond will
decline because
of changing
expectations for
the performance
of that industry
or for the
individual
company issuing
the stock or bond.
- ------------------- ------------------------------------------------------------------------------------------------------------
- ------------------- ----------------------------------------------------------------------------------------- ------------------
- ------------------- ----------------------------------------------------------------------------------------- ------------------
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
- ------------------- ------------------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------- ------------------------------------------------------------------------------------------------------------
- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
Delaware Delaware Global Delaware Delaware Delaware New Delaware Global
International Equity Fund Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Fund Markets Fund
- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
- ------------------- ----------------------------------------------------------------------------------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Interest rate Delaware International Equity Fund, Delaware Global Equity Fund, Delaware Overseas Interest rate
risk is the risk Equity Fund, Delaware New Pacific Fund and Delaware Emerging Markets Fund are generally risk is a
that securities, less affected by interest rate risk because they typically hold a smaller amount of significant risk
particularly fixed-income securities than the Delaware Global Bond Fund. for Delaware
bonds with longer Global Bond
maturities, will Fund. In an
decrease in value attempt to
if interest rates manage interest
rise. rate risk, we
adjust the Fund's
average weighted
maturity based
on our view of
interest rates. The
Fund's average
weighted maturity
will generally be in
the five-to-ten year
range. When we
anticipate that
interest rates will
decline, we may
extend the average
maturity beyond ten
years and when we
anticipate that
interest rates will
rise, we may shorten
the average maturity
to less than five
years.
- ------------------- ----------------------------------------------------------------------------------------- ------------------
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
- ------------------- ------------------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------- ------------------------------------------------------------------------------------------------------------
- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
Delaware Delaware Global Delaware Delaware Delaware New Delaware Global
International Equity Fund Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Fund Markets Fund
- ------------------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
- ------------------- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Currency risk is Each Fund may try to hedge its currency risk by purchasing foreign currency exchange contracts. If a Fund
the risk that the agrees to purchase or sell foreign securities at a pre-set price on a future date, the Fund attempts to
value of a Fund's protect the value of a security they own from future changes in currency rates. If a Fund has agreed to
investments may purchase or sell a security, it may also use foreign currency exchange contracts to "lock-in" the
be negatively security's price in terms of U.S. dollars or another applicable currency. Each Fund may use forward
affected by currency exchange contracts only for defensive or protective measures, not to enhance portfolio returns.
changes in However, there is no assurance that such a strategy will be successful.
foreign currency
exchange rates.
Adverse changes
in exchange rates
may reduce or
eliminate any
gains produced by
investments that
are denominated
in foreign
currencies and
may increase any
losses.
- ------------------- ------------------------------------------------------------------------------------------------------------
- ------------------- ----------------------------------- ----------------------------------------------------- ------------------
Small company These funds typically focus their These Funds may invest in small companies and would Delaware Global
risk is the risk investment in larger companies. be subject to this risk. We typically hold a Bond Fund does
that prices of number of different stocks in order to reduce the not invest in
smaller companies impact that one small company stock would have on small companies.
may be more the Funds. This risk is more significant for
volatile than Delaware Emerging Markets Fund, which is a
larger companies non-diversified fund.
because of
limited financial
resources or
dependence on
narrow product
lines.
- ------------------- ----------------------------------- ----------------------------------------------------- ------------------
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
- -------------------- -----------------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- -------------------- -----------------------------------------------------------------------------------------------------------
- -------------------- ------------------ --------------- ----------------- ----------------- ----------------- ------------------
Delaware Delaware Delaware Delaware Delaware New Delaware Global
International Global Equity Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Fund Fund Markets Fund
- -------------------- ------------------ --------------- ----------------- ----------------- ----------------- ------------------
- -------------------- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Political risk is We evaluate the political situations in the countries where we invest and take into account any potential
the risk that risks before we select securities for the portfolio. However, there is no way to eliminate political
countries or the risk when investing internationally.
entire region
where we invest
may experience
political
instability. This
may cause greater
fluctuation in the
value and
liquidity of our
investments due to
changes in
currency exchange
rates,
governmental
seizures or
nationalization of
assets.
- -------------------- -----------------------------------------------------------------------------------------------------------
- -------------------- ---------------------------------- ------------------------------------------------------------------------
Emerging market Delaware International Equity Delaware Overseas Equity Fund, Delaware Emerging Markets Fund,
risk is the Fund and Delaware Global Equity Delaware New Pacific Fund and Delaware Global Bond Fund are subject to
possibility that Fund, to the limited extent that this risk. Striving to manage this risk, the portfolio managers
the risks they invest in emerging markets, carefully screen securities within emerging markets and attempt to
associated with are subject to the risk. consider material risks associated with an individual company or bond
international issuer. We cannot eliminate emerging market risk and consequently
investing will be encourage shareholders to invest in these Funds only if they have a
greater in long-term time horizon, over which the potential of individual
emerging markets securities is more likely to be realized.
than in more
developed foreign
markets because,
among other
things, emerging
markets may have
less stable
political and
economic
environments.
- -------------------- ---------------------------------- ------------------------------------------------------------------------
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
- -------------------- ----------------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- -------------------- ----------------------------------------------------------------------------------------------------------
- -------------------- ----------------- ------------ ----------------- --------------- -------------------- --------------------
Delaware Delaware Delaware Delaware Delaware New Delaware Global
International Global Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Equity Fund Fund Markets Fund
- -------------------- ----------------- ------------ ----------------- --------------- -------------------- --------------------
- -------------------- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Inefficient market The Funds will attempt to reduce these risks by investing in a number of different countries, and noting
risk is the risk trends in the economy, industries and financial markets.
that foreign
markets may be
less liquid, have Delaware Global Bond Fund will also perform credit analysis in an attempt to reduce these risks.
greater price
volatility, less
regulation and
higher transaction
costs than U.S.
markets.
- -------------------- ----------------------------------------------------------------------------------------------------------
- -------------------- ----------------------------------------------------------------------------------------------------------
Information risk We conduct fundamental research on the companies we invest in rather than relying solely on information
is the risk that available through financial reporting. We believe this will help us to better uncover any potential
foreign companies weaknesses in individual companies.
may be subject to
different
accounting,
auditing and
financial
reporting
standards than
U.S. companies.
There may be less
information
available about
foreign issuers
than domestic
issuers.
Furthermore,
regulatory
oversight of
foreign issuers
may be less
stringent or less
consistently
applied than in
the United States.
- -------------------- ----------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
- ------------------- -----------------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------- -----------------------------------------------------------------------------------------------------------
- ------------------- ---------------- ------------------ ---------------- --------------- ----------------- --------------------
Delaware Delaware Global Delaware Delaware Delaware New Delaware Global
International Equity Fund Overseas Emerging Pacific Fund Bond Fund
Equity Fund Equity Fund Markets Fund
- ------------------- ---------------- ------------------ ---------------- --------------- ----------------- --------------------
- ------------------- ---------------- ------------------ ---------------- --------------- ----------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Non-diversified Delaware Delaware Global Delaware Delaware Delaware New Delaware Global
fund risk. International Equity Fund is a Overseas Emerging Pacific Fund is Bond Fund is a
Non-diversified Equity Fund is non-diversified Equity Fund is Market Fund a diversified non-diversified
funds are subject a diversified fund as defined a diversified is a fund, and is not fund, the same as
to greater risks fund, and is by the fund, and is non- subject to this Delaware Global
because adverse not subject to Investment not subject diversified risk. Equity Fund.
effects on their this risk. Company Act of to this risk. fund, the Please see the
individual 1940 Act. That same as full explanation
investments may means the Fund Delaware under Delaware
affect a larger does not have to Global Global Equity Fund
portion of their limit the Equity Fund. to the left.
overall assets. percentage of
assets invested to
the left in an
individual under
security. Delaware
However Global
Global Equity Equity
Fund, (as Fund. well
as Delaware Emerging
Markets Fund and
Global Bond Fund)
does intend to
satisfy the Internal
Revenue Code's
diversification
requirement, which
says that for 50% of
the Fund's assets,
no more than 5% of
net assets can be
invested in any
single security.
This means 50% of
the Fund's net
assets must be
spread among various
securities, with no
more than 5% of net
assets invested in
any single security.
The other 50% can be
more concentrated
with up to 25%
invested in an
individual security.
- ------------------- ---------------- ------------------ ---------------- --------------- ----------------- --------------------
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
- -------------------- -----------------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- -------------------- -----------------------------------------------------------------------------------------------------------
- -------------------- ----------------- ------------ ----------------- ---------------- ------------------- ---------------------
Delaware Delaware Delaware Delaware Delaware New Delaware Global
International Global Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Equity Fund Fund Markets Fund
- -------------------- ----------------- ------------ ----------------- ---------------- ------------------- ---------------------
- -------------------- ------------------------------------------------ ---------------- ------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Foreign government This is not a significant risk for these The Fund is This is not a The Fund is subject
and supranational Funds. subject to significant risk to this risk and
securities risks this risk and for this Fund. will attempt to
relate to the will attempt limit this risk by
ability of a to limit this performing credit
foreign government risk by analysis on the
or government performing issuer of each
related issuer to credit security purchased.
make timely analysis on The Fund attempts
payments on its the issuer of to reduce the risks
external debt each security associated with
obligations. purchased. investing in
foreign governments
The Fund by focusing on
attempts to bonds rated within
reduce this the two highest
risk by rating categories.
limiting the
portion of net
assets that
may be
invested in
these
securities.
The Fund
also
compares
the
risk-reward
potential
of foreign
government
securities
being
considered
to that
offered by
equity
securities
to
determine
whether to
allocate
assets to
equity or
fixed
income
investments.
- -------------------- ------------------------------------------------ ---------------- ------------------- ---------------------
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
- -------------------- ----------------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- -------------------- ----------------------------------------------------------------------------------------------------------
- -------------------- ----------------- ------------ ----------------- --------------- -------------------- --------------------
Delaware Delaware Delaware Delaware Delaware New Delaware Global
International Global Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Equity Fund Fund Markets Fund
- -------------------- ----------------- ------------ ----------------- --------------- -------------------- --------------------
- -------------------- ------------------------------------------------ --------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Credit risk of This is not a significant risk for Delaware Delaware This is not a Delaware Global
high-yield, high International Equity Fund, Delaware Global Emerging significant risk Bond Fund may
risk fixed-income Equity Fund and Delaware Overseas Equity Markets Fund for Delaware New Pacific invest a
securities: Fund. may invest up Pacific Fund. portion of its
Securities rated to 35% of its assets in these
lower than BBB by net assets in securities. Please
S&P and Baa by high-yield, see complete
Moody's are high risk explanation under
considered to be foreign Delaware Emerging
of poor standing fixed-income Markets Fund to
and predominantly securities. the left.
speculative as to
the issuer's We intend to
ability to repay limit our
interest and investment in
principal. any single
lower rated
These bonds are bond, which
often issued by can help to
less creditworthy reduce the
companies or by effect of an
highly leveraged individual
(indebted) firms, default on
which are the Fund. We
generally less also intend
able than more to limit our
financially stable overall
firms to make holdings of
scheduled payments bonds in this
of interest and category.
principal. The Such
risks posed by limitations
bonds issued under may not
such circumstances protect the
are substantial. Funds from
widespread
bond
defaults
brought
about by a
sustained
economic
downturn
or from
price
declines
that might
result
from
changes in
the
quality
ratings of
individual
bonds.
- -------------------- ------------------------------------------------ --------------- -------------------- --------------------
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
- -------------------- ----------------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- -------------------- ----------------------------------------------------------------------------------------------------------
- -------------------- ----------------- ------------ ----------------- --------------- -------------------- --------------------
Delaware Delaware Delaware Delaware Delaware New Delaware Global
International Global Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Equity Fund Fund Markets Fund
- -------------------- ----------------- ------------ ----------------- --------------- -------------------- --------------------
- -------------------- ------------------------------------------------ --------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Transaction costs Each of the Funds is subject to this risk. We strive to monitor transaction costs and to choose an
risk: Costs of efficient trading strategy for the Funds.
buying, selling
and holding
foreign
securities,
including
brokerage, tax and
custody costs, may
be higher than
those involved in
domestic
transactions
- -------------------- ----------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
Who manages the Funds
Delaware Investment managers and sub-advisers
Delaware International Advisers Ltd. makes investment decisions for Delaware
International Equity Fund, Delaware Global Equity Fund, Delaware Emerging
Markets Fund and Delaware Global Bond Fund, manages the Funds' business affairs
and provides daily administrative services. Delaware International Advisers is
affiliated with Delaware Management Company, a series of Delaware Management
Business Trust, which is an indirect, wholly owned subsidiary of Delaware
Management Holdings, Inc.
Delaware Management Company is the sub-adviser to Delaware Global Equity Fund.
Delaware Management Company manages the U.S. securities portion of Delaware
Global Equity Fund's portfolio under the overall supervision of Delaware
International Advisers and furnishes Delaware International Advisers with
investment recommendations, asset allocation advice, research and other
investment services regarding U.S. securities.
Delaware Overseas Equity Fund and Delaware New Pacific Fund are managed by
Delaware Management Company. Delaware International Advisers is Delaware
Overseas Equity Fund's sub-adviser and AIB Govett, Inc. is Delaware New Pacific
Fund's sub-adviser. The sub-advisers are responsible for day-to-day management
of the Fund's assets. Delaware Management Company administers the Fund's affairs
and has ultimate responsibility for all investment advisory services for the
Fund. Delaware Management Company also supervises the sub-adviser's performance.
For the services they provided, the manager and sub-advisers, where applicable,
were paid an aggregate fee by each Fund for the last fiscal year as follows:
Investment Management Fees
<TABLE>
<CAPTION>
- ---------------------------- ----------------- ---------------- ---------------- -------------- ---------------- -----------------
Delaware Delaware Global Delaware Delaware Delaware New Delaware Global
International Equity Fund Overseas Equity Emerging Pacific Fund Bond Fund
Equity Fund Fund Markets Fund
- ---------------------------- ----------------- ---------------- ---------------- -------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
As a percentage of average
daily net assets * * * * *
- ---------------------------- ----------------- ---------------- ---------------- -------------- ---------------- -----------------
</TABLE>
*Reflects a waiver of fees by the manager.
Portfolio managers
Delaware International Equity Fund
Clive A. Gillmore and Nigel G. May have primary responsibility for making
day-to-day investment decisions for Delaware International Equity Fund. In
making investment decisions for the Fund, Mr. Gillmore and Mr. May regularly
consult with a fourteen member international equity team.
Clive A. Gillmore, Senior Portfolio Manager and Director of Delaware
International Advisers, has been the senior portfolio manager for the Fund since
its inception. A graduate of the University of Warwick who began his career at
Legal and General Investment Management, Mr. Gillmore joined Delaware
International Advisers in 1990 after eight years of investment experience. His
most recent position prior to joining Delaware International Advisers was as a
Pacific Basin equity analyst and senior portfolio manager for Hill Samuel
Investment Management Ltd. Mr. Gillmore completed the London Business School
Investment Program.
52
<PAGE>
Nigel G. May, Senior Portfolio Manager and Director of Delaware International
Advisers, is a graduate of Sidney Sussex College, Cambridge. Mr. May joined Mr.
Gillmore as Co-Manager of the Fund on December 22, 1997. He joined Delaware
International Advisers in 1991, assuming portfolio-management responsibilities
and sharing analytical responsibilities for continental Europe. He previously
had been with Hill Samuel Investment Management Ltd. for five years.
Delaware Global Equity Fund
Elizabeth A. Desmond has primary responsibility for making day-to-day investment
decisions for Delaware Global Equity Fund. Robert L. Arnold makes investment
decisions for the U.S. equity portion of the Fund.
Elizabeth A. Desmond, Senior Portfolio Manager and Director of Delaware
International Advisers, has been the portfolio manager for the Fund since July
21, 1998. Ms. Desmond is a graduate of Wellesley College and the masters program
in East Asian studies at Stanford University. After working for the Japanese
government for two years, she began her investment career as a Pacific Basin
investment manager with Shearson Lehman Global Asset Management. Prior to
joining Delaware International Advisers in the spring of 1991, she was a Pacific
Basin equity analyst and senior portfolio manager at Hill Samuel Investment
Management Ltd. Ms. Desmond is a CFA charterholder.
Robert L. Arnold, Vice President/Portfolio Manager of the Fund, has been
managing the U.S. equity portion of the Fund since July 21, 1998. Prior to that
time he managed other Delaware Investments mutual funds and was a financial
analyst focusing on the financial services industry including banks, thrifts,
insurance companies and consumer finance companies. Mr. Arnold holds a BS from
Carnegie Mellon University and earned an MBA from the University of Chicago. He
began his investment career as a management consultant with Arthur Young in
Philadelphia. Prior to joining Delaware Investments in March 1992, Mr. Arnold
was a planning analyst with Chemical Bank in New York.
Delaware Overseas Equity Fund
Mr. Gillmore and Robert Akester have had primary responsibility for making
day-to-day investment decisions for Delaware Overseas Equity Fund since
September 15, 1997. Please see Delaware International Equity Fund for a
description of Mr. Gillmore's business experience.
Robert Akester, Senior Portfolio Manager of Delaware International Advisers,
joined Delaware International Advisers in 1996. Mr. Akester, who began his
investment career in 1969, was most recently a Director of Hill Samuel
Investment Management 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.
Delaware Emerging Markets Fund
Mr. Gillmore also has primary responsibility for making day-to-day investment
decisions for Delaware Emerging Markets Fund (please see Delaware International
Equity Fund for a description of Mr. Gillmore's business experience). In making
investment decisions for Delaware Emerging Markets Fund, Mr. Gillmore regularly
consults with a fourteen member international equity team, including co-managers
Robert Akester and Joshua H. Brooks. Please see Delaware Overseas Equity Fund
for a description of Mr. Akester's business experience). Mr. Gillmore has been
managing the Fund since inception and Mr. Akester and Mr. Brooks have been
Co-Managing the Fund since ______________.
Joshua H. Brooks, Senior Portfolio Manager of Delaware International Advisers,
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 acting as liaison with Delaware International Advisers.
53
<PAGE>
Delaware New Pacific Fund
Jane Pickard has had primary responsibility for making day-to-day investment
decisions for the Fund since November 12, 1997. Ms. Pickard graduated in law
from Edinburgh University. She joined Barclays de Zoete Wedd Securities Limited
in 1991, where she initially worked as a specialist in structured debt products,
moving into the Pacific Rim equity division in 1992. She remained there until
1995 when she moved to IAI International where she had responsibility for
Pacific Region investment for U.S. institutional and retail funds. Ms. Pickard
joined AIB Govett Asset Management, an affiliate of AIB Govett, Inc., in 1996.
Delaware Global Bond Fund
Christopher A. Moth and Joanna Bates have primary responsibility for making
day-to-day investment decisions for Delaware Global Bond Fund. In making
investment decisions for Delaware Global Bond Fund, Mr. Moth and Ms. Bates
regularly consult with David G. Tilles.
Christopher A. Moth, Senior Portfolio Manager - Investment Strategy of Delaware
International Advisers Ltd., is a graduate of The City University London. He
joined Delaware International in 1992. He previously worked at the Guardian
Royal Exchange where he was responsible for technical analysis, quantitative
models and projections. Mr. Moth has been awarded the certificate in Finance and
Investment from the Institute of Actuaries in London. Mr. Moth became Co-Manager
of the Fund in January 1997.
Joanna Bates, Senior Portfolio Manager - Credit and Emerging Markets of Delaware
International Advisers, is a graduate of London University. She joined the Fixed
Income team at Delaware International in June 1997. Prior to that she was
Associate Director, Fixed Interest at Hill Samuel Investment Management Ltd.
which she joined in 1990. She had previously worked at Fidelity International
and Save & Prosper as a fund manager and analyst for global bond markets. Ms.
Bates is an associate of the Institute of Investment Management and Research.
Ms. Bates became Co-Manager of the Fund in July 1999.
David G. Tilles, Managing Director and Chief Investment Officer of Delaware
International, was educated at the Sorbonne, Warwick University and Heidelberg
University. Prior to joining Delaware International in 1990 as Managing Director
and Chief Investment Officer, he spent 16 years with Hill Samuel Investment
Management Ltd. in London, serving in a number of investment capacities. His
most recent position prior to joining Delaware International was Chief
Investment Officer of Hill Samuel Investment Management Ltd.
54
<PAGE>
Who's who?
This diagram shows the various organizations involved with managing,
administering, and servicing the Delaware Investments funds.
[GRAPHIC OMITTED: DIAGRAM SHOWING THE VARIOUS ORGANIZATIONS INVOLVED
WITH MANAGING, ADMINISTERING, AND SERVICING THE DELAWARE INVESTMENTS
FUNDS]
Board of Trustees
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Manager The Funds Custodian
Delaware Management Company The Chase Manhattan Bank
One Commerce Square 4 Chase Metrotech Center
Philadelphia, PA 19103 Brooklyn, NY 11245
Portfolio managers Distributor Service agent
(see page __ for details) Delaware Distributors, L.P.. Delaware Service Company, Inc.
1818 Market Street 1818 Market Street
Philadelphia, PA 19103 Philadelphia, PA 19103
</TABLE>
Shareholders
Board of Trustees A mutual fund is governed by a board of trustees which has
oversight responsibility for the management of the fund's business affairs.
Trustees establish procedures and oversee and review the performance of the
investment manager, the distributor and others that perform services for the
fund. At least 40% of the board of trustees must be independent of the fund's
investment manager and distributor. These independent fund trustees, in
particular, are advocates for shareholder interests.
Investment manager An investment manager is a company responsible for selecting
portfolio investments consistent with the objective and policies stated in the
mutual fund's Prospectus. The investment manager places portfolio orders with
broker/dealers and is responsible for obtaining the best overall execution of
those orders. A written contract between a mutual fund and its investment
manager specifies the services the manager performs. Most management contracts
provide for the manager to receive an annual fee based on a percentage of the
fund's average daily net assets. The manager is subject to numerous legal
restrictions, especially regarding transactions between itself and the funds it
advises.
55
<PAGE>
Portfolio managers Portfolio managers are employed by the investment manager to
make investment decisions for individual portfolios on a day-to-day basis.
Custodian Mutual funds are legally required to protect their portfolio
securities and most funds place them with a qualified bank custodian who
segregates fund securities from other bank assets.
Distributor Most mutual funds continuously offer new shares to the public
through distributors who are regulated as broker-dealers and are subject to NASD
Regulation, Inc. (NASD) rules governing mutual fund sales practices.
Service agent Mutual fund companies employ service agents (sometimes called
transfer agents) to maintain records of shareholder accounts, calculate and
disburse dividends and capital gains and prepare and mail shareholder statements
and tax information, among other functions. Many service agents also provide
customer service to shareholders.
Shareholders Like shareholders of other companies, mutual fund shareholders have
specific voting rights, including the right to elect trustees. Material changes
in the terms of a fund's management contract must be approved by a shareholder
vote, and funds seeking to change fundamental investment objectives or policies
must also seek shareholder approval.
About your account
Investing in the Funds
o Institutional Class shares are available for purchase only by the following:
o retirement plans introduced by persons not associated with brokers or
dealers that are primarily engaged in the retail securities business and
rollover individual retirement accounts from such plans;
o tax-exempt employee benefit plans of the manager or its affiliates and
securities dealer firms with a selling agreement with the distributor;
o institutional advisory accounts of the manager, or its affiliates and those
having client relationships with Delaware Investment Advisers, an affiliate
of the manager, or its affiliates and their corporate sponsors, as well as
subsidiaries and related employee benefit plans and rollover individual
retirement accounts from such institutional advisory accounts;
o a bank, trust company and similar financial institution investing for its
own account or for the account of its trust customers for whom such
financial institution is exercising investment discretion in purchasing
shares of the Class, except where the investment is part of a program that
requires payment to the financial institution of a Rule 12b-1 Plan fee; and
o registered investment advisers investing on behalf of clients that consist
solely of institutions and high net-worth individuals having at least
$1,000,000 entrusted to the adviser for investment purposes, but only if the
adviser is not affiliated or associated with a broker or dealer and derives
compensation for its services exclusively from its clients for such advisory
services.
56
<PAGE>
How to buy shares
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
Complete an investment slip and mail it with your check, made payable to the
fund and class of shares you wish to purchase, to Delaware Investments, 1818
Market Street, Philadelphia, PA 19103-3682. If you are making an initial
purchase by mail, you must include a completed investment application (or an
appropriate retirement plan application if you are opening a retirement account)
with your check.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
Ask your bank to wire the amount you want to invest to First Union Bank, ABA
#031201467, Bank Account number 2014128934013. Include your account number and
the name of the fund in which you want to invest. If you are making an initial
purchase by wire, you must call us at 800.510.4015 so we can assign you an
account number.
[GRAPHIC OMITTED: ILLUSTRATION OF AN EXCHANGE SYMBOL]
By exchange
You can exchange all or part of your investment in one or more funds in the
Delaware Investments family for shares of other funds in the family. Please keep
in mind, however, that you may not exchange your shares for Class B or Class C
shares. To open an account by exchange, call your Client Services Representative
at 800.510.4015.
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of purchasing shares,
including opening an account. Your adviser may charge a separate fee for this
service.
57
<PAGE>
About your account (continued)
How to buy shares (continued)
The price you pay for shares will depend on when we receive your purchase order.
If we or an authorized agent receive your order before the close of trading on
the New York Stock Exchange (normally 4:00 p.m. Eastern Time) on a business day,
you will pay that day's closing share price which is based on the Fund's net
asset value. If we receive your order after the close of trading, you will pay
the next business day's price. A business day is any day that the New York Stock
Exchange is open for business. We reserve the right to reject any purchase
order.
We determine each Fund's net asset value (NAV) per share at the close of trading
of the New York Stock Exchange each business day that the Exchange is open. We
calculate this value by adding the market value of all the securities and assets
in each Fund's portfolio, deducting all liabilities, and dividing the resulting
number by the number of shares outstanding. The result is the net asset value
per share. We price securities and other assets for which market quotations are
available at their market value. We price fixed-income securities on the basis
of valuations provided to us by an independent pricing service that uses methods
approved by the Board of Trustees. Any fixed-income securities that have a
maturity of less than 60 days we price at amortized cost. For all other
securities, we use methods approved by the board of trustees that are designed
to price securities at their fair market value.
58
<PAGE>
How to redeem shares
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
You can redeem your shares (sell them back to the fund) by mail by writing to:
Delaware Investments, 1818 Market Street, Philadelphia, PA 19103-3682. All
owners of the account must sign the request, and for redemptions of more than
$50,000, you must include a signature guarantee for each owner. You can also fax
your written request to 215.255.8864. Signature guarantees are also required
when redemption proceeds are going to an address other than the address of
record on an account.
[GRAPHIC OMITTED: ILLUSTRATION OF A TELEPHONE]
By telephone
You can redeem up to $50,000 of your shares by telephone. You may have the
proceeds sent to you by check, or, if you redeem at least $1,000 of shares, you
may have the proceeds sent directly to your bank by wire. Bank information must
be on file before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
You can redeem $1,000 or more of your shares and have the proceeds deposited
directly to your bank account the next business day after we receive your
request. Bank information must be on file before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of redeeming your shares. Your
adviser may charge a separate fee for this service.
59
<PAGE>
About your account (continued)
How to redeem shares (cont.)
If you hold your shares in certificates, you must submit the certificates with
your request to sell the shares. We recommend that you send your certificates by
certified mail.
When you send us a properly completed request to redeem or exchange shares
before the close of trading on the New York Stock Exchange (normally 4:00 p.m.
Eastern Time), you will receive the net asset value as determined on the
business day we receive your request. You may have to pay taxes on the proceeds
from your sale of shares. We will send you a check, normally the next business
day, but no later than seven days after we receive your request to sell your
shares. If you purchased your shares by check, we will wait until your check has
cleared, which can take up to 15 days, before we send your redemption proceeds.
Account minimum
If you redeem shares and your account balance falls below $250, the Fund may
redeem your account after 60 days' written notice to you.
Exchanges
You can exchange all or part of your shares for shares of the same class in
another Delaware Investments fund. If you exchange shares to a fund that has a
sales charge you will pay any applicable sales charges on your new shares. You
don't pay sales charges on shares that are acquired through the reinvestment of
dividends. You may have to pay taxes on your exchange. When you exchange shares,
you are purchasing shares in another fund so you should be sure to get a copy of
the fund's Prospectus and read it carefully before buying shares through an
exchange. You may not exchange your shares for Class B and Class C shares of the
funds in the Delaware Investments family.
Dividends, distributions and taxes
Dividends, if any, are paid quarterly for Delaware International Equity Fund,
Delaware Global Equity Fund and Delaware Global Bond Fund and annually for
Delaware Overseas Equity Fund for Delaware New Pacific Fund and Delaware
Emerging Markets Fund. Any capital gains are distributed annually. We
automatically reinvest all dividends and any capital gains.
Tax laws are subject to change, so we urge you to consult your tax adviser about
your particular tax situation and how it might be affected by current tax law.
The tax status of your dividends from these Funds is the same whether you
reinvest your dividends or receive them in cash. Distributions from a Fund's
long-term capital gains are taxable as capital gains, while distributions from
short-term capital gains and net investment income are generally taxable as
ordinary income. Any capital gains may be taxable at different rates depending
on the length of time the Fund held the assets. In addition, you may be subject
to state and local taxes on distributions.
We will send you a statement each year by January 31 detailing the amount and
nature of all dividends and capital gains that you were paid for the prior year.
Distributions declared in October, November or December but paid in January are
taxable as if they were paid in December.
The Funds are required to withhold 31% of your taxable distributions and
redemption proceeds if you do not provide your correct taxpayer identification
number (TIN) or certify that your TIN is correct, or if the IRS instructs us to
do so.
60
<PAGE>
Certain management considerations
Year 2000
As with other mutual funds, financial and business organizations and individuals
around the world, the Funds could be adversely affected if the computer systems
used by their 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." Each Fund is taking steps to obtain satisfactory
assurances that its major service providers are taking steps reasonably designed
to address the Year 2000 Problem on the computer systems that the service
providers use. However, there can be no assurance that these steps will be
sufficient to avoid any adverse impact on the business of the Funds. The
portfolio managers and investment professionals of the Funds consider Year 2000
compliance (including, but not limited to, any or all of the following: impact
on business, cost of compliance plan review and contingency planning, and vendor
compliance) in the securities selection and investment process. However, there
can be no guarantees that, even with their due diligence efforts, they will be
able to predict the affect of Year 2000 on any company or the performance of its
securities.
Investments by fund of funds
Delaware International Equity Fund, Delaware Emerging Markets Fund, Delaware
Overseas Equity Fund and Delaware Delaware New Pacific Fund accept investments
from the series portfolios of Delaware Group Foundation Funds, a fund of funds.
From time to time, a Fund may experience large investments or redemptions due to
allocations or rebalancings by Foundation Funds. While it is impossible to
predict the overall impact of these transactions over time, there could be
adverse effects on portfolio management. For example, the Fund may be required
to sell securities or invest cash at times when it would not otherwise do so.
These transactions could also have tax consequences if sales of securities
result in gains, and could also increase transactions costs or portfolio
turnover. The manager will monitor transactions by Foundation Funds and will
attempt to minimize any adverse effects on each Fund and Foundation Funds as a
result of these transactions.
Fund Companies
The Funds are separate series of the investment companies shown below.
Delaware Group Global & International Funds
Delaware International Equity Fund
Delaware Global Equity Fund
Delaware Emerging Markets Fund
Delaware Global Bond Fund
Delaware Group Adviser Funds
Delaware Overseas Equity Fund
Delaware New Pacific Fund
61
<PAGE>
Financial information
Financial highlights
The financial highlights table are intended to help you understand a Fund's
financial performance. All "per share" information reflects financial results
for a single Fund share. This information has been audited by Ernst & Young LLP,
whose report, along with each Fund's financial statements, is included in the
Fund's annual report, which is available upon request by calling 800.523.1918.
Information for Delaware Overseas Equity Fund and Delaware New Pacific Fund for
the fiscal periods ended on or before October 31, 1996 has been audited by the
<TABLE>
<CAPTION>
- ------------------------------------------------------ --------------------------------------------------------------
Institutional Class
Delaware International Equity Fund Year Ended 11/30
- ------------------------------------------------------ --------------------------------------------------------------
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
1999 1998 1997 1996 1995
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, $14.720 $14.710 $12.240 $11.970
beginning of period
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Income from investment operations
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Net investment income(1) 0.318 0.267 0.530 0.323
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Net realized and unrealized gain on investments and
foreign currencies 0.962 0.238 2.405 0.637
----- ----- ----- -----
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Total from investment operations 1.280 0.505 2.935 0.960
----- ----- ----- -----
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Less dividends and distributions
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Dividends from net investment income (0.475) (0.475) (0.320) (0.220)
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Distributions from net realized gain on investments (0.155) (0.020) (0.145) (0.470)
------- ------- ------- -------
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Total dividends and distributions (0.630) (0.495) (0.465) (0.690)
------- ------- ------- -------
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Net asset value, end of period $15.370 $14.720 $14.710 $12.240
======= ======= ======= =======
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Total return 9.10% 3.55%(2) 24.68%(2) 8.46%
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Ratios and supplemental data
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Net assets, end of period (000 omitted) $164,823 $71,177 $34,194 $11,660
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Ratio of expenses to average net assets 1.40% 1.40% 1.55% 1.77%
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Ratio of expenses to average net assets
prior to expense limitation 1.40% 1.41% 1.65% 1.77%
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Ratio of net investment income to average net assets 2.10% 1.76% 4.00% 2.87%
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Ratio of net investment income to average net assets
prior to expense limitation 2.10% 1.75% 3.90% 2.87%
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
Portfolio turnover 5% 8% 9% 21%
- ------------------------------------------------------ ------------- ------------- ----------- ----------- ----------
</TABLE>
(1) Per share information for the years ended November 30, 1996, 1997 and 1998
was based on the average shares outstanding method.
(2) Total return reflects expense limitations in effect for the Fund.
62
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------- ----------------------------------------------------- ------------
<S> <C> <C> <C> <C> <C>
Institutional Class
Year Ended 11/30 Period
- ----------------------------------------------------- ----------------------------------------------------- 12/27/94(2)
through
Delaware Global Equity Fund 1999 1998(4) 1997 1996 11/30/95
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Net asset value, $14.100 $13.340 $11.930 $10.000
beginning of period
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Income from investment operations
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Net investment income(1) 0.329 0.478 0.567 0.473
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Net realized and net unrealized gain on investments
and foreign currencies 0.816 0.857 1.533 1.697
----- ----- ----- -----
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Total from investment operations 1.145 1.335 2.100 2.170
----- ----- ----- -----
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Less dividends and distributions
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Dividends from net investment income (0.405) (0.525) (0.420) (0.240)
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Distributions from net realized gain on investments (1.230) (0.050) (0.270) None
------- ------- ------- ----
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Total dividends and distributions (1.635) (0.575) (0.690) (0.240)
------- ------- ------- -------
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Net asset value, end of period $13.610 $14.100 $13.340 $11.930
======= ======= ======= =======
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Total return(3) 9.07% 10.34% 18.38% 21.88%
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Ratios and supplemental data
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Net assets, end of period (000 omitted) $2,627 $2,310 $2,203 $2,191
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Ratio of expenses to average net assets 1.25% 0.95% 0.95% 0.95%
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Ratio of expenses to average net assets
Prior to expense limitation 1.69% 1.86% 2.42% 7.25%
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Ratio of net investment income to average net assets 2.47% 3.54% 4.43% 5.05%
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Ratio of net investment income (loss) to average
net assets 2.03% 2.63% 2.96% (1.25%)
Prior to expense limitation
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
Portfolio turnover 90% 74% 34% 57%
- ----------------------------------------------------- -------------- ------------- ------------ ----------- ------------
</TABLE>
(1) Per share information for the years ended November 30, 1997 and 1998 was
based on the average shares outstanding method.
(2) Date of commencement of trading; ratios have been annualized but total
return has not been annualized.
(3) Total return reflects expense limitations in effect for the Fund.
(4) On July 21, 1998, the Fund was renamed Delaware Global Equity Fund (formerly
the Global Assets Fund) and its investment focus was changed, eliminating
the Fund's bond component in favor of stocks.
63
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------- -------------------------------------------------------------
Institutional Class Shares
Year Ended 10/31
- -------------------------------------------------------------- -------------------------------------------------------------
Delaware Overseas Equity Fund 1999 1998(5) 1997(5) 1996(6) 1995
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.480 $12.320 $11.440 $11.020
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Income (loss) from investment operations
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Net investment income (loss) 0.123 (0.020) (0.060) 0.040
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Net realized and unrealized gain (loss) on investments
and foreign currencies (1.513) 0.950 0.963 0.410
------- ----- ----- -----
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Total from investment operations (1.390) 0.930 0.903 0.450
------- ----- ----- -----
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Less dividends and distributions
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Dividends from net investment income (0.520) (0.440) (0.023) (0.030)
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Distributions from net realized gain on investments (1.640) (0.330) none none
------- ------- ---- ----
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Total dividends and distributions (2.160) (0.770) (0.023) (0.030)
------- ------- ------- -------
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Net asset value, end of period $8.930 $12.480 $12.320 $11.440
====== ======= ======= =======
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Total return(2) (12.82%)(3) 8.04% 7.91%(3) 4.22%(3)
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Ratios and supplemental data
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Net assets, end of period (000 omitted) $59 $60 $284 $161
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Ratio of expenses to average net assets 1.53% 1.50% 1.50% 1.50%
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Ratio of expenses to average net assets prior to
expense limitation 3.45% N/A 2.28% 2.61%
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Ratio of net investment income (loss) to average net 1.23% (0.15%) (0.19%) 0.40%
assets
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Ratio of net investment loss to average net assets
prior to expense limitation (0.69%) N/A (0.97%) (0.71%)
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
Portfolio turnover 87% 18% 21% 9%
- -------------------------------------------------------------- -------------- ------------ ---------- ----------- ----------
</TABLE>
(1) Commencement of operations.
(2) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions.
(3) Total return reflects expense limitations in effect during the period.
(4) Annualized.
(5) To calculate the net investment income per share, we have used the "average
shares outstanding method." This means that we have divided the total net
investment income by the average number of shares outstanding during the
period to determine the net investment income per share.
(6) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
64
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------- --------------- ------------------------------------------
Institutional Class
Year Ended 11/30
- ---------------------------------------------------- --------------- - ------------- ------------ -------------
Period
6/10/96(2)
through
Delaware Emerging Markets Fund 1999 1998 1997 11/30/96
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $10.250 $9.990 $10.000
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Income (loss) from investment operations
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Net investment income(1) 0.151 0.098 0.047
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Net realized and unrealized gain (loss) on
investments and foreign currencies (3.191) 0.262 (0.057)
------- ----- -------
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Total from investment operations (3.040) 0.360 (0.010)
------- ----- -------
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Less dividends and distributions
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Dividends from net investment income (0.055) (0.025) None
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Distributions from net realized gain on investments (0.605) (0.075) None
------- ------- ----
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Total dividends and distributions (0.660) (0.100) None
------- ------- ----
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Net asset value, end of period $6.550 $10.250 $9.990
====== ======= ======
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Total return(3) (31.55%) 3.64% (0.10%)
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Ratios and supplemental data
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Net assets, end of period (000 omitted) $1,117 $1,916 $3,717
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Ratio of expenses to average net assets 1.70% 1.70% 1.70%
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Ratio of expenses to average net assets
Prior to expense limitation 3.61% 2.72% 3.80%
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Ratio of net investment income to average net
assets 1.84% 0.82% 0.47%
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Ratio of net investment income (loss) to average
net assets (0.07%) (0.20%) (1.63%)
Prior to expense limitation
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Portfolio turnover 47% 65% 36%
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Volatility Period
6/10/96(2)
Volatility, as indicated by year-by-year total through
return(1) 1998 1997 11/30/96
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
Volatility chart is not part of the Financial
highlights and has not been audited by Ernst &
Young LLP. (31.55%) 3.64% (0.10%)
- ---------------------------------------------------- -------------- ---------------- ------------ -------------
</TABLE>
(1) Per share information was based on the average shares outstanding method.
(2) Date of commencement of trading; ratios have been annualized but total
return has not been annualized.
(3) Total return reflects expense limitations in effect for the Fund.
65
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------ ------------ ---------- ---------------------------------
Institutional Class
Shares
Year Ended 10/31
- ------------------------------------------------------------------ ------------ ---------- ---------------------------------
Delaware New Pacific Fund 1999 1998(4) 1997(4) 1996(5) 1995
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $7.440 $9.530 $8.770 $10.480
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Income (loss) from investment operations
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Net investment income (loss) 0.024 0.020 (0.050) (0.010)
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Net realized and unrealized gain (loss) on investments and
foreign currencies (2.719) (1.960) 0.820 (1.410)
------- ------- ----- -------
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Total from investment operations (2.695) (1.940) 0.770 (1.420)
------- ------- ----- -------
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Less dividends and distributions
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Dividends from net investment income (0.055) (0.150) (0.010) none
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Distributions from net realized gain on investments none none None (0.290)
---- ---- ---- -------
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Total dividends and distributions (0.055) (0.150) (0.010) (0.290)
------- ------- ------- -------
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Net asset value, end of period $4.690 $7.440 $9.530 $8.770
====== ====== ====== ======
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Total return(2) (36.39%) (20.79%) 8.77% (13.65%)
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Ratios and supplemental data
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Net assets, end of period (000 omitted) $219 $250 $119 $62
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Ratio of expenses to average net assets 1.60% 1.50% 1.50% 1.50%
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Ratio of expenses to average net assets prior to expense
limitation 2.93% 1.56% 2.45% 3.38%
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Ratio of net investment income (loss) to average net assets 0.45% 0.22% (0.09%) (0.16%)
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Ratio of net investment income (loss) to average net assets
prior to Expense limitation (0.88%) 0.16% (1.04%) (2.04%)
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
Portfolio turnover 188% 178% 163% 163%
- ------------------------------------------------------------------ ------------ ---------- ---------- ----------- ----------
</TABLE>
(1) Commencement of operations.
(2) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions. Total return
also reflects expense limitations in effect during the period.
(3) Annualized.
(4) The average shares outstanding method has been applied for per share
information.
(5) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
66
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------- --------------------------------------------------- ------------
Period
11/27/94(2)
Institutional Class through
Delaware Global Bond Fund Year Ended 11/30 11/30/95
- ------------------------------------------------------- --------------------------------------------------- ------------
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
1999 1998 1997 1996
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $10.810 $11.520 $11.270 $10.000
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Income from investment operations
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Net investment income(1) 0.627 0.658 0.788 0.782
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Net realized and unrealized gain (loss) on (0.017) (0.515) 0.732 1.088
------- ------- ----- -----
investments and foreign currencies
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Total from investment operations 0.610 0.143 1.520 1.870
----- ----- ----- -----
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Less dividends and distributions
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Dividends from net investment income (0.460) (0.813) (0.910) (0.600)
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Distributions from net realized gain on investments (0.030) (0.040) (0.360) none
------- ------- ------- ----
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Total dividends and distributions (0.490) (0.853) (1.270) (0.600)
------- ------- ------- -------
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Net asset value, end of period $10.930 $10.810 $11.520 $11.720
======= ======= ======= =======
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Total return(3) 5.88% 1.45% 14.68% 19.21%
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Ratios and supplemental data
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Net assets, end of period (000 omitted) $12,937 $11,278 $6,707 $897
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Ratio of expenses to average net assets 0.95% 0.95% 0.95% 0.95%
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Ratio of expenses to average net assets
Prior to expense limitation 1.29% 1.74% 4.70% 12.04%
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Ratio of net investment income to average net assets 5.88% 6.06% 7.12% 8.00%
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Ratio of net investment income (loss) to average net
assets 5.54% 5.27% 3.37% (3.09%)
Prior to expense limitation
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
Portfolio turnover 93% 76% 42% 98%
- ------------------------------------------------------- ------------ ------------- ------------ ----------- ------------
</TABLE>
(1) Per share information for the years ended November 30, 1996, 1997 and 1998
was based on the average shares outstanding method.
(2) Date of commencement of trading; ratios have been annualized but total
return has not been annualized.
(3) Total return reflects expense limitations in effect for the Fund.
67
<PAGE>
How to read the Financial highlights
Net investment income
Net investment income includes dividend and interest income earned from a fund's
securities; it is after expenses have been deducted.
Net realized and unrealized gain (loss) on investments and foreign currencies
A realized gain on investments occurs when we sell an investment at a profit,
while a realized loss on investments occurs when we sell an investment at a
loss. When an investment increases or decreases in value but we do not sell it,
we record an unrealized gain or loss. The amount of realized gain per share that
we pay to shareholders is listed under "Less dividends and
distributions-Distributions from net realized gain on investments." Realized and
unrealized gain (loss) on foreign currencies represent changes in the U.S.
dollar value of assets (including investments) and liabilities denominated in
foreign currencies as a result of changes in foreign currency exchange rates.
Net asset value (NAV)
This is the value of a mutual fund share, calculated by dividing the net assets
by the number of shares outstanding.
Total return
This represents the rate that an investor would have earned or lost on an
investment in a fund. In calculating this figure for the financial highlights
table, we include applicable fee waivers, exclude front-end and contingent
deferred sales charges, and assume the shareholder has reinvested all dividends
and realized gains.
Net assets
Net assets represent the total value of all the assets in a fund's portfolio,
less any liabilities, that are attributable to that class of the fund.
Ratio of expenses to average net assets
The expense ratio is the percentage of net assets that a fund pays annually for
operating expenses and management fees. These expenses include accounting and
administration expenses, services for shareholders, and similar expenses.
Ratio of net investment income to average net assets
We determine this ratio by dividing net investment income by average net assets.
Portfolio turnover rate
This figure tells you the amount of trading activity in a fund's portfolio. For
example, a fund with a 50% turnover has bought and sold half of the value of its
total investment portfolio during the stated period.
68
<PAGE>
[begin glossary runs along the bottom of the pages ]
How to use this glossary
Words found in the glossary are printed in boldface only the first time they
appear in the Prospectus. So if you would like to know the meaning of a word
that isn't in boldface, you might still find it in the glossary.
Amortized cost
Amortized cost is a method used to value a fixed income security that starts
with the face value of the security and then adds or subtracts from that value
depending on whether the purchase price was greater or less than the value of
the security at maturity. The amount greater or less than the par value is
divided equally over the time remaining until maturity.
Average maturity
An average of when the individual bonds and other debt securities held in a
portfolio will mature.
Bond
A debt security, like an IOU, issued by a company, municipality or government
agency. In return for lending money to the issuer, a bond buyer generally
receives fixed periodic interest payments and repayment of the loan amount on a
specified maturity date. A bond's price changes prior to maturity and is
inversely related to current interest rates. When interest rates rise, bond
prices fall, and when interest rates fall, bond prices rise.
Bond ratings
Independent evaluations of creditworthiness, ranging from Aaa/AAA (highest
quality) to D (lowest quality). Bonds rated Baa/BBB or better are considered
investment grade. Bonds rated Ba/BB or lower are commonly known as junk bonds.
See also Nationally recognized statistical rating organization. See also
Nationally recognized statistical rating organization.
Capital
The amount of money you invest.
Capital appreciation
An increase in the value of an investment.
Capital gains distributions
Payments to mutual fund shareholders of profits (realized gains) from the sale
of a fund's portfolio securities. Usually paid once a year; may be either
short-term gains or long-term gains.
Commission
The fee an investor pays to a financial adviser for investment advice and help
in buying or selling mutual funds, stocks, bonds or other securities.
Compounding
Earnings on an investment's previous earnings.
Consumer Price Index (CPI)
Measurement of U.S. inflation; represents the price of a basket of commonly
purchased goods.
Contingent deferred sales charge (CDSC)
Fee charged by some mutual funds when shares are redeemed (sold back to the
fund) within a set number of years; an alternative method for investors to
compensate a financial adviser for advice and service, rather than an up-front
commission.
Corporate bond
A debt security issued by a corporation. See Bond.
69
<PAGE>
Currency exchange rates
The price at which one country's currency can be converted into another's. This
exchange rate varies almost daily according to a wide range of political,
economic, and other factors.
Depreciation
A decline in an investment's value.
Diversification
The process of spreading investments among a number of different securities,
asset classes or investment styles to reduce the risks of investing.
Dividend distribution
Payments to mutual fund shareholders of dividends passed along from the fund's
portfolio of securities.
Duration
A measurement of a fixed-income investment's price volatility. The larger the
number, the greater the likely price change for a given change in interest
rates.
Expense ratio
A mutual fund's total operating expenses, expressed as a percentage of its total
net assets. Operating expenses are the costs of running a mutual fund, including
management fees, offices, staff, equipment and expenses related to maintaining
the fund's portfolio of securities and distributing its shares. They are paid
from the fund's assets before any earnings are distributed to shareholders.
Financial adviser
Financial professional (e.g., broker, banker, accountant, planner or insurance
agent) who analyzes clients' finances and prepares personalized programs to meet
objectives.
Fixed-income securities
With fixed-income securities, the money you originally invested is paid back at
a pre-specified maturity date. These securities, which include government,
corporate or municipal bonds, as well as money market securities, typically pay
a fixed rate of return (often referred to as interest). See Bonds.
Inflation
The increase in the cost of goods and services over time. U.S. inflation is
frequently measured by changes in the Consumer Price Index (CPI).
Investment goal
The objective, such as long-term capital growth or high current income, that a
mutual fund pursues.
Management fee
The amount paid by a mutual fund to the investment adviser for management
services, expressed as an annual percentage of the fund's average daily net
assets.
Market capitalization
The value of a corporation determined by multiplying the current market price of
a share of common stock by the number of shares held by shareholders. A
corporation with one million shares outstanding and the market price per share
of $10 has a market capitalization of $10 million.
Maturity
The length of time until a bond issuer must repay the underlying loan principal
to bondholders.
70
<PAGE>
Morgan Stanley Capital International EAFE (Europe, Australia, Far East) Index
The Morgan Stanley Capital International EAFE Stock Index is an international
index including stocks traded on 16 exchanges in Europe, Australia and the Far
East, weighted by capitalization. The index is unmanaged and doesn't include the
actual costs of buying, selling, and holding securities.
Morgan Stanley Capital International Emerging Markets Free Index The Morgan
Stanley International Emerging Markets Free Index is a U.S. dollar dominated
index comprised of stocks of countries with below average per capita GDP as
defined by the World Bank, foreign ownership restrictions, a tax regulatory
environment, and greater perceived market risk than in the developed countries.
Within this index, MSCI aims to capture an aggregate of 60% of local market
capitalization.
Morgan Stanley Capital International World Index
The Morgan Stanley Capital International World Index is an international index
that includes stocks traded in Europe, Australia, the Far East, plus the U.S.,
and Canada, and South Africa, weighted by capitalization.
Morgan Stanley Pacific Index
A total return index, reported in U.S. dollars, based on share prices and
reinvested gross dividends of approximately 500 companies (only those securities
deemed sufficiently liquid for trading by investors) from the following 6
countries: Australia, Hong Kong, Japan, Malaysia, New Zealand, Singapore.
NASD Regulation, Inc. (NASD)
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the actions of
its members.
Nationally recognized statistical rating organization (NRSRO) A company that
assesses the credit quality of bonds, commercial paper, preferred and common
stocks and municipal short-term issues, rating the probability that the issuer
of the debt will meet the scheduled interest payments and repay the principal.
Ratings are published by such companies as Moody's Investors Service (Moody's),
Standard & Poor's Ratings Group (S&P), Duff & Phelps, Inc.
(Duff), and Fitch IBCA, Inc. (Fitch).
Net asset value (NAV)
The daily dollar value of one mutual fund share. Equal to a fund's net assets
divided by the number of shares outstanding.
Preferred stock
Preferred stock has preference over common stock in the payment of dividends and
liquidation of assets. Preferred stocks also often pay dividends at a fixed rate
and are sometimes convertible into common stock.
Price/earnings ratio
A measure of a stock's value calculated by dividing the current market price of
a share of stock by its annual earnings per share. A stock selling for $100 per
share with annual earnings per share of $5 has a P/E of 20.
Principal
Amount of money you invest (also called capital). Also refers to a bond's
original face value, due to be repaid at maturity.
Prospectus
The official offering document that describes a mutual fund, containing
information required by the SEC, such as investment objectives, policies,
services and fees.
Redeem
To cash in your shares by selling them back to the mutual fund.
Risk
Generally defined as variability of value; also credit risk, inflation risk,
currency and interest rate risk. Different investments involve different types
and degrees of risk.
71
<PAGE>
Sales charge
Charge on the purchase or redemption of fund shares sold through financial
advisers. May vary with the amount invested. Typically used to compensate
advisers for advice and service provided.
Salomon Smith Barney World Government Bond Index
The WGBI is a market-capitalization weighted benchmark that tracks the
performance of the 18 Government bond markets of Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, Portugal, Spain, Sweden, Switzerland, the United Kingdom, and the
United States.
SEC (Securities and Exchange Commission)
Federal agency established by Congress to administer the laws governing the
securities industry, including mutual fund companies.
Share classes
Different classifications of shares; mutual fund share classes offer a variety
of sales charge choices.
Signature guarantee
Certification by a bank, brokerage firm or other financial institution that a
customer's signature is valid; signature guarantees can be provided by members
of the STAMP program.
Standard deviation
A measure of an investment's volatility; for mutual funds, measures how much a
fund's total return has typically varied from its historical average.
Statement of Additional Information (SAI)
The document serving as "Part B" of a fund's prospectus that provides more
detailed information about the fund's organization, investments, policies and
risks.
Stock
An investment that represents a share of ownership (equity) in a corporation.
Stocks are often referred to as "equities."
Total return
An investment performance measurement, expressed as a percentage, based on the
combined earnings from dividends, capital gains and change in price over a given
period.
Uniform Gift to Minors Act and Uniform Transfers to Minors Act Federal and state
laws that provide a simple way to transfer property to a minor with special tax
advantages.
Volatility
The tendency of an investment to go up or down in value by different magnitudes.
Investments that generally go up or down in value in relatively small amounts
are considered "low volatility" investments, whereas those investments that
generally go up or down in value in relatively large amounts are considered
"high volatility" investments.
[end glossary]
72
<PAGE>
Additional information about the Funds' investments is available in the Funds'
annual and semi-annual reports to shareholders. In the Funds' shareholder
reports, you will find a discussion of the market conditions and investment
strategies that significantly affected the Funds' performance during the report
period. You can find more detailed information about the Funds in the current
Statement of Additional Information, which we have filed electronically with the
Securities and Exchange Commission (SEC) and which is legally a part of this
Prospectus. If you want a free copy of the Statement of Additional Information,
the annual or semi-annual report, or if you have any questions about investing
in these Funds, you can write to us at 1818 Market Street, Philadelphia, PA
19103-3682, or call toll-free 800.523.1918. You may also obtain additional
information about the Funds from your financial adviser.
You can find reports and other information about the Funds on the SEC web site
(http://www.sec.gov), or you can get copies of this information, after payment
of a duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-6009. Information about the Funds, including their
Statement of Additional Information, can be reviewed and copied at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
You can get information on the public reference room by calling the SEC at
1.800.SEC.0330.
Web site
www.delawareinvestments.com
E-mail
[email protected]
Client Services Representative
800.510.4015
Delaphone Service
800.362.FUND (800.362.3863)
For convenient access to account information or current performance information
on all Delaware Investments Funds seven days a week, 24 hours a day, use this
Touch-Tone service.
Delaware Group Global & International Funds, Investment Company Act
file number: 811-6324
Delaware Group Adviser Funds, Investment Company Act file number: 811-7972
DELAWARE
INVESTMENTS
------------
Philadelphia * London
<TABLE>
<CAPTION>
- ---------------------------------------------------------- --------------------- -----------------------
Fund Symbols
- ---------------------------------------------------------- --------------------- -----------------------
Fund Name CUSIP number NASDAQ symbol
- ---------------------------------------------------------- --------------------- -----------------------
- ---------------------------------------------------------- --------------------- -----------------------
<S> <C> <C>
Delaware International Equity Fund 245914403 DEQIX
- ---------------------------------------------------------- --------------------- -----------------------
Delaware Global Equity Fund 245914601 DGAIX
- ---------------------------------------------------------- --------------------- -----------------------
Delaware Overseas Equity Fund 245917851 DEWIX
- ---------------------------------------------------------- --------------------- -----------------------
Delaware Emerging Markets Fund 245914817 DEMIX
- ---------------------------------------------------------- --------------------- -----------------------
Delaware New Pacific Fund 245917810 DENIX
- ---------------------------------------------------------- --------------------- -----------------------
Delaware Global Bond Fund 245914502 DGBIX
- ---------------------------------------------------------- --------------------- -----------------------
</TABLE>
P-002 [--] PP 1/00
<PAGE>
DELAWARE
INVESTMENTS
-----------
Philadelphia * London
Delaware Global Opportunities Fund
(formerly Global Equity Fund)
Delaware International Small Cap Fund
Delaware New Europe Fund
Delaware Latin America Fund
Class A * Class B * Class C
Prospectus
January 31, 2000
International and Global Funds
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy of this Prospectus, and any
representation to the contrary is a criminal offense.
1
<PAGE>
Table of Contents
Fund Profiles page
Delaware Global Opportunities Fund
Delaware International Small Cap Fund
Delaware New Europe Fund
Delaware Latin America Fund
How we manage the Funds page
Our investment strategies
The securities we typically invest in
The risks of investing in the Funds
Who manages the Funds page
Investment manager and sub-adviser
Portfolio managers
Fund administration (Who's who) page
About your account page
Investing in the Funds
Choosing a share class
How to reduce your sales charge
How to buy shares
Retirement plans
How to redeem shares
Account minimums
Special services
Exchanges
Dividends, Distributions and Taxes
Other investment policies and risk considerations page
Financial highlights page
Glossary page
Appendix A - Bond ratings page
2
<PAGE>
Profile: Delaware Global Opportunities Fund*
What are the Fund's goals?
Delaware Global Opportunities Fund's investment goal is to achieve long-term
growth without undue risk to principal. Although the Fund will strive to achieve
its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
Delaware Global Opportunities Fund seeks to achieve its objective by investing
in securities that provide the potential for capital appreciation and income.
The Fund's primary focus is to invest in domestic and foreign equity securities.
Under normal market conditions, the Fund will invest at least 65% of its assets
in equity 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, one which may be the United States.
In selecting investments for the Fund,
o We strive to identify well managed companies that are undervalued based on
such factors as assets, earnings, dividends or growth potential.
o In order to compare the value of different stocks, we consider whether the
future dividends on a stock are expected to increase faster than, slower than,
or in line with the level of inflation. We then estimate what we think the
value of those anticipated future dividends would be worth if they were being
paid today. We believe this gives us an estimate of what the stock's true
value is.
o We generally prefer to purchase securities in countries where the currency is
undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine whether
a particular currency is overvalued or undervalued by comparing the amount of
goods and services that a dollar will buy in the United States to the amount
of 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
overvalued, and when the dollar buys more, the foreign currency may be
undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease, sometimes rapidly and unpredictably, according to changes in the value
of the Fund's investments. This Fund will be affected primarily by declines in
stock prices that can be caused by a drop in the stock market, an adverse change
in interest rates or poor performance in specific industries or companies.
Because the Fund invests in international securities in both established and
developing countries, it will be affected by international investment risks
related to currency valuations, political instability, economic instability, or
less regulatory standards. For a more complete discussion of risk, please turn
to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for a portfolio that holds equity securities from both
U.S. and foreign countries and is permitted to invest a portion of its
assets in U.S. and foreign fixed-income securities.
o Investors seeking a measure of capital growth and income.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors who are unwilling to accept risks of investing in foreign
securities.
* The Delaware Global Opportunities Fund was formerly known as Global Equity
Fund. The change in the Fund's name became effective on July 21, 1998.
3
<PAGE>
How has the Delaware Global Opportunities Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show how returns for the Fund's Class A shares for the past two
calendar years, as well as the average annual returns for these shares for the
one-year period and since inception. The Fund's past performance is not
necessarily an indication of how it will perform in the future. The returns
reflect voluntary expense caps. The returns would be lower without the voluntary
caps.
Year-by-year total return
- -------------------------
1998 11.05%
- -------------------------
1999
- -------------------------
During the periods illustrated in this bar chart, Class A's highest quarterly
return was 00.00% for the quarter ended _________________ and its lowest
quarterly return was 00.00% for the quarter ended __________________.
The maximum Class A sales charge of 5.75%, which is normally deducted when you
purchase shares, is not reflected in the total returns above. If this fee were
included, the returns would be less than those shown. The average annual returns
in the table shown below do include the sales charge.
Average annual returns for periods ending 12/31/99
------------------------------------------------------------------
CLASS A Morgan Stanley
World Index
------------------------------------------------------------------
1 year
------------------------------------------------------------------
Since inception
(7/22/97)
------------------------------------------------------------------
The Fund's returns are compared to the performance of the Morgan Stanley World
Index. You should remember that unlike the Fund, the index is unmanaged and
doesn't reflect the costs of operating a mutual fund, such as the costs of
buying, selling, and holding the securities.
What are the Delaware Global Opportunities Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
CLASS A B C
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) imposed on
purchases as a percentage of offering price 5.75% none none
- -------------------------------------------------------------------------------------------------
Maximum contingent deferred sales charge (load)
as a percentage of original purchase price or
redemption price, whichever is lower none(1) 5%(2) 1%(3)
- -------------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
reinvested dividends none none none
- -------------------------------------------------------------------------------------------------
Redemption fees none none none
- -------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
Annual fund operating expenses are deducted from the Fund's assets.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fees
- --------------------------------------------------------------------------------------
Distribution and service (12b-1) fees(4) 0.30% 1.00% 1.00%
- --------------------------------------------------------------------------------------
Other expenses
- --------------------------------------------------------------------------------------
Total operating expenses(5)
- --------------------------------------------------------------------------------------
</TABLE>
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(6) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
<TABLE>
<CAPTION>
CLASS(7) A B B C C
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
(if (if
redeemed) (redeemed)
- -----------------------------------------------------------------------------------------------
1 year
- -----------------------------------------------------------------------------------------------
3 years
- -----------------------------------------------------------------------------------------------
5 years
- -----------------------------------------------------------------------------------------------
10 years
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) A purchase of Class A shares of $1 million or more may be made at net asset
value. However, if you buy the shares through a financial adviser who is
paid a commission, a contingent deferred sales charge will apply to certain
redemptions. Additional Class A purchase options that involve a contingent
deferred sales charge may be permitted from time to time and will be
disclosed in the Prospectus if they are available.
5
<PAGE>
(2) If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 5%, which declines to 4%
during the second year, 3% during the third and fourth years, 2% during the
fifth year, 1% during the sixth year, and 0% thereafter.
(3) Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(4) The distributor has agreed to waive the 12b-1 fees for each Class through
May 31, 2000.
(5) The investment manager has agreed to waive fees and pay expenses from the
commencement of the Fund's operations through May 31, 2000, in order to
prevent total operating expenses (excluding any taxes, interest, brokerage
fees, extraordinary expenses and 12b-1 fees) from exceeding 0.80% of average
daily net assets. The fees and expenses shown in the table above do not
reflect this voluntary expense cap. The following table shows operating
expenses which are based on the most recently completed fiscal year and
reflect the manager's and distributor's current fee waivers and payments.
- --------------------------------------------------------------------------------
Fund operating expenses including voluntary expense caps in
place through May 31, 2000
- --------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------
Management fees
- --------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------
Other expenses
- --------------------------------------------------------------------------------
Total operating expenses
- --------------------------------------------------------------------------------
(6) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show. This example does not reflect the voluntary expense caps described in
footnotes 4 and 5.
(7) The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expenses of the Class A shares.
6
<PAGE>
Profile: Delaware International Small Cap Fund
What are the Fund's goals?
Delaware International Small Cap Fund seeks long-term capital appreciation.
Although, the Fund will strive to achieve its goal, there is no assurance that
it will.
What are the Fund's main investment strategies?
Delaware International Small Cap Fund seeks to achieve its objective by
investing primarily in smaller non-U.S. companies, which may include companies
located or operating in established or emerging countries. Under normal
circumstances, at least 65% of the Fund's total assets will be invested in
equity securities of companies 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. The current market capitalization of the
companies in which the Fund intends to invest primarily will generally be $1.5
billion or less (at the time of purchase).
By focusing on smaller, non-U.S. companies, the Fund seeks to identify equity
securities of emerging and other growth-oriented companies which in the opinion
of the manage, are responsive to changes within their markets, and have the
fundamental characteristics to support growth. We will seek to identify changing
and dominant trends within the relevant markets, and will purchase securities of
companies which it believes will benefit from these trends. In addition, we will
consider the financial strength of the company or its industry. We may invest in
smaller capitalization companies that may be temporarily out of favor or
overlooked by securities analysts and whose value, therefore, may not be fully
recognized by the market.
The Fund may invest up to 15% of its net assets in high yield, high risk foreign
fixed-income securities.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease, sometimes rapidly and unpredictably, according to changes in the value
of the Fund's investments. This Fund will be affected primarily by declines in
stock and bond prices which can be caused by a drop in the stock or bond market,
an adverse change in interest rates or poor performance in specific industries
or companies. Investments in foreign securities whether equity or fixed-income,
involve special risks including those related to currency fluctuations, as well
as to political, economic and social situations different from and potentially
more volatile than those in the U.S. In addition, the accounting, tax and
financial reporting standards of foreign countries are different from and may be
less reliable or comprehensive than those relating to U.S. issuers. The high
yield, high risk foreign fixed-income securities that the Fund may invest in are
subject to substantial risks, particularly during periods of economic downturns
or rising interest rates. For a more complete discussion of risk, please turn to
page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for growth potential from a portfolio of foreign
securities.
o Investors willing to accept the risks associated with foreign investing as
well as investments in smaller-sized issuers, some of which may be
speculative.
Who should not invest in the Fund o Investors with short-term financial goals.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors whose primary goal is income.
o Investors who are unwilling to accept risks of investing in foreign
securities.
7
<PAGE>
What are the Delaware International Small Cap Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
CLASS A B C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) imposed on 5.75% none none
purchases as apercentage of offering price
- ------------------------------------------------------------------------------------------------
Maximum contingent deferred sales charge none(1) 5%(2) 1%(3)
(load) as a percentage of original purchase
price or redemption price, whichever is lower
- ------------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on none none none
reinvested dividends
- ------------------------------------------------------------------------------------------------
Redemption fees none none none
- ------------------------------------------------------------------------------------------------
</TABLE>
Annual fund operating expenses are deducted from the Fund's assets.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fees
- --------------------------------------------------------------------------------------
Distribution and service (12b-1) fees (4) 0.30% 1.00% 1.00%
- --------------------------------------------------------------------------------------
Other expenses
- --------------------------------------------------------------------------------------
Total operating expenses (5)
- --------------------------------------------------------------------------------------
</TABLE>
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown. (6) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
8
<PAGE>
<TABLE>
<CAPTION>
CLASS (7) A B B C C
- -----------------------------------------------------------------------------------------------
(if (if
redeemed) redeemed)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 year
- -----------------------------------------------------------------------------------------------
3 years
- -----------------------------------------------------------------------------------------------
5 years
- -----------------------------------------------------------------------------------------------
10 years
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) A purchase of Class A shares of $1 million or more may be made at net asset
value. However, if you buy the shares through a financial adviser who is
paid a commission, a contingent deferred sales charge will apply to certain
redemptions. Additional Class A purchase options that involve a contingent
deferred sales charge may be permitted from time to time and will be
disclosed in the Prospectus if they are available.
(2) If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 5%, which declines to 4%
during the second year, 3% during the third and fourth years, 2% during the
fifth year, 1% during the sixth year, and 0% thereafter.
(3) Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(4) The distributor has agreed to waive the 12b-1 fees through May 31, 2000.
9
<PAGE>
(5) The investment manager has agreed to waive fees and pay expenses through May
31, 2000, in order to prevent total operating expenses (excluding any taxes,
interest, brokerage fees, extraordinary expenses and 12b-1 fees) from
exceeding 1.25% of average daily net assets. The fees and expenses shown in
the table above do not reflect this voluntary expense cap. The following
table shows operating expenses which are based on the most recently
completed fiscal year and reflect the manager's and distributor's current
fee waivers and payments.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Fund operating expenses including voluntary
expense caps in place through May 31, 2000
- --------------------------------------------------------------------------------------
CLASS A B C
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fees
- --------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------------
Other expenses
- --------------------------------------------------------------------------------------
Total operating expenses 1.25% 1.25% 1.25%
- --------------------------------------------------------------------------------------
</TABLE>
(6) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show. In addition, this example does not reflect the voluntary expense cap
described in footnotes 4 and 5.
(7) The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expenses of the Class A shares.
10
<PAGE>
Profile: Delaware New Europe Fund
What are the Fund's goals?
The Delaware New Europe Fund seeks long-term capital appreciation. Although, the
Fund will strive to achieve its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
We invest primarily in equity securities of European countries. Under normal
market conditions, at least 65% of New Europe's assets will be invested in
equity securities of companies organized or having a majority of their assets in
or deriving a majority of their operating income in Europe. Such countries may
have well-established economies or securities markets or emerging economies or
securities markets or smaller securities markets. Up to 30% of the Fund's assets
may be invested 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.
In selecting investments for the Fund,
o In order to compare the value of different stocks, we consider whether the
future dividends on a stock are expected to increase faster than, slower than,
or in line with the level of inflation. We then estimate what we think the
value of those anticipated future dividends would be worth if they were being
paid today. We believe this gives us an estimate of what the stock's true
value is. Because many of the countries in which the Fund invests are emerging
countries, there may be less information available for us to use in making
this analysis than is available for more developed countries.
o We generally prefer to purchase securities in countries where the currency is
undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine whether
a particular currency is overvalued or undervalued by comparing the amount of
goods and services that a dollar will buy in the United States to the amount
of 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
overvalued, and when the dollar buys more, the foreign currency may be
undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease, sometimes rapidly and unpredictably, according to changes in the value
of the Fund's investments. This Fund will be affected primarily by declines in
stock and bond prices, which can be caused by a drop in the stock or bond
market, an adverse change in interest rates or poor performance in specific
industries or companies. Because the Fund invests in international securities in
developing countries, as well as established countries, it will be affected by
international investment risks related to currency valuations, political
instability or inadequate regulatory standards. The Delaware New Europe Fund
targets a specific region of the world for investment. Therefore, an investment
in this Fund will likely be more volatile than a more geographically diversified
fund. In addition, the performance of this Fund is closely tied to the economic
and political conditions of the region. High yield, high risk foreign
fixed-income securities are subject to substantial risks, particularly during
periods of economic downturns or rising interest rates. For a more complete
discussion of risk, please turn to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for long-term growth potential.
o Investors willing to accept the risks associated with foreign investing as
well as investments in smaller-sized issuers, some of which may be
speculative.
11
<PAGE>
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors whose primary goal is income.
o Investors who are unwilling to accept risks of investing in foreign
securities.
12
<PAGE>
How has the Delaware New Europe Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show returns for the Fund's Class A shares for the past calendar
year, as well as the average annual returns for these shares for the one-year
period and since inception. The Fund's past performance is not necessarily an
indication of how it will perform in the future. The returns reflect voluntary
expense caps. The returns would be lower without the voluntary caps.
Total Return
- -------------------------
1999
- -------------------------
During the periods illustrated in this bar chart, Class A's highest quarterly
return was 00.00% for the quarter ended _________________ and its lowest
quarterly return was 00.00% for the quarter ended __________________.
The maximum Class A sales charge of 5.75%, which is normally deducted when you
purchase shares, is not reflected in the total returns above. If this fee were
included, the returns would be less than those shown. The average annual returns
in the table shown below do include the sales charge.
Average annual returns for periods ending 12/31/99
--------------------------------------------------------------------
CLASS A Morgan Stanley Capital
International Europe Index
--------------------------------------------------------------------
1 year
--------------------------------------------------------------------
Since inception
(12/29/98)
--------------------------------------------------------------------
The Fund's returns are compared to the performance of the Morgan Stanley Capital
International Europe Index. You should remember that unlike the Fund, the index
is unmanaged and doesn't reflect the costs of operating a mutual fund, such as
the costs of buying, selling, and holding the securities.
13
<PAGE>
What are the Delaware New Europe Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
CLASS A B C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) imposed on purchases as a 5.75% none none
percentage of offering price
- ------------------------------------------------------------------------------------------------
Maximum contingent deferred sales charge none(1) 5%(2) 1%(3)
(load) as a percentage of original purchase price or
redemption price, whichever is lower
- ------------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested none none none
dividends
- ------------------------------------------------------------------------------------------------
Redemption fees none none none
- ------------------------------------------------------------------------------------------------
</TABLE>
Annual fund operating expenses are deducted from the Fund's assets.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
CLASS A B C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fees
- ------------------------------------------------------------------------------------------------
Distribution and service (12-1) fees(4) 0.30% 1.00% 1.00%
- ------------------------------------------------------------------------------------------------
Other expenses
- ------------------------------------------------------------------------------------------------
Total operating expenses(6) (5) (5)
- ------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(7) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
CLASS (8) (if (if
(redeemed) (redeemed)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 year
- -----------------------------------------------------------------------------------------------
3 years
- -----------------------------------------------------------------------------------------------
5 years
- -----------------------------------------------------------------------------------------------
10 years
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) A purchase of Class A shares of $1 million or more may be made at net asset
value. However, if you buy the shares through a financial adviser who is
paid a commission, a contingent deferred sales charge will apply to certain
redemptions. Additional Class A purchase options that involve a contingent
deferred sales charge may be permitted from time to time and will be
disclosed in the Prospectus if they are available.
(2) If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 5%, which declines to 4%
during the second year, 3% during the third and fourth years, 2% during the
fifth year, 1% during the sixth year, and 0% thereafter.
(3) Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(4) The distributor has agreed to waive the 12b-1 fees through May 31, 2000.
(5) Other expenses are based on estimated amounts for the current fiscal year.
(6) The investment manager has agreed to waive fees and pay expenses from the
commencement of the Fund's operations through May 31, 2000 in order to
prevent total operating expenses (excluding any taxes, interest, brokerage
fees, extraordinary expenses and 12b-1 fees) from exceeding 1.25% of average
daily net assets. The fees and expenses shown in the table above do not
reflect this voluntary expense cap. The following table shows operating
expenses which are based on the most recently completed fiscal year and
reflect the manager's and distributor's current fee waivers and payments.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Fund operating expenses including voluntary expense caps in
place through May 31, 2000
CLASS A B C
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fees
- --------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------------
Other expenses
- --------------------------------------------------------------------------------------
Total operating expenses 1.25% 1.25% 1.25%
- ------------------------------------------------- ----------- ------------ -----------
</TABLE>
(7) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show. This example does not reflect the voluntary expense cap described in
footnotes 4 and 6.
(8) The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expenses of the Class A shares.
15
<PAGE>
Profile: Delaware Latin America Fund
What are the Fund's goals?
Delaware Latin America Fund seeks long-term capital appreciation. Although, the
Fund will strive to achieve its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
We invest primarily in equity securities of Latin American companies. Under
normal market conditions, at least 65% of Delaware Latin America Fund's assets
will be invested in equity securities of companies organized or having a
majority of their assets in or deriving a majority of their operating income in
Latin America. Many of the countries in which the Fund invests have emerging
economies or securities markets or smaller securities markets. Up to 30% of the
Fund's assets may be invested 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.
In selecting investments for the Fund,
o In order to compare the value of different stocks, we consider whether the
future dividends on a stock are expected to increase faster than, slower than,
or in line with the level of inflation. We then estimate what we think the
value of those anticipated future dividends would be worth if they were being
paid today. We believe this gives us an estimate of what the stock's true
value is. Because many of the countries in which the Fund invests are emerging
countries, there may be less information available for us to use in making
this analysis than is available for more developed countries.
o We generally prefer to purchase securities in countries where the currency is
undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine whether
a particular currency is overvalued or undervalued by comparing the amount of
goods and services that a dollar will buy in the United States to the amount
of 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
overvalued, and when the dollar buys more, the foreign currency may be
undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase
and decrease, sometimes rapidly and unpredictably, according to changes in the
value of the Fund's investments. This Fund will be affected primarily by
declines in stock and bond prices which can be caused by a drop in the stock or
bond market, an adverse change in interest rates or poor performance in specific
industries or companies. Because the Fund invests in international securities in
developing countries, as well as established countries, it will be affected by
international investment risks related to currency valuations, political
instability or inadequate regulatory standards. The Delaware Latin America Fund
targets a specific region of the world for investment. Therefore, an investment
in this Fund will likely be more volatile than a more geographically diversified
fund. In addition, the performance of this Fund is tied to the economic and
political conditions of this region. High yield, high risk foreign fixed-income
securities are subject to substantial risks, particularly during periods of
economic downturns or rising interest rates. For a more complete discussion of
risk, please turn to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for long-term growth potential.
o Investors willing to accept the risks associated with foreign investing as
well as investments in smaller-sized issuers, some of which may be
speculative.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors whose primary goal is income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors who are unwilling to accept risks of investing in foreign
securities.
16
<PAGE>
How has the Delaware Latin America Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show returns for the Fund's Class A shares for the past calendar
year, as well as the average annual returns for these shares for the one-year
period and since inception. The Fund's past performance is not necessarily an
indication of how it will perform in the future. The returns reflect voluntary
expense caps. The returns would be lower without the voluntary caps.
Total Return
- -------------------------
1999
- -------------------------
During the periods illustrated in this bar chart, Class A's highest quarterly
return was 00.00% for the quarter ended _________________ and its lowest
quarterly return was 00.00% for the quarter ended __________________.
The maximum Class A sales charge of 5.75%, which is normally deducted when you
purchase shares, is not reflected in the total returns above. If this fee were
included, the returns would be less than those shown. The average annual returns
in the table shown below do include the sales charge.
Average annual returns for periods ending 12/31/99
---------------------------------------------------------------------
CLASS A Morgan Stanley Capital
International Emerging
Markets Free Index
---------------------------------------------------------------------
1 year
---------------------------------------------------------------------
Since inception
(12/29/98)
---------------------------------------------------------------------
The Fund's returns are compared to the performance of the Morgan Stanley Capital
International Emerging Markets Free Index. You should remember that unlike the
Fund, the index is unmanaged and doesn't reflect the costs of operating a mutual
fund, such as the costs of buying, selling, and holding the securities.
17
<PAGE>
What are Delaware Latin America Fund's fees and expenses?
Sales charges are fees paid directly from your investments when you buy or sell
shares of the Fund.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
CLASS A B C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) imposed on purchases as a 5.75% none none
percentage of offering price
- ------------------------------------------------------------------------------------------------
Maximum contingent deferred sales charge none(1) 5%(2) 1%(3)
(load) as a percentage of original purchase price or
redemption price, whichever is lower
- ------------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested none none none
dividends
- ------------------------------------------------------------------------------------------------
Redemption fees none none none
- ------------------------------------------------------------------------------------------------
</TABLE>
Annual fund operating expenses are deducted from the Fund's assets.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
CLASS A B C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fees
- ------------------------------------------------------------------------------------------------
Distribution and service (12-1) fees(4) 0.30% 1.00% 1.00%
- ------------------------------------------------------------------------------------------------
Other expenses (5) (5)
- ------------------------------------------------------------------------------------------------
Total operating expenses(6)
- ------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(7) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
<TABLE>
<CAPTION>
A B B C C
CLASS(8)
<S> <C> <C> <C> <C> <C>
(if redeemed) (if redeemed)
- ----------------- -------------- --------------- --------------- --------------- --------------
1 year
- ----------------- -------------- --------------- --------------- --------------- --------------
3 years
- ----------------- -------------- --------------- --------------- --------------- --------------
5 years
- ----------------- -------------- --------------- --------------- --------------- --------------
10 years
- ----------------- -------------- --------------- --------------- --------------- --------------
</TABLE>
(1) A purchase of Class A shares of $1 million or more may be made at net asset
value. However, if you buy the shares through a financial adviser who is
paid a commission, a contingent deferred sales charge will apply to certain
redemptions. Additional Class A purchase options that involve a contingent
deferred sales charge may be permitted from time to time and will be
disclosed in the Prospectus if they are available.
(2) If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 5%, which declines to 4%
during the second year, 3% during the third and fourth years, 2% during the
fifth year, 1% during the sixth year, and 0% thereafter.
(3) Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(4) The distributor has agreed to waive the 12b-1 fees through May 31, 2000.
(5) Other expenses are based on estimated amounts for the current fiscal year.
(6) The investment manager has agreed to waive fees and pay expenses from the
commencement of the Fund's operations through May 31, 2000 in order to
prevent total operating expenses (excluding any taxes, interest, brokerage
fees, extraordinary expenses and 12b-1 fees) from exceeding 1.25% of
average daily net assets. The fees and expenses shown in the table above do
not reflect this voluntary expense cap. The following table shows operating
expenses which are based on the most recently completed fiscal year and
reflect the manager's and distributor's current fee waivers and payments.
- --------------------------------------------------------------------------------
Fund operating expenses including voluntary expense caps in
place through May 31, 2000
- --------------------------------------------------------------------------------
CLASS A B C
- ------------------------------------------------- --------- ---------- ---------
Management fees
- ------------------------------------------------- --------- ---------- ---------
Distribution and service (12b-1) fees 0.00% 0.00% 0.00%
- ------------------------------------------------- --------- ---------- ---------
Other expenses
- ------------------------------------------------- --------- ---------- ---------
Total operating expenses 1.25% 1.25% 1.25%
- ------------------------------------------------- --------- ---------- ---------
(7) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show. In addition, this example does not reflect the voluntary expense cap
described in footnotes 4 and 6.
(8) The Class B example reflects the conversion of Class B shares to Class A
shares after approximately eight years. Information for the ninth and tenth
years reflects expenses of the Class A shares.
<PAGE>
How we manage the Funds
We take a disciplined approach to investing, combining investment strategies and
risk management techniques that can help shareholders meet their goals.
Our investment strategies
----------------------------------------------------------------------
The investment objective of each Fund described in this Prospectus is
non-fundamental. This means the Board of Trustees may change the
objective without obtaining shareholder approval. If the objective
were changed, we would notify shareholders before the change became
effective.
----------------------------------------------------------------------
Delaware Global Opportunities Fund
Delaware Global Opportunities Fund's primary objective is long-term growth
without undue risk to principal. The Fund seeks to achieve its objective by
investing in global equity securities that provide the potential for capital
appreciation and income. The Fund's primary focus will be to invest in domestic
and foreign equity securities and, under normal market conditions, at least 65%
of its assets will be invested in equity securities. The Fund's investments will
be made in 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, one of which may be the United States. However, more than 25% of the
Fund's total assets may be invested in the securities of issuers located in the
same country.
The Fund will attempt to achieve its investment objective by investing in
securities traded in equity markets and currencies that we believe offer the
best relative values within the global investment universe. Equity securities in
which the Fund may invest include convertible securities, common stocks,
preferred stocks and warrants issued in foreign countries or in the U.S.
Simultaneous with identifying the most attractive equity markets and currencies,
we will attempt to purchase undervalued securities. Individual equity securities
around the world will be selected based on an analysis of the company's
operations, financial statements and each company's currency valuation.
The Fund may invest in securities issued in any currency and may hold foreign
currency. Securities of issuers within a given country may be denominated in the
currency of another country or in multinational currency units such as the Euro
and European Currency Unit (ECU). The Fund may enter into forward foreign
currency exchange contracts (forward contracts) to buy or sell foreign
currencies. The Fund's use of forward contracts will not eliminate fluctuations
in the underlying prices of the securities that the Fund holds or intends to
purchase. While using forward contracts tends to minimize the risk of loss from
a decline in the value of a particular currency, using forward contracts also
tends to limit any potential gain that might result from the increase in value
of such currency.
The Fund may invest up to 35% of its assets in income producing debt securities
such as U.S. or foreign government or corporate bonds. As a general matter, the
Fund only invests in debt securities when we believe, considering the risks,
that they offer better long-term potential returns than investments in equity
securities.
For temporary defensive purposes, the Fund may invest all or a substantial
portion of its assets in high quality U.S. and foreign governmental and
corporate debt instruments. The Fund may also hold these securities pending
investment of proceeds from new sales of Fund shares and to maintain sufficient
cash to meet redemption requests.
While the Fund may purchase securities in any foreign country, developed and
underdeveloped, or emerging market countries, it is currently anticipated that
the countries in which the Fund may invest will include, but are not limited to
Australia, Belgium, Canada, France, Germany, Hong Kong, Japan, Malaysia, the
Netherlands, Singapore, Spain, Switzerland and the United Kingdom, as well as
Indonesia, Korea, the Philippines, South Africa, Taiwan and Thailand. In certain
countries, investments may only be made by purchasing shares of closed-end
investment companies that in turn are authorized to invest in the securities of
such countries.
Delaware International Small Cap Fund
<PAGE>
The Fund seeks long-term capital appreciation. The Fund seeks to achieve its
objective by investing primarily in equity securities of smaller non-U.S.
companies, which may include companies located or operating in established or
emerging countries. Under normal circumstances, at least 65% of the Fund's total
assets will be invested in equity securities of companies 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. However, more
than 25% of the Fund's total assets may be invested in the securities of issuers
located in the same country. The current market capitalization of the companies
in which the Fund intends to invest primarily will generally be $1.5 billion or
less (at the time of purchase).
The equity securities in which the Fund may invest include common stocks,
preferred stocks, rights or warrants to purchase common stocks and securities
convertible into common stocks. The Fund may also invest in foreign companies
through sponsored or unsponsored Depositary Receipts, which are receipts
typically issued by a bank or trust company evidencing ownership of underlying
securities issued by a foreign company. The Fund may invest in securities issued
in any currency and may hold foreign currency.
In selecting investments for the Fund, the manager 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. The manager uses the dividend discount
analysis to compare the value of different investments. Using this technique,
the manager 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.
With a purchasing parity approach, the manager 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. 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. When the dollar buys less,
the foreign currency may be considered to be overvalued. Conversely, when the
dollar buys more, the currency may be considered to be undervalued.
While the Fund may purchase securities in any foreign country, developed and
underdeveloped, or emerging market countries, it is currently anticipated that
the countries in which the Fund may invest will include, but not be limited to,
Australia, Belgium, Canada, France, Germany, Hong Kong, Japan, the Netherlands,
New Zealand, Singapore and Malaysia, Spain, Switzerland, the United Kingdom, as
well as Argentina, Brazil, Chile, Egypt, Greece, India, Indonesia, Korea, Peru,
the Philippines, South Africa, Taiwan, Thailand and Turkey. With respect to
certain countries, investments by an investment company may only be made through
investments in closed-end investment companies that in turn are authorized to
invest in the securities of such countries.
The Fund 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.
The Fund may invest up to 15% 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 (commonly known as junk bonds) rated lower
than BBB by S&P and Baa by Moody's or, if unrated, are considered by the manager
to be of equivalent quality and which present special investment risks. See High
Yield, High Risk Securities.
For temporary defensive purposes, the Fund may invest all or a substantial
portion of its assets in high quality U.S. and foreign governmental and
corporate debt instruments. The Fund may also hold these securities pending
investment of proceeds from new sales of Fund shares and to maintain sufficient
cash to meet redemption requests.
Delaware New Europe Fund
The investment objective of New Europe is to achieve long-term capital
appreciation. The Fund seeks to achieve its objective by investing primarily in
equity securities of European companies, which may include companies located or
operating in established or emerging European countries. Under normal
circumstances, at least 65% of the Fund's total assets will be invested in
equity securities of companies organized or having a majority of their assets in
or deriving a majority of their operating income in Europe. However, more than
25% of the Fund's total assets may be invested in the securities of issuers
located in the same country. The companies in which the Fund will invest will be
of varying size.
<PAGE>
The Fund will invest primarily in common stocks and may, to a lesser extent,
invest in preferred stocks, rights or warrants to purchase common stocks and
securities convertible into common stocks. The Fund will also invest in foreign
companies through sponsored or unsponsored Depositary Receipts. The Fund 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. The Fund's investments may be issued in any
currency and the Fund will, from time to time, hold cash in foreign currencies.
Securities of issuers within a given country may be denominated in the currency
of another country or in multinational currency units such as the Euro.
The Fund may invest in securities of issuers located in any European country
where the investment manager believes that there is the potential for long-term
capital appreciation. The Fund may invest in the securities of issuers located
in European countries with well-established economies and securities markets or
in countries with emerging economies or securities markets or smaller securities
markets. In addition, if opportunities arise, the Fund may invest in securities
of issuers located in Eastern European countries.
The Fund may invest up to 30% 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 (commonly known as junk bonds), including
Brady Bonds, rated lower than BBB by S&P and Baa by Moody's or, if unrated,
considered by the investment manager to be of equivalent quality, and which
present special investment risks. See High Yield, High Risk Securities.
For temporary defensive purposes, the Fund may invest all or a substantial
portion of its assets in high quality U.S. and foreign governmental and
corporate debt instruments. The Fund may also hold these securities pending
investment of proceeds from new sales of Fund shares and to maintain sufficient
cash to meet redemption requests.
Delaware Latin America Fund
The investment objective of Latin America is to achieve long-term capital
appreciation. The Fund seeks to achieve its objective by investing primarily in
equity securities of companies in Latin America, most of which are emerging
market countries. Under normal circumstances, at least 65% of the Fund's total
assets will be invested in equity securities of companies organized or having a
majority of their assets in or deriving a majority of their income in Latin
America. However, more than 25% of the Fund's total assets may be invested in
the securities of issuers located in the same country. The companies in which
the Fund will invest will be of varying size.
The Fund will invest in common stocks and may, to a lesser extent, invest in
preferred stocks, rights or warrants to purchase common stocks and securities
convertible into common stocks. The Fund will also invest in foreign companies
through sponsored or unsponsored Depositary Receipts. The Funds may also invest
in convertible preferred stocks that offer enhanced yield features and certain
other non-traditional equity securities. The Fund's investments may be issued in
any currency and the Fund will, from time to time, hold cash in foreign
currencies. Securities of issuers within a given country may be denominated in
the currency of another country or in multinational currency units such as the
Euro.
The Latin American countries in which the Fund may invest include Argentina,
Belize, Bolivia, Brazil, Chile, Columbia, Costa Rica, Cuba, Ecuador, El
Salvador, French Guyana, Guatemala, Guyana, Honduras, Mexico, Nicaragua, Panama,
Paraguay, Peru, Surinam, Trinidad/Tobago, Uruguay and Venezuela. This is a
representative list; the Fund may invest in countries not listed here.
In addition, the Fund may invest up to 30% 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 (commonly known as junk bonds) rated
lower than BBB by S&P and Baa by Moody's or, if unrated, are considered by the
investment manager to be of equivalent quality and which present special
investment risks. See High Yield, High Risk Securities.
For temporary defensive purposes, the Fund may invest all or a substantial
portion of its assets in high quality U.S. and foreign governmental and
corporate debt instruments. The Fund may also hold these securities pending
investment of proceeds from new sales of Fund shares and to maintain sufficient
cash to meet redemption requests.
<PAGE>
The securities we typically invest in
Stocks offer investors the potential for capital appreciation, and may pay
dividends as well. Fixed-income securities offer the potential for greater
income payments than stocks, and also may provide capital appreciation
potential. The following chart provides a brief description of the securities
that the Funds may invest in. Please see the Statement of Additional Information
for additional descriptions of these as well as other investments.
<TABLE>
<CAPTION>
- ---------------------------------- -------------------------------------------------------------------------------------------------
Securities How we use them
- ---------------------------------- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Global Delaware International Delaware New Europe Delaware Latin America
Opportunities Fund Small Cap Fund Fund Fund
- ---------------------------------- -------------------------------------------------------------------------------------------------
Common Stocks: Securities that Consistent with their respective investment objective, each Fund will invest its assets in common
represent shares of ownership in stocks, as well as in dividend paying stocks.
a corporation. Stockholders
participate in the corporation's
profits and losses,
proportionate to the number of
shares they own.
- ---------------------------------- -------------------------------------------------------------------------------------------------
Foreign Currency Transactions: A Although the Funds value their assets daily in U.S. dollars, they do not intend to convert their
forward foreign currency holdings of foreign currencies into U.S. dollars on a daily basis. Each Fund will, however, from
exchange contract involves an time to time, purchase or sell foreign currencies and/or engage in forward foreign currency
obligation to purchase or sell a exchange transactions. Each Fund may conduct its foreign currency transactions on a cash basis
specific currency at a future at the rate prevailing in the foreign currency exchange market or through a forward foreign
date, which may be any fixed currency exchange contract or forward contract.
number of days from the date of
the contract, agreed upon by the A Fund may use forward contracts for hedging purposes to attempt to protect the value of the
parties, at a price set at the Fund's current security or currency holdings. It may also use forward contracts if it has agreed
time of the contract. to sell a security and wants to "lock-in" the price of that security, in terms of U.S. dollars or
another currency in which the transaction will be completed. Investors should be aware of the
costs of currency conversion. The Funds will not use forward contracts for speculative purposes.
- ---------------------------------- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------- -------------------------------------------------------------------------------------------------
Securities How we use them
- --------------------------------- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Global Delaware International Delaware New Europe Delaware Latin America
Opportunities Fund Small Cap Fund Fund Fund
- --------------------------------- -------------------------------------------------------------------------------------------------
American Depositary Receipts Each Fund may invest in sponsored and unsponsored ADRs, EDRs and GDRs, generally focusing on those
(ADRs), European Depositary whose underlying securities are issued by foreign entities.
Receipts (EDRs), and Global
Depositary Receipts (GDRs): To determine whether to purchase a security in a foreign market or through depositary receipts, we
ADRs are receipts issued by a evaluate the price levels, the transaction costs, taxes and administrative costs involved with
U.S. depositary (usually a U.S. each security to identify the most efficient choice.
bank) and EDRs and GDRs are
receipts issued by a depositary
outside of the U.S. (usually a
non-U.S. bank or trust company
or a foreign branch of a U.S.
bank). Depositary receipts
represent an ownership interest
in an underlying security that
is held by the depositary.
Generally, the underlying
security represented by an ADR
is issued by a foreign issuer
and the underlying security
represented by an EDR or GDR
may be issued by a foreign
or U.S. issuer. Sponsored
depositary receipts are issued
jointly by the issuer of the
underlying security and the
depositary, and unsponsored
depositary receipts are issued
by the depositary without the
participation of the issuer of
the underlying security.
Generally, the holder of the
depositary receipt is entitled
to all payments of interest,
dividends or capital gains that
are made on the underlying
security.
- --------------------------------- --------------------------------------------------------------------------------------------------
Corporate Bonds: Debt The Funds may invest in corporate bonds generally rated AA or better by S&P and Aa by Moody's.
obligations issued by U.S. or
foreign corporations.
- ---------------------------------- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------- --------------------------------------------------------------------------------------------------
Securities How we use them
- --------------------------------- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Global Delaware International Delaware New Europe Delaware Latin America
Opportunities Fund Small Cap Fund Fund Fund
- --------------------------------- --------------------------------------------------------------------------------------------------
- --------------------------------- -------------------------- ----------------------- -----------------------------------------------
High-Yield, High Risk Delaware Global International Small Delaware New Europe Fund and Delaware
Fixed-Income Securities: Opportunities Fund may Cap may invest up Latin America Fund may invest up to 30%
Securities that are rated lower not invest in these to 15% of its net of their respective net assets in these
than BBB by S&P or Baa by securities. assets in these securities.
Moody's, or if unrated, of equal securities.
quality. These securities may be
issued by companies or
governments of emerging or
developing countries, which may
be less creditworthy. The risk
that these companies or
governments may not be able to
make interest or principal
payments is substantial.
These Funds will not purchase securities rated lower than C by S&P or
Ca by Moody's or, if unrated, considered to be of an equivalent quality
to such ratings by the Manager.
- --------------------------------- --------------------------------------------------------------------------------------------------
Foreign Government Securities: For temporary defensive purposes, each Fund may invest in high quality debt obligations of foreign
Debt obligations issued by a governments, their agencies, instrumentalities and political sub-divisions.
government other than the United
States or by an agency,
instrumentality or political
subdivision of such governments.
Delaware Global A portion of each Fund's assets may be invested in such foreign
Opportunities Fund governmental securities issued by emerging or developing countries,
may seek to achieve which may be lower rated, including securities rated below investment
growth by investing grade.
in foreign
governmental
debt securities.
- --------------------------------- --------------------------------------------------------------------------------------------------
U.S. Government Securities: For temporary defensive purposes, each Fund may invest in high quality debt instruments issued by
Securities issued or guaranteed the U.S. government, its agencies or instrumentalities (and which are backed by the full faith and
by the U.S. government or issued credit of the U.S. government), or issued by U.S. companies.
by an agency or instrumentality
of the U.S. government.
- --------------------------------- --------------------------------------------------------------------------------------------------
Repurchase Agreements: An Typically, we use repurchase agreements as a short-term investment for a Fund's cash position. In
agreement between a buyer and order to enter into these repurchase agreements, the Fund must have collateral in excess of 100%
seller of securities in which (and generally 102%) of the repurchase price.
the seller agrees to buy the
securities back within a The collateral is usually securities issued or guaranteed by the U.S. government or its agencies
specified time at the same price or instrumentalities, or other securities in which the Funds may invest directly.
the buyer paid for them, plus
an amount equal to an agreed The Funds will only enter repurchase agreements in which the collateral is comprised of U.S.
upon interest rate. Repurchase government securities.
agreements are often viewed as
equivalent to cash.
- --------------------------------- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------- --------------------------------------------------------------------------------------------------
Securities How we use them
- --------------------------------- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Global Delaware International Delaware New Europe Delaware Latin America
Opportunities Fund Small Cap Fund Fund Fund
- --------------------------------- --------------------------------------------------------------------------------------------------
Restricted Securities: Privately We may invest in privately placed securities that are eligible for resale only among certain
placed securities whose resale institutional buyers without registration, including Rule 144A Securities.
is restricted under securities
law. Restricted securities are
generally considered to be
illiquid except that a Fund may
treat Rule 144A securities as
liquid based on their trading
markets. Rule 144A securities
are restricted securities but
may be freely traded among
qualified institutional buyers.
- --------------------------------- --------------------------------------------------------------------------------------------------
Illiquid Securities: Illiquid Each Fund may invest up to 15% of its assets in illiquid securities.
securities are those that
cannot be sold or disposed of in
the ordinary course of business
within seven days at
approximately the price at which
the security has been value by
the Fund.
- --------------------------------- --------------------------- ----------------------------------------------------------------------
Brady Bonds: These are debt Delaware Global Delaware International Small Cap Fund, Delaware New Europe Fund and
securities issued under the Opportunities Fund may Delaware Latin America Fund may invest in Brady Bonds consistent with
framework of the Brady Plan, an not invest in these bonds. their respective investment objective. We believe that the economic
initiative announced by the U.S. reforms undertaken by countries in connection with the issuance of
Treasury Secretary, Nicholas F. Brady Bonds makes the debt of countries that have issued or have
Brady in 1989, as a mechanism announced plans to issue Brady Bonds a viable opportunity for
for debtor nations to investment.
restructure their outstanding
external indebtedness
(generally, commercial bank
debt). Brady Bonds tend to be of
lower quality and more
speculative than securities of
developed country issuers.
- --------------------------------- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------- --------------------------------------------------------------------------------------------------
Securities How we use them
- --------------------------------- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Global Delaware International Delaware New Europe Delaware Latin America
Opportunities Fund Small Cap Fund Fund Fund
- --------------------------------- --------------------------------------------------------------------------------------------------
Investment Company Securities: Each Fund may invest in investment company securities if we believe the country offers good
In some countries, investments investment opportunities. We would generally invest in closed-end investment companies, but we
by U.S. mutual funds are can also invest in open-end investment companies. These investments involve an indirect payment of
generally made by purchasing a portion of the expenses of the other investment companies, including their advisory fees.
shares investment companies that
in turn invest in the securities
of such countries.
- --------------------------------- --------------------------------------------------------------------------------------------------
</TABLE>
The Funds may also enter into put and call options, futures contracts and
options on futures contracts, and options on foreign currencies. Please see the
Statement of Additional Information for additional descriptions on these
securities as well as those listed in the table above.
Portfolio turnover
Each Fund anticipates that its annual portfolio turnover will be less than 100%.
Borrowing from banks
Each Fund may borrow money as a temporary measure for extraordinary or emergency
purposes or to facilitate redemptions. A Fund will not borrow money in excess of
one-third of the value of its net assets.
Securities lending
Each Fund may loan up to 25% of its assets to qualified broker/dealers or
institutional investors to generate additional income for the Fund. All such
loans will be secured by collateral.
Temporary defensive measures
For temporary defensive purposes, each Fund may invest in high quality debt
obligations of foreign governments, their agencies, instrumentalities and
political sub-divisions. For temporary defensive purposes, each Fund may invest
in high quality debt instruments issued by 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 U.S. companies. To the extent that a Fund does so, the
Fund may be unable to meet its investment objective.
<PAGE>
The risks of investing in the Funds
Investing in any mutual fund involves risk, including the risk that you may
receive little or no return on your investment, and the risk that you may lose
part or all of the money you invest. Before you invest in the Fund you should
carefully evaluate the risks. Because of the nature of the Funds, you should
consider an investment to be a long-term investment that typically provides the
best results when held for a number of years. The following are the chief risks
you assume when investing in these Funds. Please see the Statement of Additional
Information for further discussion of these risks and the other risks not
discussed here.
<TABLE>
<CAPTION>
- ------------------------------------- ----------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------------------------- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Global Delaware Delaware New Europe Delaware Latin
Opportunities Fund International Small Fund America Fund
Cap Fund
- ------------------------------------- ----------------------- ----------------------- ----------------------- ----------------------
Market Risk is the risk that all or We maintain a long-term investment approach and focus on stocks we believe can appreciate
a majority of the securities in a over an extended time frame regardless of interim market fluctuations. We do not try to
certain market--like the stock or predict overall stock market movements and do not trade for short-term purposes.
bond market--or in a certain country
or region will decline in value
because of factors such as economic
conditions, future expectations or
investor confidence.
- ------------------------------------- ----------------------------------------------------------------------------------------------
Industry and Security Risk is the We limit the amount of each Fund's assets invested in any one industry and in any individual
risk that the value of securities security. We also follow a rigorous selection process before choosing securities for a Fund.
in a particular industry or the
value of an individual stock or
bond will decline because of
changing expectations for the
performance of that industry or for
the individual company issuing the
stock or bond.
- ------------------------------------- ----------------------------------------------------------------------------------------------
Currency Risk is the risk that the Each Fund may try to hedge its currency risk by purchasing foreign currency exchange
value of a Fund's investments may contracts. If a Fund agrees to purchase or sell foreign securities at a pre-set price on a
be negatively affected by changes future date, the Fund attempts to protect the value of a security they own from future
in foreign currency exchange changes in currency rates. If a Fund has agreed to purchase or sell a security, it may also
rates. Adverse changes in exchange use foreign currency exchange contracts to "lock-in" the security's price in terms of U.S.
rates may reduce or eliminate any dollars or another applicable currency. Each Fund may use forward currency exchange
gains produced by investments that contracts only for defensive or protective measures, not to enhance portfolio returns.
are denominated in foreign However, there is no assurance that such a strategy will be successful.
currencies and may increase any
losses.
- ------------------------------------- ------------------- --------------------------------------------------------------------------
Emerging Markets Risk is the Delaware Global Delaware International Small Cap, Delaware New Europe and Delaware Latin
possibility that the risks Opportunities America Funds have the ability to invest in emerging market securities.
associated with international Fund is not We attempt to lessen this risk by maintaining a long-term investment
investing will be greater in subject to this approach.
emerging markets than in more risk.
developed foreign markets because,
among other things, emerging
markets may have less stable
political and economic environments.
- ------------------------------------- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------- ----------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------------------------- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Global Delaware Delaware New Europe Delaware Latin
Opportunities Fund International Small Fund America Fund
Cap Fund
- ------------------------------------- ----------------------- ----------------------- ----------------------- ----------------------
Inefficient Market Risk is the risk The Funds will attempt to reduce these risks by investing in a number of different countries,
that foreign markets may be less performing credit analysis and noting trends in the economy, industries and financial markets.
liquid, have greater price
volatility, less regulation and
higher transaction costs than U.S.
markets.
- ------------------------------------- ----------------------- ----------------------------------------------------------------------
Credit risk of high-yield, high This is not a We intend to limit our investment in any one lower rated bond which
risk foreign fixed-income significant risk can help to reduce the effect of an individual default on the Funds,
securities: Securities rated lower for Delaware and to limit our overall allocation of Fund assets to bonds in this
than BBB by S&P and Baa by Moody's Global category. Such limitations may not protect the Funds from widespread
are considered to be of poor Opportunities. bond defaults brought about by a sustained economic downturn.
standing and predominantly
speculative as to the issuer's The economy and interest rates may affect these high yield, high risk
ability to repay interest and securities differently from other securities. Prices have been found
principal. to be less sensitive to interest rate changes than higher rated
investments, but more sensitive to adverse economic changes or
These bonds are often issued by individual corporate developments. Also, during an economic downturn
less creditworthy companies or by or a substantial period of rising interest rates, highly leveraged
highly leveraged (indebted) firms, issuers may experience financial stress which would adversely affect
which are generally less able than their ability to service principal and interest payment obligations,
more financially stable firms to to meet projected business goals and to obtain additional financing.
make scheduled payments of interest Changes by recognized rating agencies in their rating of any such
and principal. The risks posed by security and in the ability of the issuer to make payments of interest
bonds issued under such and principal will also ordinarily have a more dramatic effect on the
circumstances are substantial. values of these investments than on the values of higher-rated
securities. Consequently, these changes will affect the Funds' net
asset value per share.
- ------------------------------------- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------- ----------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------------------------- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Global Delaware Delaware New Europe Delaware Latin
Opportunities Fund International Small Fund America Fund
Cap Fund
- ------------------------------------- ----------------------- ----------------------- ----------------------- ----------------------
Region Risk is the risk associated Delaware Global Opportunities Fund and With respect to the Delaware New Europe and
with investing a majority of a Delaware International Small Cap Fund are not Delaware Latin America Funds, we maintain a
Fund's assets in a specific region subject to region risk. long-term approach and focus on stocks in the
of the world. A Fund's performance region we believe can appreciate over an
will be dependent upon the economic extended time frame.
and financial strength and
stability of the region. An
investment in a Fund subject to
high region risk is likely to be
more volatile than an investment in
a more geographically diverse fund.
- ------------------------------------- ----------------------------------------------------------------------------------------------
Political Risk is the risk that We evaluate the political situations in the countries where we invest and take into account
countries or the entire region any potential risks before we select securities for the Fund's portfolios. However, there is
where we invest may experience no way to eliminate political risk when investing internationally.
political instability, which may
cause greater fluctuation in the
value and liquidity of our
investments due to changes in
currency exchange rates,
governmental seizures or
nationalization of assets.
- ------------------------------------- ----------------------------------------------------------------------------------------------
Information Risk is the risk that We conduct fundamental research on the companies we invest in rather than relying solely on
foreign companies may be subject to information available through financial reporting. We believe this will help us to better
different accounting, auditing and uncover any potential weaknesses in individual companies.
financial reporting standards than
U.S. companies. There may be less
information available about foreign
issuers than domestic issuers.
Furthermore, regulatory oversight
of foreign issuers may be less
stringent or less consistently
applied than in the United States.
- ------------------------------------- ----------------------------------------------------------------------------------------------
Foreign Government Securities Risks The Funds attempt to reduce the risks associated with investing in foreign governments by
relate to the ability of a foreign setting rating standards and by limiting the portion of portfolio assets that may be invested
government or government related in such securities.
issuer to make timely payments on
its external debt obligations.
This ability to make payments will
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.
- ------------------------------------- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------- ----------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ------------------------------------- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Global Delaware Delaware New Europe Delaware Latin
Opportunities Fund International Small Fund America Fund
Cap Fund
- ------------------------------------- ----------------------- ----------------------- ----------------------- ----------------------
Small Company Investment Risk The Funds attempt to reduce this risk by diversifying investments.
includes the general risks of
investing in common stocks such as
market, economic and business risk
that cause their prices to
fluctuate over time. Historically,
smaller capitalization stocks have
been more volatile in price than
larger capitalization stocks.
Among the reasons for the greater
price volatility of these
securities are the lower degree of
liquidity in the markets for such
stocks, and the potentially greater
sensitivity of such small companies
to changes in or failure of
management, and in many other
changes in competitive, business,
industry and economic conditions,
including risks associated with
limited production, markets,
management depth, or financial
resources.
- ------------------------------------- ----------------------------------------------------------------------------------------------
Transaction Costs Risk: Costs of Each of the Funds is subject to this risk. We strive to monitor transaction costs and to
buying, selling and holding foreign choose an efficient trading strategy for the Funds.
securities, including brokerage,
tax and custody costs, may be
higher than those involved in
domestic transactions
- ------------------------------------- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Who manages the Funds
Investment manager and sub-adviser
The Funds are managed by Delaware International Advisers Ltd. Delaware
International Advisers is affiliated with Delaware Management Company, a series
of Delaware Management Business Trust, which is an indirect, wholly owned
subsidiary of Delaware Management Holdings, Inc. Delaware International Advisers
makes investment decisions for these Funds, manages the Funds' business affairs
and provides daily administrative services.
Delaware Management Company is the sub-adviser to Delaware Global Opportunities
Fund. Delaware Management Company manages the U.S. securities portion of
Delaware Global Opportunities Fund's portfolio under the overall supervision of
Delaware International Advisers and furnishes Delaware International Advisers
with investment recommendations, asset allocation advice, research and other
investment services regarding U.S. securities.
For their services to the Delaware Global Opportunities Fund, the manager and
sub-adviser were paid an aggregate fee of 0.00% of average daily net assets of
the Fund for the last fiscal year after giving effect to voluntary expense caps.
For its services to the Delaware International Small Cap Fund, the manager was
paid a fee of 0.00% of average daily net assets of the Fund for the last fiscal
year after giving effect to voluntary expense caps.
For its services to each of the Delaware New Europe Fund and Delaware Latin
America Fund, the manager is paid an annual fee equal to 1.25% on the first $500
million of average daily net assets; 1.20% on the next $500 million; 1.15% on
the next $1.5 billion; and 1.10% on the average daily net assets in excess of
$2.5 billion.
Portfolio Managers
Delaware Global Opportunities Fund
Elizabeth A. Desmond has primary responsibility for making day-to-day investment
decisions for Delaware Global Opportunities Fund. Robert L. Arnold makes
investment decisions for the U.S. equity portion of the Fund.
Elizabeth A. Desmond, Senior Portfolio Manager and Trustee of Delaware
International Advisers, has primary responsibility for making day-to-day
investment decisions for Global Equity Fund. She has been the portfolio manager
for the Fund since July 21, 1998. Ms. Desmond is a graduate of Wellesley College
and the masters program in East Asian studies at Stanford University. After
working for the Japanese government for two years, she began her investment
career as a Pacific Basin investment manager with Shearson Lehman Global Asset
Management. Prior to joining Delaware International Advisers in the spring of
1991, she was a Pacific Basin equity analyst and senior portfolio manager at
Hill Samuel Investment Advisers Ltd. Ms. Desmond is a CFA charterholder.
Robert L. Arnold, Vice President/Portfolio Manager of the Fund, has been
managing the U.S. Equity portion of the Fund since July 21, 1998. Prior to this
at Delaware Investments, he managed mutual funds and was a financial analyst
focusing on the financial services industry including banks, thrifts, insurance
companies and consumer finance companies. Mr. Arnold holds a BS from Carnegie
Mellon University and earned an MBA from the University of Chicago. He began his
investment career as a management consultant with Arthur Young in Philadelphia.
Prior to joining Delaware Investments in March 1992, Mr. Arnold was a planning
analyst with Chemical Bank in New York.
Delaware International Small Cap Fund
Clive A. Gillmore, Joshua H. Brooks and Gavin A. Hall have primary
responsibility for making day-to-day investment decisions for Delaware
International Small Cap Fund.
Clive A. Gillmore, Senior Portfolio Manager and Trustee of Delaware
International Advisers Ltd., has been managing the Fund since its inception. A
graduate of the University of Warwick and having begun his career at Legal and
General Investment Management, Mr. Gillmore joined Delaware International
Advisers in 1990 after eight years of investment experience. His most recent
position prior to joining Delaware International
<PAGE>
Advisers was as a Pacific Basin equity analyst and senior portfolio manager for
Hill Samuel Investment Management Ltd. Mr. Gillmore completed the London
Business School Investment program.
Joshua H. Brooks, Senior Portfolio Manager of Delaware International Advisers
Ltd., has been managing the Fund since October 25, 1999. Mr. Brooks holds a
bachelor's degree from Yale University and holds an MBA from The London Business
School. He began his investment career with Delaware Investments in 1991. Prior
to joining the investment team in London, he was based in Philadelphia with
responsibilities that included equity market analysis and acting as liaison with
Delaware International Advisers.
Gavin A. Hall, Senior Portfolio Manager of Delaware International Advisers Ltd.,
has been managing the Fund since October 25, 1999. Mr. Hall joined Delaware
International Advisers in 1991. He began his investment career with Barings
Investment Management Ltd. after attending Dulwich College. In 1988, he became a
Portfolio Manager and Research Analyst covering the United Kingdom market at
Hill Samuel Investment Management Ltd. At Delaware International Advisers his
research responsibilities have included United Kingdom, Continental European and
Asian equity markets.
Delaware New Europe Fund
Nigel G. May, Richard Ginty and Mr. Brooks have primary responsibility for
making day-to-day investment decisions for Delaware New Europe Fund, and have
co-managed the Fund since its inception. Please see Delaware International Small
Cap Fund for Mr. Brook's business experience.
Nigel G. May, Senior Portfolio Manager and Trustee of Delaware International
Advisers, is a graduate of Sidney Sussex College, Cambridge. He joined Delaware
International Advisers 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.
Richard Ginty, Portfolio Manager of Delaware International Advisers, is a
graduate of Sheffield University. He joined Delaware International Advisers in
1992, where his primary research focus is the European equity markets. Prior to
joining Delaware International Advisers, his business experience was with
Kleinwort Benson Securities Limited, and prior to that time, with Fiduciary
Trust International.
Delaware Latin America Fund
Robert Akester, Mr. Gillmore, and Mr. Brooks have primary responsibility for
making day-to-day investment decisions for Delaware Latin America Fund, and have
co-managed the Fund since its inception. Please see Delaware International Small
Cap Fund for Mr. Gillmore's and Mr. Brook's business experience.
Robert Akester, Senior Portfolio Manager of Delaware International Advisers,
joined Delaware International Advisers in 1996. Mr. Akester, who began his
investment career in 1969, was most recently a Trustee of Hill Samuel Investment
Management 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.
<PAGE>
Who's who?
This diagram show the various organizations involved with managing,
administering and servicing the Delaware Investments funds.
Board of Trustees
<TABLE>
<S> <C> <C>
Investment Manager The Funds Custodian
Delaware International Advisers Ltd. The Chase Manhattan Bank
Third Floor 4 Chase Metrotech Center
80 Cheapside Brooklyn, NY 11245
London, England EC2V 6EE
Sub-Adviser
Delaware Management Company
One Commerce Square
Philadelphia, PA 19103
Portfolio managers Distributor Service agent
(see page ___ for details) Delaware Distributors, L.P. Delaware Service Company, Inc.
1818 Market Street 1818 Market Street
Philadelphia, PA 19103 Philadelphia, PA 19103
</TABLE>
Financial advisers
Shareholders
Board of trustees A mutual fund is governed by a board of trustees which has
oversight responsibility for the management of the fund's business affairs.
Trustees establish procedures and oversee and review the performance of the
investment manager, the distributor and others that perform services for the
fund. At least 40% of the board of trustees must be independent of the fund's
investment manager and distributor. These independent fund trustees, in
particular, are advocates for shareholder interests.
Investment manager An investment manager is a company responsible for selecting
portfolio investments consistent with the objective and policies stated in the
mutual fund's Prospectus. The investment manager places portfolio orders with
broker/dealers and is responsible for obtaining the best overall execution of
those orders. A written contract between a mutual fund and its investment
manager specifies the services the manager performs. Most management contracts
provide for the manager to receive an annual fee based on a percentage of the
fund's average daily net assets. The manager is subject to numerous legal
restrictions, especially regarding transactions between itself and the funds it
advises.
Sub-adviser A sub-adviser is a company generally responsible for the management
of the fund's assets. They are selected and supervised by the investment
manager.
Portfolio managers Portfolio managers are employed by the investment manager or
sub-adviser to make investment decisions for individual portfolios on a
day-to-day basis.
Custodian Mutual funds are legally required to protect their portfolio
securities and most funds place them with a qualified bank custodian who
segregates fund securities from other bank assets.
Distributor Most mutual funds continuously offer new shares to the public
through distributors who are regulated as broker-dealers and are subject to NASD
Regulation, Inc. (NASD) rules governing mutual fund sales practices.
<PAGE>
Service agent Mutual fund companies employ service agents (sometimes called
transfer agents) to maintain records of shareholder accounts, calculate and
disburse dividends and capital gains and prepare and mail shareholder statements
and tax information, among other functions. Many service agents also provide
customer service to shareholders.
Financial advisers Financial advisers provide advice to their clients--analyzing
their financial objectives and recommending appropriate funds or other
investments. Financial advisers are compensated for their services, generally
through sales commissions, and through 12b-1 and/or service fees deducted from
the fund's assets.
Shareholders Like shareholders of other companies, mutual fund shareholders have
specific voting rights, including the right to elect trustees. Material changes
in the terms of a fund's management contract must be approved by a shareholder
vote, and funds seeking to change fundamental investment objectives or policies
must also seek shareholder approval.
<PAGE>
About your account
Investing in the Funds
You can choose from a number of share classes for the Fund. Because each share
class has a different combination of sales charges, fees, and other features,
you should consult your financial adviser to determine which class best suits
your investment goals and time frame.
Choosing a share class
Class A
o Class A shares have an up-front sales charge of up to 5.75% that you pay
when you buy the shares. The offering price for Class A shares includes the
front-end sales charge.
o If you invest $50,000 or more, your front-end sales charge will be reduced.
o You may qualify for other reduced sales charges, as described in "How to
reduce your sales charge," and under certain circumstances the sales charge
may be waived; please see the Statement of Additional Information.
o Absent 12b-1 fee waivers, Class A shares are also subject to an annual
12b-1 fee no greater than 0.30% of average daily net assets, which is lower
than the 12b-1 fee for Class B and Class C shares.
o Class A shares generally are not subject to a contingent deferred sales
charge except in the limited circumstances noted in the table below.
<TABLE>
<CAPTION>
Class A sales charges
---------------------------------------- ----------------- ----------------- --------------------------
Amount of purchase Sales charge as Sales charge as Dealer's commission as %
% of offering % of amount of offering price
price invested
<S> <C> <C> <C>
---------------------------------------- ----------------- ----------------- --------------------------
Less than $50,000 5.75% 5.00%
---------------------------------------- ----------------- ----------------- --------------------------
$50,000 but under $100,000 4.75% 4.00%
---------------------------------------- ----------------- ----------------- --------------------------
$100,000 but under $250,000 3.75% 3.00%
---------------------------------------- ----------------- ----------------- --------------------------
$250,000 but under $500,000 2.50% 2.00%
---------------------------------------- ----------------- ----------------- --------------------------
$500,000 but under $1,000,000 2.00% 1.60%
---------------------------------------- ----------------- ----------------- --------------------------
</TABLE>
As shown below, there is no front-end sales charge when you purchase $1
million or more of Class A shares. However, if your financial adviser
is paid a commission on your purchase, you may have to pay a limited
contingent deferred sales charge of 1% if you redeem these shares
within the first year and 0.50% if you redeem them within the second
year.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Amount of purchase Sales charge as % of Sales charge as % of amount Dealer's
offering price invested commission as %
of offering price
---------------------- ------------------------------ ------------------------------ ------------------
<S> <C> <C> <C>
$1 million up to $5 none none 1.00%
million
---------------------- ------------------------------ ------------------------------ ------------------
Next $20 million
Up to $25 million none none 0.50%
---------------------- ------------------------------ ------------------------------ ------------------
Amount over $25 none none 0.25%
million
---------------------- ------------------------------ ------------------------------ ------------------
</TABLE>
<PAGE>
Class B
o Class B shares have no up-front sales charge, so the full amount of your
purchase is invested in the Fund. However, you will pay a contingent
deferred sales charge if you redeem your shares within six years after you
buy them.
o If you redeem Class B shares during the first year after you buy them, the
shares will be subject to a contingent deferred sales charge of 5%. The
contingent deferred sales charge is 4% during the second year, 3% during
the third and fourth years, 2% during the fifth year, 1% during the sixth
year, and 0% thereafter.
o Under certain circumstances the contingent deferred sales charge may be
waived; please see the Statement of Additional Information.
o For approximately eight years after you buy your Class B shares, absent
12b-1 fee waivers, they are subject to annual 12b-1 fees no greater than 1%
of average daily net assets, of which 0.25% are service fees paid to the
distributor, dealers or others for providing services and maintaining
accounts.
o Because of the higher 12b-1 fees, Class B shares have higher expenses and
any dividends paid on these shares are lower than dividends on Class A
shares.
o Approximately eight years after you buy them, Class B shares automatically
convert into Class A shares with a 12b-1 fee of no more than 0.30%, which
is currently being waived. Conversion may occur as late as three months
after the eighth anniversary of purchase, during which time Class B's
higher 12b-1 fees apply.
o You may purchase up to $250,000 of Class B shares at any one time. The
limitation on maximum purchases varies for retirement plans.
Class C
o Class C shares have no up-front sales charge, so the full amount of your
purchase is invested in the Fund. However, you will pay a contingent
deferred sales charge of 1% if you redeem your shares within 12 months
after you buy them.
o Under certain circumstances the contingent deferred sales charge may be
waived; please see the Statement of Additional Information.
o Absent 12b-1 fee waivers, Class C shares are subject to an annual 12b-1 fee
which may not be greater than 1% of average daily net assets, of which
0.25% are service fees paid to the distributor, dealers or others for
providing services and maintaining shareholder accounts.
o Because of the higher 12b-1 fees, Class C shares have higher expenses and
pay lower dividends than Class A shares.
o Unlike Class B shares, Class C shares do not automatically convert into
another class.
o You may purchase any amount less than $1,000,000 of Class C shares at any
one time. The limitation on maximum purchases varies for retirement plans.
Each share class of the Fund has adopted a separate 12b-1 plan that allows it to
pay distribution fees for the sales and distribution of its shares. Because
these fees are paid out of the Fund's assets on an ongoing basis, over time
these fees will increase the cost of your investment and may cost you more than
paying other types of sales charges.
41
<PAGE>
About your account continued
How to reduce your sales charge
We offer a number of ways to reduce or eliminate the sales charge on shares.
Please refer to the Statement of Additional Information for detailed information
and eligibility requirements. You can also get additional information from your
financial adviser. You or your financial adviser must notify us at the time you
purchase shares if you are eligible for any of these programs.
<TABLE>
<CAPTION>
- -------------------------- ------------------------------------- --------------------------------------------------------------
Program How it works Share class
A B C
- -------------------------- ----------------------------------- --------------------------------------------------------------
<S> <C> <C> <C>
Letter of Intent Through a Letter of Intent you X Although the Letter of Intent and Rights of
agree to invest a certain Accumulation do not apply to the purchase
amount in Delaware Investment of Class B and C shares, you can combine
Funds (except money market your purchase of Class A shares with your
funds with no sales charge) purchase of B and C shares to fulfill your
over a 13-month period to Letter of Intent or qualify for Rights of
qualify for reduced front-end Accumulation.
sales charges.
- -------------------------- ----------------------------------- ---------------- ---------------------------------------------
Rights of You can combine your holdings X
Accumulation or purchases of all funds in
the Delaware Investments family
(except money market funds with
no sales charge) as well as the
holdings and purchases of your
spouse and children under 21 to
qualify for reduced front-end sales
charges.
- -------------------------- ----------------------------------- ---------------- ----------------------------- ---------------
Reinvestment of Up to 12 months after you For Class A, For Class B, your Not
redeemed shares redeem shares, you can reinvest you will not account will be available
the proceeds with no additional have to pay credited with the
sales charge. an additional contingent deferred
front-end sales charge you
sales charge. previously paid on the
amount you are reinvesting.
Your schedule for contingent
deferred sales charges and
conversion to Class A will
not start over again; it
will pick up from the point
at which you redeemed your
shares.
- -------------------------- ----------------------------------- ---------------- ---------------------------------------------
SIMPLE IRA, SEP IRA, These investment plans may X There is no reduction in sales charges for
SARSEP, Prototype qualify for reduced sales Class B or Class C shares for group
Profit Sharing, charges by combining the purchases by retirement plans.
Pension, 401(k), purchases of all members of the
SIMPLE 401(k), group. Members of these groups
403(b)(7), and 457 may also qualify to purchase
Retirement Plans shares without a front-end
sales charge and a waiver of
any contingent deferred sales
charges.
- -------------------------- ----------------------------------- ---------------- ---------------------------------------------
</TABLE>
42
<PAGE>
How to buy shares
Through your financial adviser
Your financial adviser can handle all the details of purchasing shares,
including opening an account. Your adviser may charge a separate fee for this
service.
By mail
Complete an investment slip and mail it with your check, made payable to the
fund and class of shares you wish to purchase, to Delaware Investments, 1818
Market Street, Philadelphia, PA 19103-3682. If you are making an initial
purchase by mail, you must include a completed investment application (or an
appropriate retirement plan application if you are opening a retirement account)
with your check.
By wire
Ask your bank to wire the amount you want to invest to First Union Bank, ABA
#031201467, Bank Account number 2014 12893 4013. Include your account number and
the name of the fund in which you want to invest. If you are making an initial
purchase by wire, you must call us so we can assign you an account number.
By exchange
You can exchange all or part of your investment in one or more funds in the
Delaware Investments family for shares of other funds in the family. Please keep
in mind, however, that under most circumstances you are allowed to exchange only
between like classes of shares. To open an account by exchange, call the
Shareholder Service Center at 800.523.1918.
Through automated shareholder services
You can purchase or exchange shares through Delaphone, our automated telephone
service. For more information about how to sign up for this service, call our
Shareholder Service Center at 800.523.1918.
Once you have completed an application, you can open an account with an initial
investment of $1,000 and make additional investments at any time for as little
as $100. If you are buying shares in an IRA or Roth IRA, under the Uniform Gifts
to Minors Act or the Uniform Transfers to Minors Act; or through an Automatic
Investing Plan, the minimum purchase is $250, and you can make additional
investments of only $25. The minimum for an Education IRA is $500. The minimums
vary for retirement plans other than IRAs, Roth IRAs or Education IRAs.
The price you pay for shares will depend on when we receive your purchase order.
If we or an authorized agent receives your order before the close of trading on
the New York Stock Exchange (normally 4:00 p.m. Eastern Time) on a business day,
you will pay that day's closing share price which is based on the Fund's net
asset value. If we receive your order after the close of trading, you will pay
the next business day's price. A business day is any day that the New York Stock
Exchange is open for business. We reserve the right to reject any purchase
order.
We determine the Funds' net asset value (NAV) per share at the close of trading
of the New York Stock Exchange each business day that the Exchange is open. We
calculate this value by adding the market value of all the securities and assets
in the Fund's portfolio, deducting all liabilities, and dividing the resulting
number by the number of shares outstanding. The result is the net asset value
per share. Foreign securities, currencies and other assets denominated in
foreign currencies are translated into U.S. dollars at the exchange rate of
these currencies against the U.S. dollar, as provided by an independent pricing
service. We price securities and other assets for which market quotations are
available at their market value. We price fixed-income securities on the basis
of valuations provided to us by an independent pricing service that uses methods
approved by the board of trustees. Any fixed-income securities that have a
maturity of less than 60 days we price at amortized cost. For all other
securities, we use methods approved by the board of trustees that are designed
to price securities at their fair market value.
Retirement plans
In addition to being an appropriate investment for your Individual Retirement
Account (IRA), Roth IRA and Education IRA, shares in the Fund may be suitable
for group retirement plans. You may establish your IRA account even if you are
already a participant in an employer-sponsored retirement plan. For more
information on how shares in the Fund can play an important role in your
retirement planning or for details about group plans, please consult your
financial adviser, or call 800.523.1918.
43
<PAGE>
How to redeem shares
Through your financial adviser
Your financial adviser can handle all the details of redeeming your shares. Your
adviser may charge a separate fee for this service.
By mail
You can redeem your shares (sell them back to the fund) by mail by writing to:
Delaware Investments, 1818 Market Street, Philadelphia, PA 19103-3682. All
owners of the account must sign the request, and for redemptions of more than
$50,000, you must include a signature guarantee for each owner. Signature
guarantees are also required when redemption proceeds are going to an address
other than the address of record on an account.
By telephone
You can redeem up to $50,000 of your shares by telephone. You may have the
proceeds sent to you by check, or, if you redeem at least $1,000 of shares, you
may have the proceeds sent directly to your bank by wire. Bank information must
be on file before you request a wire redemption.
By wire
You can redeem $1,000 or more of your shares and have the proceeds deposited
directly to your bank account the next business day after we receive your
request. If you request a wire deposit, the First Union Bank fee (currently
$7.50) will be deducted from your proceeds. Bank information must be on file
before you request a wire redemption.
Through automated shareholder services
You can redeem shares through Delaphone, our automated telephone service. For
more information about how to sign up for this service, call our Shareholder
Service Center at 800.523.1918.
If you hold your shares in certificates, you must submit the certificates with
your request to sell the shares. We recommend that you send your certificates by
certified mail.
When you send us a properly completed request to redeem or exchange shares, you
will receive the net asset value as determined on the business day we receive
your request. We will deduct any applicable contingent deferred sales charges.
You may also have to pay taxes on the proceeds from your sale of shares. We will
send you a check, normally the next business day, but no later than seven days
after we receive your request to sell your shares. If you purchased your shares
by check, we will wait until your check has cleared, which can take up to 15
days, before we send your redemption proceeds.
If you are required to pay a contingent deferred sales charge when you redeem
your shares, the amount subject to the fee will be based on the shares' net
asset value when you purchased them or their net asset value when you redeem
them, whichever is less. This arrangement assures that you will not pay a
contingent deferred sales charge on any increase in the value of your shares.
You also will not pay the charge on any shares acquired by reinvesting dividends
or capital gains. If you exchange shares of one fund for shares of another, you
do not pay a contingent deferred sales charge at the time of the exchange. If
you later redeem those shares, the purchase price for purposes of the contingent
deferred sales charge formula will be the price you paid for the original shares
not the exchange price. The redemption price for purposes of this formula will
be the NAV of the shares you are actually redeeming.
Account minimums
If you redeem shares and your account balance falls below the required account
minimum of $1,000 ($250 for IRAs, Uniform Gift to Minors Act accounts or
accounts with automatic investing plans, $500 for Education IRAs) for three or
more consecutive months, you will have until the end of the current calendar
quarter to raise the balance to the minimum. If your account is not at the
minimum by the required time, you will be charged a $9 fee for that quarter and
each quarter after that until your account reaches the minimum balance. If your
account does not reach the minimum balance, the Fund may redeem your account
after 60 days' written notice to you.
Special services
To help make investing with us as easy as possible, and to help you build your
investments, we offer the following special services.
44
<PAGE>
Automatic Investing Plan
The Automatic Investing Plan allows you to make regular monthly investments
directly from your checking account.
Direct Deposit
With Direct Deposit you can make additional investments through payroll
deductions, recurring government or private payments such as social security or
direct transfers from your bank account.
Wealth Builder Option
With the Wealth Builder Option you can arrange automatic monthly exchanges
between your shares in one or more Delaware Investments funds. Wealth Builder
exchanges are subject to the same rules as regular exchanges (see below) and
require a minimum monthly exchange of $100 per fund.
Dividend Reinvestment Plan
Through our Dividend Reinvestment Plan, you can have your distributions
reinvested in your account or the same share class in another fund in the
Delaware Investments family. The shares that you purchase through the Dividend
Reinvestment Plan are not subject to a front-end sales charge or to a contingent
deferred sales charge. Under most circumstances, you may reinvest dividends only
into like classes of shares.
Exchanges
You can exchange all or part of your shares for shares of the same class in
another Delaware Investments fund without paying a sales charge and without
paying a contingent deferred sales charge at the time of the exchange. However,
if you exchange shares from a money market fund that does not have a sales
charge you will pay any applicable sales charges on your new shares. When
exchanging Class B and Class C shares of one fund for similar shares in other
funds, your new shares will be subject to the same contingent deferred sales
charge as the shares you originally purchased. The holding period for the CDSC
will also remain the same, with the amount of time you held your original shares
being credited toward the holding period of your new shares. You don't pay sales
charges on shares that you acquired through the reinvestment of dividends. You
may have to pay taxes on your exchange. When you exchange shares, you are
purchasing shares in another fund so you should be sure to get a copy of the
fund's Prospectus and read it carefully before buying shares through an
exchange.
Dividends, distributions and taxes
Dividends and capital gains, if any, are paid annually. We automatically
reinvest all dividends and any capital gains.
Tax laws are subject to change, so we urge you to consult you tax adviser about
your particular tax situation and how it might be affected by current law. The
tax status of your dividends from the Fund is the same whether you reinvest your
dividends or receive them in cash. Distributions from the Fund's long-term
capital gains are taxable as capital gains, while distributions from short-term
capital gains and net investment income are generally taxable as ordinary
income. Any capital gains may be taxable at different rates depending on the
length of time the Fund held the assets. In addition, you may be subject to
state and local taxes on distributions.
We will send you a statement each year by January 31 detailing the amount and
nature of all dividends and capital gains that you were paid for the prior year.
Distributions declared in October, November or December but paid in January are
taxable as if they were paid in December.
Global Funds, Inc. is required to withhold 31% of your taxable distributions and
proceed if you do not provide your correct taxpayer identification number (TIN)
or certify that your TIN is correct, or if the IRS instructs us to do so.
45
<PAGE>
Other investment policies and risk considerations
High yield, high risk securities
Delaware International Small Cap Fund, Delaware New Europe Fund and Delaware
Latin America Fund may invest in high yield, high risk foreign fixed income
securities. In the past, in the opinion of the Manager, the high yields from
these bonds have more than compensated for their higher default rates. There can
be no assurance, however, that yields will continue to offset default rates on
these bonds in the future. The Manager intends to maintain an adequately
diversified portfolio of stocks and bonds. While diversification can help to
reduce the effect of an individual default on a Fund, there can be no assurance
that diversification will protect a Fund from widespread bond defaults brought
about by a sustained economic downturn.
Medium- and low-grade bonds held by each Fund may be issued as a consequence of
corporate restructurings, such as leveraged buy-outs, mergers, acquisitions,
debt recapitalizations or similar events. Also these bonds are often issued by
smaller, less creditworthy companies or by highly leveraged (indebted) firms,
which are generally less able than more financially stable firms to make
scheduled payments of interest and principal. The risks posed by bonds issued
under such circumstances are substantial.
The economy and interest rates may affect these high yield, high risk securities
differently from other securities. Prices have been found to be less sensitive
to interest rate changes than higher rated investments, but more sensitive to
adverse economic changes or individual corporate developments. Also, during an
economic downturn or a substantial period of rising interest rates, highly
leveraged issuers may experience financial stress which would adversely affect
their ability to service principal and interest payment obligations, to meet
projected business goals and to obtain additional financing. Changes by
recognized rating agencies in their rating of any security and in the ability of
an issuer to make payments of interest and principal will also ordinarily have a
more dramatic effect on the values of these investments than on the values of
higher-rated securities. Consequently, these changes will affect a Fund's net
asset value per share.
Foreign currency transactions
Although each 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. Each Fund will, however, from time to time, purchase or sell
foreign currencies and/or engage in forward foreign currency transactions in
order to expedite settlement of portfolio transactions and to minimize currency
value fluctuations. The Funds 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 Funds will convert currency on a spot
basis from time to time, and investors should be aware of the costs of currency
conversion.
The Funds may enter into forward contracts to "lock in" the price of a security
it has agreed to purchase or sell, in terms of U.S. dollars or other currencies
in which the transaction will be consummated. By entering into a forward
contract for the purchase or sale, for a fixed amount of U.S. dollars or foreign
currency, of the amount of foreign currency involved in the underlying security
transaction, the Fund will be able to protect itself against a possible loss
resulting from an adverse change in currency exchange rates during the period
between the date the security is purchased or sold and the date on which payment
is made or received.
When the Manager believes that the currency of a particular country may suffer a
significant decline against the U.S. dollar or against another currency, the
Funds may enter into a forward foreign currency contract to sell, for a fixed
amount of U.S. dollars or other appropriate currency, the amount of foreign
currency approximating the value of some or all of the Fund's securities
denominated in such foreign currency. The Funds will not enter into forward
contracts or maintain a net exposure to such contracts where the consummation of
the contracts would obligate a Fund to deliver an amount of foreign currency in
excess of the value of the Fund's securities or other assets denominated in that
currency.
At the maturity of a forward contract, the Funds 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 Funds may realize gains or losses from currency
transactions.
46
<PAGE>
The Funds 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 Funds and against increases in the U.S. dollar cost of such securities to
be acquired. Call options on foreign currency written by a Fund will be covered,
which means that the Fund will own the underlying foreign currency. With respect
to put options on foreign currency written by a Fund, the Fund will establish a
segregated account with its Custodian Bank consisting of cash, U.S. government
securities or other high-grade liquid debt securities in an amount equal to the
amount the Fund will be required to pay upon exercise of the put.
As in the case of other kinds of options, the writing of an option on foreign
currency will constitute only a partial hedge, up to the amount of the premium
received, and the Fund could be required to purchase or sell foreign currencies
at disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on foreign currency may constitute an effective hedge against
fluctuations in exchange rates, although, in the event of rate movements adverse
to the Fund's position, the Fund may forfeit the entire amount of the premium
plus related transaction costs.
47
<PAGE>
Certain management considerations
Year 2000
As with other mutual funds, financial and business organizations and individuals
around the world, the Funds could be adversely affected if the computer systems
used by their 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." Each Fund is taking steps to obtain satisfactory
assurances that its major service providers are taking steps reasonably designed
to address the Year 2000 Problem on the computer systems that the service
providers use. However, there can be no assurance that these steps will be
sufficient to avoid any adverse impact on the business of the Funds. The Year
2000 Problem may also adversely affect the issuers of securities in which the
Funds invest. The portfolio managers and investment professionals of the Fund
consider Year 2000 compliance (including, but not limited to, any or all of the
following: impact on business; cost of compliance plan review and contingency
planning; and vendor compliance) in the securities selection and investment
process. However, there can be no guarantees that, even with their due diligence
efforts, they will be able to predict the effect of Year 2000 on any company or
the performance of its securities.
Investments by Fund of Funds
Delaware International Small Cap Fund accepts investments from the series
portfolios of Delaware Group Foundation Funds, a fund of funds. From time to
time, the Fund may experience large investments or redemptions due to
allocations or rebalancings by Foundation Funds. While it is impossible to
predict the overall impact of these transactions over time, there could be
adverse effects on portfolio management. For example, the Fund may be required
to sell securities or invest cash at times when it would not otherwise do so.
These transactions could also have tax consequences if sales of securities
result in gains, and could also increase transaction costs or portfolio
turnover. The manager will monitor transactions by Foundation Funds and will
attempt to minimize any adverse effects on Delaware International Small Cap Fund
and Foundation Funds as a result of these transactions.
48
<PAGE>
Financial highlights
The financial highlights table is intended to help you understand the Fund's
financial performance. All "per share" information reflects financial results
for a single Fund share. This information has been audited by Ernst & Young LLP,
whose report, along with the Fund's financial statements, is included in the
Fund's annual report, which is available upon request by calling 800.523.1918.
As of November 30, 1999, the Delaware International Small Cap Fund Class A had
one share outstanding, representing the initial seed purchase. Data for this
class is excluded because the data is not believed to be meaningful. The Class B
and C shares of Delaware Global Opportunities Fund and Delaware International
Small Cap Fund, Delaware New Europe Fund and Delaware Latin America Fund were
not operating as of the close of the fiscal year.
<TABLE>
<CAPTION>
Class A Shares
-------------------------------------------
Year Year Period
Ended Ended 7/22/97(1)
11/30 11/30 through
Delaware Global Opportunities Fund 1999 1998 11/30/97
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $9,100 $8,230 $8,500
Income (loss) from investment operations
Net investment income(2) 0.210 0.056
Net realized and unrealized gain (loss)
on investments and foreign currency 0.770 (0.326)
------ ------
Total from investment operations 0.980 (0.270)
------ ------
Less dividends
Dividends from net investment income (0.110) none
------ ------
Total dividends (0.110) none
------ ------
Net asset value, end of period $9.100 $8.230
====== ======
Total return(3) 12.07% (3.18%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) $13 $6
Ratio of expenses to average net assets 0.80% 0.80%
Ratio of expenses to average net assets
prior to expense limitation 1.55% 2.16%
Ratio of net investment income to
average net assets 2.40% 1.86%
Ratio of net investment income to
average net assets prior to expense
limitation 1.65% 0.50%
Portfolio turnover 50% 25%
</TABLE>
1 Date of commencement of operations; ratios have been annualized but total
return has not been annualized.
2 Per share information was based on the average shares outstanding method.
3 Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge. Total Return
reflect the expense limitations in effect for the Fund.
51
<PAGE>
<TABLE>
<CAPTION>
Class
A Shares
Period
12/29/98(1)
through
Delaware New Europe Fund 11/30/99
- --------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period
Income (loss) from investment operations
Net investment income(2)
Net realized and unrealized gain (loss)
on investments and foreign currency
Total from investment operations
Less dividends
Dividends from net investment income
Total dividends
Net asset value, end of period
Total return(3)
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
prior to expense limitation
Ratio of net investment income to
average net assets
Ratio of net investment income to
average net assets prior to expense
limitation
Portfolio turnover
</TABLE>
1 Date of commencement of operations; ratios have been annualized but total
return has not been annualized.
2 Per share information was based on the average shares outstanding method.
3 Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge. Total Return
reflect the expense limitations in effect for the Fund.
<PAGE>
<TABLE>
<CAPTION>
Class
A Shares
Period
12/29/98(1)
through
Delaware Latin America Fund 11/30/99
- --------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period
Income (loss) from investment operations
Net investment income(2)
Net realized and unrealized gain (loss)
on investments and foreign currencies
Total from investment operations
Less dividends
Dividends from net investment income
Total dividends
Net asset value, end of period
Total return(3)
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
prior to expense limitation
Ratio of net investment income to
average net assets
Ratio of net investment income to
average net assets prior to expense
limitation
Portfolio turnover
</TABLE>
1 Date of commencement of operations; ratios have been annualized but total
return has not been annualized.
2 Per share information was based on the average shares outstanding method.
3 Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge. Total Return
reflect the expense limitations in effect for the Fund.
<PAGE>
How to read the financial highlights
Net investment income
Net investment income includes dividend and interest income earned from a fund's
securities; it is after expenses have been deducted.
Net realized and unrealized gain (loss) on investments and foreign currencies
A realized gain on investments occurs when we sell an investment at a profit,
while a realized loss on investments occurs when we sell an investment at a
loss. When an investment increases or decreases in value but we do not sell it,
we record an unrealized gain or loss. The amount of realized gain per share that
we pay to shareholders is listed under "Less dividends and
distributions-Distributions from net realized gain on investments." Realized and
unrealized gain (loss) on foreign currencies represent changes in the U.S.
dollar value of assets (including investments) and liabilities denominated in
foreign currencies as a result of changes in foreign currency exchange rates.
Net asset value (NAV)
This is the value of a mutual fund share, calculated by dividing the net assets
by the number of shares outstanding.
Total return
This represents the rate that an investor would have earned or lost on an
investment in a fund. In calculating this figure for the financial highlights
table, we include fee waivers, exclude front-end and contingent deferred sales
charges, and assume the shareholder has reinvested all dividends and realized
gains.
Net assets
Net assets represent the total value of all the assets in a fund's portfolio,
less any liabilities, that are attributable to that class of the fund.
Ratio of expenses to average net assets
The expense ratio is the percentage of net assets that a fund pays annually for
operating expenses and management fees. These expenses include accounting and
administration expenses, services for shareholders, and similar expenses.
Ratio of net investment income to average net assets
We determine this ratio by dividing net investment income by average net assets.
Portfolio turnover rate
This figure tells you the amount of trading activity in a fund's portfolio. For
example, a fund with a 50% turnover has bought and sold half of the value of its
total investment portfolio during the stated period.
52
<PAGE>
Glossary
Amortized cost
Amortized cost is a method used to value a fixed income security that starts
with the face value of the security and then adds or subtracts from that value
depending on whether the purchase price was greater or less than the value of
the security at maturity. The amount greater or less than the par value is
divided equally over the time remaining until maturity.
Average maturity
An average of when the individual bonds and other debt securities held in a
portfolio will mature.
Bond
A debt security, like an IOU, issued by a company, municipality or government
agency. In return for lending money to the issuer, a bond buyer generally
receives fixed periodic interest payments and repayment of the loan amount on a
specified maturity date. A bond's price changes prior to maturity and is
inversely related to current interest rates. When interest rates rise, bond
prices fall, and when interest rates fall, bond prices rise.
Bond ratings
Independent evaluations of creditworthiness, ranging from Aaa/AAA (highest
quality) to D (lowest quality). Bonds rated Baa/BBB or better are considered
investment grade. Bonds rated Ba/BB or lower are commonly known as junk bonds.
See also Nationally recognized statistical rating organization.
Capital
The amount of money you invest.
Capital appreciation
An increase in the value of an investment.
Capital gains distributions
Payments to mutual fund shareholders of profits (realized gains) from the sale
of a fund's portfolio securities. Usually paid once a year; may be either
short-term gains or long-term gains.
Commission
The fee an investor pays to a financial adviser for investment advice and help
in buying or selling mutual funds, stocks, bonds or other securities.
Compounding
Earnings on an investment's previous earnings.
Consumer Price Index (CPI)
Measurement of U.S. inflation; represents the price of a basket of commonly
purchased goods.
Contingent deferred sales charge (CDSC)
Fee charged by some mutual funds when shares are redeemed (sold back to the
fund) within a set number of years; an alternative method for investors to
compensate a financial adviser for advice and service, rather than an up-front
commission.
Corporate bond
A debt security issued by a corporation. See Bond.
Currency exchange rates
The price at which one country's currency can be converted into another's. This
exchange rate varies almost daily according to a wide range of political,
economic and other factors.
Depreciation
A decline in an investment's value.
53
<PAGE>
Diversification
The process of spreading investments among a number of different securities,
asset classes or investment styles to reduce the risks of investing.
Dividend distribution
Payments to mutual fund shareholders of dividends passed along from the fund's
portfolio of securities.
Duration
A measurement of a fixed-income investment's price volatility. The larger the
number, the greater the likely price change for a given change in interest
rates.
Expense ratio
A mutual fund's total operating expenses, expressed as a percentage of its total
net assets. Operating expenses are the costs of running a mutual fund, including
management fees, offices, staff, equipment and expenses related to maintaining
the fund's portfolio of securities and distributing its shares. They are paid
from the fund's assets before any earnings are distributed to shareholders.
Financial adviser
Financial professional (e.g., broker, banker, accountant, planner or insurance
agent) who analyzes clients' finances and prepares personalized programs to meet
objectives.
Fixed-income securities
With fixed-income securities, the money you originally invested is paid back at
a pre-specified maturity date. These securities, which include government,
corporate or municipal bonds, as well as money market securities, typically pay
a fixed rate of return (often referred to as interest). See bonds.
Inflation
The increase in the cost of goods and services over time. U.S. inflation is
frequently measured by changes in the Consumer Price Index (CPI).
Investment goal
The objective, such as long-term capital growth or high current income, that a
mutual fund pursues.
Management fee
The amount paid by a mutual fund to the investment adviser for management
services, expressed as an annual percentage of the fund's average daily net
assets.
Market capitalization
The value of a corporation determined by multiplying the current market price of
a share of common stock by the number of shares held by shareholders. A
corporation with one million shares outstanding and the market price per share
of $10 has a market capitalization of $10 million.
Maturity
The length of time until a bond issuer must repay the underlying loan principal
to bondholders.
Morgan Stanley Capital International Emerging Markets Free Index
Morgan Stanley Capital International Europe Index
Morgan Stanley World Index
NASD Regulation, Inc. (NASD)
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the actions of
its members.
Nationally recognized statistical rating organization (NRSRO)
A company that assesses the credit quality of bonds, commercial paper, preferred
and common stocks and municipal short-term issues, rating the probability that
the issuer of the debt will meet the scheduled interest payments and repay the
principal. Ratings are published by such companies as Moody's Investors Service,
Inc. (Moody's), Standard & Poor's Ratings Group (S&P), Duff & Phelps, Inc.
(Duff), and Fitch IBCA, Inc. (Fitch).
Net asset value (NAV)
The daily dollar value of one mutual fund share. Equal to a fund's net assets
divided by the number of shares outstanding.
54
<PAGE>
Preferred stock
Preferred stock has preference over common stock in the payment of dividends and
liquidation of assets. Preferred stocks also often pay dividends at a fixed rate
and are sometimes convertible into common stock.
Price/earnings ratio
A measure of a stock's value calculated by dividing the current market price of
a share of stock by its annual earnings per share. A stock selling for $100 per
share with annual earnings per share of $5 has a P/E of 20.
Principal
Amount of money you invest (also called capital). Also refers to a bond's
original face value, due to be repaid at maturity.
Prospectus
The official offering document that describes a mutual fund, containing
information required by the SEC, such as investment objectives, policies,
services and fees.
Redeem
To cash in your shares by selling them back to the mutual fund.
Risk
Generally defined as variability of value; also credit risk, inflation risk,
currency and interest rate risk. Different investments involve different types
and degrees of risk.
Sales charge
Charge on the purchase or redemption of fund shares sold through financial
advisers. May vary with the amount invested. Typically used to compensate
advisers for advice and service provided.
SEC (Securities and Exchange Commission)
Federal agency established by Congress to administer the laws governing the
securities industry, including mutual fund companies.
Share classes
Different classifications of shares; mutual fund share classes offer a variety
of sales charge choices.
Signature guarantee
Certification by a bank, brokerage firm or other financial institution that a
customer's signature is valid; signature guarantees can be provided by members
of the STAMP program.
Standard deviation
A measure of an investment's volatility; for mutual funds, measures how much a
fund's total return has typically varied from its historical average.
Statement of Additional Information (SAI)
The document serving as "Part B" of a fund's Prospectus that provides more
detailed information about the fund's organization, investments, policies and
risks.
Stock
An investment that represents a share of ownership (equity) in a corporation.
Stocks are often referred to as "equities."
Total return
An investment performance measurement, expressed as a percentage, based on the
combined earnings from dividends, capital gains and change in price over a given
period.
Uniform Gift to Minors Act and Uniform Transfers to Minors Act
Federal and state laws that provide a simple way to transfer property to a minor
with special tax advantages.
55
<PAGE>
Volatility
The tendency of an investment to go up or down in value by different magnitudes.
Investments that generally go up or down in value in relatively small amounts
are considered "low volatility" investments, whereas those investments that
generally go up or down in value in relatively large amounts are considered
"high volatility" investments.
56
<PAGE>
Appendix A - Bond Ratings
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.
57
<PAGE>
Additional information about the Funds' investments is available in the Funds'
annual and semi-annual reports to shareholders. In the Funds' shareholder
reports, you will find a discussion of the market conditions and investment
strategies that significantly affected the Funds' performance during the report
period. You can find more detailed information about the Funds in the current
Statement of Additional Information, which we have filed electronically with the
Securities and Exchange Commission (SEC) and which is legally a part of this
Prospectus. If you want a free copy of the Statement of Additional Information,
the annual or semi-annual report, or if you have any questions about investing
in these funds, you can write to us at 1818 Market Street, Philadelphia, PA
19103-3682, or call toll-free 800.523.1918. You may also obtain additional
information about each of the Funds from your financial adviser.
You can find reports and other information about each Fund on the SEC web site
(http://www.sec.gov), or you can get copies of this information, after payment
of a duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-6009. Information about the Funds, including their
Statement of Additional Information, can be reviewed and copied at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
You can get information on the public reference room by calling the SEC at
1.800.SEC.0330.
Web site
www.delawareinvestments.com
E-mail
[email protected]
Shareholder Service Center
800.523.1918
Call the Shareholder Service Center Monday to Friday, 8 a.m. to 8 p.m. Eastern
time:
o For fund information; literature; price, yield and performance figures.
o For information on existing regular investment accounts and retirement plan
accounts including wire investments; wire redemptions; telephone
redemptions and telephone exchanges.
Delaphone Service
800.362.FUND (800.362.3863)
o For convenient access to account information or current performance
information on all Delaware Investments Funds seven days a week, 24 hours a
day, use this Touch-Tone(R) service.
Investment Company Act file number: 811-6324
- -----------------------------------------------------------------
CUSIP Numbers
- -----------------------------------------------------------------
Delaware Global Opportunities Fund
Class A 245914791
Delaware International Small Cap Fund
Class A 245914718
Delaware New Europe Fund
Class A 245914585
Delaware Latin America Fund
Class A 245914635
- -----------------------------------------------------------------
DELAWARE
INVESTMENTS
---------------------
Philadelphia * London
58
<PAGE>
DELAWARE
INVESTMENTS
Philadelphia * London
Delaware Global Opportunities Fund
(formerly Global Equity Fund)
Delaware International Small Cap Fund
Delaware New Europe Fund
Delaware Latin America Fund
Institutional Class
Prospectus
January 31, 2000
Growth of Capital Fund
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy of this prospectus, and any
representation to the contrary is a criminal offense.
<PAGE>
Table of Contents
Fund Profiles page
Delaware Global Opportunities Fund
Delaware International Small Cap Fund
Delaware New Europe Fund
Delaware Latin America Fund
How we manage the Funds page
Our investment strategies
The securities we typically invest in
The risks of investing in the Funds
Who manages the Funds page
Investment manager and sub-adviser
Portfolio managers
Fund administration (Who's who)
About your account page
Investing in the Funds
How to buy shares
How to redeem shares
Account minimum
Exchanges
Dividends, distributions and taxes
Certain management considerations page
2
<PAGE>
Financial highlights page
Appendix A-Ratings
3
<PAGE>
Profile: Delaware Global Opportunities Fund*
What are the Fund's goals?
Delaware Global Opportunities Fund's investment goal is to achieve long-term
growth without undue risk to principal. Although the Fund will strive to achieve
its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
Delaware Global Opportunities Fund seeks to achieve its objective by investing
in securities that provide the potential for capital appreciation and income.
The Fund's primary focus is to invest in domestic and foreign equity securities.
Under normal market conditions, the Fund will invest at least 65% of its assets
in equity 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, one which may be the United States.
In selecting investments for the Fund,
o We strive to identify well managed companies that are undervalued based on
such factors as assets, earnings, dividends or growth potential.
o In order to compare the value of different stocks, we consider whether the
future dividends on a stock are expected to increase faster than, slower
than, or in line with the level of inflation. We then estimate what we
think the value of those anticipated future dividends would be worth if
they were being paid today. We believe this gives us an estimate of what
the stock's true value is.
o We generally prefer to purchase securities in countries where the currency
is undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine
whether a particular currency is overvalued or undervalued by comparing the
amount of goods and services that a dollar will buy in the United States to
the amount of 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 overvalued, and when the dollar buys more, the foreign
currency may be undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease, sometimes rapidly and unpredictably, according to changes in the value
of the Fund's investments. This Fund will be affected primarily by declines in
stock prices that can be caused by a drop in the stock market, an adverse change
in interest rates or poor performance in specific industries or companies.
Because the Fund invests in international securities in both established and
developing countries, it will be affected by international investment risks
related to currency valuations, political instability, economic instability, or
less regulatory standards. For a more complete discussion of risk, please turn
to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for a portfolio that holds equity securities
from both U.S. and foreign countries and is permitted to invest a
portion of its assets in U.S. and foreign fixed-income securities.
o Investors seeking a measure of capital growth and income.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors who are unwilling to accept risks of investing in
foreign securities.
4
<PAGE>
* The Delaware Global Opportunities Fund was formerly known as Global Equity
Fund. The change in the Fund's name became effective on July 21, 1998.
How has the Delaware Global Opportunities Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show how for the past two calendar years, as well as the average
annual returns for these shares for the one-year period and since inception. The
Fund's past performance is not necessarily an indication of how it will perform
in the future. The returns reflect voluntary expense caps. The returns would be
lower without the voluntary caps.
Year-by-year total return
- ------------- -----------
1998 11.05%
- ------------- -----------
1999
- ------------- -----------
During the periods illustrated in this bar chart, the Class' highest quarterly
return was 00.00% for the quarter ended _________________ and its lowest
quarterly return was 00.00% for the quarter ended __________________.
Average annual returns for periods ending 12/31/99
-------------------------------------------------------------------------
CLASS Institutional Morgan Stanley
World Index
-------------------------------------------------------------------------
1 year
-------------------------------------------------------------------------
Since inception
(7/22/97)
-------------------------------------------------------------------------
The Fund's returns are compared to the performance of the Morgan Stanley World
Index. You should remember that unlike the Fund, the index is unmanaged and
doesn't reflect the costs of operating a mutual fund, such as the costs of
buying, selling, and holding the securities.
5
<PAGE>
What are the Delaware Global Opportunities Fund's fees and expenses?
You do not pay sales charges directly from your investments when you buy or sell
shares of the Institutional Class.
- -------------------------------------------------------- ----------
Maximum sales charge (load) imposed on purchases as a none
percentage of offering price
- -------------------------------------------------------- ----------
Maximum contingent deferred sales charge (load) as a none
percentage of original purchase price or redemption
price, whichever is lower
- -------------------------------------------------------- ----------
Maximum sales charge (load) imposed on reinvested none
dividends
- -------------------------------------------------------- ----------
Redemption fees none
- -------------------------------------------------------- ----------
Exchange Fees(1) none
- -------------------------------------------------------- ----------
Annual fund operating expenses are deducted from the Fund's assets.
- ------------------------------------------------- -----------
Management fees(2)
- ------------------------------------------------- -----------
Distribution and service (12b-1) fees none
- ------------------------------------------------- -----------
Other expenses
- ------------------------------------------------- -----------
Total operating expenses3
- ------------------------------------------------- -----------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(4) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
- ----------------- -----------
1 year
- ----------------- -----------
3 years
- ----------------- -----------
5 years
- ----------------- -----------
10 years
- ----------------- -----------
(1) Exchanges are subject to the requirements of each fund in the Delaware
Investments family. A front-end sales charge may apply if you exchange your
shares into a fund that has a front-end sales charge.
(3) The investment manager has agreed to waive fees and pay expenses from the
commencement of the Fund's operations through May 31, 2000, in order to
prevent total operating expenses (excluding any taxes, interest, brokerage
fees and extraordinary expenses) from exceeding 0.80% of average daily net
assets. The fees and expenses shown in the table above do not reflect this
voluntary expense cap. The following table shows operating expenses which
are based on the most recently completed fiscal year and reflect the
manager's current fee waivers and payments.
- ----------------------------------------------------------------------------
Fund operating expenses including voluntary expense caps in
effect through May 31, 2000
- ----------------------------------------------------------------------------
Management fees
- -------------------------------------------- -------------------------------
Distribution and service (12b-1) fees none
- -------------------------------------------- -------------------------------
Other expenses
- -------------------------------------------- -------------------------------
Total operating expenses
- -------------------------------------------- -------------------------------
(4) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show. This example does not reflect the voluntary expense cap described in
footnote 3.
6
<PAGE>
Profile: Delaware International Small Cap Fund
What are the Fund's goals?
Delaware International Small Cap Fund seeks long-term capital appreciation.
Although, the Fund will strive to achieve its goal, there is no assurance that
it will.
What are the Fund's main investment strategies?
Delaware International Small Cap Fund seeks to achieve its objective by
investing primarily in smaller non-U.S. companies, which may include companies
located or operating in established or emerging countries. Under normal
circumstances, at least 65% of the Fund's total assets will be invested in
equity securities of companies 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. The current market capitalization of the
companies in which the Fund intends to invest primarily will generally be $1.5
billion or less (at the time of purchase).
By focusing on smaller, non-U.S. companies, the Fund seeks to identify equity
securities of emerging and other growth-oriented companies which in the opinion
of the manage, are responsive to changes within their markets, and have the
fundamental characteristics to support growth. We will seek to identify changing
and dominant trends within the relevant markets, and will purchase securities of
companies which it believes will benefit from these trends. In addition, we will
consider the financial strength of the company or its industry. We may invest in
smaller capitalization companies that may be temporarily out of favor or
overlooked by securities analysts and whose value, therefore, may not be fully
recognized by the market.
The Fund may invest up to 15% of its net assets in high yield, high risk foreign
fixed-income securities.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease, sometimes rapidly and unpredictably, according to changes in the value
of the Fund's investments. This Fund will be affected primarily by declines in
stock and bond prices which can be caused by a drop in the stock or bond market,
an adverse change in interest rates or poor performance in specific industries
or companies. Investments in foreign securities whether equity or fixed-income,
involve special risks including those related to currency fluctuations, as well
as to political, economic and social situations different from and potentially
more volatile than those in the U.S. In addition, the accounting, tax and
financial reporting standards of foreign countries are different from and may be
less reliable or comprehensive than those relating to U.S. issuers. The high
yield, high risk foreign fixed-income securities that the Fund may invest in are
subject to substantial risks, particularly during periods of economic downturns
or rising interest rates. For a more complete discussion of risk, please turn to
page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for growth potential from a portfolio of foreign
securities.
o Investors willing to accept the risks associated with foreign
investing as well as investments in smaller-sized issuers, some of
which may be speculative.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors whose primary goal is income.
o Investors who are unwilling to accept risks of investing in foreign
securities.
7
<PAGE>
How has the Delaware International Small Cap Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show returns for the past calendar year, as well as the average
annual returns for these shares for the one-year period and since inception. The
Fund's past performance is not necessarily an indication of how it will perform
in the future. The returns reflect voluntary expense caps. The returns would be
lower without the voluntary caps.
Total Return
- ------------- -----------
1999
- ------------- -----------
During the period illustrated in this bar chart, the Class' highest quarterly
return was 00.00% for the quarter ended _________________ and its lowest
quarterly return was 00.00% for the quarter ended __________________.
Average annual returns for periods ending 12/31/99
-------------------------------------------------------------------------
CLASS Institutional Morgan Stanley
EAFE
Index
-------------------------------------------------------------------------
1 year
-------------------------------------------------------------------------
Since inception
(12/19/97)
-------------------------------------------------------------------------
The Fund's returns are compared to the performance of the Morgan Stanley EAFE
Index. You should remember that unlike the Fund, the index is unmanaged and
doesn't reflect the costs of operating a mutual fund, such as the costs of
buying, selling, and holding the securities.
8
<PAGE>
What are the Delaware International Small Cap Fund's fees and expenses?
You do not pay sales charges directly from your investments when you buy or sell
shares of the Institutional Class.
- -------------------------------------------------------- ----------
Maximum sales charge (load) imposed on purchases as a none
percentage of offering price
- -------------------------------------------------------- ----------
Maximum contingent deferred sales charge (load) as a none
percentage of original purchase price or redemption
price, whichever is lower
- -------------------------------------------------------- ----------
Maximum sales charge (load) imposed on reinvested none
dividends
- -------------------------------------------------------- ----------
Redemption fees none
- -------------------------------------------------------- ----------
Exchange Fees(1) none
- -------------------------------------------------------- ----------
Annual fund operating expenses are deducted from the Fund's assets.
- ------------------------------------------------- -----------
Management fees
- ------------------------------------------------- -----------
Distribution and service (12b-1) fees none
- ------------------------------------------------- -----------
Other expenses
- ------------------------------------------------- -----------
Total operating expenses(2)
- ------------------------------------------------- -----------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(3) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
- ----------------- -----------
1 year
- ----------------- -----------
3 years
- ----------------- -----------
5 years
- ----------------- -----------
10 years
- ----------------- -----------
(1) Exchanges are subject to the requirements of each fund in the Delaware
Investments family. A front-end sales charge may apply if you exchange your
shares into a fund that has a front-end sales charge.
(2) The investment manager has agreed to waive fees and pay expenses from the
commencement of operations through May 31, 2000, in order to prevent total
operating expenses (excluding any taxes, interest, brokerage fees and
extraordinary expenses) from exceeding 1.25% of average daily net assets.
The fees and expenses shown in the table above do not reflect this
voluntary expense cap. The following table shows operating expenses which
are based on the most recently completed fiscal year and reflect the
manager's current fee waivers and payments.
9
<PAGE>
- --------------------------------------------------------------------------------
Fund operating expenses including voluntary expense caps
in effect through May 31, 2000
- --------------------------------------------------------------------------------
Management fees
- -------------------------------------------------- -----------------------------
Distribution and service (12b-1) fees none
- -------------------------------------------------- -----------------------------
Other expenses
- -------------------------------------------------- -----------------------------
Total operating expenses
- -------------------------------------------------- -----------------------------
(3) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show. This example does not reflect the voluntary expense cap described in
footnote 2.
10
<PAGE>
How has the Delaware New Europe Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show returns for the past calendar year, as well as the average
annual returns for these shares for the one-year period and since inception. The
Fund's past performance is not necessarily an indication of how it will perform
in the future. The returns reflect voluntary expense caps. The returns would be
lower without the voluntary caps.
Total Return
- ------------- -----------
1999
- ------------- -----------
During the period illustrated in this bar chart, the Class' highest quarterly
return was 00.00% for the quarter ended _________________ and its lowest
quarterly return was 00.00% for the quarter ended __________________.
Average annual returns for periods ending 12/31/99
-------------------------------------------------------------------------
CLASS Institutional Morgan Stanley
Capital
International
Europe Index
-------------------------------------------------------------------------
1 year
-------------------------------------------------------------------------
Since inception
(12/19/97)
-------------------------------------------------------------------------
The Fund's returns are compared to the performance of the Morgan Stanley Capital
International Europe Index. You should remember that unlike the Fund, the index
is unmanaged and doesn't reflect the costs of operating a mutual fund, such as
the costs of buying, selling, and holding the securities.
11
<PAGE>
Profile: Delaware New Europe Fund
What are the Fund's goals?
The Delaware New Europe Fund seeks long-term capital appreciation. Although, the
Fund will strive to achieve its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
We invest primarily in equity securities of European countries. Under normal
market conditions, at least 65% of New Europe's assets will be invested in
equity securities of companies organized or having a majority of their assets in
or deriving a majority of their operating income in Europe. Such countries may
have well-established economies or securities markets or emerging economies or
securities markets or smaller securities markets. Up to 30% of the Fund's assets
may be invested 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.
In selecting investments for the Fund,
o In order to compare the value of different stocks, we consider whether the
future dividends on a stock are expected to increase faster than, slower
than, or in line with the level of inflation. We then estimate what we
think the value of those anticipated future dividends would be worth if
they were being paid today. We believe this gives us an estimate of what
the stock's true value is. Because many of the countries in which the Fund
invests are emerging countries, there may be less information available for
us to use in making this analysis than is available for more developed
countries.
o We generally prefer to purchase securities in countries where the currency
is undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine
whether a particular currency is overvalued or undervalued by comparing the
amount of goods and services that a dollar will buy in the United States to
the amount of 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 overvalued, and when the dollar buys more, the foreign
currency may be undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. The price of Fund shares will increase and
decrease, sometimes rapidly and unpredictably, according to changes in the value
of the Fund's investments. This Fund will be affected primarily by declines in
stock and bond prices, which can be caused by a drop in the stock or bond
market, an adverse change in interest rates or poor performance in specific
industries or companies. Because the Fund invests in international securities in
developing countries, as well as established countries, it will be affected by
international investment risks related to currency valuations, political
instability or inadequate regulatory standards. The Delaware New Europe Fund
targets a specific region of the world for investment. Therefore, an investment
in this Fund will likely be more volatile than a more geographically diversified
fund. In addition, the performance of this Fund is closely tied to the economic
and political conditions of the region. High yield, high risk foreign
fixed-income securities are subject to substantial risks, particularly during
periods of economic downturns or rising interest rates. For a more complete
discussion of risk, please turn to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for long-term growth potential.
o Investors willing to accept the risks associated with foreign investing
as well as investments in smaller-sized issuers, some of which may be
speculative.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors whose primary goal is income.
o Investors who are unwilling to accept risks of investing in foreign
securities.
10
What are the Delaware New Europe Fund's fees and expenses?
You do not pay sales charges directly from your investments when you buy or sell
shares of the Institutional Class.
- -------------------------------------------------------- ----------
Maximum sales charge (load) imposed on purchases as a none
percentage of offering price
- -------------------------------------------------------- ----------
Maximum contingent deferred sales charge (load) as a none
percentage of original purchase price or redemption
price, whichever is lower
- -------------------------------------------------------- ----------
Maximum sales charge (load) imposed on reinvested none
dividends
- -------------------------------------------------------- ----------
Redemption fees none
- -------------------------------------------------------- ----------
Exchange Fees(1) none
- -------------------------------------------------------- ----------
Annual fund operating expenses are deducted from the Fund's assets.
- ------------------------------------------------- -----------
Management fees
- ------------------------------------------------- -----------
Distribution and service (12b-1) fees none
- ------------------------------------------------- -----------
Other expenses
- ------------------------------------------------- -----------
Total operating expenses(2)
- ------------------------------------------------- -----------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(3) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
- ----------------- -----------
1 year
- ----------------- -----------
3 years
- ----------------- -----------
5 years
- ----------------- -----------
10 years
- ----------------- -----------
(1) Exchanges are subject to the requirements of each fund in the Delaware
Investments family. A front-end sales charge may apply if you exchange your
shares into a fund that has a front-end sales charge.
(2) The investment manager has agreed to waive fees and pay expenses through
May 31, 2000, in order to prevent total operating expenses (excluding any
taxes, interest, brokerage fees and extraordinary expenses) from exceeding
1.25% of average daily net assets. The fees and expenses shown in the table
above do not reflect this voluntary expense cap. The following table shows
Fund operating expenses for the current fiscal year reflecting the
manager's current fee waivers and payments.
- --------------------------------------------------------------------------------
Fund operating expenses including voluntary expense caps
in effect through May 31, 2000
- --------------------------------------------------------------------------------
Management fees
- ---------------------------------------------- ---------------------------------
Distribution and service (12b-1) fees none
- ---------------------------------------------- ---------------------------------
Other expenses
- ---------------------------------------------- ---------------------------------
Total operating expenses
- ---------------------------------------------- ---------------------------------
12
<PAGE>
(3) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show. This example does not reflect the voluntary expense cap described in
footnote 2.
13
<PAGE>
Profile: Delaware Latin America Fund
What are the Fund's goals?
Delaware Latin America Fund seeks long-term capital appreciation. Although, the
Fund will strive to achieve its goal, there is no assurance that it will.
What are the Fund's main investment strategies?
We invest primarily in equity securities of Latin American companies. Under
normal market conditions, at least 65% of Delaware Latin America Fund's assets
will be invested in equity securities of companies organized or having a
majority of their assets in or deriving a majority of their operating income in
Latin America. Many of the countries in which the Fund invests have emerging
economies or securities markets or smaller securities markets. Up to 30% of the
Fund's assets may be invested 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.
In selecting investments for the Fund,
o In order to compare the value of different stocks, we consider whether the
future dividends on a stock are expected to increase faster than, slower
than, or in line with the level of inflation. We then estimate what we
think the value of those anticipated future dividends would be worth if
they were being paid today. We believe this gives us an estimate of what
the stock's true value is. Because many of the countries in which the Fund
invests are emerging countries, there may be less information available for
us to use in making this analysis than is available for more developed
countries.
o We generally prefer to purchase securities in countries where the currency
is undervalued or fair-valued compared to other countries because these
securities may offer greater return potential. We attempt to determine
whether a particular currency is overvalued or undervalued by comparing the
amount of goods and services that a dollar will buy in the United States to
the amount of 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 overvalued, and when the dollar buys more, the foreign
currency may be undervalued.
What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest. . The price of Fund shares will increase
and decrease, sometimes rapidly and unpredictably, according to changes in the
value of the Fund's investments. This Fund will be affected primarily by
declines in stock and bond prices which can be caused by a drop in the stock or
bond market, an adverse change in interest rates or poor performance in specific
industries or companies. Because the Fund invests in international securities in
developing countries, as well as established countries, it will be affected by
international investment risks related to currency valuations, political
instability or inadequate regulatory standards. The Delaware Latin America Fund
targets a specific region of the world for investment. Therefore, an investment
in this Fund will likely be more volatile than a more geographically diversified
fund. In addition, the performance of this Fund is tied to the economic and
political conditions of this region. High yield, high risk foreign fixed-income
securities are subject to substantial risks, particularly during periods of
economic downturns or rising interest rates. For a more complete discussion of
risk, please turn to page ___.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
You should keep in mind that an investment in the fund is not a complete
investment program; it should be considered just one part of your total
financial plan. Be sure to discuss this Fund with your financial adviser to
determine whether it is an appropriate choice for you.
Who should invest in the Fund
o Investors with long-term financial goals.
o Investors looking for long-term growth potential.
o Investors willing to accept the risks associated with foreign investing
as well as investments in smaller-sized issuers, some of which may be
speculative.
Who should not invest in the Fund
o Investors with short-term financial goals.
o Investors whose primary goal is income.
o Investors who are unwilling to accept share prices that may fluctuate,
sometimes significantly, over the short term.
o Investors who are unwilling to accept risks of investing in foreign
securities.
14
<PAGE>
How has the Delaware Latin America Fund performed?
This bar chart and table can help you evaluate the potential risks of investing
in the Fund. We show returns for the past calendar year, as well as the average
annual returns for these shares for the one-year period and since inception. The
Fund's past performance is not necessarily an indication of how it will perform
in the future. The returns reflect voluntary expense caps. The returns would be
lower without the voluntary caps.
Total Return
- ------------- -----------
1999
- ------------- -----------
During the period illustrated in this bar chart, the Class' highest quarterly
return was 00.00% for the quarter ended _________________ and its lowest
quarterly return was 00.00% for the quarter ended __________________.
Average annual returns for periods ending 12/31/99
-------------------------------------------------------------------------
CLASS Institutional Morgan Stanley Capital
International Emerging
Markets Free Index
-------------------------------------------------------------------------
1 year
-------------------------------------------------------------------------
Since inception
(12/29/98)
-------------------------------------------------------------------------
The Fund's returns are compared to the performance of the Morgan Stanley Capital
International Emerging Markets Free Index. You should remember that unlike the
Fund, the index is unmanaged and doesn't reflect the costs of operating a mutual
fund, such as the costs of buying, selling, and holding the securities.
15
<PAGE>
What are the Delaware Latin America Fund's fees and expenses?
You do not pay sales charges directly from your investments when you buy or sell
shares of the Institutional Class.
- -------------------------------------------------------- ----------
Maximum sales charge (load) imposed on purchases as a none
percentage of offering price
- -------------------------------------------------------- ----------
Maximum contingent deferred sales charge (load) as a none
percentage of original purchase price or redemption
price, whichever is lower
- -------------------------------------------------------- ----------
Maximum sales charge (load) imposed on reinvested none
dividends
- -------------------------------------------------------- ----------
Redemption fees none
- -------------------------------------------------------- ----------
Exchange Fees(1) none
- -------------------------------------------------------- ----------
Annual fund operating expenses are deducted from the Fund's assets.
- ------------------------------------------------- -----------
Management fees
- ------------------------------------------------- -----------
Distribution and service (12b-1) fees none
- ------------------------------------------------- -----------
Other expenses
- ------------------------------------------------- -----------
Total operating expenses(2)
- ------------------------------------------------- -----------
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds with similar investment
objectives. We show the cumulative amount of Fund expenses on a hypothetical
investment of $10,000 with an annual 5% return over the time shown.(3) This is
an example only, and does not represent future expenses, which may be greater or
less than those shown here.
- ----------------- -----------
1 year
- ----------------- -----------
3 years
- ----------------- -----------
5 years
- ----------------- -----------
10 years
- ----------------- -----------
(1) Exchanges are subject to the requirements of each fund in the Delaware
Investments family. A front-end sales charge may apply if you exchange your
shares into a fund that has a front-end sales charge.
(2) The investment manager has agreed to waive fees and pay expenses from the
commencement of operations through May 31, 2000, in order to prevent total
operating expenses (excluding any taxes, interest, brokerage fees and
extraordinary expenses) from exceeding 1.25% of average daily net assets.
The fees and expenses shown in the table above do not reflect this
voluntary expense cap. The following table shows Fund operating expenses
for the current fiscal year reflecting the manager's current fee waivers
and payments.
- --------------------------------------------------------------------------------
Fund operating expenses including voluntary expense caps
in effect through May 31, 2000
- --------------------------------------------------------------------------------
Management fees
- --------------------------------------------- ----------------------------------
Distribution and service (12b-1) fees none
- --------------------------------------------- ----------------------------------
Other expenses
- --------------------------------------------- ----------------------------------
Total operating expenses
- --------------------------------------------- ----------------------------------
(3) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. Also, this example assumes that the
Fund's total operating expenses remain unchanged in each of the periods we
show. In addition, this example does not reflect the voluntary expense cap
described in footnote 2.
16
<PAGE>
How we manage the Funds
We take a disciplined approach to investing, combining investment strategies and
risk management techniques that can help shareholders meet their goals.
How we manage the Funds
We take a disciplined approach to investing, combining investment strategies and
risk management techniques that can help shareholders meet their goals.
Our investment strategies
----------------------------------------------------------------------
The investment objective of each Fund described in this Prospectus is
non-fundamental. This means the Board of Trustees may change the
objective without obtaining shareholder approval. If the objective
were changed, we would notify shareholders before the change became
effective.
----------------------------------------------------------------------
Delaware Global Opportunities Fund
Delaware Global Opportunities Fund's primary objective is long-term growth
without undue risk to principal. The Fund seeks to achieve its objective by
investing in global equity securities that provide the potential for capital
appreciation and income. The Fund's primary focus will be to invest in domestic
and foreign equity securities and, under normal market conditions, at least 65%
of its assets will be invested in equity securities. The Fund's investments will
be made in 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, one of which may be the United States. However, more than 25% of the
Fund's total assets may be invested in the securities of issuers located in the
same country.
The Fund will attempt to achieve its investment objective by investing in
securities traded in equity markets and currencies that we believe offer the
best relative values within the global investment universe. Equity securities in
which the Fund may invest include convertible securities, common stocks,
preferred stocks and warrants issued in foreign countries or in the U.S.
Simultaneous with identifying the most attractive equity markets and currencies,
we will attempt to purchase undervalued securities. Individual equity securities
around the world will be selected based on an analysis of the company's
operations, financial statements and each company's currency valuation.
The Fund may invest in securities issued in any currency and may hold foreign
currency. Securities of issuers within a given country may be denominated in the
currency of another country or in multinational currency units such as the Euro
and European Currency Unit (ECU). The Fund may enter into forward foreign
currency exchange contracts (forward contracts) to buy or sell foreign
currencies. The Fund's use of forward contracts will not eliminate fluctuations
in the underlying prices of the securities that the Fund holds or intends to
purchase. While using forward contracts tends to minimize the risk of loss from
a decline in the value of a particular currency, using forward contracts also
tends to limit any potential gain that might result from the increase in value
of such currency.
The Fund may invest up to 35% of its assets in income producing debt securities
such as U.S. or foreign government or corporate bonds. As a general matter, the
Fund only invests in debt securities when we believe, considering the risks,
that they offer better long-term potential returns than investments in equity
securities.
For temporary defensive purposes, the Fund may invest all or a substantial
portion of its assets in high quality U.S. and foreign governmental and
corporate debt instruments. The Fund may also hold these securities pending
investment of proceeds from new sales of Fund shares and to maintain sufficient
cash to meet redemption requests.
While the Fund may purchase securities in any foreign country, developed and
underdeveloped, or emerging market countries, it is currently anticipated that
the countries in which the Fund may invest will include, but are not limited to
Australia, Belgium, Canada, France, Germany, Hong Kong, Japan, Malaysia, the
Netherlands, Singapore, Spain, Switzerland and the United Kingdom, as well as
Indonesia, Korea, the Philippines, South Africa, Taiwan and
17
<PAGE>
Thailand. In certain countries, investments may only be made by purchasing
shares of closed-end investment companies that in turn are authorized to invest
in the securities of such countries.
Delaware International Small Cap Fund
The Fund seeks long-term capital appreciation. The Fund seeks to achieve its
objective by investing primarily in equity securities of smaller non-U.S.
companies, which may include companies located or operating in established or
emerging countries. Under normal circumstances, at least 65% of the Fund's total
assets will be invested in equity securities of companies 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. However, more
than 25% of the Fund's total assets may be invested in the securities of issuers
located in the same country. The current market capitalization of the companies
in which the Fund intends to invest primarily will generally be $1.5 billion or
less (at the time of purchase).
The equity securities in which the Fund may invest include common stocks,
preferred stocks, rights or warrants to purchase common stocks and securities
convertible into common stocks. The Fund may also invest in foreign companies
through sponsored or unsponsored Depositary Receipts, which are receipts
typically issued by a bank or trust company evidencing ownership of underlying
securities issued by a foreign company. The Fund may invest in securities issued
in any currency and may hold foreign currency.
In selecting investments for the Fund, the manager 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. The manager uses the dividend discount
analysis to compare the value of different investments. Using this technique,
the manager 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.
With a purchasing parity approach, the manager 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. 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. When the dollar buys less,
the foreign currency may be considered to be overvalued. Conversely, when the
dollar buys more, the currency may be considered to be undervalued.
While the Fund may purchase securities in any foreign country, developed and
underdeveloped, or emerging market countries, it is currently anticipated that
the countries in which the Fund may invest will include, but not be limited to,
Australia, Belgium, Canada, France, Germany, Hong Kong, Japan, the Netherlands,
New Zealand, Singapore and Malaysia, Spain, Switzerland, the United Kingdom, as
well as Argentina, Brazil, Chile, Egypt, Greece, India, Indonesia, Korea, Peru,
the Philippines, South Africa, Taiwan, Thailand and Turkey. With respect to
certain countries, investments by an investment company may only be made through
investments in closed-end investment companies that in turn are authorized to
invest in the securities of such countries.
The Fund 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.
The Fund may invest up to 15% 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 (commonly known as junk bonds) rated lower
than BBB by S&P and Baa by Moody's or, if unrated, are considered by the manager
to be of equivalent quality and which present special investment risks. See High
Yield, High Risk Securities.
For temporary defensive purposes, the Fund may invest all or a substantial
portion of its assets in high quality U.S. and foreign governmental and
corporate debt instruments. The Fund may also hold these securities pending
investment of proceeds from new sales of Fund shares and to maintain sufficient
cash to meet redemption requests.
Delaware New Europe Fund
18
<PAGE>
The investment objective of New Europe is to achieve long-term capital
appreciation. The Fund seeks to achieve its objective by investing primarily in
equity securities of European companies, which may include companies located or
operating in established or emerging European countries. Under normal
circumstances, at least 65% of the Fund's total assets will be invested in
equity securities of companies organized or having a majority of their assets in
or deriving a majority of their operating income in Europe. However, more than
25% of the Fund's total assets may be invested in the securities of issuers
located in the same country. The companies in which the Fund will invest will be
of varying size.
The Fund will invest primarily in common stocks and may, to a lesser extent,
invest in preferred stocks, rights or warrants to purchase common stocks and
securities convertible into common stocks. The Fund will also invest in foreign
companies through sponsored or unsponsored Depositary Receipts. The Fund 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. The Fund's investments may be issued in any
currency and the Fund will, from time to time, hold cash in foreign currencies.
Securities of issuers within a given country may be denominated in the currency
of another country or in multinational currency units such as the Euro.
The Fund may invest in securities of issuers located in any European country
where the investment manager believes that there is the potential for long-term
capital appreciation. The Fund may invest in the securities of issuers located
in European countries with well-established economies and securities markets or
in countries with emerging economies or securities markets or smaller securities
markets. In addition, if opportunities arise, the Fund may invest in securities
of issuers located in Eastern European countries.
The Fund may invest up to 30% 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 (commonly known as junk bonds), including
Brady Bonds, rated lower than BBB by S&P and Baa by Moody's or, if unrated,
considered by the investment manager to be of equivalent quality, and which
present special investment risks. See High Yield, High Risk Securities.
For temporary defensive purposes, the Fund may invest all or a substantial
portion of its assets in high quality U.S. and foreign governmental and
corporate debt instruments. The Fund may also hold these securities pending
investment of proceeds from new sales of Fund shares and to maintain sufficient
cash to meet redemption requests.
Delaware Latin America Fund
The investment objective of Latin America is to achieve long-term capital
appreciation. The Fund seeks to achieve its objective by investing primarily in
equity securities of companies in Latin America, most of which are emerging
market countries. Under normal circumstances, at least 65% of the Fund's total
assets will be invested in equity securities of companies organized or having a
majority of their assets in or deriving a majority of their income in Latin
America. However, more than 25% of the Fund's total assets may be invested in
the securities of issuers located in the same country. The companies in which
the Fund will invest will be of varying size.
The Fund will invest in common stocks and may, to a lesser extent, invest in
preferred stocks, rights or warrants to purchase common stocks and securities
convertible into common stocks. The Fund will also invest in foreign companies
through sponsored or unsponsored Depositary Receipts. The Funds may also invest
in convertible preferred stocks that offer enhanced yield features and certain
other non-traditional equity securities. The Fund's investments may be issued in
any currency and the Fund will, from time to time, hold cash in foreign
currencies. Securities of issuers within a given country may be denominated in
the currency of another country or in multinational currency units such as the
Euro.
The Latin American countries in which the Fund may invest include Argentina,
Belize, Bolivia, Brazil, Chile, Columbia, Costa Rica, Cuba, Ecuador, El
Salvador, French Guyana, Guatemala, Guyana, Honduras, Mexico, Nicaragua, Panama,
Paraguay, Peru, Surinam, Trinidad/Tobago, Uruguay and Venezuela. This is a
representative list; the Fund may invest in countries not listed here.
In addition, the Fund may invest up to 30% 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 (commonly known as junk bonds) rated
lower than BBB by S&P and
19
<PAGE>
Baa by Moody's or, if unrated, are considered by the investment manager to be of
equivalent quality and which present special investment risks. See High Yield,
High Risk Securities.
For temporary defensive purposes, the Fund may invest all or a substantial
portion of its assets in high quality U.S. and foreign governmental and
corporate debt instruments. The Fund may also hold these securities pending
investment of proceeds from new sales of Fund shares and to maintain sufficient
cash to meet redemption requests.
20
<PAGE>
The securities we typically invest in
Stocks offer investors the potential for capital appreciation, and may pay
dividends as well. Fixed-income securities offer the potential for greater
income payments than stocks, and also may provide capital appreciation
potential. The following chart provides a brief description of the securities
that the Funds may invest in. Please see the Statement of Additional Information
for additional descriptions of these as well as other investments.
<TABLE>
<CAPTION>
- ---------------------------------- -------------------------------------------------------------------------------------------------
Securities How we use them
- ---------------------------------- --------------------------- ------------------------ ------------------------ -------------------
Delaware Global Delaware International Delaware New Delaware Latin
Opportunities Fund Small Cap Fund Europe Fund America Fund
- ---------------------------------- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stocks: Securities that Consistent with their respective investment objective, each Fund will invest its assets in common
represent shares of ownership in stocks, as well as in dividend paying stocks.
a corporation. Stockholders
participate in the corporation's
profits and losses,
proportionate to the number of
shares they own.
- ---------------------------------- -------------------------------------------------------------------------------------------------
Foreign Currency Transactions: Although the Funds value their assets daily in U.S. dollars, they do not intend to convert their
A forward foreign currency holdings of foreign currencies into U.S. dollars on a daily basis. Each Fund will, however, from
exchange contract involves an time to time, purchase or sell foreign currencies and/or engage in forward foreign currency
obligation to purchase or sell a exchange transactions. Each Fund may conduct its foreign currency transactions on a cash basis
specific currency at a future at the rate prevailing in the foreign currency exchange market or through a forward foreign
date, which may be any fixed currency exchange contract or forward contract.
number of days from the date of
the contract, agreed upon by the A Fund may use forward contracts for hedging purposes to attempt to protect the value of the
parties, at a price set at the Fund's current security or currency holdings. It may also use forward contracts if it has agreed
time of the contract. to sell asecurity and wants to "lock-in" the price of that security, in terms of U.S. dollars or
another currency in which the transaction will be completed. Investors should be aware of the
costs of currency conversion. The Funds will not use forward contracts for speculative
purposes.
- ---------------------------------- -------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- -------------------------------------------------------------------------------------------------
Securities How we use them
- ---------------------------------- --------------------------- ------------------------ ------------------------ -------------------
Delaware Global Delaware International Delaware New Delaware Latin
Opportunities Fund Small Cap Fund Europe Fund America Fund
- ---------------------------------- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Depositary Receipts Each Fund may invest in sponsored and unsponsored ADRs, EDRs and GDRs, generally focusing on
(ADRs), European Depositary those whose underlying securities are issued by foreign entities.
Receipts (EDRs), and Global
Depositary Receipts (GDRs): ADRs To determine whether to purchase a security in a foreign market or through depositary receipts,
are receipts issued by a U.S. we evaluate the price levels, the transaction costs, taxes and administrative costs involved
depositary (usually a U.S. bank) with each security to identify the most efficient choice.
and EDRs and GDRs are receipts
issued by a depositary outside of
the U.S. (usually a non-U.S. bank
or trust company or a foreign
branch of a U.S. bank). Depositary
receipts represent an ownership
interest in an underlying security
that is held by the depositary.
Generally, the underlying security
represented by an ADR is issued by
a foreign issuer and the
underlying security represented by
an EDR or GDR may be issued by a
foreign or U.S. issuer. Sponsored
depositary receipts are issued
jointly by the issuer of the
underlying security and the
depositary, and unsponsored
depositary receipts are issued by
the depositary without the
participation of the issuer of the
underlying security. Generally,
the holder of the depositary
receipt is entitled to all
payments of interest, dividends or
capital gains that are made on the
underlying security.
- ---------------------------------- -------------------------------------------------------------------------------------------------
Corporate Bonds: Debt The Funds may invest in corporate bonds generally rated AA or better by S&P and Aa by Moody's.
obligations issued by U.S. or
foreign corporations.
- ---------------------------------- -------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- -------------------------------------------------------------------------------------------------
Securities How we use them
- ---------------------------------- --------------------------- ------------------------ ------------------------ -------------------
Delaware Global Delaware International Delaware New Delaware Latin
Opportunities Fund Small Cap Fund Europe Fund America Fund
- ---------------------------------- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
High-Yield, High Risk Delaware Global International Small Delaware New Europe Fund and Delaware
Fixed-Income Securities: Opportunities Fund may Cap may invest up Latin America Fund may invest up to 30%
Securities that are rated lower not invest in these to 15% of its net of their respective net assets in these
than BBB by S&P or Baa by securities. assets in these securities.
Moody's, or if unrated, of equal securities.
quality. These securities may be
issued by companies or governments
of emerging or developing
countries, which may be less
creditworthy. The risk that these
companies or governments may not
be able to make interest or
principal payments is substantial.
These Funds will not purchase securities rated lower than C by S&P
or Ca by Moody's or, if unrated, considered to be of an equivalent
quality to such ratings by the Manager.
- ------------------------------------------------------------------------------------------------------------------------------------
Foreign Government Securities:
Debt obligations issued by a
government other than the
United States or by an agency, For temporary defensive purposes, each Fund may invest in high quality debt obligations of
instrumentality or political foreign governments, their agencies, instrumentalities and political sub-divisions.
subdivision of such governments.
Delaware Global A portion of each Fund's assets may be invested in such foreign
Opportunities Fund governmental securities issued by emerging or developing countries,
may seek to achieve which may be lower rated, including securities rated below investment
growth by investing grade.
in foreign
governmental debt
securities.
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities: For temporary defensive purposes, each Fund may invest in high quality debt instruments issued
Securities issued or guaranteed by the U.S. government, its agencies or instrumentalities (and which are backed by the full
by the U.S. government or issued faith and credit of the U.S. government), or issued by U.S. companies.
by an agency or instrumentality
of the U.S. government.
- ---------------------------------- -------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- -------------------------------------------------------------------------------------------------
Securities How we use them
- ---------------------------------- --------------------------- ------------------------ ------------------------ -------------------
Delaware Global Delaware International Delaware New Delaware Latin
Opportunities Fund Small Cap Fund Europe Fund America Fund
- ---------------------------------- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Repurchase Agreements: An Typically, we use repurchase agreements as a short-term investment for a Fund's cash position.
agreement between a buyer and In order to enter into these repurchase agreements, the Fund must have collateral in excess of
seller of securities in which 100% (and generally 102%) of the repurchase price.
the seller agrees to buy the
securities back within a The collateral is usually securities issued or guaranteed by the U.S. government or its agencies
specified time at the same price or instrumentalities, or other securities in which the Funds may invest directly.
the buyer paid for them, plus
an amount equal to an agreed The Funds will only enter into repurchase agreements in which the collateral is comprised of
upon interest rate. Repurchase U.S. government securities.
agreements are often viewed as
equivalent to cash.
- ---------------------------------- -------------------------------------------------------------------------------------------------
Restricted Securities: Privately We may invest in privately placed securities that are eligible for resale only among certain
placed securities whose resale institutional buyers without registration, including Rule 144A Securities.
is restricted under securities
law. Restricted securities are
generally considered to be
illiquid except that a Fund may
treat Rule 144A securities as
liquid based on their trading
markets. Rule 144A securities
are restricted securities but
may be freely traded among
qualified institutional buyers.
- ---------------------------------- -------------------------------------------------------------------------------------------------
Illiquid Securities: Illiquid Each Fund may invest up to 15% of its assets in illiquid securities.
securities are those that cannot
be sold or disposed of in the
ordinary course of business
within seven days at
approximately the price at
which the security has been
value by the Fund.
- ---------------------------------- -------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- -------------------------------------------------------------------------------------------------
Securities How we use them
- ---------------------------------- --------------------------- ------------------------ ------------------------ -------------------
Delaware Global Delaware International Delaware New Delaware Latin
Opportunities Fund Small Cap Fund Europe Fund America Fund
- ---------------------------------- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brady Bonds: These are debt Delaware Global Delaware International Small Cap Fund, Delaware New Europe Fund and
securities issued under the Opportunities Fund may Delaware Latin America Fund may invest in Brady Bonds consistent with
framework of the Brady Plan, an not invest in these bonds. their respective investment objective. We believe that the economic
initiative announced by the U.S. reforms undertaken by countries in connection with the issuance of
Treasury Secretary, Nicholas F. Brady Bonds makes the debt of countries that have issued or have
Brady in 1989, as a mechanism announced plans to issue Brady Bonds a viable opportunity for
for debtor nations to investment.
restructure their outstanding
external indebtedness
(generally, commercial bank
debt). Brady Bonds tend to be of
lower quality and more
speculative than securities of
developed country issuers.
- ---------------------------------- -------------------------------------------------------------------------------------------------
Investment Company Securities: Each Fund may invest in investment company securities if we believe the country offers good
In some countries, investments investment opportunities. We would generally invest in closed-end investment companies, but we
by U.S. mutual funds are can also invest in open-end investment companies. These investments involve an indirect payment
generally made by purchasing of a portion of the expenses of the other investment companies, including their advisory fees.
shares investment companies that
in turn invest in the securities
of such countries.
- ---------------------------------- -------------------------------------------------------------------------------------------------
</TABLE>
The Funds may also enter into put and call options, futures contracts and
options on futures contracts, and options on foreign currencies. Please see the
Statement of Additional Information for additional descriptions on these
securities as well as those listed in the table above.
Portfolio turnover
Each Fund anticipates that its annual portfolio turnover will be less than 100%.
Borrowing from banks
Each Fund may borrow money as a temporary measure for extraordinary or emergency
purposes or to facilitate redemptions. A Fund will not borrow money in excess of
one-third of the value of its net assets.
Securities lending
Each Fund may loan up to 25% of its assets to qualified broker/dealers or
institutional investors to generate additional income for the Fund. All such
loans will be secured by collateral.
Temporary defensive measures
For temporary defensive purposes, each Fund may invest in high quality debt
obligations of foreign governments, their agencies, instrumentalities and
political sub-divisions. For temporary defensive purposes, each Fund may invest
in high quality debt instruments issued by 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 U.S. companies. To the extent that a Fund does so, the
Fund may be unable to meet its investment objective.
25
<PAGE>
The risks of investing in the Funds
Investing in any mutual fund involves risk, including the risk that you may
receive little or no return on your investment, and the risk that you may lose
part or all of the money you invest. Before you invest in the Fund you should
carefully evaluate the risks. Because of the nature of the Funds, you should
consider an investment to be a long-term investment that typically provides the
best results when held for a number of years. The following are the chief risks
you assume when investing in these Funds. Please see the Statement of Additional
Information for further discussion of these risks and the other risks not
discussed here.
<TABLE>
<CAPTION>
- ---------------------------------- -------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ---------------------------------- --------------------------- ------------------------ ------------------------ -------------------
Delaware Global Delaware International Delaware New Delaware Latin
Opportunities Fund Small Cap Fund Europe Fund America Fund
- ---------------------------------- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Market Risk is the risk that all We maintain a long-term investment approach and focus on stocks we believe can appreciate
or a majority of the securities over an extended time frame regardless of interim market fluctuations. We do not try to
in a certain market--like the predict overall stock market movements and do not trade for short-term purposes.
stock or bond market--or in a
certain country or region will
decline in value because of
factors such as economic
conditions, future expectations
or investor confidence.
- ---------------------------------- -------------------------------------------------------------------------------------------------
Industry and Security Risk is the We limit the amount of each Fund's assets invested in any one industry and in any individual
risk that the value of securities security. We also follow a rigorous selection process before choosing securities for a Fund.
in a particular industry or the
value of an individual stock or
bond will decline because of
changing expectations for the
performance of that industry or
for the individual company
issuing the stock or bond.
- ---------------------------------- -------------------------------------------------------------------------------------------------
Currency Risk is the risk that the Each Fund may try to hedge its currency risk by purchasing foreign currency exchange
value of a Fund's investments may contracts. If a Fund agrees to purchase or sell foreign securities at a pre-set price on a
be negatively affected by changes future date, the Fund attempts to protect the value of a security they own from future
in foreign currency exchange changes in currency rates. If a Fund has agreed to purchase or sell a security, it may also
rates. Adverse changes in use foreign currency exchange contracts to "lock-in" the security's price in terms of U.S.
exchange rates may reduce or dollars or another applicable currency. Each Fund may use forward currency exchange
eliminate any gains produced contracts only for defensive or protective measures, not to enhance portfolio
by investments that are returns. However, there is no assurance that such a strategy will be successful.
denominated in foreign
currencies and may increase any
losses.
- ---------------------------------- -------------------------------------------------------------------------------------------------
Emerging Markets Risk is the Delaware Global Delaware International Small Cap, Delaware New Europe and Delaware Latin
possibility that the risks Opportunities America Funds have the ability to invest in emerging market securities. We
associated with international Fund is not attempt to lessen this risk by maintaining a long-term investment approach.
investing will be greater in subject to this
emerging markets than in more risk.
developed foreign markets
because, among other things,
emerging markets may have
less stable political and
economic environments.
- ---------------------------------- -------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- -------------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ---------------------------------- --------------------------- ------------------------ ------------------------ -------------------
Delaware Global Delaware International Delaware New Delaware Latin
Opportunities Fund Small Cap Fund Europe Fund America Fund
- ---------------------------------- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inefficient Market Risk is the The Funds will attempt to reduce these risks by investing in a number of different countries,
risk that foreign markets may performing credit analysis and noting trends in the economy, industries and financial markets.
be less liquid, have greater
price volatility, less
regulation and higher
transaction costs than U.S.
markets.
- ---------------------------------- -------------------------------------------------------------------------------------------------
Credit risk of high-yield, high This is not a We intend to limit our investment in any one lower rated bond which
risk foreign fixed-income significant risk can help to reduce the effect of an individual default on the Funds,
securities: Securities rated lower for Delaware and to limit our overall allocation of Fund assets to bonds in this
than BBB by S&P and Baa by Moody's Global category. Such limitations may not protect the Funds from widespread
are considered to be of poor Opportunities bond defaults brought about by a sustained economic downturn.
standing and predominantly Fund.
speculative as to the issuer's The economy and interest rates may affect these high yield, high risk
ability to repay interest and securities differently from other securities. Prices have been found
principal. to be less sensitive to interest rate changes than higher rated
investments, but more sensitive to adverse economic changes or
These bonds are often issued by individual corporate developments. Also, during an economic downturn
less creditworthy companies or or a substantial period of rising interest rates, highly leveraged
by highly leveraged (indebted) issuers may experience financial stress which would adversely affect
firms, which are generally less their ability to service principal and interest payment obligations, to
able than more financially meet projected business goals and to obtain additional financing.
stable firms to make scheduled Changes by recognized rating agencies in their rating of any such
payments of interest and security and in the ability of the issuer to make payments of interest
principal. The risks posed by and principal will also ordinarily have a more dramatic effect on the
bonds issued under such values of these investments than on the values of higher-rated
circumstances are substantial. securities. Consequently, these changes will affect the Funds' net
asset value per share.
- ---------------------------------- -------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- ----------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ---------------------------------- --------------------------- ------------------------ ------------------------ ----------------
Delaware Global Delaware International Delaware New Delaware Latin
Opportunities Fund Small Cap Fund Europe Fund America Fund
- ---------------------------------- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Region Risk is the risk associated Delaware Global Opportunities Fund and With respect to the Delaware New Europe and
with investing a majority of a Delaware International Small Cap Fund are not Delaware Latin America Funds, we maintain a
Fund's assets in a specific region subject to region risk. long-term approach and focus on stocks in the
of the world. A Fund's performance region we believe can appreciate over an
will be dependent upon the economic extended time frame.
and financial strength and
stability of the region. An
investment in a Fund subject to
high region risk is likely to be
more volatile than an investment in
a more geographically diverse fund.
- ------------------------------------- ----------------------------------------------------------------------------------------------
Political Risk is the risk that We evaluate the political situations in the countries where we invest and take into account
countries or the entire region any potential risks before we select securities for the Fund's portfolios. However, there is
where we invest may experience no way to eliminate political risk when investing internationally.
political instability, which may
cause greater fluctuation in the
value and liquidity of our
investments due to changes in
currency exchange rates,
governmental seizures or
nationalization of assets.
- ------------------------------------- ----------------------------------------------------------------------------------------------
Information Risk is the risk that We conduct fundamental research on the companies we invest in rather than relying solely on
foreign companies may be subject to information available through financial reporting. We believe this will help us to better
different accounting, auditing and uncover any potential weaknesses in individual companies.
financial reporting standards than
U.S. companies. There may be less
information available about foreign
issuers than domestic issuers.
Furthermore, regulatory oversight
of foreign issuers may be less
stringent or less consistently
applied than in the United States.
- ------------------------------------- ----------------------------------------------------------------------------------------------
Foreign Government Securities Risks The Funds attempt to reduce the risks associated with investing in foreign governments by
relate to the ability of a foreign setting rating standards and by limiting the portion of portfolio assets that may be invested
government or government related in such securities.
issuer to make timely payments on
its external debt obligations.
This ability to make payments will
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.
- ------------------------------------- ----------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- ----------------------------------------------------------------------------------------------
Risks How we strive to manage them
- ---------------------------------- --------------------------- ------------------------ ------------------------ ----------------
Delaware Global Delaware International Delaware New Delaware Latin
Opportunities Fund Small Cap Fund Europe Fund America Fund
- ---------------------------------- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------- ---------------------- ------------------------ ----------------------------------------------
Small Company Investment Risk The Funds attempt to reduce this risk by diversifying investments.
includes the general risks of
investing in common stocks such as
market, economic and business risk
that cause their prices to
fluctuate over time. Historically,
smaller capitalization stocks have
been more volatile in price than
larger capitalization stocks.
Among the reasons for the greater
price volatility of these
securities are the lower degree of
liquidity in the markets for such
stocks, and the potentially greater
sensitivity of such small companies
to changes in or failure of
management, and in many other
changes in competitive, business,
industry and economic conditions,
including risks associated with
limited production, markets,
management depth, or financial
resources.
- ------------------------------------- ----------------------------------------------------------------------------------------------
Transaction Costs Risk: Costs of Each of the Funds is subject to this risk. We strive to monitor transaction costs and to
buying, selling and holding foreign choose an efficient trading strategy for the Funds.
securities, including brokerage,
tax and custody costs, may be
higher than those involved in
domestic transactions
- ------------------------------------- ----------------------------------------------------------------------------------------------
</TABLE>
Who manages the Funds
Investment manager and sub-adviser
The Funds are managed by Delaware International Advisers Ltd. Delaware
International Advisers is affiliated with Delaware Management Company, a series
of Delaware Management Business Trust, which is an indirect, wholly owned
subsidiary of Delaware Management Holdings, Inc. Delaware International Advisers
makes investment decisions for these Funds, manages the Funds' business affairs
and provides daily administrative services.
Delaware Management Company is the sub-adviser to Delaware Global Opportunities
Fund. Delaware Management Company manages the U.S. securities portion of
Delaware Global Opportunities Fund's portfolio under the overall supervision of
Delaware International Advisers and furnishes Delaware International Advisers
with investment recommendations, asset allocation advice, research and other
investment services regarding U.S. securities.
29
<PAGE>
For their services to the Delaware Global Opportunities Fund, the manager and
sub-adviser were paid an aggregate fee of 0.00% of average daily net assets of
the Fund for the last fiscal year after giving effect to voluntary expense caps.
For its services to the Delaware International Small Cap Fund, the manager was
paid a fee of 0.00% of average daily net assets of the Fund for the last fiscal
year after giving effect to voluntary expense caps.
For its services to each of the Delaware New Europe Fund and Delaware Latin
America Fund, the manager is paid an annual fee equal to 1.25% on the first $500
million of average daily net assets; 1.20% on the next $500 million; 1.15% on
the next $1.5 billion; and 1.10% on the average daily net assets in excess of
$2.5 billion.
Portfolio Managers
Delaware Global Opportunities Fund
Elizabeth A. Desmond has primary responsibility for making day-to-day investment
decisions for Delaware Global Opportunities Fund. Robert L. Arnold makes
investment decisions for the U.S. equity portion of the Fund.
Elizabeth A. Desmond, Senior Portfolio Manager and Trustee of Delaware
International Advisers, has primary responsibility for making day-to-day
investment decisions for Global Equity Fund. She has been the portfolio manager
for the Fund since July 21, 1998. Ms. Desmond is a graduate of Wellesley College
and the masters program in East Asian studies at Stanford University. After
working for the Japanese government for two years, she began her investment
career as a Pacific Basin investment manager with Shearson Lehman Global Asset
Management. Prior to joining Delaware International Advisers in the spring of
1991, she was a Pacific Basin equity analyst and senior portfolio manager at
Hill Samuel Investment Advisers Ltd. Ms. Desmond is a CFA charterholder.
Robert L. Arnold, Vice President/Portfolio Manager of the Fund, has been
managing the U.S. Equity portion of the Fund since July 21, 1998. Prior to this
at Delaware Investments, he managed mutual funds and was a financial analyst
focusing on the financial services industry including banks, thrifts, insurance
companies and consumer finance companies. Mr. Arnold holds a BS from Carnegie
Mellon University and earned an MBA from the University of Chicago. He began his
investment career as a management consultant with Arthur Young in Philadelphia.
Prior to joining Delaware Investments in March 1992, Mr. Arnold was a planning
analyst with Chemical Bank in New York.
Delaware International Small Cap Fund
Clive A. Gillmore, Joshua H. Brooks and Gavin A. Hall have primary
responsibility for making day-to-day investment decisions for Delaware
International Small Cap Fund.
Clive A. Gillmore, Senior Portfolio Manager and Trustee of Delaware
International Advisers Ltd., has been managing the Fund since its inception. A
graduate of the University of Warwick and having begun his career at Legal and
General Investment Management, Mr. Gillmore joined Delaware International
Advisers in 1990 after eight years of investment experience. His most recent
position prior to joining Delaware International Advisers was as a Pacific Basin
equity analyst and senior portfolio manager for Hill Samuel Investment
Management Ltd. Mr. Gillmore completed the London Business School Investment
program.
Joshua H. Brooks, Senior Portfolio Manager of Delaware International Advisers
Ltd., has been managing the Fund since October 25, 1999. Mr. Brooks holds a
bachelor's degree from Yale University and holds an MBA from The London Business
School. He began his investment career with Delaware Investments in 1991. Prior
to joining the investment team in London, he was based in Philadelphia with
responsibilities that included equity market analysis and acting as liaison with
Delaware International Advisers.
30
<PAGE>
Gavin A. Hall, Senior Portfolio Manager of Delaware International Advisers Ltd.,
has been managing the Fund since October 25, 1999. Mr. Hall joined Delaware
International Advisers in 1991. He began his investment career with Barings
Investment Management Ltd. after attending Dulwich College. In 1988, he became a
Portfolio Manager and Research Analyst covering the United Kingdom market at
Hill Samuel Investment Management Ltd. At Delaware International Advisers his
research responsibilities have included United Kingdom, Continental European and
Asian equity markets.
Delaware New Europe Fund
Nigel G. May, Richard Ginty and Mr. Brooks have primary responsibility for
making day-to-day investment decisions for Delaware New Europe Fund, and have
co-managed the Fund since its inception. Please see Delaware International Small
Cap Fund for Mr. Brook's business experience.
Nigel G. May, Senior Portfolio Manager and Trustee of Delaware International
Advisers, is a graduate of Sidney Sussex College, Cambridge. He joined Delaware
International Advisers 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.
Richard Ginty, Portfolio Manager of Delaware International Advisers, is a
graduate of Sheffield University. He joined Delaware International Advisers in
1992, where his primary research focus is the European equity markets. Prior to
joining Delaware International Advisers, his business experience was with
Kleinwort Benson Securities Limited, and prior to that time, with Fiduciary
Trust International.
Delaware Latin America Fund
Robert Akester, Mr. Gillmore, and Mr. Brooks have primary responsibility for
making day-to-day investment decisions for Delaware Latin America Fund, and have
co-managed the Fund since its inception. Please see Delaware International Small
Cap Fund for Mr. Gillmore's and Mr. Brook's business experience.
Robert Akester, Senior Portfolio Manager of Delaware International Advisers,
joined Delaware International Advisers in 1996. Mr. Akester, who began his
investment career in 1969, was most recently a Trustee of Hill Samuel Investment
Management 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.
31
<PAGE>
Who's who?
This diagram shows the various organizations involved with managing,
administering, and servicing the Delaware Investments funds.
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Manager The Funds Custodian
Delaware International Advisers Ltd. The Chase Manhattan Bank
Third Floor 4 Chase Metrotech Center
80 Cheapside Brooklyn, NY 11245
London, England EC2V 6EE
Sub-Adviser
Delaware Management Company
One Commerce Square
Philadelphia, PA 19103
Portfolio managers Distributor Service agent
(see page __ for details) Delaware Distributors, L.P. Delaware Service Company, Inc.
1818 Market Street 1818 Market Street
Philadelphia, PA 19103 Philadelphia, PA 19103
</TABLE>
Shareholders
Board of Trustees A mutual fund is governed by a Board of Trustees which has
oversight responsibility for the management of the fund's business affairs.
Trustees establish procedures and oversee and review the performance of the
investment manager, the distributor and others that perform services for the
fund. At least 40% of the Board of Trustees must be independent of the fund's
investment manager and distributor. These independent fund trustees, in
particular, are advocates for shareholder interests.
Investment manager An investment manager is a company responsible for selecting
portfolio investments consistent with the objective and policies stated in the
mutual fund's prospectus. The investment manager places portfolio orders with
broker/dealers and is responsible for obtaining the best overall execution of
those orders. A written contract between a mutual fund and its investment
manager specifies the services the manager performs. Most management contracts
provide for the manager to receive an annual fee based on a percentage of the
fund's average daily net assets. The manager is subject to numerous legal
restrictions, especially regarding transactions between itself and the funds it
advises.
Sub-adviser A sub-adviser is a company generally responsible for the management
of the fund's assets. They are selected and supervised by the investment
manager.
Portfolio managers Portfolio managers are employed by the investment manager or
sub-adviser to make investment decisions for individual portfolios on a
day-to-day basis.
Custodian Mutual funds are legally required to protect their portfolio
securities and most funds place them with a qualified bank custodian who
segregates fund securities from other bank assets.
Distributor Most mutual funds continuously offer new shares to the public
through distributors who are regulated as broker-dealers and are subject to NASD
Regulation, Inc. (NASD) rules governing mutual fund sales practices.
Service agent Mutual fund companies employ service agents (sometimes called
transfer agents) to maintain records of shareholder accounts, calculate and
disburse dividends and capital gains and prepare and mail
32
<PAGE>
shareholder statements and tax information, among other functions. Many service
agents also provide customer service to shareholders.
Shareholders Like shareholders of other companies, mutual fund shareholders have
specific voting rights, including the right to elect directors. Material changes
in the terms of a fund's management contract must be approved by a shareholder
vote, and funds seeking to change fundamental investment objectives or policies
must also seek shareholder approval.
33
<PAGE>
About your account
Investing in the Funds
Institutional Class shares are available for purchase only by the
following:
o retirement plans introduced by persons not associated with brokers or
dealers that are primarily engaged in the retail securities business and
rollover individual retirement accounts from such plans;
o tax-exempt employee benefit plans of the manager or its affiliates and
securities dealer firms with a selling agreement with the distributor;
o institutional advisory accounts of the manager, or its affiliates and those
having client relationships with Delaware Investment Advisers, an affiliate
of the manager, or its affiliates and their corporate sponsors, as well as
subsidiaries and related employee benefit plans and rollover individual
retirement accounts from such institutional advisory accounts;
o a bank, trust company and similar financial institution investing for its
own account or for the account of its trust customers for whom such
financial institution is exercising investment discretion in purchasing
shares of the Class, except where the investment is part of a program that
requires payment to the financial institution of a Rule 12b-1 Plan fee; and
o registered investment advisers investing on behalf of clients that consist
solely of institutions and high net-worth individuals having at least
$1,000,000 entrusted to the adviser for investment purposes, but only if
the adviser is not affiliated or associated with a broker or dealer and
derives compensation for its services exclusively from its clients for such
advisory services.
34
<PAGE>
How to buy shares
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
Complete an investment slip and mail it with your check, made payable to the
fund and class of shares you wish to purchase, to Delaware Investments, 1818
Market Street, Philadelphia, PA 19103-3682. If you are making an initial
purchase by mail, you must include a completed investment application (or an
appropriate retirement plan application if you are opening a retirement account)
with your check.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
Ask your bank to wire the amount you want to invest to First Union Bank, ABA
#031201467, Bank Account number 2014128934013. Include your account number and
the name of the fund in which you want to invest. If you are making an initial
purchase by wire, you must call us at 800.510.4015 so we can assign you an
account number.
[GRAPHIC OMITTED: ILLUSTRATION OF AN EXCHANGE SYMBOL]
By exchange
You can exchange all or part of your investment in one or more funds in the
Delaware Investments family for shares of other funds in the family. Please keep
in mind, however, that you may not exchange your shares for Class B or Class C
shares. To open an account by exchange, call your Client Services Representative
at 800.510.4015.
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of purchasing shares,
including opening an account. Your adviser may charge a separate fee for this
service.
35
<PAGE>
About your account (continued)
How to buy shares (continued)
The price you pay for shares will depend on when we receive your purchase order.
If we or an authorized agent receive your order before the close of trading on
the New York Stock Exchange (normally 4:00 p.m. Eastern Time) on a business day,
you will pay that day's closing share price which is based on the Fund's net
asset value. If we receive your order after the close of trading, you will pay
the next business day's price. A business day is any day that the New York Stock
Exchange is open for business. We reserve the right to reject any purchase
order.
We determine the Funds' net asset value (NAV) per share at the close of trading
of the New York Stock Exchange each business day that the Exchange is open. We
calculate this value by adding the market value of all the securities and assets
in the Fund's portfolio, deducting all liabilities, and dividing the resulting
number by the number of shares outstanding. The result is the net asset value
per share. Foreign securities, currencies and other assets denominated in
foreign currencies are translated into U.S. dollars at the exchange rate of
these currencies against the U.S. dollar, as provided by an independent pricing
service. We price securities and other assets for which market quotations are
available at their market value. We price fixed-income securities on the basis
of valuations provided to us by an independent pricing service that uses methods
approved by the board of trustees. Any fixed-income securities that have a
maturity of less than 60 days we price at amortized cost. For all other
securities, we use methods approved by the board of trustees that are designed
to price securities at their fair market value.
36
<PAGE>
How to redeem shares
[GRAPHIC OMITTED: ILLUSTRATION OF AN ENVELOPE]
By mail
You can redeem your shares (sell them back to the fund) by mail by writing to:
Delaware Investments, 1818 Market Street, Philadelphia, PA 19103-3682. All
owners of the account must sign the request, and for redemptions of $50,000 or
more, you must include a signature guarantee for each owner. You can also fax
your written request to 215.255.8864. Signature guarantees are also required
when redemption proceeds are going to an address other than the address of
record on an account.
[GRAPHIC OMITTED: ILLUSTRATION OF A TELEPHONE]
By telephone
You can redeem up to $50,000 of your shares by telephone. You may have the
proceeds sent to you by check, or, if you redeem at least $1,000 of shares, you
may have the proceeds sent directly to your bank by wire. Bank information must
be on file before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A JAGGED LINE]
By wire
You can redeem $1,000 or more of your shares and have the proceeds deposited
directly to your bank account the next business day after we receive your
request. Bank information must be on file before you request a wire redemption.
[GRAPHIC OMITTED: ILLUSTRATION OF A PERSON]
Through your financial adviser
Your financial adviser can handle all the details of redeeming your shares. Your
adviser may charge a separate fee for this service.
37
<PAGE>
About your account (continued)
How to redeem shares (cont.)
If you hold your shares in certificates, you must submit the certificates with
your request to sell the shares. We recommend that you send your certificates by
certified mail.
When you send us a properly completed request to redeem or exchange shares, you
will receive the net asset value as determined on the business day we receive
your request. We will send you a check, normally the next business day, but no
later than seven days after we receive your request to sell your shares. If you
purchased your shares by check, we will wait until your check has cleared, which
can take up to 15 days, before we send your redemption proceeds.
Account minimum
If you redeem shares and your account balance falls below $250, the Fund may
redeem your account after 60 days' written notice to you.
Exchanges
You can exchange all or part of your shares for shares of the same class in
another Delaware Investments fund. If you exchange shares to a fund that has a
sales charge you will pay any applicable sales charges on your new shares. You
don't pay sales charges on shares that are acquired through the reinvestment of
dividends. You may have to pay taxes on your exchange. When you exchange shares,
you are purchasing shares in another fund so you should be sure to get a copy of
the fund's prospectus and read it carefully before buying shares through an
exchange. You may not exchange your shares for Class B and Class C shares of the
funds in the Delaware Investments family.
Dividends, distributions and taxes
Dividends and capital gains, if any, are paid annually. We automatically
reinvest all dividends and any capital gains.
Tax laws are subject to change, so we urge you to consult you tax adviser about
your particular tax situation and how it might be affected by current law. The
tax status of your dividends from the Fund is the same whether you reinvest your
dividends or receive them in cash. Distributions from the Fund's long-term
capital gains are taxable as capital gains, while distributions from short-term
capital gains and net investment income are generally taxable as ordinary
income. Any capital gains may be taxable at different rates depending on the
length of time the Fund held the assets. In addition, you may be subject to
state and local taxes on distributions.
We will send you a statement each year by January 31 detailing the amount and
nature of all dividends and capital gains that you were paid for the prior year.
Distributions declared in October, November or December but paid in January are
taxable as if they were paid in December.
Global Funds is required to withhold 31% of your taxable distributions and
proceed if you do not provide your correct taxpayer identification number (TIN)
or certify that your TIN is correct, or if the IRS instructs us to do so.
38
<PAGE>
Other investment policies and risk considerations
High yield, high risk securities
Delaware International Small Cap Fund, Delaware New Europe Fund and Delaware
Latin America Fund may invest in high yield, high risk foreign fixed income
securities. In the past, in the opinion of the Manager, the high yields from
these bonds have more than compensated for their higher default rates. There can
be no assurance, however, that yields will continue to offset default rates on
these bonds in the future. The Manager intends to maintain an adequately
diversified portfolio of stocks and bonds. While diversification can help to
reduce the effect of an individual default on a Fund, there can be no assurance
that diversification will protect a Fund from widespread bond defaults brought
about by a sustained economic downturn.
Medium- and low-grade bonds held by each Fund may be issued as a consequence of
corporate restructurings, such as leveraged buy-outs, mergers, acquisitions,
debt recapitalizations or similar events. Also these bonds are often issued by
smaller, less creditworthy companies or by highly leveraged (indebted) firms,
which are generally less able than more financially stable firms to make
scheduled payments of interest and principal. The risks posed by bonds issued
under such circumstances are substantial.
The economy and interest rates may affect these high yield, high risk securities
differently from other securities. Prices have been found to be less sensitive
to interest rate changes than higher rated investments, but more sensitive to
adverse economic changes or individual corporate developments. Also, during an
economic downturn or a substantial period of rising interest rates, highly
leveraged issuers may experience financial stress which would adversely affect
their ability to service principal and interest payment obligations, to meet
projected business goals and to obtain additional financing. Changes by
recognized rating agencies in their rating of any security and in the ability of
an issuer to make payments of interest and principal will also ordinarily have a
more dramatic effect on the values of these investments than on the values of
higher-rated securities.
Consequently, these changes will affect a Fund's net asset value per share.
Foreign currency transactions
Although each 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. Each Fund will, however, from time to time, purchase or sell
foreign currencies and/or engage in forward foreign currency transactions in
order to expedite settlement of portfolio transactions and to minimize currency
value fluctuations. The Funds 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 Funds will convert currency on a spot
basis from time to time, and investors should be aware of the costs of currency
conversion.
The Funds may enter into forward contracts to "lock in" the price of a security
it has agreed to purchase or sell, in terms of U.S. dollars or other currencies
in which the transaction will be consummated. By entering into a forward
contract for the purchase or sale, for a fixed amount of U.S. dollars or foreign
currency, of the amount of foreign currency involved in the underlying security
transaction, the Fund will be able to protect itself against a possible loss
resulting from an adverse change in currency exchange rates during the period
between the date the security is purchased or sold and the date on which payment
is made or received.
When the Manager believes that the currency of a particular country may suffer a
significant decline against the U.S. dollar or against another currency, the
Funds may enter into a forward foreign currency contract to sell, for a fixed
amount of U.S. dollars or other appropriate currency, the amount of foreign
currency approximating the value of some or all of the Fund's securities
denominated in such foreign currency. The Funds will not enter into forward
contracts or maintain a net exposure to such contracts where the consummation of
the contracts would obligate a Fund to deliver an amount of foreign currency in
excess of the value of the Fund's securities or other assets denominated in that
currency.
39
<PAGE>
At the maturity of a forward contract, the Funds 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 Funds may realize gains or losses from currency
transactions.
The Funds 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 Funds and against increases in the U.S. dollar cost of such securities to
be acquired. Call options on foreign currency written by a Fund will be covered,
which means that the Fund will own the underlying foreign currency. With respect
to put options on foreign currency written by a Fund, the Fund will establish a
segregated account with its Custodian Bank consisting of cash, U.S. government
securities or other high-grade liquid debt securities in an amount equal to the
amount the Fund will be required to pay upon exercise of the put.
As in the case of other kinds of options, the writing of an option on foreign
currency will constitute only a partial hedge, up to the amount of the premium
received, and the Fund could be required to purchase or sell foreign currencies
at disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on foreign currency may constitute an effective hedge against
fluctuations in exchange rates, although, in the event of rate movements adverse
to the Fund's position, the Fund may forfeit the entire amount of the premium
plus related transaction costs.
40
<PAGE>
Certain management considerations
Year 2000
As with other mutual funds, financial and business organizations and individuals
around the world, the Funds could be adversely affected if the computer systems
used by their 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." Each Fund is taking steps to obtain satisfactory
assurances that its major service providers are taking steps reasonably designed
to address the Year 2000 Problem on the computer systems that the service
providers use. However, there can be no assurance that these steps will be
sufficient to avoid any adverse impact on the business of the Funds. The Year
2000 Problem may also adversely affect the issuers of securities in which the
Funds invest. The portfolio managers and investment professionals of the Fund
consider Year 2000 compliance (including, but not limited to, any or all of the
following: impact on business; cost of compliance plan review and contingency
planning; and vendor compliance) in the securities selection and investment
process. However, there can be no guarantees that, even with their due diligence
efforts, they will be able to predict the effect of Year 2000 on any company or
the performance of its securities.
Investments by Fund of Funds
Delaware International Small Cap Fund accepts investments from the series
portfolios of Delaware Group Foundation Funds, a fund of funds. From time to
time, the Fund may experience large investments or redemptions due to
allocations or rebalancings by Foundation Funds. While it is impossible to
predict the overall impact of these transactions over time, there could be
adverse effects on portfolio management. For example, the Fund may be required
to sell securities or invest cash at times when it would not otherwise do so.
These transactions could also have tax consequences if sales of securities
result in gains, and could also increase transaction costs or portfolio
turnover. The manager will monitor transactions by Foundation Funds and will
attempt to minimize any adverse effects on Delaware International Small Cap Fund
and Foundation Funds as a result of these transactions.
41
<PAGE>
Financial highlights
The financial highlights table is intended to help you understand the Fund's
financial. All "per share" information reflects financial results for a single
Fund share. This information has been audited by Ernst & Young LLP, whose
report, along with the Fund's financial statements, is included in the Fund's
annual report, which is available upon request by calling 800o523o1918.
<TABLE>
<CAPTION>
- ----------------------------------------------------- -----------------------------------------
Institutional Class
- ----------------------------------------------------- -----------------------------------------
Year Year Period
Ended Ended 7/22/97(1)
11/30 11/30 through
Delaware Global Opportunities Fund 1999 1998 11/30/97
- ----------------------------------------------------- ----------- ----------- ----------------
<S> <C> <C> <C>
- ----------------------------------------------------- ----------- ----------- ----------------
- ----------------------------------------------------- ----------- ----------- ----------------
Net asset value, beginning of period $8.230 $8.500
- ----------------------------------------------------- ----------- ----------- ----------------
- ----------------------------------------------------- ----------- ----------- ----------------
Income from investment operations
- ----------------------------------------------------- ----------- ----------- ----------------
Net investment income(2) 0.210 0.056
- ----------------------------------------------------- ----------- ----------- ----------------
Net realized and unrealized gain (loss) on 0.760 (0.326)
- ----------------------------------------------------- ----------- ----------- ----------------
Total from investment operations 0.970 (0.270)
- ----------------------------------------------------- ----------- ----------- ----------------
- ----------------------------------------------------- ----------- ----------- ----------------
Less dividends
- ----------------------------------------------------- ----------- ----------- ----------------
Dividends from net investment income (0.110) none
- ----------------------------------------------------- ----------- ----------- ----------------
Total dividends (0.110) none
- ----------------------------------------------------- ----------- ----------- ----------------
- ----------------------------------------------------- ----------- ----------- ----------------
Net asset value, end of period $9.090 $8.230
- ----------------------------------------------------- ----------- ----------- ----------------
- ----------------------------------------------------- ----------- ----------- ----------------
Total return(3) 11.95% (3.18%)
- ----------------------------------------------------- ----------- ----------- ----------------
- ----------------------------------------------------- ----------- ----------- ----------------
Ratios and supplemental data
- ----------------------------------------------------- ----------- ----------- ----------------
Net assets, end of period (000 omitted) $3,253 $2,903
- ----------------------------------------------------- ----------- ----------- ----------------
Ratio of expenses to average net assets 0.80% 0.80%
- ----------------------------------------------------- ----------- ----------- ----------------
Ratio of expenses to average net assets
prior to expense limitation 1.25% 1.86%
- ----------------------------------------------------- ----------- ----------- ----------------
Ratio of net investment income to average net assets 2.40% 1.86%
- ----------------------------------------------------- ----------- ----------- ----------------
Ratio of net investment income to average net
assets prior to expense limitation 1.95% 0.80%
- ----------------------------------------------------- ----------- ----------- ----------------
Portfolio turnover 50% 25%
- ----------------------------------------------------- ----------- ----------- ----------------
</TABLE>
(1) Date of commencement of operations; ratios have been annualized but total
return has not been annualized.
(2) Per share information was based on the average shares outstanding method.
(3) Total return reflect expense limitations in effect for the Fund.
42
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------- ---------------- --------------------
Institutional Class
Year Ended 11/30
- --------------------------------------------------- ---------------- --------------------
<S> <C> <C>
Year Period
Ended 12/19/97(1)
Delaware International Small Cap Fund 11/30 through
1999 11/30/98
- --------------------------------------------------- ---------------- --------------------
- --------------------------------------------------- ---------------- --------------------
Net asset value, beginning of period $8.500
- --------------------------------------------------- ---------------- --------------------
- --------------------------------------------------- ---------------- --------------------
Income from investment operations
- --------------------------------------------------- ---------------- --------------------
Net investment income(2) 0.191
- --------------------------------------------------- ---------------- --------------------
Net realized and unrealized gain (loss) on 0.309
investments and foreign currencies
- --------------------------------------------------- ---------------- --------------------
Total from investment operations 0.500
- --------------------------------------------------- ---------------- --------------------
- --------------------------------------------------- ---------------- --------------------
- --------------------------------------------------- ---------------- --------------------
Net asset value, end of period $9.000
- --------------------------------------------------- ---------------- --------------------
- --------------------------------------------------- ---------------- --------------------
Total return(3) 5.88%
- --------------------------------------------------- ---------------- --------------------
- --------------------------------------------------- ---------------- --------------------
Ratios and supplemental data
- --------------------------------------------------- ---------------- --------------------
Net assets, end of period (000 omitted) $3,175
- --------------------------------------------------- ---------------- --------------------
Ratio of expenses to average net assets 1.25%
- --------------------------------------------------- ---------------- --------------------
Ratio of expenses to average net assets
prior to expense limitation 2.05%
- --------------------------------------------------- ---------------- --------------------
Ratio of net investment income to average net 2.25%
assets
- --------------------------------------------------- ---------------- --------------------
Ratio of net investment income to average net
assets prior to expense limitation 1.45%
- --------------------------------------------------- ---------------- --------------------
Portfolio turnover 4%
- --------------------------------------------------- ---------------- --------------------
</TABLE>
(1) Date of commencement of operations; ratios have been annualized but total
return has not been annualized.
(2) Per share information was based on the average shares outstanding method.
(3) Total return reflect expense limitations in effect for the Fund.
43
<PAGE>
- --------------------------------------------------- ----------------------
Institutional
Class
Year Ended 11/30
- --------------------------------------------------- ----------------------
Period
12/29/98(1)
Delaware New Europe Fund through
11/30/99
- --------------------------------------------------- ----------------------
- --------------------------------------------------- ----------------------
Net asset value, beginning of period
- --------------------------------------------------- ----------------------
- --------------------------------------------------- ----------------------
Income from investment operations
- --------------------------------------------------- ----------------------
Net investment income2
- --------------------------------------------------- ----------------------
Net realized and unrealized gain (loss) on
investments and foreign currencies
- --------------------------------------------------- ----------------------
Total from investment operations
- --------------------------------------------------- ----------------------
- --------------------------------------------------- ----------------------
- --------------------------------------------------- ----------------------
Net asset value, end of period
- --------------------------------------------------- ----------------------
- --------------------------------------------------- ----------------------
Total return(3)
- --------------------------------------------------- ----------------------
- --------------------------------------------------- ----------------------
Ratios and supplemental data
- --------------------------------------------------- ----------------------
Net assets, end of period (000 omitted)
- --------------------------------------------------- ----------------------
Ratio of expenses to average net assets
- --------------------------------------------------- ----------------------
Ratio of expenses to average net assets
prior to expense limitation
- --------------------------------------------------- ----------------------
Ratio of net investment income to average net
assets
- --------------------------------------------------- ----------------------
Ratio of net investment income to average net
assets prior to expense limitation
- --------------------------------------------------- ----------------------
Portfolio turnover
- --------------------------------------------------- ----------------------
(1) Date of commencement of operations; ratios have been annualized but total
return has not been annualized.
(2) Per share information was based on the average shares outstanding method.
(3) Total return reflect expense limitations in effect for the Fund.
44
<PAGE>
- --------------------------------------------------- --------------------
Institutional
Class
Year Ended 11/30
- --------------------------------------------------- --------------------
Period
12/29/98(1)
through
Delaware Latin America Fund 11/30/99
- --------------------------------------------------- --------------------
- --------------------------------------------------- --------------------
Net asset value, beginning of period
- --------------------------------------------------- --------------------
- --------------------------------------------------- --------------------
Income from investment operations
- --------------------------------------------------- --------------------
Net investment income(2)
- --------------------------------------------------- --------------------
Net realized and unrealized gain (loss) on
investments and foreign currencies
- --------------------------------------------------- --------------------
Total from investment operations
- --------------------------------------------------- --------------------
- --------------------------------------------------- --------------------
- --------------------------------------------------- --------------------
Net asset value, end of period
- --------------------------------------------------- --------------------
- --------------------------------------------------- --------------------
Total return(3)
- --------------------------------------------------- --------------------
- --------------------------------------------------- --------------------
Ratios and supplemental data
- --------------------------------------------------- --------------------
Net assets, end of period (000 omitted)
- --------------------------------------------------- --------------------
Ratio of expenses to average net assets
- --------------------------------------------------- --------------------
Ratio of expenses to average net assets
prior to expense limitation
- --------------------------------------------------- --------------------
Ratio of net investment income to average net
assets
- --------------------------------------------------- --------------------
Ratio of net investment income to average net
assets prior to expense limitation
- --------------------------------------------------- --------------------
Portfolio turnover
- --------------------------------------------------- --------------------
(1) Date of commencement of operations; ratios have been annualized but total
return has not been annualized.
(2) Per share information was based on the average shares outstanding method.
(3) Total return reflect expense limitations in effect for the Fund.
45
<PAGE>
How to read the financial highlights
Net investment income
Net investment income includes dividend and interest income earned from the
Fund's securities; it is after expenses have been deducted.
Net realized and unrealized gain (loss) on investments and foreign currencies
A realized gain on investments occurs when we sell an investment at a profit,
while a realized loss on investments occurs when we sell an investment at a
loss. When an investment increases or decreases in value but we do not sell it,
we record an unrealized gain or loss. The amount of realized gain per share that
we pay to shareholders is listed under "Less dividends and distributions-
Distributions from net realized gain on investments." Realized and unrealized
gain (loss) on foreign currencies represent changes in the U.S. dollar value of
assets (including investments) and liabilities denominated in foreign currencies
as a result of changes in foreign currency exchange rates.
Net asset value (NAV)
This is the value of a mutual fund share, calculated by dividing the net assets
by the number of shares outstanding.
Total return
This represents the rate that an investor would have earned or lost on an
investment in the Fund. In calculating this figure for the financial highlights
table, we include fee waivers and assume the shareholder has reinvested all
dividends and realized gains.
Net assets
Net assets represent the total value of all the assets in the Fund's portfolio,
less any liabilities, that are attributable to that class of the Fund.
Ratio of expenses to average net assets
The expense ratio is the percentage of net assets that a fund pays annually for
operating expenses and management fees. These expenses include accounting and
administration expenses, services for shareholders, and similar expenses.
Ratio of net investment income to average net assets
We determine this ratio by dividing net investment income by average net assets.
Portfolio turnover rate
This figure tells you the amount of trading activity in a fund's portfolio. For
example, a fund with a 50% turnover has bought and sold half of the value of its
total investment portfolio during the stated period.
46
<PAGE>
Glossary
How to use this glossary
The glossary includes definitions of investment terms used throughout the
Prospectus. If you would like to know the meaning of an investment term that is
not explained in the text please check the glossary.
Amortized cost
Amortized cost is a method used to value a fixed-income security that starts
with the face value of the security and then adds or subtracts from that value
depending on whether the purchase price was greater or less than the value of
the security at maturity. The amount greater or less than the par value is
divided equally over the time remaining until maturity.
Average maturity
An average of when the individual bonds and other debt securities held in a
portfolio will mature.
Bond
A debt security, like an IOU, issued by a company, municipality or government
agency. In return for lending money to the issuer, a bond buyer generally
receives fixed periodic interest payments and repayment of the loan amount on a
specified maturity date. A bond's price changes prior to maturity and is
inversely related to current interest rates. When interest rates rise, bond
prices fall, and when interest rates fall, bond prices rise.
Bond ratings
Independent evaluations of creditworthiness, ranging from Aaa/AAA (highest
quality) to D (lowest quality). Bonds rated Baa/BBB or better are considered
investment grade. Bonds rated Ba/BB or lower are commonly known as junk bonds.
See also Nationally recognized statistical rating organization.
Capital
The amount of money you invest.
Capital appreciation
An increase in the value of an investment.
Capital gains distributions
Payments to mutual fund shareholders of profits (realized gains) from the sale
of a fund's portfolio securities. Usually paid once a year; may be either
short-term gains or long-term gains.
Commission
The fee an investor pays to a financial adviser for investment advice and help
in buying or selling mutual funds, stocks, bonds or other securities.
Compounding
Earnings on an investment's previous earnings.
Consumer Price Index (CPI)
Measurement of U.S. inflation; represents the price of a basket of commonly
purchased goods.
Contingent deferred sales charge (CDSC)
Fee charged by some mutual funds when shares are redeemed (sold back to the
fund) within a set number of years; an alternative method for investors to
compensate a financial adviser for advice and service, rather than an up-front
commission.
Corporate bond
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A debt security issued by a corporation. See Bond.
Depreciation
A decline in an investment's value.
Diversification
The process of spreading investments among a number of different securities,
asset classes or investment styles to reduce the risks of investing.
Dividend distribution
Payments to mutual fund shareholders of dividends passed along from the fund's
portfolio of securities.
Duration
A measurement of a fixed-income investment's price volatility. The larger the
number, the greater the likely price change for a given change in interest
rates.
Expense ratio
A mutual fund's total operating expenses, expressed as a percentage of its total
net assets. Operating expenses are the costs of running a mutual fund, including
management fees, offices, staff, equipment and expenses related to maintaining
the fund's portfolio of securities and distributing its shares. They are paid
from the fund's assets before any earnings are distributed to shareholders.
Financial adviser
Financial professional (e.g., broker, banker, accountant, planner or insurance
agent) who analyzes clients' finances and prepares personalized programs to meet
objectives.
Fixed-income securities
With fixed-income securities, the money you originally invested is paid back at
a pre-specified maturity date. These securities, which include government,
corporate or municipal bonds, as well as money market securities, typically pay
a fixed rate of return (often referred to as interest). See Bond.
Inflation
The increase in the cost of goods and services over time. U.S. inflation is
frequently measured by changes in the Consumer Price Index (CPI).
Investment goal
The objective, such as long-term capital growth or high current income, that a
mutual fund pursues.
Management fee
The amount paid by a mutual fund to the investment adviser for management
services, expressed as an annual percentage of the fund's average daily net
assets.
Market capitalization
The value of a corporation determined by multiplying the current market price of
a share of common stock by the number of shares held by shareholders. A
corporation with one million shares outstanding and the market price per share
of $10 has a market capitalization of $10 million.
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Maturity
The length of time until a bond issuer must repay the underlying loan principal
to bondholders.
Morgan Stanley World Index
Morgan Stanley EAFE Index
Morgan Stanley Capital International Emerging Markets Free Index
The Morgan Stanley International Emerging Markets Free Index is a U.S. dollar
dominated index comprised of stocks of countries with below average per capita
GDP as defined by the World Bank, foreign ownership restrictions, a tax
regulatory environment, and greater perceived market risk than in the developed
countries. Within this index, MSCI aims to capture an aggregate of 60% of local
market capitalization.
Morgan Stanley Capital International Europe Index
NASD Regulation, Inc. (NASD)
A self-regulating organization, consisting of brokerage firms (including
distributors of mutual funds), that is responsible for overseeing the actions of
its members.
Nationally recognized statistical rating organization (NRSRO)
A company that assesses the credit quality of bonds, commercial paper, preferred
and common stocks and municipal short-term issues, rating the probability that
the issuer of the debt will meet the scheduled interest payments and repay the
principal. Ratings are published by such companies as Moody's Investors Service,
Inc. (Moody's), Standard & Poor's Ratings Group (S&P), Duff & Phelps, Inc.
(Duff), and Fitch IBCA, Inc. (Fitch).
Net asset value (NAV)
The daily dollar value of one mutual fund share. Equal to a fund's net assets
divided by the number of shares outstanding.
Preferred stock
Preferred stock has preference over common stock in the payment of dividends and
liquidation of assets. Preferred stock also often pays dividends at a fixed rate
and is sometimes convertible into common stock.
Price-to-earnings ratio
A measure of a stock's value calculated by dividing the current market price of
a share of stock by its annual earnings per share. A stock selling for $100 per
share with annual earnings per share of $5 has a P/E of 20.
Principal
Amount of money you invest (also called capital). Also refers to a bond's
original face value, due to be repaid at maturity.
Prospectus
The official offering document that describes a mutual fund, containing
information required by the SEC, such as investment objectives, policies,
services and fees.
Redeem
To cash in your shares by selling them back to the mutual fund.
Risk
Generally defined as variability of value; also credit risk, inflation risk,
currency and interest rate risk. Different investments involve different types
and degrees of risk.
Sales charge
Charge on the purchase or redemption of fund shares sold through financial
advisers. May vary with the amount invested. Typically used to compensate
advisers for advice and service provided.
SEC (Securities and Exchange Commission)
Federal agency established by Congress to administer the laws governing the
securities industry, including mutual fund companies.
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Share classes
Different classifications of shares; mutual fund share classes offer a variety
of sales charge choices.
Signature guarantee
Certification by a bank, brokerage firm or other financial institution that a
customer's signature is valid; signature guarantees can be provided by members
of the STAMP program.
Standard deviation
A measure of an investment's volatility; for mutual funds, measures how much a
fund's total return has typically varied from its historical average.
Statement of Additional Information (SAI)
The document serving as "Part B" of a fund's prospectus that provides more
detailed information about the fund's organization, investments, policies and
risks.
Stock
An investment that represents a share of ownership (equity) in a corporation.
Stocks are often referred to as equities.
Total return
An investment performance measurement, expressed as a percentage, based on the
combined earnings from dividends, capital gains and change in price over a given
period.
Uniform Gift to Minors Act and Uniform Transfers to Minors Act
Federal and state laws that provide a simple way to transfer property to a minor
with special tax advantages.
Volatility
The tendency of an investment to go up or down in value by different magnitudes.
Investments that generally go up or down in value in relatively small amounts
are considered "low volatility" investments, whereas those investments that
generally go up or down in value in relatively large amounts are considered
"high volatility" investments.
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Appendix A - Bond Ratings
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.
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Additional information about the Funds' investments is available in the Funds'
annual and semi-annual reports to shareholders. In the Funds' shareholder
reports, you will find a discussion of the market conditions and investment
strategies that significantly affected the Funds' performance during the report
period. You can find more detailed information about the Funds in the current
Statement of Additional Information, which we have filed electronically with the
Securities and Exchange Commission (SEC) and which is legally a part of this
Prospectus. If you want a free copy of the Statement of Additional Information,
the annual or semi-annual report, or if you have any questions about investing
in these funds, you can write to us at 1818 Market Street, Philadelphia, PA
19103-3682, or call toll-free 800.523.1918. You may also obtain additional
information about each of the Funds from your financial adviser.
You can find reports and other information about each Fund on the SEC web site
(http://www.sec.gov), or you can get copies of this information, after payment
of a duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-6009. Information about the Funds, including their
Statement of Additional Information, can be reviewed and copied at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
You can get information on the public reference room by calling the SEC at
1.800.SEC.0330.
Web site
www.delawareinvestments.com
E-mail
[email protected]
Client Services Representative
800.510.4015
Delaphone Service
800.362.FUND (800.362.3863)
For convenient access to account information or current performance information
on all Delaware Investments Funds seven days a week, 24 hours a day, use this
Touch-Tone service.
Investment Company Act file number: 811-6324
Fund Symbols
CUSIP NASDAQ
DELAWARE
INVESTMENTS
Philadelphia * London
P-002 [--] PP 1/00
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 31, 2000
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS
Delaware Global Bond Fund
Delaware International Equity Fund
Delaware Emerging Markets Fund
Delaware Global Equity Fund
(formerly Global Assets Fund)
Delaware Global Opportunities Fund
(formerly Delaware Global Equity Fund)
Delaware International Small Cap Fund
Delaware New Europe Fund
Delaware Latin America Fund
1818 Market Street
Philadelphia, PA 19103
For more information about the Institutional Classes:
800-510-4015
For Prospectus, Performance and Information on Existing Accounts of
Class A Shares, Class B Shares and Class C Shares:
Nationwide 800-523-1918
Dealer Services:
(BROKER/DEALERS ONLY) Nationwide 800-362-7500
This Statement of Additional Information ("Part B") describes shares of
the funds listed above (individually a "Fund" and collectively the "Funds") of
Delaware Group Global & International Funds ("Global Funds"). Global Funds is a
registered, open-end management investment company.
Each Fund offers Class A Shares, Class B Shares and Class C Shares
(together referred to as the "Fund Classes"). Each Fund also offers an
Institutional Class (together referred to the "Institutional Classes"). All
references to "shares" in this Part B refer to all Classes of shares, except
where noted.
This Part B should be read in conjunction with the Prospectuses for the
Funds dated January 31, 2000, as they may be amended from time to time. The
Prospectuses may be obtained by writing or calling your investment dealer or by
calling the Funds at 800-523-1918 or by contacting the Funds' national
distributor, Delaware Distributors, L.P., 1818 Market Street, Philadelphia, PA
19103. Part B is not itself a prospectus but is, in its entirety, incorporated
by reference into each Class' Prospectus. The Funds' financial statements, the
notes relating thereto, the financial highlights and the report of independent
auditors are incorporated by reference from the Annual Reports into this Part B.
The Annual Reports will accompany any request for Part B. The Annual Reports can
be obtained, without charge, by calling 800-523-1918.
<PAGE>
TABLE OF CONTENTS
Investment Policies and Portfolio Techniques
Accounting and Tax Issues
Performance Information
Trading Practices and Brokerage
Purchasing Shares
Investment Plans
Determining Offering Price and Net Asset Value
Redemption and Exchange
Distributions and Taxes
Investment Management Agreements and Sub-Advisory Agreements
Officers and Trustees
General Information
Financial Statements
Appendix A - Description of Ratings
Appendix B - Investment Objectives of the Other Funds in the Delaware
Investments Family
<PAGE>
INVESTMENT POLICIES AND PORTFOLIO TECHNIQUES
Investment Restrictions
Fundamental Investment Restrictions -- Global Funds has adopted the
following restrictions for each Fund, as applicable (except where otherwise
noted) which cannot be changed without approval by the holders of a "majority"
of the respective Fund's outstanding shares, which is a vote by the holders of
the lesser of a) 67% or more of the voting securities present in person or by
proxy at a meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy; or b) more than 50% of the
outstanding voting securities. The percentage limitations contained in the
restrictions and policies set forth herein apply at the time of purchase of
securities.
Each Fund shall not:
1. Make investments that will result in the concentration (as that term
may be defined in the 1940 Act, any rule or other thereunder, or U.S. Securities
and Exchange Commission ("SEC") staff interpretation thereof) of its investments
in the securities of issuers primarily engaged in the same industry, provided
that this restriction does not limit the Fund from investing in obligations
issued or guaranteed by the U.S. government, its agencies or instrumentalities,
or in tax-exempt obligations or certificates of deposit.
2. Borrow money or issue senior securities, except as the 1940 Act, any
rule or order thereunder, or SEC staff interpretation thereof, may permit.
3. Underwrite the securities of other issuers, except that the Fund may
engage in transactions involving the acquisition, disposition or resale of its
portfolio securities, under circumstances where it may be considered to be an
underwriter under the Securities Act of 1933.
4. Purchase or sell real estate, unless acquired as a result of
ownership of securities or other instruments and provided that this restriction
does not prevent the Fund from investing in issuers which invest, deal or
otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests therein.
5. Purchase or sell physical commodities, unless acquired as a result
of ownership of securities or other instruments and provided that this
restriction does not prevent the Fund from engaging in transactions involving
futures contracts and options thereon or investing in securities that are
secured by physical commodities.
6. Make loans, provided that this restriction does not prevent the Fund
from purchasing debt obligations, entering into repurchase agreements, loaning
its assets to broker/dealers or institutional investors and investing in loans,
including assignments and participation interests.
Non-Fundamental Investment Restrictions -- In addition to the
fundamental policies and investment restrictions described above, and the
various general investment policies described in the prospectus, each Fund will
be subject to the following investment restrictions, which are considered
non-fundamental and may be changed by the Board of Trustees without shareholder
approval.
1. The Fund is permitted to invest in other investment companies,
including open-end, closed-end or unregistered investment companies, either
within the percentage limits set forth in the 1940 Act, any rule or order
thereunder, or SEC staff interpretation thereof, or without regard to percentage
limits in connection with a merger, reorganization, consolidation or other
similar transaction. However, the Fund may not operate as a "fund of funds"
which invests primarily in the shares of other investment companies as permitted
by Section 12(d)(1)(F) or (G) of the 1940 Act, if its own shares are utilized as
investments by such a "fund of funds."
2. The Fund may not invest more than 15% of its net assets in
securities which it cannot sell or dispose of in the ordinary course of business
within seven days at approximately the value at which the Fund has valued the
investment.
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<PAGE>
Delaware Global Bond Fund, Delaware International Equity Fund, Delaware
Emerging Markets Fund and Delaware Global Equity Fund shall not:
1. For Delaware International Equity Fund, as to 75% of its total
assets, and for Global Bond, Global Equity and Delaware Emerging Markets Funds,
as to 50% of their respective total assets, invest more than 5% of their
respective total assets in the securities of any one issuer (other than
obligations issued, or guaranteed by, the U.S. government, its agencies or
instrumentalities).
2. For International Equity, Global Bond and Delaware Global Equity
Funds, invest in securities of other open-end investment companies, except as
part of a merger, consolidation or other acquisition. This limitation does not
prohibit a Fund from investing in the securities of closed-end investment
companies at customary brokerage commission rates. Delaware Emerging Markets
Fund may invest in securities of open-end, closed-end and unregistered
investment companies, in accordance with the limitations contained in the
Investment Company Act of 1940, as amended (the "1940 Act").
3. Make loans, except to the extent that purchases of debt obligations
(including repurchase agreements) in accordance with a Fund's investment
objective and policies, are considered loans and except that the Fund may loan
up to 25% of its assets to qualified broker/dealers or institutional investors
for their use relating to short sales or other security transactions.
4. Purchase or sell real estate or real estate limited partnerships,
but this shall not prevent a Fund from investing in securities secured by real
estate or interests therein.
5. For Delaware International Equity Fund, purchase more than 10% of
the outstanding voting securities of any issuer, or invest in companies for the
purpose of exercising control or management.
6. Engage in the underwriting of securities of other issuers, except
that, in connection with the disposition of a security, the Fund may be deemed
to be an "underwriter" as that term is defined in the Securities Act of 1933
(the "1933 Act").
7. Make any investment which would cause 25% or more of its total
assets to be invested in the securities of issuers all of which conduct their
principal business activities in the same industry. This restriction does not
apply to obligations issued or guaranteed by the U.S. government, its agencies
or instrumentalities.
8. For Delaware International Equity Fund, write, purchase or sell
options, puts, calls or combinations thereof, except that such Fund may: (a)
purchase call options to the extent that the premiums paid on all outstanding
call options do not exceed 2% of such Fund's total assets; (b) write secured put
options; (c) write covered call options; and (d) purchase put options if such
Fund owns the security covered by the put option at the time of purchase, and
provided that premiums paid on all put options outstanding do not exceed 2% of
its total assets. Such Fund may sell put or call options previously purchased
and enter into closing transactions with respect to the activities noted above.
9. Purchase or sell commodities or commodity contracts, except that
each Fund may enter into futures contracts and options on futures contracts in
accordance with its respective prospectuses, subject to investment restriction
10 below.
10. Enter into futures contracts or options thereon, except that a Fund
may enter into futures contracts and options thereon to the extent that not more
than 5% of the Fund's assets are required as futures contract margin deposits
and premiums on options and only to the extent that obligations under such
contracts and transactions represent not more than 20% of the Fund's assets.
11. Make short sales of securities, or purchase securities on margin,
4
<PAGE>
except that a Fund may satisfy margin requirements with respect to futures
transactions.
12. For Delaware International Equity Fund, invest more than 5% of the
value of its total assets in securities of companies less than three years old.
Such three-year period shall include the operation of any predecessor company or
companies.
13. For Delaware International Equity Fund, purchase or retain the
securities of any issuer which has an officer, trustee or security holder who is
a trustee or officer of Global Funds or of its investment manager if or so long
as the trustees and officers of Global Funds and of its investment manager
together own beneficially more than 5% of any class of securities of such
issuer.
14. For Delaware International Equity Fund, invest in interests in oil,
gas or other mineral exploration or development programs or leases.
15. For Delaware International Equity Fund, invest more than 10% of the
Fund's total assets in repurchase agreements maturing in more than seven days
and other illiquid assets, and for Delaware Emerging Markets Fund, invest more
than 15% of the Fund's total assets in repurchase agreements maturing in more
than seven days and other illiquid assets.
16. Borrow money in excess of one-third of the value of its net assets
and then only as a temporary measure for extraordinary purposes or to facilitate
redemptions. Any borrowing will be done from a bank and to the extent that such
borrowing exceeds 5% of the value of a Fund's net assets, asset coverage of at
least 300% is required. In the event that such asset coverage shall at any time
fall below 300%, a Fund shall, within three days thereafter (not including
Sunday or holidays) or such longer period as the Securities and Exchange
Commission (the "SEC") may prescribe by rules and regulations, reduce the amount
of its borrowings to such an extent that the asset coverage of such borrowings
shall be at least 300%. A Fund will not pledge more than 10% of its net assets.
A Fund will not issue senior securities as defined in the 1940 Act, except for
notes to banks.
Although not considered to be a fundamental policy, restriction 5 above
will apply to each of the Funds of Global Funds as a whole. In addition,
although not considered a fundamental policy, for purposes of restriction 15
above, securities of foreign issuers which are not listed on a recognized
domestic or foreign exchange or for which a bona fide market does not exist at
the time of purchase or subsequent valuation are included in the category of
illiquid assets. As to Delaware International Equity Fund, Delaware Global
Equity Fund and Delaware Emerging Markets Fund, although not considered to be a
fundamental investment restriction, each Fund will invest no more than 5% of its
respective assets in warrants. Investment restrictions 5, 8, 12, 13, 14 and 15
above are nonfundamental policies of Delaware Global Bond Fund, Delaware Global
Equity Fund and Delaware Emerging Markets Fund. Investment restrictions 1 and 2
above are nonfundamental policies of Delaware Emerging Markets Fund.
Delaware International Small Cap Fund and Delaware Global Opportunities
Fund shall not:
1. As to 75% of its total assets, invest more than 5% of its total
assets in the securities of any one issuer (other than obligations issued, or
guaranteed by, the U.S. government, its agencies or instrumentalities).
2. Invest 25% or more of its total assets in any one industry provided
that there is no limitation with respect to investments in obligations issued or
guaranteed as to principal or interest by the U.S. Government, its agencies or
instrumentalities.
3. Make loans other than by the purchase of all or a portion of a
publicly or privately distributed issue of bonds, debentures or other debt
securities of the types commonly offered publicly or privately and purchased by
financial institutions (including repurchase agreements), whether or not the
purchase was made upon the original issuance of the securities, and except that
a Fund may loan its assets to qualified broker/dealers or institutional
investors.
4. Engage in underwriting of securities of other issuers, except that
portfolio securities, including securities purchased in private placements, may
be acquired under circumstances where, if sold, a Fund might be deemed to be an
underwriter under the 1933 Act. No limit is placed on the proportion of the
Fund's assets which may be invested in such securities.
5
<PAGE>
5. Borrow money or issue senior securities, except to the extent
permitted by the 1940 Act or any rule or order thereunder or interpretation
thereof. Subject to the foregoing, a Fund may engage in short sales, purchase
securities on margin, and write put and call options.
6. Purchase or sell physical commodities or physical commodity
contracts, including physical commodity options or futures contracts in a
contract market or other futures market.
7. Purchase or sell real estate; provided that a Fund may invest in
securities secured by real estate or interests therein or issued by companies
which invest in real estate or interests therein.
INVESTMENTS
Foreign Securities
Investors should recognize that investing in foreign issuers involves
certain considerations, including those set forth in the Funds' Prospectuses,
which are not typically associated with investing in United States issuers.
Since the stocks of foreign companies are frequently denominated in foreign
currencies, and since a Fund may temporarily hold uninvested reserves in bank
deposits in foreign currencies, a Fund will be affected favorably or unfavorably
by changes in currency rates and in exchange control regulations, and may incur
costs in connection with conversions between various currencies. The investment
policies of each Fund permit it to enter into forward foreign currency exchange
contracts in order to hedge each Fund's holdings and commitments against changes
in the level of future currency rates. Such contracts involve an obligation to
purchase or sell a specific currency at a future date at a price set at the time
of the contract.
There has been in the past, and there may be again in the future, an
interest equalization tax levied by the United States in connection with the
purchase of foreign securities such as those purchased by a Fund. Payment of
such interest equalization tax, if imposed, would reduce a Fund's rate of return
on its investment. Dividends paid by foreign issuers may be subject to
withholding and other foreign taxes which may decrease the net return on such
investments as compared to dividends paid to a Fund by United States
corporations. Special rules govern the federal income tax treatment of certain
transactions denominated in terms of a currency other than the U.S. dollar or
determined by reference to the value of one or more currencies other than the
U.S. dollar. The types of transactions covered by the special rules generally
include the following: (i) the acquisition of, or becoming the obligor under, a
bond or other debt instrument (including, to the extent provided in Treasury
Regulations, preferred stock); (ii) the accruing of certain trade receivables
and payables; and (iii) the entering into or acquisition of any forward
contract, futures contract, option and similar financial instruments other than
any "regulated futures contract" or "nonequity option" marked to market. The
disposition of a currency other than the U.S. dollar by a U.S. taxpayer is also
treated as a transaction subject to the special currency rules. However, foreign
currency-related regulated futures contracts and nonequity options are generally
not subject to the special currency rules, if they are or would be treated as
sold for their fair market value at year-end under the marking to market rules
applicable to other futures contracts, unless an election is made to have such
currency rules apply. With respect to transactions covered by the special rules,
foreign currency gain or loss is calculated separately from any gain or loss on
the underlying transaction and is normally taxable as ordinary gain or loss. A
taxpayer may elect to treat as capital gain or loss foreign currency gain or
loss arising from certain identified forward contracts, futures contracts and
options that are capital assets in the hands of the taxpayer and which are not
part of a straddle. Certain transactions subject to the special currency rules
that are part of a "section 988 hedging transaction" (as defined in the Internal
Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations)
will be integrated and treated as a single transaction or otherwise treated
consistently for purposes of the Code. The income tax effects of integrating and
treating a transaction as a single transaction are generally to create a
synthetic debt instrument that is subject to the original discount provisions.
It is anticipated that some of the non-U.S. dollar denominated investments and
foreign currency contracts each Fund may make or enter into will be subject to
the special currency rules described above.
Repurchase Agreements
While each Fund is permitted to do so, it normally does not invest in
repurchase agreements, except to invest cash balances.
6
<PAGE>
The funds in the Delaware Investments family have obtained an exemption
from the joint-transaction prohibitions of Section 17(d) of the 1940 Act to
allow the Delaware Investments funds jointly to invest cash balances. Each Fund
may invest cash balances in a joint repurchase agreement in accordance with the
terms of the Order and subject generally to the conditions described below.
A repurchase agreement is a short-term investment by which the
purchaser acquires ownership of a debt security and the seller agrees to
repurchase the obligation at a future time and set price, thereby determining
the yield during the purchaser's holding period. Should an issuer of a
repurchase agreement fail to repurchase the underlying security, the loss to a
Fund, if any, would be the difference between the repurchase price and the
market value of the security. Each Fund will limit its investments in repurchase
agreements to those which Delaware International Advisers Ltd. (the "Manager"),
under the guidelines of the Board of Trustees, determines to present minimal
credit risks and which are of high quality. In addition, a Fund must have
collateral of at least 102% of the repurchase price, including the portion
representing a Fund's yield under such agreements which is monitored on a daily
basis.
Portfolio Loan Transactions
Each Fund may loan up to 25% of its assets to qualified broker/dealers
or institutional investors for their use relating to short sales or other
security transactions.
It is the understanding of the Manager that the staff of the SEC
permits portfolio lending by registered investment companies if certain
conditions are met. These conditions are as follows: 1) each transaction must
have 100% collateral in the form of cash, short-term U.S. government securities,
or irrevocable letters of credit payable by banks acceptable to Global Funds
from the borrower; 2) this collateral must be valued daily and should the market
value of the loaned securities increase, the borrower must furnish additional
collateral to the Fund; 3) the Fund must be able to terminate the loan after
notice, at any time; 4) the Fund must receive reasonable interest on any loan,
and any dividends, interest or other distributions on the lent securities, and
any increase in the market value of such securities; 5) the Fund may pay
reasonable custodian fees in connection with the loan; and 6) the voting rights
on the lent securities may pass to the borrower; however, if the trustees of
Global Funds know that a material event will occur affecting an investment loan,
they must either terminate the loan in order to vote the proxy or enter into an
alternative arrangement with the borrower to enable the trustees to vote the
proxy.
The major risk to which a Fund would be exposed on a portfolio loan
transaction is the risk that the borrower would go bankrupt at a time when the
value of the security goes up. Therefore, each Fund will only enter into loan
arrangements after a review of all pertinent facts by the Manager, under the
supervision of the Board of Trustees, including the creditworthiness of the
borrowing broker, dealer or institution and then only if the consideration to be
received from such loans would justify the risk. Creditworthiness will be
monitored on an ongoing basis by the Manager.
Foreign Currency Transactions
Although the Funds value their assets daily in terms of U.S. dollars,
they do not intend to convert their holdings of foreign currencies into U.S.
dollars on a daily basis. Each Fund will, however, from time to time, purchase
or sell foreign currencies and/or engage in forward foreign currency
transactions in order to expedite settlement of portfolio transactions and to
minimize currency value fluctuations. Each Fund may conduct its foreign currency
exchange transactions on a spot (i.e., cash) basis at the spot rate prevailing
in the foreign currency exchange market or through entering into contracts to
purchase or sell foreign currencies at a future date (i.e., a "forward foreign
currency" contract or "forward" contract). A forward contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract, agreed upon by the
parties, at a price set at the time of the contract. The Funds will convert
currency on a spot basis from time to time, and investors should be aware of the
costs of currency conversion.
A Fund may enter into forward contracts to "lock in" the price of a
security it has agreed to purchase or sell, in terms of U.S. dollars or other
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currencies in which the transaction will be consummated. By entering into a
forward contract for the purchase or sale, for a fixed amount of U.S. dollars or
foreign currency, of the amount of foreign currency involved in the underlying
security transaction, the Fund will be able to protect itself against a possible
loss resulting from an adverse change in currency exchange rates during the
period between the date the security is purchased or sold and the date on which
payment is made or received.
A Fund may purchase or sell currencies and/or engage in forward foreign
currency transactions in order to expedite settlement of portfolio transactions
and to minimize currency value fluctuations.
Forward foreign currency contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial banks) and
their customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades. A Fund will account for forward
contracts by marking to market each day at daily exchange rates.
When a Fund enters into a forward 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 a Fund's assets denominated in such
foreign currency, the Fund's Custodian Bank or subcustodian will place cash or
liquid high grade debt securities in a separate account of the Fund in an amount
not less than the value of the Fund's total assets committed to the consummation
of such forward contracts. If the additional cash or securities placed in the
separate account declines, additional cash or securities will be placed in the
account on a daily basis so that the value of the account will equal the amount
of a Fund's commitments with respect to such contracts.
A Fund will not enter into forward contracts or maintain a net exposure
to such contracts where the consummation of the contracts would obligate the
Fund to deliver an amount of foreign currency in excess of the value of the
Fund's securities or other assets denominated in that currency.
At the maturity of a forward contract, a Fund may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Fund may realize a gain or loss from currency
transactions.
A Fund also may purchase and write put and call options on foreign
currencies (traded on U.S. and foreign exchanges or over-the-counter) for
hedging purposes to protect against declines in the U.S. dollar cost of foreign
securities held by the Fund and against increases in the U.S. dollar cost of
such securities to be acquired. Call options on foreign currency written by a
Fund will be covered, which means that the Fund will own the underlying foreign
currency. With respect to put options on foreign currency written by a Fund, the
Fund will establish a segregated account with its Custodian Bank consisting of
cash, U.S. government securities or other high-grade liquid debt securities in
an amount equal to the amount the Fund will be required to pay upon exercise of
the put.
Depositary Receipts
The Funds may invest in sponsored and unsponsored American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs") and Global Depositary
Receipts ("GDRs") that are actively traded in the United States. ADRs are
receipts typically issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. EDRs and
GDRs are receipts issued by non-U.S. Banks or trust companies and foreign
branches of U.S. banks that evidence ownership of the underlying foreign or U.S.
securities. "Sponsored" ADRs, EDRs or GDRs are issued jointly by the issuer of
the underlying security and a Depositary, and "unsponsored" ADRs, EDRs or GDRs
are issued without the participation of the issuer of the deposited security.
Holders of unsponsored ADRs, EDRs or GDRs generally bear all the costs of such
facilities and the Depositary of an unsponsored ADR, EDR or GDR facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Therefore, there may not be a correlation between information concerning the
issuer of the security and the market value of an unsponsored ADR, EDR or GDR.
ADRs may be listed on a national securities exchange or may be traded in the
over-the-counter market. EDRs and GDRs traded in the over-the-counter market
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which do not have an active or substantial secondary market will be considered
illiquid and therefore will be subject to a Portfolio's limitation with respect
to such securities. ADR prices are denominated in U.S. dollars although the
underlying securities are denominated in a foreign currency. Investments in
ADRs, EDRs and GDRs involve risks similar to those accompanying direct
investments in foreign securities.
Rule 144A Securities
A Fund may invest in restricted securities, including unregistered
securities eligible for resale without registration pursuant to Rule 144A ("Rule
144A Securities") under the 1933 Act. Rule 144A Securities may be freely traded
among qualified institutional investors without registration under the 1933 Act.
Investing in Rule 144A Securities could have the effect of increasing
the level of a Fund's illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities. After
the purchase of a Rule 144A Security, however, the Board of Trustees and the
Manager will continue to monitor the liquidity of that security to ensure that a
Fund has no more than 15% (or, in the case of Delaware Global Bond, Delaware
International Equity and Delaware Global Equity Funds, 10%) of its net assets in
illiquid securities.
Non-Traditional Equity Securities
Delaware Emerging Markets Fund, Delaware International Small Cap Fund,
New Europe and Latin America may each invest in convertible preferred stocks
that offer enhanced yield features, such as Preferred Equity Redemption
Cumulative Stock ("PERCS"), which provide an investor, such as the Funds, 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.
The Funds 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 Securities
Each Fund may also 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
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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 Fund has qualified as a regulated investment company under the Code.
Accordingly, during periods when a Fund receives no interest payments on its
zero-coupon securities, it will be required, in order to maintain its 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.
Interest Rate Swaps
In order to attempt to protect Delaware Global Bond Fund's investments
from interest rate fluctuations, the Fund may engage in interest rate swaps. The
Fund intends to use interest rate swaps as a hedge and not as a speculative
investment. Interest rate swaps involve the exchange by the Fund with another
party of their respective rights to receive interest, (e.g., an exchange of
fixed rate payments for floating rate payments). For example, if the Fund holds
an interest-paying security whose interest rate is reset once a year, it may
swap the right to receive interest at this fixed rate for the right to receive
interest at a rate that is reset daily. Such a swap position would offset
changes in the value of the underlying security because of subsequent changes in
interest rates. This would protect the Fund from a decline in the value of the
underlying security due to rising rates, but would also limit its ability to
benefit from falling interest rates.
The Fund may enter into interest rate swaps on either an asset-based or
liability-based basis, depending upon whether it is hedging its assets or its
liabilities, and will usually enter into interest rate swaps on a net basis
(i.e., the two payment streams are netted out, with the Fund receiving or
paying, as the case may be, only the net amount of the two payments). Inasmuch
as these hedging transactions are entered into for non-speculative purposes and
not for the purpose of leveraging the Fund's investments, the Managers and the
Fund believe such obligations do not constitute senior securities and,
accordingly, will not treat them as being subject to its borrowing restrictions.
The net amount of the excess, if any, of the Fund's obligations over its
entitlement with respect to each interest rate swap will be accrued on a daily
basis and an amount of cash or high-quality liquid securities having an
aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account by the Custodian Bank. If the Fund enters
into an interest rate swap on other than a net basis, it would maintain a
segregated account in the full amount accrued on a daily basis of the Fund's
obligations with respect to the swap.
The use of interest rate swaps by the Fund involves investment
techniques and risks different from those associated with ordinary portfolio
securities transactions. If a manager is incorrect in its forecasts of market
values, interest rates and other applicable factors, the investment performance
of the Fund will be less favorable than it would have been if this investment
technique were never used. Interest rate swaps do not involve the delivery of
securities or other underlying assets or principal. Thus, if the other party to
an interest rate swap defaults, the Fund's risk of loss consists of the net
amount of interest payments that the Fund is contractually entitled to receive.
Risks Relating to Russian Securities
Delaware New Europe Fund may invest to a limited degree in Russian
Securities. Investing in Russian companies involves a high degree of risk and
special considerations not typically associated with investing in the U.S.
securities markets, and should be considered highly speculative. Such risks
include: (1) delays in settling portfolio transactions and risk of loss arising
out of Russia's system of share registration and custody; (2) the risk that it
may be impossible or more difficult than in other countries to obtain and/or
enforce a judgment; (3) pervasiveness of corruption and crime in the Russian
economic system; (4) currency exchange rate volatility and the lack of available
currency hedging instruments; (5) higher rates of inflation (including the risk
of social unrest associated with periods of hyper-inflation); (6) controls on
foreign investment and local practices disfavoring foreign investors and
limitations on repatriation of invested capital, profits and dividends, and on
Delaware New Europe Fund's ability to exchange local currencies for U.S.
dollars; (7) the risk that the government of Russia or other executive or
legislative bodies may decide not to continue to support the economic reform
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programs implemented since the dissolution of the Soviet Union and could follow
radically different political and/or economic policies to the detriment of
investors, including non-market-oriented policies such as the support of certain
industries at the expense of other sectors or investors, or a return to the
centrally planned economy that existed prior to the dissolution of the Soviet
Union; (8) the financial condition of Russian companies, including large amounts
of inter-company debt which may create a payments crisis on a national scale;
(9) dependency on exports and the corresponding importance of international
trade; (10) the risk that the Russian tax system will not be reformed to prevent
inconsistent, retroactive and/or exorbitant taxation; and (11) possible
difficulty in identifying a purchaser of securities held by Delaware New Europe
Fund due to the underdeveloped nature of the securities markets.
There is little historical data on Russian securities markets because
they are relatively new and a substantial proportion of securities transactions
in Russia are privately negotiated outside of stock exchanges. Because of the
recent formation of the securities markets as well as the underdeveloped state
of the banking and telecommunications systems, settlement, clearing and
registration of securities transactions are subject to significant risks.
Ownership of shares (except where shares are held through depositories that meet
the requirements of the 1940 Act) is defined according to entries in the
company's share register and normally evidenced by extracts from the register or
by formal share certificates. However, there is no central registration system
for shareholders and these services are carried out by the companies themselves
or by registrars located throughout Russia. These registrars are not necessarily
subject to effective state supervision and it is possible for Delaware New
Europe Fund to lose its registration through fraud, negligence or even mere
oversight. In addition, while applicable Russian regulations impose liability on
registrars for losses resulting from their errors, it may be difficult for the
Fund to enforce any rights it may have against the registrar or issuer of the
securities in the event of loss of share registration. Furthermore, although a
Russian public enterprise with more than 1,000 shareholders is required by law
to contract out the maintenance of its shareholder register to an independent
entity that meets certain criteria, in practice this regulation has not always
been strictly enforced. Because of this lack of independence, management of a
company may be able to exert considerable influence over who can purchase and
sell the company's shares by illegally instructing the registrar to refuse to
record transactions in the share register. This practice may prevent Delaware
New Europe Fund from investing in the securities of certain Russian companies
deemed suitable by the Investment Manager. Further, this also could cause a
delay in the sale of Russian company securities by the Fund if a potential
purchaser is deemed unsuitable, which may expose the Fund to potential loss on
the investment.
Investment Company Securities
Any investments that a Fund makes in either closed-end or open-end
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. Under the 1940 Act's limitations, the Fund may not
(1) own more than 3% of the voting stock of another investment company; (2)
invest more than 5% of the Fund's total assets in the shares of any one
investment company; nor (3) invest more than 10% of the Fund's total assets in
shares of other investment companies. These percentage limitations also apply to
the Fund's investments in unregistered investment companies.
Diversification
While Delaware Global Bond Fund, Delaware Emerging Markets Fund and
Delaware Global Equity Fund each intend to seek to qualify as a "diversified"
investment company under provisions of Subchapter M of the Code, none of these
Funds will be diversified under the 1940 Act. Thus, while at least 50% of each
such Fund's 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 Fund's total assets, it will not satisfy
the 1940 Act requirement in this respect, which applies that test to 75% of the
Fund's 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.
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Options
Each Fund may purchase call options or purchase put options and will
not engage in option strategies for speculative purposes.
Each Fund may invest in options that are either listed on U.S. or
recognized foreign exchanges or traded over-the-counter. Certain
over-the-counter options may be illiquid. Thus, it may not be possible to close
options positions and this may have an adverse impact on a Fund's ability to
effectively hedge its securities. A Fund will not, however, invest more than 15%
(or, in the case of Delaware Global Bond, Delaware International Equity and
Delaware Global Equity Funds, 10%) of its assets in illiquid securities.
Purchasing Call Options--Each Fund may purchase call options to the extent that
premiums paid by the Fund do not aggregate more than 2% of the Fund's total
assets.
When a Fund purchases a call option, in return for a premium paid by a
Fund to the writer of the option, the Fund obtains the right to buy the security
underlying the option at a specified exercise price at any time during the term
of the option. The writer of the call option, who receives the premium upon
writing the option, has the obligation, upon exercise of the option, to deliver
the underlying security against payment of the exercise price. The advantage of
purchasing call options is that a Fund may alter portfolio characteristics and
modify portfolio maturities without incurring the cost associated with portfolio
transactions.
A Fund may, following the purchase of a call option, liquidate its
position by effecting a closing sale transaction. This is accomplished by
selling an option of the same series as the option previously purchased. A Fund
will realize a profit from a closing sale transaction if the price received on
the transaction is more than the premium paid to purchase the original call
option; a Fund will realize a loss from a closing sale transaction if the price
received on the transaction is less than the premium paid to purchase the
original call option.
Although a Fund will generally purchase only those call options for
which there appears to be an active secondary market, there is no assurance that
a liquid secondary market on an Exchange will exist for any particular option,
or at any particular time, and for some options no secondary market on an
Exchange may exist. In such event, it may not be possible to effect closing
transactions in particular options, with the result that a Fund would have to
exercise its options in order to realize any profit and would incur brokerage
commissions upon the exercise of such options and upon the subsequent
disposition of the underlying securities acquired through the exercise of such
options. Further, unless the price of the underlying security changes
sufficiently, a call option purchased by a Fund may expire without any value to
the Fund.
Purchasing Put Options--Each Fund may invest up to 2% of its total
assets in the purchase of put options. A Fund will, at all times during which it
holds a put option, own the security covered by such option.
A put option purchased by a Fund gives it the right to sell one of its
securities for an agreed price up to an agreed date. A Fund intends to purchase
put options in order to protect against a decline in the market value of the
underlying security below the exercise price less the premium paid for the
option ("protective puts"). The ability to purchase put options will allow a
Fund to protect unrealized gain in an appreciated security in its portfolio
without actually selling the security. If the security does not drop in value, a
Fund will lose the value of the premium paid. A Fund may sell a put option which
it has previously purchased prior to the sale of the securities underlying such
option. Such sale will result in a net gain or loss depending on whether the
amount received on the sale is more or less than the premium and other
transaction costs paid on the put option which is sold.
A Fund may sell a put option purchased on individual portfolio
securities. Additionally, a Fund may enter into closing sale transactions. A
closing sale transaction is one in which a Fund, when it is the holder of an
outstanding option, liquidates its position by selling an option of the same
series as the option previously purchased.
Futures
Each Fund may enter into contracts for the purchase or sale for future
delivery of securities or foreign currencies. While futures contracts provide
for the delivery of securities, deliveries usually do not occur. Contracts are
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generally terminated by entering into an offsetting transaction. When a Fund
enters into a futures transaction, it must deliver to the futures commission
merchant selected by the Fund an amount referred to as "initial margin." This
amount is maintained by the futures commission merchant in an account at the
Fund's Custodian Bank. Thereafter, a "variation margin" may be paid by a Fund
to, or drawn by the Fund from, such account in accordance with controls set for
such accounts, depending upon changes in the price of the underlying securities
subject to the futures contract.
In addition, when a Fund engages in futures transactions, to the extent
required by the SEC, it will maintain with its Custodian Bank, assets in a
segregated account to cover its obligations with respect to such contracts,
which assets will consist of cash, cash equivalents or high quality debt
securities from its portfolio in an amount equal to the difference between the
fluctuating market value of such futures contracts and the aggregate value of
the margin payments made by a Fund with respect to such futures contracts.
Each Fund may enter into such futures contracts to protect against the
adverse affects of fluctuations in interest or foreign exchange rates without
actually buying or selling the securities or foreign currency. For example, if
interest rates are expected to increase, a Fund might enter into futures
contracts for the sale of debt securities. Such a sale would have much the same
effect as selling an equivalent value of the debt securities owned by a Fund. If
interest rates did increase, the value of the debt securities in the portfolio
would decline, but the value of the futures contracts to a Fund would increase
at approximately the same rate, thereby keeping the net asset value of the Fund
from declining as much as it otherwise would have. Similarly, when it is
expected that interest rates may decline, futures contracts may be purchased to
hedge in anticipation of subsequent purchases of securities at higher prices.
Since the fluctuations in the value of futures contracts should be similar to
those of debt securities, a Fund could take advantage of the anticipated rise in
value of debt securities without actually buying them until the market had
stabilized. At that time, the futures contracts could be liquidated and the Fund
could then buy debt securities on the cash market.
With respect to options on futures contracts, when a Fund is not fully
invested, it may purchase a call option on a futures contract to hedge against a
market advance due to declining interest rates. The purchase of a call option on
a futures contract is similar in some respects to the purchase of a call option
on an individual security. Depending on the pricing of the option compared to
either the price of the futures contract upon which it is based, or the price of
the underlying debt securities, it may or may not be less risky than ownership
of the futures contract or underlying debt securities. As with the purchase of
futures contracts, when a Fund is not fully invested, it may purchase a call
option on a futures contract to hedge against a market advance due to declining
interest rates.
The writing of a call option on a futures contract constitutes a
partial hedge against the declining price of the security or foreign currency
which is deliverable upon exercise of the futures contract. If the futures price
at the expiration of the option is below the exercise price, a Fund will retain
the full amount of the option premium which provides a partial hedge against any
decline that may have occurred in the Fund's portfolio holdings. The writing of
a put option on a futures contract constitutes a partial hedge against the
increasing price of the security or foreign currency which is deliverable upon
exercise of the futures contract. If the futures price at the expiration of the
option is higher than the exercise price, the Fund will retain the full amount
of the option premium which provides a partial hedge against any increase in the
price of securities which the Fund intends to purchase.
If a put or call option a Fund has written is exercised, the Fund will
incur a loss which will be reduced by the amount of the premium it receives.
Depending on the degree of correlation between changes in the value of its
portfolio securities and changes in the value of its futures positions, a Fund's
losses from existing options on futures may, to some extent, be reduced or
increased by changes in the value of portfolio securities. The purchase of a put
option on a futures contract is similar in some respects to the purchase of
protective puts on portfolio securities. For example, a Fund will purchase a put
option on a futures contract to hedge the Fund's portfolio against the risk of
rising interest rates.
To the extent that interest rates move in an unexpected direction, a
Fund may not achieve the anticipated benefits of futures contracts or options on
futures contracts or may realize a loss. For example, if a Fund is hedged
against the possibility of an increase in interest rates which would adversely
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affect the price of securities held in its portfolio and interest rates decrease
instead, the Fund will lose part or all of the benefit of the increased value of
its securities which it has because it will have offsetting losses in its
futures position. In addition, in such situations, if the Fund had insufficient
cash, it may be required to sell securities from its portfolio to meet daily
variation margin requirements. Such sales of securities may, but will not
necessarily, be at increased prices which reflect the rising market. A Fund may
be required to sell securities at a time when it may be disadvantageous to do
so.
Further, with respect to options on futures contracts, a Fund may seek
to close out an option position by writing or buying an offsetting position
covering the same securities or contracts and have the same exercise price and
expiration date. The ability to establish and close out positions on options
will be subject to the maintenance of a liquid secondary market, which cannot be
assured.
Options on Foreign Currencies
Each Fund may purchase and write options on foreign currencies for
hedging purposes in a manner similar to that in which futures contracts on
foreign currencies, or forward contracts, will be utilized. For example, a
decline in the dollar value of a foreign currency in which portfolio securities
are denominated will reduce the dollar value of such securities, even if their
value in the foreign currency remains constant. In order to protect against such
diminutions in the value of portfolio securities, a Fund may purchase put
options on the foreign currency. If the value of the currency does decline, a
Fund will have the right to sell such currency for a fixed amount in dollars and
will thereby offset, in whole or in part, the adverse effect on its portfolio
which otherwise would have resulted.
Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, a Fund may purchase call options thereon. The purchase
of such options could offset, at least partially, the effects of the adverse
movement in exchange rates. As in the case of other types of options, however,
the benefit to a Fund deriving from purchases of foreign currency options will
be reduced by the amount of the premium and related transaction costs. In
addition, where currency exchange rates do not move in the direction or to the
extent anticipated, a Fund could sustain losses on transactions in foreign
currency options which would require it to forego a portion or all of the
benefits of advantageous changes in such rates.
A Fund may write options on foreign currencies for the same types of
hedging purposes. For example, where a Fund anticipates a decline in the dollar
value of foreign currency denominated securities due to adverse fluctuations in
exchange rates, it could, instead of purchasing a put option, write a call
option on the relevant currency. If the expected decline occurs, the option will
most likely not be exercised, and the diminution in the value of portfolio
securities will be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, a Fund
could write a put option on the relevant currency which, if rates move in the
manner projected, will expire unexercised and allow a Fund to hedge such
increased cost up to the amount of the premium. As in the case of other types of
options, however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium, and only if rates move in the
expected direction. If this does not occur, the option may be exercised and the
Fund would be required to purchase or sell the underlying currency at a loss
which may not be offset by the amount of the premium. Through the writing of
options on foreign currencies, a Fund also may be required to forego all or a
portion of the benefit which might otherwise have been obtained from favorable
movements in exchange rates.
Each Fund intends to write covered call options on foreign currencies.
A call option written on a foreign currency by a Fund is "covered" if the Fund
owns the underlying foreign currency covered by the call or has an absolute and
immediate right to acquire that foreign currency without additional cash
consideration (or for additional cash consideration held in a segregated account
by the Custodian Bank) upon conversion or exchange of other foreign currency
held in its portfolio. A call option is also covered if the Fund has a call on
the same foreign currency and in the same principal amount as the call written
where the exercise price of the call held (a) is equal to or less than the
exercise price of the call written, or (b) is greater than the exercise price of
the call written if the difference is maintained by the Fund in cash, U.S.
government securities or other high-grade liquid debt securities in a segregated
account with its Custodian Bank.
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With respect to writing put options, at the time the put is written, a
Fund will establish a segregated account with its Custodian Bank consisting of
cash, U.S. government securities or other high-grade liquid debt securities in
an amount equal in value to the amount the Fund will be required to pay upon
exercise of the put. The account will be maintained until the put is exercised,
has expired, or the Fund has purchased a closing put of the same series as the
one previously written.
In order to comply with the securities laws of one state, a Fund will
not write put or call options if the aggregate value of the securities
underlying the calls or obligations underlying the puts determined as of the
date the options are sold exceed 25% of the Fund's net assets. Should state laws
change or Global Funds receive a waiver of their application for a Fund, the
Funds reserve the right to increase this percentage.
Options on Stock Indices
A stock index assigns relative values to the common stocks included in
the index with the index fluctuating with changes in the market values of the
underlying common stock.
Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or make
delivery of the underlying stock at a specified price. A stock index option
gives the holder the right to receive a cash "exercise settlement amount" equal
to (i) the amount by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing value of
the underlying index on the date of exercise, multiplied by (ii) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the stock index upon which the option is based being greater than (in the case
of a call) or less than (in the case of a put) the exercise price of the option.
The amount of cash received will be equal to such difference between the closing
price of the index and exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. Gain or loss to a Fund on
transactions in stock index options will depend on price movements in the stock
market generally (or in a particular industry or segment of the market) rather
than price movements of individual securities.
As with stock options, a Fund may offset its position in stock index
options prior to expiration by entering into a closing transaction on an
Exchange or it may let the option expire unexercised.
A stock index fluctuates with changes in the market values of the stock
so included. Some stock index options are based on a broad market index such as
the Standard and Poor's 500 (R) Composite Stock Price Index ("S&P 500") or the
New York Stock Exchange Composite Index, or a narrower market index such as the
Standard & Poor's 100 Index ("S&P 100"). Indices are also based on an industry
or market segment such as the AMEX Oil and Gas Index or the Computer and
Business Equipment Index. Options on stock indices are currently traded on
domestic exchanges such as: The Chicago Board Options Exchange, the New York
Stock Exchange and American Stock Exchange as well as on foreign exchanges.
A Fund's ability to hedge effectively all or a portion of its
securities through transactions in options on stock indices depends on the
degree to which price movements in the underlying index correlate with price
movements in the Fund's portfolio securities. Since a Fund's portfolio will not
duplicate the components of an index, the correlation will not be exact.
Consequently, a Fund bears the risk that the prices of the securities being
hedged will not move in the same amount as the hedging instrument. It is also
possible that there may be a negative correlation between the index or other
securities which would result in a loss on both such securities and the hedging
instrument.
Positions in stock index options may be closed out only on an Exchange
which provides a secondary market. There can be no assurance that a liquid
secondary market will exist for any particular stock index option. Thus, it may
not be possible to close such an option. The inability to close options
positions could have an adverse impact on a Fund's ability effectively to hedge
its securities. A Fund will enter into an option position only if there appears
to be a liquid secondary market for such options.
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A Fund will not engage in transactions in options on stock indices for
speculative purposes but only to protect appreciation attained and to take
advantage of the liquidity available in the option markets.
Concentration
In applying the Funds' fundamental policy concerning concentration that
is described above, it is a matter of non-fundamental policy that: (i) utility
companies will be divided according to their services, for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry; (ii) financial service companies will be classified according to the
end users of their services, for example, automobile finance, bank finance and
diversified finance will each be considered a separate industry; and (iii) asset
backed securities will be classified according to the underlying assets securing
such securities.
SPECIAL RISK CONSIDERATIONS
Foreign Securities Risks. Each Fund has the right to purchase securities
in any developed, underdeveloped or emerging country. Investors should consider
carefully the substantial risks involved in investing in securities issued by
companies and governments of foreign nations. These risks are in addition to the
usual risks inherent in domestic investments. There is 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 securities of issuers in those
nations.
In addition, in many countries, there is substantially less publicly
available information about issuers than is available in reports about companies
in the United States. 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. In particular, the assets and profits appearing on the financial
statements of a developing or emerging country issuer may not reflect its
financial position or results of operations in the way they would be reflected
had the financial statements been prepared in accordance with the United States'
generally accepted accounting principles. Also, for an issuer that keeps
accounting records in local currency, inflation accounting rules may require for
both tax and accounting purposes, that certain assets and liabilities be
restated on the issuer's balance sheet in order to express items in terms of
currency or constant purchasing power. Inflation accounting may indirectly
generate losses or profits. Consequently, financial data may be materially
affected by restatements for inflation and may not accurately reflect the real
condition of those issuers and securities markets.
Further, a Fund 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. Further, the
settlement period of securities transactions in foreign markets may be longer
than in domestic markets, and may be subject to administrative uncertainties. 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, and capital requirements for brokerage firms are
generally lower. The foreign securities markets of many of the countries in
which a Fund may invest may also be smaller, less liquid and subject to greater
price volatility than those in the United States.
Emerging Markets Securities Risks. Compared to the United States and
other developed countries, emerging countries may have volatile social
conditions, relatively unstable governments and political systems, economies
based on only a few industries and economic structures that are less diverse and
mature, and securities markets that trade a small number of securities, which
can result in a low or nonexistent volume of trading. Prices in these securities
markets 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. Until recently, there has been an
absence of a capital market structure or market-oriented economy in certain
emerging countries. Further, investments and opportunities for investments by
foreign investors are subject to a variety of national policies and restrictions
in many emerging countries. These restrictions may take the form of prior
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governmental approval, limits on the amount or type of securities held by
foreigners, limits on the types of companies in which foreigners may invest and
prohibitions on foreign investments in issuers or industries deemed sensitive to
national interests. Additional restrictions may be imposed at any time by these
or other countries in which a Fund invests. Also, 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, the Manager does not
believe that any current repatriation restrictions would affect its decision to
invest in such countries. Countries such as those in which a Fund may invest,
and in which Delaware Emerging Markets Fund will primarily invest, have
historically experienced and may continue to experience, substantial, and in
some periods extremely high rates of inflation for many years, 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. Other 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.
Foreign Government Securities Risks. With respect to investment in debt
issues of foreign governments, 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. If a foreign government or government-related issuer cannot generate
sufficient earnings from foreign trade to service its external debt, it may need
to depend on continuing loans and aid from foreign governments, commercial banks
and multilateral organizations, and inflows of foreign investment. The
commitment on the part of these foreign governments, multilateral organizations
and others to make such disbursements may be conditioned on the government's
implementation of economic reforms and/or economic performance and the timely
service of its obligations. Failure to implement such reforms, achieve such
levels of economic performance or repay principal or interest when due may
curtail the willingness of such third parties to lend funds, which may further
impair the issuer's ability or willingness to service its debts in a timely
manner. The cost of servicing external debt will also generally be adversely
affected by rising international interest rates because many external debt
obligations bear interest at rates which are adjusted based upon international
interest rates. The ability to service external debt will also depend on the
level of the relevant government's international currency reserves and its
access to foreign exchange. Currency devaluations may affect the ability of a
government issuer to obtain sufficient foreign exchange to service its external
debt.
As a result of the foregoing, a foreign governmental issuer may default
on its obligations. If such a default occurs, a Fund may have limited effective
legal recourse against the issuer and/or guarantor. Remedies must, in some
cases, be pursued in the courts of the defaulting party itself, and the ability
of the holder of foreign government and government-related debt securities to
obtain recourse may be subject to the political climate in the relevant country.
In addition, no assurance can be given that the holders of commercial bank debt
will not contest payments to the holders of other foreign government and
government-related debt obligations in the event of default under their
commercial bank loan agreements.
Among the foreign government and government related issuers in which
Delaware Emerging Markets Fund may invest are certain high-yield securities,
including so-called Brady Bonds. The issuers of the foreign government and
government-related high yield securities, including Brady Bonds, in which
Delaware Emerging Markets Fund expect to 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
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government-related high yield securities in which Delaware Emerging Markets Fund
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.
Brady Bonds are debt securities issued under the framework of the Brady
Plan, an initiative announced by former U.S. Treasury Secretary Nicholas F.
Brady in 1989 as a mechanism for debtor nations to restructure their outstanding
external indebtedness (generally, commercial bank debt). In restructuring its
external debt under the Brady Plan framework, a debtor nation negotiates with
its existing bank lenders as well as multilateral institutions such as the World
Bank and the International Monetary Fund. The Brady Plan framework, as it has
developed, contemplates the exchange of commercial bank debt for new issued
bonds (Brady Bonds). The investment advisers believe that economic reforms
undertaken by countries in connection with the issuance of Brady Bonds make the
debt of countries which have issued or have announced plans to issue Brady Bonds
an attractive opportunity for investment. Investors, however, should recognize
that the Brady Plan only sets forth general guiding principles for economic
reform and debt reduction, emphasizing that solutions must be negotiated on a
case-by-case basis between debtor nations and their creditors. In addition,
Brady Bonds have been issued only recently and, accordingly, do not have a long
payment history.
Risks Related to Additional Investment Techniques. 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 a Fund 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 Fund 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 Fund is obligated to deliver.
Delaware Emerging Markets Fund may invest up to 35% of its net assets,
in high yield, high risk foreign fixed-income securities. These securities are
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. No Fund will purchase
securities rated lower than C by S&P or Ca by Moody's, or, if unrated,
considered to be of an equivalent quality to such ratings by the Investment
Manager. Fixed-income securities of this type are considered to be of poor
standing and predominantly speculative. Such securities are subject to a
substantial degree of credit risk.
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ACCOUNTING AND TAX ISSUES
When a Fund writes a call, or purchases a put option, an amount equal
to the premium received or paid by it is included in the Fund's assets and
liabilities as an asset and as an equivalent liability.
In writing a call, the amount of the liability is subsequently "marked
to market" to reflect the current market value of the option written. The
current market value of a written option is the last sale price on the principal
Exchange on which such option is traded or, in the absence of a sale, the mean
between the last bid and asked prices. If an option which a Fund has written
expires on its stipulated expiration date, the Fund recognizes a capital gain.
If a Fund enters into a closing purchase transaction with respect to an option
which the Fund has written, the Fund realizes a gain (or loss if the cost of the
closing transaction exceeds the premium received when the option was sold)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is extinguished. If a call option which a
Fund has written is exercised, the Fund realizes a capital gain or loss from the
sale of the underlying security and the proceeds from such sale are increased by
the premium originally received.
The premium paid by a Fund for the purchase of a put option is recorded
in the Fund's assets and liabilities as an investment and subsequently adjusted
daily to the current market value of the option. For example, if the current
market value of the option exceeds the premium paid, the excess would be
unrealized appreciation and, conversely, if the premium exceeds the current
market value, such excess would be unrealized depreciation. The current market
value of a purchased option is the last sale price on the principal Exchange on
which such option is traded or, in the absence of a sale, the mean between the
last bid and asked prices. If an option which a Fund has purchased expires on
the stipulated expiration date, the Fund realizes a short-term or long-term
capital loss for federal income tax purposes in the amount of the cost of the
option. If a Fund exercises a put option, it realizes a capital gain or loss
(long-term or short-term, depending on the holding period of the underlying
security) from the sale of the underlying security and the proceeds from such
sale will be decreased by the premium originally paid.
Options on Certain Stock Indices
Accounting for options on certain stock indices will be in accordance
with generally accepted accounting principles. The amount of any realized gain
or loss on closing out such a position will result in a realized gain or loss
for tax purposes. Such options held by a Fund at the end of each fiscal year on
a broad-based stock index will be required to be "marked to market" for federal
income tax purposes. Generally, 60% of any net gain or loss recognized on such
deemed sales or on any actual sales will be treated as long-term capital gain or
loss, and the remainder will be treated as short-term capital gain or loss.
Other Tax Requirements
Each Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Code. As such, a Fund
will not be subject to federal income tax, or to any excise tax, to the extent
its earnings are distributed as provided in the Code and it satisfies other
requirements relating to the sources of its income and diversification of its
assets. See Diversification under Investment Policies and Portfolio Techniques.
In order to qualify as a regulated investment company for federal
income tax purposes, each Fund must meet certain specific requirements,
including:
(i) A Fund must maintain a diversified portfolio of securities, wherein
no security (other than U.S. government securities and securities of other
regulated investment companies) can exceed 25% of that Fund's total assets, and,
with respect to 50% of that Fund's total assets, no investment (other than cash
and cash items, U.S. government securities and securities of other regulated
investment companies) can exceed 5% of that Fund's total assets;
(ii) A Fund must derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or disposition of stock and securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities, or currencies;
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(iii) A Fund must distribute to its shareholders at least 90% of its
investment company taxable income and net tax-exempt income for each of its
fiscal years, and
(iv) A Fund must realize less than 30% of its gross income for each
fiscal year from gains from the sale of securities and certain other assets that
have been held by the Fund for less than three months ("short-short income").
The Taxpayer Relief Act of 1997 (the "1997 Act") repealed the 30% short-short
income test for tax years of regulated investment companies beginning after
August 5, 1997; however, this rule may have continuing effect in some states for
purposes of classifying the Fund as a regulated investment company.
The Code requires a Fund to distribute at least 98% of its taxable
ordinary income earned during the calendar year and 98% of its capital gain net
income earned during the 12 month period ending October 31 (in addition to
amounts from the prior year that were neither distributed nor taxed to such
Fund) to shareholders by December 31 of each year in order to avoid federal
excise taxes. The Funds intend as a matter of policy to declare and pay
sufficient dividends in December or January (which are treated by shareholders
as received in December) but does not guarantee and can give no assurances that
its distributions will be sufficient to eliminate all such taxes.
The straddle rules of Section 1092 may apply. Generally, the straddle
provisions require the deferral of losses to the extent of unrecognized gains
related to the offsetting positions in the straddle. Excess losses, if any, can
be recognized in the year of loss. Deferred losses will be carried forward and
recognized in the year that unrealized losses exceed unrealized gains.
The federal income tax rules governing the taxation of interest rate
swaps are not entirely clear and may require Delaware Global Bond Fund to treat
payments received under such arrangements as ordinary income and to amortize
such payments under certain circumstances. Delaware Global Bond Fund will limit
its activity in this regard in order to maintain its qualification as a
regulated investment company.
The 1997 Act has also added new provisions for dealing with
transactions that are generally called "Constructive Sale Transactions." Under
these rules, the Fund must recognize gain (but not loss) on any constructive
sale of an appreciated financial position in stock, a partnership interest or
certain debt instruments. The Fund will generally be treated as making a
constructive sale when it: 1) enters into a short sale on the same or
substantially identical property; 2) enters into an offsetting notional
principal contract; or 3) enters into a futures or forward contract to deliver
the same or substantially identical property. Other transactions (including
certain financial instruments called collars) will be treated as constructive
sales as provided in Treasury regulations to be published. There are also
certain exceptions that apply for transactions that are closed before the end of
the 30th day after the close of the taxable year.
Investment in Foreign Currencies and Foreign Securities--The Funds are
authorized to invest certain limited amounts in foreign securities. Such
investments, if made, will have the following additional tax consequences to
each Fund:
Under the Code, gains or losses attributable to fluctuations in foreign
currency exchange rates which occur between the time a Fund accrues income
(including dividends), or accrues expenses which are denominated in a foreign
currency, and the time a Fund actually collects such income or pays such
expenses generally are treated as ordinary income or loss. Similarly, on the
disposition of debt securities denominated in a foreign currency and on the
disposition of certain options, futures, forward contracts, gain or loss
attributable to fluctuations in the value of foreign currency between the date
of acquisition of the security or contract and the date of its disposition are
also treated as ordinary gain or loss. These gains or losses, referred to under
the Code as "Section 988" gains or losses, may increase or decrease the amount
of a Fund's net investment company taxable income, which, in turn, will affect
the amount of income to be distributed to you by a Fund.
If a Fund's Section 988 losses exceed a Fund's other investment company
taxable income during a taxable year, a Fund generally will not be able to make
ordinary dividend distributions to you for that year, or distributions made
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before the losses were realized will be recharacterized as return of capital
distributions for federal income tax purposes, rather than as an ordinary
dividend or capital gain distribution. If a distribution is treated as a return
of capital, your tax basis in your Fund shares will be reduced by a like amount
(to the extent of such basis), and any excess of the distribution over your tax
basis in your Fund shares will be treated as capital gain to you.
The 1997 Act generally requires that foreign income be translated into
U.S. dollars at the average exchange rate for the tax year in which the
transactions are conducted. Certain exceptions apply to taxes paid more than two
years after the taxable year to which they relate. This new law may require a
Fund to track and record adjustments to foreign taxes paid on foreign securities
in which it invests. Under a Fund's current reporting procedure, foreign
security transactions are recorded generally at the time of each transaction
using the foreign currency spot rate available for the date of each transaction.
Under the new law, a Fund will be required to record at fiscal year end (and at
calendar year end for excise tax purposes) an adjustment that reflects the
difference between the spot rates recorded for each transaction and the year-end
average exchange rate for all of a Fund's foreign securities transactions. There
is a possibility that the mutual fund industry will be given relief from this
new provision, in which case no year-end adjustments will be required.
The Funds may be subject to foreign withholding taxes on income from
certain of its foreign securities. If more than 50% of the total assets of a
Fund at the end of its fiscal year are invested in securities of foreign
corporations, a Fund may elect to pass-through to you your pro rata share of
foreign taxes paid by a Fund. If this election is made, you will be: (i)
required to include in your gross income your pro rata share of foreign source
income (including any foreign taxes paid by a Fund); and (ii) entitled to either
deduct your share of such foreign taxes in computing your taxable income or to
claim a credit for such taxes against your U.S. income tax, subject to certain
limitations under the Code. You will be informed by a Fund at the end of each
calendar year regarding the availability of any such foreign tax credits and the
amount of foreign source income (including any foreign taxes paid by a Fund). If
a Fund elects to pass-through to you the foreign income taxes that it has paid,
you will be informed at the end of the calendar year of the amount of foreign
taxes paid and foreign source income that must be included on your federal
income tax return. If a Fund invests 50% or less of its total assets in
securities of foreign corporations, it will not be entitled to pass-through to
you your pro-rata shares of foreign taxes paid by a Fund. In this case, these
taxes will be taken as a deduction by a Fund, and the income reported to you
will be the net amount after these deductions. The 1997 Act also simplifies the
procedures by which investors in funds that invest in foreign securities can
claim tax credits on their individual income tax returns for the foreign taxes
paid by a Fund. These provisions will allow investors who pay foreign taxes of
$300 or less on a single return or $600 or less on a joint return during any
year (all of which must be reported on IRS Form 1099-DIV from a Fund to the
investor) to claim a tax credit against their U.S. federal income tax for the
amount of foreign taxes paid by a Fund. This process will allow you, if you
qualify, to bypass the burdensome and detailed reporting requirements on the
foreign tax credit schedule (Form 1116) and report your foreign taxes paid
directly on page 2 of Form 1040. You should note that this simplified procedure
will not be available until calendar year 1998.
Investment in Passive Foreign Investment Company securities--The Funds
may invest in shares of foreign corporations which may be classified under the
Code as passive foreign investment companies ("PFICs"). In general, a foreign
corporation is classified as a PFIC if at least one-half of its assets
constitute investment-type assets or 75% or more of its gross income is
investment-type income. If a Fund receives an "excess distribution" with respect
to PFIC stock, the Fund itself may be subject to U.S. federal income tax on a
portion of the distribution, whether or not the corresponding income is
distributed by a Fund to you. In general, under the PFIC rules, an excess
distribution is treated as having been realized ratably over the period during
which a Fund held the PFIC shares. A Fund itself will be subject to tax on the
portion, if any, of an excess distribution that is so allocated to prior Fund
taxable years, and an interest factor will be added to the tax, as if the tax
had been payable in such prior taxable years. In this case, you would not be
permitted to claim a credit on your own tax return for the tax paid by a Fund.
Certain distributions from a PFIC as well as gain from the sale of PFIC shares
are treated as excess distributions. Excess distributions are characterized as
ordinary income even though, absent application of the PFIC rules, certain
distribution might have been classified as capital gain. This may have the
effect of increasing Fund distributions to you that are treated as ordinary
dividends rather than long-term capital gain dividends.
A Fund may be eligible to elect alternative tax treatment with respect
to PFIC shares. Under an election that currently is available in some
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circumstances, a Fund generally would be required to include in its gross income
its share of the earnings of a PFIC on a current basis, regardless of whether
distributions are received from the PFIC during such period. If this election
were made, the special rules, discussed above, relating to the taxation of
excess distributions, would not apply. In addition, the 1997 Act provides for
another election that would involve marking-to-market the Fund's PFIC shares at
the end of each taxable year (and on certain other dates as prescribed in the
Code), with the result that unrealized gains would be treated as though they
were realized. The Fund would also be allowed an ordinary deduction for the
excess, if any, of the adjusted basis of its investment in the PFIC stock over
its fair market value at the end of the taxable year. This deduction would be
limited to the amount of any net mark-to-market gains previously included with
respect to that particular PFIC security. If a Fund were to make this second
PFIC election, tax at the Fund level under the PFIC rules would generally be
eliminated.
The application of the PFIC rules may affect, among other things, the
amount of tax payable by a Fund (if any), the amounts distributable to you by a
Fund, the time at which these distributions must be made, and whether these
distributions will be classified as ordinary income or capital gain
distributions to you.
You should be aware that it is not always possible at the time shares
of a foreign corporation are acquired to ascertain that the foreign corporation
is a PFIC, and that there is always a possibility that a foreign corporation
will become a PFIC after a Fund acquires shares in that corporation. While a
Fund will generally seek to avoid investing in PFIC shares to avoid the tax
consequences detailed above, there are no guarantees that it will do so and it
reserves the right to make such investments as a matter of its fundamental
investment policy.
Most foreign exchange gains are classified as ordinary income which
will be taxable to you as such when distributed. Similarly, you should be aware
that any foreign exchange losses realized by a Fund, including any losses
realized on the sale of foreign debt securities, are generally treated as
ordinary losses for federal income tax purposes. This treatment could increase
or reduce a Fund's income available for distribution to you, and may cause some
or all of a Fund's previously distributed income to be classified as a return of
capital.
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PERFORMANCE INFORMATION
From time to time, each Fund may state its Classes' total return and
yield in advertisements and other types of literature. Any statement of total
return performance data for a Class will be accompanied by information on the
average annual compounded rate of return for that Class over, as relevant, the
most recent one-, five- and ten-year, or life-of-fund periods, as applicable.
Each Fund may also advertise aggregate and average total return information for
its Classes over additional periods of time.
In presenting performance information for Class A Shares, the Limited
CDSC or other CDSC, applicable only to certain redemptions of those shares, will
not be deducted from any computation of total return. All references to a CDSC
in this Performance Information section will apply to Class B Shares or Class C
Shares.
The average annual total rate of return for each Class is based on a
hypothetical $1,000 investment that includes capital appreciation and
depreciation during the stated periods. The following formula will be used for
the actual computations:
n
P (1 + T) = ERV
Where: P = a hypothetical initial purchase order of
$1,000 from which, in the case of only
Class A Shares, the maximum front-end sales
charge is deducted;
T = average annual total return;
n = number of years;
ERV = redeemable value of the hypothetical
$1,000 purchase at the end of the period
after the deduction of the applicable CDSC,
if any, with respect to Class B Shares and
Class C Shares.
Aggregate or cumulative total return is calculated in a similar manner,
except that the results are not annualized. Each calculation assumes the maximum
front-end sales charge, if any, is deducted from the initial $1,000 investment
at the time it is made with respect to Class A Shares and that all distributions
are reinvested at net asset value, and, with respect to Class B Shares and Class
C Shares, reflects the deduction of the CDSC that would be applicable upon
complete redemption of such shares. In addition, each Fund may present total
return information that does not reflect the deduction of the maximum front-end
sales charge or any applicable CDSC.
Each Fund may also state total return performance for its Classes in
the form of an average annual return. This average annual return figure will be
computed by taking the sum of a Class' annual returns, then dividing that figure
by the number of years in the overall period indicated. The computation will
reflect the impact of the maximum front-end sales charge or CDSC, if any, paid
on the illustrated investment amount against the first year's return. From time
to time, each Fund may quote actual total return performance for its Classes in
advertising and other types of literature compared to indices or averages of
alternative financial products available to prospective investors. For example,
the performance comparisons may include the average return of various bank
instruments, some of which may carry certain return guarantees offered by
leading banks and thrifts as monitored by Bank Rate Monitor, and those of
generally-accepted corporate bond and government security price indices of
various durations prepared by Lehman Brothers and Salomon Brothers, Inc. These
indices are not managed for any investment goal.
23
<PAGE>
Below is the average annual total return performance of each Fund,
other than New Europe and Delaware Latin America Funds, through November 30,
1999. The total return for Class A Shares at offer reflects the maximum
front-end sales charge of 5.75% (4.75% for Delaware Global Bond Fund) paid on
the purchase of shares. The total return for Class A Shares at net asset value
(NAV) does not reflect the payment of any front-end sales charge. The total
return for Class B Shares and Class C Shares including deferred sales charge
reflects the deduction of the applicable CDSC that would be paid if the shares
were redeemed at the end of the period. The total return for Class B Shares and
Class C Shares excluding deferred sales charge assumes the shares were not
redeemed at the end of the period and, therefore, does not reflect the deduction
of a CDSC. Pursuant to applicable regulation, total return shown for Delaware
International Equity Fund Institutional Class for the periods prior to the
commencement of operations of such Class is calculated by taking the performance
of Delaware International Equity Fund A Class and adjusting it to reflect the
elimination of all front-end sales charges. However, for those periods, no
adjustment has been made to eliminate the impact of 12b-1 plan expenses, and
performance would have been affected had such an adjustment been made.
Performance information for the Class B and C Shares of Delaware Global
Opportunities Fund and Delaware International Small Cap Fund, New Europe and
Delaware Latin America Funds is not provided because these shares have not
commenced operations as the close of Global Fund's fiscal year.
Prior to July 21, 1998, Delaware Global Equity Fund was named Global
Assets Fund and its investment focus changed from a mix of foreign and U.S.
fixed income stocks and bonds to primarily foreign and U.S. stocks.
24
<PAGE>
Securities prices fluctuated during the periods covered and the past
results should not be considered as representative of future performance.
<TABLE>
<CAPTION>
Average Annual Total Return(1)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
1 year 3 years 5 years Life of
ended ended ended Fund(4)
11/30/99 11/30/99 11/30/99
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
<S> <C> <C> <C> <C>
Delaware Global Bond Fund A Class (at NAV)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Bond Fund A Class (at Offer)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Bond Fund B Class (including CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Bond Fund B Class (excluding CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Bond Fund C Class (including CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Bond Fund C Class (excluding CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Bond Fund Institutional Class
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware International Equity Fund A Class (at Offer)(2)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware International Equity Fund B Class (including CDSC)(3)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware International Equity Fund B Class (excluding CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware International Equity Fund C Class (including CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware International Equity Fund C Class (excluding CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware International Equity Fund Institutional Class
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Emerging Markets Fund A Class (at NAV)(5)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Emerging Markets Fund A Class (at Offer)(2)(5)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Emerging Markets Fund B Class (including CDSC)(3)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
1 year 3 years 5 years Life of
ended ended ended Fund(4)
11/30/99 11/30/99 11/30/99
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
<S> <C> <C> <C> <C>
Delaware Emerging Markets Fund B Class (excluding CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Emerging Markets Fund C Class (including CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Emerging Markets Fund C Class (excluding CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Emerging Markets Fund Institutional Class
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Equity Fund A Class (at NAV)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Equity Fund A Class (at Offer)(2)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Equity Fund B Class (including CDSC)(3)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Equity Fund B Class (excluding CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Equity Fund C Class (including CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Equity Fund C Class (excluding CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Equity Fund Institutional Class
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Opportunities Fund A Class (at NAV)(6)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Opportunities Fund A Class (at Offer)(2)(6)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Global Opportunities Fund Institutional Class
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware International Small Cap Fund A Class (at NAV)(6)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware International Small Cap Fund A Class (at Offer)(2)(6)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware International Small Cap Fund Institutional Class
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
</TABLE>
(1) The Manager voluntarily agreed to waive its management fee and pay
expenses to limit total operating expenses to certain limits during the
periods shown. Without such waiver and payment performance would have
been affected negatively. See Investment Management Agreements and
Sub-Advisory Agreement for information.
(2) Prior to November 2, 1998, the maximum front-end sales charge was 4.75%.
Effective November 2, 1998, the maximum front-end sales charge was
increased to 5.75% and the above performance numbers are calculated using
5.75% as the applicable sales charge.
(3) Effective November 2, 1998, the CDSC schedule for Class B Shares
increased as follows: (i) 5% if shares are redeemed within one year of
purchase (ii) 4% if shares are redeemed with two years of purchase; (iii)
3% if shares are redeemed during the third or fourth year following
purchase; (iv) 2% if shares are redeemed during the fifth year following
purchase; (v) 1% if shares are redeemed during the sixth year following
purchase; and (v) 0% thereafter. The above figures have been calculated
using this new schedule.
26
<PAGE>
(4) The Fund's commencement of operations were as follows:
<TABLE>
<S> <C> <C> <C>
----------------------------------------------- ---------- ------------------------------------------------ ----------
Delaware Global Bond Fund A Class 12/27/94 Delaware International Equity Fund A Class 10/31/91
Delaware Global Bond Fund B Class 12/27/94 Delaware International Equity Fund B Class 9/6/94
Delaware Global Bond Fund C Class 11/29/95 Delaware International Equity Fund C Class 11/29/95
Delaware Global Bond Fund Institutional Class 12/27/94 Delaware International Equity Fund Institutional 11/9/92
Class
----------------------------------------------- ---------- ------------------------------------------------ ----------
Delaware Emerging Markets Fund A Class 6/10/96 Delaware Global Equity Fund A Class 12/27/94
Delaware Emerging Markets Fund B Class 6/10/96 Delaware Global Equity Fund B Class 12/27/94
Delaware Emerging Markets Fund C Class 6/10/96 Delaware Global Equity Fund C Class 11/29/95
Delaware Emerging Markets Fund Institutional 6/10/96 Delaware Global Equity Fund Institutional Class 12/27/94
Class
----------------------------------------------- ---------- ------------------------------------------------ ----------
Delaware Global Opportunities Fund A Class 7/22/97 Delaware International Small Cap Fund A Class 12/19/97
Delaware Global Opportunities Fund 7/22/97 Delaware International Small Cap Fund 12/19/97
Institutional Class Institutional Class
----------------------------------------------- ---------- ------------------------------------------------ ----------
</TABLE>
(5) For the period from February 1, 1998 through May 31, 2000, the
Distributor elected voluntarily to waive 0.05% of Delaware Emerging
Markets Fund A Class' 12b-1 fee in order to limit 12b-1 Plan expenses to
0.25%. In the absence of such voluntary waiver, performance would have
been affected negatively.
(6) For the period from the commencement of operations through May 31, 2000,
the Distributor elected voluntarily to waive its entire 12b-1 fee with
respect to Class A Shares.
Total return performance for a Class will be computed by adding all
reinvested income and realized securities profits distributions plus the change
in net asset value during a specific period and dividing by the offering price
at the beginning of the period. It will also reflect, as applicable, the maximum
front-end sales charge or CDSC paid with respect to the illustrated investment
amount, but not any income taxes payable by shareholders on the reinvested
distributions included in the calculation. Because securities prices fluctuate,
past performance should not be considered as a representation of the results
which may be realized from an investment in a Fund in the future.
From time to time, each Fund may also quote its Classes' actual total
return performance, dividend results and other performance information in
advertising and other types of literature. This information may be compared to
that of other mutual funds with similar investment objectives and to stock, bond
and other relevant indices or to rankings prepared by independent services or
other financial or industry publications that monitor the performance of mutual
funds. For example, the performance of a Fund (of Fund Class) may be compared to
data prepared by Lipper Analytical Services, Inc., Morningstar, Inc., or to the
S&P 500 Index, the Dow Jones Industrial Average, the Morgan Stanley Capital
International (MSCI), Europe, Australia and Far East (EAFE) Index, the MSCI
Emerging Markets Free Index, MSCI Emerging Markets Free Latin America Index, the
MSCI Europe Index or the Salomon Brothers World Government Bond Index.
Lipper Analytical Services, Inc. maintains statistical performance
databases, as reported by a diverse universe of independently-managed mutual
funds. Morningstar, Inc. is a mutual fund rating service that rates mutual funds
on the basis of risk-adjusted performance. Rankings that compare a Fund's
performance to another fund in appropriate categories over specific time periods
also may be quoted in advertising and other types of literature. The S&P 500 and
the Dow Jones Industrial Average are industry-accepted unmanaged indices of
generally conservative securities used for measuring general market performance.
Similarly, the MSCI EAFE Index, the MSCI Emerging Markets Free Index, and the
Salomon Brothers World Government Bond Index are industry-accepted unmanaged
indices of equity securities in developed countries and global debt securities,
respectively, used for measuring general market performance. The total return
performance reported for these indices will reflect the reinvestment of all
distributions on a quarterly basis and market price fluctuations. The indices do
not take into account any sales charges or other fees. A direct investment in an
unmanaged index is not possible.
Delaware Bond Fund may also quote the current yield of each of its
Classes in advertisements and investor communications.
27
<PAGE>
The yield computation is determined by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period and annualizing the resulting figure,
according to the following formula.
a-b 6
YIELD = 2[( ---- + 1) - 1]
cd
Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends;
d = the maximum offering price per share on the last day of
the period.
The above formula will be used in calculating quotations of yield,
based on specific 30-day periods identified in advertising by Delaware Global
Bond Fund. Yield assumes the maximum front-end sales charge, if any, and does
not reflect the deduction of any CDSC or Limited CDSC. The yields of Delaware
Global Bond Fund A Class, Delaware Global Bond Fund B Class, Delaware Global
Bond Fund C Class and Delaware Global Bond Fund Institutional Class for the
30-day period ended November 30, 1999 were 0.00%, 0.00%, 0.00% and 0.00%,
respectively, reflecting the voluntary waiver of fees and payment of expenses by
the Manager. Actual yield may be affected by variations in sales charges on
investments.
Past performance, such as reflected in quoted yields, should not be
considered as representative of the results which may be realized from an
investment in a Fund in the future. Investors should note that the income earned
and dividends paid by Delaware Global Bond Fund will vary with the fluctuation
of interest rates and performance of the portfolio to the extent of a Fund's
investments in debt securities. The net asset value of any Fund may change.
Unlike money market funds, the Funds invest in longer-term securities that
fluctuate in value and do so in a manner inversely correlated with changing
interest rates. A Fund's net asset value will tend to rise when interest rates
fall. Conversely, a Fund's net asset value will tend to fall as interest rates
rise. Normally, fluctuations in interest rates have a greater effect on the
prices of longer-term bonds. The value of the securities held in a Fund will
vary from day to day and investors should consider the volatility of a Fund's
net asset value as well as its yield before making a decision to invest.
Comparative information on the Consumer Price Index may also be
included in advertisements or other literature. The Consumer Price Index, as
prepared by the U.S. Bureau of Labor Statistics, is the most commonly used
measure of inflation. It indicates the cost fluctuations of a representative
group of consumer goods. It does not represent a return from an investment.
Current interest rate and yield information on government debt
obligations of various durations, as reported weekly by the Federal Reserve
(Bulletin H.15), may also be used. As well, current industry rate and yield
information on all industry available fixed-income securities, as reported
weekly by The Bond Buyer, may also be used in preparing comparative
illustrations.
Each Fund may also promote its Classes' yield and/or total return
performance and use comparative performance information computed by and
available from certain industry and general market research and publications,
such as Lipper Analytical Services, Inc., IBC/Donoghue's Money Market Report and
Morningstar, Inc.
The performance of multiple indices compiled and maintained by
statistical research firms, such as Morgan Stanley, Salomon Brothers and Lehman
Brothers, may be combined to create a blended performance result for comparative
purposes. Generally, the indices selected will be representative of the types of
securities in which the Funds may invest and the assumptions that were used in
calculating the blended performance will be described.
28
<PAGE>
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides
historical returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury bills,
the U.S. rate of inflation (based on the Consumer Price Index), and combinations
of various capital markets. The performance of these capital markets is based on
the returns of different indices. The Funds may use the performance of these
capital markets in order to demonstrate general risk-versus-reward investment
scenarios. Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with the
security types in any capital market may or may not correspond directly to those
of the Funds. The Funds may also compare performance to that of other
compilations or indices that may be developed and made available in the future.
The Funds may include discussions or illustrations of the potential
investment goals of a prospective investor (including materials that describe
general principles of investing, such as asset allocation, diversification, risk
tolerance, and goal setting, questionnaires designed to help create a personal
financial profile, worksheets used to project savings needs based on assumed
rates of inflation and hypothetical rates of return and action plans offering
investment alternatives), investment management techniques, policies or
investment suitability of a Fund (such as value investing, market timing, dollar
cost averaging, asset allocation, constant ratio transfer, automatic account
rebalancing, the advantages and disadvantages of investing in tax-deferred and
taxable investments or global or international investments), economic and
political conditions, the relationship between sectors of the economy and the
economy as a whole, the effects of inflation and historical performance of
various asset classes, including but not limited to, stocks, bonds and Treasury
bills. From time to time advertisements, sales literature, communications to
shareholders or other materials may summarize the substance of information
contained in shareholder reports (including the investment composition of a
Fund), as well as the views as to current market, economic, trade and interest
rate trends, legislative, regulatory and monetary developments, investment
strategies and related matters believed to be of relevance to a Fund. In
addition, selected indices may be used to illustrate historic performance of
selected asset classes. The Funds may also include in advertisements, sales
literature, communications to shareholders or other materials, charts, graphs or
drawings which illustrate the potential risks and rewards of investment in
various investment vehicles, including but not limited to, domestic and
international stocks, and/or bonds, treasury bills and shares of a Fund. In
addition, advertisements, sales literature, communications to shareholders or
other materials may include a discussion of certain attributes or benefits to be
derived by an investment in a Fund and/or other mutual funds, shareholder
profiles and hypothetical investor scenarios, timely information on financial
management, tax and retirement planning (such as information on Roth IRAs and
Educational IRAs) and investment alternatives to certificates of deposit and
other financial instruments. Such sales literature, communications to
shareholders or other materials may include symbols, headlines or other material
which highlight or summarize the information discussed in more detail therein.
Materials may refer to the CUSIP numbers of the Funds and may
illustrate how to find the listings of the Funds in newspapers and periodicals.
Materials may also include discussions of other Funds, products, and services.
The Funds may quote various measures of volatility and benchmark
correlation in advertising. In addition, the Funds may compare these measures to
those of other funds. Measures of volatility seek to compare the historical
share price fluctuations or total returns to those of a benchmark. Measures of
benchmark correlation indicate how valid a comparative benchmark may be.
Measures of volatility and correlation may be calculated using averages of
historical data. A Fund may advertise its current interest rate sensitivity,
duration, weighted average maturity or similar maturity characteristics.
Advertisements and sales materials relating to a Fund may include information
regarding the background and experience of its portfolio managers.
The following tables present examples, for purposes of illustration
only, of cumulative total return performance for each Class of each Fund through
November 30, 1999. The calculations assume the reinvestment of any realized
securities profits, distributions and income dividends paid during the indicated
periods. The performance also reflects maximum sales charges, if any, but not
any income taxes payable by shareholders on the reinvested distributions
included in the calculations. The performance of Class A Shares reflects the
maximum front-end sales charge paid on purchases of shares but may also be shown
without reflecting the impact of any front-end sales charge. The performance of
Class B Shares and Class C Shares is calculated both with the applicable CDSC
included and excluded. The net asset value of a class fluctuates so shares, when
redeemed, may be worth more or less than the original investment, and a Class'
results should not be considered as representative of future performance.
29
<PAGE>
<TABLE>
<CAPTION>
Cumulative Total Return(1)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
3 months 6 months 9 months 1 year 3 years 5 years
ended ended ended ended ended ended Life of
11/30/99 11/30/99 11/30/99 11/30/99 11/30/99 11/30/99 Fund(4)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Delaware Global Bond Fund
A Class
(at NAV)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Global Bond Fund
A Class
(at Offer)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Global Bond Fund
B Class (including CDSC)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Global Bond Fund
B Class (excluding CDSC)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Global Bond Fund
C Class (including CDSC)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Global Bond Fund
C Class (excluding CDSC)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Global Bond Fund
Institutional Class
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware International
Equity Fund
A Class (at NAV)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware International
Equity Fund
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
3 months 6 months 9 months 1 year 3 years 5 years
ended ended ended ended ended ended Life of
11/30/99 11/30/99 11/30/99 11/30/99 11/30/99 11/30/99 Fund(4)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
A Class (at Offer)(2)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware International Equity
Fund
B Class (including CDSC)(3)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware International Equity
Fund
B Class (excluding CDSC)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware International Equity
Fund
C Class (including CDSC)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware International Equity
Fund
C Class (excluding CDSC)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware International Equity
Fund Institutional Class
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Emerging Markets
Fund
A Class (at NAV)(5)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Emerging Markets
Fund
A Class (at Offer)(2)(5)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Emerging Markets
Fund
B Class (including CDSC)(3)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Emerging Markets
Fund
B Class (excluding CDSC)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
3 months 6 months 9 months 1 year 3 years 5 years
ended ended ended ended ended ended Life of
11/30/99 11/30/99 11/30/99 11/30/99 11/30/99 11/30/99 Fund(4)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Delaware Emerging Markets
Fund
C Class (including CDSC)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Emerging Markets
Fund
C Class (including CDSC)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Emerging Markets
Fund Institutional Class
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Global Equity Fund
A Class
(at NAV)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Global Equity Fund
A Class
(at Offer)(2)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Global Equity Fund
B Class
(including CDSC)(3)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Global Equity Fund
B Class
(excluding CDSC)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Global Equity Fund
C Class
(including CDSC)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Global Equity Fund
C Class
(excluding CDSC)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
3 months 6 months 9 months 1 year 3 years 5 years
ended ended ended ended ended ended Life of
11/30/99 11/30/99 11/30/99 11/30/99 11/30/99 11/30/99 Fund(4)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Delaware Global Equity Fund
Institutional Class
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Global Opportunities
Fund
A Class (at NAV)(6)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Global Opportunities Fund
A Class (at Offer)(2)(6)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Global Opportunities Fund
Institutional Class
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware International Small
Cap Fund A Class at NAV)(6)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware International Small
Cap Fund A Class (at
Offer)(2)(6)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware International Small
Cap Fund Institutional Class
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Latin America Fund
A Class at NAV)(6)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware Latin America Fund
Institutional Class
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
Delaware New Europe Fund
A Class at NAV)(6)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
3 months 6 months 9 months 1 year 3 years 5 years
ended ended ended ended ended ended Life of
11/30/99 11/30/99 11/30/99 11/30/99 11/30/99 11/30/99 Fund(4)
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Delaware New Europe Fund
Institutional Class
- ------------------------------- ------------ ------------ ------------- ----------- ------------ ------------ ------------
</TABLE>
(1) The Manager voluntarily agreed to waive its management fee and pay
expenses to limit total operating expenses to certain limits during the
periods shown. Without such waiver and payment performance would have
been affected negatively. See Investment Management Agreements and
Sub-Advisory Agreement for information.
(2) Prior to November 2, 1998, the maximum front-end sales charge was
4.75%. Effective November 2, 1998, the maximum front-end sales charge
was increased to 5.75% and the above performance numbers are calculated
using 5.75% as the applicable sales charge.
(3) Effective November 2, 1998, the CDSC schedule for Class B Shares
increased as follows: (i) 5% if shares are redeemed within one year of
purchase (ii) 4% if shares are redeemed with two years of purchase;
(iii) 3% if shares are redeemed during the third or fourth year
following purchase; (iv) 2% if shares are redeemed during the fifth
year following purchase; (v) 1% if shares are redeemed during the sixth
year following purchase; and (v) 0% thereafter. The above figures have
been calculated using this new schedule.
(4) The Fund's commencement of operations were as follows:
<TABLE>
<S> <C> <C> <C>
---------------------------------------------- ---------------- ---------------------------------------------- ---------
Delaware Global Bond Fund A Class 12/27/94 Delaware Global Equity Fund A Class 12/27/94
Delaware Global Bond Fund B Class 12/27/94 Delaware Global Equity Fund B Class 12/27/94
Delaware Global Bond Fund C Class 11/29/95 Delaware Global Equity Fund C Class 11/29/95
Delaware Global Bond Fund Institutional Class 12/27/94 Delaware Global Equity Fund Institutional 12/27/94
Class
---------------------------------------------- ---------------- ---------------------------------------------- ---------
Delaware Emerging Markets Fund A Class 6/10/96 Delaware International Small Cap Fund A Class 12/19/97
Delaware Emerging Markets Fund B Class 6/10/96 Delaware International Small Cap Fund 12/19/97
Delaware Emerging Markets Fund B Class 6/10/96 Institutional Class
Delaware Emerging Markets Fund Institutional 6/10/96
Class
---------------------------------------------- ---------------- ---------------------------------------------- ---------
Delaware Global Opportunities Fund A Class 7/22/97 Delaware Latin America Fund A Class 12/29/98
Delaware Global Opportunities Fund 7/22/97 Delaware Latin America Fund Institutional 12/29/98
Institutional Class Class
---------------------------------------------- ---------------- ---------------------------------------------- ---------
Delaware International Equity Fund A Class 10/31/91 Delaware New Europe Fund A Class 12/29/98
Delaware International Equity Fund B Class 9/6/94 Delaware New Europe Fund Institutional Class 12/29/98
Delaware International Equity Fund C Class 11/29/95
Delaware International Equity Fund 11/9/92
Institutional Class
---------------------------------------------- ---------------- ---------------------------------------------- ---------
</TABLE>
34
<PAGE>
(5) For the period from February 1, 1998 through May 31, 2000, the
Distributor elected voluntarily to waive 0.05% of Delaware Emerging
Markets Fund A Class' 12b-1 fee in order to limit 12b-1 Plan expenses
to 0.25%. In the absence of such voluntary waiver, performance would
have been affected negatively.
(6) For the period from the commencement of operations through May 31,
2000, the Distributor elected voluntarily to waive its entire 12b-1 fee
with respect to Class A Shares.
Because every investor's goals and risk threshold are different, the
Distributor, as distributor for Global Funds and other Delaware Investments
mutual funds, will provide general information about investment alternatives and
scenarios that will allow investors to assess their personal goals. This
information will include general material about investing as well as materials
reinforcing various industry-accepted principles of prudent and responsible
personal financial planning. One typical way of addressing these issues is to
compare an individual's goals and the length of time the individual has to
attain these goals to his or her risk threshold. In addition, the Distributor
may also provide information that discusses the overriding investment philosophy
of Delaware Management Company ("Delaware"), or Delaware Investment Advisers
("DIA"), both series of Delaware Management Business Trust, and the Manager, an
affiliate of Delaware, and how that philosophy impacts Fund investment
disciplines and strategies employed in seeking each Fund's objectives. The
Distributor may also from time to time cite general or specific information
about the institutional clients of Delaware or DIA or the Manager, including the
number of such clients serviced by Delaware, DIA and/or the Manager.
Dollar-Cost Averaging
For many people, deciding when to invest can be a difficult decision.
Security prices tend to move up and down over various market cycles and logic
says to invest when prices are low. However, even experts can't always pick the
highs and the lows. By using a strategy known as dollar-cost averaging, you
schedule your investments ahead of time. If you invest a set amount on a regular
basis, that money will always buy more shares when the price is low and fewer
when the price is high. You can choose to invest at any regular interval--for
example, monthly or quarterly - as long as you stick to your regular schedule.
Dollar-cost averaging looks simple and it is, but there are important things to
remember.
Dollar-cost averaging works best over longer time periods, and it
doesn't guarantee a profit or protect against losses in declining markets. If
you need to sell your investment when prices are low, you may not realize a
profit no matter what investment strategy you utilize. That's why dollar-cost
averaging can make sense for long-term goals. Since the potential success of a
dollar-cost averaging program depends on continuous investing, even through
periods of fluctuating prices, you should consider your dollar-cost averaging
program a long-term commitment and invest an amount you can afford and probably
won't need to withdraw. You also should consider your financial ability to
continue to purchase shares during periods of high fund share prices. Delaware
Investments offers three services -- Automatic Investing Program, Direct Deposit
Program and the Wealth Builder Option -- that can help to keep your regular
investment program on track. See Investing by Electronic Fund Transfer - Direct
Deposit Purchase Plan and Automatic Investing Plan under Investment Plans and
Wealth Builder Option under Investment Plans for a complete description of these
services, including restrictions or limitations.
35
<PAGE>
The example below illustrates how dollar-cost averaging can work. In a
fluctuating market, the average cost per share over a period of time will be
lower than the average price per share for the same time period.
Number
Investment Price Per of Shares
Amount Share Purchased
Month 1 $100 $10.00 10
Month 2 $100 $12.50 8
Month 3 $100 $5.00 20
Month 4 $100 $10.00 10
--------------- ---------------- ----------------- ----------------
$400 $37.50 48
Total Amount Invested: $400
Total Number of Shares Purchased: 48
Average Price Per Share: $9.38 ($37.50/4)
Average Cost Per Share: $8.33 ($400/48 shares)
This example is for illustration purposes only. It is not intended to
represent the actual performance of any stock or bond fund in the Delaware
Investments family of funds.
The Power of Compounding
When you opt to reinvest your current income for additional Fund
shares, your investment is given yet another opportunity to grow. It's called
the Power of Compounding. Each Fund may include illustrations showing the power
of compounding in advertisements and other types of literature.
TRADING PRACTICES AND BROKERAGE
The Manager selects brokers or dealers to execute transactions on
behalf of each Fund for the purchase or sale of portfolio securities on the
basis of its judgment of their professional capability to provide the service.
The Sub-Adviser performs this function with respect to transactions on behalf of
Delaware Global Equity Fund and Delaware Global Opportunities Fund for the
purchase and sale of U.S. securities. The primary consideration is to have
brokers or dealers execute transactions at best execution. Best execution refers
to many factors, including the price paid or received for a security, the
commission charged, the promptness and reliability of execution, the
confidentiality and placement accorded the order and other factors affecting the
overall benefit obtained by the account on the transaction. A number of trades
are made on a net basis where a Fund either buys securities directly from the
dealer or sells them to the dealer. In these instances, there is no direct
commission charged but there is a spread (the difference between the buy and
sell price) which is the equivalent of a commission. When a commission is paid,
the Fund involved pays reasonably competitive brokerage commission rates based
upon the professional knowledge of the Manager or the Sub-Adviser as to rates
paid and charged for similar transactions throughout the securities industry. In
some instances, the Fund may pay a minimal share transaction cost when the
transaction presents no difficulty.
36
<PAGE>
During the past three fiscal years, the aggregate dollar amounts of
brokerage commissions paid by were paid by the following Funds:
<TABLE>
<CAPTION>
----------------------------------------------------- ----------------------------------------------------------
November 30,
----------------------------------------------------- ----------------------------------------------------------
1999 1998 1997
---- ---- ----
----------------------------------------------------- ----------------- ------------------ ---------------------
<S> <C> <C> <C>
Delaware International Equity Fund $300,844 $318,619
Delaware Emerging Markets Fund (1) 52,507 91,510
Delaware Global Equity Fund 19,911 1,541
Delaware Global Opportunities Fund(2) 798 none
Delaware International Small Cap Fund(3) 12,965 N/A
Delaware Latin America Fund(4) N/A N/A
Delaware New Europe Fund(4) N/A N/A
----------------------------------------------------- ----------------- ------------------ ---------------------
</TABLE>
(1) Date of initial public offering of Delaware Emerging Markets Fund was June
10, 1996.
(2) Date of initial public offering of Delaware Global Opportunities Fund was
July 22, 1997.
(3) Date of initial public offering of Delaware International Small Cap Fund
was December 19, 1997.
(4) Date of initial public offering of Delaware Latin America Fund and Delaware
New Europe Fund was December 29, 1998.
The Manager or the Sub-Adviser may allocate out of all commission
business generated by all of the funds and accounts under its management,
brokerage business to brokers or dealers who provide brokerage and research
services. These services include advice, either directly or through publications
or writings, as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing of analyses and reports
concerning issuers, securities or industries; providing information on economic
factors and trends; assisting in determining portfolio strategy; providing
computer software and hardware used in security analyses; and providing
portfolio performance evaluation and technical market analyses. Such services
are used by the Manager or the Sub-Adviser in connection with its investment
decision-making process with respect to one or more funds and accounts managed
by it, and may not be used, or used exclusively, with respect to the fund or
account generating the brokerage.
37
<PAGE>
During their last fiscal year, portfolio transactions of the following
Funds, in the amounts listed below, resulting in brokerage commissions in the
amounts listed below, were directed to brokers for brokerage and research
services provided:
<TABLE>
<CAPTION>
---------------------------------------------------- --------------------------- -----------------------------
Portfolio Brokerage
Transactions Commissions
Amounts Amounts
---------------------------------------------------- --------------------------- -----------------------------
<S> <C> <C>
Delaware International Equity Fund
Delaware Emerging Markets Fund
Delaware Global Equity Fund
Delaware Global Opportunities Fund
Delaware International Small Cap Fund
Delaware Latin America Fund(1)
Delaware New Europe Fund(1)
---------------------------------------------------- --------------------------- -----------------------------
</TABLE>
(1) Date of initial public offering of Delaware Latin America Fund and Delaware
New Europe Fund was December 29, 1998.
As provided in the Securities Exchange Act of 1934 (the "1934 Act") and
each Fund's Investment Management Agreement, higher commissions are permitted to
be paid to broker/dealers who provide brokerage and research services than to
broker/dealers who do not provide such services if such higher commissions are
deemed reasonable in relation to the value of the brokerage and research
services provided. Although transactions are directed to broker/dealers who
provide such brokerage and research services, the Funds believe that the
commissions paid to such broker/dealers are not, in general, higher than
commissions that would be paid to broker/dealers not providing such services and
that such commissions are reasonable in relation to the value of the brokerage
and research services provided. In some instances, services may be provided to
the Manager or the Sub-Adviser which constitute in some part brokerage and
research services used by the Manager or the Sub-Adviser in connection with its
investment decision-making process and constitute in some part services used by
the Manager or the Sub-Adviser in connection with administrative or other
functions not related to its investment decision-making process. In such cases,
the Manager or the Sub-Adviser will make a good faith allocation of brokerage
and research services and will pay out of its own resources for services used by
the Manager or the Sub-Adviser in connection with administrative or other
functions not related to its investment decision-making process. In addition, so
long as no fund is disadvantaged, portfolio transactions which generate
commissions or their equivalent are allocated to broker/dealers who provide
daily portfolio pricing services to a Fund and to other funds in the Delaware
Investments family. Subject to best execution, commissions allocated to brokers
providing such pricing services may or may not be generated by the funds
receiving the pricing service.
The Manager or the Sub-Adviser may place a combined order for two or
more accounts or funds engaged in the purchase or sale of the same security if,
in its judgment, joint execution is in the best interest of each participant and
will result in best execution. Transactions involving commingled orders are
allocated in a manner deemed equitable to each account or fund. When a combined
order is executed in a series of transactions at different prices, each account
participating in the order may be allocated an average price obtained from the
executing broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or fund may obtain, it is the opinion of the Manager, the Sub-Adviser
and the Funds' Board of Trustees that the advantages of combined orders outweigh
the possible disadvantages of separate transactions.
Consistent with the Conduct Rules of NASD Regulation, Inc. (the
"NASD"), and subject to seeking best execution, a Fund may place orders with
broker/dealers that have agreed to defray certain expenses of the funds in the
Delaware Investments family of funds such as custodian fees, and may, at the
request of the Distributor, give consideration to sales of shares of such funds
as a factor in the selection of brokers and dealers to execute Fund portfolio
transactions.
38
<PAGE>
Portfolio Turnover
A Fund is free to dispose of portfolio securities at any time, subject
to complying with the Code and the 1940 Act, when changes in circumstances or
conditions make such a move desirable in light of its investment objective. A
Fund will not attempt to achieve or be limited to a predetermined rate of
portfolio turnover, such a turnover always being incidental to transactions
undertaken with a view to achieving a Fund's investment objective.
The degree of portfolio activity may affect brokerage costs of a Fund
and taxes payable by a Fund's shareholders. A turnover rate of 100% would occur,
for example, if all the investments in the Fund's portfolio at the beginning of
the year were replaced by the end of the year. In investing for capital
appreciation, a Fund may hold securities for any period of time. Portfolio
turnover will also be increased if a Fund writes a large number of call options
which are subsequently exercised. To the extent a Fund realizes gains on
securities held for less than twelve months, such gains are taxable to the
shareholder or to the Fund at ordinary income tax rates. The turnover rate also
may be affected by cash requirements from redemptions and repurchases of Fund
shares. Total brokerage costs generally increase with higher portfolio turnover
rates.
Under certain market conditions, a Fund may experience a rate of
portfolio turnover which could exceed 100%. Each Fund's portfolio turnover rate
is calculated by dividing the lesser of purchases or sales of portfolio
securities for the particular fiscal year by the monthly average of the value of
the portfolio securities owned by the Fund during the particular fiscal year,
exclusive of securities whose maturities at the time of acquisition are one year
or less.
During the past two fiscal years, the portfolio turnover rates of the
Funds were as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------- --------------- --------------
1999 1998
---- ----
---------------------------------------------------------------------- --------------- --------------
<S> <C> <C>
Delaware International Equity Fund 5%
Delaware Global Bond Fund 93%
Delaware Emerging Markets Fund (1) 47%
Delaware Global Equity Fund 90%
Delaware Global Opportunities Fund(2) 50%
Delaware International Small Cap Fund (3) 4%*
Delaware Latin America Fund(4) N/A
Delaware New Europe Fund(4) N/A
---------------------------------------------------------------------- --------------- --------------
</TABLE>
(1) Date of initial public offering of Delaware Emerging Markets Fund was June
10, 1996.
(2) Date of initial pubic offering of Delaware Global Opportunities Fund was
July 22, 1997.
(3) Date of initial public offering of Delaware International Small Cap Fund
was December 19, 1997.
(4) Date of initial public offering of Delaware Latin America Fund and Delaware
New Europe Fund was December 29, 1998.
* Annualized
39
<PAGE>
PURCHASING SHARES
The Distributor serves as the national distributor for each Fund's
shares and has agreed to use its best efforts to sell shares of each Fund. See
the Prospectuses for additional information on how to invest. Shares of each
Fund are offered on a continuous basis and may be purchased through authorized
investment dealers or directly by contacting Global Funds or the Distributor.
The minimum initial investment generally is $1,000 for Class A Shares,
Class B Shares and Class C Shares. Subsequent purchases of such Classes
generally must be at least $100. The initial and subsequent investment minimums
for Class A Shares will be waived for purchases by officers, trustees and
employees of any Delaware Investments fund, the Manager or the Sub-Adviser or
any of their affiliates if the purchases are made pursuant to a payroll
deduction program. Shares purchased pursuant to the Uniform Gifts to Minors Act
or Uniform Transfers to Minors Act and shares purchased in connection with an
Automatic Investing Plan are subject to a minimum initial purchase of $250 and a
minimum subsequent purchase of $25. Accounts opened under the Asset Planner
service are subject to a minimum initial investment of $2,000 per Asset Planner
Strategy selected. There are no minimum purchase requirements for the
Institutional Classes, but certain eligibility requirements must be satisfied.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that is less than $1,000,000. See Investment Plans for purchase limitations
applicable to retirement plans. Global Funds will reject any purchase order for
more than $250,000 of Class B Shares and $1,000,000 or more of Class C Shares.
An investor may exceed these limitations by making cumulative purchases over a
period of time. In doing so, an investor should keep in mind, however, that
reduced front-end sales charges apply to investments of $50,000 or more in Class
A Shares ($100,000 or more in the case of Delaware Global Bond Fund A Class),
and that Class A Shares are subject to lower annual 12b-1 Plan expenses than
Class B Shares and Class C Shares and generally are not subject to a CDSC.
Selling dealers are responsible for transmitting orders promptly.
Global Funds reserves the right to reject any order for the purchase of its
shares of either Fund if in the opinion of management such rejection is in such
Fund's best interest. If a purchase is canceled because your check is returned
unpaid, you are responsible for any loss incurred. A Fund can redeem shares from
your account(s) to reimburse itself for any loss, and you may be restricted from
making future purchases in any of the funds in the Delaware Investments family.
Each Fund reserves the right to reject purchase orders paid by third-party
checks or checks that are not drawn on a domestic branch of a United States
financial institution. If a check drawn on a foreign financial institution is
accepted, you may be subject to additional bank charges for clearance and
currency conversion.
Each Fund also reserves the right, following shareholder notification,
to charge a service fee on non-retirement accounts that, as a result of
redemption, have remained below the minimum stated account balance for a period
of three or more consecutive months. Holders of such accounts may be notified of
their insufficient account balance and advised that they have until the end of
the current calendar quarter to raise their balance to the stated minimum. If
the account has not reached the minimum balance requirement by that time, the
Fund will charge a $9 fee for that quarter and each subsequent calendar quarter
until the account is brought up to the minimum balance. The service fee will be
deducted from the account during the first week of each calendar quarter for the
previous quarter, and will be used to help defray the cost of maintaining
low-balance accounts. No fees will be charged without proper notice, and no CDSC
will apply to such assessments.
Each Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under the minimum initial purchase
amount as a result of redemptions. An investor making the minimum initial
investment may be subject to involuntary redemption without the imposition of a
CDSC or Limited CDSC if he or she redeems any portion of his or her account.
The NASD has adopted amendments to its Conduct Rules, as amended,
relating to investment company sales charges. Global Funds and the Distributor
intend to operate in compliance with these rules.
40
<PAGE>
Class A Shares are purchased at the offering price which reflects a
maximum front-end sales charge of 5.75% (4.75% in the case of Delaware Global
Bond Fund); however, lower front-end sales charges apply for larger purchases.
See the table in the Fund Classes' Prospectuses. Absent applicable fee waivers,
Class A Shares are also subject to annual 12b-1 Plan expenses for the life of
the investment.
Class B Shares of Delaware Global Bond Fund are purchased at net asset
value and are subject to a CDSC of: (i) 4% if shares are redeemed within two
years of purchase; (ii) 3% if shares are redeemed during the third or fourth
year following purchase; (iii) 2% if shares are redeemed during the fifth year
following purchase; and (iv) 1% if shares are redeemed during the sixth year
following purchase. Class B Shares of the other Funds are purchased at net asset
value and are subject to a CDSC of: (i) 5% if shares are redeemed within one
year of purchase; (ii) 4% if shares are redeemed during the second year of
purchase; (iii) 3% if shares are redeemed during the third or fourth year
following purchase; (iv) 2% if shares are redeemed during the fifth year
following purchase; and (v) 1% if shares are redeemed during the sixth year
following purchase. Absent applicable fee waivers ,Class B Shares are also
subject to annual 12b-1 Plan expenses which are higher than those to which Class
A Shares are subject and are assessed against Class B Shares for approximately
eight years after purchase. See Automatic Conversion of Class B Shares, below.
Class C Shares are purchased at net asset value and are subject to a
CDSC of 1% if shares are redeemed within 12 months following purchase. Absent
applicable fee waivers, Class C Shares are also subject to annual 12b-1 Plan
expenses for the life of the investment which are equal to those to which Class
B Shares are subject.
Institutional Class shares are purchased at the net asset value per
share without the imposition of a front-end or contingent deferred sales charge
or 12b-1 Plan expenses. See Plans Under Rule 12b-1 for the Fund Classes under
Purchasing Shares, and Determining Offering Price and Net Asset Value in this
Part B.
Class A Shares, Class B Shares, Class C Shares and Institutional Class
shares represent a proportionate interest in a Fund's assets and will receive a
proportionate interest in that Fund's income, before application, as to Class A,
Class B and Class C Shares, of any expenses under that Fund's 12b-1 Plans.
The Distributor has voluntarily elected to waive 0.05% of the payment
of 12b-1 Plan expenses by Delaware Emerging Markets Fund A Class beginning
February 1, 1998 through May 31, 2000.
The Distributor has voluntarily elected to waive the payment of 12b-1
Plan expenses by Delaware Global Opportunities Fund, Delaware International
Small Cap Fund, Delaware New Europe Fund and Delaware Latin America Fund from
the commencement of the public offering through May 31, 2000.
Certificates representing shares purchased are not ordinarily issued
unless, in the case of Class A Shares or Institutional Class shares, a
shareholder submits a specific request. Certificates are not issued in the case
of Class B Shares or Class C Shares or in the case of any retirement plan
account including self-directed IRAs. However, purchases not involving the
issuance of certificates are confirmed to the investor and credited to the
shareholder's account on the books maintained by Delaware Service Company, Inc.
(the "Transfer Agent"). The investor will have the same rights of ownership with
respect to such shares as if certificates had been issued. An investor that is
permitted to obtain a certificate may receive a certificate representing full
share denominations purchased by sending a letter signed by each owner of the
account to the Transfer Agent requesting the certificate. No charge is assessed
by Global Funds for any certificate issued. A shareholder may be subject to fees
for replacement of a lost or stolen certificate, under certain conditions,
including the cost of obtaining a bond covering the lost or stolen certificate.
Please contact a Fund for further information. Investors who hold certificates
representing any of their shares may only redeem those shares by written
request. The investor's certificate(s) must accompany such request.
Alternative Purchase Arrangements - Class A Shares, Class B Shares and
Class C Shares
The alternative purchase arrangements of Class A Shares, Class B Shares
and Class C Shares permit investors to choose the method of purchasing shares
that is most suitable for their needs given the amount of their purchase, the
41
<PAGE>
length of time they expect to hold their shares and other relevant
circumstances. Investors should determine whether, given their particular
circumstances, it is more advantageous to purchase Class A Shares and incur a
front-end sales charge and annual 12b-1 Plan expenses of up to a maximum of
0.30% of the average daily net assets of Class A Shares, or to purchase either
Class B or Class C Shares and have the entire initial purchase amount invested
in the Fund with the investment thereafter subject to a CDSC and annual 12b-1
Plan expenses. Class B Shares are subject to a CDSC if the shares are redeemed
within six years of purchase, and Class C Shares are subject to a CDSC if the
shares are redeemed within 12 months of purchase. Class B and Class C Shares are
each subject to annual 12b-1 Plan expenses of up to a maximum of 1% (0.25% of
which are service fees to be paid to the Distributor, dealers or others for
providing personal service and/or maintaining shareholder accounts) of average
daily net assets of the respective Class. Class B Shares will automatically
convert to Class A Shares at the end of approximately eight years after purchase
and, thereafter, be subject to annual 12b-1 Plan expenses of up to a maximum of
0.30% of average daily net assets of such shares. Unlike Class B Shares, Class C
Shares do not convert to another Class.
The higher 12b-1 Plan expenses on Class B Shares and Class C Shares
will be offset to the extent a return is realized on the additional money
initially invested upon the purchase of such shares. However, there can be no
assurance as to the return, if any, that will be realized on such additional
money. In addition, the effect of any return earned on such additional money
will diminish over time. In comparing Class B Shares to Class C Shares,
investors should also consider the duration of the annual 12b-1 Plan expenses to
which each of the classes is subject and the desirability of an automatic
conversion feature, which is available only for Class B Shares.
For the distribution and related services provided to, and the expenses
borne on behalf of, the Funds, the Distributor and others will be paid, in the
case of Class A Shares, from the proceeds of the front-end sales charge and
12b-1 Plan fees and, in the case of Class B Shares and Class C Shares, from the
proceeds of the 12b-1 Plan fees and, if applicable, the CDSC incurred upon
redemption. Financial advisers may receive different compensation for selling
Class A Shares, Class B Shares and Class C Shares. Investors should understand
that the purpose and function of the respective 12b-1 Plans and the CDSCs
applicable to Class B Shares and Class C Shares are the same as those of the
12b-1 Plan and the front-end sales charge applicable to Class A Shares in that
such fees and charges are used to finance the distribution of the respective
Classes. See Plans Under Rule 12b-1 for the Fund Classes.
Dividends, if any, paid on Class A Shares, Class B Shares and Class C
Shares will be calculated in the same manner, at the same time and on the same
day and will be in the same amount, except that the additional amount of 12b-1
Plan expenses relating to Class B Shares and Class C Shares will be borne
exclusively by such shares. See Determining Offering Price and Net Asset Value.
Class A Shares
Purchases of $50,000 or $100,000 or more of Class A Shares at the
offering price carry reduced front-end sales charges as shown in the table in
the Fund Classes' Prospectuses, and may include a series of purchases over a
13-month period under a Letter of Intention signed by the purchaser. See Special
Purchase Features - Class A Shares, below for more information on ways in which
investors can avail themselves of reduced front-end sales charges and other
purchase features.
From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during which the
Distributor may reallow to dealers up to the full amount of the front-end sales.
In addition, certain dealers who enter into an agreement to provide extra
training and information on Delaware Investments products and services and who
increase sales of Delaware Investments funds may receive an additional
commission of up to 0.15% of the offering price in connection with sales of
Class A Shares. Such dealers must meet certain requirements in terms of
organization and distribution capabilities and their ability to increase sales.
The Distributor should be contacted for further information on these
requirements as well as the basis and circumstances upon which the additional
commission will be paid. Participating dealers may be deemed to have additional
responsibilities under the securities laws. Dealers who receive 90% or more of
the sales charge may be deemed to be underwriters under the 1933 Act.
42
<PAGE>
Dealer's Commission
As described in the Prospectuses, for initial purchases of Class A
Shares of $1,000,000 or more, a dealer's commission may be paid by the
Distributor to financial advisers through whom such purchases are effected.
For accounts with assets over $1 million, the dealer commission resets
annually to the highest incremental commission rate on the anniversary of the
first purchase. In determining a financial adviser's eligibility for the
dealer's commission, purchases of Class A Shares of other Delaware Investments
funds as to which a Limited CDSC applies (see Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange) may be aggregated with those of the Class A Shares of a
Fund. Financial advisers also may be eligible for a dealer's commission in
connection with certain purchases made under a Letter of Intention or pursuant
to an investor's Right of Accumulation. Financial advisers should contact the
Distributor concerning the applicability and calculation of the dealer's
commission in the case of combined purchases.
An exchange from other Delaware Investments funds will not qualify for
payment of the dealer's commission, unless a dealer's commission or similar
payment has not been previously paid on the assets being exchanged. The schedule
and program for payment of the dealer's commission are subject to change or
termination at any time by the Distributor at its discretion.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B Shares and Class C Shares are purchased without a front-end
sales charge. Class B Shares redeemed within six years of purchase may be
subject to a CDSC at the rates set forth above, and Class C Shares redeemed
within 12 months of purchase may be subject to a CDSC of 1%. CDSCs are charged
as a percentage of the dollar amount subject to the CDSC. The charge will be
assessed on an amount equal to the lesser of the net asset value at the time of
purchase of the shares being redeemed or the net asset value of those shares at
the time of redemption. No CDSC will be imposed on increases in net asset value
above the initial purchase price, nor will a CDSC be assessed on redemptions of
shares acquired through reinvestment of dividends or capital gains
distributions. For purposes of this formula, the "net asset value at the time of
purchase" will be the net asset value at purchase of Class B Shares or Class C
Shares of a Fund, even if those shares are later exchanged for shares of another
Delaware Investments fund. In the event of an exchange of the shares, the "net
asset value of such shares at the time of redemption" will be the net asset
value of the shares that were acquired in the exchange. See Waiver of Contingent
Deferred Sales Charge--Class B Shares and Class C Shares under Redemption and
Exchange for the Fund Classes for a list of the instances in which the CDSC is
waived.
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares, Class B Shares will still be subject to the
annual 12b-1 Plan expenses of up to 1% of average daily net assets of those
shares. At the end of approximately eight years after purchase, the investor's
Class B Shares will be automatically converted into Class A Shares of the same
Fund. See Automatic Conversion of Class B Shares below. Such conversion will
constitute a tax-free exchange for federal income tax purposes. See Taxes.
Investors are reminded that the Class A Shares into which Class B Shares will
convert are subject to ongoing annual 12b-1 Plan expenses of up to a maximum of
0.30% of average daily net assets of such shares.
In determining whether a CDSC applies to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are redeemed
first, followed by shares acquired through the reinvestment of dividends or
distributions, and finally by shares held longest during the six-year period.
With respect to Class C Shares, it will be assumed that shares held for more
than 12 months are redeemed first followed by shares acquired through the
reinvestment of dividends or distributions, and finally by shares held for 12
months or less.
All investments made during a calendar month, regardless of what day of
the month the investment occurred, will age one month on the last day of that
month and each subsequent month.
Deferred Sales Charge Alternative - Class B Shares
Class B Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently compensates
43
<PAGE>
dealers or brokers for selling Class B Shares at the time of purchase from its
own assets in an amount equal to no more than 5% (4% in the case of Delaware
Global Bond Fund) of the dollar amount purchased. In addition, from time to
time, upon written notice to all of its dealers, the Distributor may hold
special promotions for specified periods during which the Distributor may pay
additional compensation to dealers or brokers for selling Class B Shares at the
time of purchase. As discussed below, however, Class B Shares are subject to
annual 12b-1 Plan expenses and, if redeemed within six years of purchase, a
CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class B Shares. These
payments support the compensation paid to dealers or brokers for selling Class B
Shares. Payments to the Distributor and others under the Class B 12b-1 Plan may
be in an amount equal to no more than 1% annually. The combination of the CDSC
and the proceeds of the 12b-1 Plan fees makes it possible for a Fund to sell
Class B Shares without deducting a front-end sales charge at the time of
purchase.
Holders of Class B Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for Class B Shares
described in this Part B, even after the exchange. Such CDSC schedule may be
higher than the CDSC schedule for Class B Shares acquired as a result of the
exchange. See Redemption and Exchange.
Automatic Conversion of Class B Shares
Class B Shares, other than shares acquired through reinvestment of
dividends, held for eight years after purchase are eligible for automatic
conversion into Class A Shares. Conversions of Class B Shares into Class A
Shares will occur only four times in any calendar year, on the 18th day or next
business day of March, June, September and December (each, a "Conversion Date").
If the eighth anniversary after a purchase of Class B Shares falls on a
Conversion Date, an investor's Class B Shares will be converted on that date. If
the eighth anniversary occurs between Conversion Dates, an investor's Class B
Shares will be converted on the next Conversion Date after such anniversary.
Consequently, if a shareholder's eighth anniversary falls on the day after a
Conversion Date, that shareholder will have to hold Class B Shares for as long
as three additional months after the eighth anniversary of purchase before the
shares will automatically convert into Class A Shares.
Class B Shares of a fund acquired through a reinvestment of dividends
will convert to the corresponding Class A Shares of that fund (or, in the case
of Delaware Group Cash Reserve., Delaware Cash Reserve Fund Consultant Class)
pro-rata with Class B Shares of that fund not acquired through dividend
reinvestment.
All such automatic conversions of Class B Shares will constitute
tax-free exchanges for federal income tax purposes.
Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently compensates
dealers or brokers for selling Class C Shares at the time of purchase from its
own assets in an amount equal to no more than 1% of the dollar amount purchased.
As discussed below, Class C Shares are subject to annual 12b-1 Plan expenses
and, if redeemed within 12 months of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class C Shares. These
payments support the compensation paid to dealers or brokers for selling Class C
Shares. Payments to the Distributor and others under the Class C 12b-1 Plan may
be in an amount equal to no more than 1% annually.
Holders of Class C Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for Class C Shares as
described in this Part B. See Redemption and Exchange.
44
<PAGE>
Plans Under Rule 12b-1 for the Fund Classes
Pursuant to Rule 12b-1 under the 1940 Act, Global Funds has adopted a
separate plan for each of the Class A Shares, the Class B Shares and the Class C
Shares of a Fund (the "Plans"). Each Plan permits the relevant Fund to pay for
certain distribution, promotional and related expenses involved in the marketing
of only the Classes of shares to which the Plan applies. The Plans do not apply
to Institutional Classes of shares. Such shares are not included in calculating
the Plans' fees, and the Plans are not used to assist in the distribution and
marketing of shares of the Institutional Classes. Shareholders of the
Institutional Classes may not vote on matters affecting the Plans.
The Plans permit a Fund, pursuant to its Distribution Agreement, to pay
out of the assets of the Class A Shares, Class B Shares and Class C Shares
monthly fees to the Distributor for its services and expenses in distributing
and promoting sales of shares of such classes. These expenses include, among
other things, preparing and distributing advertisements, sales literature and
prospectuses and reports used for sales purposes, compensating sales and
marketing personnel, and paying distribution and maintenance fees to securities
brokers and dealers who enter into dealer's agreements with the Distributor. The
Plan expenses relating to Class B Shares and Class C Shares are also used to pay
the Distributor for advancing the commission costs to dealers with respect to
the initial sale of such shares.
In addition, absent any applicable fee waiver, each Fund may make
payments out of the assets of the Class A Shares, Class B Shares and Class C
Shares directly to other unaffiliated parties, such as banks, who either aid in
the distribution of shares of, or provide services to, such classes.
The maximum aggregate fee payable by a Fund under its Plans and a
Fund's Distribution Agreement, is on an annual basis, up to 0.30% of average
daily net assets of Class A Shares, and up to 1% (0.25% of which are service
fees to be paid to the Distributor, dealers and others for providing personal
service and/or maintaining shareholder accounts) of Class B Shares' and Class C
Shares' average daily net assets for the year. Global Funds Board of Trustees
may reduce these amounts at any time.
All of the distribution expenses incurred by the Distributor and
others, such as broker/dealers, in excess of the amount paid on behalf of Class
A Shares, Class B Shares and Class C Shares would be borne by such persons
without any reimbursement from such classes. Subject to seeking best execution,
a Fund may, from time to time, buy or sell portfolio securities from or to firms
which receive payments under the Plans.
From time to time, the Distributor may pay additional amounts from its
own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plans and the Distribution Agreements, as amended, have all been
approved by the Board of Trustees of Global Funds including a majority of the
trustees who are not "interested persons" (as defined in the 1940 Act) of Global
Funds and who have no direct or indirect financial interest in the Plans, by
vote cast in person at a meeting duly called for the purpose of voting on the
Plans and such Agreements. Continuation of the Plans and the Distribution
Agreements, as amended, must be approved annually by the Board of Trustees in
the same manner as specified above.
Each year, the trustees must determine whether continuation of the
Plans is in the best interest of shareholders of, respectively, Class A Shares,
Class B Shares and Class C Shares of each Fund and that there is a reasonable
likelihood of the Plan relating to a Class providing a benefit to that Class.
The Plans and the Distribution Agreements, as amended, may be terminated at any
time without penalty by a majority of those trustees who are not "interested
persons" or by a majority vote of the relevant Class' outstanding voting
securities. Any amendment materially increasing the percentage payable under the
Plans must likewise be approved by a majority vote of the relevant Class'
outstanding voting securities, as well as by a majority vote of those trustees
who are not "interested persons." With respect to each Class A Shares' Plan any
material increase in the maximum percentage payable thereunder must also be
approved by a majority of the outstanding voting securities of the respective
Fund's B Class. Also, any other material amendment to the Plans must be approved
by a majority vote of the trustees including a majority of the noninterested
trustees of Global Funds having no interest in the Plans. In addition, in order
45
<PAGE>
for the Plans to remain effective, the selection and nomination of trustees who
are not "interested persons" of Global Funds must be effected by the trustees
who themselves are not "interested persons" and who have no direct or indirect
financial interest in the Plans. Persons authorized to make payments under the
Plans must provide written reports at least quarterly to the Board of Trustees
for its review.
46
<PAGE>
The amount and purpose of 12b-1 plan payments from each Class were as follows
for their last fiscal year.
<TABLE>
<CAPTION>
Delaware International Equity Fund Delaware Global Bond Fund
- ------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C Class A Class B Class C
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Advertising
- ------------------------------------------------------------------------------------------------------------------------
Annual/Semi-Annual Reports
- ------------------------------------------------------------------------------------------------------------------------
Broker Trails
- ------------------------------------------------------------------------------------------------------------------------
Broker Sales Charges
- ------------------------------------------------------------------------------------------------------------------------
Dealer Service Expenses
- ------------------------------------------------------------------------------------------------------------------------
Interest on Broker Sales Charges
- ------------------------------------------------------------------------------------------------------------------------
Commissions to Wholesalers
- ------------------------------------------------------------------------------------------------------------------------
Promotional-Broker Meetings
- ------------------------------------------------------------------------------------------------------------------------
Promotional-Other
- ------------------------------------------------------------------------------------------------------------------------
Prospectus Printing
- ------------------------------------------------------------------------------------------------------------------------
Telephone
- ------------------------------------------------------------------------------------------------------------------------
Wholesaler Expenses
- ------------------------------------------------------------------------------------------------------------------------
Other
- ------------------------------------------------------------------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Delaware Emerging Markets Fund Delaware Global Equity Fund
- ---------------------------------------------------------------------------------------------------------------------
Class A Class B Class C Class A Class B Class C
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Advertising
- ---------------------------------------------------------------------------------------------------------------------
Annual/Semi-Annual Reports
- ---------------------------------------------------------------------------------------------------------------------
Broker Trails
- ---------------------------------------------------------------------------------------------------------------------
Broker Sales Charges
- ---------------------------------------------------------------------------------------------------------------------
Dealer Service Expenses
- ---------------------------------------------------------------------------------------------------------------------
Interest on Broker Sales Charges
- ---------------------------------------------------------------------------------------------------------------------
Commissions to Wholesalers
- ---------------------------------------------------------------------------------------------------------------------
Promotional-Broker Meetings
- ---------------------------------------------------------------------------------------------------------------------
Promotional-Other
- ---------------------------------------------------------------------------------------------------------------------
Prospectus Printing
- ---------------------------------------------------------------------------------------------------------------------
Telephone
- ---------------------------------------------------------------------------------------------------------------------
Wholesaler Expenses
- ---------------------------------------------------------------------------------------------------------------------
Other
- ---------------------------------------------------------------------------------------------------------------------
Total
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Other Payments to Dealers - Class A Shares, Class B Shares and Class C Shares
From time to time, at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of Fund Classes exceed certain limits as
set by the Distributor, may receive from the Distributor an additional payment
of up to 0.25% of the dollar amount of such sales. The Distributor may also
provide additional promotional incentives or payments to dealers that sell
48
<PAGE>
shares of the Delaware Investments family of funds. In some instances, these
incentives or payments may be offered only to certain dealers who maintain, have
sold or may sell certain amounts of shares. The Distributor may also pay a
portion of the expense of preapproved dealer advertisements promoting the sale
of Delaware Investments fund shares.
Special Purchase Features - Class A Shares
Buying Class A Shares at Net Asset Value
Class A Shares of the Fund may be purchased at net asset value under
the Delaware Investments Dividend Reinvestment Plan and, under certain
circumstances, the Exchange Privilege and the 12-Month Reinvestment Privilege.
Purchases of Class A Shares may be made at net asset value by current
and former officers, trustees and employees (and members of their families) of
the Manager, any affiliate, any of the funds in the Delaware Investments family,
certain of their agents and registered representatives and employees of
authorized investment dealers and by employee benefit plans for such entities.
Individual purchases, including those in retirement accounts, must be for
accounts in the name of the individual or a qualifying family member. Class A
Shares may also be purchased at net asset value by current and former officers,
trustees and employees (and members of their families) of the Dougherty
Financial Group LLC.
Purchases of Class A Shares may also be made by clients of registered
representatives of an authorized investment dealer at net asset value within 12
months after the registered representative changes employment, if the purchase
is funded by proceeds from an investment where a front-end sales charge,
contingent deferred sales charge or other sales charge has been assessed.
Purchases of Class A Shares may also be made at net asset value by bank
employees who provide services in connection with agreements between the bank
and unaffiliated brokers or dealers concerning sales of shares of funds in the
Delaware Investments family. Officers, trustees and key employees of
institutional clients of the Manager or any of its affiliates may purchase Class
A Shares at net asset value. Moreover, purchases may be effected at net asset
value for the benefit of the clients of brokers, dealers and registered
investment advisers affiliated with a broker or dealer, if such broker, dealer
or investment adviser has entered into an agreement with the Distributor
providing specifically for the purchase of Class A Shares in connection with
special investment products, such as wrap accounts or similar fee based
programs. Investors may be charged a fee when effecting transactions in Class A
Shares through a broker or agent that offers these special investment products.
Purchases of Class A Shares at net asset value may also be made by the
following: financial institutions investing for the account of their trust
customers if they are not eligible to purchase shares of the Institutional Class
of a Fund; any group retirement plan (excluding defined benefit pension plans),
or such plans of the same employer, for which plan participant records are
maintained on the Retirement Financial Services, Inc. (formerly known as
Delaware Investment & Retirement Services, Inc.) proprietary record keeping
system that (i) has in excess of $500,000 of plan assets invested in Class A
Shares of funds in the Delaware Investments family and any stable value account
available to investment advisory clients of the Manager or its affiliates; or
(ii) is sponsored by an employer that has at any point after May 1, 1997 had
more than 100 employees while such plan has held Class A Shares of a fund in the
Delaware Investments family and such employer has properly represented to, and
received written confirmation back from, Retirement Financial Services, Inc. in
writing that it has the requisite number of employees. See Group Investment
Plans for information regarding the applicability of the Limited CDSC.
49
<PAGE>
Purchases of Class A Shares at net asset value may also be made by bank
sponsored retirement plans that are no longer eligible to purchase Institutional
Class Shares or purchase interests in a collective trust as a result of a change
in distribution arrangements.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from such
accounts will be made at net asset value. Loan repayments made to a fund account
in connection with loans originated from accounts previously maintained by
another investment firm will also be invested at net asset value.
Global Funds must be notified in advance that the trade qualifies for
purchase at net asset value.
Allied Plans
Class A Shares are available for purchase by participants in certain
401(k) Defined Contribution Plans ("Allied Plans") which are made available
under a joint venture agreement between the Distributor and another institution
through which mutual funds are marketed and which allow investments in Class A
Shares of designated Delaware Investments funds ("eligible Delaware Investments
fund shares"), as well as shares of designated classes of non-Delaware
Investments funds ("eligible non-Delaware Investments fund shares"). Class B
Shares and Class C Shares are not eligible for purchase by Allied Plans.
With respect to purchases made in connection with an Allied Plan, the
value of eligible Delaware Investments and eligible non-Delaware Investments
fund shares held by the Allied Plan may be combined with the dollar amount of
new purchases by that Allied Plan to obtain a reduced front-end sales charge on
additional purchases of eligible Delaware Investments fund shares. See Combined
Purchases Privilege, below.
Participants in Allied Plans may exchange all or part of their eligible
Delaware Investments fund shares for other eligible Delaware Investments fund
shares or for eligible non-Delaware Investments fund shares at net asset value
without payment of a front-end sales charge. However, exchanges of eligible fund
shares, both Delaware Investments and non-Delaware Investments, which were not
subject to a front end sales charge, will be subject to the applicable sales
charge if exchanged for eligible Delaware Investments fund shares to which a
sales charge applies. No sales charge will apply if the eligible fund shares
were previously acquired through the exchange of eligible shares on which a
sales charge was already paid or through the reinvestment of dividends.
See Investing by Exchange.
A dealer's commission may be payable on purchases of eligible Delaware
Investments fund shares under an Allied Plan. In determining a financial
adviser's eligibility for a dealer's commission on net asset value purchases of
eligible Delaware Investments fund shares in connection with Allied Plans, all
participant holdings in the Allied Plan will be aggregated. See Class A Shares.
The Limited CDSC is applicable to redemptions of net asset value
purchases from an Allied Plan on which a dealer's commission has been paid.
Waivers of the Limited CDSC, as described under Waiver of Limited Contingent
Deferred Sales Charge - Class A Shares under Redemption and Exchange, apply to
redemptions by participants in Allied Plans except in the case of exchanges
between eligible Delaware Investments and non-Delaware Investments fund shares.
When eligible Delaware Investments fund shares are exchanged into eligible
non-Delaware Investments fund shares, the Limited CDSC will be imposed at the
time of the exchange, unless the joint venture agreement specifies that the
amount of the Limited CDSC will be paid by the financial adviser or selling
dealer. See Contingent Deferred Sales Charge for Certain Redemptions of Class A
Shares Purchased at Net Asset Value under Redemption and Exchange.
50
<PAGE>
Letter of Intention
The reduced front-end sales charges described above with respect to
Class A Shares are also applicable to the aggregate amount of purchases made
within a 13-month period pursuant to a written Letter of Intention provided by
the Distributor and signed by the purchaser, and not legally binding on the
signer or Global Funds which provides for the holding in escrow by the Transfer
Agent, of 5% of the total amount of Class A Shares intended to be purchased
until such purchase is completed within the 13-month period. A Letter of
Intention may be dated to include shares purchased up to 90 days prior to the
date the Letter is signed. The 13-month period begins on the date of the
earliest purchase. If the intended investment is not completed, except as noted
below, the purchaser will be asked to pay an amount equal to the difference
between the front-end sales charge on Class A Shares purchased at the reduced
rate and the front-end sales charge otherwise applicable to the total shares
purchased. If such payment is not made within 20 days following the expiration
of the 13-month period, the Transfer Agent will surrender an appropriate number
of the escrowed shares for redemption in order to realize the difference. Such
purchasers may include the value (at offering price at the level designated in
their Letter of Intention) of all their shares of the Funds and of any class of
any of the other mutual funds in Delaware Investments (except shares of any
Delaware Investments fund which do not carry a front-end sales charge, CDSC or
Limited CDSC other than shares of Delaware Group Premium Fund. beneficially
owned in connection with the ownership of variable insurance products, unless
they were acquired through an exchange from a Delaware Investments fund which
carried a front-end sales charge, CDSC or Limited CDSC) previously purchased and
still held as of the date of their Letter of Intention toward the completion of
such Letter.
Employers offering a Delaware Investments retirement plan may also
complete a Letter of Intention to obtain a reduced front-end sales charge on
investments of Class A Shares made by the plan. The aggregate investment level
of the Letter of Intention will be determined and accepted by the Transfer Agent
at the point of plan establishment. The level and any reduction in front-end
sales charge will be based on actual plan participation and the projected
investments in Delaware Investments funds that are offered with a front-end
sales charge, CDSC or Limited CDSC for a 13-month period. The Transfer Agent
reserves the right to adjust the signed Letter of Intention based on this
acceptance criteria. The 13-month period will begin on the date this Letter of
Intention is accepted by the Transfer Agent. If actual investments exceed the
anticipated level and equal an amount that would qualify the plan for further
discounts, any front-end sales charges will be automatically adjusted. In the
event this Letter of Intention is not fulfilled within the 13-month period, the
plan level will be adjusted (without completing another Letter of Intention) and
the employer will be billed for the difference in front-end sales charges due,
based on the plan's assets under management at that time. Employers may also
include the value (at offering price at the level designated in their Letter of
Intention) of all their shares intended for purchase that are offered with a
front-end sales charge, CDSC or Limited CDSC of any class. Class B Shares and
Class C Shares of a Fund and other Delaware Investments funds which offer
corresponding classes of shares may also be aggregated for this purpose.
Combined Purchases Privilege
In determining the availability of the reduced front-end sales charge
previously set forth with respect to Class A Shares, purchasers may combine the
total amount of any combination of Class A Shares, Class B Shares and/or Class C
Shares of the Funds, as well as shares of any other class of any of the other
Delaware Investments funds (except shares of any Delaware Investments fund which
do not carry a front-end sales charge, CDSC or Limited CDSC, other than shares
of Delaware Group Premium Fund. beneficially owned in connection with the
ownership of variable insurance products, unless they were acquired through an
exchange from a Delaware Investments fund which carried a front-end sales
charge, CDSC or Limited CDSC). In addition, assets held by investment advisory
clients of the Manager or its affiliates in a stable value account may be
combined with other Delaware Investments fund holdings.
The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under 21; or
a trustee or other fiduciary of trust estates or fiduciary accounts for the
benefit of such family members (including certain employee benefit programs).
Right of Accumulation
In determining the availability of the reduced front-end sales charge
with respect to the Class A Shares, purchasers may also combine any subsequent
purchases of Class A Shares, Class B Shares and Class C Shares of a Fund, as
51
<PAGE>
well as shares of any other class of any of the other Delaware Investments funds
which offer such classes (except shares of any Delaware Investments fund which
do not carry a front-end sales charge, CDSC or Limited CDSC, other than shares
of Delaware Group Premium Fund. beneficially owned in connection with the
ownership of variable insurance products, unless they were acquired through an
exchange from a Delaware Investments fund which carried a front-end sales
charge, CDSC or Limited CDSC). If, for example, any such purchaser has
previously purchased and still holds Class A Shares of Delaware International
Equity Fund and/or shares of any other of the classes described in the previous
sentence with a value of $40,000 and subsequently purchases $10,000 at offering
price of additional shares of Class A Shares, the charge applicable to the
$10,000 purchase would currently be 4.75%. For the purpose of this calculation,
the shares presently held shall be valued at the public offering price that
would have been in effect were the shares purchased simultaneously with the
current purchase. Investors should refer to the table of sales charges for Class
A Shares to determine the applicability of the Right of Accumulation to their
particular circumstances.
12-Month Reinvestment Privilege
Holders of Class A Shares and Class B Shares of a Fund (and of the
Institutional Class holding shares which were acquired through an exchange from
one of the other mutual funds in the Delaware Investments family offered with a
front-end sales charge) who redeem such shares have one year from the date of
redemption to reinvest all or part of their redemption proceeds in the same
Class of the Fund or in the same Class of any of the other funds in the Delaware
Investments family. In the case of Class A Shares, the reinvestment will not be
assessed a front-end sales charge and in the case of Class B Shares, the amount
of the CDSC previously charged on the redemption will be reimbursed by the
Distributor. The reinvestment will be subject to applicable eligibility and
minimum purchase requirements and must be in states where shares of such other
funds may be sold. This reinvestment privilege does not extend to Class A Shares
where the redemption of the shares triggered the payment of a Limited CDSC.
Persons investing redemption proceeds from direct investments in mutual funds in
the Delaware Investments family, offered without a front-end sales charge will
be required to pay the applicable sales charge when purchasing Class A Shares.
The reinvestment privilege does not extend to a redemption of Class C Shares.
Any such reinvestment cannot exceed the redemption proceeds (plus any
amount necessary to purchase a full share). The reinvestment will be made at the
net asset value next determined after receipt of remittance. In the case of
Class B Shares, the time that the previous investment was held will be included
in determining any applicable CDSC due upon redemptions as well as the automatic
conversion into Class A Shares.
A redemption and reinvestment of Class B Shares could have income tax
consequences. Shareholders will receive from the Distributor the amount of the
CDSC paid at the time of redemption as part of the reinvested shares, which may
be treated as a capital gain to the shareholder for tax purposes. It is
recommended that a tax adviser be consulted with respect to such transactions.
Any reinvestment directed to a fund in which the investor does not then
have an account will be treated like all other initial purchases of the fund's
shares. Consequently, an investor should obtain and read carefully the
prospectus for the fund in which the investment is intended to be made before
investing or sending money.
The prospectus contains more complete information about the fund,
including charges and expenses.
Investors should consult their financial advisers or the Transfer
Agent, which also serves as the Fund's shareholder servicing agent, about the
applicability of the Class A Limited CDSC in connection with the features
described above.
52
<PAGE>
Group Investment Plans
Group Investment Plans which are not eligible to purchase shares of the
Institutional Classes may also benefit from the reduced front-end sales charges
for investments in Class A Shares, based on total plan assets. If a company has
more than one plan investing in the Delaware Investments family of funds, then
the total amount invested in all plans would be used in determining the
applicable front-end sales charge reduction upon each purchase, both initial and
subsequent, upon notification to the Fund in which the investment is being made
at the time of each such purchase. Employees participating in such Group
Investment Plans may also combine the investments made in their plan account
when determining the applicable front-end sales charge on purchases to
non-retirement Delaware Investments investment accounts if they so notify the
Fund in which they are investing in connection with each purchase. See
Retirement Plans for the Fund Classes under Investment Plans for information
about Retirement Plans.
The Limited CDSC is applicable to any redemptions of net asset value
purchases made on behalf of any group retirement plan on which a dealer's
commission has been paid only if such redemption is made pursuant to a
withdrawal of the entire plan from a fund in the Delaware Investments family.
See Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value under Redemption and Exchange.
Institutional Classes
The Institutional Class of each Fund is available for purchase only by:
(a) retirement plans introduced by persons not associated with brokers or
dealers that are primarily engaged in the retail securities business and
rollover individual retirement accounts from such plans; (b) tax-exempt employee
benefit plans of the Manager or its affiliates and securities dealer firms with
a selling agreement with the Distributor; (c) institutional advisory accounts of
the Manager or its affiliates and those having client relationships with
Delaware Investment Advisers, an affiliate of the Manager, or its other
affiliates and their corporate sponsors, as well as subsidiaries and related
employee benefit plans and rollover individual retirement accounts from such
institutional advisory accounts; (d) a bank, trust company and similar financial
institution investing for its own account or for the account of its trust
customers for whom such financial institution is exercising investment
discretion in purchasing shares of the Class, except where the investment is
part of a program that requires payment of the financial institution of a Rule
12b-1 Plan fee; and (e) registered investment advisers investing on behalf of
clients that consist solely of institutions and high net-worth individuals
having at least $1,000,000 entrusted to the adviser for investment purposes, but
only if the adviser is not affiliated or associated with a broker or dealer and
derives compensation for its services exclusively from its clients for such
advisory services.
Shares of Institutional Classes are available for purchase at net asset
value, without the imposition of a front-end or contingent deferred sales charge
and are not subject to Rule 12b-1 expenses.
53
<PAGE>
INVESTMENT PLANS
Reinvestment Plan/Open Account
Unless otherwise designated by shareholders in writing, dividends from
net investment income and distributions from realized securities profits, if
any, will be automatically reinvested in additional shares of the respective
Fund Class in which an investor has an account (based on the net asset value in
effect on the reinvestment date) and will be credited to the shareholder's
account on that date. All dividends and distributions of Delaware Global
Opportunities Fund, Delaware International Small Cap Fund Delaware New Europe
Fund and Delaware Latin America Fund and the Institutional Classes of each Fund
are reinvested in the accounts of the holders of such shares (based on the net
asset value in effect on the reinvestment date). A confirmation of each dividend
payment from net investment income will be mailed to shareholders quarterly. A
confirmation of any distributions from realized securities profits will be
mailed to shareholders in the first quarter of the fiscal year.
Under the Reinvestment Plan/Open Account, shareholders may purchase and
add full and fractional shares to their plan accounts at any time either through
their investment dealers or by sending a check or money order to the specific
Fund and Class in which shares are being purchased. Such purchases, which must
meet the minimum subsequent purchase requirements set forth in the Prospectuses
and this Part B, are made for Class A Shares at the public offering price, and
for Class B Shares, Class C Shares and Institutional Classes at the net asset
value, at the end of the day of receipt. A reinvestment plan may be terminated
at any time. This plan does not assure a profit nor protect against depreciation
in a declining market.
Reinvestment of Dividends in Other Delaware Investments Family of Funds
Subject to applicable eligibility and minimum initial purchase
requirements and the limitations set forth below, holders of Class A Shares,
Class B Shares and Class C Shares may automatically reinvest dividends and/or
distributions in any of the mutual funds in the Delaware Investments, including
the Funds, in states where their shares may be sold. Such investments will be at
net asset value at the close of business on the reinvestment date without any
front-end sales charge or service fee. The shareholder must notify the Transfer
Agent in writing and must have established an account in the fund into which the
dividends and/or distributions are to be invested. Any reinvestment directed to
a fund in which the investor does not then have an account will be treated like
all other initial purchases of a fund's shares. Consequently, an investor should
obtain and read carefully the prospectus for the fund in which the investment is
intended to be made before investing or sending money. The prospectus contains
more complete information about the fund, including charges and expenses.
Subject to the following limitations, dividends and/or distributions
from other funds in Delaware Investments may be invested in shares of the Funds,
provided an account has been established. Dividends from Class A Shares may not
be directed to Class B Shares or Class C Shares. Dividends from Class B Shares
may only be directed to other Class B Shares and dividends from Class C Shares
may only be directed to other Class C Shares.
Capital gains and/or dividend distributions for participants in the
following retirement plans are automatically reinvested into the same Delaware
Investments fund in which their investments are held: SAR/SEP, SEP/IRA, SIMPLE
IRA, SIMPLE 401(k), Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, or 403(b)(7) or 457 Deferred Compensation Plans.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware
Investments family, you may write and authorize an exchange of part or all of
your investment into shares of a Fund. If you wish to open an account by
exchange, call the Shareholder Service Center for more information. All
exchanges are subject to the eligibility and minimum purchase requirements set
forth in each fund's prospectus. See Redemption and Exchange for more complete
information concerning your exchange privileges.
Holders of Class A Shares of a Fund may exchange all or part of their
shares for certain of the shares of other funds in the Delaware Investments
family, including other Class A Shares, but may not exchange their Class A
Shares for Class B Shares or Class C Shares of the Fund or of any other fund in
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the Delaware Investments family. Holders of Class B Shares of a Fund are
permitted to exchange all or part of their Class B Shares only into Class B
Shares of other Delaware Investments funds. Similarly, holders of Class C Shares
of a Fund are permitted to exchange all or part of their Class C Shares only
into Class C Shares of other Delaware Investments funds. Class B Shares of a
Fund and Class C Shares of a Fund acquired by exchange will continue to carry
the CDSC and, in the case of Class B Shares, the automatic conversion schedule
of the fund from which the exchange is made. The holding period of Class B
Shares of a Fund acquired by exchange will be added to that of the shares that
were exchanged for purposes of determining the time of the automatic conversion
into Class A Shares of that Fund.
Permissible exchanges into Class A Shares of a Fund will be made
without a front-end sales charge, except for exchanges of shares that were not
previously subject to a front-end sales charge (unless such shares were acquired
through the reinvestment of dividends). Permissible exchanges into Class B
Shares or Class C Shares of a Fund will be made without the imposition of a CDSC
by the fund from which the exchange is being made at the time of the exchange.
Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan--Investors may arrange for either Fund to
accept for investment in Class A Shares, Class B Shares or Class C Shares,
through an agent bank, preauthorized government or private recurring payments.
This method of investment assures the timely credit to the shareholder's account
of payments such as social security, veterans' pension or compensation benefits,
federal salaries, Railroad Retirement benefits, private payroll checks,
dividends, and disability or pension fund benefits. It also eliminates lost,
stolen and delayed checks.
Automatic Investing Plan--Shareholders of Class A Shares, Class B
Shares and Class C Shares may make automatic investments by authorizing, in
advance, monthly or quarterly payments directly from their checking account for
deposit into their Fund account. This type of investment will be handled in
either of the following ways. (1) If the shareholder's bank is a member of the
National Automated Clearing House Association ("NACHA"), the amount of the
investment will be electronically deducted from his or her account by Electronic
Fund Transfer ("EFT"). The shareholder's checking account will reflect a debit
each month at a specified date although no check is required to initiate the
transaction. (2) If the shareholder's bank is not a member of NACHA, deductions
will be made by preauthorized checks, known as Depository Transfer Checks.
Should the shareholder's bank become a member of NACHA in the future, his or her
investments would be handled electronically through EFT.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or 457 Deferred
Compensation Plans.
* * *
Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent investments
under such plans must be for $25 or more. An investor wishing to take advantage
of either service must complete an authorization form. Either service can be
discontinued by the shareholder at any time without penalty by giving written
notice.
Payments to a Fund from the federal government or its agencies on
behalf of a shareholder may be credited to the shareholder's account after such
payments should have been terminated by reason of death or otherwise. Any such
payments are subject to reclamation by the federal government or its agencies.
Similarly, under certain circumstances, investments from private sources may be
subject to reclamation by the transmitting bank. In the event of a reclamation,
a Fund may liquidate sufficient shares from a shareholder's account to reimburse
the government or the private source. In the event there are insufficient shares
in the shareholder's account, the shareholder is expected to reimburse the Fund.
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Direct Deposit Purchases by Mail
Shareholders may authorize a third party, such as a bank or employer,
to make investments directly to their Fund accounts. Either Fund will accept
these investments, such as bank-by-phone, annuity payments and payroll
allotments, by mail directly from the third party. Investors should contact
their employers or financial institutions who in turn should contact Global
Funds for proper instructions.
MoneyLine (SM) On Demand
You or your investment dealer may request purchases of Fund shares by
phone using MoneyLine (SM) On Demand. When you authorize a Fund to accept such
requests from you or your investment dealer, funds will be withdrawn from (for
share purchases) your predesignated bank account. Your request will be processed
the same day if you call prior to 4 p.m., Eastern time. There is a $25 minimum
and $50,000 maximum limit for MoneyLine (SM) On Demand transactions.
It may take up to four business days for the transactions to be
completed. You can initiate this service by completing an Account Services form.
If your name and address are not identical to the name and address on your Fund
account, you must have your signature guaranteed. The Funds do not charge a fee
for this service; however, your bank may charge a fee.
Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in the Fund
Classes through regular liquidations of shares in their accounts in other mutual
funds in the Delaware Investments family. Shareholders of the Fund Classes may
elect to invest in one or more of the other mutual funds in Delaware Investments
family through the Wealth Builder Option. If in connection with the election of
the Wealth Builder Option, you wish to open a new account to receive the
automatic investment, such new account must meet the minimum initial purchase
requirements described in the prospectus of the fund that you select. All
investments under this option are exchanges and are therefore subject to the
same conditions and limitations as other exchanges noted above.
Under this automatic exchange program, shareholders can authorize
regular monthly investments (minimum of $100 per fund) to be liquidated from
their account and invested automatically into other mutual funds in the Delaware
Investments family, subject to the conditions and limitations set forth in the
Fund Classes' Prospectus. The investment will be made on the 20th day of each
month (or, if the fund selected is not open that day, the next business day) at
the public offering price or net asset value, as applicable, of the fund
selected on the date of investment. No investment will be made for any month if
the value of the shareholder's account is less than the amount specified for
investment.
Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the fund
into which investments are made could fluctuate. Since this program involves
continuous investment regardless of such fluctuating value, investors selecting
this option should consider their financial ability to continue to participate
in the program through periods of low fund share prices. This program involves
automatic exchanges between two or more fund accounts and is treated as a
purchase of shares of the fund into which investments are made through the
program. Shareholders can terminate their participation in Wealth Builder at any
time by giving written notice to the fund from which exchanges are made.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or 457 Deferred
Compensation Plans. This option also is not available to shareholders of the
Institutional Classes.
Asset Planner
To invest in Delaware Investments funds using the Asset Planner asset
allocation service, you should complete an Asset Planner Account Registration
Form, which is available only from a financial adviser or investment dealer.
Effective September 1, 1997, the Asset Planner Service is only available to
financial advisers or investment dealers who have previously used this service.
The Asset Planner service offers a choice of four predesigned asset allocation
strategies (each with a different risk/reward profile) in predetermined
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percentages in Delaware Investments funds. With the help of a financial adviser,
you may also design a customized asset allocation strategy.
The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. Exchanges from existing Delaware
Investments accounts into the Asset Planner service may be made at net asset
value under the circumstances described under Investing by Exchange. Also see
Buying Class A Shares at Net Asset Value. The minimum initial investment per
Strategy is $2,000; subsequent investments must be at least $100. Individual
fund minimums do not apply to investments made using the Asset Planner service.
Class A, Class B and Class C Shares are available through the Asset Planner
service. Generally, only shares within the same class may be used within the
same Strategy. However, Class A Shares of a Fund and of other funds in the
Delaware Investments family may be used in the same Strategy with consultant
class shares that are offered by certain other Delaware Investments funds.
An annual maintenance fee, currently $35 per Strategy, is due at the
time of initial investment and by September 30 of each subsequent year. The fee,
payable to Delaware Service Company, Inc. to defray extra costs associated with
administering the Asset Planner service, will be deducted automatically from one
of the funds within your Asset Planner account if not paid by September 30.
However, effective November 1, 1996, the annual maintenance fee is waived until
further notice. Investors who utilize the Asset Planner for an IRA will continue
to pay an annual IRA fee of $15 per Social Security number. Investors will
receive a customized quarterly Strategy Report summarizing all Asset Planner
investment performance and account activity during the prior period.
Confirmation statements will be sent following all transactions other than those
involving a reinvestment of distributions.
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
Retirement Plans for the Fund Classes
An investment in the Funds may be suitable for tax-deferred retirement
plans. Delaware Investments offers a full spectrum of retirement plans,
including the 401(k) Defined Contribution Plan, Individual Retirement Account
("IRA") and the new Roth IRA and Education IRA.
Among the retirement plans that Delaware Investments offers, Class B
Shares are available only by Individual Retirement Accounts, SIMPLE IRAs, Roth
IRAs, Education IRAs, Simplified Employee Pension Plans, Salary Reduction
Simplified Employee Pension Plans, and 403(b)(7) and 457 Deferred Compensation
Plans. The CDSC may be waived on certain redemptions of Class B Shares and Class
C Shares. See Waiver of Contingent Deferred Sales Charge - Class B Shares and
Class C Shares under Redemption and Exchange for a list of the instances in
which the CDSC is waived.
Purchases of Class B Shares are subject to a maximum purchase
limitation of $250,000 for retirement plans. Purchases of Class C Shares must be
in an amount that is less than $1,000,000 for such plans. The maximum purchase
limitations apply only to the initial purchase of shares by the retirement plan.
Minimum investment limitations generally applicable to other investors
do not apply to retirement plans other than Individual Retirement Accounts, for
which there is a minimum initial purchase of $250 and a minimum subsequent
purchase of $25, regardless of which Class is selected. Retirement plans may be
subject to plan establishment fees, annual maintenance fees and/or other
administrative or trustee fees. Fees are based upon the number of participants
in the plan as well as the services selected. Additional information about fees
is included in retirement plan materials. Fees are quoted upon request. Annual
maintenance fees may be shared by Delaware Management Trust Company, the
Transfer Agent, other affiliates of the Manager and others that provide services
to such Plans.
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Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders. Certain
retirement plans may qualify to purchase shares of the Institutional Class
shares. See Institutional Classes, above. For additional information on any of
the plans and Delaware's retirement services, call the Shareholder Service
Center telephone number.
It is advisable for an investor considering any one of the retirement
plans described below to consult with an attorney, accountant or a qualified
retirement plan consultant. For further details, including applications for any
of these plans, contact your investment dealer or the Distributor.
Taxable distributions from the retirement plans described below may be
subject to withholding.
Please contact your investment dealer or the Distributor for the
special application forms required for the Plans described below.
Prototype Profit Sharing or Money Purchase Pension Plans
Prototype Plans are available for self-employed individuals,
partnerships, corporations and other eligible forms of organizations. These
plans can be maintained as Section 401(k), profit sharing or money purchase
pension plans. Contributions may be invested only in Class A Shares and Class C
Shares.
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Individual Retirement Account ("IRA")
A document is available for an individual who wants to establish an IRA
and make contributions which may be tax-deductible, even if the individual is
already participating in an employer-sponsored retirement plan. Even if
contributions are not deductible for tax purposes, as indicated below, earnings
will be tax-deferred. In addition, an individual may make contributions on
behalf of a spouse who has no compensation for the year; however, participation
may be restricted based on certain income limits.
IRA Disclosures
The Taxpayer Relief Act of 1997 provides new opportunities for
investors. Individuals have five types of tax-favored IRA accounts that can be
utilized depending on the individual's circumstances. A new Roth IRA and
Education IRA are available in addition to the existing deductible IRA and
non-deductible IRA.
Deductible and Non-deductible IRAs
An individual can contribute up to $2,000 in his or her IRA each year.
Contributions may or may not be deductible depending upon the taxpayer's
adjusted gross income ("AGI") and whether the taxpayer is an active participant
in an employer sponsored retirement plan. Even if a taxpayer is an active
participant in an employer sponsored retirement plan, the full $2,000 is still
available if the taxpayer's AGI is below $30,000 ($50,000 for taxpayers filing
joint returns) for years beginning after December 31, 1997. A partial deduction
is allowed for married couples with income between $50,000 and $60,000, and for
single individuals with incomes between $30,000 and $40,000. These income
phase-out limits reach $80,000-$100,000 in 2007 for joint filers and
$50,000-$60,000 in 2005 for single filers. No deductions are available for
contributions to IRAs by taxpayers whose AGI after IRA deductions exceeds the
maximum income limit established for each year and who are active participants
in an employer sponsored retirement plan.
Taxpayers who are not allowed deductions on IRA contributions still can
make non-deductible IRA contributions of as much as $2,000 for each working
spouse and defer taxes on interest or other earnings from the IRAs.
Under the new law, a married individual is not considered an active
participant in an employer sponsored retirement plan merely because the
individual's spouse is an active participant if the couple's combined AGI is
below $150,000. The maximum deductible IRA contribution for a married individual
who is not an active participant, but whose spouse is, is phased out for
combined AGI between $150,000 and $160,000.
Conduit (Rollover) IRAs
Certain individuals who have received or are about to receive eligible
rollover distributions from an employer-sponsored retirement plan or another IRA
may rollover the distribution tax-free to a Conduit IRA. The rollover of the
eligible distribution must be completed by the 60th day after receipt of the
distribution; however, if the rollover is in the form of a direct
trustee-to-trustee transfer without going through the distributee's hand, the
60-day limit does not apply.
A distribution qualifies as an "eligible rollover distribution" if it
is made from a qualified retirement plan, a 403(b) plan or another IRA and does
not constitute one of the following:
(1) Substantially equal periodic payments over the employee's life or
life expectancy or the joint lives or life expectancies of the employee and
his/her designated beneficiary;
(2) Substantially equal installment payments for a period certain of
10 or more years;
(3) A distribution, all of which represents a required minimum
distribution after attaining age 70 1/2;
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(4) A distribution due to a Qualified Domestic Relations Order to an
alternate payee who is not the spouse (or former spouse) of the employee; and
(5) A distribution of after-tax contributions which is not includable
in income.
Roth IRAs
For taxable years beginning after December 31, 1997, non-deductible
contributions of up to $2,000 per year can be made to a new Roth IRA. As a
result of the Internal Revenue Service Restructuring and Reform Act of 1998 (the
"1998 Act"), the $2,000 annual limit will not be reduced by any contributions to
a deductible or nondeductible IRA for the same year. The maximum contribution
that can be made to a Roth IRA is phased out for single filers with AGI between
$95,000 and $110,000, and for couples filing jointly with AGI between $150,000
and $160,000. Qualified distributions from a Roth IRA would be exempt from
federal taxes. Qualified distributions are distributions (1) made after the
five-taxable year period beginning with the first taxable year for which a
contribution was made to a Roth IRA and (2) that are (a) made on or after the
date on which the individual attains age 59 1/2, (b) made to a beneficiary on or
after the death of the individual, (c) attributed to the individual being
disabled, or (d) for a qualified special purpose (e.g., first time homebuyer
expenses).
Distributions that are not qualified distributions would always be
tax-free if the taxpayer is withdrawing contributions, not accumulated earnings.
Taxpayers with AGI of $100,000 or less are eligible to convert an
existing IRA (deductible, nondeductible and conduit) to a Roth IRA. Earnings and
contributions from a deductible IRA are subject to a tax upon conversion;
however, no 10% excise tax for early withdrawal would apply. If the conversion
is done prior to January 1, 1999, then the income from the conversion can be
included in income ratably over a four-year period beginning with the year of
conversion.
Education IRAs
For taxable years beginning after December 31, 1997, an Education IRA
has been created exclusively for the purpose of paying qualified higher
education expenses. Taxpayers can make non-deductible contributions up to $500
per year per beneficiary. The $500 annual limit is in addition to the $2,000
annual contribution limit applicable to IRAs and Roth IRAs. Eligible
contributions must be in cash and made prior to the date the beneficiary reaches
age 18. Similar to the Roth IRA, earnings would accumulate tax-free. There is no
requirement that the contributor be related to the beneficiary, and there is no
limit on the number of beneficiaries for whom one contributor can establish
Education IRAs. In addition, multiple Education IRAs can be created for the same
beneficiaries, however, the contribution limit of all contributions for a single
beneficiary cannot exceed $500 annually.
This $500 annual contribution limit for Education IRAs is phased out
ratably for single contributors with modified AGI between $95,000 and $110,000,
and for couples filing jointly with modified AGI of between $150,000 and
$160,000. Individuals with modified AGI above the phase-out range are not
allowed to make contributions to an Education IRA established on behalf of any
other individual.
Distributions from an Education IRA are excludable from gross income to
the extent that the distribution does not exceed qualified higher education
expenses incurred by the beneficiary during the year the distribution is made
regardless of whether the beneficiary is enrolled at an eligible educational
institution on a full-time, half-time, or less than half-time basis.
Any balance remaining in an Education IRA at the time a beneficiary
becomes 30 years old must be distributed, and the earnings portion of such a
distribution will be includable in gross income of the beneficiary and subject
to an additional 10% penalty tax if the distribution is not for qualified higher
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education expenses. Tax-free (and penalty-free) transfers and rollovers of
account balances from one Education IRA benefiting one beneficiary to another
Education IRA benefiting a different beneficiary (as well as redesignations of
the named beneficiary) is permitted, provided that the new beneficiary is a
member of the family of the old beneficiary and that the transfer or rollover is
made before the time the old beneficiary reaches age 30 and the new beneficiary
reaches age 18.
A company or association may establish a Group IRA or Group Roth IRA
for employees or members who want to purchase shares of a Fund.
Investments generally must be held in the IRA until age 59 1/2 in order
to avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in which
the participant reaches age 70 1/2. Individuals are entitled to revoke the
account, for any reason and without penalty, by mailing written notice of
revocation to Delaware Management Trust Company within seven days after the
receipt of the IRA Disclosure Statement or within seven days after the
establishment of the IRA, except, if the IRA is established more than seven days
after receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the year
received. Excess contributions removed after the tax-filing deadline, plus
extensions, for the year in which the excess contributions were made are subject
to a 6% excise tax on the amount of excess. Premature distributions
(distributions made before age 59 1/2, except for death, disability and certain
other limited circumstances) will be subject to a 10% excise tax on the amount
prematurely distributed, in addition to the income tax resulting from the
distribution. For information concerning the applicability of a CDSC upon
redemption of Class B Shares and Class C Shares, see Contingent Deferred Sales
Charge - Class B Shares and Class C Shares.
Effective January 1, 1997, the 10% premature distribution penalty will
not apply to distributions from an IRA that are used to pay medical expenses in
excess of 7.5% of adjusted gross income or to pay health insurance premiums by
an individual who has received unemployment compensation for 12 consecutive
weeks. In addition, effective January 1, 1998, the new law allows for premature
distribution without a 10% penalty if (i) the amounts are used to pay qualified
higher education expenses (including graduate level courses) of the taxpayer,
the taxpayer's spouse or any child or grandchild of the taxpayer or the
taxpayer's spouse, or (ii) used to pay acquisition costs of a principle
residence for the purchase of a first-time home by the taxpayer, taxpayer's
spouse or any child or grandchild of the taxpayer or the taxpayer's spouse. A
qualified first-time homebuyer is someone who has had no ownership interest in a
residence during the past two years. The aggregate amount of distribution for
first-time home purchases cannot exceed a lifetime cap of $10,000.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Classes is available for investment by a
SEP/IRA.
Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
Although new SAR/SEP plans may not be established after December 31,
1996, existing plans may continue to be maintained by employers having 25 or
fewer employees. An employer may elect to make additional contributions to such
existing plans.
Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers to establish qualified
plans based on salary deferral contributions. Effective January 1, 1997,
non-governmental tax-exempt organizations may establish 401(k) plans. Plan
documents are available to enable employers to establish a plan. An employer may
also elect to make profit sharing contributions and/or matching contributions
with investments in only Class A Shares and Class C Shares or certain other
funds in the Delaware Investments family. Purchases under the Plan may be
combined for purposes of computing the reduced front-end sales charge applicable
to Class A Shares as set forth in the table the Prospectuses for the Fund
Classes.
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Deferred Compensation Plan for Public Schools and Non-Profit Organizations
("403(b)(7)")
Section 403(b)(7) of the Code permits public school systems and certain
non-profit organizations to use mutual fund shares held in a custodial account
to fund deferred compensation arrangements for their employees. A custodial
account agreement is available for those employers who wish to purchase shares
of any of the Classes in conjunction with such an arrangement. Purchases under
the Plan may be combined for purposes of computing the reduced front-end sales
charge applicable to Class A Shares as set forth in the table the Prospectuses
for the Fund Classes.
Deferred Compensation Plan for State and Local Government Employees ("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation plan
for their employees who wish to participate. This enables employees to defer a
portion of their salaries and any federal (and possibly state) taxes thereon.
Such plans may invest in shares of the Fund. Although investors may use their
own plan, there is available a Delaware Investments 457 Deferred Compensation
Plan. Interested investors should contact the Distributor or their investment
dealers to obtain further information. Purchases under the Plan may be combined
for purposes of computing the reduced front-end sales charge applicable to Class
A Shares as set forth in the table in the Prospectuses for the Fund Classes.
SIMPLE IRA
A SIMPLE IRA combines many of the features of an IRA and a 401(k) Plan
but is easier to administer than a typical 401(k) Plan. It requires employers to
make contributions on behalf of their employees and also has a salary deferral
feature that permits employees to defer a portion of their salary into the plan
on a pre-tax basis. A SIMPLE IRA is available only to plan sponsors with 100 or
fewer employees.
SIMPLE 401(k)
A SIMPLE 401(k) is like a regular 401(k) except that it is available
only to plan sponsors 100 or fewer employees and, in exchange for mandatory plan
sponsor contributions, discrimination testing is no longer required. Class B
Shares are not available for purchase by such plans.
DETERMINING OFFERING PRICE AND NET ASSET VALUE
Orders for purchases of Class A Shares are effected at the offering
price next calculated by the Fund in which shares are being purchased after
receipt of the order by the Fund or its agent. Orders for purchases of Class B
Shares, Class C Shares and the Institutional Classes are effected at the net
asset value per share next calculated after receipt of the order by the Fund in
which shares are being purchased or its agent. See Distribution and Service
under Investment Management Agreement and Sub-Advisory Agreements. Selling
dealers have the responsibility of transmitting orders promptly.
The offering price for Class A Shares consists of the net asset value
per share plus any applicable sales charges. Offering price and net asset value
are computed as of the close of regular trading on the New York Stock Exchange
(ordinarily, 4 p.m., Eastern time) on days when the Exchange is open. The New
York Stock Exchange is scheduled to be open Monday through Friday throughout the
year except for days when the following holidays are observed: New Year's Day,
Martin Luther King, Jr.'s Birthday, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. When the New York Stock
Exchange is closed, the Funds will generally be closed, pricing calculations
will not be made and purchase and redemption orders will not be processed.
An example showing how to calculate the net asset value per share and,
in the case of Class A Shares, the offering price per share, is included in a
Fund's financial statements which are incorporated by reference into this Part
B.
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Each Fund's net asset value per share is computed by adding the value
of all the securities and other assets in the Fund's portfolio, deducting any
liabilities of the Fund, and dividing by the number of Fund shares outstanding.
Expenses and fees are accrued daily. In determining a Fund's total net assets,
portfolio securities primarily listed or traded on a national or foreign
securities exchange, except for bonds, are valued at the last sale price on that
exchange. Exchange traded options are valued at the last reported sale price or,
if no sales are reported, at the mean between bid and asked prices. Non-exchange
traded options are valued at fair value using a mathematical model. Futures
contracts are valued at their daily quoted settlement price. For valuation
purposes, foreign currencies and foreign securities denominated in foreign
currency values will be converted into U.S. dollar values at the mean between
the bid and offered quotations of such currencies against U.S. dollars based on
rates in effect that day. Securities not traded on a particular day,
over-the-counter securities, and government and agency securities are valued at
the mean value between bid and asked prices. Money market instruments having a
maturity of less than 60 days are valued at amortized cost. Debt securities
(other than short-term obligations) are valued on the basis of valuations
provided by a pricing service when such prices are believed to reflect the fair
value of such securities. Foreign securities currencies and other assets
denominated in foreign currencies are translated into U.S. dollars at the
exchange rate of such currencies against the U.S. dollar, as provided by
independent pricing service. Use of a pricing service has been approved by the
Board of Trustees. Prices provided by a pricing service take into account
appropriate factors such as institutional trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data. Subject to the foregoing, securities for
which market quotations are not readily available and other assets are valued at
fair value as determined in good faith and in a method approved by the Board of
Trustees.
Each Class of a Fund will bear, pro-rata, all of the common expenses of
that Fund. The net asset values of all outstanding shares of each Class of a
Fund will be computed on a pro-rata basis for each outstanding share based on
the proportionate participation in that Fund represented by the value of shares
of that Class. All income earned and expenses incurred by a Fund, will be borne
on a pro-rata basis by each outstanding share of a Class, based on each Class'
percentage in that Fund represented by the value of shares of such Classes,
except that Institutional Classes will not incur any of the expenses under
Global Funds 12b-1 Plans and Class A Shares, Class B Shares and Class C Shares
alone will bear the 12b-1 Plan expenses payable under their respective Plans.
Due to the specific distribution expenses and other costs that will be allocable
to each Class, the net asset value of each Class of a Fund will vary.
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REDEMPTION AND EXCHANGE
You can redeem or exchange your shares in a number of different ways.
The exchange service is useful if your investment requirements change and you
want an easy way to invest in other equity funds, tax-advantaged funds, bond
funds or money market funds. This service is also useful if you are anticipating
a major expenditure and want to move a portion of your investment into a fund
that has the checkwriting feature. Exchanges are subject to the requirements of
each fund and all exchanges of shares constitute taxable events. Further, in
order for an exchange to be processed, shares of the fund being acquired must be
registered in the state where the acquiring shareholder resides. You may want to
consult your financial adviser or investment dealer to discuss which funds in
Delaware Investments will best meet your changing objectives, and the
consequences of any exchange transaction. You may also call Delaware Investments
directly for fund information.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after a Fund receives your request in good order,
subject, in the case of a redemption, to any applicable CDSC or Limited CDSC.
For example, redemption or exchange requests received in good order after the
time the offering price and net asset value of shares are determined will be
processed on the next business day. See the Prospectuses. A shareholder
submitting a redemption request may indicate that he or she wishes to receive
redemption proceeds of a specific dollar amount. In the case of such a request,
and in the case of certain redemptions from retirement plan accounts, a Fund
will redeem the number of shares necessary to deduct the applicable CDSC in the
case of Class B Shares and Class C Shares, and, if applicable, the Limited CDSC
in the case of Class A Shares and tender to the shareholder the requested
amount, assuming the shareholder holds enough shares in his or her account for
the redemption to be processed in this manner. Otherwise, the amount tendered to
the shareholder upon redemption will be reduced by the amount of the applicable
CDSC or Limited CDSC. Redemption proceeds will be distributed promptly, as
described below, but not later than seven days after receipt of a redemption
request.
Except as noted below, for a redemption request to be in "good order,"
you must provide your account number, account registration, and the total number
of shares or dollar amount of the transaction. For exchange requests, you must
also provide the name of the fund in which you want to invest the proceeds.
Exchange instructions and redemption requests must be signed by the record
owner(s) exactly as the shares are registered. You may request a redemption or
an exchange by calling the Shareholder Service Center at 800-523-1918. Each Fund
may suspend, terminate, or amend the terms of the exchange privilege upon 60
days' written notice to shareholders.
In addition to redemption of Fund shares, the Distributor, acting as
agent of the Funds, offers to repurchase Fund shares from broker/dealers acting
on behalf of shareholders. The redemption or repurchase price, which may be more
or less than the shareholder's cost, is the net asset value per share next
determined after receipt of the request in good order by the respective Fund,
its agent, or certain authorized persons, subject to applicable CDSC or Limited
CDSC. This is computed and effective at the time the offering price and net
asset value are determined. See Determining Offering Price and Net Asset Value.
The Funds and the Distributor end their business days at 5 p.m., Eastern time.
This offer is discretionary and may be completely withdrawn without further
notice by the Distributor.
Orders for the repurchase of Fund shares which are submitted to the
Distributor prior to the close of its business day will be executed at the net
asset value per share computed that day (subject to the applicable CDSC or
Limited CDSC), if the repurchase order was received by the broker/dealer from
the shareholder prior to the time the offering price and net asset value are
determined on such day. The selling dealer has the responsibility of
transmitting orders to the Distributor promptly. Such repurchase is then settled
as an ordinary transaction with the broker/dealer (who may make a charge to the
shareholder for this service) delivering the shares repurchased.
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Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later than seven days, after receipt of a redemption request
in good order by the Fund or certain other authorized persons (see Distribution
and Service under Investment Management Agreements and Sub-Advisory Agreements);
provided, however, that each commitment to mail or wire redemption proceeds by a
certain time, as described below, is modified by the qualifications described in
the next paragraph.
Each Fund will process written and telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. Each Fund will honor redemption requests as to shares for which a check
was tendered as payment, but a Fund will not mail or wire the proceeds until it
is reasonably satisfied that the purchase check has cleared, which may take up
to 15 days from the purchase date. You can avoid this potential delay if you
purchase shares by wiring Federal Funds. Each Fund reserves the right to reject
a written or telephone redemption request or delay payment of redemption
proceeds if there has been a recent change to the shareholder's address of
record.
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason, the
Fund involved will automatically redeem from the shareholder's account the
shares purchased by the check plus any dividends earned thereon. Shareholders
may be responsible for any losses to a Fund or to the Distributor.
In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result of
which disposal by a Fund of securities owned by it is not reasonably practical,
or it is not reasonably practical for a Fund fairly to value its assets, or in
the event that the SEC has provided for such suspension for the protection of
shareholders, a Fund may postpone payment or suspend the right of redemption or
repurchase. In such case, the shareholder may withdraw the request for
redemption or leave it standing as a request for redemption at the net asset
value next determined after the suspension has been terminated.
Payment for shares redeemed or repurchased may be made either in cash
or kind, or partly in cash and partly in kind. Any portfolio securities paid or
distributed in kind would be valued as described in Determining Offering Price
and Net Asset Value. Subsequent sale by an investor receiving a distribution in
kind could result in the payment of brokerage commissions. However, Global Funds
has elected to be governed by Rule 18f-1 under the 1940 Act pursuant to which
each Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value of such Fund during any 90-day period for
any one shareholder.
The value of a Fund's investments is subject to changing market prices.
Thus, a shareholder reselling shares to a Fund may sustain either a gain or
loss, depending upon the price paid and the price received for such shares.
Certain redemptions of Class A Shares purchased at net asset value may
result in the imposition of a Limited CDSC. See Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value, below.
Class B Shares of Delaware Global Bond Fund are subject to a CDSC of: (i) 4% if
shares are redeemed during the first or second year after purchase (ii) 3% if
shares are redeemed during the third or fourth year following purchase; (iii) 2%
if shares are redeemed during the fifth year following purchase; and (iv) 1% if
shares are redeemed during the sixth year following purchase. Class B Shares of
the other Funds are subject to a CDSC of (i) 5% if shares are redeemed within
one year of purchase; (ii) 4% if shares are redeemed during the second year
after purchase (iii) 3% if shares are redeemed during the third or fourth year
following purchase; (iv) 2% if shares are redeemed during the fifth year
following purchase; and (v) 1% if shares are redeemed during the sixth year
following purchase. Class C Shares are subject to a CDSC of 1% if shares are
redeemed within 12 months following purchase. See Contingent Deferred Sales
Charge - Class B Shares and Class C Shares under Purchasing Shares. Except for
the applicable CDSC or Limited CDSC and, with respect to the expedited payment
by wire described below for which, in the case of the Fund Classes, there is
currently a
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$7.50 bank wiring cost, neither the Funds nor the Distributor charges a fee for
redemptions or repurchases, but such fees could be charged at any time in the
future.
Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for shares of other funds in Delaware Investments (in each
case, "New Shares") in a permitted exchange, will not be subject to a CDSC that
might otherwise be due upon redemption of the Original Shares. However, such
shareholders will continue to be subject to the CDSC and, in the case of Class B
Shares, the automatic conversion schedule of the Original Shares as described in
this Part B and any CDSC assessed upon redemption will be charged by the fund
from which the Original Shares were exchanged. In an exchange of Class B Shares
from a Fund, the Fund's CDSC schedule may be higher than the CDSC schedule
relating to the New Shares acquired as a result of the exchange. For purposes of
computing the CDSC that may be payable upon a disposition of the New Shares, the
period of time that an investor held the Original Shares is added to the period
of time that an investor held the New Shares. With respect to Class B Shares,
the automatic conversion schedule of the Original Shares may be longer than that
of the New Shares. Consequently, an investment in New Shares by exchange may
subject an investor to the higher 12b-1 fees applicable to Class B Shares of a
Fund for a longer period of time than if the investment in New Shares were made
directly.
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Written Redemption
You can write to each Fund at 1818 Market Street, Philadelphia, PA
19103 to redeem some or all of your shares. The request must be signed by all
owners of the account or your investment dealer of record. For redemptions of
more than $50,000, or when the proceeds are not sent to the shareholder(s) at
the address of record, the Funds require a signature by all owners of the
account and a signature guarantee for each owner. A signature guarantee can be
obtained from a commercial bank, a trust company or a member of a Securities
Transfer Association Medallion Program ("STAMP"). Each Fund reserves the right
to reject a signature guarantee supplied by an eligible institution based on its
creditworthiness. The Funds may require further documentation from corporations,
executors, retirement plans, administrators, trustees or guardians.
Payment is normally mailed the next business day after receipt of your
redemption request. If your Class A Shares are in certificate form, the
certificate(s) must accompany your request and also be in good order.
Certificates are issued for Class A Shares only if a shareholder submits a
specific request. Certificates are not issued for Class B Shares or Class C
Shares.
Written Exchange
You may also write to each Fund (at 1818 Market Street, Philadelphia,
PA 19103) to request an exchange of any or all of your shares into another
mutual fund in Delaware Investments, subject to the same conditions and
limitations as other exchanges noted above.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your Class A Shares in certificate form, you may
redeem or exchange only by written request and you must return your
certificates.
The Telephone Redemption - Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in which you have your account
in writing that you do not wish to have such services available with respect to
your account. Each Fund reserves the right to modify, terminate or suspend these
procedures upon 60 days' written notice to shareholders. It may be difficult to
reach the Funds by telephone during periods when market or economic conditions
lead to an unusually large volume of telephone requests.
Neither the Funds nor their Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, each Fund will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, such Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Telephone instructions received by the
Fund Classes are generally tape recorded, and a written confirmation will be
provided for all purchase, exchange and redemption transactions initiated by
telephone. By exchanging shares by telephone, you are acknowledging prior
receipt of a prospectus for the fund into which your shares are being exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption proceeds of
$50,000 or less mailed to you at your address of record. Checks will be payable
to the shareholder(s) of record. Payment is normally mailed the next business
day after receipt of the redemption request. This service is only available to
individual, joint and individual fiduciary-type accounts.
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Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must complete an Authorization Form and have your signature
guaranteed. For your protection, your authorization must be on file. If you
request a wire, your funds will normally be sent the next business day. If the
proceeds are wired to the shareholder's account at a bank which is not a member
of the Federal Reserve System, there could be a delay in the crediting of the
funds to the shareholder's bank account. First Union National Bank's fee
(currently $7.50) will be deducted from Fund Class redemption proceeds. If you
ask for a check, it will normally be mailed the next business day after receipt
of your redemption request to your predesignated bank account. There are no
separate fees for this redemption method, but the mail time may delay getting
funds into your bank account. Simply call the Shareholder Service Center prior
to the time the offering price and net asset value are determined, as noted
above.
Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to
adjust your investment holdings as your liquidity requirements and investment
objectives change. You or your investment dealer of record can exchange your
shares into other funds in Delaware Investments under the same registration,
subject to the same conditions and limitations as other exchanges noted above.
As with the written exchange service, telephone exchanges are subject to the
requirements of each fund, as described above. Telephone exchanges may be
subject to limitations as to amounts or frequency.
The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on short-term
swings in the securities market through frequent transactions in and out of the
funds in the Delaware Investments family. Telephone exchanges may be subject to
limitations as to amounts or frequency. The Transfer Agent and each Fund reserve
the right to record exchange instructions received by telephone and to reject
exchange requests at any time in the future.
MoneyLine (SM) On Demand
You or your investment dealer may request redemptions of Fund shares by
phone using MoneyLine (SM) On Demand. When you authorize a Fund to accept such
requests from you or your investment dealer, funds will be deposited to (for
share redemptions) your predesignated bank account. Your request will be
processed the same day if you call prior to 4 p.m., Eastern time. There is a $25
minimum and $50,000 maximum limit for MoneyLine (SM) On Demand transactions. See
MoneyLine (SM) On Demand under Investment Plans.
Right to Refuse Timing Accounts
With regard to accounts that are administered by market timing services
("Timing Firms") to purchase or redeem shares based on changing economic and
market conditions ("Timing Accounts"), the Funds will refuse any new timing
arrangements, as well as any new purchases (as opposed to exchanges) in Delaware
Investments funds from Timing Firms. A Fund reserves the right to temporarily or
permanently terminate the exchange privilege or reject any specific purchase
order for any person whose transactions seem to follow a timing pattern who: (i)
makes an exchange request out of the Fund within two weeks of an earlier
exchange request out of the Fund, or (ii) makes more than two exchanges out of
the Fund per calendar quarter, or (iii) exchanges shares equal in value to at
least $5 million, or more than 1/4 of 1% of the Fund's net assets. Accounts
under common ownership or control, including accounts administered so as to
redeem or purchase shares based upon certain predetermined market indicators,
will be aggregated for purposes of the exchange limits.
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Restrictions on Timed Exchanges
Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight Delaware Investments funds: (1)
Delaware Decatur Equity Income Fund, (2) Delaware Growth and Income Fund, (3)
Delaware Balanced Fund, (4) Delaware Limited-Term Government Fund, (5) Delaware
Tax-Free USA Fund, (6) Delaware Cash Reserve Fund, (7) Delaware Delchester Fund
and (8) Delaware Tax-Free Pennsylvania Fund. No other Delaware Investments funds
are available for timed exchanges. Assets redeemed or exchanged out of Timing
Accounts in Delaware Investments funds not listed above may not be reinvested
back into that Timing Account. Each Fund reserves the right to apply these same
restrictions to the account(s) of any person whose transactions seem to follow a
time pattern (as described above).
Each Fund also reserves the right to refuse the purchase side of an
exchange request by any Timing Account, person, or group if, in the Manager's
judgment, the Fund would be unable to invest effectively in accordance with its
investment objectives and policies, or would otherwise potentially be adversely
affected. A shareholder's purchase exchanges may be restricted or refused if a
Fund receives or anticipates simultaneous orders affecting significant portions
of the Fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a Fund and therefore may be
refused.
Except as noted above, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.
Systematic Withdrawal Plans
Shareholders of Class A Shares, Class B Shares and Class C Shares who
own or purchase $5,000 or more of shares at the offering price, or net asset
value, as applicable, for which certificates have not been issued may establish
a Systematic Withdrawal Plan for monthly withdrawals of $25 or more, or
quarterly withdrawals of $75 or more, although the Funds do not recommend any
specific amount of withdrawal. This is particularly useful to shareholders
living on fixed incomes, since it can provide them with a stable supplemental
amount. This $5,000 minimum does not apply for a Fund's prototype retirement
plans. Shares purchased with the initial investment and through reinvestment of
cash dividends and realized securities profits distributions will be credited to
the shareholder's account and sufficient full and fractional shares will be
redeemed at the net asset value calculated on the third business day preceding
the mailing date.
Checks are dated either the 1st or the 15th of the month, as selected
by the shareholder (unless such date falls on a holiday or a weekend), and are
normally mailed within two business days. Both ordinary income dividends and
realized securities profits distributions will be automatically reinvested in
additional shares of the Class at net asset value. This plan is not recommended
for all investors and should be started only after careful consideration of its
operation and effect upon the investor's savings and investment program. To the
extent that withdrawal payments from the plan exceed any dividends and/or
realized securities profits distributions paid on shares held under the plan,
the withdrawal payments will represent a return of capital, and the share
balance may in time be depleted, particularly in a declining market.
Shareholders should not purchase additional shares while participating in a
Systematic Withdrawal Plan.
The sale of shares for withdrawal payments constitutes a taxable event
and a shareholder may incur a capital gain or loss for federal income tax
purposes. This gain or loss may be long-term or short-term depending on the
holding period for the specific shares liquidated. Premature withdrawals from
retirement plans may have adverse tax consequences.
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Withdrawals under this plan made concurrently with the purchases of additional
shares may be disadvantageous to the shareholder. Purchases of Class A Shares
through a periodic investment program in a fund managed by the Manager must be
terminated before a Systematic Withdrawal Plan with respect to such shares can
take effect, except if the shareholder is Delaware Investments funds which do
not carry a sales charge. Redemptions of Class A Shares pursuant to a Systematic
Withdrawal Plan may be subject to a Limited CDSC if the purchase was made at net
asset value and a dealer's commission has been paid on that purchase. The
applicable Limited CDSC for Class A Shares and CDSC for Class B and C Shares
redeemed via a Systematic Withdrawal Plan will be waived if the annual amount
withdrawn in each year is less than 12% of the account balance on the date that
the Plan is established. If the annual amount withdrawn in any year exceeds 12%
of the account balance on the date that the Systematic Withdrawal Plan is
established, all redemptions under the Plan will be subjected to the applicable
contingent deferred sales charge, including an assessment for previously
redeemed amounts under the Plan. Whether a waiver of the contingent deferred
sales charge is available or not, the first shares to be redeemed for each
Systematic Withdrawal Plan payment will be those not subject to a contingent
deferred sales charge because they have either satisfied the required holding
period or were acquired through the reinvestment of distributions.
An investor wishing to start a Systematic Withdrawal Plan must complete
an authorization form. If the recipient of Systematic Withdrawal Plan payments
is other than the registered shareholder, the shareholder's signature on this
authorization must be guaranteed. Each signature guarantee must be supplied by
an eligible guarantor institution. The Funds reserve the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. This plan may be terminated by the shareholder or the Transfer
Agent at any time by giving written notice.
Systematic Withdrawal Plan payments are normally made by check. In the
alternative, you may elect to have your payments transferred from your Fund
account to your predesignated bank account through the MoneyLine (SM) Direct
Deposit Service. Your funds will normally be credited to your bank account up to
four business days after the payment date. There are no separate fees for this
redemption method. It may take up to four business days for the transactions to
be completed. You can initiate this service by completing an Account Services
form. If your name and address are not identical to the name and address on your
Fund account, you must have your signature guaranteed. The Funds do not charge a
fee for any this service; however, your bank may charge a fee. This service is
not available for retirement plans.
The Systematic Withdrawal Plan is not available for Delaware Global
Opportunities Fund, Delaware International Small Cap Fund, Delaware Latin
America Fund or Delaware New Europe Fund or for the Institutional Class of each
Fund. Shareholders should consult with their financial advisers to determine
whether a Systematic Withdrawal Plan would be suitable for them.
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value
For purchases of $1,000,000 or more made on or after July 1, 1998, a
Limited CDSC will be imposed on certain redemptions of Class A Shares (or shares
into which such Class A Shares are exchanged) according to the following
schedule: (1) 1.00% if shares are redeemed during the first year after the
purchase; and (2) 0.50% if such shares are redeemed during the second year after
the purchase, if such purchases were made at net asset value and triggered the
payment by the Distributor of the dealer's commission described above.
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The Limited CDSC will be paid to the Distributor and will be assessed
on an amount equal to the lesser of : (1) the net asset value at the time of
purchase of the Class A Shares being redeemed or (2) the net asset value of such
Class A Shares at the time of redemption. For purposes of this formula, the "net
asset value at the time of purchase" will be the net asset value at purchase of
the Class A Shares even if those shares are later exchanged for shares of
another Delaware Investments fund and, in the event of an exchange of Class A
Shares, the "net asset value of such shares at the time of redemption" will be
the net asset value of the shares acquired in the exchange.
Redemptions of such Class A Shares held for more than two years will
not be subjected to the Limited CDSC and an exchange of such Class A Shares into
another Delaware Investments fund will not trigger the imposition of the Limited
CDSC at the time of such exchange. The period a shareholder owns shares into
which Class A Shares are exchanged will count towards satisfying the two-year
holding period. The Limited CDSC is assessed if such two year period is not
satisfied irrespective of whether the redemption triggering its payment is of
Class A Shares of a Fund or Class A Shares acquired in the exchange.
In determining whether a Limited CDSC is payable, it will be assumed
that shares not subject to the Limited CDSC are the first redeemed followed by
other shares held for the longest period of time. The Limited CDSC will not be
imposed upon shares representing reinvested dividends or capital gains
distributions, or upon amounts representing share appreciation. All investments
made during a calendar month, regardless of what day of the month the investment
occurred, will age one month on the last day of that month and each subsequent
month.
Waiver of Limited Contingent Deferred Sales Charge - Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission has
been paid will be waived in the following instances: (i) redemptions that result
from a Fund's right to liquidate a shareholder's account if the aggregate net
asset value of the shares held in the account is less than the then-effective
minimum account size; (ii) distributions to participants from a retirement plan
qualified under section 401(a) or 401(k) of the Internal Revenue Code of 1986,
as amended (the "Code"), or due to death of a participant in such a plan; (iii)
redemptions pursuant to the direction of a participant or beneficiary of a
retirement plan qualified under section 401(a) or 401(k) of the Code with
respect to that retirement plan; (iv) periodic distributions from an IRA, SIMPLE
IRA, or 403(b)(7) or 457 Deferred Compensation Plan due to death, disability, or
attainment of age 59 1/2, and IRA distributions qualifying under Section 72(t)
of the Internal Revenue Code; (v) returns of excess contributions to an IRA;
(vi) distributions by other employee benefit plans to pay benefits; (vii)
distributions described in (ii), (iv), and (vi) above pursuant to a systematic
withdrawal plan; (viii) distributions form an account if the redemption results
from a death of a registered owner, or a registered joint owner, of the account
(in the case of accounts established under the Uniform Gifts to Minors or
Uniform transfers to Minors Acts or trust accounts, the waiver applies upon the
death of all beneficial owners) or a total disability (as defined in Section 72
of the Code) of all registered owners occurring after the purchase of the shares
being redeemed; and (ix) redemptions by the classes of shareholders who are
permitted to purchase shares at net asset value, regardless of the size of the
purchase (see Buying Class A Shares at Net Asset Value under Purchasing Shares).
Waiver of Contingent Deferred Sales Charge - Class B Shares
The CDSC is waived on certain redemptions of Class B Shares in
connection with the following redemptions: (i) redemptions that result from a
Fund's right to liquidate a shareholder's account if the aggregate net asset
value of the shares held in the account is less than the then-effective minimum
account size; (ii) returns of excess contributions to an IRA, SIMPLE IRA,
SEP/IRA, or 403(b)(7) or 457 Deferred Compensation Plan; (iii) periodic
distributions from an IRA, SIMPLE IRA, SAR/SEP, SEP/IRA, or 403(b)(7) or 457
Deferred Compensation Plan due to death, disability or attainment of age 59 1/2,
and IRA distributions qualifying under Section 72(t) of the Internal Revenue
Code; and (iv) distributions from an account if the redemption results from the
death of a registered owner, or a registered joint owner, of the account (in the
case of accounts established under the Uniform Gifts to Minors or Uniform
Transfers to Minors Acts or trust accounts, the waiver applies upon the death of
all beneficial owners) or a total and permanent disability (as defined in
Section 72 of the Code) of all registered owners occurring after the purchase of
the shares being redeemed.
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Waiver of Contingent Deferred Sales Charge -Class C Shares
The CDSC on Class C Shares is waived in connection with the following
redemptions: (i) redemptions that result from the Fund's right to liquidate a
shareholder's account if the aggregate net asset value of the shares held in the
account is less than the then-effective minimum account size; (ii) returns of
excess contributions to an IRA, SIMPLE IRA, 403(b)(7) or 457 Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan, or 401(k)
Defined Contribution plan; (iii) periodic distributions from a 403(b)(7) or 457
Deferred Compensation Plan upon attainment of age 59 1/2, Profit Sharing Plan,
Money Purchase Plan, 401(k) Defined Contribution Plan upon attainment of age 70
1/2, and IRA distributions qualifying under Section 72(t) of the Internal
Revenue Code; (iv) distributions from a 403(b)(7) or 457 Deferred Compensation
Plan, Profit Sharing Plan, or 401(k) Defined Contribution Plan, under hardship
provisions of the plan; (v) distributions from a 403(b)(7) or 457 Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan or a 401(k)
Defined Contribution Plan upon attainment of normal retirement age under the
plan or upon separation from service; (vi) periodic distributions from an IRA or
SIMPLE IRA on or after attainment of age 59 1/2; and (vii) distributions from an
account if the redemption results from the death of a registered owner, or a
registered joint owner, of the account (in the case of accounts established
under the Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust
accounts, the waiver applies upon the death of all beneficial owners) or a total
and permanent disability (as defined in Section 72 of the Code) of all
registered owners occurring after the purchase of the shares being redeemed.
* * *
In addition, the CDSC will be waived on Class A Shares, Class B Shares
and Class C Shares redeemed in accordance with a Systematic Withdrawal Plan if
the annual amount selected to be withdrawn under the Plan does not exceed 12% of
the value of the account on the date that the Systematic Withdrawal Plan was
established or modified.
DISTRIBUTIONS AND TAXES
Delaware International Equity Fund will normally declare and make
payments from net investment income on a quarterly basis. Delaware Global Bond
Fund will normally declare and make payments from net investment income on a
monthly basis. Delaware Emerging Markets and Delaware Global Equity Funds each
will normally declare and make payments from net investment income on an annual
basis.
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Payments from net realized securities profits of a Fund, if any, will
be distributed annually in the quarter following the close of the fiscal year.
Dividend payments of $1.00 or less will be automatically reinvested,
notwithstanding a shareholder's election to receive dividends in cash. If such a
shareholder's dividends increase to greater than $1.00, the shareholder would
have to file a new election in order to begin receiving dividends in cash again.
Any check in payment of dividends or other distributions which cannot be
delivered by the United States Post Office or which remains uncashed for a
period of more than one year may be reinvested in the shareholder's account at
the then-current net asset value and the dividend option may be changed from
cash to reinvest. A Fund may deduct from a shareholder's account the costs of
the Fund's effort to locate a shareholder if a shareholder's mail is returned by
the U.S. Post Office or the Fund is otherwise unable to locate the shareholder
or verify the shareholder's mailing address. These costs may include a
percentage of the account when a search company charges a percentage fee in
exchange for their location services.
Each class of shares of a Fund will share proportionately in the
investment income and expenses of such Fund, except that, absent any applicable
fee waiver, Class A Shares, Class B Shares and Class C Shares alone will incur
distribution fees under their respective 12b-1 Plans.
Under the Taxpayer Relief Act of 1997 (the "1997 Act"), as revised by
the Internal Revenue Service Restructuring and Reform Act of 1998 (the "1998
Act") and the Omnibus Consolidated and Emergency Supplemental Appropriations
Act, a Fund is required to track its sales of portfolio securities and to report
its capital gain distributions to you according to the following categories:
"Long-term capital gains": gains on securities sold after December 31,
1997 and held for more than 12 months as capital assets in the hands of
the holder are taxed at the 20% rate when distributed to shareholders
(15% for individual investors in the 15% tax bracket.
"Short-term capital gains": Gains on securities sold by a Fund that do
not meet the long-term holdings period are considered short term
capital gains and are taxable as ordinary income.
73
<PAGE>
"Qualified 5-year gains": For individuals in the 15% bracket, qualified
five-year gains are net gains on securities held for more than 5 years
which are sold after December 31, 2000. For individual who are subject
to tax at higher rate brackets, qualified five-year gains are net gains
on securities which are purchased after December 31, 2000 and are held
for more than five years. Taxpayers subject to tax at a higher rate
brackets may also make an election for shares held on January 1, 2001
to recognize gain on their shares in order to qualify such shares as
qualified five-year property. These gains will be taxable to individual
investors at a maximum rate of 18% for investors in the 28% or higher
federal income tax brackets, and at a maximum rate of 8% for investors
in the 15% federal income tax bracket when sold after the five-year
holding period.
Any loss incurred on the redemption or exchange of shares held for six
months or less will be disallowed to the extent of any exempt-interest dividends
distributed to you with respect to your Fund shares and any remaining loss will
be treated as a long-term capital loss to the extent of any long-term capital
gains distributed to you by the Fund on those shares.
All or a portion of any loss that you realize upon the redemption of
your Fund shares will be disallowed to the extent that you buy other shares in
the Fund (through reinvestment of dividends or otherwise) within 30 days before
or after your share redemption. Any loss disallowed under these rules will be
added to your tax basis in the new shares you buy.
If you redeem some or all of yours shares in a Fund, and then reinvest
the sales proceeds in such Fund or in another Delaware Investments fund within
90 days of buying the original shares, the sales charge that would otherwise
apply to your reinvestment may be reduced or eliminated. The IRS will require
you to report gain or loss on the redemption of your original shares in a Fund.
In doing so, all or a portion of the sales charge that you paid for your
original shares in a Fund will be excluded from your tax basis in the shares
sold (for the purpose of determining gain or loss upon the sale of such shares).
The portion of the sales charge excluded will equal the amount that the sales
charge is reduced on your reinvestment. Any portion of the sales charge excluded
from your tax basis in the shares sold will be added to the tax basis of the
shares you acquire from your reinvestment.
Because of each Fund's investment policy, it is expected that either
none or only a nominal portion of a Fund's dividends will be eligible for the
dividends-received deduction for corporations. The portion of dividends paid by
a Fund that so qualifies will be designated each year in a notice mailed to the
Fund's shareholders, and cannot exceed the gross amount of dividends received by
a Fund from domestic (U.S.) corporations that would have qualified for the
dividends-received deduction in the hands of a Fund if the Fund was a regular
corporation. The availability of the dividends-received deduction is subject to
certain holding period and debt financing restrictions imposed under the Code on
the corporation claiming the deduction. Under the 1997 Act, the amount that a
Fund may designate as eligible for the dividends-received deduction will be
reduced or eliminated if the shares on which the dividends earned by the Fund
were debt-financed or held by the Fund for less than a 46-day period during a
90-day period beginning 45 days before the ex-dividend date and ending 45 days
after the ex-dividend date. Similarly, if your Fund shares are debt-financed or
held by you for less than a 46-day period during a 90-day period beginning 45
days before the ex-dividend date and ending 45 days after the ex-dividend date,
then the dividends-received deduction for Fund dividends on your shares may also
be reduced or eliminated. Even if designated as dividends eligible for the
dividends-received deduction, all dividends (including any deducted portion)
must be included in your alternative minimum taxable income calculation.
Shareholders will be notified annually by Global Funds as to the
federal income tax status of dividends and distributions paid by the Funds.
74
<PAGE>
In addition to the federal taxes described above, shareholders may or
may not be subject to various state and local taxes. Because shareholders' state
and local taxes may be different than the federal taxes described above,
shareholders should consult their own tax advisers.
See also Other Tax Requirements under Accounting and Tax Issues in this
Part B.
75
<PAGE>
INVESTMENT MANAGEMENT AGREEMENTS AND SUB-ADVISORY AGREEMENTS
Delaware International Advisers Ltd. ("Delaware International"),
located at Third Floor, 80 Cheapside, London, England EC2V 6EE, furnishes
investment management services to Delaware Global Bond Fund Delaware
International Equity Fund, Delaware Emerging Markets Fund, Delaware Global
Equity Fund, Delaware Global Opportunities Fund, Delaware International Small
Cap Fund and Delaware New Europe Fund Delaware Latin America Fund subject to the
supervision and direction of Global Funds' Board of Trustees. Delaware
International has entered into separate Sub-Advisory Agreements with Delaware
Management Company ("Delaware Management") for Delaware Global Equity Fund and
Delaware Global Opportunities Fund. Delaware International is affiliated with
Delaware Management.
Delaware Management and its predecessors have been managing the funds
in Delaware Investments since 1938. On November 30, 1999, Delaware Management,
Delaware International and their affiliates within Delaware Investments were
managing in the aggregate more than $00 billion in assets in the various
institutional or separately managed approximately $00,000,000,000 and investment
company approximately $00,000,000,000 accounts.
The Investment Management Agreement for each Fund is dated as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
Fund Date Approved by initial shareholder
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Delaware Global Bond November 23, 1999 November 23, 1999
---------------------------------------------------------------------------------------------------
Delaware International Equity November 23, 1999 November 23, 1999
---------------------------------------------------------------------------------------------------
Delaware Emerging Markets November 23, 1999 November 23, 1999
---------------------------------------------------------------------------------------------------
Delaware Global Equity November 23, 1999 November 23, 1999
---------------------------------------------------------------------------------------------------
Delaware Global Opportunities November 23, 1999 November 23, 1999
---------------------------------------------------------------------------------------------------
Delaware International Small Cap November 23, 1999 November 23, 1999
---------------------------------------------------------------------------------------------------
Delaware New Europe November 23, 1999 November 23, 1999
---------------------------------------------------------------------------------------------------
Delaware Latin America November 23, 1999 November 23, 1999
---------------------------------------------------------------------------------------------------
</TABLE>
The Agreements have an initial term of two years and may be further
renewed after their initial terms only so long as such renewal and continuance
are specifically approved at least annually by the Board of Trustees or by vote
of a majority of the outstanding voting securities of the Fund to which the
76
<PAGE>
Agreement relates, and only if the terms of the renewal thereof have been
approved by the vote of a majority of the trustees of Global Funds who are not
parties thereto or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval. The Agreements are
terminable without penalty on 60 days' notice by the trustees of Global Funds or
by the Manager. The Agreements will terminate automatically in the event of
their assignment.
77
<PAGE>
The compensation payable by each Fund to Delaware International or
Delaware Management, as applicable, for investment management services is equal
to (on an annual basis) as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Fund Fee
-------------------------------------------------------------------------------------------------------
<S> <C>
Delaware Global Bond Fund 0.75% on the first $500 million of average daily net assets;
0.70% on the next $500 million; 0.65% on the next $1.5 billion;
0.60% on the average daily net assets in excess of $2.5 billion
-------------------------------------------------------------------------------------------------------
Delaware International Equity 0.85% on the first $500 million of average daily net assets,
Fund 0.80% on the next $500 million; 0.75% on the next $1.5 billion;
0.70% on the average daily net assets in excess of $2.5 billion
-------------------------------------------------------------------------------------------------------
Delaware Emerging Markets Fund 1.25% on the first $500 million of average daily net assets;
1.20% on the next $500 million; 1.15% on the next $1.5 billion;
and 1.10% on the average daily net assets in excess of $2.5 billion
-------------------------------------------------------------------------------------------------------
Delaware Global Equity Fund 0.85% on the first $500 million of average daily net assets,
0.80% on the next $500 million; 0.75% on the next $1.5 billion;
0.70% on the average daily net assets in excess of $2.5 billion
-------------------------------------------------------------------------------------------------------
Delaware Global Opportunities 0.85% on the first $500 million of average daily net assets,
Fund 0.80% on the next $500 million; 0.75% on the next $1.5 billion;
0.70% on the average daily net assets in excess of $2.5 billion
-------------------------------------------------------------------------------------------------------
Delaware International Small Cap 1.25% on the first $500 million of average daily net assets;
Fund 1.20% on the next $500 million; 1.15% on the next $1.5 billion;
and 1.10% on the average daily net assets in excess of $2.5 billion
-------------------------------------------------------------------------------------------------------
Delaware New Europe Fund 1.25% on the first $500 million of average daily net assets;
1.20% on the next $500 million; 1.15% on the next $1.5 billion;
and 1.10% on the average daily net assets in excess of $2.5 billion
-------------------------------------------------------------------------------------------------------
Delaware Latin America Fund 1.25% on the first $500 million of average daily net assets;
1.20% on the next $500 million; 1.15% on the next $1.5 billion;
and 1.10% on the average daily net assets in excess of $2.5 billion
-------------------------------------------------------------------------------------------------------
</TABLE>
78
<PAGE>
Under the separate Sub-Advisory Agreement for Delaware Global
Opportunities Fund, Delaware Management manages the Funds' investments in U.S.
securities. For the services provided to Delaware International, Delaware
International pays Delaware Management a monthly fee equal to 50% of the fee
paid to the Manager under the terms of the Investment Management Agreement.
Under the Sub-Advisory Agreement Delaware Global Equity Fund, Delaware
Management manages the Funds' investments in U.S. securities. Delaware
Management will receive from the Manager 25% of the investment management fees
under the Investment Management Agreement for Delaware Global Equity Fund.
On November 30, 1999, the total net assets of the following Funds were:
Delaware International Equity Fund
Delaware Global Bond Fund
Delaware Emerging Markets Fund
Delaware Global Equity Fund
Delaware Global Opportunities Fund
Delaware International Small Cap Fund
Delaware International has elected to waive that portion, if any, of
the annual management fees payable by a Fund and to pay a Fund's expenses to the
extent necessary to ensure that the Total Operating Expenses for a Fund do not
exceed the following percentages of average daily net assets (exclusive of
applicable 12b-1 payments, taxes, interest, brokerage commissions and
extraordinary expenses) through , 2000.
-------------------------------------------------- -----------
Delaware Global Bond Fund(1)
-------------------------------------------------- -----------
Delaware Emerging Markets Fund (2)
-------------------------------------------------- -----------
Delaware Global Equity Fund (3)
-------------------------------------------------- -----------
Delaware Global Opportunities Fund (2)
-------------------------------------------------- -----------
Delaware International Small Cap Fund (2)
-------------------------------------------------- -----------
Delaware New Europe Fund (2)
-------------------------------------------------- -----------
Delaware Latin America Fund (2)
-------------------------------------------------- -----------
79
<PAGE>
(1) This expense cap is in place from December 1, 1998 through May 31,
1999. From the commencement of operations through November 30, 1998,
Delaware International elected to voluntarily waive that portion, if
any, of the annual management fees payable by Delaware Global Bond Fund
and to pay certain expenses of the Fund to the extent necessary to
ensure that the Fund's total operating expenses (exclusive of
applicable 12b-1 plan expenses, taxes, interest, brokerage commissions
and extraordinary expenses) did not exceed on an annualized basis 0.95%
of average daily net assets.
(2) This expense cap has been in place from the commencement of the Fund's
operations.
(3) This expense cap is in place from June 1, 1998 through May 31, 1999.
From the commencement of operations through May 31, 1998, Delaware
International elected to voluntarily waive that portion, if any, of the
annual management fees payable by Delaware Global Equity Fund and to
pay certain expenses of the Fund to the extent necessary to ensure that
the Fund's total operating expenses (exclusive of applicable 12b-1 plan
expenses, taxes, interest, brokerage commissions and extraordinary
expenses) did not exceed on an annualized basis 0.95% of average daily
net assets.
For Delaware International Equity Fund, Delaware International elected
voluntarily to waive that portion, if any, of the annual management fees payable
by Delaware International Equity Fund and to reimburse the Fund's expenses to
the extent necessary to ensure that the Total Operating Expenses (exclusive of
applicable 12b-1 plan expenses, taxes, interest, brokerage commissions,
extraordinary expenses) did not exceed 0.95% from the commencement of operations
through May 31, 1994. Such commitment from June 1, 1994 through November 30,
1994 was 1.50% of average daily net assets and from December 1, 1995 through
November 30, 1998 was 1.55% of average daily net assets.
The expense waivers and/or payments will be reevaluated by the
respective Manager periodically.
80
<PAGE>
Investment management fees incurred for the last three fiscal years
with respect to each Fund at the end of the last fiscal year were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------- ------------------------------- ------------------------------- --------------------------
Fund November 30, 1999 November 30, 1998 November 30, 1997
- ---- ----------------- ----------------- -----------------
- ----------------------------------------- ------------------------------- ------------------------------- --------------------------
<S> <C> <C> <C>
- ----------------------------------------- ------------------------------- ------------------------------- --------------------------
Delaware International Equity Fund $2,084,553 earned $1,412,913
$2,084,553 paid $1,400,095
$-0- waived $12,818 waived
- ----------------------------------------- ------------------------------- ------------------------------- --------------------------
Delaware Global Bond Fund $137,275 earned $111,059 earned
$74,025 paid $-0- paid
$63,250 waived $111,059 waived
- ----------------------------------------- ------------------------------- ------------------------------- --------------------------
Delaware Emerging Markets Fund (1) $172,141 earned $185,509 earned
$-0- paid $34,313 paid
$172,141 waived $151,196 waived
- ----------------------------------------- ------------------------------- ------------------------------- --------------------------
Delaware Global Equity Fund $132,982 earned $126,579 earned
$55,228 paid $-0- paid
$77,754 waived $126,579 waived
- ----------------------------------------- ------------------------------- ------------------------------- --------------------------
Delaware Global Opportunities Fund(2) $25,114 $8,529 earned
$10,877 $-0- paid
$14,237 $8,529 waived
- ----------------------------------------- ------------------------------- ------------------------------- --------------------------
Delaware International Small Cap Fund(3) $37,005 N/A
$13,454 N/A
$23,551 N/A
- ----------------------------------------- ------------------------------- ------------------------------- --------------------------
</TABLE>
(1) Date of initial public offering was June 10, 1996.
(2) Commenced operations on July 22, 1997.
(3) Commenced operations on December 19, 1997.
81
<PAGE>
Delaware International and Delaware Management are controlled and
indirectly, wholly owned by Delaware Management Holdings, Inc.
Except for those expenses borne by the Manager under the Investment
Management Agreements and the Distributor under the Distribution Agreements,
each Fund is responsible for all of its own expenses. Among others, these
include each Fund's proportionate share of rent and certain other administrative
expenses; the investment management fees; transfer and dividend disbursing agent
fees and costs; custodian expenses; federal and state securities registration
fees; proxy costs; and the costs of preparing prospectuses and reports sent to
shareholders.
82
<PAGE>
Distribution and Service
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), located at 1818 Market Street, serves
as the national distributor of the shares of each Fund under separate agreements
dated as of November 23, 1999.
The Distributor is an affiliate of the Manager and bears all of the
costs of promotion and distribution, except for payments by each Fund on behalf
of its respective Class A Shares, Class B Shares and Class C Shares under the
12b-1 Plan for each class. Commencing February 1, 1998, the Distributor has
elected voluntarily to waive 0.05% of the 0.30% 12b-1 plan expenses otherwise
payable by Delaware Emerging Markets Fund A Class through May 31, 2000. The
Distributor elected to voluntarily waive payments under the 12b-1 Plan for
Delaware Global Opportunities Fund's, Delaware International Small Cap Fund's,
Delaware New Europe Fund's and Delaware Latin America Fund's Class A Shares,
Class B Shares and Class C Shares during the commencement of the public offering
of the Fund through May 31, 2000.
The Transfer Agent, Delaware Service Company, Inc., another affiliate
of the Manager located at 1818 Market Street, Philadelphia, PA 19103, serves as
the shareholder servicing, dividend disbursing and transfer agent for each Fund
under an agreement dated November 23, 1998. The Transfer Agent provides
accounting services to the Funds pursuant to the terms of a separate Fund
Accounting Agreement. The Transfer Agent is also an indirect, wholly owned
subsidiary of Delaware Management Holdings, Inc.
The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders in addition to the Transfer Agent. Such brokers
are authorized to designate other intermediaries to accept purchase and
redemption orders on the behalf of the Funds. For purposes of pricing, the Funds
will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order.
OFFICERS AND TRUSTEES
The business and affairs of Global Funds are managed under the
direction of its Board of Trustees.
Certain officers and trustees of Global Funds hold identical positions
in each of the other funds in the Delaware Investments family. As of December
31, 1999, the officers and trustees of Global Funds, as a group, owned less than
1% of the outstanding shares of Class A Shares, Class B Shares, Class C Shares
and Institutional Class Shares of each Fund.
83
<PAGE>
As of December 31, 1999, management believes the following accounts
held 5% or more of a Class of shares of a Fund:
<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------
<S> <C> <C> <C>
Delaware International Equity Fund B Class Merrill Lynch, Pierce, Fenner & Smith
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484
Delaware International Equity Fund C Class Merrill Lynch, Pierce, Fenner & Smith
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484
Delaware International Equity Fund Norwest Bank Colorado NA TTEE
Institutional Class County of Los Angeles Def Comp
and Thrift Plan
c/o Great West Life and Annuity
8515 East Orchard Rd #2T2
Englewood, CO 80111-5002
Bankers Trust as Trustee for
Coopers and Lybrand Map Savings Plan
100 Plaza One Mail Stop 3048
Jersey City, NJ 07311-3999
Northern Telecom, Inc.
Long Term Investment Plan
c/o BTNY Service
Attn: Gina Anzalone
34 Exchange Place Mail Stop 3064
Jersey City, NJ 07302-3885
Delaware International Equity Fund RS 401(k) Plan
Institutional Class Price Waterhouse Coopers LLP
Savings Plan
c/o Delpac 16th Floor
1818 Market Street
Philadelphia, PA 19103-3638
Delaware Global Equity Fund A Class RS DMTC 401(k) Plan
Pacific Detroit Diesel-Allison
401(k) Plan
Attn: Retirement Plans
1818 Market St. 16th Floor
Philadelphia, PA 19103
</TABLE>
84
<PAGE>
<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------
<S> <C> <C> <C>
Delaware Global Equity Fund B Class Merrill Lynch, Pierce, Fenner & Smith
For the Sole Benefit of its Customers
SEC#97F14
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484
Delaware Global Equity Fund C Class Merrill Lynch, Pierce, Fenner & Smith
For the Sole Benefit of its Customers
SEC#97F14
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484
Delaware Global Equity Fund RS DMC Employee Profit Sharing Plan
Institutional Class Delaware Management Company
Employee Profit Sharing Trust
c/o Rick Seidel
1818 Market St.
Philadelphia, PA 19103-3682
RS DMTC P/S Plan
Columbia Diagnostics, Inc. P/S
Attn: Retirement Plans
1818 Market St.
Philadelphia, PA 19103-3638
Delaware Global Bond Fund B Class Bruce A. Baker and Claire B. Baker
5 Shaftsbury Villa Allen St.
United Kingdom Kensington
London W86UZ
Delaware Global Bond Fund B Class Donaldson Lufkin Jenrette
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-2052
NFSC/FEBO #BQD-951714
NFSC/FMTC IRA Rollover
FBO Lester C. Gilman Jr.
1485 Kathleen Pl.
Englewood, FL 34223-4321
NFSC/FEBO #BQ5-903701
NFSC/FMTC IRA
FBO Myra S. Holladay
P.O. Box 52071
Albany, GA 31703-2071
</TABLE>
85
<PAGE>
<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------
<S> <C> <C> <C>
Delaware Global Bond Fund C Class NFSC/FEBO #BT9-238031
John S. McNally
Charlotte McNally
457 Glenview Dr.
Lower Burrell, PA 15068-3020
Delaware Global Bond Fund Institutional Class Lincoln National Life Insurance Co.
Attn: Karen Gerke 4C01
1300 S. Clinton St.
Fort Wayne, IN 46802-3518
RS DMC Employee Profit Sharing Plan
Delaware Management Company
Employee Profit Sharing Trust
c/o Rick Seidel
1818 Market St.
Philadelphia, PA 19103-3682
NFSC/FEBO #179-367451
Benson Rev Dec of Trust
Roger S. Benson TTEE
U/A 10/18/85
7550 Hillside Dr.
La Jolla, CA 92037-3940
Delaware Emerging Markets Fund B Class Merrill Lynch, Pierce, Fenner & Smith
For the Sole Benefit of its Customers
SEC#97KB3
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484
Delaware Emerging Markets Fund RS DMC Employee Profit Sharing Plan
Institutional Class Delaware Management Company
Employee Profit Sharing Trust
C/o Rick Seidel
1818 Market Street
Philadelphia, PA 19103-3682
Chase Manhattan Bank C/F
Delaware Group Foundation Funds
Balanced Portfolio
Attn: Marisol Gordon
Global Investment Services
3 Metrotech Center 8th Floor
Brooklyn, NY 11201-3800
</TABLE>
86
<PAGE>
<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------
<S> <C> <C> <C>
Delaware Emerging Markets Fund Chase Manhattan Bank C/F
Institutional Class Delaware Group Foundation Funds
Growth Portfolio
Attn: Marisol Gordon
Global Investment Services
3 Metrotech Center 8th Floor
Brooklyn, NY 11201-3800
International Small Cap Delaware Management Business Trust-DIA
Fund A Class Attn: Joseph H. Hastings
1818 Market Street 17th Floor
Philadelphia, PA 19103-3638
Delaware Global Opportunities Fund A Class Kandiah Balendran and
Radhika Balendran JT WROS
1 Bromley Ct
Voorhees, NJ 08043-3922
DMTC Custodian for the Rollover IRA of
Arber Lee Hayes
8558 Black Kite Dr.
Elk Grove, CA 95624-1222
DMTC Custodian for the IRA of
Caralyn B. Ballou
45 Glenwood Ave.
Northfield, MA 01360-1125
DMTC Custodian for the Roth IRA of
Becky L. Hammer
1036 S 2800 W
Ogden, UT 84404-9596
Delaware Global Opportunities Fund A Class DMTC Custodian for
Christopher A. McGinnis
28 Gerry Ln.
Sicklerville, NJ 08081-4472
Delaware Global Opportunities Fund Lincoln National Life Insurance, Co.
Institutional Class c/o Lincoln Investment Management, Inc.
Attn: Carol A. Schmidt - Mgr. Sec. Adm. 3R
200 East Berry St.
Fort Wayne, IN 46802-2706
</TABLE>
87
<PAGE>
<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------
<S> <C> <C> <C>
Delaware New Europe Fund A Class David F. Frank
801 W. Park Ave. Apt. 30D
Lindenwold, NJ 08021-3643
Delaware New Europe Fund Institutional Class Lincoln National Life Insurance Co.
1300 S. Clinton St.
Fort Wayne, IN 46802-3518
Delaware Latin America Fund A Class Alfio Leone IV
209 Crickett Ave.
Ardmore, PA 19003-2120
Delaware Latin America Fund Lincoln National Life Insurance Co.
Institutional Class 1300 S. Clinton St.
Fort Wayne, IN 46802-3518
</TABLE>
DMH Corp., Delvoy, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Management Company, Inc., Delaware Investment Advisers (a series of Delaware
Management Business Trust), Delaware Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc., Delaware Management Trust Company,
Delaware International Holdings Ltd., Founders Holdings, Inc., Delaware
International Advisers Ltd., Delaware Capital Management, Inc. and Retirement
Financial Services, Inc. are direct or indirect, wholly owned subsidiaries of
Delaware Management Holdings, Inc. ("DMH"). On April 3, 1995, a merger between
DMH and a wholly owned subsidiary of Lincoln National Corporation ("Lincoln
National") was completed. DMH and the Manager are now indirect, wholly owned
subsidiaries, and subject to the ultimate control, of Lincoln National. Lincoln
National, with headquarters in Fort Wayne, Indiana, is a diversified
organization with operations in many aspects of the financial services industry,
including insurance and investment management.
Trustees and principal officers of Global Funds are noted below along
with their ages and their business experience for the past five years. Unless
otherwise noted, the address of each officer and trustee is One Commerce Square,
Philadelphia, PA 19103.
88
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Trustee and Officer Business Experience
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
*Wayne A. Stork (62) Chairman, Director/Trustee of Global Funds and each of the other 32
investment companies in the Delaware Investments family.
Chairman and Director of Delaware Management Holdings, Inc.
Director of Delaware International Advisers Ltd.
Prior to January 1, 1999, Mr. Stork was Director of Delaware Capital
Management, Inc.; Chairman, President and Chief Executive Officer and
Director/Trustee of DMH Corp., Delaware Distributors, Inc. and Founders
Holdings, Inc.; Chairman, President, Chief Executive Officer, Chief
Investment Officer and Director/Trustee of Delaware Management Company,
Inc. and Delaware Management Business Trust; Chairman, President, Chief
Executive Officer and Chief Investment Officer of Delaware Management
Company (a series of Delaware Management Business Trust); Chairman,
Chief Executive Officer and Chief Investment Officer of Delaware
Investment Advisers (a series of Delaware Management Business Trust);
Chairman and Chief Executive Officer of Delaware International Advisers
Ltd.; Chairman, Chief Executive Officer and Director of Delaware
International Holdings Ltd.; Chief Executive Officer of Delaware
Management Holdings, Inc.; President and Chief Executive Officer of
Delvoy, Inc.; Chairman of Delaware Distributors, L.P.; Director of
Delaware Service Company, Inc. and Retirement Financial Services, Inc.
In addition, during the five years prior to January 1, 1999, Mr. Stork
has served in various executive capacities at different times within the
Delaware organization.
- --------------------------------------------------------------------------------------------------------------------------
- ----------------------
* Trustee affiliated with Global Funds' investment manager and considered an "interested person" as defined in the 1940 Act.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
89
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Trustee and Officer Business Experience
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
*David K. Downes (59) President, Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer and Director/Trustee of Global Funds and each of the other 32
investment companies in the Delaware Investments family.
President and Director of Delaware Management Company, Inc.
President of Delaware Management Company (a series of Delaware Management
Business Trust)
President, Chief Executive Officer and Director of Delaware Capital
Management, Inc.
Chairman, President, Chief Executive Officer and Director of Delaware
Service Company, Inc.
President, Chief Operating Officer, Chief Financial Officer and Director of
Delaware International Holdings Ltd.
Chairman and Director of Delaware Management Trust Company and Retirement
Financial Services, Inc.
Executive Vice President, Chief Operating Officer, Chief Financial Officer
of Delaware Management Holdings, Inc., Founders CBO Corporation, Delaware
Investment Advisers (a series of Delaware Management Business Trust) and
Delaware Distributors, L.P.
Executive Vice President, Chief Operating Officer, Chief Financial Officer
and Director of DMH Corp., Delaware Distributors, Inc., Founders Holdings,
Inc. and Delvoy, Inc.
Executive Vice President and Trustee of Delaware Management Business Trust
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Downes has served in various executive capacities
at different times within the Delaware organization.
- --------------------------------------------------------------------------------------------------------------------------
- ----------------------
* Trustee affiliated with Global Funds' investment manager and considered an
"interested person" as defined in the 1940 Act.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
90
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Trustee Business Experience
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Walter P. Babich (72) Director/Trustee of Global Funds and each of the other 32 investment
companies in the Delaware Investments family
460 North Gulph Road, King of Prussia, PA 19406
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and from
1988 to 1991, he was a partner of I&L Investors.
- --------------------------------------------------------------------------------------------------------------------------
John H. Durham (62) Director/Trustee of Global Funds and 18 other investment companies in the
Delaware Investments family.
Private Investor.
P.O. Box 819, Gwynedd Valley, PA 19437
Mr. Durham served as Chairman of the Board of each fund in the Delaware
Investments family from 1986 to 1991; President of each fund from 1977 to 1990;
and Chief Executive Officer of each fund from 1984 to 1990. Prior to 1992, with
respect to Delaware Management Holdings, Inc., Delaware Management Company,
Delaware Distributors, Inc. and Delaware Service Company, Inc., Mr. Durham served
as a director and in various executive capacities at different times. He was also
a Partner of Complete Care Services from 1995 to 1999.
- --------------------------------------------------------------------------------------------------------------------------
Anthony D. Knerr (60) Director/Trustee of Global Funds and each of the other 32 investment
companies in the Delaware Investments family.
500 Fifth Avenue, New York, NY 10110
Founder and Managing Director, Anthony Knerr & Associates
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and
Treasurer of Columbia University, New York. From 1987 to 1989, he was also a
lecturer in English at the University. In addition, Mr. Knerr was Chairman
of The Publishing Group, Inc., New York, from 1988 to 1990. Mr. Knerr
founded The Publishing Group, Inc. in 1988.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
91
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Trustee Business Experience
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Ann R. Leven (58) Director/Trustee of Global Funds and each of the other 32 other investment
companies in the Delaware Investments family.
785 Park Avenue, New York, NY 10021
Treasurer, National Gallery of Art
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer of the
Smithsonian Institution, Washington, DC, and from 1975 to 1992, she was
Adjunct Professor of Columbia Business School.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
92
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Trustee Business Experience
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Thomas F. Madison (63) Director/Trustee of Global Funds and each of the other 32 investment
companies in the Delaware Investments family.
200 South Fifth Street, Suite 2100, Minneapolis, Minnesota 55402
President and Chief Executive Officer, MLM Partners, Inc.
Mr. Madison has also been Chairman of the Board of Communications Holdings,
Inc. since 1996. From February to September 1994, Mr. Madison served as Vice
Chairman--Office of the CEO of The Minnesota Mutual Life Insurance Company and
from 1988 to 1993, he was President of U.S. WEST Communications--Markets.
- --------------------------------------------------------------------------------------------------------------------------
Charles E. Peck (73) Director/Trustee of Global Funds and each of the other 32 investment
companies in the Delaware Investments family.
P.O. Box 1102, Columbia, MD 21044
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive Officer of
The Ryland Group, Inc., Columbia, MD.
- --------------------------------------------------------------------------------------------------------------------------
Janet L. Yeomans (51) Director/Trustee of Global Funds and each of the other 32 investment
companies in the Delaware Investments family.
Building 220-13W-37, St. Paul, MN 55144
Vice President and Treasurer, 3M Corporation.
From 1987-1994, Ms. Yeomans was Director of Benefit Funds and Financial Markets
for the 3M Corporation; Manager of Benefit Fund Investments for the
3M Corporation, 1985-1987; Manager of Pension Funds for the 3M Corporation,
1983-1985; Consultant--Investment Technology Group of Chase Econometrics,
1982-1983; Consultant for Data Resources, 1980-1982; Programmer for the
Federal Reserve Bank of Chicago, 1970-1974.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
93
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Officer Business Experience
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Richard G. Unruh, Jr. (60) Executive Vice President and Chief Investment Officer, Equity of Global Funds and each of
the other 32 investment companies in the Delaware Investments family.
Chief Executive Officer/Chief Investment Officer of Delaware Investment Advisers (a
series of Delaware Management Business Trust)
Executive Vice President of Delaware Management Holdings, Inc. and Delaware Capital
Management, Inc.
Executive Vice President/Chief Investment Officer of Delaware Management Company (a
series of Delaware Management Business Trust)
Executive Vice President and Trustee of Delaware Management Business Trust
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has
served in various executive capacities at
different times within the Delaware
organization.
- --------------------------------------------------------------------------------------------------------------------------
H. Thomas McMeekin (46) Executive Vice President and Chief Investment Officer, Fixed Income of Global Funds and
each of the other 32 investment companies in the Delaware Investments family.
Director of Delaware Management Holdings, Inc. and Founders CBO Corporation.
Executive Vice President/Chief Investment Officer, DMC-Fixed Income of Delaware
Management Company (a series of Delaware Management Business Trust)
Executive Vice President/Chief Investment Officer, DIA-Fixed Income of Delaware
Investment Advisers (a series of Delaware Management Business Trust)
Executive Vice President and Director of Founders Holdings, Inc.
Executive Vice President of Delaware Management Business Trust and Delaware Capital
Management, Inc.
Mr. McMeekin joined Delaware Investments in 1999. During the past five years, he has
also served in various executive capacities for Lincoln National Corporation.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
94
<PAGE>
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------------------------------
Richard J. Flannery (42) Executive Vice President/General Counsel of Global Funds and each of the other 32
investment companies in the Delaware Investments family, Delaware Management Holdings,
Inc., Delaware Distributors, L.P., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware Management
Business Trust) and Founders CBO Corporation.
Executive Vice President/General Counsel and Director of Delaware International
Holdings Ltd., Founders Holdings, Inc., Delvoy, Inc., DMH Corp., Delaware Management
Company, Inc., Delaware Service Company, Inc., Delaware Capital Management, Inc.,
Retirement Financial Services, Inc., Delaware Distributors, Inc. and Delaware
Management Trust Company.
Executive Vice President and Trustee of Delaware Management Business Trust.
Director of Delaware International Advisers Ltd.
Director of HYPPCO Finance Company Ltd.
During the past five years, Mr. Flannery has served in various executive capacities
at different times within the Delaware organization.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
95
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Officer Business Experience
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Eric E. Miller (46) Senior Vice President/Deputy General Counsel and Secretary of Global Funds and
each of the other 32 investment companies in Delaware Investments.
Senior Vice President/Deputy General Counsel and Assistant Secretary of
Delaware Management Holdings, Inc., DMH Corp., Delvoy, Inc., Delaware
Management Company, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business Trust),
Delaware Service Company, Inc., Delaware Capital Management, Inc.,
Retirement Financial Services, Inc., Delaware Distributors, Inc., Delaware
Distributors, L.P. and Founders Holdings, Inc.
During the past five years, Mr. Miller has served in various executive
capacities at different times within Delaware Investments.
- --------------------------------------------------------------------------------------------------------------------------
Joseph H. Hastings (49) Senior Vice President/Corporate Controller of Global Funds and each of the
other 32 investment companies in the Delaware Investments family and Delaware
Investment Advisers (a series of Delaware Management Business Trust)
Senior Vice President/Corporate Controller and Treasurer of Delaware Management
Holdings, Inc., DMH Corp., Delvoy , Inc., Delaware Management Company, Inc.,
Delaware Management Business Trust, Delaware Management Company (a series of
Delaware Management Business Trust), Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Capital Management,
Inc., Delaware International Holdings Ltd., Founders Holdings, Inc. and Delaware
Management Business Trust
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company
Senior Vice President/Assistant Treasurer of Founders CBO Corporation
Chief Financial Officer of Retirement Financial Services, Inc.
During the past five years, Mr. Hastings has served in various executive
capacities at different times within the Delaware organization.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
96
<PAGE>
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------------------------------
Michael P. Bishof (37) Senior Vice President and Treasurer of Global Funds and each of the other 32
investment companies in the Delaware Investments family.
Senior Vice President/Investment Accounting of Delaware Management Company (a
series of Delaware Management Business Trust), Delaware Service Company, Inc.
and Delaware Capital Management, Inc. and Founders Holdings, Inc.
Senior Vice President and Treasurer/ Investment Accounting of Delaware
Distributors, L.P. and Delaware Investment Advisers (a series of Delaware
Management Business Trust)
Senior Vice President/Manager of Investment Accounting of Delaware
International Holdings, Inc.
Senior Vice President and Assistant Treasurer of Founders CBO Corporation
Before joining Delaware Investments in 1995, Mr. Bishof was a Vice President
for Bankers Trust, New York, NY from 1994 to 1995, a Vice President for CS
First Boston Investment Management, New York, NY from 1993 to 1994 and an
Assistant Vice President for Equitable Capital Management Corporation,
New York, NY from 1987 to 1993.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Officer Business Experience
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Robert L. Arnold (34) Vice President/Portfolio Manager of Global Funds, each of the other 32
investment companies in the Delaware Investments family and Delaware Management
Company, Delaware Investment Advisers and Delaware Capital Management, Inc.
During the past five years, Mr. Arnold has served in various capacities at
different times within the Delaware organization.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
97
<PAGE>
The following is a compensation table listing for each trustee entitled
to receive compensation, the aggregate compensation received from Global Funds
and the total compensation received from all investment companies in the
Delaware Investments family for which he or she serves as a director or trustee
for their respective fiscal years and an estimate of annual benefits to be
received upon retirement under the Delaware Group Retirement Plan for
Directors/Trustees as of November 30, 1999. Only the independent trustees of the
Fund receive compensation from the Fund.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Pension or
Retirement
Benefits Total
Accrued Estimated Compensation
Aggregate as Part of Annual from
Compensation Global Benefits Delaware
from Global Funds Upon Investments
Name(3) Funds Expenses Retirement(1) Companies(2)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Walter P. Babich None $38,000
---------------------------------------------------------------------------------------------------------
John H. Durham None $32,180
---------------------------------------------------------------------------------------------------------
Anthony D. Knerr None $38,000
---------------------------------------------------------------------------------------------------------
Ann R. Leven None $38,000
---------------------------------------------------------------------------------------------------------
Thomas F. Madison None $38,000
---------------------------------------------------------------------------------------------------------
Charles E. Peck None $38,000
---------------------------------------------------------------------------------------------------------
Janet L. Yeomans(4) None $38,000
---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director/trustee who, at the
time of his or her retirement from the Board, has attained the age of
70 and served on the Board for at least five continuous years, is
entitled to receive payments from each investment company in the
Delaware Investments family for which he or she serves as a director or
trustee for a period equal to the lesser of the number of years that
such person served as a director or trustee or the remainder of such
person's life. The amount of such payments will be equal, on an annual
basis, to the amount of the annual retainer that is paid to
directors/trustees of each investment company at the time of such
person's retirement. If an eligible director/trustee retired as of
November 30, 1999, he or she would be entitled to annual payments
totaling the amount noted above, in the aggregate, from all of the
investment companies in the Delaware Investments family for which he or
she served as director or trustee, based on the number of investment
companies in the Delaware Investments family as of that date.
(2) Each independent director/trustee (other than John H. Durham) currently
receives a total annual retainer fee of $38,000 for serving as a
director or trustee for all 33 investment companies in Delaware
Investments, plus $3,145 for each Board Meeting attended. John H.
Durham currently receives a total annual retainer fee of $32,180 for
serving as a director or trustee for 19 investment companies in
Delaware Investments, plus $1,810 for each Board Meeting attended. Ann
R. Leven, Charles E. Peck, Anthony D. Knerr and Thomas F. Madison serve
on the Fund's audit committee; Ms. Leven is the chairperson. Members of
the audit committee currently receive additional annual compensation of
$5,000 from all investment companies, in the aggregate, with the
exception of the chairperson, who receives $6,000.
(3) W. Thacher Longstreth served as an independent trustee of Global Funds
during its last fiscal years. For the period December 1, 1998 through
March 17, 1999, Mr. Longstreth received $0,000 from Global Funds and
$00,000 for all investment companies in the Delaware Investments
family.
(4) Janet L Yeomans joined the Boards of all investment companies in the
Delaware Investments family in March 1999 for some funds and in April
1999 for other funds.
98
<PAGE>
GENERAL INFORMATION
Global Funds, Inc. is an open-end management investment company. Global
Funds, Inc. was organized as a Maryland corporation on May 30, 1991 and
reorganized as a Delaware business trust on November 23, 1999.
Delaware International and Delaware Management, the investment
managers to the Funds, also provide investment management services to certain of
the other funds in the Delaware Investments family. An affiliate of each Manager
also manages private investment accounts. While investment decisions of the
Funds are made independently from those of the other funds and accounts,
investment decisions for such other funds and accounts may be made at the same
time as investment decisions for the Funds.
Delaware or Delaware International also manages the investment options
for Delaware-Lincoln Choice Plus and Delaware Medallion (SM) III Variable
Annuities. Choice Plus is issued and distributed by Lincoln National Life
Insurance Company. Choice Plus offers a variety of different investment styles
managed by leading money managers. Medallion is issued by Allmerica Financial
Life Insurance and Annuity Company (First Allmerica Financial Life Insurance
Company in New York and Hawaii). Delaware Medallion offers various investment
series ranging from domestic equity funds, international equity and bond funds
and domestic fixed income funds. Each investment series available through Choice
Plus and Medallion utilizes an investment strategy and discipline the same as or
similar to one of the Delaware Investments mutual funds available outside the
annuity. See Delaware Group Premium Fund in Appendix B.
Access persons and advisory persons of the Delaware Investments family
of funds, as those terms are defined in SEC Rule 17j-1 under the 1940 Act, who
provide services to Delaware Management, Delaware International or their
affiliates, are permitted to engage in personal securities transactions subject
to the exceptions set forth in Rule 17j-1 and the following general restrictions
and procedures: (1) certain blackout periods apply to personal securities
transactions of those persons; (2) transactions must receive advance clearance
and must be completed on the same day as the clearance is received; (3) certain
persons are prohibited from investing in initial public offerings of securities
and other restrictions apply to investments in private placements of securities;
(4) opening positions by certain covered persons in certain securities may only
be closed-out at a profit after a 60-day holding period has elapsed; and (5) the
Compliance Officer must be informed periodically of all securities transactions
and duplicate copies of brokerage confirmations and account statements must be
supplied to the Compliance Officer.
The Distributor acts as national distributor for each of the Funds and
for the other mutual funds in the Delaware Investments family. The Distributor
("DDLP") received net commissions from each Fund on behalf of Class A Shares,
after reallowances to dealers, as follows:
99
<PAGE>
- --------------------------------------------------------------------------
Delaware International Equity Fund
Class A Shares
- --------------------------------------------------------------------------
Total
Fiscal Amount of Amounts Net
Year Underwriting Reallowed Commission
Ended Commissions to Dealers to DDLP/DDI
- --------------------------------------------------------------------------
11/30/99
11/30/98 396,347 327,390 68,957
11/30/97 637,741 528,999 108,742
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Delaware Global Bond Fund
Class A Shares
- --------------------------------------------------------------------------
Total
Fiscal Amount of Amounts Net
Year Underwriting Reallowed Commission
Ended Commissions to Dealers to DDLP/DDI
- --------------------------------------------------------------------------
11/30/99
11/30/98 14,425 11,667 2,758
11/30/97 36,196 28,643 7,553
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Delaware Emerging Markets Fund
Class A Shares
- --------------------------------------------------------------------------
Total
Fiscal Amount of Amounts Net
Year Underwriting Reallowed Commission
Ended Commissions to Dealers to DDLP/DDI
- --------------------------------------------------------------------------
11/30/99
11/30/98 $42,873 $35,289 $7,584
11/30/97(1) 281,015 266,705 14,310
- --------------------------------------------------------------------------
(1) Date of initial public offering was June 10, 1996.
- --------------------------------------------------------------------------
Delaware Global Equity Fund
Class A Shares
- --------------------------------------------------------------------------
Total
Fiscal Amount of Amounts Net
Year Underwriting Reallowed Commission
Ended Commissions to Dealers to DDLP/DDI
- --------------------------------------------------------------------------
11/30/99
11/30/98 $42,465 $35,927 $6,538
11/30/97 76,066 63,246 12,820
- --------------------------------------------------------------------------
100
<PAGE>
- --------------------------------------------------------------------------
Delaware Global Opportunities Fund
Class A Shares
- --------------------------------------------------------------------------
Total
Fiscal Amount of Amounts Net
Year Underwriting Reallowed Commission
Ended Commissions to Dealers to DDLP/DDI
- --------------------------------------------------------------------------
11/30/99
11/30/98 none none none
11/30/97(1) none none none
- --------------------------------------------------------------------------
(1) Date of initial public offering was July 22, 1997.
- --------------------------------------------------------------------------
Delaware Global Opportunities Fund
Class A Shares
- --------------------------------------------------------------------------
Total
Fiscal Amount of Amounts Net
Year Underwriting Reallowed Commission
Ended Commissions to Dealers to DDLP/DDI
- --------------------------------------------------------------------------
11/30/99
11/30/98(1) none none none
- --------------------------------------------------------------------------
(1) Date of initial public offering was December 19, 1997.
- --------------------------------------------------------------------------
Delaware New Europe Fund
Class A Shares
- --------------------------------------------------------------------------
Total
Fiscal Amount of Amounts Net
Year Underwriting Reallowed Commission
Ended Commissions to Dealers to DDLP/DDI
- --------------------------------------------------------------------------
11/30/99(1)
- --------------------------------------------------------------------------
(1) Date of initial public offering was December 29, 1998.
- --------------------------------------------------------------------------
Delaware Latin America Fund
Class A Shares
- --------------------------------------------------------------------------
Total
Fiscal Amount of Amounts Net
Year Underwriting Reallowed Commission
Ended Commissions to Dealers to DDLP/DDI
- --------------------------------------------------------------------------
11/30/99(1)
- --------------------------------------------------------------------------
(1) Date of initial public offering was December 29, 1998.
101
<PAGE>
The Distributor received in the aggregate Limited CDSC payments with
respect to Class A Shares of each Fund as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Limited CDSC Payments
- -----------------------------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware
Fiscal International Delaware Emerging Delaware Global International Delaware
Year Equity Global Bond Markets Global Equity Opportunities Small Cap Delaware New Latin
Ended Fund Fund Fund Fund Fund Fund Europe Fund America Fund
A Class A Class A Class(1) A Class A Class(1) A Class(1) A Class(1) A Class(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11/30/99
11/30/98 4,706 --- --- --- --- ---
11/30/97 --- --- --- --- --- N/A
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Date of initial public offerings were as follows: Delaware Emerging Markets
Fund A Class - June 10, 1996; Delaware Global Opportunities Fund - July 22,
1997; Delaware International Small Cap Fund - December 19, 1997; Delaware
New Europe Fund - December 29, 1998; and Delaware Latin America Fund -
December 29, 1999.
The Distributor received in the aggregate CDSC payments with respect to
Class B Shares of each Fund as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CDSC Payments
- -----------------------------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware
Fiscal International Delaware Emerging Delaware Global International Delaware
Year Equity Global Bond Markets Global Equity Opportunities Small Cap Delaware New Latin
Ended Fund Fund Fund Fund Fund Fund Europe Fund America Fund
B Class B Class B Class(1) B Class B Class(1) B Class(1) B Class(1) B Class(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11/30/99
11/30/98 99,962 7,957 6,091 8,550 none none
11/30/97 56,080 3,667 4,249 9,391 none N/A
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Date of initial public offerings were as follows: Delaware Emerging Markets
Fund A Class - June 10, 1996; Delaware Global Opportunities Fund - July 22,
1997; Delaware International Small Cap Fund - December 19, 1997; Delaware
New Europe Fund - December 29, 1998; and Delaware Latin America Fund -
December 29, 1999.
102
<PAGE>
The Distributor received in the aggregate CDSC payments with respect to
Class C Shares of each Fund as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CDSC Payments
- -----------------------------------------------------------------------------------------------------------------------------------
Delaware Delaware Delaware Delaware
Fiscal International Delaware Emerging Delaware Global International Delaware
Year Equity Global Bond Markets Global Equity Opportunities Small Cap Delaware New Latin
Ended Fund Fund Fund Fund Fund Fund Europe Fund America Fund
C Class C Class C Class(1) C Class C Class(1) C Class(1) C Class(1) C Class(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11/30/99
11/30/98 $12,696 $298 $1,265 $1,011 none none
11/30/97 5,271 65 678 1,088 none N/A
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Date of initial public offerings were as follows: Delaware Emerging Markets
Fund A Class - June 10, 1996; Delaware Global Opportunities Fund - July 22,
1997; Delaware International Small Cap Fund - December 19, 1997; Delaware
New Europe Fund - December 29, 1998; and Delaware Latin America Fund -
December 29, 1999.
The Transfer Agent, an affiliate of the Managers, acts as shareholder
servicing, dividend disbursing and transfer agent for each Fund and for the
other mutual funds in the Delaware Investments family. The Transfer Agent is
paid a fee by each Fund for providing these services consisting of an annual per
account charge of $5.50 for each Fund plus transaction charges for particular
services according to a schedule. Compensation is fixed each year and approved
by the Board of Trustees, including a majority of the unaffiliated trustees. The
Transfer Agent also provides accounting services to each Fund. Those services
include performing all functions related to calculating each Fund's net asset
value and providing all financial reporting services, regulatory compliance
testing and the related accounting services. For its services, the Transfer
Agent is paid a fee based on total assets of all funds in the Delaware
Investments family for which it provides such accounting services. Such fee is
equal to 0.25% multiplied by the total amount of assets in the complex for which
the Transfer Agent furnishes accounting services, where such aggregate complex
assets are $10 billion or less, and 0.20% of assets if such aggregate complex
assets exceed $10 billion. The fees are charged to each fund, including each
Fund, on an aggregate pro-rata basis. The asset-based fee payable to the
Transfer Agent is subject to a minimum fee calculated by determining the total
number of investment portfolios and associated classes.
Delaware and its affiliates own the name "Delaware Group." Under
certain circumstances, including the termination of Global Funds' advisory
relationship with Delaware International and Delaware or its distribution
relationship with the Distributor, Delaware and its affiliates could cause
Global Funds to delete the words "Delaware Group" from Global Funds' name.
The Chase Manhattan Bank ("Chase"), 4 Chase Metrotech Center, Brooklyn,
NY 11245, is custodian of each Fund's securities and cash. As custodian for the
Fund, Chase maintains a separate account or accounts for each Fund; receives,
holds and releases portfolio securities on account of each Fund; receives and
disburses money on behalf of each Fund; and collects and receives income and
other payments and distributions on account of each Fund's portfolio securities.
Capitalization
Global Fund has a present unlimited authorized number of shares of
beneficial interest with no par value allocated to each of their respective
Classes. Each Fund currently offers four classes of shares.
While shares of Global Funds have equal voting rights, except as noted
below, on matters affecting the Funds, each Fund would vote separately on any
matter it is directly affected by, such as any change in its fundamental
investment policies and as otherwise prescribed by the 1940 Act. Shares of each
Fund have a priority in that Fund's assets, and in gains on and income from the
portfolio of that Fund. All shares have no preemptive rights, are fully
transferable and, when issued, are fully paid and nonassessable.
103
<PAGE>
Each Class of each Fund represents a proportionate interest in the
assets of such Fund and has the same voting and other rights and preferences as
the other classes of that Fund, except that shares of a Fund's Institutional
Class may not vote on any matter affecting the Fund Classes' Plans under Rule
12b-1. Similarly, as a general matter, shareholders of Class A Shares, Class B
Shares and Class C Shares of a Fund may vote only on matters affecting the 12b-1
Plan that relates to the class of shares that they hold. However, Class B Shares
of a Fund may vote on any proposal to increase materially the fees to be paid by
a Fund under the 12b-1 Plan relating to its Class A Shares. General expenses of
a Fund will be allocated on a pro-rata basis to the respective classes according
to asset size, except that expenses of the 12b-1 Plans of each Fund's Class A
Shares, Class B Shares and Class C Shares will be allocated solely to those
Classes.
Prior to September 6, 1994, Delaware International Equity Fund A Class
was known as Delaware International Equity Fund class and Delaware International
Equity Fund Institutional Class was known as Delaware International Equity Fund
(Institutional) class. Prior to July 21, 1998, Delaware Global Equity Fund and
its respective classes were known as Global Assets Fund. Prior to July 21, 1998,
Delaware Global Opportunities Fund and its respective classes were known as
Delaware Global Equity Fund.
Effective as of August 16, 1999, the names of the Funds changed as
follows. Corresponding changes were also made to each of the Funds' Classes.
- --------------------------------------------------------------------------------
Old name New name as of August 16, 1999
- --------------------------------------------------------------------------------
Global Bond Fund Delaware Global Bond Fund
- --------------------------------------------------------------------------------
International Equity Fund Delaware International Equity Fund
- --------------------------------------------------------------------------------
Emerging Markets Fund Delaware Emerging Markets Fund
- --------------------------------------------------------------------------------
Global Equity Fund Delaware Global Equity Fund
- --------------------------------------------------------------------------------
Global Opportunities Fund Delaware Global Opportunities Fund
- --------------------------------------------------------------------------------
International Small Cap Fund Delaware International Small Cap Fund
- --------------------------------------------------------------------------------
New Europe Fund Delaware New Europe Fund
- --------------------------------------------------------------------------------
Latin America Fund Delaware Latin America Fund
- --------------------------------------------------------------------------------
As of November 23, 1999, Delaware Group Global & International Funds,
Inc. changed its name to Delaware Group Global & International Funds.
All shares have noncumulative voting rights which means that the
holders of more than 50% of Global Funds' shares voting for the election of
trustees can elect 100% of the trustees if they choose to do so.
EURO
Several European countries are participating in the European Economic
and Monetary Union, which established a common European currency for
participating countries. This currency is commonly known as the "Euro." Each
participating country replaced its previous currency with the Euro on January 1,
1999. Additional European countries may elect to participate after that date. In
addition, full implementation of the Euro will extend over a period of several
years. Initial implementation of the Euro occurred on January 1, 1999 without
disruption of services provided to each Fund. Each Fund's service providers
cooperated over the implementation weekend and following weeks to reconcile
their records and procedures. Going forward, if a Fund is invested in securities
of participating countries or countries that elect to participate at a later
date, it could be adversely affected if the computer systems used by its
applicable service providers are not properly prepared to handle the
implementation of this single currency through completion of the process or the
adoption of the Euro by additional countries in the future.
104
<PAGE>
FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditors for Delaware Group
Global & International Funds and, in its capacity as such, audits the annual
financial statements of Delaware International Equity Fund, Delaware Global Bond
Fund, Delaware Emerging Markets Fund, Delaware Global Equity Fund, Delaware
Global Opportunities Fund, Delaware International Small Cap Fund, Delaware New
Europe Fund and Delaware Latin America Fund. The Funds' Statements of Net
Assets, Statements of Operations, Statements of Changes in Net Assets, Financial
Highlights and Notes to Financial Statements, as well as the reports of Ernst &
Young LLP, independent auditors, for the fiscal year ended November 30, 1999 are
included in the Funds' Annual Reports to shareholders. The financial statements
and financial highlights, the notes relating thereto and the reports of Ernst &
Young LLP listed above are incorporated by reference from the Annual Reports
into this Part B.
105
<PAGE>
APPENDIX A--DESCRIPTION OF RATINGS
The Fund has the ability to invest up to 10% of its net assets in high
yield, high risk fixed-income securities. The following paragraphs contain
excerpts from Moody's and S&P's rating descriptions. These credit ratings
evaluate only the safety of principal and interest and do not consider the
market value risk associated with high yield securities.
General Rating Information
MOODY'S INVESTORS SERVICE
BOND RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than Aaa bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements which make
the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes
and are considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds that are rated Baa are considered medium grade obligations,
i.e., they are neither highly protected nor poorly secured. 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. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are 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: Bonds which are rated 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: Bonds which are rated 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: Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C: Bonds which are rated C are 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.
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SHORT-TERM DEBT RATINGS
Moody's short-term debt ratings are opinions of the ability of issuers
to repay punctually senior obligations which have an original maturity not
exceeding one year.
P-1: Issuers rated "PRIME-1" or "P-1" (or supporting institutions) have
superior ability for repayment of senior short-term debt obligations.
P-2: Issuers rated "PRIME-2" or "P-2" (or supporting institutions) have
a strong ability for repayment of senior short-term debt obligations.
P-3: Issuers rated "PRIME-3" or "P-3" (or supporting institutions) have
an acceptable ability for repayment of senior short-term debt obligations.
MUNICIPAL NOTE RATINGS
Issuers or the features associated with Moody's MIG or VMIG ratings are
identified by date of issue, date of maturity or maturities or rating expiration
date and description to distinguish each rating from other ratings. Each rating
designation is unique with no implication as to any other similar issue of the
same obligor. MIG ratings terminate at the retirement of the obligation while
VMIG rating expiration will be a function of each issue's specific structural or
credit features.
MIG 1/VMIG 1: This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity
support, or demonstrated broad-based access to the market for
refinancing.
MIG 2/VMIG 2: This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/VMIG 3: This designation denotes favorable quality. All security
elements are accounted for but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow
protection may be narrow and market access for refinancing is
likely to be less well established.
MIG 4/VMIG 4: This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and
although not distinctly or predominantly speculative, there is
specific risk.
STANDARD & POOR'S RATINGS GROUP
BOND RATINGS
AAA: Debt rated AAA has the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
A: Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB: Debt rated BBB is regarded as having an adequate capacity to pay
interest an repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
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BB, B, CCC and CC: Debt rated BB, B, CCC or CC is regarded, on balance,
as predominately 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: This rating is reserved for income bonds on which no interest is
being paid.
D: Debt rated D is in default, and payment of interest and/or repayment
of principal is in arrears.
COMMERCIAL PAPER RATINGS
S&P's commercial paper ratings are current assessments of the
likelihood of timely payment of debt having an original maturity of no more than
365 days.
A-1: The A-1 designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. A plus (+) designation is
applied only to those issues rated A-1 which possess an overwhelming degree of
safety.
A-2: Capacity for timely payment on issues with the designation A-2 is
strong. However, the relative degree of safely is not as high as for issues
designated A-1.
A-3: Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
MUNICIPAL NOTE RATINGS
An S&P municipal note rating reflects the liquidity concerns and market
access risks unique to notes. Notes due in 3 years or less will likely receive a
note rating. Notes maturing beyond 3 years will most likely receive a long-term
debt rating. The following criteria will be used in making that assessment:
Amortization schedule (the larger the final maturity relative to other
maturities, the more likely it will be treated as a note).
Sources of payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note).
SP-1: Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
SP-3: Speculative capacity to pay principal and interest.
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APPENDIX B--INVESTMENT OBJECTIVES OF THE OTHER FUNDS IN THE DELAWARE
INVESTMENTS FAMILY
Following is a summary of the investment objectives of the other funds
in the Delaware Investments family:
Following is a summary of the investment objectives of the funds in the Delaware
Investments family:
Delaware Balanced Fund seeks long-term growth by a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that are
believed to demonstrate potential for income and capital growth. Delaware Devon
Fund seeks current income and capital appreciation by investing primarily in
income-producing common stocks, with a focus on common stocks the Manager
believes have the potential for above average dividend increases over time.
Delaware Trend Fund seeks long-term growth by investing in common
stocks issued by emerging growth companies exhibiting strong capital
appreciation potential.
Delaware Small Cap Value Fund seeks capital appreciation by investing
primarily in common stocks whose market values appear low relative to their
underlying value or future potential.
Delaware DelCap Fund seeks long-term capital growth by investing in
common stocks and securities convertible into common stocks of companies that
have a demonstrated history of growth and have the potential to support
continued growth.
Delaware Decatur Equity Income Fund seeks the highest possible current
income by investing primarily in common stocks that provide the potential for
income and capital appreciation without undue risk to principal. Delaware Growth
and Income Fund seeks long-term growth by investing primarily in securities that
provide the potential for income and capital appreciation without undue risk to
principal. Delaware Blue Chip Fund seeks to achieve long-term capital
appreciation. Current income is a secondary objective. It seeks to achieve these
objectives by investing primarily in equity securities and any securities that
are convertible into equity securities. Delaware Social Awareness Fund seeks to
achieve long-term capital appreciation. It seeks to achieve this objective by
investing primarily in equity securities of medium- to large-sized companies
expected to grow over time that meet the Fund's "Social Criteria" strategy.
Delaware Delchester Fund seeks as high a current income as possible by
investing principally in high yield, high risk corporate bonds, and also in U.S.
government securities and commercial paper. Delaware Strategic Income Fund seeks
to provide investors with high current income and total return by using a
multi-sector investment approach, investing principally in three sectors of the
fixed-income securities markets: high yield, higher risk securities, investment
grade fixed-income securities and foreign government and other foreign
fixed-income securities. Delaware High-Yield Opportunities Fund seeks to provide
investors with total return and, as a secondary objective, high current income.
Delaware Corporate Bond Fund seeks to provide investors with total return by
investing primarily in corporate bonds. Delaware Extended Duration Bond Fund
seeks to provide investors with total return by investing primarily in corporate
bonds.
Delaware Limited-Term Government Fund seeks high, stable income by
investing primarily in a portfolio of short-and intermediate-term securities
issued or guaranteed by the U.S. government, its agencies or instrumentalities
and instruments secured by such securities.
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Delaware American Government Bond Fund seeks high current income by
investing primarily in long-term debt obligations issued or guaranteed by the
U.S. government, its agencies or instrumentalities.
Delaware Cash Reserve Fund seeks the highest level of income consistent
with the preservation of capital and liquidity through investments in short-term
money market instruments, while maintaining a stable net asset value.
REIT Fund seeks to achieve maximum long-term total return with capital
appreciation as a secondary objective. It seeks to achieve its objectives by
investing in securities of companies primarily engaged in the real estate
industry.
Delaware Tax-Free USA Fund seeks high current income exempt from
federal income tax by investing in municipal bonds of geographically-diverse
issuers. Delaware Tax-Free Insured Fund invests in these same types of
securities but with an emphasis on municipal bonds protected by insurance
guaranteeing principal and interest are paid when due. Delaware Tax-Free USA
Intermediate Fund seeks a high level of current interest income exempt from
federal income tax, consistent with the preservation of capital by investing
primarily in municipal bonds.
Delaware Tax-Free Money Fund seeks high current income, exempt from
federal income tax, by investing in short-term municipal obligations, while
maintaining a stable net asset value.
Delaware Tax-Free New Jersey Fund seeks a high level of current
interest income exempt from federal income tax and New Jersey state and local
taxes, consistent with preservation of capital. Delaware Tax-Free Ohio Fund
seeks a high level of current interest income exempt from federal income tax and
Ohio state and local taxes, consistent with preservation of capital. Delaware
Tax-Free Pennsylvania Fund seeks a high level of current interest income exempt
from federal income tax and Pennsylvania state and local taxes, consistent with
the preservation of capital.
Foundation Funds are "fund of funds" which invest in other funds in the
Delaware Investments family (referred to as "Underlying Funds"). Foundation
Funds Delaware Income Portfolio seeks a combination of current income and
preservation of capital with capital appreciation by investing primarily in a
mix of fixed income and domestic equity securities, including fixed income and
domestic equity Underlying Funds. Foundation Funds Delaware Balanced Portfolio
seeks capital appreciation with current income as a secondary objective by
investing primarily in domestic equity and fixed income securities, including
domestic equity and fixed income Underlying Funds. Foundation Funds Delaware
Growth Portfolio seeks long term capital growth by investing primarily in equity
securities, including equity Underlying Funds, and, to a lesser extent, in fixed
income securities, including fixed-income Underlying Funds.
Delaware International Equity Fund seeks to achieve long-term growth
without undue risk to principal by investing primarily in international
securities that provide the potential for capital appreciation and income.
Delaware Global Bond Fund seeks to achieve current income consistent with the
preservation of principal by investing primarily in global fixed-income
securities that may also provide the potential for capital appreciation.
Delaware Global Equity Fund seeks to achieve long-term total return by investing
in global securities that provide the potential for capital appreciation and
income. Delaware Emerging Markets Fund seeks long-term capital appreciation by
investing primarily in equity securities of issuers located or operating in
emerging countries.
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Delaware U.S. Growth Fund seeks to maximize capital appreciation by
investing in companies of all sizes which have low dividend yields, strong
balance sheets and high expected earnings growth rates relative to their
industry. Delaware Overseas Equity Fund seeks to maximize total return (capital
appreciation and income), principally through investments in an internationally
diversified portfolio of equity securities. Delaware New Pacific Fund seeks
long-term capital appreciation by investing primarily in companies which are
domiciled in or have their principal business activities in the Pacific Basin.
Delaware Group Premium Fund. offers various funds available exclusively
as funding vehicles for certain insurance company separate accounts. Growth and
Income Series seeks the highest possible total rate of return by selecting
issues that exhibit the potential for capital appreciation while providing
higher than average dividend income. Delchester Series seeks as high a current
income as possible by investing in rated and unrated corporate bonds, U.S.
government securities and commercial paper. Capital Reserves Series seeks a high
stable level of current income while minimizing fluctuations in principal by
investing in a diversified portfolio of short- and intermediate-term securities.
Cash Reserve Series seeks the highest level of income consistent with
preservation of capital and liquidity through investments in short-term money
market instruments. DelCap Series seeks long-term capital appreciation by
investing its assets in a diversified portfolio of securities exhibiting the
potential for significant growth. Delaware Balanced Series seeks a balance of
capital appreciation, income and preservation of capital. It uses a
dividend-oriented valuation strategy to select securities issued by established
companies that are believed to demonstrate potential for income and capital
growth. International Equity Series seeks long-term growth without undue risk to
principal by investing primarily in equity securities of foreign issuers that
provide the potential for capital appreciation and income. Small Cap Value
Series seeks capital appreciation by investing primarily in small-cap common
stocks whose market values appear low relative to their underlying value or
future earnings and growth potential. Emphasis will also be placed on securities
of companies that may be temporarily out of favor or whose value is not yet
recognized by the market. Trend Series seeks long-term capital appreciation by
investing primarily in small-cap common stocks and convertible securities of
emerging and other growth-oriented companies. These securities will have been
judged to be responsive to changes in the market place and to have fundamental
characteristics to support growth. Income is not an objective. Global Bond
Series seeks to achieve current income consistent with the preservation of
principal by investing primarily in global fixed-income securities that may also
provide the potential for capital appreciation. Strategic Income Series seeks
high current income and total return by using a multi-sector investment
approach, investing primarily in three sectors of the fixed-income securities
markets: high-yield, higher risk securities; investment grade fixed-income
securities; and foreign government and other foreign fixed-income securities.
Devon Series seeks current income and capital appreciation by investing
primarily in income-producing common stocks, with a focus on common stocks that
the investment manager believes have the potential for above-average dividend
increases over time. Emerging Markets Series seeks to achieve long-term capital
appreciation by investing primarily in equity securities of issuers located or
operating in emerging countries. Convertible Securities Series seeks a high
level of total return on its assets through a combination of capital
appreciation and current income by investing primarily in convertible
securities. Social Awareness Series seeks to achieve long-term capital
appreciation by investing primarily in equity securities of medium to
large-sized companies expected to grow over time that meet the Series' "Social
Criteria" strategy. REIT Series seeks to achieve maximum long-term total return,
with capital appreciation as a secondary objective, by investing in securities
of companies primarily engaged in the real estate industry. Aggressive Growth
Series seeks long-term capital appreciation. The Series attempts to achieve its
investment objective by investing primarily in equity securities of companies
which the manager believes have the potential for high earnings growth. U.S.
Growth Series seeks to maximize capital appreciation. The Series seeks to
achieve its investment objective by investing in companies of all sizes which
have low dividend yields, strong balance sheets and high expected earnings
growth rates relative to their industry.
Delaware U.S. Government Securities Fund seeks to provide a high level
of current income consistent with the prudent investment risk by investing in
U.S. Treasury bills, notes, bonds, and other obligations issued or
unconditionally guaranteed by the full faith and credit of the U.S. Treasury,
and repurchase agreements fully secured by such obligations.
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Delaware Tax-Free Arizona Insured Fund seeks to provide a high level of
current income exempt from federal income tax and the Arizona personal income
tax, consistent with the preservation of capital. Delaware Minnesota Insured
Fund seeks to provide a high level of current income exempt from federal income
tax and the Minnesota personal income tax, consistent with the preservation of
capital.
Delaware Tax-Free Minnesota Intermediate Fund seeks to provide a high
level of current income exempt from federal income tax and the Minnesota
personal income tax, consistent with preservation of capital. The Fund seeks to
reduce market risk by maintaining an average weighted maturity from five to ten
years.
Delaware Tax-Free California Insured Fund seeks to provide a high level
of current income exempt from federal income tax and the California personal
income tax, consistent with the preservation of capital. Delaware Tax-Free
Florida Insured Fund seeks to provide a high level of current income exempt from
federal income tax, consistent with the preservation of capital. The Fund will
seek to select investments that will enable its shares to be exempt from the
Florida intangible personal property tax. Delaware Tax-Free Florida Fund seeks
to provide a high level of current income exempt from federal income tax,
consistent with the preservation of capital. The Fund will seek to select
investments that will enable its shares to be exempt from the Florida intangible
personal property tax. Delaware Tax-Free Kansas Fund seeks to provide a high
level of current income exempt from federal income tax, the Kansas personal
income tax and the Kansas intangible personal property tax, consistent with the
preservation of capital. Delaware Tax-Free Missouri Insured Fund seeks to
provide a high level of current income exempt from federal income tax and the
Missouri personal income tax, consistent with the preservation of capital.
Delaware Tax-Free New Mexico Fund seeks to provide a high level of current
income exempt from federal income tax and the New Mexico personal income tax,
consistent with the preservation of capital. Delaware Tax-Free Oregon Insured
Fund seeks to provide a high level of current income exempt from federal income
tax and the Oregon personal income tax, consistent with the preservation of
capital.
Delaware Tax-Free Arizona Fund seeks to provide a high level of current
income exempt from federal income tax and the Arizona personal income tax,
consistent with the preservation of capital. Delaware Tax-Free California Fund
seeks to provide a high level of current income exempt from federal income tax
and the California personal income tax, consistent with the preservation of
capital. Delaware Tax-Free Iowa Fund seeks to provide a high level of current
income exempt from federal income tax and the Iowa personal income tax,
consistent with the preservation of capital. Delaware Tax-Free Idaho Fund seeks
to provide a high level of current income exempt from federal income tax and the
Idaho personal income tax, consistent with the preservation of capital. Delaware
Minnesota High-Yield Municipal Bond Fund seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal income
tax primarily through investment in medium and lower grade municipal
obligations. Delaware National High-Yield Municipal Fund seeks to provide a high
level of income exempt from federal income tax, primarily through investment in
medium and lower grade municipal obligations. Delaware Tax-Free New York Fund
seeks to provide a high level of current income exempt from federal income tax
and the personal income tax of the state of New York and the city of New York,
consistent with the preservation of capital. Delaware Tax-Free Wisconsin Fund
seeks to provide a high level of current income exempt from federal income tax
and the Wisconsin personal income tax, consistent with the preservation of
capital.
Delaware Montana Municipal Bond Fund seek as high a level of current
income exempt from federal income tax and from the Montana personal income tax,
as is consistent with preservation of capital.
Delaware Tax-Free Colorado Fund seeks to provide a high level of
current income exempt from federal income tax and the Colorado personal income
tax, consistent with the preservation of capital.
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Delaware Tax-Free Minnesota Fund seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal income
tax, consistent with the preservation of capital. Delaware Tax-Free North Dakota
Fund seeks to provide a high level of current income exempt from federal income
tax and the North Dakota personal income tax, consistent with the preservation
of capital.
Delaware Select Growth Fund seeks long-term capital appreciation, which
the Fund attempts to achieve by investing primarily in equity securities
believed to have the potential for high earnings growth. Although the Fund, in
seeking its objective, may receive current income from dividends and interest,
income is only an incidental consideration in the selection of the Fund's
investments. Delaware Growth Stock Fund has an objective of long-term capital
appreciation. The Fund seeks to achieve its objective from equity securities
diversified among individual companies and industries. Delaware Tax-Efficient
Equity Fund seeks to obtain for taxable investors a high total return on an
after-tax basis. The Fund will attempt to achieve this objective by seeking to
provide a high long-term after-tax total return through managing its portfolio
in a manner that will defer the realization of accrued capital gains and
minimize dividend income.
For more complete information about any of the funds in the Delaware
Investments family, including charges and expenses, you can obtain a prospectus
from the Distributor. Read it carefully before you invest or forward funds.
Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).
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Delaware Investments includes funds with a wide range of investment objectives.
Stock funds, income funds, national and state-specific tax-exempt funds, money
market funds, global and international funds and closed-end funds give investors
the ability to create a portfolio that fits their personal financial goals. For
more information, shareholders of the Fund Classes should contact their
financial adviser or call Delaware Investments at 800-523-1918.
INVESTMENT MANAGER
Delaware International Advisers Ltd.
80 Cheapside
Third Floor
London, England EC2V 6EE
INVESTMENT SUB-ADVISERS
Delaware Management Company
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS
Delaware Global Bond Fund
Delaware International Equity Fund
Delaware Emerging Markets Fund
Delaware Global Equity Fund
(formerly Global Assets Fund)
Delaware Global Opportunities Fund
(formerly Global Equity Fund)
Delaware International Small Cap Fund
Delaware New Europe Fund
Delaware Latin America Fund
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
INSTITUTIONAL CLASS
PART B
STATEMENT OF
ADDITIONAL INFORMATION
January 31, 2000
- ----------------
DELAWARE(SM)
INVESTMENTS
- ----------------
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STATEMENT OF ADDITIONAL INFORMATION
JANUARY 31, 2000
DELAWARE GROUP ADVISER FUNDS
Delaware New Pacific Fund
Delaware Overseas Equity Fund
1818 Market Street
Philadelphia, PA 19103
For more information about the Institutional Classes:
800-510-4015
For Prospectus, Performance and Information on
Existing Accounts of Class A Shares, Class
B Shares and Class C Shares:
Nationwide 800-523-1918
Dealer Services:
(BROKER/DEALERS ONLY) Nationwide 800-362-7500
This Statement of Additional Information ("Part B") describes shares of
the funds listed above (individually a "Fund" and collectively the "Funds") for
Delaware Group Adviser Funds ("Adviser Funds"). Adviser Funds is registered,
open-end management investment company.
Each Fund offers Class A Shares, Class B Shares and Class C Shares
(together referred to as the "Fund Classes"). Each Fund also offers an
Institutional Class (together referred to the "Institutional Classes"). All
references to "shares" in this Part B refer to all Classes of shares, except
where noted.
This Part B should be read in conjunction with the Prospectuses for the
Funds dated January 31, 2000, as they may be amended from time to time. The
Prospectuses may be obtained by writing or calling your investment dealer or by
calling the Funds at 800-523-1918 or by contacting the Funds' national
distributor, Delaware Distributors, L.P., 1818 Market Street, Philadelphia, PA
19103. Part B is not itself a prospectus but is, in its entirety, incorporated
by reference into each Class' Prospectus. The Funds' financial statements, the
notes relating thereto, the financial highlights and the report of independent
auditors are incorporated by reference from the Annual Report into this Part B.
The Annual Report will accompany any request for Part B. The Annual Report can
be obtained, without charge, by calling 800-523-1918.
<PAGE>
TABLE OF CONTENTS
Investment Policies and Portfolio Techniques
Performance Information
Trading Practices and Brokerage
Purchasing Shares
Investment Plans
Determining Offering Price and Net Asset Value
Redemption and Exchange
Dividends, Distributions and Taxes
Investment Management Agreement and Sub-Advisory Agreements
Officers and Trustees
General Information
Financial Statements
Appendix A - Investment Objectives of the Other Funds in the Delaware
Investments Family
<PAGE>
INVESTMENT POLICIES AND PORTFOLIO TECHNIQUES
Investment Restrictions
Fundamental Investment Restrictions -- Adviser Fund has adopted the
following restrictions for each Fund, as applicable (except where otherwise
noted) which cannot be changed without approval by the holders of a "majority"
of the respective Fund's outstanding shares, which is a vote by the holders of
the lesser of a) 67% or more of the voting securities present in person or by
proxy at a meeting, if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy; or b) more than 50% of the
outstanding voting securities. The percentage limitations contained in the
restrictions and policies set forth herein apply at the time of purchase of
securities.
Each Fund shall not:
1. Make investments that will result in the concentration (as that term
may be defined in the 1940 Act, any rule or other thereunder, or U.S. Securities
and Exchange Commission ("SEC") staff interpretation thereof) of its investments
in the securities of issuers primarily engaged in the same industry, provided
that this restriction does not limit the Fund from investing in obligations
issued or guaranteed by the U.S. government, its agencies or instrumentalities,
or in tax-exempt obligations or certificates of deposit.
2. Borrow money or issue senior securities, except as the 1940 Act, any
rule or order thereunder, or SEC staff interpretation thereof, may permit.
3. Underwrite the securities of other issuers, except that the Fund may
engage in transactions involving the acquisition, disposition or resale of its
portfolio securities, under circumstances where it may be considered to be an
underwriter under the Securities Act of 1933.
4. Purchase or sell real estate, unless acquired as a result of
ownership of securities or other instruments and provided that this restriction
does not prevent the Fund from investing in issuers which invest, deal or
otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests therein.
5. Purchase or sell physical commodities, unless acquired as a result
of ownership of securities or other instruments and provided that this
restriction does not prevent the Fund from engaging in transactions involving
futures contracts and options thereon or investing in securities that are
secured by physical commodities.
6. Make loans, provided that this restriction does not prevent the Fund
from purchasing debt obligations, entering into repurchase agreements, loaning
its assets to broker/dealers or institutional investors and investing in loans,
including assignments and participation interests.
Non-Fundamental Investment Restrictions -- In addition to the
fundamental policies and investment restrictions described above, and the
various general investment policies described in the prospectus, each Fund will
be subject to the following investment restrictions, which are considered
non-fundamental and may be changed by the Board of Trustees without shareholder
approval.
1. The Fund is permitted to invest in other investment companies,
including open-end, closed-end or unregistered investment companies, either
within the percentage limits set forth in the 1940 Act, any rule or order
thereunder, or SEC staff interpretation thereof, or without regard to percentage
limits in connection with a merger, reorganization, consolidation or other
similar transaction. However, the Fund may not operate as a "fund of funds"
which invests primarily in the shares of other investment companies as permitted
by Section 12(d)(1)(F) or (G) of the 1940 Act, if its own shares are utilized as
investments by such a "fund of funds."
2. The Fund may not invest more than 15% of its net assets in
securities which it cannot sell or dispose of in the ordinary course of business
within seven days at approximately the value at which the Fund has valued the
investment.
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In addition the Funds shall not:
1. Purchase any security (other than obligations of the U.S.
government, its agencies or instrumentalities) if as a result, with respect to
75% of the Fund's total assets, more than 5% of the Fund's assets (determined at
the time of investment) would then be invested in securities of a single issuer;
2. Purchase any securities (other than obligations of the U.S.
government, its agencies and instrumentalities) if as a result 25% or more of
the value of the Fund's total assets (determined at the time of investment)
would be invested in the securities of one or more issuers conducting their
principal business activities in the same industry, provided that there is no
limitation with respect to money market instruments of domestic banks, U.S.
branches of foreign banks that are subject to the same regulations as U.S. banks
and foreign branches of domestic banks (provided that the domestic bank is
unconditionally liable in the event of the failure of the foreign branch to make
payment on its instruments for any reason). Foreign governments, including
agencies and instrumentalities thereof, and each of the electric utility,
natural gas distribution, natural gas pipeline, combined electric and natural
gas utility, and telephone industries shall be considered as a separate industry
for this purpose;
3. Buy or sell real estate, interests in real estate or commodities or
commodity contracts; however, each Fund may invest in debt securities secured by
real estate or interests therein, or issued by companies which invest in real
estate or interests therein, including real estate investment trusts, and may
purchase or sell currencies (including forward currency contracts) and financial
futures contracts and options thereon;
4. Engage in the business of underwriting securities of other issuers,
except to the extent that the disposal of an investment position may technically
cause Adviser Funds, Inc. to be considered an underwriter as that term is
defined under the 1933 Act, as amended;
5. Make loans in an aggregate amount in excess of one-third of a Fund's
total assets, taken at the time any loan is made, provided that entering into
certain repurchase agreements and purchasing debt securities shall not be deemed
loans for the purposes of this restriction;
6. Make short sales of securities or maintain a short position if, when
added together, more than 25% of the value of the Fund's net assets would be (i)
deposited as collateral for the obligation to replace securities borrowed to
effect short sales and (ii) allocated to segregated accounts in connection with
short sales;
7. Borrow money, except from banks for temporary or emergency purposes
not in excess of one-third of the value of a Fund's assets, and except that
Funds may enter into reverse repurchase agreements and engage in "roll"
transactions, provided that reverse repurchase agreements, "roll" transactions
and any other transactions constituting borrowing by a Fund may not exceed
one-third of the Fund's total assets;
8. Invest in securities of other investment companies except as may be
acquired as part of a merger, consolidation, reorganization or acquisition of
assets and except that each of the Funds may invest up to 5% of its total assets
in the securities of any one investment company, but may not own more than 3% of
the securities of any investment company or invest more than 10% of its total
assets in the securities of other investment companies;
9. Make investments for the purpose of exercising control or
management;
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10. Invest in securities of any issuer if, to the knowledge of Adviser
Funds, Inc., any officer or director of the Adviser Funds, Inc. or the Manager
or any sub-adviser owns more than 1/2 of 1% of the outstanding securities of
such issuer, and such officers and directors who own more than 1/2 of 1% own in
the aggregate more than 5% of the outstanding securities of such issuer;
11. Purchase any security if as a result a Fund would then have more
than 5% of its total assets (determined at the time of investment) invested in
securities of companies (including predecessors) less than three years old; or
12. Purchase illiquid securities or other securities that are not
readily marketable if more than 10% of the total assets of the Fund would be
invested in such securities.
In order to comply with certain state "blue sky" restrictions, Delaware
New Pacific Fund and Delaware Overseas Equity Fund will not as a matter of
operating policy:
1. Invest in oil, gas and mineral leases or programs;
2. Purchase warrants if as a result the Fund would then have more than
5% of its net assets (determined at the time of investment) invested in
warrants. Warrants will be valued at the lower of cost or market and investment
in warrants which are not listed on the New York Stock Exchange or American
Stock Exchange will be limited to 2% of the net assets of Adviser Funds, Inc.
(determined at the time of investment). For the purpose of this limitation,
warrants acquired in units or attached to securities are deemed to be without
value;
3. In connection with investment restriction number eight above, invest
in securities issued by other investment companies without waiving the advisory
fee on that portion of its assets invested in such securities; or
4. Purchase puts, calls, straddles, spreads, and any combination
thereof if by reason thereof the value of its aggregate investment in such
classes of securities will exceed 5% of its total assets.
INVESTMENTS
The Prospectuses discuss the Funds' investment objectives and the
policies followed to achieve those objectives. The following discussion
supplements the description of the Funds' investment objectives and policies in
the Prospectuses.
Mortgage-Backed Securities
Each Fund may invest in mortgage-related securities including those
representing an undivided ownership interest in a pool of mortgages.
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Government National Mortgage Association Certificates. Certificates
issued by the Government National Mortgage Association ("GNMA") are
mortgage-backed securities representing part ownership of a pool of mortgage
loans, which are issued by lenders such as mortgage bankers, commercial banks
and savings and loan associations, and are either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration. A pool of these
mortgages is assembled and, after being approved by GNMA, is offered to
investors through securities dealers. The timely payment of interest and
principal on each mortgage is guaranteed by GNMA and backed by the full faith
and credit of the U.S. government.
Principal is paid back monthly by the borrower over the term of the
loan. Investment of prepayments may occur at higher or lower rates than the
anticipated yield on the certificates. Due to the prepayment feature and the
need to reinvest prepayments of principal at current market rates, GNMA
certificates can be less effective than typical bonds of similar maturities at
"locking in" yields during periods of declining interest rates. GNMA
certificates typically appreciate or decline in market value during periods of
declining or rising interest rates, respectively. Due to the regular repayment
of principal and the prepayment feature, the effective maturities of mortgage
pass-through securities are shorter than stated maturities, will vary based on
market conditions and cannot be predicted in advance. The effective maturities
of newly-issued GNMA certificates backed by relatively new loans at or near the
prevailing interest rates are generally assumed to range between approximately
nine and 12 years.
FNMA and FHLMC Mortgage-Backed Obligations. The Federal National
Mortgage Association ("FNMA"), a federally chartered and privately-owned
corporation, issues pass-through securities representing interests in a pool of
conventional mortgage loans. FNMA guarantees the timely payment of principal and
interest but this guarantee is not backed by the full faith and credit of the
U.S. government. The Federal Home Loan Mortgage Corporation ("FHLMC"), a
corporate instrumentality of the U.S. government, issues participation
certificates which represent an interest in a pool of conventional mortgage
loans. FHLMC guarantees the timely payment of interest and the ultimate
collection of principal, and maintains reserves to protect holders against
losses due to default, but the certificates are not backed by the full faith and
credit of the U.S.
government.
As is the case with GNMA certificates, the actual maturity of and
realized yield on particular FNMA and FHLMC pass-through securities will vary
based on the prepayments of the underlying pool of mortgages and cannot be
predicted.
Foreign Investments
Delaware Overseas Equity Fund and Delaware New Pacific Fund may invest
substantially all of their assets in foreign investments. Foreign investments
can involve significant risks in addition to the risks inherent in U.S.
investments. The value of securities denominated in or indexed to foreign
currencies, and of dividends and interest from such securities, can change
significantly when foreign currencies strengthen or weaken relative to the U.S.
dollar. Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be highly
volatile. Many foreign countries lack uniform accounting and disclosure
standards comparable to those applicable to U.S. companies, and it may be more
difficult to obtain reliable information regarding an issuer's financial
condition and operations. In addition, the costs of foreign investing, including
withholding taxes, brokerage commissions, and custodial costs, are generally
higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may involve increased
risks in the event of a failed trade or the insolvency of a broker-dealer, and
may involve substantial delays. It may also be difficult to enforce legal rights
in foreign countries.
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Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments adverse to
the interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic, or social instability, military action or unrest, or adverse
diplomatic developments. There is no assurance that the Manager or sub-adviser
will be able to anticipate or counter these potential events.
The considerations noted above generally are intensified for
investments in developing countries. Developing countries may have relatively
unstable governments, economies based on only a few industries, and securities
markets that trade a small number of securities.
The Funds may invest in foreign securities that impose restrictions on
transfer within the United States or to U.S. persons. Although securities
subject to transfer restrictions may be marketable abroad, they may be less
liquid than foreign securities of the same class that are not subject to such
restrictions.
American Depositary Receipts and European Depositary Receipts ("ADRs"
and "EDRs") are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed for
use in U.S. and European securities markets, respectively, ADRs and EDRs are
alternatives to the purchase of the underlying securities in their national
markets and currencies.
Mortgage Dollar Rolls
Each Fund may enter into mortgage "dollar rolls" in which the Fund
sells mortgage-backed securities for delivery in the current month and
simultaneously contracts to repurchase substantially similar (same type, coupon
and maturity) securities on a specified future date. Dollar roll transactions
consist of the sale by a Fund of mortgage-backed securities, together with a
commitment to purchase similar, but not necessarily identical, securities at a
future date. Any difference between the sale price and the purchase price is
netted against the interest income foregone on the securities to arrive at an
implied borrowing (reverse repurchase) rate. Alternatively, the sale and
purchase transactions which constitute the dollar roll can be executed at the
same price, with the Fund being paid a fee as consideration for entering into
the commitment to purchase. Dollar rolls may be renewed prior to cash settlement
and initially may involve only a firm commitment agreement by the Fund to buy a
security. If the broker/dealer to whom the Fund sells the security becomes
insolvent, the Fund's right to purchase or repurchase the security may be
restricted; the value of the security may change adversely over the term of the
dollar roll; the security that the Fund is required to repurchase may be worth
less than the security that the Fund originally held, and the return earned by
the Fund with the proceeds of a dollar roll may not exceed transaction costs.
The Fund will place U.S. government or other liquid, high quality assets in a
segregated account in an amount sufficient to cover its repurchase obligation.
Options on Foreign and U.S. Currencies and Securities
The Funds may purchase and sell (write) put and call options on
securities, although the present intent is to write only covered call options.
These covered call options must remain covered so long as a Fund is obligated as
a writer. A call option written by a Fund is "covered" if the Fund owns the
security underlying the option or has an absolute and immediate right to acquire
that security without additional cash consideration (or for additional cash
consideration held in a segregated account by the Fund's Custodian) upon
conversion or exchange of other securities held in its fund. A call option is
also covered if a Fund holds on a share-for-share basis a call on the same
security as the call written where the exercise price of the call held is equal
to or less than the exercise price of the call written or greater than the
exercise price of the call written if the difference is maintained by the Fund
in cash, treasury bills or other high grade, short-term debt obligations in a
segregated account with the Custodian. The premium paid by the purchaser of an
option will reflect, among other things, the relationship of the exercise price
to the market price and volatility of the underlying security, the remaining
term of the option, supply and demand and interest rates.
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If the writer of an option wishes to terminate the obligation, he or
she may effect a "closing purchase transaction." This is accomplished by buying
an option of the same series as the option previously written. The effect of the
purchase is that the writer's position will be canceled by the clearing
corporation. However, a writer may not effect a closing purchase transaction
after he or she has been notified of the exercise of an option. Similarly, an
investor who is the holder of an option may liquidate his or her position by
effecting a "closing sale transaction." This is accomplished by selling an
option of the same series as the option previously purchased. There is no
guarantee that either a closing purchase or a closing sale transaction can be
effected. To secure the obligation to deliver the underlying security in the
case of a call option, the writer of the option (whether an exchange-traded
option or a NASDAQ option) is required to pledge for the benefit of the broker
the underlying security or other assets in accordance with the rules of The
Options Clearing Corporation (OCC), the Chicago Board of Trade and the Chicago
Mercantile Exchange, institutions which interpose themselves between buyers and
sellers of options. Technically, each of these institutions assumes the other
side of every purchase and sale transaction on an exchange and, by doing so,
guarantees the transaction.
An option position may be closed out only on an exchange, board of
trade or other trading facility which provides a secondary market for an option
of the same series. Although a Fund will generally purchase or write only those
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market on an exchange or other trading
facility will exist for any particular option, or at any particular time, and
for some options no secondary market on an exchange or otherwise may exist. In
such event it might not be possible to effect closing transactions in particular
options, with the result that the Fund would have to exercise its options in
order to realize any profit and would incur brokerage commissions upon the
exercise of call options and upon the subsequent disposition of underlying
securities acquired through the exercise of call options or upon the purchase of
underlying securities for the exercise of put options. If a Fund as a covered
call option writer is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise.
Reasons for the absence of a liquid secondary market on an exchange
include the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities; (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (v) the facilities of an exchange or
a clearing corporation may not at all times be adequate to handle current
trading volume; or (vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the trading
of options (or a particular class or series of options), in which event the
secondary market on that exchange (or in the class or series of options) would
cease to exist, although outstanding options on that exchange that had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms. There is no assurance
that higher than anticipated trading activity or other unforeseen events might
not, at times, render certain of the facilities of any of the clearing
corporations inadequate, and thereby result in the institution by an exchange of
special procedures which may interfere with the timely execution of customers'
orders. However, the OCC, based on forecasts provided by the U.S. exchanges,
believes that its facilities are adequate to handle the volume of reasonably
anticipated options transactions, and such exchanges have advised such clearing
corporation that they believe their facilities will also be adequate to handle
reasonably anticipated volume.
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Options on Stock Indices
Options on stock indices are similar to options on stock except that,
rather than the right to take or make delivery of stock at a specified price, an
option on a stock index gives the holder the right to receive, upon exercise of
the option, an amount of cash if the closing level of the stock index upon which
the option is based is greater than, in the case of a call, or less than, in the
case of a put, the exercise price of the option. This amount of cash is equal to
such difference between the closing price of the index and the exercise price of
the option expressed in dollars times a specified multiple (the "multiplier").
The writer of the option is obligated, in return for the premium received, to
make delivery of this amount. Unlike stock options, all settlements are in cash.
The multiplier for an index option performs a function similar to the
unit of trading for a stock option. It determines the total dollar value per
contract of each point in the difference between the exercise price of an option
and the current level of the underlying index. A multiplier of 100 means that a
one-point difference will yield $100. Options on different indices may have
different multipliers.
Except as described below, a Fund will write call options on indices
only if on such date it holds a portfolio of securities at least equal to the
value of the index times the multiplier times the number of contracts. When a
Fund writes a call option on a broadly-based stock market index, the Fund will
segregate or put into escrow with the Custodian, or pledge to a broker as
collateral for the option, cash, cash equivalents or at least one "qualified
security" with a market value at the time the option is written of not less than
100% of the current index value times the multiplier times the number of
contracts. A Fund will write call options on broadly-based stock market indices
only if at the time of writing it holds a diversified portfolio of stocks.
If a Fund has written an option on an industry or market segment index,
it will so segregate or put into escrow with the Custodian, or pledge to a
broker as collateral for the option, at least ten "qualified securities," which
are stocks of an issuer in such industry or market segment, with a market value
at the time the option is written of not less than 100% of the current index
value times the multiplier times the number of contracts. Such stocks will
include stocks which represent at least 50% of the Fund's holdings in that
industry or market segment. No individual security will represent more than 15%
of the amount so segregated, pledged or escrowed in the case of broadly-based
stock market index options or 25% of such amount in the case of industry or
market segment index options.
If at the close of business, the market value of such qualified
securities so segregated, escrowed or pledged falls below 100% of the current
index value times the multiplier times the number of contracts, a Fund will
segregate, escrow or pledge an amount in cash, Treasury bills or other high
grade short-term debt obligations equal in value to the difference. In addition,
when a Fund writes a call on an index which is in-the-money at the time the call
is written, the Fund will segregate with the Custodian or pledge to the broker
as collateral, cash, U.S. government or other high grade short-term debt
obligations equal in value to the amount by which the call is in-the-money times
the multiplier times the number of contracts. Any amount segregated pursuant to
the foregoing sentence may be applied to the Fund's obligation to segregate
additional amounts in the event that the market value of the qualified
securities falls below 100% of the current index value times the multiplier
times the number of contracts. However, if a Fund holds a call on the same index
as the call written where the exercise price of the call held is equal to or
less than the exercise price of the call written or greater than the exercise
price of the call written if the difference is maintained by the Fund in cash,
Treasury bills or other high grade short-term debt obligations in a segregated
account with the Custodian, it will not be subject to the requirements described
in this paragraph.
Risks of Options on Stock Indices. Index prices may be distorted if
trading of certain securities included in the index is interrupted. Trading in
the index options also may be interrupted in certain circumstances, such as if
trading were halted in a substantial number of securities included in the index.
If this occurred, a Fund would not be able to close out options which it had
purchased or written and, if restrictions on exercise were imposed, may be
unable to exercise an option it holds, which could result in substantial losses
to the Fund. It is the Funds' policy to purchase or write options only on
indices which include a number of securities sufficient to minimize the
likelihood of a trading halt in the index.
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Special Risks of Writing Calls on Stock Indices. Unless a Fund has
other liquid assets which are sufficient to satisfy the exercise of a call, the
Fund would be required to liquidate portfolio securities in order to satisfy the
exercise. Because an exercise must be settled within hours after receiving the
notice of exercise, if a Fund fails to anticipate an exercise it may have to
borrow from a bank (in amounts not exceeding 20% of the value of the Fund's
total assets) pending settlement of the sale of securities in its portfolio and
would incur interest charges thereon.
When a Fund has written a call, there is also a risk that the market
may decline between the time the Fund has a call exercised against it, at a
price which is fixed as of the closing level of the index on the date of
exercise, and the time the Fund is able to sell securities in its portfolio. As
with stock options, a Fund will not learn that an index option has been
exercised until the day following the exercise date. Unlike a call on stock
where the Fund would be able to deliver the underlying securities in settlement,
the Fund may have to sell part of its portfolio in order to make settlement in
cash, and the price of such securities might decline before they can be sold.
This timing risk makes certain strategies involving more than one option
substantially more risky with index options than with stock options. For
example, even if an index call which a Fund has written is "covered" by an index
call held by the Fund with the same strike price, the Fund will bear the risk
that the level of the index may decline between the close of trading on the date
the exercise notice is filed with the clearing corporation and the close of
trading on the date the Fund exercises the call it holds or the time the Fund
sells the call, which in either case would occur no earlier than the day
following the day the exercise notice was filed.
Over-the-Counter Options and Illiquid Securities. As indicated in the
Prospectuses, each Fund may deal in over-the-counter ("OTC") options. The Funds
understand the position of the staff of the Securities and Exchange Commission
("SEC") to be that purchased OTC options and the assets used as "cover" for
written OTC options are illiquid securities. The Funds, the Manager, and the
sub-advisers disagree with this position and have found the dealers with which
they engage in OTC options transactions generally agreeable to and capable of
entering into closing transactions. As also indicated in the Prospectuses, the
Funds have adopted procedures for engaging in OTC options for the purpose of
reducing any potential adverse impact of such transactions upon the liquidity of
each Fund's portfolio.
As part of these procedures the Funds will engage in OTC options
transactions only with primary dealers that have been specifically approved by
the Board of Trustees of Adviser Funds, Inc. and the Manager and/or sub-advisers
believe that the approved dealers should be agreeable and able to enter into
closing transactions if necessary and, therefore, present minimal credit risks
to the Funds. The Funds anticipate entering into written agreements with those
dealers to whom the Funds may sell OTC options, pursuant to which the Funds
would have the absolute right to repurchase the OTC options from such dealers at
any time at a price determined pursuant to a formula set forth in certain no
action letters published by the SEC staff. A Fund will not engage in OTC options
transactions if the amount invested by the Fund in OTC options plus, with
respect to OTC options written by the Fund, the amounts required to be treated
as illiquid pursuant to the terms of such letters (and the value of the assets
used as cover with respect to OTC option sales which are not within the scope of
such letters), plus the amount invested by the Fund in illiquid securities,
would exceed 15% of the Fund's total assets. OTC options on securities other
than U.S. government securities may not be within the scope of such letters and,
accordingly, the amount invested by a Fund in OTC options on such other
securities and the value of the assets used as cover with respect to OTC option
sales regarding such non-U.S. government securities will be treated as illiquid
and subject to the 10% limitation on the Fund's net assets that may be invested
in illiquid securities. See Illiquid Securities, below.
Futures Contracts and Options Thereon
A futures contract is an agreement in which the writer (or seller) of
the contract agrees to deliver to the buyer an amount of cash or securities
equal to a specific dollar amount times the difference between the value of a
specific fixed-income security or index at the close of the last trading day of
the contract and the price at which the agreement is made. No physical delivery
of the underlying securities is made. When the futures contract is entered into,
each party deposits with a broker or in a segregated custodial account
approximately 5% of the contract amount, called the "initial margin." Subsequent
payments to and from the broker, called "variation margin," will be made on a
daily basis as the price of the underlying security or index fluctuates, making
the long and short positions in the futures contracts more or less valuable, a
process known as "marking to market." In the case of options on futures
contracts, the holder of the option pays a premium and receives the right, upon
exercise of the option at a specified price during the option period, to assume
a position in the futures contract (a long position if the option is a call and
a short position if the option is a put). If the option is exercised by the
holder before the last trading day during the option period, the option writer
delivers the futures position, as well as any balance in the writer's futures
margin account. If it is exercised on the last trading day, the option writer
delivers to the option holder cash in an amount equal to the difference between
the option exercise price and the closing level of the relevant security or
index on the date the option expires.
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Each Fund intends to engage in futures contracts and options thereon as
a hedge against changes, resulting from market conditions, in the value of
securities which are held by the Fund or which the Fund intends to purchase, in
accordance with the rules and regulations of the Commodity Futures Trading
Commission ("CFTC"). Additionally, the Funds may write options on futures
contracts to realize through the receipt of premium income a greater return than
would be realized in a Fund's portfolio securities alone.
Risks of Transactions in Futures Contracts. There are several risks in
connection with the use of futures contracts as a hedging device. Successful use
of futures contracts by a Fund is subject to the ability of the Fund's Manager
or sub-adviser to correctly predict movements in the direction of interest rates
or changes in market conditions. These predictions involve skills and techniques
that may be different from those involved in the management of the portfolio
being hedged. In addition, there can be no assurance that there will be a
correlation between movements in the price of the underlying index or securities
and movements in the price of the securities which are the subject of the hedge.
A decision of whether, when and how to hedge involves the exercise of skill and
judgment, and even a well-conceived hedge may be unsuccessful to some degree
because of market behavior or unexpected trends in interest rates.
Although the Funds will purchase or sell futures contracts only on
exchanges where there appears to be an adequate secondary market, there is no
assurance that a liquid secondary market on an exchange will exist for any
particular contract or at any particular time. Accordingly, there can be no
assurance that it will be possible, at any particular time, to close a futures
position. In the event a Fund could not close a futures position and the value
of such position declined, the Fund would be required to continue to make daily
cash payments of variation margin. However, in the event futures contracts have
been used to hedge portfolio securities, such securities will not be sold until
the futures contract can be terminated. In such circumstances, an increase in
the price of the securities, if any, may partially or completely offset losses
on the futures contract. However, there is no guarantee that the price movements
of the securities will, in fact, correlate with the price movements in the
futures contract and thus provide an offset to losses on a futures contract.
The hours of trading of futures contracts may not conform to the hours
during which a Fund may trade the underlying securities. To the extent that the
futures markets close before the securities markets, significant price and rate
movements can take place in the securities markets that cannot be reflected in
the futures market.
Foreign Currency Transactions. The Funds may hold foreign currency
deposits from time to time and may convert dollars and foreign currencies in the
foreign exchange markets. Currency conversion involves dealer spreads and other
costs, although commissions usually are not charged. Currencies may be exchanged
on a spot (i.e., cash) basis, or by entering into forward contracts to purchase
or sell foreign currencies at a future date and price. Forward contracts
generally are traded in an interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. The parties to a
forward contract may agree to offset or terminate the contract before its
maturity, or may hold the contract to maturity and complete the contemplated
currency exchange.
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Forward Foreign Currency Exchange Contracts
The Funds' dealings in forward contracts will be limited to hedging
involving either specific transactions or portfolio positions. Transaction
hedging is the purchase or sale of forward contracts with respect to specific
receivables or payables of a Fund generally arising in connection with the
purchase or sale of its portfolio securities and accruals of interest or
dividends receivable and Fund expenses. Position hedging is the sale of a
foreign currency with respect to portfolio security positions denominated or
quoted in that currency. A Fund may not position hedge with respect to a
particular currency for an amount greater than the aggregate market value
(determined at the time of making any sale of a forward contract) of securities
held in its portfolio denominated or quoted in, or currently convertible into,
such currency.
When a Fund enters into a contract for the purchase or sale of a
security denominated in a foreign currency, or when a Fund anticipates the
receipt in a foreign currency of dividends or interest payments on a security
which it holds, the Fund may desire to "lock in" the U.S. dollar price of the
security or the U.S. dollar equivalent of such dividend or interest payment as
the case may be. By entering into a forward contract for a fixed amount of
dollars for the purchase or sale of the amount of foreign currency involved in
the underlying transactions, a Fund will be able to protect itself against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the subject foreign currency during the period between the date
on which the security is purchased or sold, or on which the dividend or interest
payment is declared, and the date on which such payments are made or received.
Additionally, when the Manager and/or applicable sub-adviser believes
that the currency of a particular foreign country may suffer a substantial
decline against the U.S. dollar, a Fund may enter into a forward contract for a
fixed amount of dollars, to sell the amount of foreign currency approximating
the value of some or all of the securities of the Fund denominated in such
foreign currency.
The Funds may use currency forward contracts to manage currency risks
and to facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by these Funds.
In connection with purchases and sales of securities denominated in
foreign currencies, a Fund may enter into currency forward contracts to fix a
definite price for the purchase or sale in advance of the trade's settlement
date. This technique is sometimes referred to as a "settlement hedge" or
"transaction hedge." The Manager and/or sub-advisers expect to enter into
settlement hedges in the normal course of managing the Funds' foreign
investments. The Funds could also enter into forward contracts to purchase or
sell a foreign currency in anticipation of future purchases or sales of
securities denominated in foreign currency, even if the specific investments
have not yet been selected by the Manager and/or sub-adviser.
The Funds may also use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For example,
if a Fund owned securities denominated in pounds sterling, it could enter into a
forward contract to sell pounds sterling in return for U.S. dollars to hedge
against possible declines in the pound's value. Such a hedge (sometimes referred
to as a "position hedge") would tend to offset both positive and negative
currency fluctuations, but would not offset changes in security values caused by
other factors. The Fund could also hedge the position by selling another
currency expected to perform similarly to the pound sterling -- for example, by
entering into a forward contract to sell Deutschemarks or European Currency
Units in return for U.S. dollars. This type of hedge, sometimes referred to as a
"proxy hedge," could offer advantages in terms of cost, yield, or efficiency,
but generally will not hedge currency exposure as effectively as a simple hedge
into U.S. dollars. Proxy hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which the hedged securities
are denominated.
12
<PAGE>
Under certain conditions, SEC guidelines require mutual funds to set
aside cash and appropriate liquid assets in a segregated custodian account to
cover currency forward contracts. As required by SEC guidelines, the Funds will
segregate assets to cover currency forward contracts, if any, whose purpose is
essentially speculative. The Funds will not segregate assets to cover forward
contracts, including settlement hedges, position hedges, and proxy hedges.
Successful use of forward currency contracts will depend on the Manager's and/or
sub-advisers' skill in analyzing and predicting currency values. Forward
contracts may substantially change the Funds' investment exposure to changes in
currency exchange rates, and could result in losses to the Funds if currencies
do not perform as the Manager and/or sub-advisers anticipate. For example, if a
currency's value rose at a time when the Manager and/or applicable sub-adviser
had hedged a Fund by selling that currency in exchange for dollars, the Fund
would be unable to participate in the currency's appreciation. If the Manager
and/or applicable sub-adviser hedges currency exposure through proxy hedges, a
Fund could realize currency losses from the hedge and the security position at
the same time if the two currencies do not move in tandem. Similarly, if the
Manager and/or sub-adviser increases a Fund's exposure to a foreign currency,
and that currency's value declines, the Fund will realize a loss. There is no
assurance that the Manager's and/or sub-advisers' use of forward currency
contracts will be advantageous to the Funds or that it will hedge at an
appropriate time.
Foreign Currency Options
The Funds may purchase U.S. exchange-listed call and put options on
foreign currencies. Such options on foreign currencies operate similarly to
options on securities. Options on foreign currencies are affected by all of
those factors which influence foreign exchange rates and investments generally.
The value of a foreign currency option is dependent upon the value of
the foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealer or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the options market.
Foreign Currency Conversion
Although foreign exchange dealers do not charge a fee for currency
conversion, they do realize a profit based on the difference (the "spread")
between prices at which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to a Fund at one rate, while
offering a lesser rate of exchange should those Funds desire to resell that
currency to the dealer.
13
<PAGE>
Combined Transactions
Each Fund may enter into multiple transactions, including multiple
options transactions, multiple futures transactions, multiple currency
transactions (including forward currency contracts) and multiple interest rate
transactions and any combination of futures, options, currency and interest rate
transactions ("component" transactions), instead of a single transaction, as
part of a single or combined strategy when, in the opinion of the Manager and/or
sub-adviser, it is in the best interests of the Fund to do so. A combined
transaction will usually contain elements of risk that are present in each of
its component transactions. Although combined transactions are normally entered
into based on the Manager's and/or sub-adviser's judgment that the combined
strategies will reduce risk or otherwise more effectively achieve the desired
portfolio management goal, it is possible that the combination will instead
increase such risks or hinder achievement of the portfolio management objective.
Swaps, Caps, Floors and Collars
Each Fund may enter into interest rate, currency and index swaps and
the purchase or sale of related caps, floors and collars. The Funds expect to
enter into these transactions primarily to preserve a return or spread on a
particular investment or portion of its portfolio, to protect against currency
fluctuations, as a duration management technique or to protect against any
increase in the price of securities the Fund anticipates purchasing at a later
date. The Funds intend to use these transactions as hedges and not speculative
investments and will not sell interest rate caps or floors where it does not own
securities or other instruments providing the income stream the Fund may be
obligated to pay. Interest rate swaps involve the exchange by the Fund with
another party of their respective commitments to pay or receive interest, e.g.,
an exchange of floating rate payments for fixed rate payments with respect to a
nominal amount of principal. A currency swap is an agreement to exchange cash
flows on a notional amount of two or more currencies based on the relative value
differential among them and an index swap is an agreement to swap cash flows on
a notional amount based on changes in the values of the reference indices. The
purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling such cap to the extent that a specified
index exceeds a predetermined interest rate or amount. The purchase of a floor
entitles the purchaser to receive payments on a notional principal amount from
the party selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return within a predetermined range of interest
rates or values.
A Fund will usually enter into swaps on a net basis, i.e., the two
payment streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with the Fund receiving or paying, as the case may
be, only the net amount of the two payments. Inasmuch as these swaps, caps,
floors and collars are entered into for good faith hedging purposes, the
investment manager and the Fund believe such obligations do not constitute
senior securities under the Investment Company Act of 1940 (the "1940 Act") and,
accordingly, will not treat them as being subject to its borrowing restrictions.
A Fund will not enter into any swap, cap, floor or collar transaction unless, at
the time of entering into such transaction, the unsecured long-term debt of the
counterparty, combined with any credit enhancements, is rated at least A by S&P
or Moody's or is determined to be of equivalent credit quality by the Manager
and/or sub-adviser. If there is a default by the counterparty, the Fund may have
contractual remedies pursuant to the agreements related to the transaction. The
swap market has grown substantially in recent years with a large number of banks
and investment banking firms acting both as principals and as agent utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid. Caps, floors and collars are more recent innovations for
which standardized documentation has not yet been fully developed and,
accordingly, they are less liquid than swaps.
Eurodollar Instruments
The Funds may make investments in Eurodollar instruments. Eurodollar
instruments are U.S. dollar-denominated futures contracts or options thereon
which are linked to the London Interbank Offered Rate ("LIBOR"), although
foreign currency-denominated instruments are available from time to time.
Eurodollar futures contracts enable purchasers to obtain a fixed rate for the
lending of funds and sellers to obtain a fixed rate for borrowings. A Fund might
use Eurodollar futures contracts and options thereon to hedge against changes in
LIBOR, to which many interest rate swaps and fixed-income instruments are
linked.
14
<PAGE>
Lending of Portfolio Securities
As discussed in the Prospectuses, each Fund has the ability to lend
securities from its portfolio to brokers, dealers and other financial
organizations. Such loans, if and when made, may not exceed one-third of a
Fund's total assets. A Fund may not lend its portfolio securities to Lincoln
National Corporation or its affiliates unless it has applied for and received
specific authority from the SEC. Loans of securities by the Funds will be
collateralized by cash, letters of credit or U.S. government securities, which
will be maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities. From time to time, a Fund may
return a part of the interest earned from the investment of collateral received
for securities loaned to the borrower and/or a third party, which is
unaffiliated with the Fund or with Lincoln National Corporation, and which is
acting as a "finder."
In lending its portfolio securities, a Fund can increase its income by
continuing to receive interest on the loaned securities as well as by either
investing the cash collateral in short-term instruments or obtaining yield in
the form of interest paid by the borrower when government securities are used as
collateral. Requirements of the SEC, which may be subject to future
modifications, currently provide that the following conditions must be met
whenever portfolio securities are loaned: (a) the Fund must receive at least
102% cash collateral or equivalent securities from the borrower; (b) the
borrower must increase such collateral whenever the market value of the loaned
securities rises above the level of such collateral; (c) the Fund must be able
to terminate the loan at any time; (d) the Fund must receive reasonable interest
on the loan, as well as an amount equal to any dividends, interest or other
distributions on the loaned securities, and any increase in market value; (e)
the Fund may pay only reasonable custodian fees in connection with the loan; and
(f) voting rights on the loaned securities may pass to the borrower; however, if
a material event adversely affecting the investment occurs, the Fund's Board of
Trustees must terminate the loan and regain the right to vote the securities.
The risks in lending portfolio securities, as with other extensions of secured
credit, consist of possible delay in receiving additional collateral or in the
recovery of the securities or possible loss of rights in the collateral should
the borrower fail financially.
When-Issued Securities
The Funds may purchase securities on a "when-issued" basis. When a Fund
agrees to purchase securities, the Custodian will set aside cash or liquid
portfolio securities equal to the amount of the commitment in a separate
account. Normally, the Custodian will set aside portfolio securities to satisfy
a purchase commitment. In such a case, a Fund may be required subsequently to
place additional assets in the separate account in order to assure that the
value of the account remains equal to the amount of the Fund's commitment. It
may be expected that a Fund's net assets will fluctuate to a greater degree when
it sets aside portfolio securities to cover such purchase commitments than when
it sets aside cash. No Fund intends to purchase "when-issued" securities for
speculative purposes but only in furtherance of its investment objective.
Because a Fund will set aside cash or liquid portfolio securities to satisfy its
purchase commitments in the manner described, the Fund's liquidity and the
ability of the Manager or sub-adviser to manage the Fund might be affected in
the event its commitments to purchase when-issued securities ever exceeded 25%
of the value of its assets.
When a Fund engages in "when-issued" transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result in the
Fund's incurring a loss or missing the opportunity to obtain a price considered
to be advantageous.
Money Market Instruments
Each Fund may invest for defensive purposes in corporate government
bonds and notes and money market instruments. Money market instruments in which
the Funds may invest include U.S. government securities; certificates of
deposit, time deposits and bankers' acceptances issued by domestic banks
(including their branches located outside the U.S. and subsidiaries located in
Canada), domestic branches of foreign banks, savings and loan associations and
similar institutions; high grade commercial paper; and repurchase agreements
with respect to the foregoing types of instruments. The following is a more
detailed description of such money market instruments.
15
<PAGE>
Bank Obligations
Certificates of deposit ("CDs") are short-term negotiable obligations
of commercial banks; time deposits ("TDs") are non-negotiable deposits
maintained in banking institutions for specified periods of time at stated
interest rates; and bankers' acceptances are time drafts drawn on commercial
banks by borrowers usually in connection with international transactions.
Obligations of foreign branches of domestic banks, such as CDs and TDs,
may be general obligations of the parent bank in addition to the issuing branch,
or may be limited by the terms of a specific obligation and government
regulation. Such obligations are subject to different risks than are those of
domestic banks or domestic branches of foreign banks. These risks include
foreign economic and political developments, foreign governmental restrictions
that may adversely affect payment of principal and interest on the obligations,
foreign exchange controls and foreign withholding and other taxes on interest
income. Foreign branches of domestic banks are not necessarily subject to the
same or similar regulatory requirements that apply to domestic banks, such as
mandatory reserve requirements, loan limitations, and accounting, auditing and
financial recordkeeping requirements. In addition, less information may be
publicly available about a foreign branch of a domestic bank than about a
domestic bank. CDs issued by wholly owned Canadian subsidiaries of domestic
banks are guaranteed as to repayment of principal and interest (but not as to
sovereign risk) by the domestic parent bank.
Obligations of domestic branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by governmental regulation as
well as governmental action in the country in which the foreign bank has its
head office. A domestic branch of a foreign bank with assets in excess of $1
billion may or may not be subject to reserve requirements imposed by the Federal
Reserve System or by the state in which the branch is located if the branch is
licensed in that state. In addition, branches licensed by the Comptroller of the
Currency and branches licensed by certain states ("State Branches") may or may
not be required to: (a) pledge to the regulator by depositing assets with a
designated bank within the state, an amount of its assets equal to 5% of its
total liabilities; and (b) maintain assets within the state in an amount equal
to a specified percentage of the aggregate amount of liabilities of the foreign
bank payable at or through all of its agencies or branches within the state. The
deposits of state branches may not necessarily be insured by the FDIC. In
addition, there may be less publicly available information about a domestic
branch of a foreign bank than about a domestic bank.
In view of the foregoing factors associated with the purchase of CDs
and TDs issued by foreign branches of domestic banks or by domestic branches of
foreign banks, the Manager and/or sub-advisers will carefully evaluate such
investments on a case-by-case basis.
Savings and loan associations whose CDs may be purchased by the Funds
are supervised by the Office of Thrift Supervision and are insured by the
Savings Association Insurance Fund, which is administered by the FDIC and is
backed by the full faith and credit of the U.S. government. As a result, such
savings and loan associations are subject to regulation and examination.
Reverse Repurchase Agreements
Each Fund is authorized to enter into reverse repurchase agreements. A
reverse repurchase agreement is the sale of a security by a Fund and its
agreement to repurchase the security at a specified time and price. A Fund will
maintain in a segregated account with the Custodian cash, cash equivalents or
U.S. government securities in an amount sufficient to cover its obligations
under reverse repurchase agreements with broker/dealers (but no collateral is
required on reverse repurchase agreements with banks). Under the 1940 Act,
reverse repurchase agreements may be considered borrowings by a Fund;
accordingly, each Fund will limit its investments in reverse repurchase
agreements, together with any other borrowings, to no more than one-third of its
total assets. The use of reverse repurchase agreements by a Fund creates
leverage which increases the Fund's investment risk. If the income and gains on
securities purchased with the proceeds of reverse repurchase agreements exceed
the costs of the agreements, a Fund's earnings or net asset value will increase
faster than otherwise would be the case; conversely, if the income and gains
fail to exceed the costs, earnings or net asset value would decline faster than
otherwise would be the case.
16
<PAGE>
"Roll" Transactions
Each Fund may engage in "roll" transactions. A "roll" transaction is
the sale of securities together with a commitment (for which a Fund may receive
a fee) to purchase similar, but not identical, securities at a future date.
Under the 1940 Act, these transactions may be considered borrowings by the
Funds; accordingly, each Fund will limit its use of these transactions, together
with any other borrowings, to no more than one-third of its total assets. The
Funds will segregate liquid assets such as cash, U.S. government securities or
other high grade debt obligations in an amount sufficient to meet their payment
obligations in these transactions. Although these transactions will not be
entered into for leveraging purposes, to the extent a Fund's aggregate
commitments under these transactions exceed its holdings of cash and securities
that do not fluctuate in value (such as short-term money market instruments),
the Fund temporarily will be in a leveraged position (i.e., it will have an
amount greater than its net assets subject to market risk). Should the market
value of a Fund's portfolio securities decline while the Fund is in a leveraged
position, greater depreciation of its net assets would likely occur than were it
not in such a position. As a Fund's aggregate commitments under these
transactions increase, the opportunity for leverage similarly increases.
Repurchase Agreements
While the Funds are permitted to do so, they normally do not invest in
repurchase agreements, except to invest cash balances.
The funds available from Delaware Investments have obtained an
exemption (the "Order") from the joint-transaction prohibitions of Section 17(d)
of the 1940 Act to allow Delaware Investments funds jointly to invest cash
balances. The Funds may invest cash balances in a joint repurchase agreement in
accordance with the terms of the Order and subject generally to the conditions
described below.
A repurchase agreement is a short-term investment by which the
purchaser acquires ownership of a debt security and the seller agrees to
repurchase the obligation at a future time and set price, thereby determining
the yield during the purchaser's holding period. Should an issuer of a
repurchase agreement fail to repurchase the underlying security, the loss to the
Funds, if any, would be the difference between the repurchase price and the
market value of the security. A Fund will limit its investments in repurchase
agreements to those which the Manager and/or sub-adviser, under the guidelines
of the Board of Trustees, determines to present minimal credit risks and which
are of high quality. In addition, a Fund must have collateral of at least 102%
of the repurchase price, including the portion representing the Fund's yield
under such agreements, which is monitored on a daily basis.
Illiquid Securities
Each Fund may invest no more than 10% of the value of its net assets in
illiquid securities.
Each Fund may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933 (the "1933 Act"). Rule 144A
permits many privately placed and legally restricted securities to be freely
traded among certain institutional buyers such as the Funds.
While maintaining oversight, the Board of Trustees has delegated to the
Manager the day-to-day function of determining whether or not individual Rule
144A Securities are liquid for purposes of a Fund's 10% limitation on
investments in illiquid assets. The Board has instructed the Manager to consider
the following factors in determining the liquidity of a Rule 144A Security: (i)
the frequency of trades and trading volume for the security; (ii) whether at
least three dealers are willing to purchase or sell the security and the number
of potential purchasers; (iii) whether at least two dealers are making a market
in the security; and (iv) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security, the method
of soliciting offers, and the mechanics of transfer).
If the Manager determines that a Rule 144A Security that was previously
determined to be liquid is no longer liquid and, as a result, a Fund's holdings
of illiquid securities exceed the Fund's 10% limit on investment in such
securities, the Manager will determine what action to take to ensure that the
Fund continues to adhere to such limitation.
17
<PAGE>
Variable and Floating Rate Notes
Variable rate master demand notes, in which the Funds may invest, are
unsecured demand notes that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate according to the terms of
the instrument. A Fund will not invest over 5% of its assets in variable rate
master demand notes. Because master demand notes are direct lending arrangements
between a Fund and the issuer, they are not normally traded. Although there is
no secondary market in the notes, a Fund may demand payment of principal and
accrued interest at any time. While the notes are not typically rated by credit
rating agencies, issuers of variable amount master demand notes (which are
normally manufacturing, retail, financial, and other business concerns) must
satisfy the same criteria as set forth above for commercial paper. In
determining average weighted portfolio maturity, a variable amount master demand
note will be deemed to have a maturity equal to the period of time remaining
until the principal amount can be recovered from the issuer through demand.
A variable rate note is one whose terms provide for the adjustment of
its interest rate on set dates and which, upon such adjustment, can reasonably
be expected to have a market value that approximates its par value. A floating
rate note is one whose terms provide for the adjustment of its interest rate
whenever a specified interest rate changes and which, at any time, can
reasonably be expected to have a market value that approximates its par value.
Such notes are frequently not rated by credit rating agencies; however, unrated
variable and floating rate notes purchased by a Fund will be determined by the
Fund's Manager and/or sub-adviser under guidelines established by the Fund's
Board of Trustees to be of comparable quality at the time of purchase to rated
instruments eligible for purchase under the Fund's investment policies. In
making such determinations, the Manager and/or sub-adviser, if any, will
consider the earning power, cash flow and other liquidity ratios of the issuers
of such notes (such issuers include financial, merchandising, bank holding and
other companies) and will continuously monitor their financial condition.
Although there may be no active secondary market with respect to a particular
variable or floating rate note purchased by a Fund, the Fund may re-sell the
note at any time to a third party. The absence of such an active secondary
market, however, could make it difficult for the Fund to dispose of the variable
or floating rate note involved in the event the issuer of the note defaulted on
its payment obligations, and the Fund could, for this or other reasons, suffer a
loss to the extent of the default. Variable or floating rate notes may be
secured by bank letters of credit.
Variable and floating rate notes for which no readily available market
exists will be purchased in an amount which, together with securities with legal
or contractual restrictions on resale or for which no readily available market
exists (including repurchase agreements providing for settlement more than seven
days after notice), exceed 10% of the Fund's total assets only if such notes are
subject to a demand feature that will permit the Fund to demand payment of the
Principal within seven days after demand by the Fund. If not rated, such
instruments must be found by the Fund's Manager and/or sub-adviser under
guidelines established by the Fund's Board of Trustees, to be of comparable
quality to instruments that are rated high quality. A rating may be relied upon
only if it is provided by a nationally recognized statistical rating
organization that is not affiliated with the issuer or guarantor of the
instruments. For a description of the rating symbols of S&P and Moody's used in
this paragraph, see the Prospectuses. The Fund may also invest in Canadian
Commercial Paper, which is commercial paper issued by a Canadian corporation or
a Canadian counterpart of a U.S. corporation, and in Europaper which is U.S.
dollar denominated commercial paper of a foreign issuer.
18
<PAGE>
Municipal Securities
Municipal Securities are issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities such
as bridges, highways, roads, schools, water and sewer works, and other
utilities. Other public purposes for which Municipal Securities may be issued
include refunding outstanding obligations, obtaining funds for general operating
expenses and obtaining funds to lend to other public institutions and
facilities. In addition, certain debt obligations known as "private activity
bonds" may be issued by or on behalf of municipalities and public authorities to
obtain funds to provide certain water, sewage and solid waste facilities,
qualified residential rental projects, certain local electric, gas and other
heating or cooling facilities, qualified hazardous waste facilities, high-speed
intercity rail facilities, governmentally-owned airports, docks and wharves and
mass commuting facilities, certain qualified mortgages, student loan and
redevelopment bonds and bonds used for certain organizations exempt from federal
income taxation. Certain debt obligations known as "industrial development
bonds" under prior federal tax law may have been issued by or on behalf of
public authorities to obtain funds to provide certain privately-operated housing
facilities, sports facilities, industrial parks, convention or trade show
facilities, airport, mass transit, port or parking facilities, air or water
pollution control facilities, sewage or solid waste disposal facilities, and
certain facilities for water supply. Other private activity bonds and industrial
development bonds issued to finance the construction, improvement, equipment or
repair of privately-operated industrial, distribution, research, or commercial
facilities may also be Municipal Securities, but the size of such issues is
limited under current and prior federal tax law.
Information about the financial condition of issuers of Municipal
Securities may be less available than about corporations with a class of
securities registered under the Securities Exchange Act of 1934 (the "1934
Act").
Concentration
In applying the Funds' fundamental policy concerning concentration that
is described above, it is a matter of non-fundamental policy that: (i) utility
companies will be divided according to their services, for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry; (ii) financial service companies will be classified according to the
end users of their services, for example, automobile finance, bank finance and
diversified finance will each be considered a separate industry; and (iii) asset
backed securities will be classified according to the underlying assets securing
such securities.
19
<PAGE>
PERFORMANCE INFORMATION
From time to time, each Fund may state its Classes' total return and
yield in advertisements and other types of literature. Any statement of total
return performance data for a Class will be accompanied by information on the
average annual compounded rate of return for that Class over, as relevant, the
most recent one-, five- and ten-year, or life-of-fund periods, as applicable.
Each Fund may also advertise aggregate and average total return information for
its Classes over additional periods of time.
In presenting performance information for Class A Shares, the Limited
CDSC or other CDSC, applicable only to certain redemptions of those shares, will
not be deducted from any computation of total return. All references to a CDSC
in this Performance Information section will apply to Class B Shares or Class C
Shares.
The average annual total rate of return for each Class is based on a
hypothetical $1,000 investment that includes capital appreciation and
depreciation during the stated periods. The following formula will be used for
the actual computations:
n
P (1 + T) = ERV
Where: P = a hypothetical initial purchase order of
$1,000 from which, in the case of only
Class A Shares, the maximum front-end sales
charge is deducted;
T = average annual total return;
n = number of years;
ERV = redeemable value of the hypothetical $1,000
purchase at the end of the period after the
deduction of the applicable CDSC, if any,
with respect to Class B Shares and Class C
Shares.
Aggregate or cumulative total return is calculated in a similar manner,
except that the results are not annualized. Each calculation assumes the maximum
front-end sales charge, if any, is deducted from the initial $1,000 investment
at the time it is made with respect to Class A Shares and that all distributions
are reinvested at net asset value, and, with respect to Class B Shares and Class
C Shares, reflects the deduction of the CDSC that would be applicable upon
complete redemption of such shares. In addition, each Fund may present total
return information that does not reflect the deduction of the maximum front-end
sales charge or any applicable CDSC.
Each Fund may also state total return performance for its Classes in
the form of an average annual return. This average annual return figure will be
computed by taking the sum of a Class' annual returns, then dividing that figure
by the number of years in the overall period indicated. The computation will
reflect the impact of the maximum front-end sales charge or CDSC, if any, paid
on the illustrated investment amount against the first year's return. From time
to time, each Fund may quote actual total return performance for its Classes in
advertising and other types of literature compared to indices or averages of
alternative financial products available to prospective investors. For example,
the performance comparisons may include the average return of various bank
instruments, some of which may carry certain return guarantees offered by
leading banks and thrifts as monitored by Bank Rate Monitor, and those of
generally-accepted corporate bond and government security price indices of
various durations prepared by Lehman Brothers and Salomon Brothers, Inc. These
indices are not managed for any investment goal.
20
<PAGE>
Below is the average annual total return performance of each Fund
through October 31, 1999. The total return for Class A Shares at offer reflects
the maximum front-end sales charge of 5.75% paid on the purchase of shares. The
total return for Class A Shares at net asset value (NAV) does not reflect the
payment of any front-end sales charge. The total return for Class B Shares and
Class C Shares including deferred sales charge reflects the deduction of the
applicable CDSC that would be paid if the shares were redeemed at the end of the
period. The total return for Class B Shares and Class C Shares excluding
deferred sales charge assumes the shares were not redeemed at the end of the
period and, therefore, does not reflect the deduction of a CDSC.
Securities prices fluctuated during the periods covered and the past
results should not be considered as representative of future performance.
<TABLE>
<CAPTION>
Average Annual Total Return(1)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
1 year 3 years 5 years Life of
ended ended ended Fund
10/31/99 10/31/99 10/31/99
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
<S> <C> <C> <C> <C>
Delaware New Pacific Fund A Class (at NAV)(2)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware New Pacific Fund A Class (at Offer)(2)(3)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware New Pacific Fund B Class (including CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware New Pacific Fund B Class (excluding CDSC)(4)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware New Pacific Fund C Class (including CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware New Pacific Fund C Class (excluding CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware New Pacific Fund Institutional Class
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Overseas Equity Fund A Class (at NAV)(2)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Overseas Equity Fund A Class (at Offer)(2)(3)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Overseas Equity Fund B Class (including CDSC)(4)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Overseas Equity Fund B Class (excluding CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Overseas Equity Fund C Class (including CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Overseas Equity Fund C Class (excluding CDSC)
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
Delaware Overseas Equity Fund Institutional Class
- --------------------------------------------------------------------- ------------- -------------- -------------- ----------
</TABLE>
(1) The Manager has committed to waive a portion of its annual compensation or
pay expenses to limit the operating expenses of the Funds. See Investment
Management Agreement and Sub-Advisory Agreements. In the absence of such
waivers or payments, performance would have been affected negatively.
(2) The 12b-1 fees payable by each Fund for Class A Shares were at a rate equal
to 0.35% of the average daily net assets. Beginning May 6, 1996, the
payments were set at 0.30%. Performance calculations for periods after May
6, 1996 reflect the lower 12b-1 fee rate.
(3) Effective November 2, 1998, the maximum front-end sales charge was increased
from 4.75% to 5.75%. The above performance figures are calculated using
5.75% as the applicable sales charge for all time periods.
(4) Effective November 2, 1998, the CDSC schedule for Class B Shares is as
follows: (i) 5% if shares are redeemed within one year of purchase (ii) 4%
if shares are redeemed during the second year of purchase; (iii) 3% if
shares are redeemed during the third or fourth year following purchase; (iv)
2% if shares are redeemed during the fifth year following purchase; (v) 1%
if shares are redeemed during the sixth year following purchase; and (vi) 0%
thereafter. The above performance figures are calculated using the new
applicable CDSC schedule.
21
<PAGE>
Total return performance for a Class will be computed by adding all
reinvested income and realized securities profits distributions plus the change
in net asset value during a specific period and dividing by the offering price
at the beginning of the period. It will also reflect, as applicable, the maximum
front-end sales charge or CDSC paid with respect to the illustrated investment
amount, but not any income taxes payable by shareholders on the reinvested
distributions included in the calculation. Because securities prices fluctuate,
past performance should not be considered as a representation of the results
which may be realized from an investment in a Fund in the future.
From time to time, each Fund may also quote its Classes' actual total
return performance, dividend results and other performance information in
advertising and other types of literature. This information may be compared to
that of other mutual funds with similar investment objectives and to stock, bond
and other relevant indices or to rankings prepared by independent services or
other financial or industry publications that monitor the performance of mutual
funds. For example, the performance of a Fund (of Fund Class) may be compared to
data prepared by Lipper Analytical Services, Inc., Morningstar, Inc., or to the
S&P 500 Index, the Dow Jones Industrial Average, the Morgan Stanley Capital
International (MSCI), Europe, Australia and Far East (EAFE) Index, the MSCI
Emerging Markets Free Index, MSCI Emerging Markets Free Latin America Index, the
MSCI Europe Index or the Salomon Brothers World Government Bond Index.
Lipper Analytical Services, Inc. maintains statistical performance
databases, as reported by a diverse universe of independently-managed mutual
funds. Morningstar, Inc. is a mutual fund rating service that rates mutual funds
on the basis of risk-adjusted performance. Rankings that compare a Fund's
performance to another fund in appropriate categories over specific time periods
also may be quoted in advertising and other types of literature. The S&P 500 and
the Dow Jones Industrial Average are industry-accepted unmanaged indices of
generally conservative securities used for measuring general market performance.
Similarly, the MSCI EAFE Index, the MSCI Emerging Markets Free Index, and the
Salomon Brothers World Government Bond Index are industry-accepted unmanaged
indices of equity securities in developed countries and global debt securities,
respectively, used for measuring general market performance. The total return
performance reported for these indices will reflect the reinvestment of all
distributions on a quarterly basis and market price fluctuations. The indices do
not take into account any sales charges or other fees. A direct investment in an
unmanaged index is not possible.
Comparative information on the Consumer Price Index may also be
included in advertisements or other literature. The Consumer Price Index, as
prepared by the U.S. Bureau of Labor Statistics, is the most commonly used
measure of inflation. It indicates the cost fluctuations of a representative
group of consumer goods. It does not represent a return from an investment.
Current interest rate and yield information on government debt
obligations of various durations, as reported weekly by the Federal Reserve
(Bulletin H.15), may also be used. As well, current industry rate and yield
information on all industry available fixed-income securities, as reported
weekly by The Bond Buyer, may also be used in preparing comparative
illustrations.
Each Fund may also promote its Classes' yield and/or total return
performance and use comparative performance information computed by and
available from certain industry and general market research and publications,
such as Lipper Analytical Services, Inc., IBC/Donoghue's Money Market Report and
Morningstar, Inc.
22
<PAGE>
The performance of multiple indices compiled and maintained by
statistical research firms, such as Morgan Stanley, Salomon Brothers and Lehman
Brothers, may be combined to create a blended performance result for comparative
purposes. Generally, the indices selected will be representative of the types of
securities in which the Funds may invest and the assumptions that were used in
calculating the blended performance will be described.
Ibbotson Associates of Chicago, Illinois ("Ibbotson") provides
historical returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury bills,
the U.S. rate of inflation (based on the Consumer Price Index), and combinations
of various capital markets. The performance of these capital markets is based on
the returns of different indices. The Funds may use the performance of these
capital markets in order to demonstrate general risk-versus-reward investment
scenarios. Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with the
security types in any capital market may or may not correspond directly to those
of the Funds. The Funds may also compare performance to that of other
compilations or indices that may be developed and made available in the future.
The Funds may include discussions or illustrations of the potential
investment goals of a prospective investor (including materials that describe
general principles of investing, such as asset allocation, diversification, risk
tolerance, and goal setting, questionnaires designed to help create a personal
financial profile, worksheets used to project savings needs based on assumed
rates of inflation and hypothetical rates of return and action plans offering
investment alternatives), investment management techniques, policies or
investment suitability of a Fund (such as value investing, market timing, dollar
cost averaging, asset allocation, constant ratio transfer, automatic account
rebalancing, the advantages and disadvantages of investing in tax-deferred and
taxable investments or global or international investments), economic and
political conditions, the relationship between sectors of the economy and the
economy as a whole, the effects of inflation and historical performance of
various asset classes, including but not limited to, stocks, bonds and Treasury
bills. From time to time advertisements, sales literature, communications to
shareholders or other materials may summarize the substance of information
contained in shareholder reports (including the investment composition of a
Fund), as well as the views as to current market, economic, trade and interest
rate trends, legislative, regulatory and monetary developments, investment
strategies and related matters believed to be of relevance to a Fund. In
addition, selected indices may be used to illustrate historic performance of
selected asset classes. The Funds may also include in advertisements, sales
literature, communications to shareholders or other materials, charts, graphs or
drawings which illustrate the potential risks and rewards of investment in
various investment vehicles, including but not limited to, domestic and
international stocks, and/or bonds, treasury bills and shares of a Fund. In
addition, advertisements, sales literature, communications to shareholders or
other materials may include a discussion of certain attributes or benefits to be
derived by an investment in a Fund and/or other mutual funds, shareholder
profiles and hypothetical investor scenarios, timely information on financial
management, tax and retirement planning (such as information on Roth IRAs and
Educational IRAs) and investment alternatives to certificates of deposit and
other financial instruments. Such sales literature, communications to
shareholders or other materials may include symbols, headlines or other material
which highlight or summarize the information discussed in more detail therein.
Materials may refer to the CUSIP numbers of the Funds and may
illustrate how to find the listings of the Funds in newspapers and periodicals.
Materials may also include discussions of other Funds, products, and services.
The Funds may quote various measures of volatility and benchmark
correlation in advertising. In addition, the Funds may compare these measures to
those of other funds. Measures of volatility seek to compare the historical
share price fluctuations or total returns to those of a benchmark. Measures of
benchmark correlation indicate how valid a comparative benchmark may be.
Measures of volatility and correlation may be calculated using averages of
historical data. A Fund may advertise its current interest rate sensitivity,
duration, weighted average maturity or similar maturity characteristics.
Advertisements and sales materials relating to a Fund may include information
regarding the background and experience of its portfolio managers.
The following tables present examples, for purposes of illustration
only, of cumulative total return performance for each Class of each Fund through
October 31, 1999. The calculations assume the reinvestment of any realized
securities profits, distributions and income dividends paid during the indicated
periods. The performance also reflects maximum sales charges, if any, but not
any income taxes payable by shareholders on the reinvested distributions
included in the calculations. The performance of Class A Shares reflects the
maximum front-end sales charge paid on purchases of shares but may also be shown
without reflecting the impact of any front-end sales charge. The performance of
Class B Shares and Class C Shares is calculated both with the applicable CDSC
included and excluded. The net asset value of a class fluctuates so shares, when
redeemed, may be worth more or less than the original investment, and a Class'
results should not be considered as representative of future performance.
23
<PAGE>
<TABLE>
<CAPTION>
Cumulative Total Return(1)
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
3 months 6 months 9 months 1 year 3 years 5 years Life of
ended ended ended ended ended ended Fund
10/31/99 10/31/99 10/31/99 10/31/99 10/31/99 10/31/99
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Delaware New Pacific Fund A Class (at NAV)(2)
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Delaware New Pacific Fund A Class (at
Offer)(2)(3)
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Delaware New Pacific Fund B Class (including
CDSC)
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Delaware New Pacific Fund B Class (excluding
CDSC)(4)
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Delaware New Pacific Fund C Class (including
CDSC)
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Delaware New Pacific Fund C Class (excluding
CDSC)
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Delaware New Pacific Fund Institutional Class
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Delaware Overseas Equity Fund A Class (at NAV)(2)
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Delaware Overseas Equity Fund A Class (at
Offer)(2)(3)
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Delaware Overseas Equity Fund B Class (including
CDSC)(4)
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Delaware Overseas Equity Fund B Class (excluding
CDSC)
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Delaware Overseas Equity Fund C Class (including
CDSC)
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Delaware Overseas Equity Fund C Class (excluding
CDSC)
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Delaware Overseas Equity Fund Institutional Class
- -------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
</TABLE>
(1) The Manager has committed to waive a portion of its annual compensation or
pay expenses to limit the operating expenses of the Funds. See Investment
Management Agreement and Sub-Advisory Agreements. In the absence of such
waivers or payments, performance would have been affected negatively.
(2) The 12b-1 fees payable by each Fund for Class A Shares were at a rate equal
to 0.35% of the average daily net assets. Beginning May 6, 1996, the
payments were set at 0.30%. Performance calculations for periods after May
6, 1996 reflect the lower 12b-1 fee rate.
(3) Effective November 2, 1998, the maximum front-end sales charge was increased
from 4.75% to 5.75%. The above performance figures are calculated using
5.75% as the applicable sales charge for all time periods.
(4) Effective November 2, 1998, the CDSC schedule for Class B Shares is as
follows: (i) 5% if shares are redeemed within one year of purchase (ii) 4%
if shares are redeemed during the second year of purchase; (iii) 3% if
shares are redeemed during the third or fourth year following purchase; (iv)
2% if shares are redeemed during the fifth year following purchase; (v) 1%
if shares are redeemed during the sixth year following purchase; and (vi) 0%
thereafter. The above performance figures are calculated using the new
applicable CDSC schedule.
24
<PAGE>
Because every investor's goals and risk threshold are different, the
Distributor, as distributor for the Funds and other mutual funds available from
Delaware Investments, will provide general information about investment
alternatives and scenarios that will allow investors to assess their personal
goals. This information will include general material about investing as well as
materials reinforcing various industry-accepted principles of prudent and
responsible personal financial planning. One typical way of addressing these
issues is to compare an individual's goals and the length of time the individual
has to attain these goals to his or her risk threshold. In addition, the
Distributor will provide information that discusses the Manager's and
Sub-Adviser's overriding investment philosophy and how that philosophy impacts
the Funds', and other Delaware Investments funds', investment disciplines
employed in seeking their objectives. The Distributor may also from time to time
cite general or specific information about the institutional clients of
affiliates of the Manager, including the number of such clients serviced by such
affiliates.
Dollar-Cost Averaging
For many people, deciding when to invest can be a difficult decision.
Security prices tend to move up and down over various market cycles and logic
says to invest when prices are low. However, even experts can't always pick the
highs and the lows. By using a strategy known as dollar-cost averaging, you
schedule your investments ahead of time. If you invest a set amount on a regular
basis, that money will always buy more shares when the price is low and fewer
when the price is high. You can choose to invest at any regular interval--for
example, monthly or quarterly - as long as you stick to your regular schedule.
Dollar-cost averaging looks simple and it is, but there are important things to
remember.
Dollar-cost averaging works best over longer time periods, and it
doesn't guarantee a profit or protect against losses in declining markets. If
you need to sell your investment when prices are low, you may not realize a
profit no matter what investment strategy you utilize. That's why dollar-cost
averaging can make sense for long-term goals. Since the potential success of a
dollar-cost averaging program depends on continuous investing, even through
periods of fluctuating prices, you should consider your dollar-cost averaging
program a long-term commitment and invest an amount you can afford and probably
won't need to withdraw. You also should consider your financial ability to
continue to purchase shares during periods of high fund share prices. Delaware
Investments offers three services -- Automatic Investing Program, Direct Deposit
Program and the Wealth Builder Option -- that can help to keep your regular
investment program on track. See Investing by Electronic Fund Transfer - Direct
Deposit Purchase Plan and Automatic Investing Plan under Investment Plans and
Wealth Builder Option under Investment Plans for a complete description of these
services, including restrictions or limitations.
The example below illustrates how dollar-cost averaging can work. In a
fluctuating market, the average cost per share over a period of time will be
lower than the average price per share for the same time period.
Number
Investment Price Per of Shares
Amount Share Purchased
Month 1 $100 $10.00 10
Month 2 $100 $12.50 8
Month 3 $100 $5.00 20
Month 4 $100 $10.00 10
--------------- ---------------- ----------------- ----------------
$400 $37.50 48
Total Amount Invested: $400
Total Number of Shares Purchased: 48
Average Price Per Share: $9.38 ($37.50/4)
Average Cost Per Share: $8.33 ($400/48 shares)
This example is for illustration purposes only. It is not intended to
represent the actual performance of any stock or bond fund in the Delaware
Investments family of funds.
The Power of Compounding
When you opt to reinvest your current income for additional Fund
shares, your investment is given yet another opportunity to grow. It's called
the Power of Compounding. Each Fund may include illustrations showing the power
of compounding in advertisements and other types of literature.
25
<PAGE>
TRADING PRACTICES AND BROKERAGE
Fund transactions are executed by the Manager or any sub-adviser
(collectively referred to in this section as the "Manager") on behalf of the
Fund in accordance with the standards described below.
Brokers, dealers, banks and others are selected to execute transactions
for the purchase or sale of portfolio securities or other instruments on the
basis of the Manager's judgment of their professional capability to provide the
service. The primary consideration is to have brokers, dealers or banks execute
securities transactions at best price and execution. Best execution refers to
many factors, including the price paid or received for a security, the
commission charged, the promptness and reliability of execution, the
confidentiality and placement accorded the order and other factors affecting the
overall benefit obtained by the account on the transaction. Trades are generally
made on a net basis where securities are either bought or sold directly from or
to a broker, dealer or bank or others. In these instances, there is no direct
commission charged, but there is a spread (the difference between the buy and
sell price) which is the equivalent of a commission. When a commission is paid,
the Funds pay reasonably competitive brokerage commission rates based upon the
professional knowledge of the Manager's trading department as to rates paid and
charged for similar transactions throughout the securities industry. In some
instances, the Funds pay a minimal share transaction cost when the transaction
presents no difficulty.
During the past three fiscal years, the aggregate dollar amounts of
brokerage commissions paid by were paid by the following Funds:
- --------------------------------------------------------------------------------
November 30,
- --------------------------------------------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------
Delaware New Pacific Fund $155,362 $264,369
Delaware Overseas Equity Fund $ 58,354 $ 30,918
- --------------------------------------------------------------------------------
The Manager or the Sub-Adviser may allocate out of all commission
business generated by all of the funds and accounts under its management,
brokerage business to brokers or dealers who provide brokerage and research
services. These services include advice, either directly or through publications
or writings, as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing of analyses and reports
concerning issuers, securities or industries; providing information on economic
factors and trends; assisting in determining portfolio strategy; providing
computer software and hardware used in security analyses; and providing
portfolio performance evaluation and technical market analyses. Such services
are used by the Manager or the Sub-Adviser in connection with its investment
decision-making process with respect to one or more funds and accounts managed
by it, and may not be used, or used exclusively, with respect to the fund or
account generating the brokerage.
During their last fiscal year, portfolio transactions of the following
Funds, in the amounts listed below, resulting in brokerage commissions in the
amounts listed below, were directed to brokers for brokerage and research
services provided:
26
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Brokerage
Transactions Commissions
Amounts Amounts
- --------------------------------------------------------------------------------
Delaware New Pacific Fund
Delaware Overseas Equity Fund
- --------------------------------------------------------------------------------
As provided in the Securities Exchange Act of 1934 (the "1934 Act") and
each Fund's Investment Management Agreement, higher commissions are permitted to
be paid to broker/dealers who provide brokerage and research services than to
broker/dealers who do not provide such services if such higher commissions are
deemed reasonable in relation to the value of the brokerage and research
services provided. Although transactions are directed to broker/dealers who
provide such brokerage and research services, the Funds believe that the
commissions paid to such broker/dealers are not, in general, higher than
commissions that would be paid to broker/dealers not providing such services and
that such commissions are reasonable in relation to the value of the brokerage
and research services provided. In some instances, services may be provided to
the Manager or the Sub-Adviser which constitute in some part brokerage and
research services used by the Manager or the Sub-Adviser in connection with its
investment decision-making process and constitute in some part services used by
the Manager or the Sub-Adviser in connection with administrative or other
functions not related to its investment decision-making process. In such cases,
the Manager or the Sub-Adviser will make a good faith allocation of brokerage
and research services and will pay out of its own resources for services used by
the Manager or the Sub-Adviser in connection with administrative or other
functions not related to its investment decision-making process. In addition, so
long as no fund is disadvantaged, portfolio transactions which generate
commissions or their equivalent are allocated to broker/dealers who provide
daily portfolio pricing services to a Fund and to other funds in the Delaware
Group. Subject to best execution, commissions allocated to brokers providing
such pricing services may or may not be generated by the funds receiving the
pricing service.
The Manager or the Sub-Adviser may place a combined order for two or
more accounts or funds engaged in the purchase or sale of the same security if,
in its judgment, joint execution is in the best interest of each participant and
will result in best execution. Transactions involving commingled orders are
allocated in a manner deemed equitable to each account or fund. When a combined
order is executed in a series of transactions at different prices, each account
participating in the order may be allocated an average price obtained from the
executing broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or fund may obtain, it is the opinion of the Manager, the Sub-Adviser
and the Funds' Board of Trustees that the advantages of combined orders outweigh
the possible disadvantages of separate transactions.
Consistent with the Conduct Rules of NASD Regulation, Inc. (the
"NASD"), and subject to seeking best execution, a Fund may place orders with
broker/dealers that have agreed to defray certain expenses of the funds in the
Delaware Investments family of funds such as custodian fees, and may, at the
request of the Distributor, give consideration to sales of shares of such funds
as a factor in the selection of brokers and dealers to execute Fund portfolio
transactions.
27
<PAGE>
Portfolio Turnover
A Fund is free to dispose of portfolio securities at any time, subject
to complying with the Code and the 1940 Act, when changes in circumstances or
conditions make such a move desirable in light of its investment objective. A
Fund will not attempt to achieve or be limited to a predetermined rate of
portfolio turnover, such a turnover always being incidental to transactions
undertaken with a view to achieving a Fund's investment objective.
The degree of portfolio activity may affect brokerage costs of a Fund
and taxes payable by a Fund's shareholders. A turnover rate of 100% would occur,
for example, if all the investments in the Fund's portfolio at the beginning of
the year were replaced by the end of the year. In investing for capital
appreciation, a Fund may hold securities for any period of time. Portfolio
turnover will also be increased if a Fund writes a large number of call options
which are subsequently exercised. To the extent a Fund realizes gains on
securities held for less than twelve months, such gains are taxable to the
shareholder or to the Fund at ordinary income tax rates. The turnover rate also
may be affected by cash requirements from redemptions and repurchases of Fund
shares. Total brokerage costs generally increase with higher portfolio turnover
rates.
Under certain market conditions, a Fund may experience a rate of
portfolio turnover which could exceed 100%. Each Fund's portfolio turnover rate
is calculated by dividing the lesser of purchases or sales of portfolio
securities for the particular fiscal year by the monthly average of the value of
the portfolio securities owned by the Fund during the particular fiscal year,
exclusive of securities whose maturities at the time of acquisition are one year
or less.
During the past two fiscal years, the portfolio turnover rates of the
Funds were as follows:
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
Delaware New Pacific Fund 188%
Delaware Overseas Equity Fund 87%
- --------------------------------------------------------------------------------
28
<PAGE>
PURCHASING SHARES
The Distributor serves as the national distributor for each Fund's shares
and has agreed to use its best efforts to sell shares of each Fund. See the
Prospectuses for information on how to invest. Shares of each Fund are offered
on a continuous basis and may be purchased through authorized investment dealers
or directly by contacting Adviser Funds, Inc.
or the Distributor.
The minimum initial investment generally is $1,000 for Class A Shares,
Class B Shares and Class C Shares. Subsequent purchases of such Classes
generally must be at least $100. The initial and subsequent investment minimums
for Class A Shares will be waived for purchases by officers, trustees and
employees of any Delaware Investments fund, the Manager or any of the Manager's
affiliates if the purchases are made pursuant to a payroll deduction program.
Shares purchased pursuant to the Uniform Gifts to Minors Act or Uniform
Transfers to Minors Act and shares purchased in connection with an Automatic
Investing Plan are subject to a minimum initial purchase of $250 and a minimum
subsequent purchase of $25. Accounts opened under the Delaware Investments Asset
Planner service are subject to a minimum initial investment of $2,000 per Asset
Planner Strategy selected. There are no minimum purchase requirements for the
Institutional Classes, but certain eligibility requirements must be satisfied.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that is less than $1,000,000. See Investment Plans for purchase limitations
applicable to retirement plans. Adviser Funds, Inc. will reject any purchase
order for more than $250,000 of Class B Shares and $1,000,000 or more of Class C
Shares. An investor may exceed these limitations by making cumulative purchases
over a period of time. In doing so, an investor should keep in mind, however,
that reduced front-end sales charges apply to investments of $50,000 or more in
Class A Shares, and that Class A Shares are subject to lower annual 12b-1 Plan
expenses than Class B Shares and Class C Shares and generally are not subject to
a CDSC.
Selling dealers are responsible for transmitting orders promptly. Adviser
Funds reserves the right to reject any order for the purchase of its shares of
either Fund if in the opinion of management such rejection is in such Fund's
best interest. If a purchase is canceled because your check is returned unpaid,
you are responsible for any loss incurred. A Fund can redeem shares from your
account(s) to reimburse itself for any loss, and you may be restricted from
making future purchases in any of the funds in the Delaware Investments family.
Each Fund reserves the right to reject purchase orders paid by third-party
checks or checks that are not drawn on a domestic branch of a United States
financial institution. If a check drawn on a foreign financial institution is
accepted, you may be subject to additional bank charges for clearance and
currency conversion.
Each Fund also reserves the right, following shareholder notification, to
charge a service fee on non-retirement accounts that, as a result of redemption,
have remained below the minimum stated account balance for a period of three or
more consecutive months. Holders of such accounts may be notified of their
insufficient account balance and advised that they have until the end of the
current calendar quarter to raise their balance to the stated minimum. If the
account has not reached the minimum balance requirement by that time, the Fund
will charge a $9 fee for that quarter and each subsequent calendar quarter until
the account is brought up to the minimum balance. The service fee will be
deducted from the account during the first week of each calendar quarter for the
previous quarter, and will be used to help defray the cost of maintaining
low-balance accounts. No fees will be charged without proper notice, and no CDSC
will apply to such assessments.
Each Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under the minimum initial purchase
amount as a result of redemptions. An investor making the minimum initial
investment may be subject to involuntary redemption without the imposition of a
CDSC or Limited CDSC if he or she redeems any portion of his or her account.
The NASD has adopted amendments to its Conduct Rules, as amended,
relating to investment company sales charges. Adviser Funds, and the
Distributor intend to operate in compliance with these rules.
29
<PAGE>
Class A Shares are purchased at the offering price which reflects a
maximum front-end sales charge of 5.75%; however, lower front-end sales charges
apply for larger purchases. See the table in the Fund Classes' Prospectus. Class
A Shares are also subject to annual 12b-1 Plan expenses for the life of the
investment.
Class B Shares are purchased at net asset value and are subject to a CDSC
of: (i) 5% if shares are redeemed within one year of purchase; (ii) 4% if shares
are redeemed during the second year of purchase; (iii) 3% if shares are redeemed
during the third or fourth year following purchase; (iv) 2% if shares are
redeemed during the fifth year following purchase; and (v) 1% if shares are
redeemed during the sixth year following purchase. Class B Shares are also
subject to annual 12b-1 Plan expenses which are higher than those to which Class
A Shares are subject and are assessed against Class B Shares for approximately
eight years after purchase. See Automatic Conversion of Class B Shares, below.
Class C Shares are purchased at net asset value and are subject to a CDSC
of 1% if shares are redeemed within 12 months following purchase. Class C Shares
are also subject to annual 12b-1 Plan expenses for the life of the investment
which are equal to those to which Class B Shares are subject.
Institutional Class shares are purchased at the net asset value per share
without the imposition of a front-end or contingent deferred sales charge or
12b-1 Plan expenses. See Plans Under Rule 12b-1 for the Fund Classes under
Purchasing Shares, and Determining Offering Price and Net Asset Value in this
Part B.
Class A Shares, Class B Shares, Class C Shares and Institutional Class
shares represent a proportionate interest in a Fund's assets and will receive a
proportionate interest in that Fund's income, before application, as to Class A,
Class B and Class C Shares, of any expenses under that Fund's 12b-1 Plans.
Certificates representing shares purchased are not ordinarily issued
unless, in the case of Class A Shares or Institutional Class shares, a
shareholder submits a specific request. Certificates are not issued in the case
of Class B Shares or Class C Shares or in the case of any retirement plan
account including self-directed IRAs. However, purchases not involving the
issuance of certificates are confirmed to the investor and credited to the
shareholder's account on the books maintained by Delaware Service Company, Inc.
(the "Transfer Agent"). The investor will have the same rights of ownership with
respect to such shares as if certificates had been issued. An investor that is
permitted to obtain a certificate may receive a certificate representing full
share denominations purchased by sending a letter signed by each owner of the
account to the Transfer Agent requesting the certificate. No charge is assessed
by Adviser Funds for any certificate issued. A shareholder may be subject to
fees for replacement of a lost or stolen certificate, under certain conditions,
including the cost of obtaining a bond covering the lost or stolen certificate.
Please contact a Fund for further information. Investors who hold certificates
representing any of their shares may only redeem those shares by written
request. The investor's certificate(s) must accompany such request.
Alternative Purchase Arrangements - Class A, Class B and Class C
The alternative purchase arrangements of Class A Shares, Class B Shares
and Class C Shares permit investors to choose the method of purchasing shares
that is most suitable for their needs given the amount of their purchase, the
length of time they expect to hold their shares and other relevant
circumstances. Investors should determine whether, given their particular
circumstances, it is more advantageous to purchase Class A Shares and incur a
front-end sales charge and annual 12b-1 Plan expenses of up to a maximum of
0.35% (currently no more than 0.30%) of the average daily net assets of Class A
Shares, or to purchase either Class B or Class C Shares and have the entire
initial purchase amount invested in the Fund with the investment thereafter
subject to a CDSC and annual 12b-1 Plan expenses. Class B Shares are subject to
a CDSC if the shares are redeemed within six years of purchase, and Class C
Shares are subject to a CDSC if the shares are redeemed within 12 months of
purchase. Class B and Class C Shares are each subject to annual 12b-1 Plan
expenses of up to a maximum of 1% (0.25% of which are service fees to be paid to
the Distributor, dealers or others for providing personal service and/or
maintaining shareholder accounts) of average daily net assets of the respective
Class. Class B Shares will automatically convert to Class A Shares at the end of
approximately eight years after purchase and, thereafter, be subject to annual
12b-1 Plan expenses of up to a maximum of 0.35% (currently no more than 0.30%)
of average daily net assets of such shares. Unlike Class B Shares, Class C
Shares do not convert to another Class.
30
<PAGE>
The higher 12b-1 Plan expenses on Class B Shares and Class C Shares will
be offset to the extent a return is realized on the additional money initially
invested upon the purchase of such shares. However, there can be no assurance as
to the return, if any, that will be realized on such additional money. In
addition, the effect of any return earned on such additional money will diminish
over time. In comparing Class B Shares to Class C Shares, investors should also
consider the duration of the annual 12b-1 Plan expenses to which each of the
classes is subject and the desirability of an automatic conversion feature,
which is available only for Class B Shares.
For the distribution and related services provided to, and the expenses
borne on behalf of, the Funds, the Distributor and others will be paid, in the
case of Class A Shares, from the proceeds of the front-end sales charge and
12b-1 Plan fees and, in the case of Class B Shares and Class C Shares, from the
proceeds of the 12b-1 Plan fees and, if applicable, the CDSC incurred upon
redemption. Financial advisers may receive different compensation for selling
Class A Shares, Class B Shares and Class C Shares. Investors should understand
that the purpose and function of the respective 12b-1 Plans and the CDSCs
applicable to Class B Shares and Class C Shares are the same as those of the
12b-1 Plan and the front-end sales charge applicable to Class A Shares in that
such fees and charges are used to finance the distribution of the respective
Classes. See Plans Under Rule 12b-1 for the Fund Classes.
Dividends, if any, paid on Class A Shares, Class B Shares and Class C
Shares will be calculated in the same manner, at the same time and on the same
day and will be in the same amount, except that the additional amount of 12b-1
Plan expenses relating to Class B Shares and Class C Shares will be borne
exclusively by such shares. See Determining Offering Price and Net Asset Value.
Class A Shares
Purchases of $50,000 or more of Class A Shares at the offering price
carry reduced front-end sales charges as shown in the table in the Fund Classes'
Prospectuses, and may include a series of purchases over a 13-month period under
a Letter of Intention signed by the purchaser. See Special Purchase Features -
Class A Shares, below for more information on ways in which investors can avail
themselves of reduced front-end sales charges and other purchase features.
From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during which the
Distributor may reallow to dealers up to the full amount of the front-end sales.
In addition, certain dealers who enter into an agreement to provide extra
training and information on Delaware Investments products and services and who
increase sales of Delaware Investments funds may receive an additional
commission of up to 0.15% of the offering price in connection with sales of
Class A Shares. Such dealers must meet certain requirements in terms of
organization and distribution capabilities and their ability to increase sales.
The Distributor should be contacted for further information on these
requirements as well as the basis and circumstances upon which the additional
commission will be paid. Participating dealers may be deemed to have additional
responsibilities under the securities laws. Dealers who receive 90% or more of
the sales charge may be deemed to be underwriters under the 1933 Act.
Dealer's Commission
As described in the Prospectuses, for initial purchases of Class A Shares
of $1,000,000 or more, a dealer's commission may be paid by the Distributor to
financial advisers through whom such purchases are effected.
For accounts with assets over $1 million, the dealer commission resets
annually to the highest incremental commission rate on the anniversary of the
first purchase. In determining a financial adviser's eligibility for the
dealer's commission, purchases of Class A Shares of other Delaware Investments
funds as to which a Limited CDSC applies (see Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange) may be aggregated with those of the Class A Shares of a
Fund. Financial advisers also may be eligible for a dealer's commission in
connection with certain purchases made under a Letter of Intention or pursuant
to an investor's Right of Accumulation. Financial advisers should contact the
Distributor concerning the applicability and calculation of the dealer's
commission in the case of combined purchases.
31
<PAGE>
An exchange from other Delaware Investments funds will not qualify for
payment of the dealer's commission, unless a dealer's commission or similar
payment has not been previously paid on the assets being exchanged. The schedule
and program for payment of the dealer's commission are subject to change or
termination at any time by the Distributor at its discretion.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B Shares and Class C Shares are purchased without a front-end
sales charge. Class B Shares redeemed within six years of purchase may be
subject to a CDSC at the rates set forth above, and Class C Shares redeemed
within 12 months of purchase may be subject to a CDSC of 1%. CDSCs are charged
as a percentage of the dollar amount subject to the CDSC. The charge will be
assessed on an amount equal to the lesser of the net asset value at the time of
purchase of the shares being redeemed or the net asset value of those shares at
the time of redemption. No CDSC will be imposed on increases in net asset value
above the initial purchase price, nor will a CDSC be assessed on redemptions of
shares acquired through reinvestment of dividends or capital gains
distributions. For purposes of this formula, the "net asset value at the time of
purchase" will be the net asset value at purchase of Class B Shares or Class C
Shares of a Fund, even if those shares are later exchanged for shares of another
Delaware Investments fund. In the event of an exchange of the shares, the "net
asset value of such shares at the time of redemption" will be the net asset
value of the shares that were acquired in the exchange. See Waiver of Contingent
Deferred Sales Charge--Class B Shares and Class C Shares under Redemption and
Exchange for a list of the instances in which the CDSC is waived.
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares, Class B Shares will still be subject to the
annual 12b-1 Plan expenses of up to 1% of average daily net assets of those
shares. At the end of approximately eight years after purchase, the investor's
Class B Shares will be automatically converted into Class A Shares of the same
Fund. See Automatic Conversion of Class B Shares below. Such conversion will
constitute a tax-free exchange for federal income tax purposes. Investors are
reminded that the Class A Shares into which Class B Shares will convert are
subject to ongoing annual 12b-1 Plan expenses of up to a maximum of 0.35%
(currently no more than 0.30%) of average daily net assets of such shares.
32
<PAGE>
In determining whether a CDSC applies to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are redeemed
first, followed by shares acquired through the reinvestment of dividends or
distributions, and finally by shares held longest during the six-year period.
With respect to Class C Shares, it will be assumed that shares held for more
than 12 months are redeemed first followed by shares acquired through the
reinvestment of dividends or distributions, and finally by shares held for 12
months or less.
All investments made during a calendar month, regardless of what day of
the month the investment occurred, will age one month on the last day of that
month and each subsequent month.
Deferred Sales Charge Alternative - Class B Shares
Class B Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently compensates
dealers or brokers for selling Class B Shares at the time of purchase from its
own assets in an amount equal to no more than 5% of the dollar amount purchased.
In addition, from time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during which the
Distributor may pay additional compensation to dealers or brokers for selling
Class B Shares at the time of purchase. As discussed below, however, Class B
Shares are subject to annual 12b-1 Plan expenses and, if redeemed within six
years of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class B Shares. These
payments support the compensation paid to dealers or brokers for selling Class B
Shares. Payments to the Distributor and others under the Class B 12b-1 Plan may
be in an amount equal to no more than 1% annually. The combination of the CDSC
and the proceeds of the 12b-1 Plan fees makes it possible for a Fund to sell
Class B Shares without deducting a front-end sales charge at the time of
purchase.
Holders of Class B Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for Class B Shares
described in this Part B, even after the exchange. Such CDSC schedule may be
higher than the CDSC schedule for Class B Shares acquired as a result of the
exchange. See Redemption and Exchange.
Automatic Conversion of Class B Shares
Class B Shares, other than shares acquired through reinvestment of
dividends, held for eight years after purchase are eligible for automatic
conversion into Class A Shares. Conversions of Class B Shares into Class A
Shares will occur only four times in any calendar year, on the 18th day or next
business day of March, June, September and December (each, a "Conversion Date").
If the eighth anniversary after a purchase of Class B Shares falls on a
Conversion Date, an investor's Class B Shares will be converted on that date. If
the eighth anniversary occurs between Conversion Dates, an investor's Class B
Shares will be converted on the next Conversion Date after such anniversary.
Consequently, if a shareholder's eighth anniversary falls on the day after a
Conversion Date, that shareholder will have to hold Class B Shares for as long
as three additional months after the eighth anniversary of purchase before the
shares will automatically convert into Class A Shares.
Class B Shares of a fund acquired through a reinvestment of dividends
will convert to the corresponding Class A Shares of that fund (or, in the case
of Delaware Group Cash Reserve, Inc., the Delaware Cash Reserve Consultant
Class) pro-rata with Class B Shares of that fund not acquired through dividend
reinvestment.
All such automatic conversions of Class B Shares will constitute
tax-free exchanges for federal income tax purposes.
Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently compensates
dealers or brokers for selling Class C Shares at the time of purchase from its
own assets in an amount equal to no
33
<PAGE>
more than 1% of the dollar amount purchased. As discussed below, Class C Shares
are subject to annual 12b-1 Plan expenses and, if redeemed within 12 months of
purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class C Shares. These
payments support the compensation paid to dealers or brokers for selling Class C
Shares. Payments to the Distributor and others under the Class C 12b-1 Plan may
be in an amount equal to no more than 1% annually.
Holders of Class C Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for Class C Shares as
described in this Part B. See Redemption and Exchange.
Plans Under Rule 12b-1 for the Fund Classes
Pursuant to Rule 12b-1 under the 1940 Act, Adviser Funds, Inc. has
adopted a separate plan for each of the Class A Shares, Class B Shares and Class
C Shares of each Fund (the "Plans"). Each Plan permits the particular Fund to
pay for certain distribution, promotional and related expenses involved in the
marketing of only the Classes of shares to which the Plan applies. The Plans do
not apply to the Institutional Classes of shares. Such shares are not included
in calculating the Plans' fees, and the Plans are not used to assist in the
distribution and marketing of shares of the Institutional Classes. Shareholders
of the Institutional Classes may not vote on matters affecting the Plans.
The Plans permit the Funds, pursuant to the Distribution Agreements, to
pay out of the assets of Class A Shares, Class B Shares and Class C Shares
monthly fees to the Distributor for its services and expenses in distributing
and promoting sales of shares of such classes. These expenses include, among
other things, preparing and distributing advertisements, sales literature and
prospectuses and reports used for sales purposes, compensating sales and
marketing personnel, and paying distribution and maintenance fees to securities
brokers and dealers who enter into agreements with the Distributor. The Plan
expenses relating to Class B Shares and Class C Shares are also used to pay the
Distributor for advancing the commission costs to dealers with respect to the
initial sale of such shares.
In addition, the Funds may make payments out of the assets of Class A
Shares, Class B Shares and Class C Shares directly to other unaffiliated
parties, such as banks, who either aid in the distribution of shares of, or
provide services to, such classes.
The maximum aggregate fee payable by the Funds under the Plans, and the
Funds' Distribution Agreements, is on an annual basis up to 0.35% of average
daily net assets of Class A Shares, and up to 1% (0.25% of which are service
fees to be paid to the Distributor, dealers and others for providing personal
service and/or maintaining shareholder accounts) of each of Class B Shares' and
Class C Shares' average daily net assets for the year. Adviser Funds, Inc.'s
Board of Trustees may reduce these amounts at any time. The Distributor has
agreed to waive these distribution fees to the extent such fees for any day
exceeds the net investment income realized by the Fund Classes for such day.
Effective at the close of business on May 3, 1996, the annual fee
payable on a monthly basis under Class A Shares' Plan is equal to 0.30% of
average daily net assets.
All of the distribution expenses incurred by the Distributor and
others, such as broker/dealers, in excess of the amount paid on behalf of Class
A Shares, Class B Shares and Class C Shares would be borne by such persons
without any payment from such classes. Subject to seeking best price and
execution, the Fund may, from time to time, buy or sell portfolio securities
from or to firms which receive payments under the Plans. From time to time, the
Distributor may pay additional amounts from its own resources to dealers for aid
in distribution or for aid in providing administrative services to shareholders.
The Plans and the Distribution Agreement, as amended, have been
approved by the Board of Trustees of Adviser Funds, including a majority of the
trustees who are not "interested persons"
34
<PAGE>
(as defined in the 1940 Act) of Adviser Funds, Inc. and who have no direct or
indirect financial interest in the Plans, by vote cast in person at a meeting
duly called for the purpose of voting on the Plans and such Distribution
Agreement. Continuation of the Plans and the Distribution Agreement, as amended,
must be approved annually by the Board of Trustees in the same manner as
specified above.
Each year, the trustees must determine whether continuation of the
Plans is in the best interest of shareholders of, respectively, Class A Shares,
Class B Shares and Class C Shares of each Fund and that there is a reasonable
likelihood of the Plan relating to a Fund Class providing a benefit to the
relevant shareholders of that Class. The Plans and the Distribution Agreement,
as amended, may be terminated at any time without penalty by a majority of those
trustees who are not "interested persons" or by a majority vote of the relevant
Class' outstanding voting securities. Any amendment materially increasing the
percentage payable under the Plans must likewise be approved by a majority vote
of the relevant Class' outstanding voting securities, as well as by a majority
vote of those trustees who are not "interested persons." With respect to the
Class A Shares' Plan, any material increase in the maximum percentage payable
thereunder must also be approved by a majority of the outstanding voting
securities of the respective Fund's B Class. Also, any other material amendment
to the Plans must be approved by a majority vote of the trustees, including a
majority of the trustees who are not "interested persons" of Adviser Funds, Inc.
having no interest in the Plans. In addition, in order for the Plans to remain
effective, the selection and nomination of trustees who are not "interested
persons" of Adviser Funds, Inc. must be effected by the trustees who themselves
are not "interested persons" and who have no direct or indirect financial
interest in the Plans. Persons authorized to make payments under the Plans must
provide written reports at least quarterly to the Board of Trustees for their
review.
The amount and purpose of 12b-1 plan payments from each Class were as
follows for their last fiscal year.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware New Pacific Fund Delaware Overseas Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C Class A Class B Class C
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Advertising
- ------------------------------------------------------------------------------------------------------------------------------------
Annual/Semi-Annual Reports
- ------------------------------------------------------------------------------------------------------------------------------------
Broker Trails
- ------------------------------------------------------------------------------------------------------------------------------------
Broker Sales Charges
- ------------------------------------------------------------------------------------------------------------------------------------
Dealer Service Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Interest on Broker Sales Charges
- ------------------------------------------------------------------------------------------------------------------------------------
Commissions to Wholesalers
- ------------------------------------------------------------------------------------------------------------------------------------
Promotional-Broker Meetings
- ------------------------------------------------------------------------------------------------------------------------------------
Promotional-Other
- ------------------------------------------------------------------------------------------------------------------------------------
Prospectus Printing
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware New Pacific Fund Delaware Overseas Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C Class A Class B Class C
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Telephone
- ------------------------------------------------------------------------------------------------------------------------------------
Wholesaler Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Other
- ------------------------------------------------------------------------------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Other Payments to Dealers - Class A Shares, Class B Shares and Class C Shares
From time to time, at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of Fund Classes exceed certain limits as
set by the Distributor, may receive from the Distributor an additional payment
of up to 0.25% of the dollar amount of such sales. The Distributor may also
provide additional promotional incentives or payments to dealers that sell
shares of the Delaware Investments family of funds. In some instances, these
incentives or payments may be offered only to certain dealers who maintain, have
sold or may sell certain amounts of shares. The Distributor may also pay a
portion of the expense of preapproved dealer advertisements promoting the sale
of Delaware Investments fund shares.
Special Purchase Features - Class A Shares
Buying Class A Shares at Net Asset Value
Class A Shares of the Fund may be purchased at net asset value under
the Delaware Investments Dividend Reinvestment Plan and, under certain
circumstances, the Exchange Privilege and the 12-Month Reinvestment Privilege.
Purchases of Class A Shares may be made at net asset value by current
and former officers, trustees and employees (and members of their families) of
the Manager, any affiliate, any of the funds in the Delaware Investments family,
certain of their agents and registered representatives and employees of
authorized investment dealers and by employee benefit plans for such entities.
Individual purchases, including those in retirement accounts, must be for
accounts in the name of the individual or a qualifying family member. Class A
Shares may also be purchased at net asset value by current and former officers,
trustees and employees (and members of their families) of the Dougherty
Financial Group LLC.
Purchases of Class A Shares may also be made by clients of registered
representatives of an authorized investment dealer at net asset value within 12
months after the registered representative changes employment, if the purchase
is funded by proceeds from an investment where a front-end sales charge,
contingent deferred sales charge or other sales charge has been assessed.
Purchases of Class A Shares may also be made at net asset value by bank
employees who provide services in connection with agreements between the bank
and unaffiliated brokers or dealers concerning sales of shares of funds in the
Delaware Investments family. Officers, trustees and key employees of
institutional clients of the Manager or any of its affiliates may purchase Class
A Shares at net asset value. Moreover, purchases may be effected at net asset
value for the benefit of the clients of brokers, dealers and registered
investment advisers affiliated with a broker or dealer, if such broker, dealer
or investment adviser has entered into an agreement with the Distributor
providing specifically for the purchase of Class A Shares in connection with
special investment products, such as wrap accounts or similar fee based
programs. Investors may be charged a fee when effecting transactions in Class A
Shares through a broker or agent that offers these special investment products.
36
<PAGE>
Purchases of Class A Shares at net asset value may also be made by the
following: financial institutions investing for the account of their trust
customers if they are not eligible to purchase shares of the Institutional Class
of a Fund; any group retirement plan (excluding defined benefit pension plans),
or such plans of the same employer, for which plan participant records are
maintained on the Retirement Financial Services, Inc. (formerly known as
Delaware Investment & Retirement Services, Inc.) proprietary record keeping
system that (i) has in excess of $500,000 of plan assets invested in Class A
Shares of funds in the Delaware Investments family and any stable value account
available to investment advisory clients of the Manager or its affiliates; or
(ii) is sponsored by an employer that has at any point after May 1, 1997 had
more than 100 employees while such plan has held Class A Shares of a fund in the
Delaware Investments family and such employer has properly represented to, and
received written confirmation back from, Retirement Financial Services, Inc. in
writing that it has the requisite number of employees. See Group Investment
Plans for information regarding the applicability of the Limited CDSC.
Purchases of Class A Shares at net asset value may also be made by bank
sponsored retirement plans that are no longer eligible to purchase Institutional
Class Shares or purchase interests in a collective trust as a result of a change
in distribution arrangements.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from such
accounts will be made at net asset value. Loan repayments made to a fund account
in connection with loans originated from accounts previously maintained by
another investment firm will also be invested at net asset value.
Adviser Funds must be notified in advance that the trade qualifies for
purchase at net asset value.
Allied Plans
Class A Shares are available for purchase by participants in certain
401(k) Defined Contribution Plans ("Allied Plans") which are made available
under a joint venture agreement between the Distributor and another institution
through which mutual funds are marketed and which allow investments in Class A
Shares of designated Delaware Investments funds ("eligible Delaware Investments
fund shares"), as well as shares of designated classes of non-Delaware
Investments funds ("eligible non-Delaware Investments fund shares"). Class B
Shares and Class C Shares are not eligible for purchase by Allied Plans.
With respect to purchases made in connection with an Allied Plan, the
value of eligible Delaware Investments and eligible non-Delaware Investments
fund shares held by the Allied Plan may be combined with the dollar amount of
new purchases by that Allied Plan to obtain a reduced front-end sales charge on
additional purchases of eligible Delaware Investments fund shares. See Combined
Purchases Privilege, below.
Participants in Allied Plans may exchange all or part of their eligible
Delaware Investments fund shares for other eligible Delaware Investments fund
shares or for eligible non-Delaware Investments fund shares at net asset value
without payment of a front-end sales charge. However, exchanges of eligible fund
shares, both Delaware Investments and non-Delaware Investments, which were not
subject to a front end sales charge, will be subject to the applicable sales
charge if exchanged for eligible Delaware Investments fund shares to which a
sales charge applies. No sales charge will apply if the eligible fund shares
were previously acquired through the exchange of eligible shares on which a
sales charge was already paid or through the reinvestment of dividends. See
Investing by Exchange.
A dealer's commission may be payable on purchases of eligible Delaware
Investments fund shares under an Allied Plan. In determining a financial
adviser's eligibility for a dealer's commission on net asset value purchases of
eligible Delaware Investments fund shares in connection with Allied Plans, all
participant holdings in the Allied Plan will be aggregated. See Class A Shares.
37
<PAGE>
The Limited CDSC is applicable to redemptions of net asset value
purchases from an Allied Plan on which a dealer's commission has been paid.
Waivers of the Limited CDSC, as described under Waiver of Limited Contingent
Deferred Sales Charge - Class A Shares under Redemption and Exchange, apply to
redemptions by participants in Allied Plans except in the case of exchanges
between eligible Delaware Investments and non-Delaware Investments fund shares.
When eligible Delaware Investments fund shares are exchanged into eligible
non-Delaware Investments fund shares, the Limited CDSC will be imposed at the
time of the exchange, unless the joint venture agreement specifies that the
amount of the Limited CDSC will be paid by the financial adviser or selling
dealer. See Contingent Deferred Sales Charge for Certain Redemptions of Class A
Shares Purchased at Net Asset Value under Redemption and Exchange.
Letter of Intention
The reduced front-end sales charges described above with respect to
Class A Shares are also applicable to the aggregate amount of purchases made
within a 13-month period pursuant to a written Letter of Intention provided by
the Distributor and signed by the purchaser, and not legally binding on the
signer or Adviser Funds which provides for the holding in escrow by the Transfer
Agent, of 5% of the total amount of Class A Shares intended to be purchased
until such purchase is completed within the 13-month period. A Letter of
Intention may be dated to include shares purchased up to 90 days prior to the
date the Letter is signed. The 13-month period begins on the date of the
earliest purchase. If the intended investment is not completed, except as noted
below, the purchaser will be asked to pay an amount equal to the difference
between the front-end sales charge on Class A Shares purchased at the reduced
rate and the front-end sales charge otherwise applicable to the total shares
purchased. If such payment is not made within 20 days following the expiration
of the 13-month period, the Transfer Agent will surrender an appropriate number
of the escrowed shares for redemption in order to realize the difference. Such
purchasers may include the value (at offering price at the level designated in
their Letter of Intention) of all their shares of the Funds and of any class of
any of the other mutual funds in Delaware Investments (except shares of any
Delaware Investments fund which do not carry a front-end sales charge, CDSC or
Limited CDSC other than shares of Delaware Group Premium Fund beneficially owned
in connection with the ownership of variable insurance products, unless they
were acquired through an exchange from a Delaware Investments fund which carried
a front-end sales charge, CDSC or Limited CDSC) previously purchased and still
held as of the date of their Letter of Intention toward the completion of such
Letter.
Employers offering a Delaware Investments retirement plan may also
complete a Letter of Intention to obtain a reduced front-end sales charge on
investments of Class A Shares made by the plan. The aggregate investment level
of the Letter of Intention will be determined and accepted by the Transfer Agent
at the point of plan establishment. The level and any reduction in front-end
sales charge will be based on actual plan participation and the projected
investments in Delaware Investments funds that are offered with a front-end
sales charge, CDSC or Limited CDSC for a 13-month period. The Transfer Agent
reserves the right to adjust the signed Letter of Intention based on this
acceptance criteria. The 13-month period will begin on the date this Letter of
Intention is accepted by the Transfer Agent. If actual investments exceed the
anticipated level and equal an amount that would qualify the plan for further
discounts, any front-end sales charges will be automatically adjusted. In the
event this Letter of Intention is not fulfilled within the 13-month period, the
plan level will be adjusted (without completing another Letter of Intention) and
the employer will be billed for the difference in front-end sales charges due,
based on the plan's assets under management at that time. Employers may also
include the value (at offering price at the level designated in their Letter of
Intention) of all their shares intended for purchase that are offered with a
front-end sales charge, CDSC or Limited CDSC of any class. Class B Shares and
Class C Shares of a Fund and other Delaware Investments funds which offer
corresponding classes of shares may also be aggregated for this purpose.
Combined Purchases Privilege
In determining the availability of the reduced front-end sales charge
previously set forth with respect to Class A Shares, purchasers may combine the
total amount of any combination of Class A Shares, Class B Shares and/or Class C
Shares of the Funds, as well as shares of any other class of any of the other
Delaware Investments funds (except shares of any Delaware Investments fund which
do not carry a front-end sales charge, CDSC or Limited CDSC, other than shares
of Delaware Group Premium Fund beneficially owned in connection with the
ownership of variable insurance products, unless they were acquired through an
38
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exchange from a DelawareInvestments fund which carried a front-end sales charge,
CDSC or Limited CDSC). In addition, assets held by investment advisory clients
of the Manager or its affiliates in a stable value account may be combined with
other Delaware Investments fund holdings.
The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under 21; or
a trustee or other fiduciary of trust estates or fiduciary accounts for the
benefit of such family members (including certain employee benefit programs).
Right of Accumulation
In determining the availability of the reduced front-end sales charge
with respect to the Class A Shares, purchasers may also combine any subsequent
purchases of Class A Shares, Class B Shares and Class C Shares of a Fund, as
well as shares of any other class of any of the other Delaware Investments funds
which offer such classes (except shares of any Delaware Investments fund which
do not carry a front-end sales charge, CDSC or Limited CDSC, other than shares
of Delaware Group Premium Fund beneficially owned in connection with the
ownership of variable insurance products, unless they were acquired through an
exchange from a Delaware Investments fund which carried a front-end sales
charge, CDSC or Limited CDSC). If, for example, any such purchaser has
previously purchased and still holds Class A Shares of a Fund and/or shares of
any other of the classes described in the previous sentence with a value of
$40,000 and subsequently purchases $10,000 at offering price of additional
shares of Class A Shares, the charge applicable to the $10,000 purchase would
currently be 4.75%. For the purpose of this calculation, the shares presently
held shall be valued at the public offering price that would have been in effect
were the shares purchased simultaneously with the current purchase. Investors
should refer to the table of sales charges for Class A Shares to determine the
applicability of the Right of Accumulation to their particular circumstances.
12-Month Reinvestment Privilege
Holders of Class A Shares and Class B Shares of a Fund (and of the
Institutional Class holding shares which were acquired through an exchange from
one of the other mutual funds in the Delaware Investments family offered with a
front-end sales charge) who redeem such shares have one year from the date of
redemption to reinvest all or part of their redemption proceeds in the same
Class of the Fund or in the same Class of any of the other funds in the Delaware
Investments family. In the case of Class A Shares, the reinvestment will not be
assessed a front-end sales charge and in the case of Class B Shares, the amount
of the CDSC previously charged on the redemption will be reimbursed by the
Distributor. The reinvestment will be subject to applicable eligibility and
minimum purchase requirements and must be in states where shares of such other
funds may be sold. This reinvestment privilege does not extend to Class A Shares
where the redemption of the shares triggered the payment of a Limited CDSC.
Persons investing redemption proceeds from direct investments in mutual funds in
the Delaware Investments family, offered without a front-end sales charge will
be required to pay the applicable sales charge when purchasing Class A Shares.
The reinvestment privilege does not extend to a redemption of Class C Shares.
Any such reinvestment cannot exceed the redemption proceeds (plus any
amount necessary to purchase a full share). The reinvestment will be made at the
net asset value next determined after receipt of remittance. In the case of
Class B Shares, the time that the previous investment was held will be included
in determining any applicable CDSC due upon redemptions as well as the automatic
conversion into Class A Shares.
A redemption and reinvestment of Class B Shares could have income tax
consequences. Shareholders will receive from the Distributor the amount of the
CDSC paid at the time of redemption as part of the reinvested shares, which may
be treated as a capital gain to the shareholder for tax purposes. It is
recommended that a tax adviser be consulted with respect to such transactions.
Any reinvestment directed to a fund in which the investor does not then
have an account will be treated like all other initial purchases of the fund's
shares. Consequently, an investor should obtain and read carefully the
prospectus for the fund in which the investment is intended to be made before
investing or sending money.
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The prospectus contains more complete information about the fund,
including charges and expenses.
Investors should consult their financial advisers or the Transfer
Agent, which also serves as the Fund's shareholder servicing agent, about the
applicability of the Class A Limited CDSC in connection with the features
described above.
Group Investment Plans
Group Investment Plans which are not eligible to purchase shares of the
Institutional Classes may also benefit from the reduced front-end sales charges
for investments in Class A Shares, based on total plan assets. If a company has
more than one plan investing in the Delaware Investments family of funds, then
the total amount invested in all plans would be used in determining the
applicable front-end sales charge reduction upon each purchase, both initial and
subsequent, upon notification to the Fund in which the investment is being made
at the time of each such purchase. Employees participating in such Group
Investment Plans may also combine the investments made in their plan account
when determining the applicable front-end sales charge on purchases to
non-retirement Delaware Investments investment accounts if they so notify the
Fund in which they are investing in connection with each purchase. See
Retirement Plans for the Fund Classes under Investment Plans for information
about Retirement Plans.
The Limited CDSC is applicable to any redemptions of net asset value
purchases made on behalf of any group retirement plan on which a dealer's
commission has been paid only if such redemption is made pursuant to a
withdrawal of the entire plan from a fund in the Delaware Investments family.
See Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value under Redemption and Exchange.
Institutional Classes
The Institutional Class of each Fund is available for purchase only by:
(a) retirement plans introduced by persons not associated with brokers or
dealers that are primarily engaged in the retail securities business and
rollover individual retirement accounts from such plans; (b) tax-exempt employee
benefit plans of the Manager or its affiliates and securities dealer firms with
a selling agreement with the Distributor; (c) institutional advisory accounts of
the Manager or its affiliates and those having client relationships with
Delaware Investment Advisers, an affiliate of the Manager, or its other
affiliates and their corporate sponsors, as well as subsidiaries and related
employee benefit plans and rollover individual retirement accounts from such
institutional advisory accounts; (d) a bank, trust company and similar financial
institution investing for its own account or for the account of its trust
customers for whom such financial institution is exercising investment
discretion in purchasing shares of the Class, except where the investment is
part of a program that requires payment of the financial institution of a Rule
12b-1 Plan fee; and (e) registered investment advisers investing on behalf of
clients that consist solely of institutions and high net-worth individuals
having at least $1,000,000 entrusted to the adviser for investment purposes, but
only if the adviser is not affiliated or associated with a broker or dealer and
derives compensation for its services exclusively from its clients for such
advisory services.
Shares of Institutional Classes are available for purchase at net asset
value, without the imposition of a front-end or contingent deferred sales charge
and are not subject to Rule 12b-1 expenses.
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INVESTMENT PLANS
Reinvestment Plan/Open Account
Unless otherwise designated by shareholders in writing, dividends from
net investment income and distributions from realized securities profits, if
any, will be automatically reinvested in additional shares of the respective
Fund Class in which an investor has an account (based on the net asset value in
effect on the reinvestment date) and will be credited to the shareholder's
account on that date. All dividends and distributions of the Institutional
Classes of each Fund are reinvested in the accounts of the holders of such
shares (based on the net asset value in effect on the reinvestment date). A
confirmation of each dividend payment from net investment income will be mailed
to shareholders quarterly. A confirmation of any distributions from realized
securities profits will be mailed to shareholders in the first quarter of the
fiscal year.
Under the Reinvestment Plan/Open Account, shareholders may purchase and
add full and fractional shares to their plan accounts at any time either through
their investment dealers or by sending a check or money order to the specific
Fund and Class in which shares are being purchased. Such purchases, which must
meet the minimum subsequent purchase requirements set forth in the Prospectuses
and this Part B, are made for Class A Shares at the public offering price, and
for Class B Shares, Class C Shares and Institutional Classes at the net asset
value, at the end of the day of receipt. A reinvestment plan may be terminated
at any time. This plan does not assure a profit nor protect against depreciation
in a declining market.
Reinvestment of Dividends in Other Delaware Investments Family of Funds
Subject to applicable eligibility and minimum initial purchase
requirements and the limitations set forth below, holders of Class A Shares,
Class B Shares and Class C Shares may automatically reinvest dividends and/or
distributions in any of the mutual funds in the Delaware Investments, including
the Funds, in states where their shares may be sold. Such investments will be at
net asset value at the close of business on the reinvestment date without any
front-end sales charge or service fee. The shareholder must notify the Transfer
Agent in writing and must have established an account in the fund into which the
dividends and/or distributions are to be invested. Any reinvestment directed to
a fund in which the investor does not then have an account will be treated like
all other initial purchases of a fund's shares. Consequently, an investor should
obtain and read carefully the prospectus for the fund in which the investment is
intended to be made before investing or sending money. The prospectus contains
more complete information about the fund, including charges and expenses.
Subject to the following limitations, dividends and/or distributions
from other funds in Delaware Investments may be invested in shares of the Funds,
provided an account has been established. Dividends from Class A Shares may not
be directed to Class B Shares or Class C Shares. Dividends from Class B Shares
may only be directed to other Class B Shares and dividends from Class C Shares
may only be directed to other Class C Shares.
Capital gains and/or dividend distributions for participants in the
following retirement plans are automatically reinvested into the same Delaware
Investments fund in which their investments are held: SAR/SEP, SEP/IRA, SIMPLE
IRA, SIMPLE 401(k), Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, or 403(b)(7) or 457 Deferred Compensation Plans.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware
Investments family, you may write and authorize an exchange of part or all of
your investment into shares of a Fund. If you wish to open an account by
exchange, call the Shareholder Service Center for more information. All
exchanges are subject to the eligibility and minimum purchase requirements set
forth in each fund's prospectus. See Redemption and Exchange for more complete
information concerning your exchange privileges.
Holders of Class A Shares of a Fund may exchange all or part of their
shares for certain of the shares of other funds in the Delaware Investments
family, including other Class A Shares, but may not exchange their Class A
Shares for Class B Shares or Class C Shares of the Fund or of any other fund in
the Delaware Investments family. Holders of Class B Shares of a Fund are
permitted to exchange all or part of their Class B Shares only into
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Class B Shares of other Delaware Investments funds. Similarly, holders of Class
C Shares of a Fund are permitted to exchange all or part of their Class C Shares
only into Class C Shares of other Delaware Investments funds. Class B Shares of
a Fund and Class C Shares of a Fund acquired by exchange will continue to carry
the CDSC and, in the case of Class B Shares, the automatic conversion schedule
of the fund from which the exchange is made. The holding period of Class B
Shares of a Fund acquired by exchange will be added to that of the shares that
were exchanged for purposes of determining the time of the automatic conversion
into Class A Shares of that Fund.
Permissible exchanges into Class A Shares of a Fund will be made
without a front-end sales charge, except for exchanges of shares that were not
previously subject to a front-end sales charge (unless such shares were acquired
through the reinvestment of dividends). Permissible exchanges into Class B
Shares or Class C Shares of a Fund will be made without the imposition of a CDSC
by the fund from which the exchange is being made at the time of the exchange.
Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan--Investors may arrange for either Fund to
accept for investment in Class A Shares, Class B Shares or Class C Shares,
through an agent bank, preauthorized government or private recurring payments.
This method of investment assures the timely credit to the shareholder's account
of payments such as social security, veterans' pension or compensation benefits,
federal salaries, Railroad Retirement benefits, private payroll checks,
dividends, and disability or pension fund benefits. It also eliminates lost,
stolen and delayed checks.
Automatic Investing Plan--Shareholders of Class A Shares, Class B
Shares and Class C Shares may make automatic investments by authorizing, in
advance, monthly or quarterly payments directly from their checking account for
deposit into their Fund account. This type of investment will be handled in
either of the following ways. (1) If the shareholder's bank is a member of the
National Automated Clearing House Association ("NACHA"), the amount of the
investment will be electronically deducted from his or her account by Electronic
Fund Transfer ("EFT"). The shareholder's checking account will reflect a debit
each month at a specified date although no check is required to initiate the
transaction. (2) If the shareholder's bank is not a member of NACHA, deductions
will be made by preauthorized checks, known as Depository Transfer Checks.
Should the shareholder's bank become a member of NACHA in the future, his or her
investments would be handled electronically through EFT.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or 457 Deferred
Compensation Plans.
* * *
Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent investments
under such plans must be for $25 or more. An investor wishing to take advantage
of either service must complete an authorization form. Either service can be
discontinued by the shareholder at any time without penalty by giving written
notice.
Payments to a Fund from the federal government or its agencies on
behalf of a shareholder may be credited to the shareholder's account after such
payments should have been terminated by reason of death or otherwise. Any such
payments are subject to reclamation by the federal government or its agencies.
Similarly, under certain circumstances, investments from private sources may be
subject to reclamation by the transmitting bank. In the event of a reclamation,
a Fund may liquidate sufficient shares from a shareholder's account to reimburse
the government or the private source. In the event there are insufficient shares
in the shareholder's account, the shareholder is expected to reimburse the Fund.
Direct Deposit Purchases by Mail
Shareholders may authorize a third party, such as a bank or employer,
to make investments directly to their Fund accounts. Either Fund will accept
these investments, such as bank-by-phone, annuity payments and payroll
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allotments, by mail directly from the third party. Investors should contact
their employers or financial institutions who in turn should contact Adviser
Funds for proper instructions.
MoneyLine (SM) On Demand
You or your investment dealer may request purchases of Fund shares by
phone using MoneyLine (SM) On Demand. When you authorize a Fund to accept such
requests from you or your investment dealer, funds will be withdrawn from (for
share purchases) your predesignated bank account. Your request will be processed
the same day if you call prior to 4 p.m., Eastern time. There is a $25 minimum
and $50,000 maximum limit for MoneyLine (SM) On Demand transactions.
It may take up to four business days for the transactions to be
completed. You can initiate this service by completing an Account Services form.
If your name and address are not identical to the name and address on your Fund
account, you must have your signature guaranteed. The Funds do not charge a fee
for this service; however, your bank may charge a fee.
Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in the Fund
Classes through regular liquidations of shares in their accounts in other mutual
funds in the Delaware Investments family. Shareholders of the Fund Classes may
elect to invest in one or more of the other mutual funds in Delaware Investments
family through the Wealth Builder Option. If in connection with the election of
the Wealth Builder Option, you wish to open a new account to receive the
automatic investment, such new account must meet the minimum initial purchase
requirements described in the prospectus of the fund that you select. All
investments under this option are exchanges and are therefore subject to the
same conditions and limitations as other exchanges noted above.
Under this automatic exchange program, shareholders can authorize
regular monthly investments (minimum of $100 per fund) to be liquidated from
their account and invested automatically into other mutual funds in the Delaware
Investments family, subject to the conditions and limitations set forth in the
Fund Classes' Prospectus. The investment will be made on the 20th day of each
month (or, if the fund selected is not open that day, the next business day) at
the public offering price or net asset value, as applicable, of the fund
selected on the date of investment. No investment will be made for any month if
the value of the shareholder's account is less than the amount specified for
investment.
Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the fund
into which investments are made could fluctuate. Since this program involves
continuous investment regardless of such fluctuating value, investors selecting
this option should consider their financial ability to continue to participate
in the program through periods of low fund share prices. This program involves
automatic exchanges between two or more fund accounts and is treated as a
purchase of shares of the fund into which investments are made through the
program. Shareholders can terminate their participation in Wealth Builder at any
time by giving written notice to the fund from which exchanges are made.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or 457 Deferred
Compensation Plans. This option also is not available to shareholders of the
Institutional Classes.
Asset Planner
To invest in Delaware Investments funds using the Asset Planner asset
allocation service, you should complete an Asset Planner Account Registration
Form, which is available only from a financial adviser or investment dealer.
Effective September 1, 1997, the Asset Planner Service is only available to
financial advisers or investment dealers who have previously used this service.
The Asset Planner service offers a choice of four predesigned asset allocation
strategies (each with a different risk/reward profile) in predetermined
percentages in
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Delaware Investments funds. With the help of a financial adviser, you may also
design a customized asset allocation strategy.
The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. Exchanges from existing Delaware
Investments accounts into the Asset Planner service may be made at net asset
value under the circumstances described under Investing by Exchange. Also see
Buying Class A Shares at Net Asset Value. The minimum initial investment per
Strategy is $2,000; subsequent investments must be at least $100. Individual
fund minimums do not apply to investments made using the Asset Planner service.
Class A, Class B and Class C Shares are available through the Asset Planner
service. Generally, only shares within the same class may be used within the
same Strategy. However, Class A Shares of a Fund and of other funds in the
Delaware Investments family may be used in the same Strategy with consultant
class shares that are offered by certain other Delaware Investments funds.
An annual maintenance fee, currently $35 per Strategy, is due at the
time of initial investment and by September 30 of each subsequent year. The fee,
payable to Delaware Service Company, Inc. to defray extra costs associated with
administering the Asset Planner service, will be deducted automatically from one
of the funds within your Asset Planner account if not paid by September 30.
However, effective November 1, 1996, the annual maintenance fee is waived until
further notice. Investors who utilize the Asset Planner for an IRA will continue
to pay an annual IRA fee of $15 per Social Security number. Investors will
receive a customized quarterly Strategy Report summarizing all Asset Planner
investment performance and account activity during the prior period.
Confirmation statements will be sent following all transactions other than those
involving a reinvestment of distributions.
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
Retirement Plans for the Fund Classes
An investment in the Funds may be suitable for tax-deferred retirement
plans. Delaware Investments offers a full spectrum of retirement plans,
including the 401(k) Defined Contribution Plan, Individual Retirement Account
("IRA") and the new Roth IRA and Education IRA.
Among the retirement plans that Delaware Investments offers, Class B
Shares are available only by Individual Retirement Accounts, SIMPLE IRAs, Roth
IRAs, Education IRAs, Simplified Employee Pension Plans, Salary Reduction
Simplified Employee Pension Plans, and 403(b)(7) and 457 Deferred Compensation
Plans. The CDSC may be waived on certain redemptions of Class B Shares and Class
C Shares. See Waiver of Contingent Deferred Sales Charge - Class B Shares and
Class C Shares under Redemption and Exchange for a list of the instances in
which the CDSC is waived.
Purchases of Class B Shares are subject to a maximum purchase
limitation of $250,000 for retirement plans. Purchases of Class C Shares must be
in an amount that is less than $1,000,000 for such plans. The maximum purchase
limitations apply only to the initial purchase of shares by the retirement plan.
Minimum investment limitations generally applicable to other investors
do not apply to retirement plans other than Individual Retirement Accounts, for
which there is a minimum initial purchase of $250 and a minimum subsequent
purchase of $25, regardless of which Class is selected. Retirement plans may be
subject to plan establishment fees, annual maintenance fees and/or other
administrative or trustee fees. Fees are based upon the number of participants
in the plan as well as the services selected. Additional information about fees
is included in retirement plan materials. Fees are quoted upon request. Annual
maintenance fees may be shared by Delaware Management Trust Company, the
Transfer Agent, other affiliates of the Manager and others that provide services
to such Plans.
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Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders. Certain
retirement plans may qualify to purchase shares of the Institutional Class
shares. See Institutional Classes, above. For additional information on any of
the plans and Delaware's retirement services, call the Shareholder Service
Center telephone number.
It is advisable for an investor considering any one of the retirement
plans described below to consult with an attorney, accountant or a qualified
retirement plan consultant. For further details, including applications for any
of these plans, contact your investment dealer or the Distributor.
Taxable distributions from the retirement plans described below may be
subject to withholding.
Please contact your investment dealer or the Distributor for the
special application forms required for the Plans described below.
Prototype Profit Sharing or Money Purchase Pension Plans
Prototype Plans are available for self-employed individuals,
partnerships, corporations and other eligible forms of organizations. These
plans can be maintained as Section 401(k), profit sharing or money purchase
pension plans.
Contributions may be invested only in Class A Shares and Class C Shares.
Individual Retirement Account ("IRA")
A document is available for an individual who wants to establish an IRA
and make contributions which may be tax-deductible, even if the individual is
already participating in an employer-sponsored retirement plan. Even if
contributions are not deductible for tax purposes, as indicated below, earnings
will be tax-deferred. In addition, an individual may make contributions on
behalf of a spouse who has no compensation for the year; however, participation
may be restricted based on certain income limits.
IRA Disclosures
The Taxpayer Relief Act of 1997 provides new opportunities for
investors. Individuals have five types of tax-favored IRA accounts that can be
utilized depending on the individual's circumstances. A new Roth IRA and
Education IRA are available in addition to the existing deductible IRA and
non-deductible IRA.
Deductible and Non-deductible IRAs
An individual can contribute up to $2,000 in his or her IRA each year.
Contributions may or may not be deductible depending upon the taxpayer's
adjusted gross income ("AGI") and whether the taxpayer is an active participant
in an employer sponsored retirement plan. Even if a taxpayer is an active
participant in an employer sponsored retirement plan, the full $2,000 is still
available if the taxpayer's AGI is below $30,000 ($50,000 for taxpayers filing
joint returns) for years beginning after December 31, 1997. A partial deduction
is allowed for married couples with income between $50,000 and $60,000, and for
single individuals with incomes between $30,000 and $40,000. These income
phase-out limits reach $80,000-$100,000 in 2007 for joint filers and
$50,000-$60,000 in 2005 for single filers. No deductions are available for
contributions to IRAs by taxpayers whose AGI after IRA deductions exceeds the
maximum income limit established for each year and who are active participants
in an employer sponsored retirement plan.
Taxpayers who are not allowed deductions on IRA contributions still can
make non-deductible IRA contributions of as much as $2,000 for each working
spouse and defer taxes on interest or other earnings from the IRAs.
Under the new law, a married individual is not considered an active
participant in an employer sponsored retirement plan merely because the
individual's spouse is an active participant if the couple's combined AGI is
below $150,000. The maximum deductible IRA contribution for a married individual
who is not an active participant, but whose spouse is, is phased out for
combined AGI between $150,000 and $160,000.
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Conduit (Rollover) IRAs
Certain individuals who have received or are about to receive eligible
rollover distributions from an employer-sponsored retirement plan or another IRA
may rollover the distribution tax-free to a Conduit IRA. The rollover of the
eligible distribution must be completed by the 60th day after receipt of the
distribution; however, if the rollover is in the form of a direct
trustee-to-trustee transfer without going through the distributee's hand, the
60-day limit does not apply.
A distribution qualifies as an "eligible rollover distribution" if it
is made from a qualified retirement plan, a 403(b) plan or another IRA and does
not constitute one of the following:
(1) Substantially equal periodic payments over the employee's life or
life expectancy or the joint lives or life expectancies of the employee and
his/her designated beneficiary;
(2) Substantially equal installment payments for a period certain of 10
or more years;
(3) A distribution, all of which represents a required minimum
distribution after attaining age 70 1/2;
(4) A distribution due to a Qualified Domestic Relations Order to an
alternate payee who is not the spouse (or former spouse) of the employee; and
(5) A distribution of after-tax contributions which is not includable
in income.
Roth IRAs
For taxable years beginning after December 31, 1997, non-deductible
contributions of up to $2,000 per year can be made to a new Roth IRA. As a
result of the Internal Revenue Service Restructuring and Reform Act of 1998 (the
"1998 Act"), the $2,000 annual limit will not be reduced by any contributions to
a deductible or nondeductible IRA for the same year. The maximum contribution
that can be made to a Roth IRA is phased out for single filers with AGI between
$95,000 and $110,000, and for couples filing jointly with AGI between $150,000
and $160,000. Qualified distributions from a Roth IRA would be exempt from
federal taxes. Qualified distributions are distributions (1) made after the
five-taxable year period beginning with the first taxable year for which a
contribution was made to a Roth IRA and (2) that are (a) made on or after the
date on which the individual attains age 59 1/2, (b) made to a beneficiary on or
after the death of the individual, (c) attributed to the individual being
disabled, or (d) for a qualified special purpose (e.g., first time homebuyer
expenses).
Distributions that are not qualified distributions would always be
tax-free if the taxpayer is withdrawing contributions, not accumulated earnings.
Taxpayers with AGI of $100,000 or less are eligible to convert an
existing IRA (deductible, nondeductible and conduit) to a Roth IRA. Earnings and
contributions from a deductible IRA are subject to a tax upon conversion;
however, no 10% excise tax for early withdrawal would apply. If the conversion
is done prior to January 1, 1999, then the income from the conversion can be
included in income ratably over a four-year period beginning with the year of
conversion.
Education IRAs
For taxable years beginning after December 31, 1997, an Education IRA
has been created exclusively for the purpose of paying qualified higher
education expenses. Taxpayers can make non-deductible contributions up to $500
per year per beneficiary. The $500 annual limit is in addition to the $2,000
annual contribution limit applicable to IRAs and Roth IRAs. Eligible
contributions must be in cash and made prior to the date the beneficiary reaches
age 18. Similar to the Roth IRA, earnings would accumulate tax-free. There is no
requirement that the contributor be related to the beneficiary, and there is no
limit on the number of beneficiaries for whom one contributor can establish
Education IRAs. In addition, multiple Education IRAs can be created for the same
beneficiaries, however, the contribution limit of all contributions for a single
beneficiary cannot exceed $500 annually.
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This $500 annual contribution limit for Education IRAs is phased out
ratably for single contributors with modified AGI between $95,000 and $110,000,
and for couples filing jointly with modified AGI of between $150,000 and
$160,000. Individuals with modified AGI above the phase-out range are not
allowed to make contributions to an Education IRA established on behalf of any
other individual.
Distributions from an Education IRA are excludable from gross income to
the extent that the distribution does not exceed qualified higher education
expenses incurred by the beneficiary during the year the distribution is made
regardless of whether the beneficiary is enrolled at an eligible educational
institution on a full-time, half-time, or less than half-time basis.
Any balance remaining in an Education IRA at the time a beneficiary
becomes 30 years old must be distributed, and the earnings portion of such a
distribution will be includable in gross income of the beneficiary and subject
to an additional 10% penalty tax if the distribution is not for qualified higher
education expenses. Tax-free (and penalty-free) transfers and rollovers of
account balances from one Education IRA benefiting one beneficiary to another
Education IRA benefiting a different beneficiary (as well as redesignations of
the named beneficiary) is permitted, provided that the new beneficiary is a
member of the family of the old beneficiary and that the transfer or rollover is
made before the time the old beneficiary reaches age 30 and the new beneficiary
reaches age 18.
A company or association may establish a Group IRA or Group Roth IRA
for employees or members who want to purchase shares of the Fund.
Investments generally must be held in the IRA until age 59 1/2 in order
to avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in which
the participant reaches age 70 1/2. Individuals are entitled to revoke the
account, for any reason and without penalty, by mailing written notice of
revocation to Delaware Management Trust Company within seven days after the
receipt of the IRA Disclosure Statement or within seven days after the
establishment of the IRA, except, if the IRA is established more than seven days
after receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the year
received. Excess contributions removed after the tax-filing deadline, plus
extensions, for the year in which the excess contributions were made are subject
to a 6% excise tax on the amount of excess. Premature distributions
(distributions made before age 59 1/2, except for death, disability and certain
other limited circumstances) will be subject to a 10% excise tax on the amount
prematurely distributed, in addition to the income tax resulting from the
distribution. For information concerning the applicability of a CDSC upon
redemption of Class B Shares and Class C Shares, see Contingent Deferred Sales
Charge - Class B Shares and Class C Shares.
Effective January 1, 1997, the 10% premature distribution penalty will
not apply to distributions from an IRA that are used to pay medical expenses in
excess of 7.5% of adjusted gross income or to pay health insurance premiums by
an individual who has received unemployment compensation for 12 consecutive
weeks. In addition, effective January 1, 1998, the new law allows for premature
distribution without a 10% penalty if (i) the amounts are used to pay qualified
higher education expenses (including graduate level courses) of the taxpayer,
the taxpayer's spouse or any child or grandchild of the taxpayer or the
taxpayer's spouse, or (ii) used to pay acquisition costs of a principle
residence for the purchase of a first-time home by the taxpayer, taxpayer's
spouse or any child or grandchild of the taxpayer or the taxpayer's spouse. A
qualified first-time homebuyer is someone who has had no ownership interest in a
residence during the past two years. The aggregate amount of distribution for
first-time home purchases cannot exceed a lifetime cap of $10,000.
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Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Classes is available for investment by a
SEP/IRA.
Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
Although new SAR/SEP plans may not be established after December 31,
1996, existing plans may continue to be maintained by employers having 25 or
fewer employees. An employer may elect to make additional contributions to such
existing plans.
Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers to establish qualified
plans based on salary deferral contributions. Effective January 1, 1997,
non-governmental tax-exempt organizations may establish 401(k) plans. Plan
documents are available to enable employers to establish a plan. An employer may
also elect to make profit sharing contributions and/or matching contributions
with investments in only Class A Shares and Class C Shares or certain other
funds in the Delaware Investments family. Purchases under the Plan may be
combined for purposes of computing the reduced front-end sales charge applicable
to Class A Shares as set forth in the table the Prospectuses for the Fund
Classes.
Deferred Compensation Plan for Public Schools and Non-Profit Organizations
("403(b)(7)")
Section 403(b)(7) of the Code permits public school systems and certain
non-profit organizations to use mutual fund shares held in a custodial account
to fund deferred compensation arrangements for their employees. A custodial
account agreement is available for those employers who wish to purchase shares
of any of the Classes in conjunction with such an arrangement. Purchases under
the Plan may be combined for purposes of computing the reduced front-end sales
charge applicable to Class A Shares as set forth in the table the Prospectuses
for the Fund Classes.
Deferred Compensation Plan for State and Local Government Employees ("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation plan
for their employees who wish to participate. This enables employees to defer a
portion of their salaries and any federal (and possibly state) taxes thereon.
Such plans may invest in shares of the Fund. Although investors may use their
own plan, there is available a Delaware Investments 457 Deferred Compensation
Plan. Interested investors should contact the Distributor or their investment
dealers to obtain further information. Purchases under the Plan may be combined
for purposes of computing the reduced front-end sales charge applicable to Class
A Shares as set forth in the table in the Prospectuses for the Fund Classes.
SIMPLE IRA
A SIMPLE IRA combines many of the features of an IRA and a 401(k) Plan
but is easier to administer than a typical 401(k) Plan. It requires employers to
make contributions on behalf of their employees and also has a salary deferral
feature that permits employees to defer a portion of their salary into the plan
on a pre-tax basis. A SIMPLE IRA is available only to plan sponsors with 100 or
fewer employees.
SIMPLE 401(k)
A SIMPLE 401(k) is like a regular 401(k) except that it is available
only to plan sponsors 100 or fewer employees and, in exchange for mandatory plan
sponsor contributions, discrimination testing is no longer required. Class B
Shares are not available for purchase by such plans.
DETERMINING OFFERING PRICE AND NET ASSET VALUE
Orders for purchases of Class A Shares are effected at the offering
price next calculated by the Fund in which shares are being purchased after
receipt of the order by the Fund or its agent. Orders for purchases of
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Class B Shares, Class C Shares and the Institutional Classes are effected at the
net asset value per share next calculated after receipt of the order by the Fund
in which shares are being purchased or its agent. See Distribution and Service
under Investment Management Agreement and Sub-Advisory Agreements. Selling
dealers have the responsibility of transmitting orders promptly.
The offering price for Class A Shares consists of the net asset value
per share plus any applicable sales charges. Offering price and net asset value
are computed as of the close of regular trading on the New York Stock Exchange
(ordinarily, 4 p.m., Eastern time) on days when the Exchange is open. The New
York Stock Exchange is scheduled to be open Monday through Friday throughout the
year except for days when the following holidays are observed: New Year's Day,
Martin Luther King, Jr.'s Birthday, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. When the New York Stock
Exchange is closed, the Funds will generally be closed, pricing calculations
will not be made and purchase and redemption orders will not be processed.
An example showing how to calculate the net asset value per share and,
in the case of Class A Shares, the offering price per share, is included in a
Fund's financial statements which are incorporated by reference into this Part
B.
Each Fund's net asset value per share is computed by adding the value
of all the securities and other assets in the Fund's portfolio, deducting any
liabilities of the Fund, and dividing by the number of Fund shares outstanding.
Expenses and fees are accrued daily. In determining a Fund's total net assets,
portfolio securities primarily listed or traded on a national or foreign
securities exchange, except for bonds, are valued at the last sale price on that
exchange. Exchange traded options are valued at the last reported sale price or,
if no sales are reported, at the mean between bid and asked prices. Non-exchange
traded options are valued at fair value using a mathematical model. Futures
contracts are valued at their daily quoted settlement price. For valuation
purposes, foreign currencies and foreign securities denominated in foreign
currency values will be converted into U.S. dollar values at the mean between
the bid and offered quotations of such currencies against U.S. dollars based on
rates in effect that day. Securities not traded on a particular day,
over-the-counter securities, and government and agency securities are valued at
the mean value between bid and asked prices. Money market instruments having a
maturity of less than 60 days are valued at amortized cost. Debt securities
(other than short-term obligations) are valued on the basis of valuations
provided by a pricing service when such prices are believed to reflect the fair
value of such securities. Foreign securities currencies and other assets
denominated in foreign currencies are translated into U.S. dollars at the
exchange rate of such currencies against the U.S. dollar, as provided by
independent pricing service. Use of a pricing service has been approved by the
Board of Trustees. Prices provided by a pricing service take into account
appropriate factors such as institutional trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data. Subject to the foregoing, securities for
which market quotations are not readily available and other assets are valued at
fair value as determined in good faith and in a method approved by the Board of
Trustees.
Each Class of a Fund will bear, pro-rata, all of the common expenses of
that Fund. The net asset values of all outstanding shares of each Class of a
Fund will be computed on a pro-rata basis for each outstanding share based on
the proportionate participation in that Fund represented by the value of shares
of that Class. All income earned and expenses incurred by a Fund, will be borne
on a pro-rata basis by each outstanding share of a Class, based on each Class'
percentage in that Fund represented by the value of shares of such Classes,
except that Institutional Classes will not incur any of the expenses under
Adviser Funds 12b-1 Plans and Class A Shares, Class B Shares and Class C Shares
alone will bear the 12b-1 Plan expenses payable under their respective Plans.
Due to the specific distribution expenses and other costs that will be allocable
to each Class, the net asset value of each Class of a Fund will vary.
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REDEMPTION AND EXCHANGE
You can redeem or exchange your shares in a number of different ways.
The exchange service is useful if your investment requirements change and you
want an easy way to invest in other equity funds, tax-advantaged funds, bond
funds or money market funds. This service is also useful if you are anticipating
a major expenditure and want to move a portion of your investment into a fund
that has the checkwriting feature. Exchanges are subject to the requirements of
each fund and all exchanges of shares constitute taxable events. Further, in
order for an exchange to be processed, shares of the fund being acquired must be
registered in the state where the acquiring shareholder resides. You may want to
consult your financial adviser or investment dealer to discuss which funds in
Delaware Investments will best meet your changing objectives, and the
consequences of any exchange transaction. You may also call the Delaware
Investments directly for fund information.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after a Fund receives your request in good order,
subject, in the case of a redemption, to any applicable CDSC or Limited CDSC.
For example, redemption or exchange requests received in good order after the
time the offering price and net asset value of shares are determined will be
processed on the next business day. See the Prospectuses. A shareholder
submitting a redemption request may indicate that he or she wishes to receive
redemption proceeds of a specific dollar amount. In the case of such a request,
and in the case of certain redemptions from retirement plan accounts, a Fund
will redeem the number of shares necessary to deduct the applicable CDSC in the
case of Class B Shares and Class C Shares, and, if applicable, the Limited CDSC
in the case of Class A Shares and tender to the shareholder the requested
amount, assuming the shareholder holds enough shares in his or her account for
the redemption to be processed in this manner. Otherwise, the amount tendered to
the shareholder upon redemption will be reduced by the amount of the applicable
CDSC or Limited CDSC. Redemption proceeds will be distributed promptly, as
described below, but not later than seven days after receipt of a redemption
request.
Except as noted below, for a redemption request to be in "good order,"
you must provide your account number, account registration, and the total number
of shares or dollar amount of the transaction. For exchange requests, you must
also provide the name of the fund in which you want to invest the proceeds.
Exchange instructions and redemption requests must be signed by the record
owner(s) exactly as the shares are registered. You may request a redemption or
an exchange by calling the Shareholder Service Center at 800-523-1918. Each Fund
may suspend, terminate, or amend the terms of the exchange privilege upon 60
days' written notice to shareholders.
In addition to redemption of Fund shares, the Distributor, acting as
agent of the Funds, offers to repurchase Fund shares from broker/dealers acting
on behalf of shareholders. The redemption or repurchase price, which may be more
or less than the shareholder's cost, is the net asset value per share next
determined after receipt of the request in good order by the respective Fund,
its agent, or certain authorized persons, subject to applicable CDSC or Limited
CDSC. This is computed and effective at the time the offering price and net
asset value are determined. See Determining Offering Price and Net Asset Value.
The Funds and the Distributor end their business days at 5 p.m., Eastern time.
This offer is discretionary and may be completely withdrawn without further
notice by the Distributor.
Orders for the repurchase of Fund shares which are submitted to the
Distributor prior to the close of its business day will be executed at the net
asset value per share computed that day (subject to the applicable CDSC or
Limited CDSC), if the repurchase order was received by the broker/dealer from
the shareholder prior to the time the offering price and net asset value are
determined on such day. The selling dealer has the responsibility of
transmitting orders to the Distributor promptly. Such repurchase is then settled
as an ordinary transaction with the broker/dealer (who may make a charge to the
shareholder for this service) delivering the shares repurchased.
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Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later than seven days, after receipt of a redemption request
in good order by the Fund or certain other authorized persons (see Distribution
and Service under Investment Management Agreement and Sub-Advisory Agreements);
provided, however, that each commitment to mail or wire redemption proceeds by a
certain time, as described below, is modified by the qualifications described in
the next paragraph.
Each Fund will process written and telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. Each Fund will honor redemption requests as to shares for which a check
was tendered as payment, but a Fund will not mail or wire the proceeds until it
is reasonably satisfied that the purchase check has cleared, which may take up
to 15 days from the purchase date. You can avoid this potential delay if you
purchase shares by wiring Federal Funds. Each Fund reserves the right to reject
a written or telephone redemption request or delay payment of redemption
proceeds if there has been a recent change to the shareholder's address of
record.
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason, the
Fund involved will automatically redeem from the shareholder's account the
shares purchased by the check plus any dividends earned thereon. Shareholders
may be responsible for any losses to a Fund or to the Distributor.
In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result of
which disposal by a Fund of securities owned by it is not reasonably practical,
or it is not reasonably practical for a Fund fairly to value its assets, or in
the event that the SEC has provided for such suspension for the protection of
shareholders, a Fund may postpone payment or suspend the right of redemption or
repurchase. In such case, the shareholder may withdraw the request for
redemption or leave it standing as a request for redemption at the net asset
value next determined after the suspension has been terminated.
Payment for shares redeemed or repurchased may be made either in cash
or kind, or partly in cash and partly in kind. Any portfolio securities paid or
distributed in kind would be valued as described in Determining Offering Price
and Net Asset Value. Subsequent sale by an investor receiving a distribution in
kind could result in the payment of brokerage commissions. However, Adviser
Funds has elected to be governed by Rule 18f-1 under the 1940 Act pursuant to
which each Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value of such Fund during any 90-day period for
any one shareholder.
The value of a Fund's investments is subject to changing market prices.
Thus, a shareholder reselling shares to a Fund may sustain either a gain or
loss, depending upon the price paid and the price received for such shares.
Certain redemptions of Class A Shares purchased at net asset value may
result in the imposition of a Limited CDSC. See Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value, below.
Class B Shares of the Funds are subject to a CDSC of (i) 5% if shares are
redeemed within one year of purchase; (ii) 4% if shares are redeemed during the
second year after purchase (iii) 3% if shares are redeemed during the third or
fourth year following purchase; (iv) 2% if shares are redeemed during the fifth
year following purchase; and (v) 1% if shares are redeemed during the sixth year
following purchase. Class C Shares are subject to a CDSC of 1% if shares are
redeemed within 12 months following purchase. See Contingent Deferred Sales
Charge - Class B Shares and Class C Shares under Purchasing Shares. Except for
the applicable CDSC or Limited CDSC and, with respect to the expedited payment
by wire described below for which, in the case of the Fund Classes, there is
currently a $7.50 bank wiring cost, neither the Funds nor the Distributor
charges a fee for redemptions or repurchases, but such fees could be charged at
any time in the future.
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Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for shares of other funds in the Delaware Investments (in
each case, "New Shares") in a permitted exchange, will not be subject to a CDSC
that might otherwise be due upon redemption of the Original Shares. However,
such shareholders will continue to be subject to the CDSC and, in the case of
Class B Shares, the automatic conversion schedule of the Original Shares as
described in this Part B and any CDSC assessed upon redemption will be charged
by the fund from which the Original Shares were exchanged. In an exchange of
Class B Shares from a Fund, the Fund's CDSC schedule may be higher than the CDSC
schedule relating to the New Shares acquired as a result of the exchange. For
purposes of computing the CDSC that may be payable upon a disposition of the New
Shares, the period of time that an investor held the Original Shares is added to
the period of time that an investor held the New Shares. With respect to Class B
Shares, the automatic conversion schedule of the Original Shares may be longer
than that of the New Shares. Consequently, an investment in New Shares by
exchange may subject an investor to the higher 12b-1 fees applicable to Class B
Shares of a Fund for a longer period of time than if the investment in New
Shares were made directly.
Written Redemption
You can write to each Fund at 1818 Market Street, Philadelphia, PA
19103 to redeem some or all of your shares. The request must be signed by all
owners of the account or your investment dealer of record. For redemptions of
more than $50,000, or when the proceeds are not sent to the shareholder(s) at
the address of record, the Funds require a signature by all owners of the
account and a signature guarantee for each owner. A signature guarantee can be
obtained from a commercial bank, a trust company or a member of a Securities
Transfer Association Medallion Program ("STAMP"). Each Fund reserves the right
to reject a signature guarantee supplied by an eligible institution based on its
creditworthiness. The Funds may require further documentation from corporations,
executors, retirement plans, administrators, trustees or guardians.
Payment is normally mailed the next business day after receipt of your
redemption request. If your Class A Shares are in certificate form, the
certificate(s) must accompany your request and also be in good order.
Certificates are issued for Class A Shares only if a shareholder submits a
specific request. Certificates are not issued for Class B Shares or Class C
Shares.
Written Exchange
You may also write to each Fund (at 1818 Market Street, Philadelphia,
PA 19103) to request an exchange of any or all of your shares into another
mutual fund in Delaware Investments, subject to the same conditions and
limitations as other exchanges noted above.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your Class A Shares in certificate form, you may
redeem or exchange only by written request and you must return your
certificates.
The Telephone Redemption - Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in which you have your account
in writing that you do not wish to have such services available with respect to
your account. Each Fund reserves the right to modify, terminate or suspend these
procedures upon 60 days' written notice to shareholders. It may be difficult to
reach the Funds by telephone during periods when market or economic conditions
lead to an unusually large volume of telephone requests.
Neither the Funds nor their Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, each Fund will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, such Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Telephone instructions received by the
Fund Classes are generally tape
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recorded, and a written confirmation will be provided for all purchase, exchange
and redemption transactions initiated by telephone. By exchanging shares by
telephone, you are acknowledging prior receipt of a prospectus for the fund into
which your shares are being exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption proceeds of
$50,000 or less mailed to you at your address of record. Checks will be payable
to the shareholder(s) of record. Payment is normally mailed the next business
day after receipt of the redemption request. This service is only available to
individual, joint and individual fiduciary-type accounts.
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must complete an Authorization Form and have your signature
guaranteed. For your protection, your authorization must be on file. If you
request a wire, your funds will normally be sent the next business day. If the
proceeds are wired to the shareholder's account at a bank which is not a member
of the Federal Reserve System, there could be a delay in the crediting of the
funds to the shareholder's bank account. First Union National Bank's fee
(currently $7.50) will be deducted from Fund Class redemption proceeds. If you
ask for a check, it will normally be mailed the next business day after receipt
of your redemption request to your predesignated bank account. There are no
separate fees for this redemption method, but the mail time may delay getting
funds into your bank account. Simply call the Shareholder Service Center prior
to the time the offering price and net asset value are determined, as noted
above.
Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to
adjust your investment holdings as your liquidity requirements and investment
objectives change. You or your investment dealer of record can exchange your
shares into other funds in Delaware Investments under the same registration,
subject to the same conditions and limitations as other exchanges noted above.
As with the written exchange service, telephone exchanges are subject to the
requirements of each fund, as described above. Telephone exchanges may be
subject to limitations as to amounts or frequency.
The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on short-term
swings in the securities market through frequent transactions in and out of the
funds in the Delaware Investments family. Telephone exchanges may be subject to
limitations as to amounts or frequency. The Transfer Agent and each Fund reserve
the right to record exchange instructions received by telephone and to reject
exchange requests at any time in the future.
MoneyLine (SM) On Demand
You or your investment dealer may request redemptions of Fund shares by
phone using MoneyLine (SM) On Demand. When you authorize a Fund to accept such
requests from you or your investment dealer, funds will be deposited to (for
share redemptions) your predesignated bank account. Your request will be
processed the same day if you call prior to 4 p.m., Eastern time. There is a $25
minimum and $50,000 maximum limit for MoneyLine (SM) On Demand transactions. See
MoneyLine (SM) On Demand under Investment Plans.
Right to Refuse Timing Accounts
With regard to accounts that are administered by market timing services
("Timing Firms") to purchase or redeem shares based on changing economic and
market conditions ("Timing Accounts"), the Funds will refuse any new timing
arrangements, as well as any new purchases (as opposed to exchanges) in Delaware
Investments funds from Timing Firms. A Fund reserves the right to temporarily or
permanently terminate the exchange privilege or reject any specific purchase
order for any person whose transactions seem to follow a
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timing pattern who: (i) makes an exchange request out of the Fund within two
weeks of an earlier exchange request out of the Fund, or (ii) makes more than
two exchanges out of the Fund per calendar quarter, or (iii) exchanges shares
equal in value to at least $5 million, or more than 1/4 of 1% of the Fund's net
assets. Accounts under common ownership or control, including accounts
administered so as to redeem or purchase shares based upon certain predetermined
market indicators, will be aggregated for purposes of the exchange limits.
Restrictions on Timed Exchanges
Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight Delaware Investments funds: (1)
Delaware Decatur Equity Income Fund, (2) Delaware Growth and Income Fund, (3)
Delaware Balanced Fund, (4) Delaware Limited-Term Government Fund, (5) Delaware
Tax-Free USA Fund, (6) Delaware Cash Reserve Fund, (7) Delaware Delchester Fund
and (8) Delaware Tax-Free Pennsylvania Fund. No other Delaware Investments funds
are available for timed exchanges. Assets redeemed or exchanged out of Timing
Accounts in Delaware Investments funds not listed above may not be reinvested
back into that Timing Account. Each Fund reserves the right to apply these same
restrictions to the account(s) of any person whose transactions seem to follow a
time pattern (as described above).
Each Fund also reserves the right to refuse the purchase side of an
exchange request by any Timing Account, person, or group if, in the Manager's
judgment, the Fund would be unable to invest effectively in accordance with its
investment objectives and policies, or would otherwise potentially be adversely
affected. A shareholder's purchase exchanges may be restricted or refused if a
Fund receives or anticipates simultaneous orders affecting significant portions
of the Fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a Fund and therefore may be
refused.
Except as noted above, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.
Systematic Withdrawal Plans
Shareholders of Class A Shares, Class B Shares and Class C Shares who
own or purchase $5,000 or more of shares at the offering price, or net asset
value, as applicable, for which certificates have not been issued may establish
a Systematic Withdrawal Plan for monthly withdrawals of $25 or more, or
quarterly withdrawals of $75 or more, although the Funds do not recommend any
specific amount of withdrawal. This is particularly useful to shareholders
living on fixed incomes, since it can provide them with a stable supplemental
amount. This $5,000 minimum does not apply for a Fund's prototype retirement
plans. Shares purchased with the initial investment and through reinvestment of
cash dividends and realized securities profits distributions will be credited to
the shareholder's account and sufficient full and fractional shares will be
redeemed at the net asset value calculated on the third business day preceding
the mailing date.
Checks are dated either the 1st or the 15th of the month, as selected
by the shareholder (unless such date falls on a holiday or a weekend), and are
normally mailed within two business days. Both ordinary income dividends and
realized securities profits distributions will be automatically reinvested in
additional shares of the Class at net asset value. This plan is not recommended
for all investors and should be started only after careful consideration of its
operation and effect upon the investor's savings and investment program. To the
extent that withdrawal payments from the plan exceed any dividends and/or
realized securities profits distributions paid on shares held under the plan,
the withdrawal payments will represent a return of capital, and the share
balance may in time be depleted, particularly in a declining market.
Shareholders should not purchase additional shares while participating in a
Systematic Withdrawal Plan.
The sale of shares for withdrawal payments constitutes a taxable event
and a shareholder may incur a capital gain or loss for federal income tax
purposes. This gain or loss may be long-term or short-term depending on the
holding period for the specific shares liquidated. Premature withdrawals from
retirement plans may have adverse tax consequences.
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Withdrawals under this plan made concurrently with the purchases of additional
shares may be disadvantageous to the shareholder. Purchases of Class A Shares
through a periodic investment program in a fund managed by the Manager must be
terminated before a Systematic Withdrawal Plan with respect to such shares can
take effect, except if the shareholder is Delaware Investments funds which do
not carry a sales charge. Redemptions of Class A Shares pursuant to a Systematic
Withdrawal Plan may be subject to a Limited CDSC if the purchase was made at net
asset value and a dealer's commission has been paid on that purchase. The
applicable Limited CDSC for Class A Shares and CDSC for Class B and C Shares
redeemed via a Systematic Withdrawal Plan will be waived if the annual amount
withdrawn in each year is less than 12% of the account balance on the date that
the Plan is established. If the annual amount withdrawn in any year exceeds 12%
of the account balance on the date that the Systematic Withdrawal Plan is
established, all redemptions under the Plan will be subjected to the applicable
contingent deferred sales charge, including an assessment for previously
redeemed amounts under the Plan. Whether a waiver of the contingent deferred
sales charge is available or not, the first shares to be redeemed for each
Systematic Withdrawal Plan payment will be those not subject to a contingent
deferred sales charge because they have either satisfied the required holding
period or were acquired through the reinvestment of distributions.
An investor wishing to start a Systematic Withdrawal Plan must complete
an authorization form. If the recipient of Systematic Withdrawal Plan payments
is other than the registered shareholder, the shareholder's signature on this
authorization must be guaranteed. Each signature guarantee must be supplied by
an eligible guarantor institution. The Funds reserve the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. This plan may be terminated by the shareholder or the Transfer
Agent at any time by giving written notice.
Systematic Withdrawal Plan payments are normally made by check. In the
alternative, you may elect to have your payments transferred from your Fund
account to your predesignated bank account through the MoneyLine (SM) Direct
Deposit Service. Your funds will normally be credited to your bank account up to
four business days after the payment date. There are no separate fees for this
redemption method. It may take up to four business days for the transactions to
be completed. You can initiate this service by completing an Account Services
form. If your name and address are not identical to the name and address on your
Fund account, you must have your signature guaranteed. The Funds do not charge a
fee for any this service; however, your bank may charge a fee. This service is
not available for retirement plans.
The Systematic Withdrawal Plan is not available for the Institutional
Class of each Fund. Shareholders should consult with their financial advisers to
determine whether a Systematic Withdrawal Plan would be suitable for them.
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value For purchases of $1,000,000 or more made
on or after July 1, 1998, a Limited CDSC will be imposed on certain redemptions
of Class A Shares (or shares into which such Class A Shares are exchanged)
according to the following schedule: (1) 1.00% if shares are redeemed during the
first year after the purchase; and (2) 0.50% if such shares are redeemed during
the second year after the purchase, if such purchases were made at net asset
value and triggered the payment by the Distributor of the dealer's commission
described above.
The Limited CDSC will be paid to the Distributor and will be assessed
on an amount equal to the lesser of : (1) the net asset value at the time of
purchase of the Class A Shares being redeemed or (2) the net asset
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value of such Class A Shares at the time of redemption. For purposes of this
formula, the "net asset value at the time of purchase" will be the net asset
value at purchase of the Class A Shares even if those shares are later exchanged
for shares of another Delaware Investments fund and, in the event of an exchange
of Class A Shares, the "net asset value of such shares at the time of
redemption" will be the net asset value of the shares acquired in the exchange.
Redemptions of such Class A Shares held for more than two years will
not be subjected to the Limited CDSC and an exchange of such Class A Shares into
another Delaware Investments fund will not trigger the imposition of the Limited
CDSC at the time of such exchange. The period a shareholder owns shares into
which Class A Shares are exchanged will count towards satisfying the two-year
holding period. The Limited CDSC is assessed if such two year period is not
satisfied irrespective of whether the redemption triggering its payment is of
Class A Shares of a Fund or Class A Shares acquired in the exchange.
In determining whether a Limited CDSC is payable, it will be assumed
that shares not subject to the Limited CDSC are the first redeemed followed by
other shares held for the longest period of time. The Limited CDSC will not be
imposed upon shares representing reinvested dividends or capital gains
distributions, or upon amounts representing share appreciation. All investments
made during a calendar month, regardless of what day of the month the investment
occurred, will age one month on the last day of that month and each subsequent
month.
Waiver of Limited Contingent Deferred Sales Charge - Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission has
been paid will be waived in the following instances: (i) redemptions that result
from a Fund's right to liquidate a shareholder's account if the aggregate net
asset value of the shares held in the account is less than the then-effective
minimum account size; (ii) distributions to participants from a retirement plan
qualified under section 401(a) or 401(k) of the Internal Revenue Code of 1986,
as amended (the "Code"), or due to death of a participant in such a plan; (iii)
redemptions pursuant to the direction of a participant or beneficiary of a
retirement plan qualified under section 401(a) or 401(k) of the Code with
respect to that retirement plan; (iv) periodic distributions from an IRA, SIMPLE
IRA, or 403(b)(7) or 457 Deferred Compensation Plan due to death, disability, or
attainment of age 59 1/2, and IRA distributions qualifying under Section 72(t)
of the Internal Revenue Code; (v) returns of excess contributions to an IRA;
(vi) distributions by other employee benefit plans to pay benefits; (vii)
distributions described in (ii), (iv), and (vi) above pursuant to a systematic
withdrawal plan; (viii) distributions form an account if the redemption results
from a death of a registered owner, or a registered joint owner, of the account
(in the case of accounts established under the Uniform Gifts to Minors or
Uniform transfers to Minors Acts or trust accounts, the waiver applies upon the
death of all beneficial owners) or a total disability (as defined in Section 72
of the Code) of all registered owners occurring after the purchase of the shares
being redeemed; and (ix) redemptions by the classes of shareholders who are
permitted to purchase shares at net asset value, regardless of the size of the
purchase (see Buying Class A Shares at Net Asset Value under Purchasing Shares).
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Waiver of Contingent Deferred Sales Charge - Class B Shares
The CDSC is waived on certain redemptions of Class B Shares in
connection with the following redemptions: (i) redemptions that result from a
Fund's right to liquidate a shareholder's account if the aggregate net asset
value of the shares held in the account is less than the then-effective minimum
account size; (ii) returns of excess contributions to an IRA, SIMPLE IRA,
SEP/IRA, or 403(b)(7) or 457 Deferred Compensation Plan; (iii) periodic
distributions from an IRA, SIMPLE IRA, SAR/SEP, SEP/IRA, or 403(b)(7) or 457
Deferred Compensation Plan due to death, disability or attainment of age 59 1/2,
and IRA distributions qualifying under Section 72(t) of the Internal Revenue
Code; and (iv) distributions from an account if the redemption results from the
death of a registered owner, or a registered joint owner, of the account (in the
case of accounts established under the Uniform Gifts to Minors or Uniform
Transfers to Minors Acts or trust accounts, the waiver applies upon the death of
all beneficial owners) or a total and permanent disability (as defined in
Section 72 of the Code) of all registered owners occurring after the purchase of
the shares being redeemed.
Waiver of Contingent Deferred Sales Charge -Class C Shares
The CDSC on Class C Shares is waived in connection with the following
redemptions: (i) redemptions that result from the Fund's right to liquidate a
shareholder's account if the aggregate net asset value of the shares held in the
account is less than the then-effective minimum account size; (ii) returns of
excess contributions to an IRA, SIMPLE IRA, 403(b)(7) or 457 Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan, or 401(k)
Defined Contribution plan; (iii) periodic distributions from a 403(b)(7) or 457
Deferred Compensation Plan upon attainment of age 59 1/2, Profit Sharing Plan,
Money Purchase Plan, 401(k) Defined Contribution Plan upon attainment of age 70
1/2, and IRA distributions qualifying under Section 72(t) of the Internal
Revenue Code; (iv) distributions from a 403(b)(7) or 457 Deferred Compensation
Plan, Profit Sharing Plan, or 401(k) Defined Contribution Plan, under hardship
provisions of the plan; (v) distributions from a 403(b)(7) or 457 Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan or a 401(k)
Defined Contribution Plan upon attainment of normal retirement age under the
plan or upon separation from service; (vi) periodic distributions from an IRA or
SIMPLE IRA on or after attainment of age 59 1/2; and (vii) distributions from an
account if the redemption results from the death of a registered owner, or a
registered joint owner, of the account (in the case of accounts established
under the Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust
accounts, the waiver applies upon the death of all beneficial owners) or a total
and permanent disability (as defined in Section 72 of the Code) of all
registered owners occurring after the purchase of the shares being redeemed.
* * *
In addition, the CDSC will be waived on Class A Shares, Class B Shares
and Class C Shares redeemed in accordance with a Systematic Withdrawal Plan if
the annual amount selected to be withdrawn under the Plan does not exceed 12% of
the value of the account on the date that the Systematic Withdrawal Plan was
established or modified.
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DIVIDENDS, DISTRIBUTIONS AND TAXES
The following supplements the information in each Prospectus under the
heading Dividends, Distributions and Taxes.
Under the Taxpayer Relief Act of 1997 (the "1997 Act"), as revised by
the Internal Revenue Service Restructuring and Reform Act of 1998 (the "1998
Act") and the Omnibus Consolidated and Emergency Supplemental Appropriations
Act, a Fund is required to track its sales of portfolio securities and to report
its capital gain distributions to you according to the following categories:
"Long-term capital gains": gains on securities sold after December 31,
1997 and held for more than 12 months as capital assets in the hands of
the holder are taxed at the 20% rate when distributed to shareholders
(15% for individual investors in the 15% tax bracket.
"Short-term capital gains": Gains on securities sold by a Fund that do
not meet the long-term holdings period are considered short term
capital gains and are taxable as ordinary income.
"Qualified 5-year gains": For individuals in the 15% bracket, qualified
five-year gains are net gains on securities held for more than 5 years
which are sold after December 31, 2000. For individual who are subject
to tax at higher rate brackets, qualified five-year gains are net gains
on securities which are purchased after December 31, 2000 and are held
for more than five years. Taxpayers subject to tax at a higher rate
brackets may also make an election for shares held on January 1, 2001
to recognize gain on their shares in order to qualify such shares as
qualified five-year property. These gains will be taxable to individual
investors at a maximum rate of 18% for investors in the 28% or higher
federal income tax brackets, and at a maximum rate of 8% for investors
in the 15% federal income tax bracket when sold after the five-year
holding period.
Any loss incurred on the redemption or exchange of shares held for six
months or less will be disallowed to the extent of any exempt-interest dividends
distributed to you with respect to your Fund shares and any remaining loss will
be treated as a long-term capital loss to the extent of any long-term capital
gains distributed to you by the Fund on those shares.
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All or a portion of any loss that you realize upon the redemption of
your Fund shares will be disallowed to the extent that you buy other shares in
the Fund (through reinvestment of dividends or otherwise) within 30 days before
or after your share redemption. Any loss disallowed under these rules will be
added to your tax basis in the new shares you buy.
If you redeem some or all of yours shares in a Fund, and then reinvest
the sales proceeds in such Fund or in another Delaware Investments fund within
90 days of buying the original shares, the sales charge that would otherwise
apply to your reinvestment may be reduced or eliminated. The IRS will require
you to report gain or loss on the redemption of your original shares in a Fund.
In doing so, all or a portion of the sales charge that you paid for your
original shares in a Fund will be excluded from your tax basis in the shares
sold (for the purpose of determining gain or loss upon the sale of such shares).
The portion of the sales charge excluded will equal the amount that the sales
charge is reduced on your reinvestment. Any portion of the sales charge excluded
from your tax basis in the shares sold will be added to the tax basis of the
shares you acquire from your reinvestment.
Tax Information Concerning Each Fund
Each Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Code. As such, a Fund
will not be subject to federal income tax, or to any excise tax, to the extent
its earnings are distributed as provided in the Code and it satisfies other
requirements relating to the sources of its income and diversification of its
assets. In order to qualify as a regulated investment company for federal income
tax purposes, each Fund must meet certain specific requirements, including:
(i) A Fund must maintain a diversified portfolio of securities, wherein
no security (other than U.S. government securities and securities of other
regulated investment companies) can exceed 25% of that Fund's total assets, and,
with respect to 50% of that Fund's total assets, no investment (other than cash
and cash items, U.S. government securities and securities of other regulated
investment companies) can exceed 5% of that Fund's total assets;
(ii) A Fund must derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or disposition of stock and securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities, or currencies;
(iii) A Fund must distribute to its shareholders at least 90% of its
investment company taxable income and net tax-exempt income for each of its
fiscal years, and
(iv) A Fund must realize less than 30% of its gross income for each
fiscal year from gains from the sale of securities and certain other assets that
have been held by the Fund for less than three months ("short-short income").
The "1997 Act" repealed the 30% short-short income test for tax years of
regulated investment companies beginning after August 5, 1997; however, this
rule may have continuing effect in some states for purposes of classifying the
Fund as a regulated investment company.
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The Code requires a Fund to distribute at least 98% of its taxable
ordinary income earned during the calendar year and 98% of its capital gain net
income earned during the 12 month period ending October 31 (in addition to
amounts from the prior year that were neither distributed nor taxed to such
Fund) to shareholders by December 31 of each year in order to avoid federal
excise taxes. The Funds intend as a matter of policy to declare and pay
sufficient dividends in December or January (which are treated by shareholders
as received in December) but does not guarantee and can give no assurances that
its distributions will be sufficient to eliminate all such taxes.
The straddle rules of Section 1092 may apply. Generally, the straddle
provisions require the deferral of losses to the extent of unrecognized gains
related to the offsetting positions in the straddle. Excess losses, if any, can
be recognized in the year of loss. Deferred losses will be carried forward and
recognized in the year that unrealized losses exceed unrealized gains.
The 1997 Act has also added new provisions for dealing with
transactions that are generally called "Constructive Sale Transactions." Under
these rules, the Fund must recognize gain (but not loss) on any constructive
sale of an appreciated financial position in stock, a partnership interest or
certain debt instruments. The Fund will generally be treated as making a
constructive sale when it: 1) enters into a short sale on the same or
substantially identical property; 2) enters into an offsetting notional
principal contract; or 3) enters into a futures or forward contract to deliver
the same or substantially identical property. Other transactions (including
certain financial instruments called collars) will be treated as constructive
sales as provided in Treasury regulations to be published. There are also
certain exceptions that apply for transactions that are closed before the end of
the 30th day after the close of the taxable year.
Investment in Foreign Currencies and Foreign Securities--The Funds are
authorized to invest certain limited amounts in foreign securities. Such
investments, if made, will have the following additional tax consequences to
each Fund:
Under the Code, gains or losses attributable to fluctuations in foreign
currency exchange rates which occur between the time a Fund accrues income
(including dividends), or accrues expenses which are denominated in a foreign
currency, and the time a Fund actually collects such income or pays such
expenses generally are treated as ordinary income or loss. Similarly, on the
disposition of debt securities denominated in a foreign currency and on the
disposition of certain options, futures, forward contracts, gain or loss
attributable to fluctuations in the value of foreign currency between the date
of acquisition of the security or contract and the date of its disposition are
also treated as ordinary gain or loss. These gains or losses, referred to under
the Code as "Section 988" gains or losses, may increase or decrease the amount
of a Fund's net investment company taxable income, which, in turn, will affect
the amount of income to be distributed to you by a Fund.
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If a Fund's Section 988 losses exceed a Fund's other investment company
taxable income during a taxable year, a Fund generally will not be able to make
ordinary dividend distributions to you for that year, or distributions made
before the losses were realized will be recharacterized as return of capital
distributions for federal income tax purposes, rather than as an ordinary
dividend or capital gain distribution. If a distribution is treated as a return
of capital, your tax basis in your Fund shares will be reduced by a like amount
(to the extent of such basis), and any excess of the distribution over your tax
basis in your Fund shares will be treated as capital gain to you.
The 1997 Act generally requires that foreign income be translated into
U.S. dollars at the average exchange rate for the tax year in which the
transactions are conducted. Certain exceptions apply to taxes paid more than two
years after the taxable year to which they relate. This new law may require a
Fund to track and record adjustments to foreign taxes paid on foreign securities
in which it invests. Under a Fund's current reporting procedure, foreign
security transactions are recorded generally at the time of each transaction
using the foreign currency spot rate available for the date of each transaction.
Under the new law, a Fund will be required to record at fiscal year end (and at
calendar year end for excise tax purposes) an adjustment that reflects the
difference between the spot rates recorded for each transaction and the year-end
average exchange rate for all of a Fund's foreign securities transactions. There
is a possibility that the mutual fund industry will be given relief from this
new provision, in which case no year-end adjustments will be required.
The Funds may be subject to foreign withholding taxes on income from
certain of its foreign securities. If more than 50% of the total assets of a
Fund at the end of its fiscal year are invested in securities of foreign
corporations, a Fund may elect to pass-through to you your pro rata share of
foreign taxes paid by a Fund. If this election is made, you will be: (i)
required to include in your gross income your pro rata share of foreign source
income (including any foreign taxes paid by a Fund); and (ii) entitled to either
deduct your share of such foreign taxes in computing your taxable income or to
claim a credit for such taxes against your U.S. income tax, subject to certain
limitations under the Code. You will be informed by a Fund at the end of each
calendar year regarding the availability of any such foreign tax credits and the
amount of foreign source income (including any foreign taxes paid by a Fund). If
a Fund elects to pass-through to you the foreign income taxes that it has paid,
you will be informed at the end of the calendar year of the amount of foreign
taxes paid and foreign source income that must be included on your federal
income tax return. If a Fund invests 50% or less of its total assets in
securities of foreign corporations, it will not be entitled to pass-through to
you your pro-rata shares of foreign taxes paid by a Fund. In this case, these
taxes will be taken as a deduction by a Fund, and the income reported to you
will be the net amount after these deductions. The 1997 Act also simplifies the
procedures by which investors in funds that invest in foreign securities can
claim tax credits on their individual income tax returns for the foreign taxes
paid by a Fund. These provisions will allow investors who pay foreign taxes of
$300 or less on a single return or $600 or less on a joint return during any
year (all of which must be reported on IRS Form 1099-DIV from a Fund to the
investor) to claim a tax credit against their U.S. federal income tax for the
amount of foreign taxes paid by a Fund. This process will allow you, if you
qualify, to bypass the burdensome and detailed reporting requirements on the
foreign tax credit schedule (Form 1116) and report your foreign taxes paid
directly on page 2 of Form 1040. You should note that this simplified procedure
was not available until calendar year 1998.
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Investment in Passive Foreign Investment Company securities--The Funds
may invest in shares of foreign corporations which may be classified under the
Code as passive foreign investment companies ("PFICs"). In general, a foreign
corporation is classified as a PFIC if at least one-half of its assets
constitute investment-type assets or 75% or more of its gross income is
investment-type income. If a Fund receives an "excess distribution" with respect
to PFIC stock, the Fund itself may be subject to U.S. federal income tax on a
portion of the distribution, whether or not the corresponding income is
distributed by a Fund to you. In general, under the PFIC rules, an excess
distribution is treated as having been realized ratably over the period during
which a Fund held the PFIC shares. A Fund itself will be subject to tax on the
portion, if any, of an excess distribution that is so allocated to prior Fund
taxable years, and an interest factor will be added to the tax, as if the tax
had been payable in such prior taxable years. In this case, you would not be
permitted to claim a credit on your own tax return for the tax paid by a Fund.
Certain distributions from a PFIC as well as gain from the sale of PFIC shares
are treated as excess distributions. Excess distributions are characterized as
ordinary income even though, absent application of the PFIC rules, certain
distribution might have been classified as capital gain. This may have the
effect of increasing Fund distributions to you that are treated as ordinary
dividends rather than long-term capital gain dividends.
A Fund may be eligible to elect alternative tax treatment with respect
to PFIC shares. Under an election that currently is available in some
circumstances, a Fund generally would be required to include in its gross income
its share of the earnings of a PFIC on a current basis, regardless of whether
distributions are received from the PFIC during such period. If this election
were made, the special rules, discussed above, relating to the taxation of
excess distributions, would not apply. In addition, the 1997 Act provides for
another election that would involve marking-to-market the Fund's PFIC shares at
the end of each taxable year (and on certain other dates as prescribed in the
Code), with the result that unrealized gains would be treated as though they
were realized. The Fund would also be allowed an ordinary deduction for the
excess, if any, of the adjusted basis of its investment in the PFIC stock over
its fair market value at the end of the taxable year. This deduction would be
limited to the amount of any net mark-to-market gains previously included with
respect to that particular PFIC security. If a Fund were to make this second
PFIC election, tax at the Fund level under the PFIC rules would generally be
eliminated.
The application of the PFIC rules may affect, among other things, the
amount of tax payable by a Fund (if any), the amounts distributable to you by a
Fund, the time at which these distributions must be made, and whether these
distributions will be classified as ordinary income or capital gain
distributions to you.
You should be aware that it is not always possible at the time shares
of a foreign corporation are acquired to ascertain that the foreign corporation
is a PFIC, and that there is always a possibility that a foreign corporation
will become a PFIC after a Fund acquires shares in that corporation. While a
Fund will generally seek to avoid investing in PFIC shares to avoid the tax
consequences detailed above, there are no guarantees that it will do so and it
reserves the right to make such investments as a matter of its fundamental
investment policy.
Most foreign exchange gains are classified as ordinary income which
will be taxable to you as such when distributed. Similarly, you should be aware
that any foreign exchange losses realized by a Fund, including any losses
realized on the sale of foreign debt securities, are generally treated as
ordinary losses for federal income tax purposes. This treatment could increase
or reduce a Fund's income available for distribution to you, and may cause some
or all of a Fund's previously distributed income to be classified as a return of
capital.
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Taxation of Shareholders
Dividends of net investment income and distributions of net realized
short-term capital gains will be taxable to shareholders as ordinary income for
federal income tax purposes, whether received in cash or reinvested in
additional shares. Dividends received by corporate shareholders will qualify for
the dividends-received deduction only to the extent that each Fund designates
the amount distributed as a dividend and the amount so designated does not
exceed the aggregate amount of dividends received by the Funds from domestic
corporations for the taxable year. The federal dividends-received deduction for
corporate shareholders may be further reduced or disallowed if the shares with
respect to which dividends are received are treated as debt-financed or are
deemed to have been held for less than 46 days.
Foreign countries may impose withholding and other taxes on dividends
and interest paid to the Funds with respect to investments in foreign
securities. However, certain foreign countries have entered into tax conventions
with the U.S. to reduce or eliminate such taxes.
Distributions of long-term capital gains will be taxable to
shareholders as such, whether paid in cash or reinvested in additional shares
and regardless of the length of time that the shareholder has held his or her
interest in one of the Funds. If a shareholder receives a distribution taxable
as long-term capital gain with respect to his or her investment in a Fund and
redeems or exchanges the shares before he or she has held them for more than six
months, any loss on the redemption or exchange that is less than or equal to the
amount of the distribution will be treated as a long-term capital loss.
Investors considering buying shares of a Fund just prior to a record
date for a taxable dividend or capital gain distribution should be aware that,
regardless of whether the price of the Fund shares to be purchased reflects the
amount of the forthcoming dividend or distribution payment, any such payment
will be a taxable dividend or distribution payment. This is of particular
concern for investors in the Equity Funds since these Funds may make
distributions on an annual basis.
Each Fund will be required in certain cases to withhold and remit to
the United States Treasury 31% of taxable dividends or of gross proceeds from
redemptions paid to any shareholder who has provided either an incorrect tax
identification number or no number at all, or who is subject to withholding by
the Internal Revenue Service for failure to properly include on his tax return
payments of interest or dividends. This withholding, known as backup
withholding, is not an additional tax, and any amounts withheld may be credited
against the shareholder's ultimate U.S. tax liability.
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Certain investments and hedging activities of the Funds, including
transactions in options, futures contracts, hedging transactions, forward
contracts, straddles, foreign currencies, and foreign securities will be subject
to special tax rules. See Option Transactions, Straddles and Wash Sales, below.
In a given case, these rules may accelerate income to a Fund, defer losses to a
Fund, cause adjustments in the holding periods of a Fund's securities, convert
short-term capital losses into long-term capital losses, or otherwise affect the
character of a Fund's income. These rules could therefore affect the amount,
timing and character of distributions to shareholders. Each Fund will endeavor
to make any available elections pertaining to such transactions in a manner
believed to be in the best interest of a Fund.
Certain securities purchased by the Funds (such as STRIPS, CUBES, TRs,
TIGRs and CATS), are sold at original issue discount and do not make periodic
cash interest payments. A Fund will be required to include as part of its
current income the imputed interest on such obligations even though a Fund has
not received any interest payments on such obligations during that period.
Because a Fund distributes all of its net investment income to its shareholders
(including such imputed interest), a Fund may have to sell securities in order
to generate the cash necessary for the required distributions. Such sales may
occur at a time when the Manager or sub-adviser would not have chosen to sell
such securities and which may result in a taxable gain or loss.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting purchasers of shares of each Fund of Adviser
Funds, Inc. Further tax information regarding Overseas Equity and Delaware New
Pacific Funds are included in following sections of this Part B. No attempt is
made to present a detailed explanation of the federal income tax treatment of
each Fund or its shareholders, and this discussion is not intended as a
substitute for careful tax planning. Accordingly, prospective purchasers of
shares of a Fund are urged to consult their tax advisors with specific reference
to their own tax situation, including the potential application of state and
local taxes.
Options Transactions
When a Fund writes a call option, an amount equal to the premium
received by it is included in the Fund's assets and liabilities as an asset and
as an equivalent liability. The amount of the liability is subsequently "marked
to market" to reflect the current market value of the option written. The
current market value of a written option is the last sale price on the principal
Exchange on which such option is traded or, in the absence of a sale, the mean
between the last bid and asked prices. If an option which a Fund has written
expires on its stipulated expiration date, or if a Fund enters into a closing
purchase transaction, the Fund realizes a gain (or loss if the cost of the
closing transaction exceeds the premium received when the option was sold)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is extinguished. Any such gain or loss is a
short-term capital gain or loss for federal income tax purposes. If a call
option which a Fund has written is exercised, the Fund realizes a capital gain
or loss (long-term or short-term, depending on the holding period of the
underlying security) from the sale of the underlying security, and the proceeds
from such sale are increased by the premium originally received.
The premium paid by a Fund for the purchase of a put option is recorded
in the section of the Fund's assets and liabilities as an investment and
subsequently adjusted daily to the current market value of the option. For
example, if the current market value of the option exceeds the premium paid, the
excess would be unrealized appreciation and, conversely, if the premium exceeds
the current market value, such excess would be unrealized depreciation. If a put
option which a Fund has purchased expires on the stipulated expiration date,
that Fund realizes a long- or short-term capital loss for federal income tax
purposes in the amount of the cost of the option. If the Fund sells the put
option, it realizes a long- or short-term capital gain or loss, depending on
whether the proceeds from the sale are greater or less than the cost of the
option. If the Fund exercises a put option, it realizes a capital gain or loss
(long-term or short-term, depending on the holding period of the underlying
security) from the sale of the underlying security and the proceeds from such
sale will be decreased by the premium originally paid. However, since the
purchase of a put option is treated as a short sale for federal income tax
purposes, the holding period of the underlying security will be affected by such
a purchase.
Futures Contracts
The initial margin deposits made when entering into futures contracts
are recognized as assets due from the broker. During the period the futures
contract is open, changes in the value of the contract will be reflected at the
end of each day.
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Regulated futures contracts held by the Fund at the end of each fiscal
year will be required to be "marked to market" for federal income tax purposes.
Any unrealized gain or loss on futures contracts will therefore be recognized
and deemed to consist of 60% long-term capital gain or loss and 40% short-term
capital gain or loss. Therefore, adjustments are made to the tax basis in the
futures contract to reflect the gain or loss recognized at year end.
Straddles
The Code contains rules applicable to "straddles," that is, "offsetting
positions in actively traded personal property." Such personal property includes
offsetting puts of the same class, section 1256 contracts or other investment
contracts. Where applicable, the straddle rules generally override the other
provisions of the Code. In general, investment positions will be offsetting if
there is a substantial diminution in the risk of loss from holding one position
by reason of holding one or more other positions (although certain covered call
options would not be treated as part of a straddle). The Funds are authorized to
enter into covered call and covered put positions. Depending on what other
investments are held by a Fund, at the time it enters into one of the above
transactions, the Fund may create a straddle for purposes of the Code.
Wash Sales
"Wash sale" rules will apply to prevent the recognition of loss with
respect to a position where an identical or substantially identical position has
been acquired 30 days prior to or 30 days after the date of the loss.
The foregoing is only a summary of certain federal tax considerations
generally affecting the Funds and their shareholders and is not intended as a
substitute for careful tax planning. Shareholders are urged to consult their tax
advisers with specific reference to their own tax situations, including their
state and local tax liabilities.
65
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT AND SUB-ADVISORY AGREEMENTS
Delaware Management Company ("Delaware Management") located at One
Commerce Square, Philadelphia, PA 19103, furnishes investment management
services to Delaware New Pacific Fund and Delaware Overseas Equity Fund.
Delaware Management and its predecessors have been managing the funds
in Delaware Investments since 1938. On November 30, 1999, Delaware Management,
Delaware International and their affiliates within Delaware Investments were
managing in the aggregate more than $00 billion in assets in the various
institutional or separately managed approximately $00,000,000,000 and investment
company approximately $00,000,000,000 accounts.
The Investment Management Agreement for each Fund is dated as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Fund Date Approved by initial shareholder
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Delaware New Pacific Fund November 23, 1999 November 23, 1999
- ----------------------------------------------------------------------------------------------------
Delaware Overseas Equity Fund November 23, 1999 November 23, 1999
- ----------------------------------------------------------------------------------------------------
</TABLE>
The Agreement has an initial term of two years and may be further
renewed after their initial terms only so long as such renewal and continuance
are specifically approved at least annually by the Board of Trustees or by vote
of a majority of the outstanding voting securities of the Fund to which the
Agreement relates, and only if the terms of the renewal thereof have been
approved by the vote of a majority of the trustees of Adviser Funds who are not
parties thereto or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval. The Agreement is
terminable without penalty on 60 days' notice by the trustees of Adviser Funds
or by the Manager. The Agreement will terminate automatically in the event of
its assignment.
66
<PAGE>
The Manager manages each Fund's investments. The compensation payable
by each Fund for investment management services is equal to (on an annual basis)
as follows:
- ------------------------------------------------------------------------------
Fund Fee
- ------------------------------------------------------------------------------
Delaware New Pacific Fund 0.85% on the first $500 million of
average daily net assets, 0.80%
on the next $500 million; 0.75% on
the next $1.5 billion; 0.70% on
the average daily net assets in excess
of $2.5 billion
- ------------------------------------------------------------------------------
Delaware Overseas Equity Fund 0.85% on the first $500 million of
average daily net assets, 0.80%
on the next $500 million; 0.75% on
the next $1.5 billion; 0.70% on
the average daily net assets in excess
of $2.5 billion
- ------------------------------------------------------------------------------
On October 31, 1999, the total net assets of the Funds were as follows:
67
<PAGE>
Delaware New Pacific Fund
Delaware Overseas Equity Fund
Investment management fees were paid by the Funds for the last three
fiscal years as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
October 31, 1999 October 31, 1998 October 31, 1997
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Delaware New Pacific Fund $50,696 earned $118,010 earned
$-0- paid $109,011 paid
$50,696 waived $8,999 waived
- ----------------------------------------------------------------------------------------------------------------------------------
Delaware Overseas Equity Fund $46,051 earned $176,619 earned
$-0- paid $176,619 paid
$46,051 waived -$0- waived
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Beginning May 1, 1998, the Manager elected voluntarily to waive that
portion, if any, of the annual management fees payable by each Fund and to pay a
Fund for its expenses to the extent necessary to ensure that the total operating
expenses of the Fund do not exceed on an annualized basis 1.55% for Delaware
Overseas Equity Fund and 1.70% for Delaware New Pacific Fund, in each case as a
percentage of average net assets (exclusive of 12b-1 Plan expenses, taxes,
interest, brokerage commissions and extraordinary expenses) through October 31,
1998. These voluntary waivers and payments of expenses have been extended
through April 30, 1999 for each Fund.
The Manager had voluntarily committed to waive its fees or pay expenses
for the Funds beginning as of the close of business May 3, 1996 through April
30, 1998 to the extent necessary to ensure that the total operating expenses of
the Fund do not exceed on an annualized basis 1.50%. The cap for each Fund was
lowered from that maintained by the previous investment manager by 0.05%,
reflecting the reduction from 0.35% to 0.30% of the 12b-1 fees payable by the
Funds with respect to Class A Shares. The expense waivers and/or payments will
be reevaluated by the Manager periodically.
Sub-Advisers
The following registered investment advisers serve as sub-advisers to
the Funds: Delaware International Advisers Ltd. serves as sub-adviser of
Delaware Overseas Equity Fund; and AIB Govett, Inc. serves as sub-adviser of
Delaware New Pacific Fund.
68
<PAGE>
During the past three fiscal years, the Sub-Advisers received fees from
the Manager in the following amounts:
October 31
1999 1998 1997
---- ---- ----
Delaware International Advisers Ltd. 36,840 132,730
AIB Govett, Inc. 31,685 73,483
Delaware International Adviser Ltd. was established in 1990 and began
serving as Sub-Adviser to Delaware Overseas Equity Fund on September 15, 1997.
Delaware International Advisers Ltd. provides investment advisory services to
certain other funds available from Delaware Investments and to institutional
clients. As of October 31, 1998, Delaware International Advisers Ltd. had total
assets under management in excess of $8 billion. Under the Sub-Advisory
Agreement, Delaware Management pays Delaware International Advisers Ltd.
receives 80% of the fees it receive under its Investment Management Agreement
with Delaware Overseas Equity Fund.
AIB Govett, Inc. is a unit of AIB Asset Management Holdings Limited, a
majority owned subsidiary of Allied Irish Bank plc ("AIB"), Ireland's largest
bank. AIB Govett, Inc. coordinates with its offices and affiliates worldwide,
including AIB Govett Asset Management Limited in London to provide asset
management, client service, marketing and business development for AIB's North
American asset management business. AIB Govett, Inc. has been an investment
adviser to clients such as investment trusts, investment companies, mutual funds
and pension funds since its inception in the 1920s. As of November 30, 1998, AIB
Govett, Inc. had assets under management in excess of $13.9 billion. Under the
Sub-Advisory Agreement, AIB Govett, Inc. receives on an annual basis 0.50% of
the average daily net assets of the Fund.
Delaware International and Delaware are controlled and indirectly,
wholly owned by Delaware Management Holdings, Inc.
Except for those expenses borne by the Manager under the Investment
Management Agreement and the Distributor under the Distribution Agreements, each
Fund is responsible for all of its own expenses. Among others, these include
each Fund's proportionate share of rent and certain other administrative
expenses; the investment management fees; transfer and dividend disbursing agent
fees and costs; custodian expenses; federal and state securities registration
fees; proxy costs; and the costs of preparing prospectuses and reports sent to
shareholders.
Distribution and Service
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), located at 1818 Market Street, serves
as the national distributor of the shares of each Fund under separate agreements
dated as of November 23, 1999. The Distributor is an affiliate of the Manager
and bears all of the costs of promotion and distribution, except for payments by
each Fund on behalf of its respective Class A Shares, Class B Shares and Class C
Shares under the 12b-1 Plan for each class.
69
<PAGE>
The Transfer Agent, Delaware Service Company, Inc., another affiliate
of the Manager located at 1818 Market Street, Philadelphia, PA 19103, serves as
the shareholder servicing, dividend disbursing and transfer agent for each Fund
under an agreement dated November 23, 1998. The Transfer Agent provides
accounting services to the Funds pursuant to the terms of a separate Fund
Accounting Agreement. The Transfer Agent is also an indirect, wholly owned
subsidiary of Delaware Management Holdings, Inc.
The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders in addition to the Transfer Agent. Such brokers
are authorized to designate other intermediaries to accept purchase and
redemption orders on the behalf of the Funds. For purposes of pricing, the Funds
will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order.
70
<PAGE>
OFFICERS AND TRUSTEES
The business and affairs of Adviser Funds are managed under the
direction of its Board of Trustees.
Certain officers and trustees of Adviser Funds hold identical positions
in each of the other funds in the Delaware Investments family. As of December
31, 1999, the officers and trustees of Adviser Funds, as a group, owned less
than 1% of the outstanding shares of Class A Shares, Class B Shares, Class C
Shares and Institutional Class Shares of each Fund.
As of December 31, 1999, management believes the following accounts
held 5% or more of a Class of shares of a Fund:
<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------
<S> <C> <C> <C>
Delaware DMTC C/F The Rollover IRA of
Overseas Equity Fund Carl W. Niederwimmer
B Class 301 NW 73rd Terrace
Gladstone, MO 64118-1675
Merrill Lynch, Pierce, Fenner & Smith
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Delaware Dain Rauscher Inc. FBO
Overseas Equity Fund Thomas L. Rourke TTEE
C Class The Thomas L. Rourke Trust
U/A dtd 04/13/1992
9 Westover Rd.
Troy, NY 12180-4730
NFSC FEBO
Haus Geborgenheit Ltd.
A Partnership
2305 Versailles Ct
Heath, TX 75032-7670
Merrill Lynch, Pierce, Fenner & Smith
For the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
</TABLE>
71
<PAGE>
<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------
<S> <C> <C> <C>
Delaware RS DMC Employee Profit Sharing Plan
Overseas Equity Fund Delaware Management Co.
Institutional Class Employee Profit Sharing Trust
C/o Rick Seidel
1818 Market Street
Philadelphia, PA 19103-3682
Lincoln National Investment Management
Attn: David Humes 3RO3
200 East Berry Street
Fort Wayne, IN 46802-2706
Delaware Merrill Lynch, Pierce, Fenner & Smith
New Pacific Fund For the Sole Benefit of its Customers
C Class Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Dain Rauscher Inc. FBO
Leann Purtill
4805 E. Gleneagle
Spokane, WA 99223-1577
Delaware DMTC C/F The Rollover IRA of
New Pacific Fund Kathleen L. Eckman
C Class 1629 Michigan Ave.
Orofino, ID 83544-9007
Delaware RS DMC Employee Profit Sharing Plan
New Pacific Fund Delaware Management Co.
Institutional Class Employee Profit Sharing Trust
c/o Rick Seidel
1818 Market Street
Philadelphia, PA 19103-3682
</TABLE>
DMH Corp., Delvoy, Inc., Delaware Management Business Trust, Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Management Company, Inc., Delaware Investment Advisers (a series of Delaware
Management Business Trust), Delaware Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc., Delaware Management Trust Company,
Delaware International Holdings Ltd., Founders Holdings, Inc., Delaware
International Advisers Ltd., Delaware Capital Management, Inc. and Retirement
Financial Services, Inc. are direct or indirect, wholly owned subsidiaries of
Delaware Management Holdings, Inc. ("DMH"). On April 3, 1995, a merger between
DMH and a wholly owned subsidiary of Lincoln National Corporation ("Lincoln
National") was completed. DMH and the Manager are now indirect, wholly owned
subsidiaries, and subject to the ultimate control, of Lincoln National. Lincoln
National, with headquarters in Fort Wayne, Indiana, is a diversified
organization with operations in many aspects of the financial services industry,
including insurance and investment management.
Trustees and principal officers of Adviser Funds are noted below along
with their ages and their business experience for the past five years. Unless
otherwise noted, the address of each officer and trustee is One Commerce Square,
Philadelphia, PA 19103.
72
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Trustee and Officer Business Experience
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
*Wayne A. Stork (62) Chairman, Director/Trustee of Adviser Funds and each of the other 32 investment
companies in the Delaware Investments family.
Chairman and Director of Delaware Management Holdings, Inc.
Director of Delaware International Advisers Ltd.
Prior to January 1, 1999, Mr. Stork was Director of Delaware Capital Management,
Inc.; Chairman, President and Chief Executive Officer and Director/Trustee of DMH
Corp., Delaware Distributors, Inc. and Founders Holdings, Inc.; Chairman, President,
Chief Executive Officer, Chief Investment Officer and Director/Trustee of Delaware
Management Company, Inc. and Delaware Management Business Trust; Chairman,
President, Chief Executive Officer and Chief Investment Officer of Delaware
Management Company (a series of Delaware Management Business Trust); Chairman, Chief
Executive Officer and Chief Investment Officer of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Chairman and Chief Executive Officer
of Delaware International Advisers Ltd.; Chairman, Chief Executive Officer and
Director of Delaware International Holdings Ltd.; Chief Executive Officer of
Delaware Management Holdings, Inc.; President and Chief Executive Officer of Delvoy,
Inc.; Chairman of Delaware Distributors, L.P.; Director of Delaware Service Company,
Inc. and Retirement Financial Services, Inc.
In addition, during the five years prior to January 1, 1999, Mr. Stork has served in
various executive capacities at different times within the Delaware organization.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
* Trustee affiliated with Adviser Funds' investment manager and considered an
"interested person" as defined in the 1940 Act.
- -------------------------------------------------------------------------------
73
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Trustee and Officer Business Experience
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
*David K. Downes (59)
President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer
and Director/Trustee of Adviser Funds and each of the other 32 investment companies
in the Delaware Investments family.
President and Director of Delaware Management Company, Inc.
President of Delaware Management Company (a series of Delaware Management Business
Trust)
President, Chief Executive Officer and Director of Delaware Capital Management, Inc.
Chairman, President, Chief Executive Officer and Director of Delaware Service
Company, Inc.
President, Chief Operating Officer, Chief Financial Officer and Director of Delaware
International Holdings Ltd.
Chairman and Director of Delaware Management Trust Company and Retirement Financial
Services, Inc.
Executive Vice President, Chief Operating Officer, Chief Financial Officer of
Delaware Management Holdings, Inc., Founders CBO Corporation, Delaware Investment
Advisers (a series of Delaware Management Business Trust) and Delaware Distributors,
L.P.
Executive Vice President, Chief Operating Officer, Chief Financial Officer and
Director of DMH Corp., Delaware Distributors, Inc., Founders Holdings, Inc. and
Delvoy, Inc.
Executive Vice President and Trustee of Delaware Management Business Trust
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Downes has served in various executive capacities at
different times within the Delaware organization.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
* Trustee affiliated with Adviser Funds' investment manager and considered an
"interested person" as defined in the 1940 Act.
- -------------------------------------------------------------------------------
74
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Trustee Business Experience
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Walter P. Babich (72) Director/Trustee Adviser Funds and each of the other 32 investment companies in the
Delaware Investments family
460 North Gulph Road, King of Prussia, PA 19406
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and from 1988 to
1991, he was a partner of I&L Investors.
- ----------------------------------------------------------------------------------------------------------------------------------
John H. Durham (62) Director/Trustee of Adviser Funds and 18 other investment companies in the Delaware
Investments family
Private Investor.
P.O. Box 819, Gwynedd Valley, PA 19437
Mr. Durham served as Chairman of the Board of each fund in the Delaware Investments
family from 1986 to 1991; President of each fund from 1977 to 1990; and Chief
Executive Officer of each fund from 1984 to 1990. Prior to 1992, with respect to
Delaware Management Holdings, Inc., Delaware Management Company, Delaware
Distributors, Inc. and Delaware Service Company, Inc., Mr. Durham served as a
director and in various executive capacities at different times. He was also a
Partner of Complete Care Services from 1995 to 1999.
- ----------------------------------------------------------------------------------------------------------------------------------
Anthony D. Knerr (60) Director/Trustee of Adviser Funds and each of the 32 other investment companies in
the Delaware Investments family.
500 Fifth Avenue, New York, NY 10110
Founder and Managing Director, Anthony Knerr & Associates
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and Treasurer of
Columbia University, New York. From 1987 to 1989, he was also a lecturer in English
at the University. In addition, Mr. Knerr was Chairman of The Publishing Group,
Inc., New York, from 1988 to 1990. Mr. Knerr founded The Publishing Group, Inc. in
1988.
- ----------------------------------------------------------------------------------------------------------------------------------
Ann R. Leven (58) Director/Trustee of Adviser Funds and each of the other 32 other investment
companies in the Delaware Investments family
785 Park Avenue, New York, NY 10021
Treasurer, National Gallery of Art
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer of the
Smithsonian Institution, Washington, DC, and from 1975 to 1992, she was Adjunct
Professor of Columbia Business School.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
75
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Trustee Business Experience
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Thomas F. Madison (63) Director/Trustee of Adviser Fundss and each of the other 32 investment companies in
the Delaware Investments family
200 South Fifth Street, Suite 2100, Minneapolis, Minnesota 55402
President and Chief Executive Officer, MLM Partners, Inc.
Mr. Madison has also been Chairman of the Board of Communications Holdings, Inc.
since 1996. From February to September 1994, Mr. Madison served as Vice
Chairman--Office of the CEO of The Minnesota Mutual Life Insurance Company and from
1988 to 1993, he was President of U.S. WEST Communications--Markets.
- ----------------------------------------------------------------------------------------------------------------------------------
Charles E. Peck (73) Director/Trustee of Adviser Funds and each of the other 32 investment companies in
the Delaware Investments family
P.O. Box 1102, Columbia, MD 21044
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive Officer of The Ryland
Group, Inc., Columbia, MD.
- ----------------------------------------------------------------------------------------------------------------------------------
Janet L. Yeomans (51) Director/Trustee of Adviser Funds and 32 other investment companies in the Delaware
Investments family.
Building 220-13W-37, St. Paul, MN 55144
Vice President and Treasurer, 3M Corporation.
From 1987-1994, Ms. Yeomans was Director of Benefit Funds and Financial Markets for
the 3M Corporation; Manager of Benefit Fund Investments for the 3M Corporation,
1985-1987; Manager of Pension Funds for the 3M Corporation, 1983-1985;
Consultant--Investment Technology Group of Chase Econometrics, 1982-1983; Consultant
for Data Resources, 1980-1982; Programmer for the Federal Reserve Bank of Chicago,
1970-1974.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
76
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Officer Business Experience
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Richard G. Unruh, Jr. (60) Executive Vice President and Chief Investment Officer, Equity of Adviser Funds, each
of the other 32 investment companies in the Delaware Investments family
Chief Executive Officer/Chief Investment Officer of Delaware Investment Advisers (a
series of Delaware Management Business Trust)
Executive Vice President of Delaware Management Holdings, Inc. and Delaware Capital
Management, Inc.
Executive Vice President/Chief Investment Officer of Delaware Management Company (a
series of Delaware Management Business Trust)
Executive Vice President and Trustee of Delaware Management Business Trust
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive capacities at
different times within the Delaware organization.
- ----------------------------------------------------------------------------------------------------------------------------------
H. Thomas McMeekin (46) Executive Vice President and Chief Investment Officer, Fixed Income of Adviser Funds
and each of the other 32 investment companies in the Delaware Investments family.
Director of Delaware Management Holdings, Inc. and Founders CBO Corporation.
Executive Vice President/Chief Investment Officer, DMC-Fixed Income of Delaware
Management Company (a series of Delaware Management Business Trust)
Executive Vice President/Chief Investment Officer, DIA-Fixed Income of Delaware
Investment Advisers (a series of Delaware Management Business Trust)
Executive Vice President and Director of Founders Holdings, Inc.
Executive Vice President of Delaware Management Business Trust and Delaware Capital
Management, Inc.
Mr. McMeekin joined Delaware Investments in 1999. During the past five years, he has
also served in various executive capacities for Lincoln National Corporation.
- ----------------------------------------------------------------------------------------------------------------------------------
Richard J. Flannery (42) Executive Vice President/General Counsel of Adviser Funds and each of the other 32
investment companies in the Delaware Investments family, Delaware Management
Holdings, Inc., Delaware Distributors, L.P., Delaware Management Company (a series
of Delaware Management Business Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust) and Founders CBO Corporation.
Executive Vice President/General Counsel and Director of Delaware International
Holdings Ltd., Founders Holdings, Inc., Delvoy, Inc., DMH Corp., Delaware Management
Company, Inc., Delaware Service Company, Inc., Delaware Capital Management, Inc.,
Retirement Financial Services, Inc., Delaware Distributors, Inc. and Delaware
Management Trust Company.
Executive Vice President and Trustee of Delaware Management Business Trust.
Director of Delaware International Advisers Ltd.
Director of HYPPCO Finance Company Ltd.
During the past five years, Mr. Flannery has served in various executive capacities
at different times within the Delaware organization.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
77
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Officer Business Experience
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Eric E. Miller (46) Senior Vice President/Deputy General Counsel and Secretary of Adviser Funds and each
of the other 32 investment companies in Delaware Investments.
Senior Vice President/Deputy General Counsel and Assistant Secretary of Delaware
Management Holdings, Inc., DMH Corp., Delvoy, Inc., Delaware Management Company,
Inc., Delaware Management Business Trust, Delaware Management Company (a series of
Delaware Management Business Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust), Delaware Service Company, Inc., Delaware
Capital Management, Inc., Retirement Financial Services, Inc., Delaware
Distributors, Inc., Delaware Distributors, L.P. and Founders Holdings, Inc.
During the past five years, Mr. Miller has served in various executive capacities at
different times within Delaware Investments.
- ----------------------------------------------------------------------------------------------------------------------------------
Joseph H. Hastings (49) Senior Vice President/Corporate Controller of Adviser Funds and each of the other 32
investment companies in the Delaware Investments family and Delaware Investment
Advisers (a series of Delaware Management Business Trust)
Senior Vice President/Corporate Controller and Treasurer of Delaware Management
Holdings, Inc., DMH Corp., Delvoy , Inc., Delaware Management Company, Inc.,
Delaware Management Business Trust, Delaware Management Company (a series of
Delaware Management Business Trust), Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Capital Management,
Inc., Delaware International Holdings Ltd., Founders Holdings, Inc. and Delaware
Management Business Trust
Executive Vice President/Chief Financial Officer/Treasurer of Delaware Management
Trust Company
Senior Vice President/Assistant Treasurer of Founders CBO Corporation
Chief Financial Officer of Retirement Financial Services, Inc.
During the past five years, Mr. Hastings has served in various executive capacities
at different times within the Delaware organization.
- ----------------------------------------------------------------------------------------------------------------------------------
Michael P. Bishof (37) Senior Vice President and Treasurer of Adviser Funds and each of the other 32
investment companies in the Delaware Investments family.
Senior Vice President/Investment Accounting of Delaware Management Company (a series
of Delaware Management Business Trust), Delaware Service Company, Inc. and Delaware
Capital Management, Inc. and Founders Holdings, Inc.
Senior Vice President and Treasurer/ Investment Accounting of Delaware Distributors,
L.P. and Delaware Investment Advisers (a series of Delaware Management Business
Trust)
Senior Vice President/Manager of Investment Accounting of Delaware International
Holdings, Inc.
Senior Vice President and Assistant Treasurer of Founders CBO Corporation
Before joining Delaware Investments in 1995, Mr. Bishof was a Vice President for
Bankers Trust, New York, NY from 1994 to 1995, a Vice President for CS First Boston
Investment Management, New York, NY from 1993 to 1994 and an Assistant Vice
President for Equitable Capital Management Corporation, New York, NY from 1987 to
1993.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
78
<PAGE>
The following is a compensation table listing for each trustee entitled
to receive compensation, the aggregate compensation received from Adviser Funds
and the total compensation received from all investment companies in the
Delaware Investments family for which he or she serves as a director or trustee
for the fiscal year ended October 31, 1999 and an estimate of annual benefits to
be received upon retirement under the Delaware Group Retirement Plan for
Directors/Trustees as of October 31, 1999. Only the independent trustees of the
Fund receive compensation from the Fund.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Pension or
Retirement
Benefits Total
Accrued Estimated Compensation
Aggregate as Part of Annual from
Compensation Adviser Benefits Delaware
from Adviser Funds Upon Investments
Name(3) Funds Expenses Retirement(1) Companies(2)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Walter P. Babich None $38,000
- -------------------------------------------------------------------------------------------------------------------------
John H. Durham None $32,180
- -------------------------------------------------------------------------------------------------------------------------
Anthony D. Knerr None $38,000
- -------------------------------------------------------------------------------------------------------------------------
Ann R. Leven None $38,000
- -------------------------------------------------------------------------------------------------------------------------
Thomas F. Madison None $38,000
- -------------------------------------------------------------------------------------------------------------------------
Charles E. Peck None $38,000
- -------------------------------------------------------------------------------------------------------------------------
Janet L. Yeomans(4) None $38,000
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director/trustee who, at the time of
his or her retirement from the Board, has attained the age of 70 and served
on the Board for at least five continuous years, is entitled to receive
payments from each investment company in the Delaware Investments family for
which he or she serves as a director or trustee for a period equal to the
lesser of the number of years that such person served as a director or
trustee or the remainder of such person's life. The amount of such payments
will be equal, on an annual basis, to the amount of the annual retainer that
is paid to directors/trustees of each investment company at the time of such
person's retirement. If an eligible director/trustee retired as of October
31, 1999, he or she would be entitled to annual payments totaling the amount
noted above, in the aggregate, from all of the investment companies in the
Delaware Investments family for which he or she served as director or
trustee, based on the number of investment companies in the Delaware
Investments family as of that date.
(2) Each independent director/trustee (other than John H. Durham) currently
receives a total annual retainer fee of $38,000 for serving as a director or
trustee for all 33 investment companies in Delaware Investments, plus $3,145
for each Board Meeting attended. John H. Durham currently receives a total
annual retainer fee of $32,180 for serving as a director or trustee for 19
investment companies in Delaware Investments, plus $1,810 for each Board
Meeting attended. Ann R. Leven, Charles E. Peck, Anthony D. Knerr and Thomas
F. Madison serve on the Fund's audit committee; Ms. Leven is the
chairperson. Members of the audit committee currently receive additional
annual compensation of $5,000 from all investment companies, in the
aggregate, with the exception of the chairperson, who receives $6,000.
(3) W. Thacher Longstreth served as an independent trustee of Adviser Funds
during its last fiscal year for the period November 1, 1998 through March
17, 1999, the date on which he retired. For this period, Mr. Longstreth
received $0,000 from Adviser Funds and $00,000 for all investment companies
in the Delaware Investments family.
(4) Janet L Yeomans joined the Boards of all investment companies in the
Delaware Investments family in March 1999 for some funds and in April 1999
for other funds.
79
<PAGE>
GENERAL INFORMATION
Adviser Funds is an open-end management investment company. The Fund's
portfolio of assets is diversified as defined by the 1940 Act. Adviser Funds was
organized as a Maryland corporation on August 10, 1993 and reorganized as a
Delaware business trust on November 23, 1999.
The Manager is the investment manager of the Funds. The Manager also
provides investment management services to certain of the other funds in the
Delaware Investments family. An affiliate of the Manager also manages private
investment accounts. While investment decisions of the Funds are made
independently from those of the other funds and accounts, investment decisions
for such other funds and accounts may be made at the same time as investment
decisions for the Funds.
The Manager or Delaware International Advisers Ltd. also manages the
investment options for Delaware-Lincoln Choice Plus and Delaware Medallion (SM)
III Variable Annuities. Choice Plus is issued and distributed by Lincoln
National Life Insurance Company. Choice Plus offers a variety of different
investment styles managed by leading money managers. Medallion is issued by
Allmerica Financial Life Insurance and Annuity Company (First Allmerica
Financial Life Insurance Company in New York and Hawaii). Delaware Medallion
offers various investment series ranging from domestic equity funds,
international equity and bond funds and domestic fixed income funds. Each
investment series available through Choice Plus and Medallion utilizes an
investment strategy and discipline the same as or similar to one of the Delaware
Investments mutual funds available outside the annuity. See Delaware Group
Premium Fund in Appendix A.
Access persons and advisory persons of the Delaware Investments family
of funds, as those terms are defined in SEC Rule 17j-1 under the 1940 Act, who
provide services to the Manager, Delaware International or their affiliates, are
permitted to engage in personal securities transactions subject to the
exceptions set forth in Rule 17j-1 and the following general restrictions and
procedures: (1) certain blackout periods apply to personal securities
transactions of those persons; (2) transactions must receive advance clearance
and must be completed on the same day as the clearance is received; (3) certain
persons are prohibited from investing in initial public offerings of securities
and other restrictions apply to investments in private placements of securities;
(4) opening positions by certain covered persons in certain securities may only
be closed-out at a profit after a 60-day holding period has elapsed; and (5) the
Compliance Officer must be informed periodically of all securities transactions
and duplicate copies of brokerage confirmations and account statements must be
supplied to the Compliance Officer.
The Distributor acts as national distributor for each of the Funds and
for the other mutual funds in the Delaware Investments family. The Distributor
("DDLP") received net commissions from each Fund on behalf of Class A Shares,
after reallowances to dealers, as follows:
Delaware Overseas Equity Fund
Class A Shares
Total
Fiscal Amount of Amounts Net
Year Underwriting Reallowed Commission
Ended Commissions to Dealers to DDLP
----- ----------- ---------- -------
10/31/99
10/31/98 8,093 6,838 1,255
10/31/97 15,657 3,194 12,463
Delaware New Pacific Fund
Class A Shares
Total
Fiscal Amount of Amounts Net
Year Underwriting Reallowed Commission
Ended Commissions to Dealers to DDLP
----- ----------- ---------- -------
10/31/99
10/31/98 53,408 44,672 8,736
10/31/97 28,375 5,847 22,528
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The Distributor received in the aggregate Limited CDSC payments with
respect to Class A Shares of each Fund as follows:
Limited CDSC Payments
Fiscal
Year Delaware Overseas Equity Delaware New Pacific
Ended Fund A Class Fund A Class
------ ------------------------ --------------------
10/31/99
10/31/98 none none
10/31/97 none none
The Distributor received in the aggregate CDSC payments with respect to
Class B Shares of each Fund as follows:
CDSC Payments
Fiscal
Year Delaware Overseas Equity Delaware New Pacific
Ended Fund B Class Fund B Class
----- ------------------------ --------------------
10/31/99
10/31/98 1,541 4,704
10/31/97 2,815 4,476
The Distributor received in the aggregate CDSC payments with respect to
Class C Shares of each Fund as follows:
CDSC Payments
Fiscal
Year Delaware Overseas Equity Delaware New Pacific
Ended Fund C Class Fund C Class
----- ------------------------ --------------------
10/31/99
10/31/98 60 325
10/31/97 24 33
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The Transfer Agent, an affiliate of the Manager, acts as shareholder
servicing, dividend disbursing and transfer agent for each Fund and for the
other mutual funds in the Delaware Investments family. The Transfer Agent is
paid a fee by each Fund for providing these services consisting of an annual per
account charge of $5.50 for each Fund plus transaction charges for particular
services according to a schedule. Compensation is fixed each year and approved
by the Board of Trustees, including a majority of the unaffiliated trustees. The
Transfer Agent also provides accounting services to each Fund. Those services
include performing all functions related to calculating each Fund's net asset
value and providing all financial reporting services, regulatory compliance
testing and the related accounting services. For its services, the Transfer
Agent is paid a fee based on total assets of all funds in the Delaware
Investments family for which it provides such accounting services. Such fee is
equal to 0.25% multiplied by the total amount of assets in the complex for which
the Transfer Agent furnishes accounting services, where such aggregate complex
assets are $10 billion or less, and 0.20% of assets if such aggregate complex
assets exceed $10 billion. The fees are charged to each fund, including each
Fund, on an aggregate pro-rata basis. The asset-based fee payable to the
Transfer Agent is subject to a minimum fee calculated by determining the total
number of investment portfolios and associated classes.
The Manager and its affiliates own the name "Delaware Group." Under
certain circumstances, including the termination of Adviser Funds' advisory
relationship with the Manager or its distribution relationship with the
Distributor, the Manager and its affiliates could cause Adviser Funds to delete
the words "Delaware Group" from Adviser Funds' name.
The Chase Manhattan Bank ("Chase"), 4 Chase Metrotech Center, Brooklyn,
NY 11245, is custodian of each Fund's securities and cash. As custodian for the
Fund, Chase maintains a separate account or accounts for each Fund; receives,
holds and releases portfolio securities on account of each Fund; receives and
disburses money on behalf of each Fund; and collects and receives income and
other payments and distributions on account of each Fund's portfolio securities.
Capitalization
Adviser Funds has a present unlimited authorized number of shares of
beneficial interest with no par value allocated to each Class. Adviser Funds
also offers Delaware U.S. Growth Fund through a separate Prospectus and
Statement of Additional Information. Each Class represents a proportionate
interest in the assets of the Fund, and each has the same voting and other
rights and preferences as the other classes of the Fund, except that shares of
the Institutional Class may not vote on any matter that affects the Fund
Classes' Distribution Plans under Rule 12b-1. Similarly, as a general matter,
shareholders of Class A Shares, Class B Shares and Class C Shares may vote only
on matters affecting the 12b-1 Plan that relates to the class of shares that
they hold. However, Class B Shares may vote on any proposal to increase
materially the fees to be paid by the Fund under the Rule 12b-1 Plan relating to
Class A Shares. General expenses of the Fund will be allocated on a pro-rata
basis to the classes according to asset size, except that expenses of the Plans
of Class A Shares, Class B Shares and Class C Shares will be allocated solely to
those classes.
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All shares have no preemptive rights, are fully transferable and, when
issued, are fully paid and nonassessable and, except as described above, have
equal voting rights.
On November 29, 1993, the name Lincoln Renaissance Funds, Inc. was
changed to Lincoln Advisor Funds, Inc.
As of the close of business on May 3, 1996, the changes of the names of
the funds were as follows: Lincoln U.S. Growth Portfolio to U.S. Growth Fund;
Lincoln World Growth Portfolio to World Growth Fund; and Lincoln New Pacific
Portfolio to New Pacific Fund. In addition, as of the close of business May 3,
1996, the name of Lincoln Advisor Funds, Inc. was changed to Delaware Group
Adviser Funds, Inc. As of December 18, 1997, the name of Word Growth Fund
changed to Overseas Equity Fund. As of August 16, 1999, the names of U.S. Growth
Fund, Overseas Equity Fund and New Pacific Fund changed to Delaware U.S. Growth
Fund, Delaware Overseas Equity Fund and Delaware New Pacific Fund. Corresponding
changes were also made to the names of each fund's classes on that date.
Effective November 23, 1999, the name of Delaware Group Adviser Funds, Inc. was
changed to Delaware Group Adviser Funds.
EURO
Several European countries are participating in the European Economic
and Monetary Union, which established a common European currency for
participating countries. This currency is commonly known as the "Euro." Each
participating country replaced its previous currency with the Euro on January 1,
1999. Additional European countries may elect to participate after that date. In
addition, full implementation of the Euro will extend over a period of several
years. Initial implementation of the Euro occurred on January 1, 1999 without
disruption of services provided to each Fund. Each Fund's service providers
cooperated over the implementation weekend and following weeks to reconcile
their records and procedures. Going forward, if a Fund is invested in securities
of participating countries or countries that elect to participate at a later
date, it could be adversely affected if the computer systems used by its
applicable service providers are not properly prepared to handle the
implementation of this single currency through completion of the process or the
adoption of the Euro by additional countries in the future.
Restructuring of Adviser Funds
Until April 26, 1996, Adviser Funds consisted of nine series of shares
(U.S. Growth Fund, World Growth Fund (now named Delaware Overseas Equity Fund)
and New Pacific Fund, as well as six other funds) and was named Lincoln Advisor
Funds, Inc. ("LAF"). On February 23, 1996, LAF's Board of Directors approved a
restructuring to integrate fully LAF into the Delaware Investments family of
funds. The restructuring provided, among other things, for the liquidation of
three funds; the appointment of Delaware Management Company, Inc. as the
investment manager of each of the funds; the appointment of certain
sub-advisers; changes in certain names, including: Lincoln U.S. Growth Portfolio
to U.S. Growth Fund; Lincoln World Growth Portfolio to World Growth Fund; and
Lincoln New Pacific Portfolio to New Pacific Fund; and the change of the LAF to
Delaware Group Adviser Funds. The liquidations were completed on April 26, 1996
and following required shareholder approval of the investment management and
sub-advisory arrangements at a meeting of shareholders held on May 3, 1996, the
restructuring was consummated.
In accordance with the restructuring, beginning May 6, 1996, the former
Class D shares have been redesignated as the Institutional Class shares.
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On July 17, 1997, the Board of Trustees approved the liquidations of
three additional funds. These liquidations were completed on September 19, 1997.
Effective September 15, 1997, the name of World Growth Fund changed to Overseas
Equity Fund.
In accordance with the restructuring, the front-end sales charges for
and 12b-1 Plan distribution fees assessable against Class A Shares and the
contingent deferred sales charge schedule for Class B Shares, as well as its
feature for conversion to Class A Shares, have been modified to be made
consistent with the charges, fees and features that generally apply to all other
Delaware Investments funds. The charges and fees previously applicable to the
Class C Shares have not been changed.
Beginning May 6, 1996, the charges, fees and features described in this
Part B have been applied to the respective shares, except for Class B Shares
purchased before that date. Class B Shares purchased prior to May 6, 1996
continue to be subject to the following contingent deferred sales charge
schedule if redemptions are made during the time periods described: within the
first year after purchase (5.0%); within the second year after purchase (4.0%);
within the third year after purchase (4.0%); within the fourth year after
purchase (3.0%); within the fifth year after purchase (2.0%); within the sixth
year after purchase (1.0%); and thereafter, none. In addition, Class B Shares
purchased prior to May 6, 1996 still will convert to Class A Shares after the
expiration of approximately six years after purchase. Class B Shares purchased
with reinvested dividends, whether effected before or after May 6, 1996, will be
aggregated and converted pro-rata with other Class B Shares.
Noncumulative Voting
Adviser Funds' shares have noncumulative voting rights which means that
the holders of more than 50% of the shares of Adviser Funds voting for the
election of trustees can elect all the trustees if they choose to do so, and, in
such event, the holders of the remaining shares will not be able to elect any
trustees.
This Part B does not include all of the information contained in the
Registration Statement which is on file with the SEC.
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FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditors for Delaware
Group Adviser Funds and, in its capacity as such, audits the financial
statements contained in the Funds' Annual Report. The Funds' Statements of Net
Assets, Statements of Assets and Liabilities, Statements of Operations,
Statements of Changes in Net Assets, Financial Highlights and Notes to Financial
Statements, as well as the report of Ernst & Young LLP, independent auditors,
for the fiscal year ended October 31, 1999 are included in the Funds' Annual
Report to shareholders. The financial statements and financial highlights, the
notes relating thereto and the report of Ernst & Young LLP are incorporated by
reference from the Annual Report into this Part B. The Fund's previous auditors
audited the financial highlights of the Funds for the fiscal periods ending on
or before October 31, 1996.
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APPENDIX A--INVESTMENT OBJECTIVES OF THE OTHER FUNDS IN THE DELAWARE INVESTMENTS
FAMILY
Following is a summary of the investment objectives of the other funds
in the Delaware Investments family:
Following is a summary of the investment objectives of the funds in the Delaware
Investments family:
Delaware Balanced Fund seeks long-term growth by a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that are
believed to demonstrate potential for income and capital growth. Delaware Devon
Fund seeks current income and capital appreciation by investing primarily in
income-producing common stocks, with a focus on common stocks the Manager
believes have the potential for above average dividend increases over time.
Delaware Trend Fund seeks long-term growth by investing in common
stocks issued by emerging growth companies exhibiting strong capital
appreciation potential.
Delaware Small Cap Value Fund seeks capital appreciation by investing
primarily in common stocks whose market values appear low relative to their
underlying value or future potential.
Delaware DelCap Fund seeks long-term capital growth by investing in
common stocks and securities convertible into common stocks of companies that
have a demonstrated history of growth and have the potential to support
continued growth.
Delaware Decatur Equity Income Fund seeks the highest possible current
income by investing primarily in common stocks that provide the potential for
income and capital appreciation without undue risk to principal. Delaware Growth
and Income Fund seeks long-term growth by investing primarily in securities that
provide the potential for income and capital appreciation without undue risk to
principal. Delaware Blue Chip Fund seeks to achieve long-term capital
appreciation. Current income is a secondary objective. It seeks to achieve these
objectives by investing primarily in equity securities and any securities that
are convertible into equity securities. Delaware Social Awareness Fund seeks to
achieve long-term capital appreciation. It seeks to achieve this objective by
investing primarily in equity securities of medium- to large-sized companies
expected to grow over time that meet the Fund's "Social Criteria" strategy.
Delaware Delchester Fund seeks as high a current income as possible by
investing principally in high yield, high risk corporate bonds, and also in U.S.
government securities and commercial paper. Delaware Strategic Income Fund seeks
to provide investors with high current income and total return by using a
multi-sector investment approach, investing principally in three sectors of the
fixed-income securities markets: high yield, higher risk securities, investment
grade fixed-income securities and foreign government and other foreign
fixed-income securities. Delaware High-Yield Opportunities Fund seeks to provide
investors with total return and, as a secondary objective, high current income.
Delaware Corporate Bond Fund seeks to provide investors with total return by
investing primarily in corporate bonds. Delaware Extended Duration Bond Fund
seeks to provide investors with total return by investing primarily in corporate
bonds.
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Delaware Limited-Term Government Fund seeks high, stable income by
investing primarily in a portfolio of short-and intermediate-term securities
issued or guaranteed by the U.S. government, its agencies or instrumentalities
and instruments secured by such securities.
Delaware American Government Bond Fund seeks high current income by
investing primarily in long-term debt obligations issued or guaranteed by the
U.S. government, its agencies or instrumentalities.
Delaware Cash Reserve Fund seeks the highest level of income consistent
with the preservation of capital and liquidity through investments in short-term
money market instruments, while maintaining a stable net asset value.
REIT Fund seeks to achieve maximum long-term total return with capital
appreciation as a secondary objective. It seeks to achieve its objectives by
investing in securities of companies primarily engaged in the real estate
industry.
Delaware Tax-Free USA Fund seeks high current income exempt from
federal income tax by investing in municipal bonds of geographically-diverse
issuers. Delaware Tax-Free Insured Fund invests in these same types of
securities but with an emphasis on municipal bonds protected by insurance
guaranteeing principal and interest are paid when due. Delaware Tax-Free USA
Intermediate Fund seeks a high level of current interest income exempt from
federal income tax, consistent with the preservation of capital by investing
primarily in municipal bonds.
Delaware Tax-Free Money Fund seeks high current income, exempt from
federal income tax, by investing in short-term municipal obligations, while
maintaining a stable net asset value.
Delaware Tax-Free New Jersey Fund seeks a high level of current
interest income exempt from federal income tax and New Jersey state and local
taxes, consistent with preservation of capital. Delaware Tax-Free Ohio Fund
seeks a high level of current interest income exempt from federal income tax and
Ohio state and local taxes, consistent with preservation of capital. Delaware
Tax-Free Pennsylvania Fund seeks a high level of current interest income exempt
from federal income tax and Pennsylvania state and local taxes, consistent with
the preservation of capital.
Foundation Funds are "fund of funds" which invest in other funds in the
Delaware Investments family (referred to as "Underlying Funds"). Foundation
Funds Delaware Income Portfolio seeks a combination of current income and
preservation of capital with capital appreciation by investing primarily in a
mix of fixed income and domestic equity securities, including fixed income and
domestic equity Underlying Funds. Foundation Funds Delaware Balanced Portfolio
seeks capital appreciation with current income as a secondary objective by
investing primarily in domestic equity and fixed income securities, including
domestic equity and fixed income Underlying Funds. Foundation Funds Delaware
Growth Portfolio seeks long term capital growth by investing primarily in equity
securities, including equity Underlying Funds, and, to a lesser extent, in fixed
income securities, including fixed-income Underlying Funds.
Delaware International Equity Fund seeks to achieve long-term growth
without undue risk to principal by investing primarily in international
securities that provide the potential for capital appreciation and income.
Delaware Global Bond Fund seeks to achieve current income consistent with the
preservation of principal by investing primarily in global fixed-income
securities that may also provide the potential for capital appreciation.
Delaware Global Equity Fund seeks to achieve long-term total return by investing
in global securities that provide the potential for capital appreciation and
income. Delaware Emerging Markets Fund seeks long-term capital appreciation by
investing primarily in equity securities of issuers located or operating in
emerging countries.
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Delaware U.S. Growth Fund seeks to maximize capital appreciation by
investing in companies of all sizes which have low dividend yields, strong
balance sheets and high expected earnings growth rates relative to their
industry. Delaware Overseas Equity Fund seeks to maximize total return (capital
appreciation and income), principally through investments in an internationally
diversified portfolio of equity securities. Delaware New Pacific Fund seeks
long-term capital appreciation by investing primarily in companies which are
domiciled in or have their principal business activities in the Pacific Basin.
Delaware Group Premium Fund offers various funds available exclusively
as funding vehicles for certain insurance company separate accounts. Growth and
Income Series seeks the highest possible total rate of return by selecting
issues that exhibit the potential for capital appreciation while providing
higher than average dividend income. Delchester Series seeks as high a current
income as possible by investing in rated and unrated corporate bonds, U.S.
government securities and commercial paper. Capital Reserves Series seeks a high
stable level of current income while minimizing fluctuations in principal by
investing in a diversified portfolio of short- and intermediate-term securities.
Cash Reserve Series seeks the highest level of income consistent with
preservation of capital and liquidity through investments in short-term money
market instruments. DelCap Series seeks long-term capital appreciation by
investing its assets in a diversified portfolio of securities exhibiting the
potential for significant growth. Delaware Balanced Series seeks a balance of
capital appreciation, income and preservation of capital. It uses a
dividend-oriented valuation strategy to select securities issued by established
companies that are believed to demonstrate potential for income and capital
growth. International Equity Series seeks long-term growth without undue risk to
principal by investing primarily in equity securities of foreign issuers that
provide the potential for capital appreciation and income. Small Cap Value
Series seeks capital appreciation by investing primarily in small-cap common
stocks whose market values appear low relative to their underlying value or
future earnings and growth potential. Emphasis will also be placed on securities
of companies that may be temporarily out of favor or whose value is not yet
recognized by the market. Trend Series seeks long-term capital appreciation by
investing primarily in small-cap common stocks and convertible securities of
emerging and other growth-oriented companies. These securities will have been
judged to be responsive to changes in the market place and to have fundamental
characteristics to support growth. Income is not an objective. Global Bond
Series seeks to achieve current income consistent with the preservation of
principal by investing primarily in global fixed-income securities that may also
provide the potential for capital appreciation. Strategic Income Series seeks
high current income and total return by using a multi-sector investment
approach, investing primarily in three sectors of the fixed-income securities
markets: high-yield, higher risk securities; investment grade fixed-income
securities; and foreign government and other foreign fixed-income securities.
Devon Series seeks current income and capital appreciation by investing
primarily in income-producing common stocks, with a focus on common stocks that
the investment manager believes have the potential for above-average dividend
increases over time. Emerging Markets Series seeks to achieve long-term capital
appreciation by investing primarily in equity securities of issuers located or
operating in emerging countries. Convertible Securities Series seeks a high
level of total return on its assets through a combination of capital
appreciation and current income by investing primarily in convertible
securities. Social Awareness Series seeks to achieve long-term capital
appreciation by investing primarily in equity securities of medium to
large-sized companies expected to grow over time that meet the Series' "Social
Criteria" strategy. REIT Series seeks to achieve maximum long-term total return,
with capital appreciation as a secondary objective, by investing in securities
of companies primarily engaged in the real estate industry. Aggressive Growth
Series seeks long-term capital appreciation. The Series attempts to achieve its
investment objective by investing primarily in equity securities of companies
which the manager believes have the potential for high earnings growth. U.S.
Growth Series seeks to maximize capital appreciation. The Series seeks to
achieve its investment objective by investing in companies of all sizes which
have low dividend yields, strong balance sheets and high expected earnings
growth rates relative to their industry.
Delaware U.S. Government Securities Fund seeks to provide a high level
of current income consistent with the prudent investment risk by investing in
U.S. Treasury bills, notes, bonds, and other obligations issued or
unconditionally guaranteed by the full faith and credit of the U.S. Treasury,
and repurchase agreements fully secured by such obligations.
Delaware Tax-Free Arizona Insured Fund seeks to provide a high level of
current income exempt from federal income tax and the Arizona personal income
tax, consistent with the preservation of capital. Delaware Minnesota Insured
Fund seeks to provide a high level of current income exempt from federal income
tax and the Minnesota personal income tax, consistent with the preservation of
capital.
Delaware Tax-Free Minnesota Intermediate Fund seeks to provide a high
level of current income exempt from federal income tax and the Minnesota
personal income tax, consistent with preservation of capital. The Fund seeks to
reduce market risk by maintaining an average weighted maturity from five to ten
years.
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Delaware Tax-Free California Insured Fund seeks to provide a high level
of current income exempt from federal income tax and the California personal
income tax, consistent with the preservation of capital. Delaware Tax-Free
Florida Insured Fund seeks to provide a high level of current income exempt from
federal income tax, consistent with the preservation of capital. The Fund will
seek to select investments that will enable its shares to be exempt from the
Florida intangible personal property tax. Delaware Tax-Free Florida Fund seeks
to provide a high level of current income exempt from federal income tax,
consistent with the preservation of capital. The Fund will seek to select
investments that will enable its shares to be exempt from the Florida intangible
personal property tax. Delaware Tax-Free Kansas Fund seeks to provide a high
level of current income exempt from federal income tax, the Kansas personal
income tax and the Kansas intangible personal property tax, consistent with the
preservation of capital. Delaware Tax-Free Missouri Insured Fund seeks to
provide a high level of current income exempt from federal income tax and the
Missouri personal income tax, consistent with the preservation of capital.
Delaware Tax-Free New Mexico Fund seeks to provide a high level of current
income exempt from federal income tax and the New Mexico personal income tax,
consistent with the preservation of capital. Delaware Tax-Free Oregon Insured
Fund seeks to provide a high level of current income exempt from federal income
tax and the Oregon personal income tax, consistent with the preservation of
capital.
Delaware Tax-Free Arizona Fund seeks to provide a high level of current
income exempt from federal income tax and the Arizona personal income tax,
consistent with the preservation of capital. Delaware Tax-Free California Fund
seeks to provide a high level of current income exempt from federal income tax
and the California personal income tax, consistent with the preservation of
capital. Delaware Tax-Free Iowa Fund seeks to provide a high level of current
income exempt from federal income tax and the Iowa personal income tax,
consistent with the preservation of capital. Delaware Tax-Free Idaho Fund seeks
to provide a high level of current income exempt from federal income tax and the
Idaho personal income tax, consistent with the preservation of capital. Delaware
Minnesota High-Yield Municipal Bond Fund seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal income
tax primarily through investment in medium and lower grade municipal
obligations. Delaware National High-Yield Municipal Fund seeks to provide a high
level of income exempt from federal income tax, primarily through investment in
medium and lower grade municipal obligations. Delaware Tax-Free New York Fund
seeks to provide a high level of current income exempt from federal income tax
and the personal income tax of the state of New York and the city of New York,
consistent with the preservation of capital. Delaware Tax-Free Wisconsin Fund
seeks to provide a high level of current income exempt from federal income tax
and the Wisconsin personal income tax, consistent with the preservation of
capital. Delaware Montana Municipal Bond Fund seek as high a level of current
income exempt from federal income tax and from the Montana personal income tax,
as is consistent with preservation of capital.
Delaware Tax-Free Colorado Fund seeks to provide a high level of
current income exempt from federal income tax and the Colorado personal income
tax, consistent with the preservation of capital.
Delaware Tax-Free Minnesota Fund seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal income
tax, consistent with the preservation of capital. Delaware Tax-Free North Dakota
Fund seeks to provide a high level of current income exempt from federal income
tax and the North Dakota personal income tax, consistent with the preservation
of capital.
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Delaware Select Growth Fund seeks long-term capital appreciation, which
the Fund attempts to achieve by investing primarily in equity securities
believed to have the potential for high earnings growth. Although the Fund, in
seeking its objective, may receive current income from dividends and interest,
income is only an incidental consideration in the selection of the Fund's
investments. Delaware Growth Stock Fund has an objective of long-term capital
appreciation. The Fund seeks to achieve its objective from equity securities
diversified among individual companies and industries. Delaware Tax-Efficient
Equity Fund seeks to obtain for taxable investors a high total return on an
after-tax basis. The Fund will attempt to achieve this objective by seeking to
provide a high long-term after-tax total return through managing its portfolio
in a manner that will defer the realization of accrued capital gains and
minimize dividend income.
For more complete information about any of the funds in the Delaware
Investments family, including charges and expenses, you can obtain a prospectus
from the Distributor. Read it carefully before you invest or forward funds.
Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).
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Delaware Investments includes funds with a wide range of investment objectives.
Stock funds, income funds, national and state-specific tax-exempt funds, money
market funds, global and international funds and closed-end funds give investors
the DELAWARE GROUP ADVISER FUNDS ability to create a portfolio that fits their
personal financial goals. For more information, shareholders of the Fund Classes
Delaware New Pacific Fund should contact their financial adviser or call
Delaware Delaware Overseas Equity Fund Investments at 800-523-1918.
INVESTMENT MANAGER Delaware Group Advisor Funds
Delaware Management Company Delaware New Pacific Fund
One Commerce Square Delaware Overseas Equity Fund
Philadelphia, PA 19103
SUB-ADVISERS
Delaware International Advisers Ltd.
80 Cheapside CLASS A SHARES
Third Floor CLASS B SHARES
London, England EC2V 6EE CLASS C SHARES
INSTITUTIONAL CLASS
AIB Govett, Inc.
250 Montgomery Street, Suite 1200
San Francisco, CA 94104
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street PART B
Philadelphia, PA 19103
STATEMENT OF
SHAREHOLDER SERVICING, ADDITIONAL INFORMATION
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc. January 31, 2000
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN -----------------
The Chase Manhattan Bank DELAWARE(SM)
4 Chase Metrotech Center INVESTMENTS
Brooklyn, NY 11245 -----------------
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PART C
Other Information
Item 23. Exhibits
(a) Agreement and Declaration of Trust.
(1) Agreement and Declaration of Trust (December 17, 1998)
incorporated into this filing by reference to Post-Effective
Amendment No. 22 filed November 22, 1999.
(2) Certificate of Trust (December 17, 1998) incorporated into this
filing by reference to Post-Effective Amendment No. 22 filed
November 22, 1999.
(b) By-Laws. By-Laws (December 17, 1998) incorporated into this filing
by reference to Post-Effective Amendment No. 22 filed November 22,
1999.
(c) Copies of All Instruments Defining the Rights of Holders.
(1) Agreement and Declaration of Trust. Articles III, V and VI of
Agreement and Declaration of Trust incorporated into this
filing by reference to Post-Effective Amendment No. 22 filed
November 22, 1999.
(2) By-Laws. Article II of By-Laws incorporated into this filing by
reference to Post-Effective Amendment No. 22 filed November 22,
1999.
(d) Investment Management Agreements.
(1) Form of Investment Management Agreement (November 1999) between
Delaware International Advisers Ltd. and the Registrant on
behalf of each Fund incorporated into this filing by reference
to Post-Effective Amendment No. 22 filed November 22, 1999.
(2) Form of Sub-Advisory Agreement (November 1999) between Delaware
International Advisers Ltd. and Delaware Management Company (a
series of Delaware Management Business Trust) on behalf of the
Delaware Global Equity Fund incorporated into this filing by
reference to Post-Effective Amendment No. 22 filed November 22,
1999.
(3) Form of Sub-Advisory Agreement (November 1999) between Delaware
International Advisers Ltd. and Delaware Management Company (a
series of Delaware Management Business Trust) on behalf of the
Delaware Global Opportunities Fund incorporated into this
filing by reference to Post-Effective Amendment No. 22 filed
November 22, 1999.
(e) (1) Distribution Agreements.
(i) Form of Distribution Agreement (November 1999) between
Delaware Distributors, L.P. and the Registrant on behalf of
each Fund incorporated into this filing by reference to
Post-Effective Amendment No. 19 filed October 2, 1998.
(2) Administration and Service Agreement. Form of Administration
and Service Agreement (Module) (as amended November 1995)
incorporated into this filing by reference to Post-Effective
Amendment No. 10 filed November 27, 1995.
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(3) Dealer's Agreements.
(i) Form of Dealer's Agreement (Module) with Delaware
Distributors, Inc. (as amended November 1995) incorporated
into this filing by reference to Post-Effective Amendment
No. 10 filed November 27, 1995.
(4) Form of Mutual Fund Agreement for the Delaware Group of Funds
(Module) (November 1995) incorporated into this filing by
reference to Post-Effective Amendment No. 11 filed January 31,
1996.
(f) Inapplicable.
(g) Custodian Agreements.
(1) Form of Custodian Agreement (Module) between The Chase
Manhattan Bank and the Registrant on behalf of each Fund
(November 1999) incorporated into this filing by reference to
Post-Effective Amendment No. 14 filed November 27, 1996.
(i) Form of Amendment to Custodian Agreement (November 1999)
between The Chase Manhattan Bank and the Registrant on
behalf of each Fund incorporated into this filing by
reference to Post-Effective Amendment No. 18 filed February
4, 1998.
(2) Form of Securities Lending Agreement (1996) between The Chase
Manhattan Bank and the Registrant on behalf of each Fund
incorporated into this filing by reference to Post-Effective
Amendment No. 13 filed May 16, 1996.
(h) Other Material Contracts.
(1) Form of Shareholders Services Agreement (November 1999) between
Delaware Service Company, Inc. and the Registrant on behalf of
each Fund incorporated into this filing by reference to
Post-Effective Amendment No. 19 filed October 2, 1998.
(2) Form of Delaware Group of Funds Fund Accounting Agreement
(November 1999) between Delaware Service Company, Inc. and the
Registrant incorporated into this filing by reference to
Post-Effective Amendment No. 14 filed November 27, 1996.
(i) Opinion of Counsel. Incorporated into this filing by reference to
Post-Effective Amendment No. 22 filed November 22, 1999.
(j) Consent of Auditors. To be filed by Amendment.
(k) Inapplicable.
(l) Undertaking of Initial Shareholder. Incorporated into this filing
by reference to Pre-Effective Amendment No. 1 filed August 22,
1991.
(m) Plans under Rule 12b-1.
(1) Form of Plan under Rule 12b-1 for Class A (November 1999)
incorporated into this filing by reference to Post-Effective
Amendment No. 19 filed October 2, 1998.
<PAGE>
(2) Form of Plan under Rule 12b-1 for Class B (November 1999)
incorporated into this filing by reference to Post-Effective
Amendment No. 19 filed October 2, 1998.
(3) Form of Plan under Rule 12b-1 for Class C (November 1999)
incorporated into this filing by reference to Post-Effective
Amendment No. 19 filed October 2, 1998.
(n) Plan under Rule 18f-3.
(1) Form of Plan under Rule 18f-3 (November 1999) incorporated into
this filing by reference to Post-Effective Amendment No. 19
filed October 2, 1998.
(o) Other: Trustees' Power of Attorney. Incorporated into this filing
by reference to Post-Effective Amendment No. 22 filed November 22,
1999.
Item 24. Persons Controlled by or under Common Control with Registrant. None
Item 25. Indemnification. Article VI of the By-Laws incorporated into this
filing by reference to Post-Effective Amendment No. 22 filed November
22, 1999.
Item 26. Business and Other Connections of Investment Adviser.
(a) Delaware International Advisers Ltd. ("Delaware International")
serves as investment manager to Delaware International Equity Fund,
Delaware Global Bond Fund, Delaware Global Equity Fund, Delaware
Emerging Markets Fund, Delaware International Small Cap Fund,
Delaware Global Opportunities Fund, Delaware Latin America Fund and
Delaware New Europe Fund of the Registrant, and also serves as
investment manager or sub-investment adviser to certain of the
other funds in the Delaware Investments family (Delaware Group
Adviser Funds, Delaware Group Global Dividend and Income Fund,
Inc., Delaware Group Income Funds, Inc., Delaware Pooled Trust,
Inc. and Delaware Group Premium Fund, Inc.) and institutional
accounts. Information regarding the officers and directors of
Delaware International and the positions they have held with the
Registrant during the past two fiscal years is provided below.
<TABLE>
<CAPTION>
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Positions and Offices with the Manager and its Affiliates and
Name and Principal Business Address Other Positions and Offices Held
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
G. Roger H. Kitson* Vice Chairman and Director of Delaware International Advisers
Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
David G. Tilles* Managing Director/Chief Investment Officer and Director of
Delaware International Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Elizabeth A. Desmond* Senior Portfolio Manager and Director of Delaware International
Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
John Emberson* Finance Director/Company Secretary/Compliance Officer of
Delaware International Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Clive A. Gillmore* Senior Portfolio Manager and Director of Delaware International
Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Nigel G. May* Senior Portfolio Manager and Director of Delaware International
Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Hamish O. Parker* Senior Portfolio Manager and Director of Delaware International
Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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Positions and Offices with the Manager and its Affiliates and
Name and Principal Business Address Other Positions and Offices Held
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Robert Akester* Senior Portfolio Manager of Delaware International Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Fiona A. Barwick* Senior Portfolio Manager of Delaware International Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Joanna Bates* Senior Portfolio Manager of Delaware International Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Joshua H. Brooks* Senior Portfolio Manager of Delaware International Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Gavin A. Hall* Senior Portfolio Manager of Delaware International Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
John Kirk* Senior Portfolio Manager of Delaware International Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
W. Hywel Morgan* Senior Portfolio Manager of Delaware International Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Richard J. Ginty* Portfolio Manager of Delaware International Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
R. Emma Lewis* Portfolio Manager of Delaware International Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Hugh A. Serjeant* Portfolio Manager of Delaware International Advisers Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
John C. E. Campbell** Director of Delaware International Advisers Ltd.; Executive
Vice President/Global Marketing & Client Services of Delaware
Management Company (a series of Delaware Management Business
Trust) and Delaware Investment Advisers (a series of Delaware
Management Business Trust)
- ------------------------------------------------------------------------------------------------------------------------------------
George E. Deming** Director of Delaware International Advisers Ltd.; Vice
President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust) and
Delaware Investment Advisers (a series of Delaware Management
Business Trust)
- ------------------------------------------------------------------------------------------------------------------------------------
David K. Downes** Director of Delaware International Advisers Ltd.; President,
Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer and Director/Trustee of the Registrant and
each of the other investment companies in the Delaware
Investments family; President and Director of Delaware
Management Company, Inc.; President of Delaware Management
Company (a series of Delaware Management Business Trust);
President, Chief Executive Officer and Director of Delaware
Capital Management, Inc.; Chairman, President, Chief Executive
Officer and Director of Delaware Service Company, Inc.;
President, Chief Operating Officer, Chief Financial Officer and
Director of Delaware International Holdings Ltd.; Chairman and
Director of Delaware Management Trust Company and Retirement
Financial Services, Inc.; Executive Vice President, Chief
Operating Officer, Chief Financial Officer of Delaware
Management Holdings, Inc., Founders CBO Corporation, Delaware
Investment Advisers (a series of Delaware Management Business
Trust) and Delaware Distributors, L.P.; Executive Vice
President, Chief Operating Officer, Chief Financial Officer and
Director of DMH Corp., Delaware Distributors, Inc., Founders
Holdings, Inc. and Delvoy, Inc.; Executive Vice President and
Trustee of Delaware Management Business Trust
Chief Executive Officer and Director of Forewarn, Inc. since
1993, 8 Clayton Place, Newtown Square, PA
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with the Manager and its Affiliates and
Name and Principal Business Address Other Positions and Offices Held
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Richard J. Flannery** Director of Delaware International Advisers Ltd.; Executive
Vice President/General Counsel of the Registrant and each of
the other investment companies in the Delaware Investments
family, Delaware Management Holdings, Inc., Delaware
Distributors, L.P., Delaware Management Company (a series of
Delaware Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business Trust) and
Founders CBO Corporation; Executive Vice President/General
Counsel and Director of Delaware International Holdings Ltd.,
Founders Holdings, Inc., Delvoy, Inc., DMH Corp., Delaware
Management Company, Inc., Delaware Service Company, Inc.,
Delaware Capital Management, Inc., Retirement Financial
Services, Inc., Delaware Distributors, Inc. and Delaware
Management Trust Company.; Executive Vice President and Trustee
of Delaware Management Business Trust; Director of HYPPCO
Finance Company Ltd.
Limited Partner of Stonewall Links, L.P. since 1991, Bulltown
Rd., Elverton, PA; Director and Member of Executive Committee
of Stonewall Links, Inc. since 1991, Bulltown Rd., Elverton, PA
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with the Manager and its Affiliates and
Name and Principal Business Address Other Positions and Offices Held
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Wayne A. Stork** Director of Delaware International Advisers Ltd.; Chairman,
Director/Trustee of the Fund and each of the other 32
investment companies in the Delaware Investments family;
Chairman and Director of Delaware Management Holdings, Inc.;
Prior to January 1, 1999, Mr. Stork was Director of Delaware
Capital Management, Inc.; Chairman, President and Chief
Executive Officer and Director/Trustee of DMH Corp., Delaware
Distributors, Inc. and Founders Holdings, Inc.; Chairman,
President, Chief Executive Officer, Chief Investment Officer
and Director/Trustee of Delaware Management Company, Inc. and
Delaware Management Business Trust; Chairman, President, Chief
Executive Officer and Chief Investment Officer of Delaware
Management Company (a series of Delaware Management Business
Trust); Chairman, Chief Executive Officer and Chief Investment
Officer of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Chairman and Chief Executive
Officer of Delaware International Advisers Ltd.; Chairman,
Chief Executive Officer and Director of Delaware International
Holdings Ltd.; Chief Executive Officer of Delaware Management
Holdings, Inc.; President and Chief Executive Officer of
Delvoy, Inc.; Chairman of Delaware Distributors, L.P.; Director
of Delaware Service Company, Inc. and Retirement Financial
Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Richard G. Unruh** Director of Delaware International Advisers Ltd.; Executive
Vice President and Chief Investment Officer, Equity of the
Fund, each of the other 32 investment companies in the Delaware
Investments family; Chief Executive Officer/Chief Investment
Officer of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Executive Vice President of
Delaware Management Holdings, Inc. and Delaware Capital
Management, Inc.; Executive Vice President/Chief Investment
Officer of Delaware Management Company (a series of Delaware
Management Business Trust); Executive Vice President and
Trustee of Delaware Management Business Trust
Board of Directors, Chairman of Finance Committee, Keystone
Insurance Company since 1989, 2040 Market Street, Philadelphia,
PA; Board of Directors, Chairman of Finance Committee, AAA Mid
Atlantic, Inc. since 1989, 2040 Market Street, Philadelphia,
PA; Board of Directors, Metron, Inc. since 1995, 11911 Freedom
Drive, Reston, VA
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Business address of each is Third Floor, 80 Cheapside, London, England EC2V
6EE.
** Business address of each is 1818 Market Street, Philadelphia, PA 19103.
(b) Delaware Management Company, a series of Delaware Management
Business Trust, (the "Manager") serves as sub-adviser to the Registrant and also
serves as investment manager or sub-adviser to certain of the other funds in the
Delaware Investments family (Delaware Group Equity Funds I, Inc., Delaware Group
Equity Funds II, Inc., Delaware Group Equity Funds III, Inc., Delaware Group
Equity Funds IV, Inc., Delaware Group Equity Funds V, Inc., Delaware Group
Government Fund, Delaware Group Income Funds, Delaware Group Limited-Term
Government Funds, Inc., Delaware Group Cash Reserve, Inc., Delaware Group
Tax-Free Fund, Inc., Delaware Group State Tax-Free Income Trust, Delaware Group
Tax-Free Money Fund, Delaware Group Premium Fund, Inc., Delaware Pooled Trust,
Inc., Delaware Group Adviser Funds, Inc., Delaware Group Dividend and Income
Fund, Inc., Delaware Group Global Dividend and Income Fund, Inc., Delaware Group
Foundation Funds, Voyageur Intermediate Tax-Free Funds, Voyageur Tax-Free Funds,
Voyageur Funds, Inc., Voyageur Insured Funds, Voyageur Investment Trust,
Voyageur Mutual Funds, Voyageur Mutual Funds II, Voyageur Mutual Funds III,
Inc., Voyageur Arizona Municipal Income Fund, Inc., Voyageur Colorado Insured
Municipal Income Fund, Inc., Voyageur Florida Insured Municipal Income Fund,
Voyageur Minnesota
<PAGE>
Municipal Fund, Inc., Voyageur Minnesota Municipal Fund II, Inc. and Voyageur
Minnesota Municipal Fund III, Inc.). In addition, certain officers of the
Manager also serve as directors/trustees of the other funds in the Delaware
Investments family, and certain officers are also officers of these other funds.
A company indirectly owned by the Manager's indirect parent company acts as
principal underwriter to the mutual funds in the Delaware Investments family
(see Item 27 below) and another such company acts as the shareholder services,
dividend disbursing, accounting servicing and transfer agent for all of the
mutual funds in the Delaware Investments family.
The following persons serving as directors or officers of the
Manager have held the following positions during the past two years:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its
Name and Principal Business Address* Affiliates and Other Positions and Offices Held
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
David K. Downes President of Delaware Management Company (a series of Delaware
Management Business Trust); President, Chief Executive Officer
and Director of Delaware Capital Management, Inc.; Director of
Delaware International Advisers Ltd.; President, Chief
Executive Officer, Chief Operating Officer, Chief Financial
Officer and Director/Trustee of the Registrant and each of the
other investment companies in the Delaware Investments family;
President and Director of Delaware Management Company, Inc.;
Chairman, President, Chief Executive Officer and Director of
Delaware Service Company, Inc.; President, Chief Operating
Officer, Chief Financial Officer and Director of Delaware
International Holdings Ltd.; Chairman and Director of Delaware
Management Trust Company and Retirement Financial Services,
Inc.; Executive Vice President, Chief Operating Officer, Chief
Financial Officer of Delaware Management Holdings, Inc.,
Founders CBO Corporation, Delaware Investment Advisers (a
series of Delaware Management Business Trust) and Delaware
Distributors, L.P.; Executive Vice President, Chief Operating
Officer, Chief Financial Officer and Director of DMH Corp.,
Delaware Distributors, Inc., Founders Holdings, Inc. and
Delvoy, Inc.; Executive Vice President and Trustee of Delaware
Management Business Trust
Chief Executive Officer and Director of Forewarn, Inc. since
1993, 8 Clayton Place, Newtown Square, PA
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its
Name and Principal Business Address* Affiliates and Other Positions and Offices Held
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Richard J. Flannery Executive Vice President/General Counsel of the Registrant and
each of the other investment companies in the Delaware
Investments family, Delaware Management Holdings, Inc.,
Delaware Distributors, L.P., Delaware Management Company (a
series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business
Trust) and Founders CBO Corporation; Director of Delaware
International Advisers Ltd.; Executive Vice President/General
Counsel and Director of Delaware International Holdings Ltd.,
Founders Holdings, Inc., Delvoy, Inc., DMH Corp., Delaware
Management Company, Inc., Delaware Service Company, Inc.,
Delaware Capital Management, Inc., Retirement Financial
Services, Inc., Delaware Distributors, Inc. and Delaware
Management Trust Company.; Executive Vice President and Trustee
of Delaware Management Business Trust; Director of HYPPCO
Finance Company Ltd.
Limited Partner of Stonewall Links, L.P. since 1991, Bulltown
Rd., Elverton, PA; Director and Member of Executive Committee
of Stonewall Links, Inc. since 1991, Bulltown Rd., Elverton, PA
- ------------------------------------------------------------------------------------------------------------------------------------
Richard G. Unruh Executive Vice President/Chief Investment Officer of Delaware
Management Company (a series of Delaware Management Business
Trust); Director of Delaware International Advisers Ltd.;
Executive Vice President and Chief Investment Officer, Equity
of the Registrant and each of the other investment companies in
the Delaware Investments family; Chief Executive Officer/Chief
Investment Officer of Delaware Investment Advisers (a series of
Delaware Management Business Trust); Executive Vice President
of Delaware Management Holdings, Inc. and Delaware Capital
Management, Inc.; Executive Vice President and Trustee of
Delaware Management Business Trust
Board of Directors, Chairman of Finance Committee, Keystone
Insurance Company since 1989, 2040 Market Street, Philadelphia,
PA; Board of Directors, Chairman of Finance Committee, AAA Mid
Atlantic, Inc. since 1989, 2040 Market Street, Philadelphia,
PA; Board of Directors, Metron, Inc. since 1995, 11911 Freedom
Drive, Reston, VA
- ------------------------------------------------------------------------------------------------------------------------------------
H. Thomas McMeekin(1) Executive Vice President of Delaware Management Business Trust;
Executive Vice President/Chief Investment Officer DMC-Fixed
Income of Delaware Management Company (a series of Delaware
Management Business Trust); Executive Vice President/Chief
Investment Officer DIA-Fixed Income of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Executive Vice President of Delaware Capital Management, Inc.;
Executive Vice President and Director of Delaware Management
Holdings, Inc.; Executive Vice President and Chief Investment
Officer, Fixed Income of the Registrant and each of the other
investment companies in the Delaware Investments family.
- ------------------------------------------------------------------------------------------------------------------------------------
William E. Dodge(2) Executive Vice President/Chief Investment Officer, DMC-Equity
of Delaware Management Company (a series of Delaware Management
Trust Company); Executive Vice President of Delaware Management
Business Trust; President/Chief Investment Officer, DIA-Equity
of Delaware Investment Advisers (a series of Delaware
Management Business Trust)
- ------------------------------------------------------------------------------------------------------------------------------------
Douglas L. Anderson Senior Vice President/Operations of Delaware Management Company
(a series of Delaware Management Business Trust; Senior Vice
President/Operations of Delaware Service Company, Inc.; Senior
Vice President/Operations of Retirement Financial Services,
Inc.; Senior Vice President/Operations of Delaware Management
Trust Company.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its
Name and Principal Business Address* Affiliates and Other Positions and Offices Held
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Michael P. Bishof Senior Vice President/Investment Accounting of Delaware
Management Company (a series of Delaware Management Business
Trust), Delaware Service Company, Inc. and Delaware Capital
Management, Inc. and Founders Holdings, Inc.; Senior Vice
President and Treasurer of the Registrant and each of the other
investment companies in the Delaware Investments family; Senior
Vice President and Treasurer/ Investment Accounting of Delaware
Distributors, L.P. and Delaware Investment Advisers (a series
of Delaware Management Business Trust); Senior Vice
President/Manager of Investment Accounting of Delaware
International Holdings, Inc.; Senior Vice President and
Assistant Treasurer of Founders CBO Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
Robert J. DiBraccio Senior Vice President/Head of Equity Trading of Delaware
Management Company (a series of Delaware Management Business
Trust); Senior Vice President/Head of Equity Trading of
Delaware Investment Advisers (a series of Delaware Management
Business Trust); Senior Vice President/Head of Equity Trading
of Delaware Capital Management, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
John B. Fields Senior Vice President/Senior Portfolio Manager of Delaware
Management Company (a series of Delaware Management Business
Trust); Trustee of Delaware Management Business Trust; Senior
Vice President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Senior Vice President/Senior Portfolio Manager of Delaware
Capital Management, Inc.; Senior Vice President/Senior
Portfolio Manager of the Registrant and each of the other
investment companies in the Delaware Investments family.
- ------------------------------------------------------------------------------------------------------------------------------------
Gerald S. Frey Senior Vice President/Senior Portfolio Manager of the
Registrant and each of the other investment companies in the
Delaware Investments family, Delaware Management Company (a
series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business
Trust) and Delaware Capital Management, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Susan L. Hanson Senior Vice President/Global Marketing and Client Services of
Delaware Management Company (a series of Delaware Management
Business Trust); Senior Vice President/Global Marketing and
Client Services of Delaware Investment Advisers (a series of
Delaware Management Business Trust)
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph H. Hastings Senior Vice President/Corporate Controller and Treasurer of
Delaware Management Holdings, Inc., DMH Corp., Delvoy , Inc.,
Delaware Management Company, Inc., Delaware Management Business
Trust, Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc.,
Delaware Capital Management, Inc., Delaware International
Holdings Ltd., Founders Holdings, Inc. and Delaware Management
Business Trust; Senior Vice President/Corporate Controller of
the Registrant and each of the other investment companies in
the Delaware Investments family and Delaware Investment
Advisers (a series of Delaware Management Business Trust);
Executive Vice President/Chief Financial Officer/Treasurer of
Delaware Management Trust Company; Senior Vice
President/Assistant Treasurer of Founders CBO Corporation;
Chief Financial Officer of Retirement Financial Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Joanne O. Hutcheson Senior Vice President/Human Resources of Delaware Management
Company (a series of Delaware Management Business Trust);
Senior Vice President/Human Resources of Delaware Management
Holdings, Inc.; Senior Vice President/Human Resources of DMH
Corp.; Senior Vice President/Human Resources of Delvoy, Inc.;
Senior Vice President/Human Resources of Delaware Management
Company, Inc.; Senior Vice President/Human Resources of
Delaware Management Business Trust; Senior Vice President/Human
Resources of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Senior Vice President/Human
Resources of
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its
Name and Principal Business Address* Affiliates and Other Positions and Offices Held
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Service Company, Inc.; Senior Vice President/Human
Resources of Delaware Capital Management, Inc.; Senior Vice
President/Human Resources of Delaware Retirement Financial
Services, Inc.; Senior Vice President/Human Resources of
Delaware Management Trust Company; Senior Vice President/Human
Resources of Delaware Distributors, Inc.; Senior Vice
President/Human Resources of Delaware Distributors, L.P.;
Senior Vice President/Human Resources of the Registrant and
each of the other investment companies in the Delaware
Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Richelle S. Maestro Senior Vice President, Deputy General Counsel and Secretary of
Delaware Management Company (a series of Delaware Management
Business Trust); Senior Vice President, Deputy General Counsel
and Secretary of Delaware Management Holdings, Inc.; Senior
Vice President, Deputy General Counsel and Secretary of DMH
Corp.; Senior Vice President, Deputy General Counsel and
Secretary of Delaware Management Business Trust; Senior Vice
President, Deputy General Counsel and Secretary of Delaware
Investment Advisers (a series of Delaware Management Business
Trust); Senior Vice President, Deputy General Counsel and
Secretary of Retirement Financial Services, Inc.; Senior Vice
President, Deputy General Counsel and Secretary of Delaware
Distributors, Inc.; Senior Vice President, Deputy General
Counsel and Assistant Secretary of Delaware Distributors, L.P.;
Senior Vice President, Secretary and Deputy General Counsel of
Delaware Management Trust Company; Senior Vice President,
Secretary and Deputy General Counsel of Delaware International
Holdings Ltd.; Senior Vice President, Secretary and Deputy
General Counsel of Delvoy, Inc.; Senior Vice President,
Secretary and Deputy General Counsel of Delaware Management
Company, Inc.; Senior Vice President, Secretary and Deputy
General Counsel of Delaware Service Company, Inc.; Senior Vice
President, Secretary and Deputy General Counsel of Delaware
Capital Management, Inc.; Secretary of Founders CBO
Corporation; Senior Vice President, Deputy General Counsel and
Secretary of Founders Holdings, Inc.; Senior Vice President,
Deputy General Counsel and Assistant Secretary of the
Registrant and each of the other investment companies in the
Delaware Investments family
General Partner of Tri-R Associates since 1989, 10001 Sandmeyer
Lane, Philadelphia, PA.
- ------------------------------------------------------------------------------------------------------------------------------------
Eric E. Miller Senior Vice President, Deputy General Counsel and Assistant
Secretary of Delaware Management Company (a series of Delaware
Management Business Trust); Senior Vice President, Deputy
General Counsel and Assistant Secretary of Delaware Management
Holdings, Inc.; Senior Vice President, Deputy General Counsel
and Assistant Secretary of DMH Corp.; Senior Vice President,
Deputy General Counsel and Assistant Secretary of Delvoy, Inc.;
Senior Vice President, Deputy General Counsel and Assistant
Secretary of Delaware Management Company, Inc.; Senior Vice
President, Deputy General Counsel and Assistant Secretary of
Delaware Management Business Trust; Senior Vice President,
Deputy General Counsel and Assistant Secretary of Delaware
Investment Advisers (a series of Delaware Management Business
Trust); Senior Vice President, Deputy General Counsel and
Assistant Secretary of Delaware Service Company, Inc.; Senior
Vice President, Deputy General Counsel and Assistant Secretary
of Delaware Capital Management, Inc.; Senior Vice President,
Deputy General Counsel and Assistant Secretary of Retirement
Financial Services, Inc.; Senior Vice President, Deputy General
Counsel and Assistant Secretary of Delaware Distributors, Inc.;
Senior Vice President, Deputy General Counsel and Assistant
Secretary of Delaware Distributors, L.P.; Senior Vice
President, Deputy General Counsel and Assistant Secretary of
Founders Holdings, Inc.; Senior Vice President, Deputy General
Counsel and Secretary of the Registrant and each of the other
investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its
Name and Principal Business Address* Affiliates and Other Positions and Offices Held
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
James L. Shields Senior Vice President, Chief Information Officer of Delaware
Management Company (a series of Delaware Management Business
Trust); Senior Vice President, Chief Information Officer of
Delaware Investment Advisers (a series of Delaware Management
Business Trust); Senior Vice President, Chief Information
Officer of Delaware Service Company, Inc.; Senior Vice
President, Chief Information Officer of Delaware Capital
Management Company, Inc.; Senior Vice President, Chief
Information Officer of Retirement Financial Services, Inc.;
Senior Vice President, Chief Information Officer of Delaware
Distributors, L.P.
- ------------------------------------------------------------------------------------------------------------------------------------
Gary T. Abrams Vice President/Equity Trading of Delaware Management Company (a
series of Delaware Management Business Trust); Vice
President/Equity Trading of Delaware Investment Advisers (a
series of Delaware Management Business Trust)
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher S. Adams Vice President/Equity Analyst of Delaware Management Company (a
series of Delaware Management Business Trust); Vice
President/Equity Analyst of Delaware Investment Advisers (a
series of Delaware Management Business Trust)
- ------------------------------------------------------------------------------------------------------------------------------------
Robert L. Arnold Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Capital
Management, Inc.; Vice President/Senior Portfolio Manager of
the Registrant and each of the other investment companies in
the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Marshall T. Bassett Vice President/Portfolio Manager of Delaware Management Company
(a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice
President/Portfolio Manager of each fund in the Delaware
Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher S. Beck Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of each fund in the Delaware
Investments family.
Trustee of New Castle County Pension Board since October 1992,
Wilmington DE.
- ------------------------------------------------------------------------------------------------------------------------------------
Richard E. Beister Vice President/Trading Operations of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Trading Operations of Delaware Investment Advisers (a
series of Delaware Management Business Trust)
- ------------------------------------------------------------------------------------------------------------------------------------
Lisa O. Brinkley Vice President/Compliance Director of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Compliance Director of Delaware Management Holdings,
Inc.; Vice President/Compliance Director of DMH Corp.; Vice
President/Compliance Director of Delvoy, Inc.; Vice
President/Compliance Director of Delaware Management Company,
Inc.; Vice President/Compliance Director of Delaware Management
Business Trust; Vice President/Compliance Director of Delaware
Investment Advisers (a series of Delaware Management Business
Trust);Vice President/Compliance Director of Delaware Service
Company, Inc.; Vice President/Compliance Director of Delaware
Capital Management, Inc.; Vice President/Compliance Director of
Retirement Financial Services, Inc.; Vice President/Compliance
Director/Assistant Secretary of Delaware Management Business
Trust; Vice President/Compliance Director of Delaware
Distributors, Inc.; Vice President/Compliance Director of
Delaware Distributors, L.P.; Vice President/Compliance Director
of the Registrant and each of the other investment companies in
the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its
Name and Principal Business Address* Affiliates and Other Positions and Offices Held
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Michael P. Buckley Vice President/Portfolio Manager/Senior Municipal Analyst of
Delaware Management Company (a series of Delaware Management
Business Trust); Vice President/Portfolio Manager/Senior
Municipal Analyst of Delaware Investment Advisers (a series of
Delaware Management Business Trust); Vice President/Portfolio
Manager/Senior Municipal Analyst of the Registrant and each of
the other investment companies in the Delaware Investments
family
- ------------------------------------------------------------------------------------------------------------------------------------
MaryEllen M. Carrozza Vice President/Client Services of Delaware Management Company
(a series of Delaware Management Business Trust);Vice
President/Client Services of Delaware Investment Advisers (a
series of Delaware Management Business Trust);Vice
President/Client Services of the Registrant and each of the
other investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen R. Cianci Vice President/Portfolio Manager of Delaware Management Company
(a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice
President/Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Mitchell L. Conery Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of the Registrant and each
of the other investment companies in the Delaware Investments
family
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy G. Connors Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of the Registrant and each
of the other investment companies in the Delaware Investments
family
- ------------------------------------------------------------------------------------------------------------------------------------
Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Capital
Management, Inc.; Vice President/Senior Portfolio Manager of
the Registrant and each of the other investment companies in
the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
George E. Deming Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of the Registrant and each
of the other investment companies in the Delaware Investments
family
- ------------------------------------------------------------------------------------------------------------------------------------
James P. Dokas Vice President/Portfolio Manager of Delaware Management Company
(a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice President/
Portfolio Manager of the Registrant and each of the other
investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Michael J. Dugan Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of the Registrant and each
of the other investment companies in the Delaware Investments
family
- ------------------------------------------------------------------------------------------------------------------------------------
Roger A. Early Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio of the Registrant and each of the
other investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its
Name and Principal Business Address* Affiliates and Other Positions and Offices Held
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Joel A. Ettinger Vice President/Taxation of Delaware Management Company (a
series of Delaware Management Business Trust);Vice
President/Taxation of Delaware Management Holdings, Inc.; Vice
President/Taxation of DMH Corp.; Vice President/Taxation of
Delvoy, Inc.; Vice President/Taxation of Delaware Management
Company, Inc.; Vice President/Taxation of Delaware Management
Business Trust; Vice President/Taxation of Delaware Investment
Advisers (a series of Delaware Management Business Trust);Vice
President/Taxation of Delaware Service Company, Inc.; Vice
President/Taxation of Delaware Capital Management, Inc.; Vice
President/Taxation of Retirement Financial Services, Inc.; Vice
President/Taxation of Delaware Distributors, Inc.; Vice
President/Taxation of Delaware Distributors, L.P.; Vice
President/Taxation of Founders Holdings, Inc.; Vice
President/Taxation of Founders CBO Corporation; Vice
President/Taxation of the Registrant and each of the other
investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph Fiorilla Vice President/Performance Analyst of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Performance Analyst of Delaware Investment Advisers
(a series of Delaware Management Business Trust)
- ------------------------------------------------------------------------------------------------------------------------------------
James A. Furgele Vice President/Investment Accounting of Delaware Management
Company (a series of Delaware Management Business Trust);Vice
President/Investment Accounting of Delaware Investment Advisers
(a series of Delaware Management Business Trust); Vice
President/Investment Accounting of Delaware Service Company,
Inc.; Vice President/Investment Accounting of the Registrant
and each of the other investment companies in the Delaware
Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas C. Gariepy(3) Vice President/Director of Corporate Communications of Delaware
Management Company (a series of Delaware Management Business
Trust); Vice President/Director of Corporate Communications of
Delaware Investment Advisers (a series of Delaware Management
Business Trust)
- ------------------------------------------------------------------------------------------------------------------------------------
Stuart M. George Vice President/Equity Trading of Delaware Management Company (a
series of Delaware Management Business Trust);Vice
President/Equity Trading of Delaware Investment Advisers (a
series of Delaware Management Business Trust)
- ------------------------------------------------------------------------------------------------------------------------------------
Barry Gladstein Vice President/Business Manager of Delaware Management Company
(a series of Delaware Management Business Trust);Vice
President/Business Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust)
- ------------------------------------------------------------------------------------------------------------------------------------
Paul Grillo Vice President/Portfolio Manager of Delaware Management Company
(a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice
President/Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Brian T. Hannon Vice President of Delaware Management Company (a series of
Delaware Management Business Trust); Vice President of Delaware
Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Senior Portfolio Manager of the
Registrant and each of the other investment companies in the
Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
John A. Heffern Vice President/Portfolio Manager of Delaware Management Company
(a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice
President/Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its
Name and Principal Business Address* Affiliates and Other Positions and Offices Held
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Elizabeth H. Howell Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of the Registrant and each
of the other investment companies in the Delaware Investments
family
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey W. Hynoski Vice President/Portfolio Manager of Delaware Management Company
(a series of Delaware Management Business Trust);Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust);Vice
President/Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Cynthia Isom Vice President/Portfolio Manager of Delaware Management Company
(a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice
President/Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Karina J. Ivstan Vice President/Strategic Planning of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Strategic Planning of Delaware Management Holdings,
Inc.; Vice President/Strategic Planning of Delaware Management
Business Trust; Vice President/Strategic Planning of Delaware
Investment Advisers (a series of Delaware Management Business
Trust); Vice President/Strategic Planning of Delaware Service
Company, Inc.; Vice President/Strategic Planning of Delaware
Capital Management, Inc.; Vice President/Strategic Planning of
Retirement Financial Services, Inc.; Vice President/Strategic
Planning of Delaware Management Trust Company; Vice
President/Strategic of Delaware Distributors, L.P.; Vice
President/Strategic Planning of the Registrant and each of the
other investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Audrey E. Kohart Vice President/Assistant Controller/Corporate Accounting of
Delaware Management Company (a series of Delaware Management
Business Trust); Vice President/Assistant Controller/Corporate
Accounting of Delaware Investment Advisers (a series of
Delaware Management Business Trust)
- ------------------------------------------------------------------------------------------------------------------------------------
Steven T. Lampe Vice President/Portfolio Manager of Delaware Management Company
(a series of Delaware Management Business Trust); Vice
President/ Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice
President/Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Philip Y. Lin Vice President, Associate General Counsel and Assistant
Secretary of Delaware Management Company (a series of Delaware
Management Business Trust); Vice President, Associate General
Counsel and Assistant Secretary of Delaware Investment Advisers
(a series of Delaware Management Business Trust); Vice
President, Associate General Counsel and Assistant Secretary of
Delaware Service Company, Inc.; Vice President, Associate
General Counsel and Assistant Secretary of Delaware Capital
Management, Inc.; Vice President, Associate General Counsel and
Assistant Secretary of Retirement Financial Services, Inc.;
Vice President, Associate General Counsel and Assistant
Secretary of Delaware Management Trust Company; Vice President,
Associate General Counsel and Assistant Secretary of Delaware
Distributors, L.P.; Vice President, Associate General Counsel
and Assistant Secretary of the Registrant and each of the other
investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Michael D. Mabry Vice President, Associate General Counsel and Assistant
Secretary of Delaware Management Company (a series of Delaware
Management Business Trust); Vice President, Associate General
Counsel and Assistant Secretary of Delaware Investment
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its
Name and Principal Business Address* Affiliates and Other Positions and Offices Held
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Advisers (a series of Delaware Management Business Trust);Vice
President, Associate General Counsel and Assistant Secretary of
Delaware Service Company, Inc.; Vice President, Associate
General Counsel and Assistant Secretary of Delaware Capital
Management, Inc.; Vice President, Associate General Counsel and
Assistant Secretary of Retirement Financial Services, Inc.;
Vice President, Associate General Counsel and Assistant
Secretary of Delaware Distributors, L.P.; Vice President,
Associate General Counsel and Assistant Secretary of the
Registrant and each of the other investment companies in the
Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Founders Holdings, Inc.,
President and Director of Founders CBO Corporation; Vice
President/Senior Portfolio Manager of the Registrant and each
of the other investment companies in the Delaware Investments
family.
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew M. McCullagh, Jr. Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of the Registrant and each
of the other investment companies in the Delaware Investments
family
- ------------------------------------------------------------------------------------------------------------------------------------
Francis X. Morris Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio of the Registrant and each of the
other investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Founders Holdings, Inc.,
Treasurer, Assistant Secretary and Director of Founders CBO
Corporation; Vice President/Senior Portfolio Manager of the
Registrant and each of the other investment companies in the
Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Robert A. Norton, Jr. Vice President/Research Analyst of Delaware Management Company
(a series of Delaware Management Business Trust); Vice
President/Research Analyst of Delaware Investment Advisers (a
series of Delaware Management Business Trust)
- ------------------------------------------------------------------------------------------------------------------------------------
David P. O'Connor Vice President, Associate General Counsel and Assistant
Secretary of Delaware Management Company (a series of Delaware
Management Business Trust); Vice President, Associate General
Counsel and Assistant Secretary of Delaware Investment Advisers
(a series of Delaware Management Business Trust);Vice
President, Associate General Counsel and Assistant Secretary of
Delaware Service Company, Inc.; Vice President, Associate
General Counsel and Assistant Secretary of Delaware Capital
Management, Inc.; Vice President, Associate General Counsel and
Assistant Secretary of Retirement Financial Services, Inc.;
Vice President, Associate General Counsel and Assistant
Secretary of Delaware Distributors, L.P.; Vice President,
Associate General Counsel and Assistant Secretary of the
Registrant and each of the other investment companies in the
Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Gary A. Reed Vice President/Senior Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of Delaware Investment
Advisers (a series of Delaware Management Business Trust); Vice
President/Senior Portfolio Manager of the Registrant and each
of the other investment companies in the Delaware Investments
family
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Positions and Offices with Delaware Management Company and its
Name and Principal Business Address* Affiliates and Other Positions and Offices Held
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Richard Salus Vice President/Assistant Controller of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/Assistant Controller of Delaware Investment Advisers
(a series of Delaware Management Business Trust); Vice
President/Assistant Controller of Delaware Management Trust
Company; Vice President/Assistant Controller of Delaware
International Holdings Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
Richard D. Siedel Vice President/Assistant Controller/Manager, Payroll of
Delaware Management Company (a series of Delaware Management
Business Trust); Vice President/Assistant Controller/Manager,
Payroll of Delaware Investment Advisers (a series of Delaware
Management Business Trust)
- ------------------------------------------------------------------------------------------------------------------------------------
Michael T. Taggart Vice President/Facilities and Administration Services of
Delaware Management Company (a series of Delaware Management
Business Trust); Vice President/Facilities and Administration
Services of Delaware Investment Advisers (a series of Delaware
Management Business Trust); Vice President/Facilities and
Administration Services of Delaware Service Company, Inc.; Vice
President/Facilities and Administration Services of Delaware
Distributors, L.P.
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas J. Trotman Vice President/Portfolio Manager of Delaware Management Company
(a series of Delaware Management Business Trust); Vice
President/Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice
President/Portfolio Manager of the Registrant and each of the
other investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
Lori P. Wachs Vice President/ Portfolio Manager of Delaware Management
Company (a series of Delaware Management Business Trust); Vice
President/ Portfolio Manager of Delaware Investment Advisers (a
series of Delaware Management Business Trust); Vice President/
Portfolio Manager of the Registrant and each of the other
investment companies in the Delaware Investments family
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Business Address is 1818 Market Street, Philadelphia, PA 19103.
- --------------------------------------------------------------------------------
(1) PRESIDENT AND DIRECTOR, Lincoln Investment Management, Inc. 1987 to present.
EXECUTIVE VICE PRESIDENT/CHIEF INVESTMENT OFFICER of Lincoln National
Corporation 1992 to present.
(2) PRESIDENT, DIRECTOR OF MARKETING AND SENIOR PORTFOLIO MANAGER, Marvin &
Palmer Associates, Wilmington, DE 1996-1998.
(3) VICE PRESIDENT/DIRECTOR OF PUBLIC RELATIONS, Liberty Funds Distributor,
Inc., Boston, MA, 1996-1998.
- --------------------------------------------------------------------------------
Item 27. Principal Underwriters.
(a) Delaware Distributors, L.P. serves as principal underwriter for all
the mutual funds in the Delaware Investments family.
(b) Information with respect to each director, officer or partner of
principal underwriter:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Underwriter Positions and Offices with Registrant
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Distributors, Inc. General Partner None
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Investment Advisers Limited Partner None
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Capital Management, Inc. Limited Partner None
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Underwriter Positions and Offices with Registrant
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Bruce D. Barton President and Chief Executive Officer None
- ------------------------------------------------------------------------------------------------------------------------------------
David K. Downes Executive Vice President/Chief Operating President and Chief Executive
Officer/Chief Financial Officer Officer/Chief Financial Officer/Chief
Operating Officer and Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Richard J. Flannery Executive Vice President/General Counsel Executive Vice President/General Counsel
- ------------------------------------------------------------------------------------------------------------------------------------
Diane M. Anderson Senior Vice President/Retirement None
Operations
- ------------------------------------------------------------------------------------------------------------------------------------
Michael P. Bishof Senior Vice President/Treasurer/ Senior Vice President/Treasurer
Investment Accounting
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel J. Brooks III Senior Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Terrence P. Cunningham Senior Vice President/National Sales None
Director, Financial Institutions
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph H. Hastings Senior Vice President/Treasurer/ Senior Vice President/Corporate
Corporate Controller Controller
- ------------------------------------------------------------------------------------------------------------------------------------
Joanne O. Hutcheson Senior Vice President/Human Resources Senior Vice President/Human Resources
- ------------------------------------------------------------------------------------------------------------------------------------
Bradley L. Kolstoe Senior Vice President/Western Division None
Sales, Independent Plannner and Insurance
Channel
- ------------------------------------------------------------------------------------------------------------------------------------
Richelle S. Maestro Senior Vice President/Deputy General Senior Vice President/Deputy General
Counsel/ Secretary Counsel/ Secretary
- ------------------------------------------------------------------------------------------------------------------------------------
Mac Macaulliffe Senior Vice President/Divisional Sales None
Manager
- ------------------------------------------------------------------------------------------------------------------------------------
J. Chris Meyer Senior Vice President/Director, Product None
Management
- ------------------------------------------------------------------------------------------------------------------------------------
Eric E. Miller Senior Vice President/Deputy General Senior Vice President/Deputy General
Counsel/Assistant Secretary Counsel/Secretary
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen C. Nell Senior Vice President/National Retirement None
Sales
- ------------------------------------------------------------------------------------------------------------------------------------
Henry W. Orvin Senior Vice President/Eastern Divisional None
Sales Manager
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher H. Price Senior Vice President/Channel Manager, None
Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas E. Sawyer Senior Vice President/Director, National None
Sales
- ------------------------------------------------------------------------------------------------------------------------------------
James L. Shields Senior Vice President/Chief Information None
Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Steven Sorenson Senior Vice President/National Director,
Independent Planner Channel None
- ------------------------------------------------------------------------------------------------------------------------------------
Richard P. Allen Vice President/Wholesaler, Midwest None
- ------------------------------------------------------------------------------------------------------------------------------------
David P. Anderson, Jr. Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Underwriter Positions and Offices with Registrant
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey H. Arcy Vice President/Wholesaler, None
South East Region
- ------------------------------------------------------------------------------------------------------------------------------------
Patrick A. Bearss Vice President/Wholesaler - Midwest None
- ------------------------------------------------------------------------------------------------------------------------------------
Gabriella Bercze Vice President/Wholesaler, Financial None
Institutions
- ------------------------------------------------------------------------------------------------------------------------------------
Larry D. Bridwell Vice President/Financial Institutions None
Wholesaler
- ------------------------------------------------------------------------------------------------------------------------------------
Lisa O. Brinkley Vice President/Compliance Director Vice President/Compliance Director
- ------------------------------------------------------------------------------------------------------------------------------------
Terrance L. Bussard Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel H. Carlson Vice President/Marketing Services None
- ------------------------------------------------------------------------------------------------------------------------------------
Larry Carr Vice President/Variable Annuity Sales None
Manager
- ------------------------------------------------------------------------------------------------------------------------------------
William S. Carroll Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Matthew Coldren Vice President/National Accounts None
- ------------------------------------------------------------------------------------------------------------------------------------
Patrick A Connelly Vice President/Registered Investment None
Adviser Sales
- ------------------------------------------------------------------------------------------------------------------------------------
Jessie V. Emery Vice President/Marketing Communications None
- ------------------------------------------------------------------------------------------------------------------------------------
Joel A. Ettinger Vice President/Taxation Vice President/Taxation
- ------------------------------------------------------------------------------------------------------------------------------------
Edward A. Foley Vice President/Marketing Communications None
- ------------------------------------------------------------------------------------------------------------------------------------
Susan T. Friestedt Vice President/Retirement Services None
- ------------------------------------------------------------------------------------------------------------------------------------
Douglas R. Glennon Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Darryl S. Grayson Vice President/Director, Internal Sales None
- ------------------------------------------------------------------------------------------------------------------------------------
Rhonda J. Guido Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald A. Haimowitz Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Edward J. Hecker Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
John R. Herron Vice President/Variable Annuity Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Steven N. Horton Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Dinah J. Huntoon Vice President/Product Manager, Equities None
- ------------------------------------------------------------------------------------------------------------------------------------
Karina J. Istvan Vice President/Strategic Planning Vice President/Strategic Planning
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher L. Johnston Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Michael J. Jordan Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Carolyn Kelly Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Richard M. Koerner Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Underwriter Positions and Offices with Registrant
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Ellen M. Krott Vice President/Marketing None
- ------------------------------------------------------------------------------------------------------------------------------------
John LeBoeuf Vice President/Independent Planner and None
Insurance Sales-East
- ------------------------------------------------------------------------------------------------------------------------------------
SooHee Lee Vice President/Fixed Income & None
International Product Management
- ------------------------------------------------------------------------------------------------------------------------------------
Philip Y. Lin Vice President/Associate General Vice President/Associate General
Counsel/Assistant Secretary Counsel/Assistant Secretary
- ------------------------------------------------------------------------------------------------------------------------------------
John R. Logan Vice President/Wholesaler, Financial None
Institutions
- ------------------------------------------------------------------------------------------------------------------------------------
Michael D. Mabry Vice President/Associate General Vice President/Associate General
Counsel/Assistant Secretary Counsel/Assistant Secretary
- ------------------------------------------------------------------------------------------------------------------------------------
Theodore T. Malone Vice President/ Independent Planner and None
Insurance Sales Wholesaler
- ------------------------------------------------------------------------------------------------------------------------------------
Debbie Marler Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Raymond G. McCarthy Vice President/National Accounts,
Independent Planner & Insurance Channel None
- ------------------------------------------------------------------------------------------------------------------------------------
Joanne C. McCranie Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Gregory J. McMillan Vice President/National Accounts None
- ------------------------------------------------------------------------------------------------------------------------------------
Nathan W. Medin Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Scott L. Metzger Vice President/Business Development None
- ------------------------------------------------------------------------------------------------------------------------------------
Jamie L. Meyer Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Roger J. Miller Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Christopher W. Moore Vice President/Variable Annuity Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew F. Morris Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Patrick L. Murphy Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Scott E. Naughton Vice President/Independent Planner & None
Insurance Wholesaler
- ------------------------------------------------------------------------------------------------------------------------------------
Julie Nusbaum Vice President/Wholesaler, Financial None
Institutions
- ------------------------------------------------------------------------------------------------------------------------------------
Julie A. Nye Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel J. O'Brien Vice President/Insurance Products None
- ------------------------------------------------------------------------------------------------------------------------------------
David P. O'Connor Vice President/Associate General Vice President/Associate General
Counsel/Assistant Secretary Counsel/Assistant Secretary
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph T. Owczarek Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Otis S. Page Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Name and Principal Business Address* Positions and Offices with Underwriter Positions and Offices with Registrant
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Mary Ellen Pernice-Fadden Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Eric Preus Vice President/Wrap Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Philip G. Rickards Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Laura E. Roman Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Robert A. Rosso Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Terri Lynn Sabby Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Richard Salus Vice President/Assistant Controller None
- ------------------------------------------------------------------------------------------------------------------------------------
Linda D. Shulz Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Gordon E. Searles Vice President/Client Services None
- ------------------------------------------------------------------------------------------------------------------------------------
Catherine A. Seklecki Vice President/Retirement Sales None
- ------------------------------------------------------------------------------------------------------------------------------------
John C. Shalloe Vice President/Wrap Fee Wholesaler, None
Western Region
- ------------------------------------------------------------------------------------------------------------------------------------
Edward B. Sheridan Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Kimberly Spangler Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Robert E. Stansbury Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Stephanie R. Szabo Vice President/Retirement Marketing None
- ------------------------------------------------------------------------------------------------------------------------------------
Michael T. Taggart Vice President/Facilities and None
Administration Services
- ------------------------------------------------------------------------------------------------------------------------------------
Julia R. Vander Els Vice President/Retirement Plan None
Communications
- ------------------------------------------------------------------------------------------------------------------------------------
Wayne W. Wagner Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
John A. Wells Vice President/Marketing Technology None
- ------------------------------------------------------------------------------------------------------------------------------------
Courtney S. West Vice President/Institutional Sales None
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew J. Whitaker Vice President/Wholesaler, Financial None
Institutions
- ------------------------------------------------------------------------------------------------------------------------------------
Scott Whitehouse Vice President/Wholesaler None
- ------------------------------------------------------------------------------------------------------------------------------------
Wesley Williams Vice President/Wholesaler
- ------------------------------------------------------------------------------------------------------------------------------------
Theodore V. Wood Vice President/Technical Systems Officer None
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
(c) Inapplicable.
<PAGE>
Item 28. Location of Accounts and Records.
All accounts and records are maintained in Philadelphia at 1818 Market
Street, Philadelphia, PA 19103 or One Commerce Square, Philadelphia, PA
19103, or in London at Third Floor, 80 Cheapside, London, England EC2V
6EE.
Item 29. Management Services. None.
Item 30. Undertakings. Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Philadelphia and Commonwealth of Pennsylvania on
this 29th day of November, 1999.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS
By /s/David K. Downes
----------------------------------------
David K. Downes
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------------------------------- ----------------------------- ----------------
<S> <C> <C>
President/Chief Executive Officer
Chief Operating Officer/Chief
Financial Officer
(Principal Executive Officer, Principal
/s/David K. Downes Financial Officer and Principal
- --------------------------------- Accounting Officer) and Trustee November 29, 1999
David K. Downes
/s/Wayne A. Stork Trustee November 29, 1999
- ---------------------------------
Wayne A. Stork
/s/ Walter P. Babich * Trustee November 29, 1999
- ---------------------------------
Walter P. Babich
/s/ John H. Durham * Trustee November 29, 1999
- ---------------------------------
John H. Durham
/s/ Anthony D. Knerr * Trustee November 29, 1999
- ---------------------------------
Anthony D. Knerr
/s/ Ann R. Leven * Trustee November 29, 1999
- ---------------------------------
Ann R. Leven
/s/Thomas F. Madison * Trustee November 29, 1999
- ---------------------------------
Thomas F. Madison
/s/Charles E. Peck * Trustee November 29, 1999
- ---------------------------------
Charles E. Peck
/s/ Jan L. Yeomans * Trustee November 29, 1999
- ---------------------------------
Jan L. Yeomans
*By /s/ David K. Downes
---------------------------------
David K. Downes
as Attorney-in-Fact for
each of the persons indicated
</TABLE>
