Delaware Group Equity Funds I: 485b Filing dated 2/22/06

485BPOS 1 dgefi485b.htm Delaware Group Equity Funds I: 485b Filing dated 2/22/06

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

File No. 002-10765
File No. 811-00249

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No.
/ /

Post-Effective Amendment No. 119 /X/

AND

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

Amendment No. 119

DELAWARE GROUP EQUITY FUNDS I
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(Exact Name of Registrant as Specified in Charter)

2005 Market Street, Philadelphia, Pennsylvania 19103-7094
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(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (800) 523-1918

David F. Connor, Esq., 2005 Market Street, Philadelphia, PA 19103-7094
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(Name and Address of Agent for Service)

Approximate Date of Public Offering: February 28, 2006

It is proposed that this filing will become effective:

/ / immediately upon filing pursuant to paragraph (b)
/X/ on February 28, 2006 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a) (1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a) (2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate:

/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment

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

This Post-Effective Amendment No. 119 to Registration File No. 002-10765
includes the following:

1. Facing Page

2. Contents Page

3. Part A - Prospectuses

4. Part B - Statement of Additional Information

5. Part C - Other Information

6. Signatures

7. Exhibits

VALUE EQUITY DELAWARE
INVESTMENTS(R)
A Member of Lincoln Financial Group

Prospectus FEBRUARY 28, 2006

DELAWARE BALANCED FUND
CLASS A o CLASS B o CLASS C o CLASS R

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.

Table of contents

Fund profile page
Delaware Balanced Fund

How we manage the Fund page
Our investment strategies
The securities we typically invest in
The risks of investing in the Fund
Disclosure of portfolio holdings information

Who manages the Fund page
Investment manager
Portfolio managers
Who's who?

About your account page
Investing in the Fund
Choosing a share class
Dealer compensation
How to reduce your sales charge
How to buy shares
Fair valuation
Retirement plans
How to redeem shares
Account minimums
Special services
Frequent trading of Fund shares
Dividends, distributions and taxes

Certain management considerations page

Financial highlights page

Glossary page

Profile: Delaware Balanced Fund

What is the Fund's goal?
Delaware Balanced Fund seeks a balance of capital appreciation, income and
preservation of capital. Although the Fund will strive to meet its goal, there
is no assurance that it will.

What are the Fund's main investment strategies?
Under normal circumstances, the Fund will generally invest at least 25% of its
net assets in equity securities and at least 25% of its net assets in
fixed-income securities, including high-yield fixed-income securities. We invest
in common stocks of established companies we believe have the potential for
long-term capital appreciation. In addition, we invest in various types of
fixed-income securities, including U.S. government securities and corporate
bonds. Funds with this mix of stocks and bonds are commonly known as balanced
funds.

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. Over time, the value of your investment in
the Fund will increase and decrease according to changes in the value of the
securities in the Fund's portfolio. This Fund will be affected primarily by
declines in stock and bond prices which can be caused by a decline in the stock
or bond market, an adverse change in interest rates or poor performance in
specific industries or companies.

For a more complete discussion of risk, please see "The risks of investing in
the Fund" on page [____].

An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.

Who should invest in the Fund
o Investors with long-term financial goals.
o Investors seeking stocks and bonds combined in a single investment.
o Investors seeking modest quarterly income.
o Investors seeking a measure of capital preservation.

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.

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 advisor to
determine whether it is an appropriate choice for you.

How has Delaware Balanced Fund performed?

This bar chart and table can help you evaluate the risks of investing in the
Fund. We show how annual returns for the Fund's Class A shares have varied over
the past ten calendar years, as well as the average annual returns of the Class
A, B, C and R shares for one-year, five-year and ten-year or lifetime periods,
as applicable. The Fund's past performance (before and after taxes) is not
necessarily an indication of how it will perform in the future. The returns
reflect any relevant expense caps in effect during these periods. The returns
would be lower without the expense caps. Please see the footnotes on page [___]
for additional information about the expense caps.

[GRAPHIC OMITTED: BAR CHART SHOWING YEAR-BY-YEAR TOTAL RETURN (CLASS A)]

Year-by-year total return (Class A)

-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
13.94% 24.47% 17.40% -7.98% -2.77% -7.62% -15.82% 18.52% 5.50% 3.76%
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

During the periods illustrated in this bar chart, Class A's highest quarterly
return was 15.07% for the quarter ended December 31, 1998 and its lowest
quarterly return was -16.52% for the quarter ended September 30, 2001.

The maximum Class A sales charge of 5.75%, which is normally deducted when you
purchase shares, is not reflected in the total returns in the previous paragraph
or in the bar chart. If this fee were included, the returns would be less than
those shown. The average annual returns in the table below do include the sales
charge.

Average annual returns for periods ending 12/31/05

------------------------------------------ ---------- ----------- ------------
1 year 5 years 10 years or
lifetime**
------------------------------------------ ---------- ----------- ------------
Class A return before taxes (2.21)% (1.00)% (3.55)%
------------------------------------------ ---------- ----------- ------------
Class A return after taxes on
distributions (3.01)% (1.59)% 1.77%
------------------------------------------ ---------- ----------- ------------
Class A return after taxes on
distributions and sale of Fund shares (1.44)% (1.18)% 2.14%
------------------------------------------ ---------- ----------- ------------
Class B return before taxes* (1.05)% (1.02)% 3.51%
------------------------------------------ ---------- ----------- ------------
Class C return before taxes* 1.89% (0.60)% 3.35%
------------------------------------------ ---------- ----------- ------------
Class R return before taxes 3.39% N/A 6.63%
------------------------------------------ ---------- ----------- ------------
S&P 500(R)Index (reflects no deduction
for fees, expenses or taxes) 4.91% 0.54% 9.07%
------------------------------------------ ---------- ----------- ------------
Lehman Brothers Aggregate Bond Index
(reflects no deduction for fees,
expenses or taxes) 2.43% 5.87% 6.16%
------------------------------------------ ---------- ----------- ------------

The Fund's returns above are compared to the performance of the S&P 500 Index
and the Lehman Brothers Aggregate Bond Index. You should remember that, unlike
the Fund, the indexes are unmanaged and do not include the costs of operating a
mutual fund, such as the costs of buying, selling and holding securities.
Neither index is a perfect comparison to the Fund since the S&P 500 Index does
not include fixed-income securities and the Lehman Brothers Aggregate Bond Index
does not include stocks. Maximum sales charges are included in the Fund returns
shown above.

After-tax performance is presented only for Class A shares of the Fund. The
after-tax returns for other Fund classes may vary. Actual after-tax returns
depend on the investor's individual tax situation and may differ from the
returns shown. After-tax returns are not relevant for shares held in
tax-deferred investment vehicles such as employer-sponsored 401(k) plans and
individual retirement accounts. The after-tax returns shown are calculated using
the highest individual federal marginal income tax rates in effect during the
periods presented and do not reflect the impact of state and local taxes. The
after-tax rate used is based on the current tax characterization of the elements
of the Fund's returns (e.g., qualified vs. non-qualified dividends) and may be
different than the final tax characterization of such elements. Past
performance, both before and after taxes, is not a guarantee of future results.

* Total returns assume redemption of shares at end of period. Lifetime
returns for Class B shares reflect conversion to Class A shares after 8
years. If shares were not redeemed, the returns for Class B would be 2.95%,
-0.60% and 3.51% for the one-year, five-year and 10-year periods,
respectively. Returns for Class C would be 2.89%, -0.60% and 3.35% for the
one-year, five-year and 10-year periods, respectively.
** Lifetime returns are shown if the Fund or Class existed for less than 10
years. The inception date for Class R shares of the Fund was June 2, 2003.
The S&P 500 Index and Lehman Brothers Aggregate Bond Index returns are for
Class A's ten-year period. The S&P 500 Index returns for the Class R
lifetime period was 12.40%. The Lehman Brothers Aggregate Bond Index
returns for the Class R lifetime period was 2.76%.

What are the Fund's fees and expenses?

CLASS A B C R
----------------------------------------- --------------------------------------------- --------- --------- --------- ---------
Sales charges are fees paid directly Maximum sales charge (load) imposed 5.75% none none none
from your investments when you buy on purchases as a percentage of
or sell shares of the Fund. You do not offering price
pay sales charges when you buy or
sell Class R shares. --------------------------------------------- --------- --------- --------- ---------
Maximum contingent deferred sales charge
(load) as a percentage of original
purchase price or redemption price,
whichever is lower none(1) 4.00%(2) 1.00%(3) none
--------------------------------------------- --------- --------- --------- ---------
Maximum sales charge (load) imposed on
reinvested dividends none none none none
--------------------------------------------- --------- --------- --------- ---------
Redemption fees none none none none
--------------------------------------------- --------- --------- --------- ---------
Exchange fees none none none none

----------------------------------------- --------------------------------------------- --------- --------- --------- ---------
Annual fund operating expenses are Management fees 0.65% 0.65% 0.65% 0.65%
deducted from the Fund's assets.
--------------------------------------------- --------- --------- --------- ---------
Distribution and service (12b-1) fees (4) 0.26%(5) 1.00% 1.00% 0.60%(5)
--------------------------------------------- --------- --------- --------- ---------
Other expenses 0.33% 0.33% 0.33% 0.33%
--------------------------------------------- --------- --------- --------- ---------
Total annual fund operating expenses 1.24% 1.98% 1.98% 1.58%
--------------------------------------------- --------- --------- --------- ---------
Fee waivers and payment(5) (0.04)% N/A N/A (0.10)%
--------------------------------------------- --------- --------- --------- ---------
Net expenses 1.20% 1.98% 1.98% 1.48%
--------------------------------------------- --------- --------- --------- ---------
--------------------------------------------------------------------------------

CLASS(6) A B(7) B(7) C C R
(if redeemed) (if redeemed)
----------------------------------------- ------------- ----------- ----------- ----------- ----------- ----------- -----------
This example is intended to help you 1 year $690 $201 $601 $201 $301 $151
compare the cost of investing in the ------------- ----------- ----------- ----------- ----------- ----------- -----------
Fund to the cost of investing in other 3 years $942 $621 $896 $621 $621 $489
mutual funds with similar investment ------------- ----------- ----------- ----------- ----------- ----------- -----------
objectives. We show the cumulative 5 years $1,213 $1,068 $1,293 $1,068 $1,068 $851
amount of Fund expenses on a hypothetical ------------- ----------- ----------- ----------- ----------- ----------- -----------
investment of $10,000 with an annual 5% 10 years $1,985 $2,115 $2,115 $2,306 $2,306 $1,870
return over the time shown.(6) This ------------- ----------- ----------- ----------- ----------- ----------- -----------
example reflects the net operating
expenses with expense waivers for the
one-year contractual period and the
total operating expenses without
waivers for years two through ten.
This is an example only, and does
not represent future expenses, which
may be greater or less than those
shown here.

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

(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 advisor who is
paid a commission, a contingent deferred sales charge will apply to certain
redemptions made within two years of purchase. Additional Class A purchase
options that involve a contingent deferred sales charge may be permitted
from time to time and will be disclosed in the Prospectus if they are
available.

(2) If you redeem Class B shares during the first year after you buy them, you
will pay a contingent deferred sales charge of 4.00%, which declines to
3.25% during the second year, 2.75% during the third year, 2.25% during the
fourth and fifth years, 1.50% during the sixth year and 0% thereafter.

(3) Class C shares redeemed within one year of purchase are subject to a 1.00%
contingent deferred sales charge.

(4) The Board of Trustees adopted a formula for calculating 12b-1 plan expenses
for the Fund's Class A shares that went into effect on June 1, 1992. Under
this formula, 12b-1 plan expenses will not be more than 0.30% or less than
0.10% of average daily net assets. Class B and Class C shares are each
subject to a 12b-1 fee of 1.00% of average daily net assets. Class R shares
are subject to a 12b-1 fee of 0.60% of average daily net assets.

(5) The Fund's distributor has contracted to limit the Class A and Class R
shares' 12b-1 fee through February 28, 2007 to no more than 0.25% and
0.50%, respectively, of average daily net assets.

(6) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here.

(7) The Class B example reflects the conversion of Class B shares to Class A
shares after eight years. Information for the ninth and tenth years
reflects expenses of the Class A shares.

How we manage the Fund

Our investment strategies
We research individual companies and analyze economic and market conditions,
seeking to identify the securities or market sectors that we believe are the
best investments for the Fund. Following are descriptions of how the portfolio
management team pursues the Fund's investment goals.

We take a disciplined approach to investing, combining investment strategies and
risk management techniques that can help shareholders meet their goals.

We seek capital appreciation by generally investing at least 25% of the Fund's
net assets in equity securities of primarily large-capitalization companies that
we believe have long-term capital appreciation potential. We will typically
follow a value-oriented investment philosophy in selecting stocks for the Fund
using a research-intensive approach that considers factors such as:

o security prices that reflect a market valuation that is judged to be below
the estimated present or future value of the company;
o favorable earnings growth prospects;
o expected above-average return on equity and dividend yield;
o the financial condition of the issuer; and
o various qualitative factors.

While our investment philosophy will typically be value-oriented, we also may
invest in issues with growth characteristics during market cycles when growth
stocks appear attractive.

To seek current income and help preserve capital, we generally invest at least
25% of the Fund's net assets in various types of fixed-income securities,
including U.S. government and government agency securities, corporate bonds and
high-yield securities. Each bond in the portfolio will typically have a maturity
between one and 30 years, and the average maturity of the portfolio will
typically be between one and 10 years.

We conduct ongoing analysis of the different markets to determine the
appropriate mix of stocks and bonds for the current economic and investment
environment.

The Fund's investment objective is non-fundamental. This means that the Board of
Trustees may change the objective without obtaining shareholder approval. If the
objective were changed, we would notify shareholders before the change in the
objective became effective.

The securities we typically invest in
Stocks offer investors the potential for capital appreciation. Certain stocks
that we invest in may pay dividends and others may not. Fixed income securities
offer the potential for greater income payments than stocks, and also may
provide capital appreciation.

------------------------------------------------------------------ ----------------------------------------------------------------
Securities How we use them
------------------------------------------------------------------ ----------------------------------------------------------------
Common stocks: Securities that represent shares of ownership in a Under normal circumstances, we generally invest at least 25% of
corporation. Stockholders participate in the corporation's the Fund's net assets in common stocks.
profits and losses, proportionate to the number of shares they
own.

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Convertible securities: Usually preferred stocks or corporate The Fund may invest in convertible securities; however, we will
bonds that can be exchanged for a set number of shares of common not invest more than 10% of net assets in convertible
stock at a predetermined price. These securities offer higher securities that are rated below investment grade by a
appreciation potential than nonconvertible bonds and greater nationally recognized statistical ratings organization (NRSRO)
income potential than nonconvertible preferred stocks. or in securities that are unrated but deemed equivalent to
non-investment grade.

------------------------------------------------------------------ ----------------------------------------------------------------
Mortgage-backed securities: Fixed-income securities that There is no limit on government-related mortgage-backed
represent pools of mortgages, with investors receiving principal securities or on fully collateralized privately issued
and interest payments as the underlying mortgage loans are paid mortgage-backed securities.
back. Many are issued and guaranteed against default by the U.S.
government or its agencies or instrumentalities, such as the We may invest up to 20% of net assets in mortgage-backed
Federal Home Loan Mortgage Corporation, Federal National Mortgage securities issued by private companies whether or not the
Association and the Government National Mortgage Association. securities are 100% collateralized. However, these securities
Others are issued by private financial institutions, with some must be rated at the time of purchase in one of the four
fully collateralized by certificates issued or guaranteed by the highest categories by an NRSRO. The privately issued securities
U.S. government or its agencies or instrumentalities. we invest in are either CMOs or REMICs (see below).

------------------------------------------------------------------ ----------------------------------------------------------------
Collateralized mortgage obligations (CMOs) and real estate See mortgage-backed securities above.
mortgage investment conduits (REMICs): Privately issued
mortgage-backed bonds whose underlying value is the mortgages
that are grouped into different pools according to their maturity.

------------------------------------------------------------------ ----------------------------------------------------------------
Asset-backed securities: Bonds or notes backed by accounts The Fund invests only in asset-backed securities rated in one
receivable including home equity, automobile or credit loans. of the four highest categories by an NRSRO.

------------------------------------------------------------------ ----------------------------------------------------------------
Corporate bonds: Debt obligations issued by a corporation. We focus on bonds rated in one of the four highest categories
by an NRSRO (or if unrated, deemed equivalent), with maturities
between one and 30 years.

------------------------------------------------------------------ ----------------------------------------------------------------
High-yield corporate bonds: Debt obligations issued by a The Fund may invest up to 20% of net fixed-income assets in
corporation and rated lower than investment grade by an NRSRO high-yield corporate bonds. Emphasis is typically on those
such as S&P or Moody's. High-yield bonds, also known as "junk rated BB or Ba by an NRSRO.
bonds," are issued by corporations that have lower credit quality
and may have difficulty repaying principal and interest. We carefully evaluate an individual company's financial
situation, its management, the prospects for its industry and
the technical factors related to its bond offering. Our goal is
to identify those companies that we believe will be able to
repay their debt obligations in spite of poor ratings. The Fund
may invest in unrated bonds if we believe their credit quality
is comparable to the rated bonds we are permitted to invest in.
Unrated bonds may be more speculative in nature than rated
bonds.

------------------------------------------------------------------ ----------------------------------------------------------------
Repurchase agreements: An agreement between a buyer of Typically, we use repurchase agreements as a short-term
securities, such as the Fund, and a seller of securities, in investment for the Fund's cash position. In order to enter into
which the seller agrees to buy the securities back within a these repurchase agreements, the Fund must have collateral of
specified time at the same price the buyer paid for them, plus an 102% of the repurchase price. The Fund may not have more than
amount equal to an agreed upon interest rate. Repurchase 10% of its net assets in repurchase agreements with maturities
agreements are often viewed as equivalent to cash. of over seven days. The Fund will only enter into repurchase
agreements in which the collateral is comprised of U.S.
government securities.

------------------------------------------------------------------ ----------------------------------------------------------------
American Depositary Receipts (ADRs): ADRs are issued by a U.S. We may invest without limitation in ADRs.
bank and represent the bank's holdings of a stated number of
shares of a foreign corporation. An ADR entitles the holder to
all dividends and capital gains earned by the underlying foreign
shares. ADRs are typically bought and sold on U.S. securities
exchanges in the same way as other U.S. securities.

------------------------------------------------------------------ ----------------------------------------------------------------
Options and futures: Options represent a right to buy or sell a At times when we anticipate adverse conditions, we may want to
security or a group of securities at an agreed upon price at a protect gains on securities without actually selling them. We
future date. The purchaser of an option may or may not choose to might buy or sell options or futures to neutralize the effect
go through with the transaction. The seller of an option, of any price declines, without buying or selling a security, or
however, must go through with the transaction if its purchaser as a hedge against changes in interest rates. We might also
exercises the option. use options or futures to gain exposure to a particular market
segment without purchasing individual securities in that
Futures contracts are agreements for the purchase or sale of a segment or to earn additional income for the Fund.
security or a group of securities at a specified price, on a
specified date. Unlike purchasing an option, a futures contract Use of these strategies can increase the operating costs of the
must be executed unless it is sold before the settlement date. Fund and can lead to loss of principal.

Options and futures are generally considered to be derivative
securities.

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Restricted securities: Privately placed securities whose resale We may invest in privately placed securities including those
is restricted under U.S. securities laws. that are eligible for resale only among certain institutional
buyers without registration, commonly known as "Rule 144A
Securities." Restricted securities that are determined to be
illiquid may not exceed the Fund's 10% limit on illiquid
securities, which is described below.

------------------------------------------------------------------ ----------------------------------------------------------------
Interest rate swap, index swap and credit default swap We may use interest rate swaps to adjust the Fund's sensitivity
agreements: In an interest rate swap, a fund receives payments to interest rates or to hedge against changes in interest
from another party based on a variable or floating interest rate, rates. Index swaps may be used to gain exposure to markets
in return for making payments based on a fixed interest rate. An that the Fund invests in, such as the corporate bond market.
interest rate swap can also work in reverse with a fund receiving We may also use index swaps as a substitute for futures or
payments based on a fixed interest rate and making payments based options contracts if such contracts are not directly available
on a variable or floating interest rate. In an index swap, a to the Fund on favorable terms. We may enter into credit
fund receives gains or incurs losses based on the total return of default swaps in order to hedge against a credit event, to
a specified index, in exchange for making interest payments to enhance total return or to gain exposure to certain securities
another party. An index swap can also work in reverse with a or markets.
fund receiving interest payments from another party in exchange
for movements in the total return of a specified index. In a
credit default swap, a fund may transfer the financial risk of a
credit event occurring (a bond default, bankruptcy,
restructuring, etc.) on a particular security or basket of
securities to another party by paying that party a periodic
premium; likewise, a fund may assume the financial risk of a
credit event occurring on a particular security or basket of
securities in exchange for receiving premium payments from
another party. Interest rate swaps, index swaps and credit
default swaps may be considered to be illiquid.

------------------------------------------------------------------ ----------------------------------------------------------------
Illiquid securities: Securities that do not have a ready market, We may invest up to 10% of the Fund's net assets in illiquid
and cannot be easily sold within seven days at approximately the securities.
price at which a fund has valued them.

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

The Fund may also invest in other securities, including real estate investment
trusts, rights and warrants to purchase common stock, U.S. Treasury securities
and foreign securities. Please see the Statement of Additional Information (SAI)
for additional information on these securities as well as those listed in the
table above.

Lending securities The Fund may lend up to 25% of its assets to qualified
brokers, dealers and institutional investors for use in their securities
transactions. These transactions may generate additional income for the Fund.

Purchasing securities on a when-issued or delayed delivery basis The Fund may
buy or sell securities on a when-issued or delayed delivery basis; that is,
paying for securities before delivery or taking delivery at a later date. The
Fund will designate cash or securities in amounts sufficient to cover its
obligations, and will value the designated assets daily.

Temporary defensive positions In response to unfavorable market conditions, the
Fund may make temporary investments in cash or cash equivalents. These
investments may not be consistent with the Fund's investment objective. To the
extent that the Fund holds such instruments, the Fund may be unable to achieve
its investment objective.

Portfolio turnover It is possible that the Fund's portfolio turnover rate will
exceed 100%. A turnover rate of 100% would occur if, for example, a fund bought
and sold all of the securities in its portfolio once in the course of a year or
frequently traded a single security. A high rate of portfolio turnover in any
year may increase brokerage commissions paid and could generate taxes for
shareholders on realized investment gains.

The risks of investing in the Fund
Investing in any mutual fund involves risk, including the risk that you may
receive little or no return on your investment, and the risk that you may lose
part or all of the money you invest. Before you invest in the Fund, you should
carefully evaluate the risks. Because of the nature of the Fund, you should
consider your investment to be a long-term investment that typically provides
the best results when held for a number of years. The table below describes the
chief risks you assume when investing in the Fund. Please see the SAI for
further discussion of these risks and other risks not discussed here.

------------------------------------------------------------------ ----------------------------------------------------------------
Risks How we strive to manage them
------------------------------------------------------------------ ----------------------------------------------------------------
Market risk is the risk that all or a majority of the securities We maintain a long-term investment approach and focus on
in a certain market-- like the stock or bond market-- will securities we believe can appreciate over an extended time
decline in value because of factors such as economic conditions, frame regardless of interim market fluctuations. We do not try
future expectations or investor confidence. to predict overall market movements. Although we may hold
securities for any amount of time, we generally do not trade
Index swaps are subject to the same market risks as the for short-term purposes.
investment market or sector that the index represents. Depending
on the actual movements of the index and how well the portfolio We diversify the Fund's assets among two major categories of
manager forecasts those movements, a fund could experience a investments-- stocks and bonds-- which tend to increase and
higher or lower return than anticipated. decline in value in different economic or investment conditions.

In evaluating the use of an index swap, we carefully consider
how market changes could affect the swap and how that compares
to us investing directly in the market the swap is intended to
represent.

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Industry and security risk: Industry risk is the risk that the We limit the amount of the Fund's assets invested in any one
value of securities in a particular industry will decline because industry and in any individual security. We also follow a
of changing expectations for the performance of that industry. rigorous selection process before choosing securities and
continually monitor them while they remain in the portfolio.
Securities risk is the risk that the value of an individual stock
or bond will decline because of changing expectations for the
performance of the individual company issuing the stock or bond.

------------------------------------------------------------------ ----------------------------------------------------------------
Interest rate risk is the risk that securities, particularly We do not try to increase return by predicting and aggressively
bonds with longer maturities, will decrease in value if interest capitalizing on interest rate moves. Instead, we aim to keep
rates rise. the interest rate risk similar to the Lehman Brothers Aggregate
Bond Index.
Swaps may be particularly sensitive to interest rate changes.
Depending on the actual movements of interest rates and how well We will not invest in swaps with maturities of more than two
the portfolio manager anticipates them, a fund could experience a years. Each business day we will calculate the amount the Fund
higher or lower return than anticipated. must pay for swaps it holds and will segregate cash or other
liquid securities to cover that amount.

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Credit risk is the risk that there is the possibility that a Our careful, credit-oriented bond selection and our commitment
bond's issuer will be unable to make timely payments of interest to hold a diversified selection of high-yield bonds are
and principal. designed to manage this risk. We will limit the Fund's
investments in high-yield bonds to 20% of the Fund's net assets
Investing in so-called "junk" or "high-yield" bonds entails the allocated to fixed-income securities (typically no more than 8%
risk of principal loss, which may be greater than the risk of the Fund's aggregate net assets).
involved in investment grade bonds. High-yield bonds are
sometimes issued by companies whose earnings at the time of
issuance are less than the projected debt service on the junk
bonds.

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Foreign risk is the risk that foreign securities may be adversely We typically invest only a small portion of the Fund's
affected by political instability, changes in currency exchange portfolio in foreign securities. When we do purchase foreign
rates, foreign economic conditions or inadequate regulatory and securities, they are often denominated in U.S. dollars. We also
accounting standards. tend to avoid markets where we believe accounting principles or
the regulatory structure are underdeveloped.

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Liquidity risk is the possibility that securities cannot be We limit exposure to illiquid securities to no more than 10% of
readily sold within seven days at approximately the price that a the Fund's net assets.
fund values them.
Swap agreements will be treated as illiquid securities, but
swap dealers may be willing to repurchase interest rate swaps.

------------------------------------------------------------------ ----------------------------------------------------------------
Futures and options risk is the possibility that a fund may We will buy and sell options and futures for defensive
experience a significant loss if it employs an options or futures purposes, such as to protect gains in the portfolio without
strategy related to a security or a market index and that actually selling a security, to neutralize the impact of
security or index moves in the opposite direction from what the interest rate changes or to earn additional income. We will not
portfolio manager anticipated. Futures and options also involve use futures and options for speculative reasons or in an effort
additional expenses, which could reduce any benefit or increase to enhance return.
any loss to a fund from using the strategy.

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Derivatives Risk is the possibility that a fund may experience a We will use derivatives for defensive purposes, such as to
significant loss if it employs a derivatives strategy (including protect gains or hedge against potential losses in the
a strategy involving swaps such as interest rate swaps, index portfolio without actually selling a security, to neutralize
swaps and credit default swaps) related to a security or a the impact of interest rate changes, to affect diversification
securities index and that security or index moves in the opposite or to earn additional income. We will not use derivatives for
direction from what the portfolio manager had anticipated. reasons inconsistent with our investment objectives.
Another risk of derivative transactions is the creditworthiness
of the counterparty because the transaction depends on the
willingness and ability of the counterparty to fulfill its
contractual obligations. Derivatives also involve additional
expenses, which could reduce any benefit or increase any loss to
a fund from using the strategy.

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

Disclosure of portfolio holdings information
A description of the Fund's policies and procedures with respect to the
disclosure of the Fund's portfolio securities is available in the Fund's SAI.

Who manages the Fund

Investment manager
The Fund is managed by Delaware Management Company, a series of Delaware
Management Business Trust, which is an indirect, wholly owned subsidiary of
Delaware Management Holdings, Inc. Delaware Management Company makes investment
decisions for the Fund, manages the Fund's business affairs and provides daily
administrative services. For its services to the Fund, the manager was paid an
aggregate fee of 0.65% of average daily net assets for the last fiscal year.

A discussion of the basis for the Board of Trustees' approval of the Fund's
investment advisory contract is available in the Fund's annual report to
shareholders for the fiscal year ended October 31, 2005.

Portfolio managers
D. Tysen Nutt, Jr., Jordan L. Irving, Anthony A. Lombardi and Robert A. Vogel,
Jr. have primary responsibility for making the day-to-day investment decisions
for the equity portion of the Fund. Messrs. Nutt, Irving, Lombardi and Vogel
assumed responsibility for the Fund in February 2005.

Paul Grillo, Stephen R. Cianci and Timothy L. Rabe have primary responsibility
for making day-to-day investment decisions for the fixed-income portion of the
Fund. Messrs. Grillo and Cianci have been co-managing the fixed-income portion
of the Fund since April 2000. Mr. Rabe assumed responsibility for the Fund in
February 2005.

D. Tysen Nutt, Jr., Senior Vice President/Senior Portfolio Manager, joined
Delaware Investments in 2004. Prior to that, Mr. Nutt graduated from Dartmouth
College with a BA. Mr. Nutt began his investment career in 1983 at Dean Witter
Reynolds where he advanced to Vice President, Investments. In 1988, he joined
investment advisor Van Deventer & Hoch (V&H), where he managed large cap value
portfolios for both institutions and private clients. As a Senior Vice President
at V&H, he was a member of the firm's Management Committee and directed new
business development in addition to his portfolio management duties. Mr. Nutt
moved to Merrill Lynch Investment Managers in 1994 and later served as leader of
the U.S. Active Large Cap Value Team, managing mutual funds and separate
accounts for institutions and private clients. He is a member of the New York
Society of Security Analysts and the CFA Institute.

Jordan L. Irving, Vice President/Senior Portfolio Manager, joined Delaware
Investments in 2004. Prior to that, Mr. Irving graduated from Yale University
with a BA in American Studies and earned a Special Diploma in Social Studies at
Oxford University the following year. He joined Merrill Lynch Investment
Managers (MLIM) as a Portfolio Manager in 1998. In 2004, Mr. Irving joined
Delaware Investments as Vice President/Senior Portfolio Manager. While working
for MLIM, Mr. Irving competed for The United States National Rowing Team,
winning a gold medal at the 1997 World Rowing Championships in Aiguebelette,
France.

Anthony A. Lombardi, Vice President/Senior Portfolio Manager, joined Delaware
Investments in 2004. Prior to that, Mr. Lombardi graduated from Hofstra
University with a BBA and MBA in Finance. Mr. Lombardi's first financial
services position was as an Investment Analyst with Crossland Savings, FSB,
Brooklyn, NY from 1989 to 1990. He started at Dean Witter Reynolds, Inc. as a
Research Assistant in 1990 and rose to the position of Vice President, Research
Analyst, which he held from 1993 to 1997. He then moved to Merrill Lynch
Investment Managers (MLIM) in 1998, joining the Capital Management Group, and
became a Portfolio Manager with the U.S. Active Large Cap Value Team in 2000. He
departed MLIM as a Director. Mr. Lombardi is a CFA charterholder.

Robert A. Vogel, Jr., Vice President/Senior Portfolio Manager, joined Delaware
Investments in 2004. Prior to that, Mr. Vogel graduated from Loyola College in
Maryland, earning both his BBA and MS in Finance. He earned his MBA with a
concentration in Finance at the Wharton School of Business at the University of
Pennsylvania. Mr. Vogel started his financial services career as a Financial
Consultant with Merrill Lynch in 1992. He then moved to Merrill Lynch Investment
Managers (MLIM) in 1997, joining the Capital Management Group, and became a
Portfolio Manager with the U.S. Active Large Cap Value Team in 1998. He departed
MLIM as a Director. In 2004, Mr. Vogel joined Delaware Investments as Vice
President/Senior Portfolio Manager. Mr. Vogel is a CFA charterholder.

Paul Grillo, Senior Vice President/Senior Portfolio Manager, holds a BA in
business management from North Carolina State University and an MBA in finance
from Pace University. Prior to joining Delaware Investments in 1993, Mr. Grillo
served as mortgage strategist and trader at the Dreyfus Corporation. He also
served as mortgage strategist and portfolio manager for the Chemical Investment
Group and as financial analyst at Chemical Bank. Mr. Grillo is a CFA
charterholder.

Stephen R. Cianci, Senior Vice President/Senior Portfolio Manager, holds a BS
and an MBA in finance from Widener University. He joined Delaware Investments in
1992 and assumed responsibility for maintaining the Fixed-Income Department's
investment grade analytical systems. These responsibilities included portfolio
analysis and the analysis of mortgage-backed and asset-backed securities. Mr.
Cianci is an Adjunct Professor of finance at Widener University and a CFA
charterholder.

Timothy L. Rabe, Senior Vice President/Senior Portfolio Manager, received a
bachelor's degree in finance from the University of Illinois. Prior to joining
Delaware Investments in 2000, Mr. Rabe was a high-yield portfolio manager for
Conseco Capital Management. Before that, he worked as a tax analyst for The
Northern Trust Company. He is a CFA charterholder.

The SAI for the Fund provides additional information about the portfolio
managers' compensation, other accounts managed by the portfolio managers and the
portfolio managers' ownership of Fund shares.

Who's who?
This diagram shows the various organizations involved in 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
Investment manager Custodian
Delaware Management Company JPMorgan Chase Bank
2005 Market Street 4 Chase Metrotech Center
Philadelphia, PA 19103-7094 The Fund Brooklyn, NY 11245

Distributor Service agent
Delaware Distributors, L.P. Delaware Service Company, Inc.
2005 Market Street 2005 Market Street
Philadelphia, PA 19103-7094 Philadelphia, PA 19103-7094

Financial intermediary wholesaler
Lincoln Financial Distributors, Inc.
2001 Market Street
Philadelphia, PA 19103-7055

Portfolio managers
(see page [__] for details)

Financial advisors

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. Generally, at least 40% of the board of trustees must be independent of
the fund's investment manager and distributor. However, the Delaware Balanced
Fund relies on certain exemptive rules adopted by the SEC that require its Board
of Trustees to be comprised of a majority of such independent Trustees. These
independent fund Trustees, in particular, are advocates for shareholder
interests.

Investment manager An investment manager is a company responsible for selecting
portfolio investments consistent with the objective and policies stated in the
mutual fund's prospectus. The investment manager places portfolio orders with
broker/dealers and is responsible for obtaining the best overall execution of
those orders. A written contract between a mutual fund and its investment
manager specifies the services the manager performs. Most management contracts
provide for the manager to receive an annual fee based on a percentage of the
fund's average daily net assets. The manager is subject to numerous legal
restrictions, especially regarding transactions between itself and the funds it
advises.

Portfolio managers Portfolio managers are employed by the investment manager to
make investment decisions for individual portfolios on a day-to-day basis.

Custodian Mutual funds are legally required to protect their portfolio
securities and most funds place them with a qualified bank custodian who
segregates fund securities from other bank assets.

Distributor Most mutual funds continuously offer new shares to the public
through distributors who are regulated as broker/dealers and are subject to NASD
rules governing mutual fund sales practices.

Financial intermediary wholesaler Pursuant to a contractual arrangement with
Delaware Distributors, L.P., Lincoln Financial Distributors, Inc. (LFD) is
primarily responsible for promoting the sale of Fund shares through
broker/dealers, financial advisors and other financial intermediaries.

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 advisors Financial advisors provide advice to their clients, analyzing
their financial objectives and recommending appropriate funds or other
investments. Financial advisors are associated with securities broker/dealers
who have entered into selling and/or service arrangements with the distributor.
Selling broker/dealers and financial advisors are compensated for their services
generally through sales commissions, and through 12b-1 fees and/or service fees
deducted from the fund's assets.

Shareholders Like shareholders of other companies, mutual fund shareholders have
specific voting rights. 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 policies must also seek shareholder approval.

About your account

Investing in the Fund
You can choose from a number of share classes for the Fund. Because each share
class has a different combination of sales charges, fees and other features, you
should consult your financial advisor 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.

o If you invest $50,000 or more, your front-end sales charge will be reduced.

o You may qualify for other reductions in sales charges and under certain
circumstances the sales charge may be waived, as described in "How to
reduce your sales charge" below.

o Class A shares are also subject to an annual 12b-1 fee no greater than
0.30% (currently, waived not to exceed 0.25%) of average daily net assets,
which is lower than the 12b-1 fee for Class B, Class C and Class R shares.
See "Dealer compensation" below for further information.

o Class A shares generally are not subject to a contingent deferred sales
charge except in the limited circumstances described in the table below.

o Class A shares generally are not available for purchase by anyone qualified
to purchase Class R shares, except as described below.

Class A sales charges
The table below details your sales charges on purchases of Class A shares. The
offering price for Class A shares includes the front end sales charge. The sales
charge as a percentage of the net amount invested is the maximum percentage of
the amount invested rounded to the nearest hundredth. The actual percentage will
vary depending on the amount invested, rounding and the then-current NAV.
Similarly, the actual sales charge as a percentage of offering price may be
different due to the amount invested, rounding and the then-current offering may
be greater or lesser than the percentage shown.

----------------------------------- ---------------------------------- -----------------------------------
Sales charge as % Sales charge as %
Amount of purchase of offering price of net amount invested
----------------------------------- ---------------------------------- -----------------------------------
Less than $50,000 5.75% 6.54%
----------------------------------- ---------------------------------- -----------------------------------
$50,000 but less than $100,000 4.75% 5.41%
----------------------------------- ---------------------------------- -----------------------------------
$100,000 but less than $250,000 3.75% 4.31%
----------------------------------- ---------------------------------- -----------------------------------
$250,000 but less than $500,000 2.50% 3.00%
----------------------------------- ---------------------------------- -----------------------------------
$500,000 but less than $1 million 2.00% 2.44%
----------------------------------- ---------------------------------- -----------------------------------
$1 million or more None (Limited CDSC may apply)* None (Limited CDSC may apply)*
----------------------------------- ---------------------------------- -----------------------------------

* There is no front-end sales charge when you purchase $1 million or more of
Class A shares. However, if the Distributor paid your financial advisor a
commission on your purchase of $1 million or more of Class A shares, you
will have to pay a limited contingent deferred sales charge (Limited CDSC)
of 1.00% if you redeem these shares within the first year and 0.50% if you
redeem them within the second year, unless a specific waiver of the charge
applies. 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. 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. See "Dealer compensation" below for a description of the dealer
commission that is paid.
--------------------------------------------------------------------------------

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 4.00%. The
contingent deferred sales charge is 3.25% during the second year, 2.75%
during the third year, 2.25% during the fourth and fifth years, 1.50%
during the sixth year and 0% thereafter.

o In determining whether the contingent deferred sales charge 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. For further information on how the
contingent deferred sales charge is determined, please see "Calculation of
Contingent Deferred Sales Charges - Class B and Class C" below.

o Under certain circumstances the contingent deferred sales charge may be
waived; please see "Waivers of Contingent Deferred Sales Charges" below for
further information.

o For approximately eight years after you buy your Class B shares, they are
subject to an annual 12b-1 fee no greater than 1.00% 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 fee, Class B shares have higher expenses and
any dividends paid on these shares are generally lower than dividends on
Class A and Class R 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%
(currently 0.25%). 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 only up to $100,000 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 1.00% if you redeem your shares within 12 months
after you buy them.

o In determining whether the contingent deferred sales charge applies to a
redemption of 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. For further information on how the contingent deferred
sales charge is determined, please see "Calculation of Contingent Deferred
Sales Charges - Class B and Class C" below.

o Under certain circumstances the contingent deferred sales charge may be
waived; please see "Waivers of Contingent Deferred Sales Charges" below for
further information.

o Class C shares are subject to an annual 12b-1 fee no greater than 1.00% 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 fee, Class C shares have higher expenses and
any dividends paid on these shares are generally lower than dividends on
Class A and Class R 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.

CLASS R

o Class R shares have no up-front sales charge, so the full amount of your
purchase is invested in the Fund. Class R shares are not subject to a
contingent deferred sales charge.

o Class R shares are subject to an annual 12b-1 fee no greater than 0.60%
(currently, waived not to exceed 0.50%) of average daily net assets, which
is lower than the 12b-1 fee for Class B and Class C shares.

o Because of the higher 12b-1 fee, Class R shares have higher expenses and
any dividends paid on these shares are lower than dividends on Class A
shares.

o Unlike Class B shares, Class R shares do not automatically convert into
another class.

o Class R shares generally are available only to (i) qualified and
non-qualified plan shareholders covering multiple employees (including
401(k), 401(a), 457, and non-custodial 403(b) plans, as well as other
non-qualified deferred compensation plans) with assets (at the time shares
are considered for purchase) of $10 million or less; and (ii) to IRA
rollovers from plans that were previously maintained on Delaware's
retirement record keeping system or maintained on BISYS's retirement record
keeping system that are offering Class R shares to participants.

Except as noted above, no other IRA accounts are eligible for Class R shares
(e.g., no SIMPLE IRA's, SEP/IRA's, SAR/IRA's, Roth IRA's, etc.). For purposes of
determining plan asset levels, affiliated plans may be combined at the request
of the plan sponsor.

Each share class may be eligible for purchase through programs sponsored by
financial intermediaries where such programs require the purchase of a specific
class of shares.

Any account holding Class A shares as of June 2, 2003 (the date Class R shares
were made available) continues to be eligible to purchase Class A shares after
that date. Any account holding Class R shares is not eligible to purchase Class
A shares.

Each share class of the Fund has adopted a separate 12b-1 plan that allows it to
pay distribution fees for the sale 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.

Calculation of Contingent Deferred Sales Charges - Class B and Class C
Contingent deferred sales charges are charged as a percentage of the dollar
amount subject to the contingent deferred sales charge. 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 contingent deferred sales charges will be imposed on
increases in net asset value above the initial purchase price, nor will a
contingent deferred sales charge 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.

Dealer compensation
Your financial advisor that sells you shares of the Fund may be eligible to
receive the following amounts as compensation for your investment in the Fund.
These amounts are paid by the distributor to the securities dealer with whom
your financial advisor is associated.

---------------------------- ------------ ------------ ------------ ------------
Class A(1) Class B(2) Class C(3) Class R(4)
---------------------------- ------------ ------------ ------------ ------------
Commission (%) - 4.00% 1.00% -
---------------------------- ------------ ------------ ------------ ------------
Investment less than
$50,000 5.00% - - -
---------------------------- ------------ ------------ ------------ ------------
$50,000 but less than
$100,000 4.00% - - -
---------------------------- ------------ ------------ ------------ ------------
$100,000 but less than
$250,000 3.00% - - -
---------------------------- ------------ ------------ ------------ ------------
$250,000 but less than
$500,000 2.00% - - -
---------------------------- ------------ ------------ ------------ ------------
$500,000 but less than
$1,000,000 1.60% - - -
---------------------------- ------------ ------------ ------------ ------------
$1,000,000 but less than
$5,000,000 1.00% - - -
---------------------------- ------------ ------------ ------------ ------------
$5,000,000 but less than
$25,000,000 0.50% - - -
---------------------------- ------------ ------------ ------------ ------------
$25,000,000 or more 0.25% - - -
---------------------------- ------------ ------------ ------------ ------------
12b-1 Fee to Dealer 0.30% 0.25% 1.00% 0.60%
---------------------------- ------------ ------------ ------------ ------------

(1) On sales of Class A shares, the Distributor re-allows to your securities
dealer a portion of the front-end sales charge depending upon the amount
you invested. Your securities dealer is eligible to receive up to 0.30% of
the 12b-1 fee applicable to Class A shares, although under the plan adopted
by the Board of Trustees that went into effect on June 1, 1992, a lesser
amount may be paid. The maximum 12b-1 fee applicable to Class A shares is
0.30%. However, the Distributor has contracted to limit this amount to
0.25% through February 28, 2007.

(2) On sales of Class B shares, the Distributor pays your securities dealer an
up-front commission of 4.00%. Your securities dealer also may be eligible
to receive a 12b-1 service fee of up to 0.25% from the date of purchase.
After approximately eight years, Class B shares automatically convert into
Class A shares and dealers may then be eligible to receive the 12b-1 fee
applicable to Class A.

(3) On sales of Class C shares, the Distributor pays your securities dealer an
up-front commission of 1.00%. The up-front commission includes an advance
of the first year's 12b-1 service fee of up to 0.25%. During the first 12
months, the Distributor retains the full 1.00% 12b-1 fee to partially
offset the up-front commission and the prepaid 0.25% service fee advanced
at the time of purchase. Starting in the 13th month, your securities dealer
may be eligible to receive the full 1.00% 12b-1 fee applicable to Class C.

(4) On sales of Class R shares, the Distributor does not pay your securities
dealer an up-front commission. The maximum 12b-1 fee applicable to Class R
shares is 0.60% of average daily net assets. However, the Distributor has
contracted to limit this amount to 0.50% through February 28, 2007. Your
securities dealer may be eligible to receive a 12b-1 fee of up to 0.60%
from the date of purchase, although the current rate is 0.50%.

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 SAI for detailed information and eligibility requirements.
You can also get additional information from your financial advisor. You or your
financial advisor must notify us at the time you purchase shares if you are
eligible for any of these programs. You may also need to provide information to
your financial advisor or the Fund in order to qualify for a reduction in sales
charges. Such information may include your Delaware Investments Funds holdings
in any other account, including retirement accounts held indirectly or through
an intermediary and the name of qualifying family members and their holdings.
Class R shares have no up-front sales charge. We reserve the right to determine
whether any purchase is entitled, by virtue of the foregoing, to the reduced
initial sales charge.

-------------------- ---------------------------------- --------------------------------------------------------------
Program How it works Share class
A B 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 Investments of Class B and Class C shares, you can
Funds (except money market combine your purchase of Class A shares
funds with no sales charge) with your purchase of Class B and Class C
over a 13-month period to shares to fulfill your Letter of Intent or
qualify for reduced front-end qualify for Rights of Accumulation.
sales charges.

-------------------- ---------------------------------- ---------------- ---------------------------------------------
Rights of You can combine your holdings X
Accumulation or purchases of all funds in
the Delaware Investments
family (except 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 account Not
Redeemed Shares redeem shares, you can you will not will be credited with the available.
reinvest the proceeds without have to pay contingent deferred sales
paying a sales charge, as an charge you previously
noted to the right. additional paid on the amount you
front-end are reinvesting. Your
sales charge. 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
SAR/SEP, Profit qualify for reduced sales Class B or Class C shares for group
Sharing, Pension, charges by combining the purchases by retirement plans.
401(k), purchases of all members of
SIMPLE 401(k), the group. Members of these
403(b)(7),and 457 groups may also qualify to
Retirement Plans purchase shares without a
front-end sales charge and may
qualify for a waiver of any
contingent deferred sales
charges on Class A shares.
-------------------- ---------------------------------- ---------------- ---------------------------------------------

Buying Class A shares at Net Asset Value

Class A shares of a Fund may be purchased at net asset value under the following
circumstances, provided that you notify the Fund in advance that the trade
qualifies for this privilege.

o Shares purchased under the Delaware Investments Dividend Reinvestment Plan
and, under certain circumstances, the Exchange Privilege and the 12-Month
Reinvestment Privilege.

o Purchases by (i) current and former officers, Trustees/Directors and
employees of any fund in the Delaware Investments family, the Manager or
any of the Manager's current affiliates and those that may in the future be
created; (ii) legal counsel to the funds; and (iii) registered
representatives and employees of broker/dealers who have entered into
Dealer's Agreements with the Distributor. Family members (regardless of
age) of such persons at their direction, and any employee benefit plan
established by any of the foregoing entities, counsel or broker/dealers may
also purchase shares at net asset value.

o Shareholders who own Class A shares of Delaware Cash Reserve Fund as a
result of a liquidation of a fund in the Delaware Investments family may
exchange into Class A shares of another Fund at net asset value.

o Purchases 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.

o Purchases by certain officers, trustees and key employees of institutional
clients of the Manager or any of the Manager's affiliates.

o Purchases for the benefit of the clients of brokers, dealers and registered
investment advisors if such broker, dealer or investment advisor 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.

o Purchases by 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.

o Purchases by retirement plans that are maintained on retirement platforms
sponsored by financial intermediary firms, provided the financial
intermediary firm has entered into a Class A NAV Agreement with respect to
such retirement platforms.

o Purchases by certain legacy bank sponsored retirement plans that meet
requirements set forth in the SAI.

o Purchases by certain legacy retirement assets that meet requirements set
forth in the SAI.

o Investments made by plan level and/or participant retirement accounts that
are for the purpose of repaying a loan taken from such accounts.

o Loan repayments made to a Fund account in connection with loans originated
from accounts previously maintained by another investment firm.

Waivers of Contingent Deferred Sales Charges

--------------------------------------- ------------------ --------------------- --------------------
Share Class
Category A* B C
--------------------------------------- ------------------ --------------------- --------------------
Redemptions in accordance with a X X
Systematic Withdrawal Plan, provided
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
--------------------------------------- ------------------ --------------------- --------------------
Redemptions that result from the X X
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
--------------------------------------- ------------------ --------------------- --------------------
Distributions to participants or Not available. Not available.
beneficiaries from a retirement plan
qualified under section 401(a) of the
Internal Revenue Code of 1986, as
amended (the "Code")
--------------------------------------- ------------------ --------------------- --------------------
Redemptions pursuant to the direction X Not available. Not available.
of a participant or beneficiary of a
retirement plan qualified under
section 401(a) of the Code with
respect to that retirement plan
--------------------------------------- ------------------ --------------------- --------------------
Periodic distributions from an X
individual retirement account (i.e.,
IRA, ROTH IRA, EDUCATION OR COVERDALE
IRA, SIMPLE IRA, SAR/SEP or SEP/IRA)
or a qualified plan** (403(b)(7)
plan, 457 Deferred Compensation Plan,
Profit Sharing Plan, Money Purchase
Plan or 401(k) Defined Contribution
Plan) not subject to a penalty under
Section 72(t)(2)(A) of the Internal
Revenue Code ("IRC") or a hardship or
unforeseen emergency provision in the
qualified plan as described in Tres.
Reg. §1.401(k)-1(d)(2) and Section
457(d)(3) of the IRC.
--------------------------------------- ------------------ --------------------- --------------------
Returns of Excess Contributions due X X X
to any regulatory limit from an
individual retirement account (i.e.,
IRA, ROTH IRA, EDUCATION OR COVERDALE
IRA, SIMPLE IRA, SAR/SEP or SEP/IRA)
or a qualified plan (403(b)(7) plan,
457 Deferred Compensation Plan,
Profit Sharing Plan, Money Purchase
Plan or 401(k) Defined Contribution
Plan).
--------------------------------------- ------------------ --------------------- --------------------
Distributions by other employee Not available. Not available.
benefit plans to pay benefits
--------------------------------------- ------------------ --------------------- --------------------
Systematic withdrawals from a X X
retirement account or qualified plan
that are not subject to a penalty
pursuant to Section 72(t)(2)(A) of
the IRC or a hardship or unforeseen
emergency provision in the qualified
plan** as described in Tres. Reg.
§1.401(k)-1(d)(2) and Section
457(d)(3) of the IRC. The systematic
withdrawal may be pursuant to
Delaware Investments funds'
Systematic Withdrawal Plan or a
systematic withdrawal permitted by
the IRC.
--------------------------------------- ------------------ --------------------- --------------------
Distributions from an account of a X X
redemption resulting from the death
or disability (as defined in Section
72(t)(2)(A) of the IRC) of a
registered owner or a registered
joint owner occurring after the
purchase of the shares being
redeemed. In the case of accounts
established under the Uniform Gifts
to Minors or Uniform Transfers to
Minors Act or trust accounts, the
waiver applies upon the death of all
beneficial owners.
--------------------------------------- ------------------ --------------------- --------------------
Redemptions by certain legacy Not available. X
retirement assets that meet the
requirements set forth in the
SAI.
--------------------------------------- ------------------ --------------------- --------------------
Redemptions by the classes of X Not available. Not available.
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" above.
--------------------------------------- ------------------ --------------------- --------------------

* The waiver for Class A shares relates to a waiver of the Limited CDSC.
Please note that you or your financial advisor will have to notify us at
the time of purchase that the trade qualifies for such waiver.

** Qualified plans that are fully redeemed at the direction of the plan's
fiduciary are subject to any applicable contingent deferred sales charge or
Limited CDSC, unless the redemption is due to the termination of the plan.

Certain sales charges may be based on historical cost. Therefore, you should
maintain any records that substantiate these costs because the Fund, its
transfer agent and financial intermediaries may not maintain this information.
Information about existing sales charges and sales charge reductions and waivers
is available free of charge in a clear and prominent format on the Delaware
Investments family's Web site at www.delawareinvestments.com. Additional
information on sales charges can be found in the SAI.

About your account (continued)

How to buy shares

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Through your financial advisor
Your financial advisor can handle all the details of purchasing shares,
including opening an account. Your financial advisor may charge a separate fee
for this service.

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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, 2005
Market Street, Philadelphia, PA 19103-7094. 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.

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By wire
Ask your bank to wire the amount you want to invest to Bank of New York, ABA
#021000018, Bank Account number 8900403748. Include your account number and the
name of the fund in which you want to invest. If you are making an initial
purchase by wire, you must first call us at 800 523-1918 so we can assign you an
account number.

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By exchange
You may exchange all or part of your investment in one or more Delaware
Investments Funds for shares of other Delaware Investments Funds. 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.

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Through automated shareholder services
You may 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.

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. The minimum purchase is $250, and you can make additional investments
of only $25 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 for a Coverdell Education Savings
Account (formerly an "Education IRA") is $500. The minimums vary for retirement
plans other than IRAs, Roth IRAs or Coverdell Education Savings Accounts.

The price you pay for shares will depend on when we receive your purchase order.
If we or an authorized agent receive your order before the close of regular
trading on the New York Stock Exchange (NYSE), which is normally 4:00 p.m.
Eastern Time, you will pay that day's closing share price, which is based on the
Fund's net asset value (NAV). If your order is received after the close of
regular trading on the NYSE, you will pay the next business day's price. A
business day is any day that the NYSE is open for business (Business Day). We
reserve the right to reject any purchase order.

We determine the NAV per share for each class of the Fund at the close of
regular trading on the NYSE each Business Day. The NAV per share for each class
of the Fund is calculated by subtracting the liabilities of each class from its
total assets and dividing the resulting number by the number of shares
outstanding for that class. We generally price securities and other assets for
which market quotations are readily available at their market value. We price
any 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.
We price any fixed-income securities that have a maturity of less than 60 days
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.

Fair valuation
When the Fund uses fair value pricing, it may take into account any factors it
deems appropriate. The Fund may determine fair value based upon developments
related to a specific security, current valuations of foreign stock indices (as
reflected in U.S. futures markets) and/or U.S. sector or broader stock market
indices. The price of securities used by the Fund to calculate its NAV may
differ from quoted or published prices for the same securities. Fair value
pricing may involve subjective judgments and it is possible that the fair value
determined for a security is materially different than the value that could be
realized upon the sale of that security.

The Fund anticipates using fair value pricing for securities primarily traded on
U.S. exchanges only under very limited circumstances, such as the early closing
of the exchange on which a security is traded or suspension of trading in the
security. The Fund may use fair value pricing more frequently for securities
primarily traded in non-U.S. markets because, among other things, most foreign
markets close well before the Fund values its securities at 4:00 p.m. Eastern
Time. The earlier close of these foreign markets gives rise to the possibility
that significant events, including broad market moves, may have occurred in the
interim. To account for this, the Fund may frequently value many foreign equity
securities using fair value prices based on third party vendor modeling tools to
the extent available.

Subject to the Board's oversight, the Fund's Board has delegated responsibility
for valuing the Fund's assets to a Pricing Committee of the Manager, which
operates under the policies and procedures approved by the Board as described
above.

Retirement plans
In addition to being an appropriate investment for your IRA, Roth IRA and
Coverdell Education Savings Account, 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 advisor, or call 800 523-1918.

About your account (continued)

How to redeem shares

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Through your financial advisor
Your financial advisor can handle all the details of redeeming your shares
(selling them back to the Fund). Your financial advisor may charge a separate
fee for this service.

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By mail
You may redeem your shares by mail by writing to: Delaware Investments, 2005
Market Street, Philadelphia, PA 19103-7094. All owners of the account must sign
the request. For redemptions of more than $100,000, 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 the
account.

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By telephone
You may redeem up to $100,000 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.

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By wire
You may redeem $1,000 or more of your shares and have the proceeds deposited
directly to your bank account, normally the next business day after we receive
your request. If you request a wire deposit, a bank wire fee may be deducted
from your proceeds. Bank information must be on file before you request a wire
redemption.

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Through automated shareholder services
You may 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.

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, and
we (or an authorized agent) receive the request before the close of regular
trading on the NYSE (normally 4:00 p.m. Eastern Time), you will receive the NAV
next determined after we receive your request. If we receive your request after
the close of regular trading on the NYSE, you will receive the NAV next
determined on the next business day. We will deduct any applicable contingent
deferred sales charges. You may also have to pay taxes on the proceeds from your
sale of shares. We will send you a check, normally the next business day, but no
later than seven days after we receive your request to sell your shares. If you
purchased your shares by check, we will wait until your check has cleared, which
can take up to 15 days, before we send your redemption proceeds.

If you are required to pay a contingent deferred sales charge when you redeem
your shares, the amount subject to the fee will be based on the shares' NAV when
you purchased them or their NAV 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.

The Fund has reserved the right to pay for redemptions with portfolio securities
under certain circumstances. See the SAI for more information on redemptions
in-kind.

Account minimums
If you redeem shares and your account balance falls below the Fund's required
account minimum of $1,000 ($250 for IRAs and Roth IRAs, Uniform Gifts to Minors
Act and Uniform Transfers to Minors Act accounts or accounts with automatic
investing plans and $500 for Coverdell Education Savings Account) for three or
more consecutive months, you will have until the end of the current calendar
quarter to raise the balance to the minimum. If your account is not at the
minimum by the required time, you will be charged a $9 fee for that quarter and
each quarter after that until your account reaches the minimum balance. If your
account does not reach the minimum balance, your Fund may redeem your account
after 60 days' written notice to you.

If you have an account in the same Delaware Investments Fund as another member
of your household, we are sending your household one copy of the Fund's
prospectus, annual and semi-annual reports unless you opt otherwise. This will
help us reduce the printing and mailing expenses associated with the Funds. We
will continue to send one copy of each of these documents to your household
until you notify us that you wish individual materials. If you wish to receive
individual materials, please call our Shareholder Service Center at 800-523-1918
or your financial advisor. We will begin sending you individual copies of these
documents thirty days after receiving your request.

About your account (continued)

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.

Online Account Access
Account Access is a password-protected area of the Delaware Investments internet
Web site that gives you access to your account information and allows you to
perform transactions in a secure internet environment.

Electronic Delivery
With Delaware eDelivery, you can receive your fund documents electronically
instead of via the U.S. mail. When you sign up for eDelivery, you can access
your account statements, shareholder reports and other fund materials online, in
a secure internet environment, at any time from anywhere.

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, normally for shares of the same
class in another Delaware Investments Fund without paying a front-end sales
charge or a contingent deferred sales charge at the time of the exchange.
However, if you exchange shares from a money market fund that does not have a
sales charge or from Class R shares of any fund, you will pay any applicable
sales charge on your new shares. When exchanging Class B and Class C shares of
one fund for the same class of shares in other funds, your new shares will be
subject to the same contingent deferred sales charge as the shares you
originally purchased. The holding period for the contingent deferred sales
charge will also remain the same, with the amount of time you held your original
shares being credited toward the holding period of your new shares. You do not
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.

Special services (continued)

MoneyLine(SM) On Demand Service
Through our MoneyLine(SM) On Demand Service, you or your financial advisor may
transfer money between your Fund account and your predesignated bank account by
telephone request. This service is not available for retirement plans. MoneyLine
has a minimum transfer of $25 and a maximum transfer of $50,000 except for
purchases into IRAs. Delaware Investments does not charge a fee for this
service; however, your bank may assess one.

MoneyLine Direct Deposit Service
Through our MoneyLine Direct Deposit Service you can have $25 or more in
dividends and distributions deposited directly to your bank account. Delaware
Investments does not charge a fee for this service; however, your bank may
assess one. This service is not available for retirement plans.

Systematic Withdrawal Plan
Through our Systematic Withdrawal Plan you can arrange a regular monthly or
quarterly payment from your account made to you or someone you designate. If the
value of your account is $5,000 or more, you can make withdrawals of at least
$25 monthly, or $75 quarterly. You may also have your withdrawals deposited
directly to your bank account through our MoneyLine Direct Deposit Service.

The applicable limited contingent deferred sales charges for Class A Shares and
the contingent deferred sales charges 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.

Frequent trading of Fund shares
The Fund discourages purchases by market timers and purchase orders (including
the purchase side of exchange orders) by shareholders identified as market
timers may be rejected. The Fund's Board of Trustees has adopted policies and
procedures designed to detect, deter and prevent trading activity detrimental to
the Fund and its shareholders, such as market timing. The Fund will consider
anyone who follows a pattern of market timing in any fund in the Delaware
Investments family or Optimum Fund Trust to be a market timer and may consider
anyone who has followed a similar pattern of market timing at an unaffiliated
fund family to be a market timer.

Market timing of a fund occurs when investors make consecutive, rapid,
short-term "roundtrips" -- that is, purchases into a fund followed quickly by
redemptions out of that fund. A short-term roundtrip is any redemption of fund
shares within 20 business days of a purchase of that fund's shares. If you make
a second such short-term roundtrip in a fund within the same calendar quarter of
a previous short-term roundtrip in that fund, you may be considered a market
timer. In determining whether market timing has occurred, the Fund will consider
short-term roundtrips to include rapid purchases and sales of Fund shares
through the exchange privilege. The Fund reserves the right to consider other
trading patterns to be market timing.

Your ability to use the Fund's exchange privilege may be limited if you are
identified as a market timer. If you are identified as a market timer, we will
execute the redemption side of your exchange order but may refuse the purchase
side of your exchange order. The Fund reserves the right to restrict, reject or
cancel, without prior notice, any purchase order or exchange order for any
reason, including any purchase order or exchange order accepted by any
shareholder's financial intermediary or in any omnibus-type account.
Transactions placed in violation of the Fund's market timing policy are not
necessarily deemed accepted by the Fund and may be cancelled or revoked by the
Fund on the next business day following receipt by the Fund.

Redemptions will continue to be permitted in accordance with the Fund's current
Prospectus. A redemption of shares under these circumstances could be costly to
a shareholder if, for example, the shares have declined in value, the
shareholder recently paid a front-end sales charge, the shares are subject to a
contingent deferred sales charge or the sale results in adverse tax
consequences. To avoid this risk, a shareholder should carefully monitor the
purchases, sales and exchanges of Fund shares and avoid frequent trading in Fund
shares.

The Fund reserves the right to modify this policy at any time without notice,
including modifications to the Fund's monitoring procedures and the procedures
to close accounts to new purchases. Although the implementation of this policy
involves judgments that are inherently subjective and may be selectively
applied, we seek to make judgments and applications that are consistent with the
interests of the Fund's shareholders. While we will take actions designed to
detect and prevent market timing, there can be no assurance that such trading
activity will be completely eliminated. Moreover, the Fund's market timing
policy does not require the Fund to take action in response to frequent trading
activity. If the Fund elects not to take any action in response to frequent
trading, such frequent trading and market timing activity could continue.

Risks of market timing
By realizing profits through short-term trading, shareholders that engage in
rapid purchases and sales or exchanges of the Fund's shares dilute the value of
shares held by long-term shareholders. Volatility resulting from excessive
purchases and sales or exchanges of Fund shares, especially involving large
dollar amounts, may disrupt efficient portfolio management. In particular, the
Fund may have difficulty implementing its long-term investment strategies if it
is forced to maintain a higher level of its assets in cash to accommodate
significant short-term trading activity. Excessive purchases and sales or
exchanges of the Fund's shares may also force the Fund to sell portfolio
securities at inopportune times to raise cash to accommodate short-term trading
activity. This could adversely affect the Fund's performance if, for example,
the Fund incurs increased brokerage costs and realization of taxable capital
gains without attaining any investment advantage.

A fund that invests significantly in foreign securities may be particularly
susceptible to short-term trading strategies. This is because foreign securities
are typically traded on markets that close well before the time the fund
calculates its NAV (typically, 4:00 p.m. Eastern Time). Developments that occur
between the closing of the foreign market and the fund's NAV calculation may
affect the value of these foreign securities. The time zone differences among
international stock markets can allow a shareholder engaging in a short-term
trading strategy to exploit differences in fund share prices that are based on
closing prices of foreign securities established some time before a fund
calculates its own share price.

Any fund that invests in securities that are thinly traded, traded infrequently
or relatively illiquid has the risk that the securities prices used to calculate
the fund's NAV may not accurately reflect current market values. A shareholder
may seek to engage in short-term trading to take advantage of these pricing
differences. Funds that may be adversely affected by such arbitrage include, in
particular, funds that significantly invest in small-cap securities, technology
and other specific industry sector securities, and in certain fixed-income
securities, such as high-yield bonds, asset-backed securities or municipal
bonds.

Transaction monitoring procedures The Fund, through its transfer agent,
maintains surveillance procedures designed to detect excessive or short-term
trading in Fund shares. This monitoring process involves several factors, which
include scrutinizing transactions in fund shares for violations of the Fund's
market timing policy or other patterns of short-term or excessive trading. For
purposes of these transaction monitoring procedures, the Fund may consider
trading activity by multiple accounts under common ownership, control or
influence to be trading by a single entity. Trading activity identified by these
factors, or as a result of any other available information, will be evaluated to
determine whether such activity might constitute market timing. These procedures
may be modified from time to time to improve the detection of excessive or
short-term trading or to address other concerns. Such changes may be necessary
or appropriate, for example, to deal with issues specific to certain retirement
plans, plan exchange limits, U.S. Department of Labor regulations, certain
automated or pre-established exchange, asset allocation or dollar cost averaging
programs, or omnibus account arrangements.

Omnibus account arrangements are common forms of holding shares of the Fund,
particularly among certain brokers/dealers and other financial intermediaries,
including sponsors of retirement plans and variable insurance products. The Fund
will attempt to apply its monitoring procedures to these omnibus accounts and to
the individual participants in such accounts. In an effort to discourage market
timers in such accounts, the Fund may consider enforcement against market timers
at the participant level and at the omnibus level, up to and including
termination of the omnibus account's authorization to purchase Fund shares.

Limitations on ability to detect and curtail market timing Shareholders seeking
to engage in market timing may employ a variety of strategies to avoid detection
and, despite the efforts of the Fund and its agents to detect market timing in
Fund shares, there is no guarantee that the Fund will be able to identify these
shareholders or curtail their trading practices. In particular, the Fund may not
be able to detect market timing attributable to a particular investor who
effects purchase, redemption and/or exchange activity in Fund shares through
omnibus accounts. The difficulty of detecting market timing may be further
compounded if these entities utilize multiple tiers or omnibus accounts.

Dividends, distributions and taxes
Dividends and Distributions. The Fund has elected to be treated as a regulated
investment company under Subchapter M of the Internal Revenue Code. As a
regulated investment company, the Fund generally pays no federal income tax on
the income and gains it distributes to you. The Fund expects to declare and
distribute all of its net investment income, if any, to shareholders as
dividends quarterly. The Fund will also distribute net capital gains, if any,
annually. The amount of any distribution will vary, and there is no guarantee
the Fund will pay either an income dividend or a capital gain distribution. We
automatically reinvest all dividends and any capital gains, unless you direct us
to do otherwise.

Annual Statements. Every January, you will receive a statement that shows the
tax status of distributions you received the previous year. Distributions
declared in December but paid in January are taxable as if they were paid in
December. A mutual Fund may reclassify income after your tax reporting statement
is mailed to you. Prior to issuing your statement, the Fund makes every effort
to search for reclassified income to reduce the number of corrected forms mailed
to shareholders. However, when necessary, the Fund will send you a corrected
Form 1099-DIV to reflect reclassified information.

Avoid "Buying A Dividend." If you invest in the Fund shortly before the record
date of a taxable distribution, the distribution will lower the value of the
Fund's shares by the amount of the distribution and, in effect, you will receive
some of your investment back in the form of a taxable distribution.

Tax Considerations. In general, if you are a taxable investor, Fund
distributions are taxable to you at either ordinary income or capital gains tax
rates. This is true whether you reinvest your distributions in additional Fund
shares or receive them in cash.

For federal income tax purposes, Fund distributions of short-term capital gains
are taxable to you as ordinary income. Fund distributions of long-term capital
gains are taxable to you as long-term capital gains no matter how long you have
owned your shares. A portion of income dividends designated by the Fund may be
qualified dividend income eligible for taxation by individual shareholders at
long-term capital gain rates provided certain holding period requirements are
met.

A sale or redemption of Fund shares is a taxable event and, accordingly, a
capital gain or loss may be recognized. For tax purposes, an exchange of your
Fund shares for shares of a different Fund is the same as a sale.

By law, if you do not provide the Fund with your proper taxpayer identification
number and certain required certifications, you may be subject to backup
withholding on any distributions of income, capital gains or proceeds from the
sale of your shares. The Fund also must withhold if the IRS instructs it to do
so. When withholding is required, the amount will be 28% of any distributions or
proceeds paid.

Fund distributions and gains from the sale or exchange of your Fund shares
generally are subject to state and local taxes. Non-U.S. investors may be
subject to U.S. withholding or estate tax, and are subject to special U.S. tax
certification requirements.

This discussion of "Dividends, distributions and taxes" is not intended or
written to be used as tax advice. Because everyone's tax situation is unique,
you should consult your tax professional about federal, state, local or foreign
tax consequences before making an investment in the Fund.

Certain management considerations

Manager of managers structure

At a shareholder meeting held on March 23, 2005 (or as adjourned), the Fund's
shareholders approved a "manager of managers" structure that would permit
Delaware Management Company, the Fund's investment advisor, to appoint and
replace sub-advisors, enter into sub-advisory agreements, and amend and
terminate sub-advisory agreements with respect to the Fund, subject to Board
approval but without shareholder approval (the "Manager of Managers Structure").
While Delaware Management Company does not currently expect to use the Manager
of Managers Structure with respect to the Fund, Delaware Management Company may,
in the future, recommend to the Fund's Board the establishment of the Manager of
Managers Structure by recommending the hiring of one or more sub-advisors to
manage all or a portion of the Fund's portfolio if it believes that doing so
would be likely to enhance the Fund's performance by introducing a different
investment style or focus.

The ability to implement the Manager of Managers Structure with respect to the
Fund is contingent upon the receipt of an exemptive order from the U.S.
Securities and Exchange Commission (the "SEC") or the adoption of a rule by the
SEC authorizing the implementation of the Manager of Managers Structure. The use
of the Manager of Managers Structure with respect to the Fund may be subject to
certain conditions set forth in the SEC exemptive order or rule. There can be no
assurance that the SEC will grant the Fund's application for an exemptive order
or adopt such a rule.

The Manager of Managers Structure would enable the Fund to operate with greater
efficiency and without incurring the expense and delays associated with
obtaining shareholder approval of sub-advisory agreements. The Manager of
Managers Structure would not permit investment management fees paid by the Fund
to be increased without shareholder approval or change Delaware Management
Company's responsibilities to the Fund, including Delaware Management Company's
responsibility for all advisory services furnished by a sub-advisor.

Financial highlights

The Financial highlights tables are 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.

Delaware Balanced Fund Class A
Year ended 10/31
2005 2004 2003 2002(1) 2001

Net asset value, beginning of period $15.630 $15.060 $13.390 $15.100 $18.620

Income (loss) from investment operations:
Net investment income (loss)(2) 0.342 0.190 0.182 0.234 0.349
Net realized and unrealized gain (loss) on
investments 0.580 0.592 1.749 (1.609) (3.451)
------- ------ ------ ------ ------
Total from investment operations 0.922 0.782 1.931 (1.375) (3.102)
------- ------ ------ ------ ------
Less dividends and distributions from:
Net investment income (0.262) (0.212) (0.261) (0.335) (0.418)
Net realized gain on investments ----- ----- ----- ----- -----
------- ------- ------- ------- -------
Total dividends and distributions (0.262) (0.212) (0.261) (0.335) (0.418)
------- ------ ------ ------- -------
Net asset value, end of period $16.290 $15.630 $15.060 $13.390 $15.100
======= ======= ======= ======= =======
Total return(3) 5.91% 5.28% 14.53% (9.38%) (16.88%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) $214,273 $232,351 $257,950 $253,089 $319,842
Ratio of expenses to average net assets 1.20% 1.27% 1.35% 1.37% 1.30%
Ratio of expenses to average net assets prior
to expense limitation and expenses
paid indirectly 1.24% 1.31% 1.38% 1.37% 1.30%
Ratio of net investment income to average net
assets 2.12% 1.23% 1.30% 1.54% 2.07%
Ratio of net investment income to average net
assets prior to expense limitation and
expenses paid indirectly 2.08% 1.19% 1.27% 1.54% 2.07%
Portfolio turnover 203% 244% 249% 368% 288%

(1) As required, effective November 1, 2002, the Fund adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies that requires
amortization of all premiums and discounts on debt securities and the
recording of paydown gains and losses on mortgage- and asset-backed
securities as an adjustment to interest income. The effect of these changes
for the year ended October 31, 2002 was a decrease in net investment income
per share of $0.014, an increase in net realized and unrealized gain (loss)
per share of $0.014 and a decrease in the ratio of net investment income to
average net assets of 0.09%. Per share data and ratios for periods prior to
November 1, 2001 have not been restated to reflect these changes in
accounting.

(2) The average shares outstanding method has been applied for per share
information.

(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a sales
charge. Total investment return reflects a waiver and payment of fees by
the distributor, as applicable. Performance would have been lower had the
expense limitation not been in effect.

Delaware Balanced Fund Class B
Year ended 10/31
2005 2004 2003 2002(1) 2001

Net asset value, beginning of period $15.630 $15.060 $13.410 $15.110 $18.600

Income (loss) from investment operations:
Net investment income (loss)(2) 0.214 0.067 0.073 0.121 0.223
Net realized and unrealized gain (loss) on
investments 0.582 0.594 1.743 (1.611) (3.435)
------- ------ ------ ------ ------
Total from investment operations 0.796 0.661 1.816 (1.490) (3.212)
------- ------ ------ ------ ------
Less dividends and distributions from:
Net investment income (0.126) (0.091) (0.166) (0.210) (0.278)
Net realized gain on investments ----- ----- ----- ----- -----
------- ------- ------- ------- -------
Total dividends and distributions (0.126) (0.091) (0.166) (0.210) (0.278)
------- ------ ------ ------- -------
Net asset value, end of period $16.300 $15.630 $15.060 $13.410 $15.110
======= ======= ======= ======= =======
Total return(3) 5.10% 4.40% 13.66% (10.06%) (17.47%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) $20,658 $26,254 $30,353 $32,035 $44,491
Ratio of expenses to average net assets 1.98% 2.07% 2.13% 2.12% 2.05%
Ratio of expenses to average net assets prior
to expense limitation and expenses
paid indirectly 1.98% 2.07% 2.13% 2.12% 2.05%
Ratio of net investment income to average net
assets 1.33% 2.07% 2.13% 2.12% 2.05%
Ratio of net investment income to average net
assets prior to expense limitation and
expenses paid indirectly 1.33% 2.07% 2.13% 2.12% 2.05%
Portfolio turnover 203% 244% 249% 368% 288%

(2) The average shares outstanding method has been applied for per share
information.

Delaware Balanced Fund Class C
Year ended 10/31
2005 2004 2003 2002(1) 2001

Net asset value, beginning of period $15.620 $15.040 $13.400 $15.090 $18.580

Income (loss) from investment operations:
Net investment income (loss)(2) 0.215 0.067 0.073 0.121 0.222
Net realized and unrealized gain (loss) on
investments 0.571 0.604 1.733 (1.601) (3.434)
------- ------ ------ ------ ------
Total from investment operations 0.786 0.671 1.806 (1.480) (3.212)
------- ------ ------ ------ ------
Less dividends and distributions from:
Net investment income (0.126) (0.091) (0.166) (0.210) (0.278)
Net realized gain on investments ----- ----- ----- ----- -----
------- ------- ------- ------- -------
Total dividends and distributions (0.126) (0.091) (0.166) (0.210) (0.278)
------- ------ ------ ------- -------
Net asset value, end of period $16.280 $15.620 $15.040 $13.400 $15.090
======= ======= ======= ======= =======
Total return(3) 5.03% 4.47% 13.60% (10.01%) (17.48%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) $5,638 $7,518 $7,710 $6,937 $8,418
Ratio of expenses to average net assets 1.98% 2.07% 2.13% 2.12% 2.05%
Ratio of expenses to average net assets prior
to expense limitation and expenses
paid indirectly 1.98% 2.07% 2.13% 2.12% 2.05%
Ratio of net investment income to average net
assets 1.33% 0.43% 0.52% 0.81% 1.32%
Ratio of net investment income to average net
assets prior to expense limitation and
expenses paid indirectly 1.33% 0.43% 0.52% 0.81% 1.32%
Portfolio turnover 203% 244% 249% 368% 288%

(2) The average shares outstanding method has been applied for per share
information.

Delaware Balanced Fund Class R
Year Year 6/2/03(4)
ended ended through
10/31/05 10/31/04 10/31/03

Net asset value, beginning of period $15.600 $15.030 $14.500

Income (loss) from investment operations:
Net investment income (loss)(2) 0.283 0.131 0.050
Net realized and unrealized gain (loss) on
investments 0.577 0.598 0.564
------- ------ ------
Total from investment operations 0.860 0.729 0.614
------- ------ ------
Less dividends and distributions from:
Net investment income (0.190) (0.159) (0.084)
Net realized gain on investments ----- ----- -----
------- ------- -------
Total dividends and distributions (0.190) (0.159) (0.084)
------- ------ ------
Net asset value, end of period $16.270 $15.600 $15.030
======= ======= =======
Total return(3) 5.52% 4.87% 4.25%

Ratios and supplemental data:
Net assets, end of period (000 omitted) $5 $3 $----
Ratio of expenses to average net assets 1.56% 1.66% 1.74%
Ratio of expenses to average net assets prior
to expense limitation and expenses
paid indirectly 1.58% 1.66% 1.74%
Ratio of net investment income to average net
assets 1.75% 0.83% 0.70%
Ratio of net investment income to average net
assets prior to expense limitation and
expenses paid indirectly 1.73% 0.83% 0.70%
Portfolio turnover 203% 244% 249%

(2) The average shares outstanding method has been applied for per share
information.

(4) Date of commencement of operations; ratios and portfolio turnover has been
annualized but total return has not been annualized.

How to read the financial highlights

Net investment income (loss)
Net investment income (loss) includes dividend and interest income earned from a
fund's investments; it is after expenses have been deducted.

Net realized and unrealized gain (loss) on investments
A realized gain occurs when we sell an investment at a profit, while a realized
loss occurs when we sell an investment at a loss. When an investment increases
or decreases in value but we do not sell it, we record an unrealized gain or
loss. The amount of realized gain per share, if any, that we pay to shareholders
would be listed under "Less dividends and distributions from: Net realized gain
on investments."

Net asset value (NAV)
This is the value of a mutual fund share, calculated by dividing the net assets
by the number of shares outstanding.

Total return
This represents the rate that an investor would have earned or lost on an
investment in a fund. In calculating this figure for the financial highlights
table, we include applicable fee waivers, exclude front-end and contingent
deferred sales charges, and assume the shareholder has reinvested all dividends
and realized gains.

Net assets
Net assets represent the total value of all the assets in a fund's portfolio,
less any liabilities, that are attributable to that class of the fund.

Ratio of expenses to average net assets
The expense ratio is the percentage of net assets that a fund pays annually for
operating expenses and management fees. These expenses include accounting and
administration expenses, services for shareholders, and similar expenses.

Ratio of net investment income (loss) to average net assets
We determine this ratio by dividing net investment income (loss) by average net
assets.

Portfolio turnover rate
This figure tells you the amount of trading activity in a fund's portfolio. A
turnover rate of 100% would occur if, for example, a fund bought and sold all of
the securities in its portfolio once in the course of a year or frequently
traded a single security. A high rate of portfolio turnover in any year may
increase brokerage commissions paid and could generate taxes for shareholders on
realized investment gains.

Glossary

How to use this glossary
The glossary includes definitions of investment terms, many of which are 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 typically
is inversely related to current interest rates. Generally, when interest rates
rise, bond prices fall, and when interest rates fall, bond prices rise. See
Fixed-income securities.

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. See also Nationally recognized statistical ratings
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 advisor for 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 advisor for advice and service, rather than an up-front
commission.

Corporate bond
A debt security issued by a corporation. See Bond.

Cost basis
The original purchase price of an investment, used in determining capital gains
and losses.

Currency exchange rates
The price at which one country's currency can be converted into another's. This
exchange rate varies almost daily according to a wide range of political,
economic and other factors.

Depreciation
A decline in an investment's value.

Diversification
The process of spreading investments among a number of different securities,
asset classes or investment styles to reduce the risks of investing.

Dividend distribution
Payments to mutual fund shareholders of dividends passed along from the fund's
portfolio of securities.

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 advisor
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 invest 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.

Government securities
Securities issued by the U.S. government or its agencies. They include
Treasuries as well as agency-backed securities such as Fannie Maes.

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.

Lehman Brothers Aggregate Bond Index
An index that measures the performance of about 6,500 U.S. corporate and
government bonds.

Management fee
The amount paid by a mutual fund to the investment advisor 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.

NASD
The National Association of Securities Dealers, Inc., which is responsible for
regulating the securities industry.

Nationally recognized statistical ratings 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, a division of the McGraw-Hill Companies, Inc.
(S&P) and Fitch, Inc. (Fitch).

Net assets
The total value of all the assets in a fund's portfolio, less any liabilities.

Preferred stock
Preferred stock has preference over common stock in the payment of dividends and
liquidation of assets. Preferred stocks also often pay dividends at a fixed rate
and are sometimes convertible into common stock.

Price-to-earnings ratio (P/E)
A measure of a stock's value calculated by dividing the current market price of
a share of stock by its annual earnings per share. A stock selling for $100 per
share with annual earnings per share of $5 has a P/E of 20.

Principal
Amount of money you invest (also called capital). Also refers to a bond's
original face value, due to be repaid at maturity.

Prospectus
The official offering document that describes a mutual fund, containing
information required by the SEC, such as investment objectives, policies,
services and fees.

Redeem
To cash in your shares by selling them back to the mutual fund.

Risk
Generally defined as variability of value; also credit risk, inflation risk,
currency and interest rate risk. Different investments involve different types
and degrees of risk.

S&P 500 Index
The S&P 500 Index is an unmanaged index of 500 widely held common stocks that is
often used to represent performance of the U.S. stock market.

Sales charge
A commission that is charged on the purchase or redemption of fund shares sold
through financial advisors. May vary with the amount invested. Typically used to
compensate financial advisors 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 funds.

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)
A document that provides more detailed information about a fund's organization,
management, investments, policies and risks.

Stock
An investment that represents a share of ownership (equity) in a corporation.
Stocks are often referred to as common stocks or 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 Gifts to Minors Act and Uniform Transfers to Minors Act
Federal and state laws that provide special tax advantages and a simple way to
transfer property to a minor.

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.

DELAWARE BALANCED Additional information about the Fund's investments is
FUND available in the Fund's annual and semiannual reports to
shareholders. In the Fund's shareholder reports, you will
find a discussion of the market conditions and investment
strategies that significantly affected the Fund's
performance during the period covered by the report. You can
find more information about the Fund in the current
Statement of Additional Information (SAI), which we have
filed electronically with the Securities and Exchange
Commission (SEC) and which is legally a part of this
Prospectus (it is incorporated by reference). If you want a
free copy of the SAI, the annual or semiannual report, or if
you have any questions about investing in the Fund, you can
write to us at 2005 Market Street, Philadelphia, PA
19103-7094, or call toll-free 800 523-1918. The Fund's SAI
and annual and semiannual reports to shareholders are also
available, free of charge, through the Fund's internet Web
site (www.delawareinvestments.com). You may obtain
additional information about the Fund from your financial
advisor.

You can find reports and other information about the Fund on
the EDGAR Database on the SEC Web site (www.sec.gov). You
can also get copies of this information, after payment of a
duplicating fee, by e-mailing the SEC at publicinfo@sec.gov
or by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-0102. Information about the Fund,
including its SAI, can be reviewed and copied at the SEC's
Public Reference Room in Washington, D.C. You can get
information on the Public Reference Room by calling the SEC
at 202 942-8090.

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

Web site
www.delawareinvestments.com

E-mail
service@delinvest.com

Shareholder Service Center
800 523-1918
Call the Shareholder Service Center Monday to Friday, 8 a.m.
to 7 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 Balanced Fund
CUSIP NASDAQ
Class A 246093108 DELFX
Class B 246093504 DELBX
Class C 246093702 DEDCX
Class R 246093884 DELRX

Investment Company Act file number: 811-249

P-002 [10/04] IVES 02/04

VALUE EQUITY DELAWARE
INVESTMENTS(R)
A Member of Lincoln Financial Group

Prospectus FEBRUARY 28, 2006

DELAWARE BALANCED FUND
INSTITUTIONAL CLASS

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.

Table of contents

Fund profile page
Delaware Balanced Fund

How we manage the Fund page
Our investment strategies
The securities we typically invest in
The risks of investing in the Fund
Disclosure of portfolio holdings information

Who manages the Fund page
Investment manager
Portfolio managers
Who's who?

About your account page
Investing in the Fund
How to buy shares
Fair valuation
How to redeem shares
Account minimum
Exchanges
Frequent trading of Fund shares
Dividends, distributions and taxes

Certain management considerations page

Financial highlights page

Glossary page

Profile: Delaware Balanced Fund

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. Over time, the value of your investment in
the Fund will increase and decrease according to changes in the value of the
securities in the Fund's portfolio. This Fund will be affected 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.

For a more complete discussion of risk, please see "The risks of investing in
the Fund" on page [__].

An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.

Who should invest in the Fund

o Investors with long-term financial goals.
o Investors seeking stocks and bonds combined in a single investment.
o Investors seeking modest quarterly income.
o Investors seeking a measure of capital preservation.

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.

How has Delaware Balanced Fund performed?

This bar chart and table can help you evaluate the risks of investing in the
Fund. We show how annual returns for the Fund's Institutional Class have varied
over the past ten calendar years, as well as the average annual returns for the
one-year, five-year and ten-year periods. The Fund's past performance (before
and after taxes) 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)

-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
14.14% 24.77% 17.58% -7.74% -2.55% -7.41% -15.59% 18.75% 5.79% 3.97%
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

During the periods illustrated in this bar chart, the Institutional Class'
highest quarterly return was 15.10% for the quarter ended December 31, 1998 and
its lowest quarterly return was -16.45% for the quarter ended September 30,
2001.

Average annual returns for periods ending 12/31/05
------------------------------------------ ---------- ----------- ------------
1 year 5 years 10 years
------------------------------------------ ---------- ----------- ------------
Return before taxes 3.97% 0.41% 4.39%
------------------------------------------ ---------- ----------- ------------
Return after taxes on distributions 3.05% (0.26)% 2.53%
------------------------------------------ ---------- ----------- ------------
Return after taxes on distributions
and sale of Fund shares 2.58% (0.03)% 2.82%
------------------------------------------ ---------- ----------- ------------
S&P 500 Index (reflects no deduction
for fees, expenses or taxes) 4.91% 0.54% 9.07%
------------------------------------------ ---------- ----------- ------------
Lehman Brothers Aggregate Bond Index
(reflects no deduction for
fees, expenses or taxes) 2.43% 5.87% 6.16%
------------------------------------------ ---------- ----------- ------------

The Fund's returns above are compared to the performance of the S&P 500 Index
and Lehman Brothers Aggregate Bond Index. You should remember that, unlike the
Fund, the indexes are unmanaged and do not reflect the actual costs of operating
a mutual fund, such as the costs of buying, selling and holding securities.
Neither index is a perfect comparison to Delaware Balanced Fund since the S&P
500 Index does not include fixed-income securities and the Lehman Brothers
Aggregate Bond Index does not include stocks.

Actual after-tax returns depend on the investor's individual tax situation and
may differ from the returns shown. After-tax returns are not relevant for shares
held in tax-deferred investment vehicles such as employer-sponsored 401(k) plans
and individual retirement accounts. The after-tax returns shown are calculated
using the highest individual federal marginal income tax rates in effect during
the Fund's lifetime and do not reflect the impact of state and local taxes. The
after-tax rate used is based on the current tax characterization of the elements
of the fund's returns (e.g., qualified vs. non-qualified dividends) and may be
different than the final tax characterization of such elements. Past
performance, both before and after taxes, is not a guarantee of future results.

What are the Fund's fees and expenses?

----------------------------------------- --------------------------------------------- ---------
You do not pay sales charges directly Maximum sales charge (load) imposed none
from your investments when you buy on purchases as a percentage of
or sell shares of the offering price
Institutional Class.
--------------------------------------------- ---------
Maximum contingent deferred sales charge
(load) as a percentage of original
purchase price or redemption price,
whichever is lower none
--------------------------------------------- ---------
Maximum sales charge (load) imposed on
reinvested dividends none
--------------------------------------------- ---------
Redemption fees none
--------------------------------------------- ---------
Exchange fees none

----------------------------------------- --------------------------------------------- ---------
Annual fund operating expenses are Management fees 0.65%
deducted from the Fund's assets.
--------------------------------------------- ---------
Distribution and service (12b-1) fees none
--------------------------------------------- ---------
Other expenses 0.33%
--------------------------------------------- ---------
Total operating expenses 0.98%

----------------------------------------- --------------------------------------------- ---------
This example is intended to help you 1 year $100
compare the cost of investing in the --------------------------------------------- ---------
Fund to the cost of investing in other 3 years $312
mutual funds with similar investment --------------------------------------------- ---------
objectives. We show the cumulative 5 years $542
amount of Fund expenses on a hypothetical --------------------------------------------- ---------
investment of $10,000 with an annual 5% 10 years $1,201
return over the time shown.(2) The --------------------------------------------- ---------
example assumes that the Fund's total
operating expenses remain unchanged in
each of the periods we show. This is an
example only, and does not represent
future expenses, which may be greater or
less than those shown here.

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

(1) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here. The example assumes that the Fund's
total operating expenses remain unchanged in each of the periods we show.

How we manage the Fund

We take a disciplined approach to investing, combining investment
strategies and risk management techniques that can help shareholders meet
their goals.

o security prices that reflect a market valuation that is judged to be
below the estimated present or future value of the company;
o favorable earnings growth prospects;
o expected above-average return on equity and dividend yield;
o the financial condition of the issuer; and
o various qualitative factors.

While our investment philosophy will typically be value-oriented, we also may
invest in issues with growth characteristics during market cycles when growth
stocks appear attractive.

We conduct ongoing analysis of the different markets to determine the
appropriate mix of stocks and bonds for the current economic and investment
environment.

------------------------------------------------------------------ -----------------------------------------------------------------
Securities How we use them
------------------------------------------------------------------ -----------------------------------------------------------------
Common stocks: Securities that represent shares of ownership in a Under normal circumstances, we generally invest at least 25% of
corporation. Stockholders participate in the corporation's the Fund's net assets in common stocks.
profits and losses, proportionate to the number of shares they
own.

------------------------------------------------------------------ -----------------------------------------------------------------
Convertible securities: Usually preferred stocks or corporate The Fund may invest in convertible securities; however, we will
bonds that can be exchanged for a set number of shares of common not invest more than 10% of net assets in convertible
stock at a predetermined price. These securities offer higher securities that are rated below investment grade by a
appreciation potential than nonconvertible bonds and greater nationally recognized statistical ratings organization (NRSRO)
income potential than nonconvertible preferred stocks. or in securities that are unrated but deemed equivalent to
non-investment grade.

------------------------------------------------------------------ -----------------------------------------------------------------
Mortgage-backed securities: Fixed-income securities that There is no limit on government-related mortgage-backed
represent pools of mortgages, with investors receiving principal securities or on fully collateralized privately issued
and interest payments as the underlying mortgage loans are paid mortgage-backed securities.
back. Many are issued and guaranteed against default by the U.S.
government or its agencies or instrumentalities, such as the We may invest up to 20% of net assets in mortgage-backed
Federal Home Loan Mortgage Corporation, Federal National Mortgage securities issued by private companies whether or not the
Association and the Government National Mortgage Association. securities are 100% collateralized. However, these securities
Others are issued by private financial institutions, with some must be rated at the time of purchase in one of the four
fully collateralized by certificates issued or guaranteed by the highest categories by an NRSRO. The privately issued securities
U.S. government or its agencies or instrumentalities. we invest in are either CMOs or REMICs (see below).

------------------------------------------------------------------ -----------------------------------------------------------------
Collateralized mortgage obligations (CMOs) and real estate See mortgage-backed securities above.
mortgage investment conduits (REMICs): Privately issued
mortgage-backed bonds whose underlying value is the mortgages
that are grouped into different pools according to their
maturity.

------------------------------------------------------------------ -----------------------------------------------------------------
Asset-backed securities: Bonds or notes backed by accounts The Fund invests only in asset-backed securities rated in one
receivable including home equity, automobile or credit loans. of the four highest categories by an NRSRO.

------------------------------------------------------------------ -----------------------------------------------------------------
Corporate bonds: Debt obligations issued by a corporation. We focus on bonds rated in one of the four highest categories
by an NRSRO (or if unrated, deemed equivalent), with maturities
between one and 30 years.

------------------------------------------------------------------ -----------------------------------------------------------------
High-yield corporate bonds: Debt obligations issued by a The Fund may invest up to 20% of net fixed-income assets in
corporation and rated lower than investment grade by an NRSRO high-yield corporate bonds. Emphasis is typically on those
such as S&P or Moody's. High-yield bonds, also known as "junk rated BB or Ba by an NRSRO.
bonds," are issued by corporations that have lower credit
quality and may have difficulty repaying principal and interest. We carefully evaluate an individual company's financial
situation, its management, the prospects for its industry and
the technical factors related to its bond offering. Our goal is
to identify those companies that we believe will be able to
repay their debt obligations in spite of poor ratings. The Fund
may invest in unrated bonds if we believe their credit quality
is comparable to the rated bonds we are permitted to invest in.
Unrated bonds may be more speculative in nature than rated
bonds.

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Repurchase agreements: An agreement between a buyer of Typically, we use repurchase agreements as a short-term
securities, such as the Fund, and a seller of securities, in investment for the Fund's cash position. In order to enter into
which the seller agrees to buy the securities back within a these repurchase agreements, the Fund must have collateral of
specified time at the same price the buyer paid for them, plus 102% of the repurchase price. The Fund may not have more than
an amount equal to an agreed upon interest rate. Repurchase 10% of its net assets in repurchase agreements with maturities
agreements are often viewed as equivalent to cash. of over seven days. The Fund will only enter into repurchase
agreements in which the collateral is comprised of U.S.
government securities.

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American Depositary Receipts (ADRs): ADRs are issued by a U.S. We may invest without limitation in ADRs.
bank and represent the bank's holdings of a stated number of
shares of a foreign corporation. An ADR entitles the holder to
all dividends and capital gains earned by the underlying foreign
shares. ADRs are typically bought and sold on U.S. securities
exchanges in the same way as other U.S. securities.

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Options and futures: Options represent a right to buy or sell a At times when we anticipate adverse conditions, we may want to
security or a group of securities at an agreed upon price at a protect gains on securities without actually selling them. We
future date. The purchaser of an option may or may not choose to might buy or sell options or futures to neutralize the effect
go through with the transaction. The seller of an option, of any price declines, without buying or selling a security, or
however, must go through with the transaction if its purchaser as a hedge against changes in interest rates. We might also
exercises the option. use options or futures to gain exposure to a particular market
segment without purchasing individual securities in that
Futures contracts are agreements for the purchase or sale of a segment or to earn additional income for the Fund.
security or a group of securities at a specified price, on a
specified date. Unlike purchasing an option, a futures contract Use of these strategies can increase the operating costs of the
must be executed unless it is sold before the settlement date. Fund and can lead to loss of principal.

Options and futures are generally considered to be derivative
securities.

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Restricted securities: Privately placed securities whose resale We may invest in privately placed securities including those
is restricted under U.S. securities laws. that are eligible for resale only among certain institutional
buyers without registration, which are commonly known as "Rule
144A Securities." Restricted securities that are determined to
be illiquid may not exceed the Fund's 10% limit on illiquid
securities, which is described below.

------------------------------------------------------------------ -----------------------------------------------------------------
Interest rate swap, index swap and credit default swap We may use interest rate swaps to adjust the Fund's sensitivity
agreements: In an interest rate swap, a fund receives payments to interest rates or to hedge against changes in interest
from another party based on a variable or floating interest rate, rates. Index swaps may be used to gain exposure to markets
in return for making payments based on a fixed interest rate. An that the Fund invests in, such as the corporate bond market.
interest rate swap can also work in reverse with a fund receiving We may also use index swaps as a substitute for futures or
payments based on a fixed interest rate and making payments based options contracts if such contracts are not directly available
on a variable or floating interest rate. In an index swap, a to the Fund on favorable terms. We may enter into credit
fund receives gains or incurs losses based on the total return of default swaps in order to hedge against a credit event, to
a specified index, in exchange for making interest payments to enhance total return or to gain exposure to certain securities
another party. An index swap can also work in reverse with a or markets.
fund receiving interest payments from another party in exchange
for movements in the total return of a specified index. In a
credit default swap, a fund may transfer the financial risk of a
credit event occurring (a bond default, bankruptcy,
restructuring, etc.) on a particular security or basket of
securities to another party by paying that party a periodic
premium; likewise, a fund may assume the financial risk of a
credit event occurring on a particular security or basket of
securities in exchange for receiving premium payments from
another party. Interest rate swaps, index swaps and credit
default swaps may be considered to be illiquid.

------------------------------------------------------------------ -----------------------------------------------------------------
Illiquid securities: Securities that do not have a ready market, We may invest up to 10% of the Fund's net assets in illiquid
and cannot be easily sold within seven days at approximately the securities.
price at which a Fund has valued them.

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

The Fund may also invest in other securities including real estate investment
trusts, rights and warrants to purchase common stock, U.S. Treasury securities
and foreign securities. Please see the Statement of Additional Information (SAI)
for additional information on these securities as well as those listed in the
table above.

Portfolio turnover We anticipate that the Fund's annual portfolio turnover may
be greater than 100%. A turnover rate of 100% would occur if, for example, a
fund bought and sold all of the securities in its portfolio once in the course
of a year or frequently traded a single security. A high rate of portfolio
turnover in any year may increase brokerage commissions paid and could generate
taxes for shareholders on realized investment gains.

------------------------------------------------------------------ -----------------------------------------------------------------
Risks How we strive to manage them
------------------------------------------------------------------ -----------------------------------------------------------------
Market risk is the risk that all or a majority of the securities We maintain a long-term investment approach and focus on
in a certain market-- like the stock or bond market-- will securities that we believe can appreciate over an extended time
decline in value because of factors such as economic conditions, frame regardless of interim market fluctuations. We do not try
future expectations or investor confidence. to predict overall market movements. Although we may hold
securities for any amount of time, we generally do not trade
Index swaps are subject to the same market risks as the for short-term purposes.
investment market or sector that the index represents. Depending
on the actual movements of the index and how well the portfolio We diversify the Fund's assets among two major categories of
manager forecasts those movements, a fund could experience a investments-- stocks and bonds-- which tend to increase and
higher or lower return than anticipated. decline in value in different economic or investment conditions.

In evaluating the use of an index swap, we carefully consider
how market changes could affect the swap and how that compares
to us investing directly in the market the swap is intended to
represent.

------------------------------------------------------------------ -----------------------------------------------------------------
Industry and security risk: Industry risk is the risk that the We limit the amount of the Fund's assets invested in any one
value of securities in a particular industry will decline because industry and in any individual security. We also follow a
of changing expectations for the performance of that industry. rigorous selection process before choosing securities and
continually monitor them while they remain in the portfolio.
Securities risk is the risk that the value of an individual stock
or bond will decline because of changing expectations for the
performance of the individual company issuing the stock or bond.

------------------------------------------------------------------ -----------------------------------------------------------------
Interest rate risk is the risk that securities, particularly We do not try to increase return by predicting and aggressively
bonds with longer maturities, will decrease in value if interest capitalizing on interest rate moves. Instead, we aim to keep
rates rise. the interest rate risk similar to the Lehman Brothers Aggregate
Bond Index.
Swaps may be particularly sensitive to interest rate changes.
Depending on the actual movements of interest rates and how well We will not invest in swaps with maturities of more than two
the portfolio manager anticipates them, a fund could experience a years. Each business day we will calculate the amount the Fund
higher or lower return than anticipated. must pay for swaps it holds and will segregate cash or other
liquid securities to cover that amount.

------------------------------------------------------------------ -----------------------------------------------------------------
Credit risk is the risk that there is the possibility that a Our careful, credit-oriented bond selection and our commitment
bond's issuer will be unable to make timely payments of interest to hold a diversified selection of high-yield bonds are
and principal. designed to manage this risk. We will limit the Fund's
investments in high-yield bonds to 20% of the Fund's net assets
Investing in so-called "junk" or "high-yield" bonds entails the allocated to fixed-income securities (typically no more than 8%
risk of principal loss, which may be greater than the risk of the Fund's aggregate net assets).
involved in investment grade bonds. High-yield bonds are
sometimes issued by companies whose earnings at the time of
issuance are less than the projected debt service on the junk
bonds.

------------------------------------------------------------------ -----------------------------------------------------------------
Foreign risk is the risk that foreign securities may be adversely We typically invest only a small portion of the Fund's
affected by political instability, changes in currency exchange portfolio in foreign securities. When we do purchase foreign
rates, foreign economic conditions or inadequate regulatory and securities, they are often denominated in U.S. dollars. We also
accounting standards. tend to avoid markets where we believe accounting principles or
the regulatory structure are underdeveloped.

------------------------------------------------------------------ -----------------------------------------------------------------
Liquidity risk is the possibility that securities cannot be We limit exposure to illiquid securities to no more than 10% of
readily sold within seven days at approximately the price that a the Fund's net assets.
fund has valued them.
Swap agreements will be treated as illiquid securities, but
swap dealers may be willing to repurchase interest rate swaps.

------------------------------------------------------------------ -----------------------------------------------------------------
Futures and options risk is the possibility that a fund may We will buy and sell options and futures for defensive
experience a significant loss if it employs an options or futures purposes, such as to protect gains in the portfolio without
strategy related to a security or a market index and that actually selling a security, to neutralize the impact of
security or index moves in the opposite direction from what the interest rate changes or to earn additional income. We will not
portfolio manager anticipated. Futures and options also involve use futures and options for speculative reasons or in an effort
additional expenses, which could reduce any benefit or increase to enhance return.
any loss to a fund from using the strategy.

------------------------------------------------------------------ -----------------------------------------------------------------
Derivatives Risk is the possibility that a fund may experience a We will use derivatives for defensive purposes, such as to
significant loss if it employs a derivatives strategy (including protect gains or hedge against potential losses in the
a strategy involving swaps such as interest rate swaps, index portfolio without actually selling a security, to neutralize
swaps and credit default swaps) related to a security or a the impact of interest rate changes, to affect diversification
securities index and that security or index moves in the opposite or to earn additional income. We will not use derivatives for
direction from what the portfolio manager had anticipated. reasons inconsistent with our investment objectives.
Another risk of derivative transactions is the creditworthiness
of the counterparty because the transaction depends on the
willingness and ability of the counterparty to fulfill its
contractual obligations. Derivatives also involve additional
expenses, which could reduce any benefit or increase any loss to
a fund from using the strategy.

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

Disclosure of portfolio holdings information
A description of the Fund's policies and procedures with respect to the
disclosure of the Fund's portfolio securities is available in the Fund's SAI.

Who manages the Fund

Robert A. Vogel, Jr., Vice President/Senior Portfolio Manager, joined Delaware
Investments in 2004. Prior to that, Mr. Vogel graduated from Loyola College in
Maryland earning both his BBA and MS in Finance. He earned his MBA with a
concentration in Finance at the Wharton School of Business at the University of
Pennsylvania. Mr. Vogel started his financial services career as a Financial
Consultant with Merrill Lynch in 1992. He then moved to Merrill Lynch Investment
Managers (MLIM) in 1997, joining the Capital Management Group, and became a
Portfolio Manager with the U.S. Active Large Cap Value Team in 1998. He departed
MLIM as a Director. In 2004, Mr. Vogel joined Delaware Investments as Vice
President/Senior Portfolio Manager. Mr. Vogel is a CFA charterholder.

The SAI for the Fund provides additional information about the portfolio
manager's compensation, other accounts managed by the portfolio manager and the
portfolio manager's ownership of other Fund shares.

Who's who?
This diagram shows the various organizations involved in 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
Investment manager Custodian
Delaware Management Company JPMorgan Chase Bank
2005 Market Street 4 Chase Metrotech Center
Philadelphia, PA 19103-7094 The Fund Brooklyn, NY 11245

Distributor Service agent
Delaware Distributors, L.P. Delaware Service Company, Inc.
2005 Market Street 2005 Market Street
Philadelphia, PA 19103-7094 Philadelphia, PA 19103-7094

Financial intermediary wholesaler
Lincoln Financial Distributors, Inc.
2001 Market Street
Philadelphia, PA 19103-7055

Portfolio managers
(see page [__] for details)

Financial advisors
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. Generally, at least 40% of the board of trustees must be independent of
the fund's investment manager and distributor. However, the Delaware Balanced
Fund relies on certain exemptive rules adopted by the SEC that require its Board
of Trustees to be comprised of a majority of such independent Trustees. These
independent fund Trustees, in particular, are advocates for shareholder
interests.

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
rules governing mutual fund sales practices.

About your account

Investing in the Fund
Institutional Class shares are available for purchase only by the following:

o retirement plans introduced by persons not associated with brokers or
dealers that are primarily engaged in the retail securities business and
rollover individual retirement accounts from such plans;

o tax-exempt employee benefit plans of the Fund's manager or its affiliates
and of securities dealer firms with a selling agreement with the
distributor;

o institutional advisory accounts of the Fund's manager, or its affiliates
and those having client relationships with Delaware Investment Advisers, an
affiliate of the manager, or its affiliates and their corporate sponsors,
as well as subsidiaries and related employee benefit plans and rollover
individual retirement accounts from such institutional advisory accounts;

o a bank, trust company and similar financial institution, including mutual
funds managed by the Fund's investment manager, investing for its own
account or for the account of its trust customers for whom the 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;

o registered investment advisors investing on behalf of clients that consist
solely of institutions and high net-worth individuals having at least
$1,000,000 entrusted to the advisor for investment purposes. Use of
Institutional Class shares is restricted to advisors who are not affiliated
or associated with a broker or dealer and who derive compensation for their
services exclusively from their advisory clients;

o certain plans qualified under Section 529 of the Internal Revenue Code for
which the Fund's manager, distributor or service agent or one or more of
their affiliates provide record keeping, administrative, investment
management, marketing, distribution or similar services; or

o programs sponsored by financial intermediaries where such program requires
the purchase of Institutional Class shares.

About your account (continued)

How to buy shares

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[GRAPHIC OMITTED: SYMBOL OF A JAGGED LINE]

[GRAPHIC OMITTED: EXCHANGE SYMBOL]

By exchange
You may exchange all or part of your investment in one or more Delaware
Investments Funds for shares of other Delaware Investments Funds. Please keep in
mind, however, that you may not exchange your shares for Class B, Class C or
Class R shares. To open an account by exchange, call your Client Services
Representative at 800 510-4015.

[GRAPHIC OMITTED: SYMBOL OF A PERSON]

Through your financial advisor
Your financial advisor can handle all the details of purchasing shares,
including opening an account. Your financial advisor may charge a separate fee
for this service.

We determine the NAV per share for each class of the Fund at the close of
regular trading on the NYSE on each Business Day. The NAV per share for each
class of the Fund is calculated by subtracting the liabilities of each class
from its total assets and dividing the resulting number by the number of shares
outstanding for that class. We generally price securities and other assets for
which market quotations are readily 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.
We price any fixed-income securities that have a maturity of less than 60 days
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.

Fair Valuation
When the Fund uses fair value pricing, it may take into account any factors it
deems appropriate. The Fund may determine fair value based upon developments
related to a specific security, current valuations of foreign stock indices (as
reflected in U.S. futures markets) and/or U.S. sector or broader stock market
indices. The price of securities used by the Fund to calculate its NAV may
differ from quoted or published prices for the same securities. Fair value
pricing may involve subjective judgments and it is possible that the fair value
determined for a security is materially different than the value that could be
realized upon the sale of that security.

About your account (continued)_

How to redeem shares

[GRAPHIC OMITTED: SYMBOL OF AN ENVELOPE]

By mail
You may redeem your shares (sell them back to the Fund) by mail by writing to:
Delaware Investments, 2005 Market Street, Philadelphia, PA 19103-7094. All
owners of the account must sign the request, and for redemptions of more than
$100,000, you must include a signature guarantee for each owner. You can also
fax your written request to 267 256-8990. Signature guarantees are also required
when redemption proceeds are going to an address other than the address of
record on an account.

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[GRAPHIC OMITTED: SYMBOL OF A JAGGED LINE]

[GRAPHIC OMITTED: SYMBOL OF A PERSON]

Through your financial advisor
Your financial advisor can handle all the details of redeeming your shares. Your
financial advisor may charge a separate fee for this service.

If you hold your shares in certificates, you must submit the certificates with
your request to sell the shares. We recommend that you send your certificates by
certified mail.

When you send us a properly completed request to redeem or exchange shares, and
we or an authorized agent receive the request before the close of regular
trading on the NYSE (normally 4:00 p.m. Eastern Time), you will receive the NAV
next determined after we receive your request. If we receive your request after
the close of regular trading on the NYSE, you will receive the NAV next
determined on the next business day. You may have to pay taxes on the proceeds
from your sale of shares. We will send you a check, normally the next business
day, but no later than seven days after we receive your request to sell your
shares. If you purchased your shares by check, we will wait until your check has
cleared, which can take up to 15 days, before we send your redemption proceeds.

The Fund has reserved the right to pay for redemptions with portfolio securities
under certain circumstances. See the SAI for more information on redemptions
in-kind.

About your account (continued)

Account minimum
If you redeem shares and your account balance falls below $250, your Fund may
redeem your account after 60 days' written notice to you.

Exchanges
You can exchange all or part of your shares for shares of the same class in
another Delaware Investments Fund. If you exchange shares to a fund that has a
sales charge you will pay any applicable sales charges on your new shares. You
do not 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, Class C or Class R
shares of the funds in the Delaware Investments family.

Frequent trading of fund shares (Market timing)
The Fund discourages purchases by market timers and purchase orders (including
the purchase side of exchange orders) by shareholders identified as market
timers may be rejected. The Fund's Board of Trustees has adopted policies and
procedures designed to detect, deter and prevent trading activity detrimental to
the Fund and its shareholders, such as market timing. The Fund will consider
anyone who follows a pattern of market timing in any fund in the Delaware
Investments family or Optimum Fund Trust to be a market timer and may consider
anyone who has followed a similar pattern of market timing at an unaffiliated
fund family to be a market timer.

Omnibus account arrangements are common forms of holding shares of the Fund,
particularly among certain brokers/ dealers and other financial intermediaries,
including sponsors of retirement plans and variable insurance products. The Fund
will attempt to apply its monitoring procedures to these omnibus accounts and to
the individual participants in such accounts. In an effort to discourage market
timers in such accounts, the Fund may consider enforcement against market timers
at the participant level and at the omnibus level, up to and including
termination of the omnibus account's authorization to purchase Fund shares.

Certain management considerations

Manager of managers structure

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.

-------------------------------------------- -------------------------------------------------------
Delaware Balanced Fund Institutional Class
-------------------------------------------- -------------------------------------------------------
Year Ended 10/31
-------------------------------------------- -------- ---------- ------------ ---------- -----------
2005 2004 2003 2002(1) 2001
-------------------------------------------- -------- ---------- ------------ ---------- -----------

Net asset value, beginning of period $15.640 $15.070 $13.400 $15.120 $18.640

Income (loss) from investment operations:
Net investment income(2) 0.377 0.223 0.213 0.272 0.391
Net realized and unrealized gain (loss)
on investments and foreign currencies 0.576 0.601 1.748 (1.612) (3.451)
------- ------- ------- ------- -------
Total from investment operations 0.953 0.824 1.961 (1.340) (3.060)
------- ------- ------- ------- -------

Less dividends and distributions from:
Net investment income (loss) (0.283) (0.254) (0.291) (0.380) (0.460)
------- ------- ------- ------- -------
Net realized gain (loss) on investments ---- ----- ----- ----- -----
------- ------- ------- ------- -------
Total dividends and distributions (0.283) (0.254) (0.291) (0.380) (0.460)
------- ------- ------- ------- -------

Net asset value, end of period $16.310 $15.640 $15.070 $13.400 $15.120
======= ======= ======= ======= =======

Total return(3) 6.11% 5.49% 14.83% (9.16%) (16.65%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) $3,507 $3,664 $7,125 $12,849 $20,820
Ratio of expenses to average net assets 0.98% 1.06% 1.13% 1.12% 1.05%
Ratio of net investment income to
average net assets 2.33% 1.43% 1.52% 1.81% 2.32%
Portfolio turnover 203% 244% 249% 368% 288%
----------------------------------------------------------------------------------------------------

(2) The average shares outstanding method has been applied for per share
information.

(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value.

How to read the Financial highlights

Net investment income (loss)
Net investment income (loss) includes dividend and interest income earned from a
fund's investments; it is after expenses have been deducted.

Net asset value (NAV)
This is the value of a mutual fund share, calculated by dividing the net assets
by the number of shares outstanding.

Total return
This represents the rate that an investor would have earned or lost on an
investment in a fund. In calculating this figure for the financial highlights
table, we include applicable fee waivers and assume the shareholder has
reinvested all dividends and realized gains.

Net assets
Net assets represent the total value of all the assets in a fund's portfolio,
less any liabilities, that are attributable to that class of the fund.

Ratio of net investment income (loss) to average net assets
We determine this ratio by dividing net investment income (loss) by average net
assets.

Glossary

How to use this glossary
This glossary includes definitions of investment terms, many of which are 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.