<PAGE>
June 30, 1995
Dear Shareholder:
Since we wrote to you in the 1994 Annual Report, we have seen several
significant developments in the economy and consequently, the financial
markets. Following a series of six short-term interest rate increases in
calendar year 1994, the Federal Reserve raised rates only once in the first
five months of 1995 amid signs of slowing economic activity. In addition,
long-term interest rates declined steadily, which prompted a return to the
stock and bond markets for many investors. Your Fund responded positively to
this more attractive investing environment.
For the six-month period ended May 31, 1995, Decatur Total Return
Fund A Class had a total return (capital change plus income) that
significantly outpaced the return of the Lipper Equity Income Fund Average,
which includes 129 mutual funds with investment objectives similar to those
of your Fund. The Fund's results were competitive with that of the Standard &
Poor's 500 Stock Index, an unmanaged index comprised of large market
capitalization stocks.
- --------------------------------------------------------------------------------
TOTAL RETURN
SIX MONTHS ENDED
MAY 31, 1995
Decatur Total Return Fund A Class +18.45%
Standard & Poor's 500 Stock Index +19.20%
Lipper Equity Income Fund Average +13.83%
Performance of Decatur and Lipper Equity Income Fund Average is based on net
asset value without impact of sales charge. Decatur's return reflects the
reinvestment of two quarterly dividend payments for December and March, each
in the amount of $0.10 per share. Performance information for all classes of
the Fund can be found on page 4.
- --------------------------------------------------------------------------------
During this recent fiscal period, the Fund's conservative,
yield-oriented buy and sell disciplines led us to invest in a number of market
sectors which performed exceptionally well. The Fund's large positions and
good stock selection in banks, chemicals, energy and health care stocks
contributed most to our strong performance. Furthermore, Decatur Total Return
Fund delivered this return despite having no holdings of technology stocks,
the top performing stock group of the past six months. We discuss our
position on technology stocks in greater detail on page 3 of this report.
As we look toward the rest of the year, we remain optimistic. Though
earnings growth rates of American companies may slow from their current high
levels--in fact, we may see some periodic "corrections" in the stock market--
we believe that the overall market will continue to perform well throughout
1995. In our opinion, Decatur Total Return Fund is in a good position to help
you capture the long-term return potential of this market while giving you an
opportunity for high current income in the form of quarterly dividends.
This report contains an update from the senior portfolio manager of
the Fund, who explains the Fund's positioning over the past six months and
its impact on performance. As always, we thank you for your continued
confidence.
/s/ Wayne A. Stork /s/ Brian F. Wruble
- ------------------ -------------------
Wayne A. Stork Brian F. Wruble
Chairman, Board of Directors President and Chief Executive Officer
Delaware Group Decatur Total Return Fund Delaware Group
Decatur Total Return Fund
<PAGE>
Portfolio Manager's Market Review
Over the past six months, two key factors influenced the stock market's
performance. First, lower long-term interest rates resulted in higher
valuations for the stock market. You may recall that the yield on the 30-year
U.S. Treasury bond soared from 6.25% in January 1994 to 8.21% in early
November 1994, causing severe price setbacks in both bonds and stocks. Since
then, the 30-year Treasury's yield has moved steadily downward, reaching 6.60%
on May 31, 1995, prompting a significantly brighter investing climate.
Second, and perhaps more important, world class competitive American
companies continued to generate much better than expected levels of earnings
growth. In our view, this earnings growth, combined with lower interest rates,
has been the foundation supporting the stock market's strong gains thus far in
1995.
As stock prices have risen, however, the dividend yield on the stocks
comprising the Standard & Poor's 500 Stock Index has declined to historic
lows. As of May 31, 1995, the average yield of the S&P 500 stocks was 2.58%
(Decatur Total Return Fund A Class yielded 2.57%, calculated according to SEC
guidelines). We disagree with market analysts who see this as an indication
of a forthcoming bear market as explained in the Market Outlook section on
the next page.
INSIDE THE DECATUR PORTFOLIO
Given the decline in the stock market's yield, it is important to
remember that even though dividends are extremely important to the total
return equation, it is the combination of capital gains and dividends that
leads to strong long-term returns from stocks.
Decatur Total Return Fund has a very clear buy/sell discipline for
stock selection that not only targets above-average up-front dividend yields,
but offers the opportunity to participate in the capital gains potential
the equity market offers. To be eligible for purchase or holding by the Fund,
a stock must have a current dividend yield greater than that of the S&P 500
Index. When a stock's current yield falls below the average yield of the
S&P 500, we begin to sell the holding. Thus, stocks in the portfolio have a
current dividend yield greater than that of the overall market average.
We believe the result of this discipline is that Decatur will
typically buy stocks that are out of favor and unpopular, and whose prices
have declined to the point that their current dividend yields are above the
market average. In contrast, we expect to typically sell those stocks which
are popular and whose prices have increased to the point where the current
dividend yields are below average.
A PROFILE FOR STOCK SELECTION
More specifically, when it comes to the stocks we select, we look for
the following characteristics:
* Above-average dividend yields
* Potential for better-than-expected earnings growth
* Less price risk relative to the market
These might seem like difficult criteria to meet in a market yielding
only 2.58%, but we have been able to find stocks within this risk/reward
profile. Although all sectors of the portfolio contributed to your Fund's
performance over the past six months, significant positions and good stock
selection in bank, chemical, energy and selected health care stocks
contributed most to our strong performance.
<PAGE>
Even though we were not invested in technology stocks, the market's
"hottest" performing single sector of the past six months, Decatur delivered
a return that was competitive with that of the S&P 500 Index, which does
include technology stocks. Technology companies tend to have little, or no,
dividend yield. For this reason, they have not been eligible for purchase in
the Fund's portfolio which may help mitigate the effects of a market reversal
should one occur.
Recently, we have moderately increased our portfolio holdings in the
consumer cyclical (automobile, retailing, etc.) area of the market where
investors have reacted very negatively to near-term earnings weakness.
Overall, however, we do not see the need for any major changes in the Fund's
sector allocation or individual stock holdings. All of the Fund's investments
are under continuous review and where more attractive risk/reward situations
develop, we will strive to take advantage of them.
MARKET OUTLOOK
While some market analysts believe that the low dividend yield on the
S&P 500 Index is indicative of a bear market, we hold a different view. In our
opinion, the current strong level of earnings growth exhibited by American
companies would have to decline significantly for a bear market to occur, and we
don't see anything on the horizon that would cause that to happen. Unless
interest rates rise significantly or corporate profit growth falls dramatically,
the stock market should continue its upward trend.
We do expect the overall stock market's performance to become
somewhat more volatile in the second half of 1995. The market's rise has been
virtually straight up since the end of January and we could see a
"correction" at any time, which we expect would have the most impact on
technology stocks.
Clearly, economic growth has slowed; however, we believe that the stage
is set for a worldwide reduction in interest rates that could lead to a long and
sustained economic growth cycle. This should continue to fuel companies'
earnings growth, which in turn should provide ongoing support to the U.S. stock
market and your Decatur Total Return Fund.
/s/ JOHN B. FIELDS
- ------------------
John B. Fields
Vice President
Senior Portfolio Manager
<PAGE>
Long-Term Performance
DECATUR TOTAL RETURN FUND
Performance through May 31, 1995
CLASS A CLASS B
Average Annual Total Returns(1) Aggregate Total Returns(2)
(Introduced September 6, 1994)
Lifetime +10.77% Lifetime +11.68%
Excluding Sales Charge
5 Years +9.07% +7.68%
Including Sales Charge
1 Year +9.57%
Performance through June 30, 1995
CLASS A CLASS B
Average Annual Total Returns(1) Aggregate Total Returns(2)
(Introduced September 6, 1994)
Lifetime +10.87% Lifetime +13.54%
Excluding Sales Charge
5 Years +9.67% +9.54%
Including Sales Charge
1 Year +13.00%
RETURN AND SHARE VALUE FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THE ORIGINAL INVESTMENT. PAST PERFORMANCE IS NOT A
GUARANTEE OF FUTURE RESULTS.
(1) CLASS A returns reflect the reinvestment of all distributions, the 5.75%
maximum sales charge and the impact of a 12b-1 fee on performance after June
6, 1992.
(2) CLASS B returns "including sales charge" reflect the reinvestment of all
distributions, the impact of the maximum 4% contingent deferred sales charge and
a 1% annual distribution and service fee, for the period from introduction of
Class B on September 6, 1994, through May 31, 1995. Class B six-month aggregate
total returns for the period ended May 31, 1995, were +18.02% (excluding sales
charge) and +14.02% (including sales charge). Returns "excluding sales charge"
assume that the investment was not redeemed. Performance for this short time
period may not be representative of longer term performance of this class.
The average annual total returns for Decatur Total Return Fund's Institutional
Class, which is available without sales or asset-based distribution charges only
to certain eligible institutional accounts, were +11.59%, +10.48% and +16.63%,
respectively, for the lifetime, five- and one-year periods ended May 31, 1995.
The aggregate total return for the Institutional Class for the six months ended
May 31, 1995, was +18.63%. Institutional Class returns were +11.69%, +11.11% and
+20.35% for the 10-, five- and one-year periods ended June 30, 1995. The
Institutional Class was initially made available on November 9, 1992.
Performance for the Institutional Class for periods prior to this date are based
on Class A performance, adjusted to eliminate the impact of the sales charge,
but not the Class A asset-based distribution charge.
<PAGE>
Financial Statements
DELAWARE GROUP DECATUR FUND, INC. --
DECATUR TOTAL RETURN FUND
STATEMENT OF NET ASSETS
Six Months Ended May 31, 1995
(Unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK - 91.12%
AEROSPACE & DEFENSE - 2.50%
General Dynamics ............................. 97,300 $ 4,256,875
Lockheed Martin .............................. 43,760 2,603,720
United Technologies .......................... 72,200 5,478,175
------------
12,338,770
------------
AUTOMOTIVES AND AUTOMOTIVE PARTS - 2.44%
Chrysler ..................................... 170,000 7,416,250
Genuine Parts ................................ 118,045 4,633,266
------------
12,049,516
------------
BANKING, FINANCE & INSURANCE - 17.74%
Aetna Life & Casualty ........................ 115,900 6,910,538
Aon .......................................... 127,200 4,642,800
Chase Manhattan .............................. 154,000 7,122,500
Chemical Bank ................................ 126,300 5,825,588
CIGNA ........................................ 92,600 6,921,850
CoreStates Financial ......................... 112,200 3,730,650
Exel Limited ................................. 36,500 1,706,375
Great Western Financial ...................... 120,000 2,625,000
KeyCorp ...................................... 183,900 5,631,938
Marsh & McLennan ............................. 80,000 6,370,000
Mellon Bank .................................. 166,000 7,096,500
Meridian Bancorp ............................. 175,000 5,589,063
NationsBank .................................. 75,600 4,280,850
St. Paul ..................................... 112,900 5,743,788
Shawmut National ............................. 164,000 4,756,000
UJB Financial ................................ 165,700 4,888,150
U.S. Bancorp ................................. 150,000 3,684,375
------------
87,525,965
------------
CHEMICALS - 12.27%
Dow Chemical ................................. 130,000 9,538,750
DuPont (EI) deNemours ........................ 217,600 14,769,600
Grace (W.R.) ................................. 37,300 2,396,525
Imperial Chemical ADR ........................ 75,000 3,806,250
Monsanto ..................................... 146,100 12,162,825
Occidental Petroleum ......................... 365,000 8,395,000
P.P.G. Industries ............................ 52,800 2,197,800
Witco ........................................ 264,100 7,262,750
------------
60,529,500
------------
COMPUTERS & ELECTRONICS - 4.12%
General Electric ............................. 177,200 10,277,600
Hubbell Class B .............................. 67,600 3,844,750
Thomas & Betts ............................... 92,400 6,225,450
------------
20,347,800
------------
<PAGE>
COMMON STOCK (CONTINUED)
NUMBER MARKET
OF SHARES VALUE
CONSUMER PRODUCTS - 2.66%
Avon Products ................................ 53,000 $ 3,570,875
Eastman Kodak ................................ 91,900 5,548,463
Minnesota Mining & Manufacturing ............. 66,600 3,987,675
------------
13,107,013
------------
ENERGY - 17.71%
Amoco ........................................ 119,700 8,184,488
Atlantic Richfield ........................... 60,000 6,967,500
Dresser Industries ........................... 394,700 9,028,763
Exxon ........................................ 183,500 13,097,313
Imperial Oil Limited ......................... 185,700 7,219,088
Kerr-McGee ................................... 500 27,875
Mobil ........................................ 40,300 4,045,113
Phillips Petroleum ........................... 109,000 3,951,250
Sonat ........................................ 148,000 4,865,500
Tenneco ...................................... 183,700 8,817,600
Texaco ....................................... 151,000 10,343,500
USX-Marathon Group ........................... 545,000 10,831,875
------------
87,379,865
------------
FOOD, BEVERAGES & TOBACCO - 5.47%
American Brands .............................. 99,300 4,009,238
General Mills ................................ 94,000 4,876,250
Heinz (H.J.) ................................. 157,400 7,122,350
Philip Morris ................................ 110,000 8,016,250
RJR Nabisco Holdings ......................... 103,620 2,953,170
------------
26,977,258
------------
HEALTHCARE & PHARMACEUTICALS - 6.89%
American Home Products ....................... 15,600 1,148,550
Glaxo Wellcome PLC-ADR ....................... 198,300 4,610,475
Lilly (Eli) .................................. 64,600 4,820,775
Smithkline Beecham ADR Unit .................. 237,600 9,385,200
Upjohn ....................................... 145,800 5,303,475
Warner-Lambert ............................... 105,500 8,743,313
------------
34,011,788
------------
INDUSTRIAL MACHINERY - 2.36%
Cooper Industries ............................ 165,600 6,127,200
McDermott International ...................... 210,500 5,525,625
------------
11,652,825
------------
MEDIA, LEISURE & ENTERTAINMENT - 3.30%
McGraw-Hill .................................. 169,400 12,535,600
Reader's Digest .............................. 90,500 3,755,750
------------
16,291,350
------------
<PAGE>
STATEMENT OF NET ASSETS (CONTINUED)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK (CONTINUED)
METALS & MINING - 1.36%
Freeport McMoRan ............................ 388,700 $ 6,705,075
------------
6,705,075
------------
PAPER & FOREST PRODUCTS - 1.76%
Kimberly-Clark .............................. 70,000 4,200,000
Union Camp .................................. 86,500 4,487,188
------------
8,687,188
------------
RETAIL - 3.23%
*Darden Restaurants .......................... 85,200 937,200
Penney (J.C.) ............................... 141,400 6,663,475
Sears Roebuck ............................... 148,000 8,343,500
------------
15,944,175
------------
TRANSPORTATION - 0.47%
Union Pacific ............................... 41,900 2,320,213
------------
2,320,213
------------
UTILITIES - 6.84%
ALLTEL ...................................... 177,800 4,378,325
BellSouth ................................... 80,400 4,934,550
FPL Group ................................... 65,000 2,551,250
Frontier .................................... 209,400 4,763,850
Houston Industries .......................... 60,000 2,587,500
Pacific Telesis Group ....................... 179,300 4,796,275
SBC Communications .......................... 128,000 5,760,000
TransCanada Pipeline ........................ 300,000 3,975,000
------------
33,746,750
------------
TOTAL COMMON STOCK (COST $399,937,777) ...... 449,615,051
------------
PREFERRED STOCK - 4.47%
AUTOMOBILES - 2.12%
Ford Motor $4.20 pfd cv "A" ................. 54,500 5,204,750
General Motors $3.25 pfd cv "C" ............. 85,000 5,270,000
------------
10,474,750
------------
FOOD, BEVERAGES & TOBACCO - 0.96%
RJR Nabisco Holdings $0.6012 pfd cv ......... 775,000 4,746,875
------------
4,746,875
------------
METALS & MINING - 0.36%
Freeport McMoRan Copper & Gold
7.0% pfd cv ................................. 70,000 1,750,000
------------
1,750,000
------------
TRANSPORTATION - 1.03%
Delta Air Lines $3.50 pfd cv "C" ............ 94,000 5,099,500
------------
5,099,500
------------
TOTAL PREFERRED STOCK (COST $21,368,301) .... 22,071,125
------------
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
REPURCHASE AGREEMENTS - 2.89%
With Chase Manhattan 6.125% 6/1/95
(dated 5/31/95, collateralized by
$4,824,000 Treasury Notes 6.00%
due 6/30/96, market value $4,949,111) ........... $ 4,818,000 $ 4,818,000
With Deutsche Bank 6.10% 6/1/95
(dated 5/31/95, collateralized by
$4,671,000 U.S. Treasury Notes 6.125%
due 7/31/96, market value $4,772,444) ........... 4,678,000 4,678,000
With PaineWebber 6.125% 6/1/95
(dated 5/31/95, collateralized by $972,000
U.S. Treasury Notes 3.875% due 8/31/95,
market value $976,599 and $3,713,000
U.S. Treasury Notes 8.50% due
4/15/97, market value $3,921,132) ............... 4,752,000 4,752,000
------------
TOTAL REPURCHASE AGREEMENTS
(COST $14,248,000) ................................... 14,248,000
-------------
TOTAL MARKET VALUE OF SECURITIES
OWNED - 98.48% (COST $435,554,078) ................... 485,934,176
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES-1.52% ............................. 7,492,819
-------------
NET ASSETS APPLICABLE TO 35,555,326 SHARES
($1 PAR VALUE) OUTSTANDING - 100.00% ................. $ 493,426,995
=============
NET ASSET VALUE - DECATUR TOTAL RETURN
FUND A CLASS ($478,813,770 / 34,501,799 SHARES) ...... $ 13.88
=============
NET ASSET VALUE - DECATUR TOTAL RETURN
FUND B CLASS ($5,840,509 / 421,887 SHARES) ........... $ 13.84
=============
NET ASSET VALUE - DECATUR TOTAL RETURN
FUND INSTITUTIONAL CLASS
($8,772,716 / 631,640 SHARES) ........................ $ 13.89
=============
- ------------------------
*Non-income producing for the six months ended May 31, 1995.
COMPONENTS OF NET ASSETS AT MAY 31, 1995
Common stock, $1 par value, 200,000,000 shares
authorized to Fund with 100,000,000 shares allocated
to the Decatur Total Return Fund A Class, 50,000,000
shares allocated to the Decatur Total Return Fund
B Class and 50,000,000 shares allocated to the
Decatur Total Return Fund Institutional Class ................ $428,970,483
Accumulated undistributed income:
Net investment income........................................ 2,341,206
Net realized gain on investments.. .......................... 11,735,208
Net unrealized appreciation on investments .................. 50,380,098
------------
Total net assets............................................... $493,426,995
============
See accompanying notes
<PAGE>
DELAWARE GROUP DECATUR FUND, INC. --
DECATUR TOTAL RETURN FUND
STATEMENT OF OPERATIONS
Six Months Ended May 31, 1995
(Unaudited)
INVESTMENT INCOME:
Dividends ........................................ $ 8,635,282
Interest ......................................... 406,224 $ 9,041,506
-----------
EXPENSES:
Management fees ($1,311,644) and
directors' fees ($14,353) ...................... 1,325,997
Distribution expenses ............................ 663,116
Dividend disbursing and transfer agent fees
and expenses .................................... 422,200
Report to shareholders ........................... 99,511
Salaries ......................................... 53,479
Custodian fees ................................... 26,056
Federal and state registration fees .............. 25,259
Professional fees ................................ 15,700
Taxes, other than taxes on income ................ 7,575
Other ............................................ 78,906 2,717,799
---------- -----------
NET INVESTMENT INCOME ............................ 6,323,707
-----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain from security transactions .................... 13,315,892
Net unrealized appreciation of
investments during the period .................................. 55,711,648
-----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS ............................................ 69,027,540
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................................... $75,351,247
===========
See accompanying notes
<PAGE>
DELAWARE GROUP DECATUR FUND, INC. --
DECATUR TOTAL RETURN FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED 5/31/95 YEAR ENDED
(UNAUDITED) 11/30/94
OPERATIONS:
Net investment income ............................ $ 6,323,707 $ 12,298,767
Net realized gain from security transactions ..... 13,315,892 13,432,223
Net realized appreciation (depreciation)
of investments during the period ................ 55,711,648 (25,513,930)
------------ ------------
Net increase in net assets
resulting from operations ....................... 75,351,247 217,060
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Decatur Total Return Fund A Class ............... (6,629,792) (13,809,161)
Decatur Total Return Fund B Class ............... (40,147) (2,634)
Decatur Total Return Fund
Institutional Class ............................ (70,414) (39,777)
Net realized gain from security transactions:
Decatur Total Return Fund A Class ............... (13,655,358) (49,579,695)
Decatur Total Return Fund B Class ............... (46,914) --
Decatur Total Return Fund
Institutional Class ............................ (70,859) (105,220)
------------ ------------
(20,513,484) (63,536,487)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Decatur Total Return Fund A Class ............... 39,231,405 43,830,883
Decatur Total Return Fund B Class ............... 3,725,575 1,802,152
Decatur Total Return Fund
Institutional Class ............................ 6,388,306 686,198
Net asset value of shares issued upon
reinvestment of dividends from net investment
income and realized securities profits:
Decatur Total Return Fund A Class ............... 19,219,847 60,129,721
Decatur Total Return Fund B Class ............... 102,531 2,465
Decatur Total Return Fund
Institutional Class ............................ 117,328 144,998
----------- -----------
68,784,992 106,596,417
----------- -----------
Cost of shares repurchased:
Decatur Total Return Fund A Class ............... (35,860,667) (69,644,135)
Decatur Total Return Fund B Class ............... (186,718) --
Decatur Total Return Fund
Institutional Class ............................ (111,701) (488,748)
------------- -----------
(36,159,086) (70,132,883)
Increase in net assets derived from
capital share transactions ...................... 32,625,906 36,463,534
------------- -----------
NET INCREASE (DECREASE)
IN NET ASSETS ................................... 87,463,669 (26,855,893)
NET ASSETS:
Beginning of period .............................. 405,963,326 432,819,219
------------- -----------
End of period (including undistributed net
investment income of $2,341,206 and
$2,757,852, respectively) ....................... $ 493,426,995 $ 405,963,326
============= ============
See accompanying notes
<PAGE>
DELAWARE GROUP DECATUR FUND, INC. --
DECATUR TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 1995
(Unaudited)
Delaware Group Decatur Fund, Inc. (the "Company"), is registered as a
diversified open-end investment company under the Investment Company Act of
1940. The Company currently offers two Series, Decatur Total Return Fund (the
"Fund") and Decatur Income Fund. The Company is organized as a Maryland
corporation and the Fund offers three classes of shares.
1. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with general accounting
principles and are consistently followed by the Fund for financial statement
preparation:
SECURITY VALUATION - Securities listed on an exchange are valued at the last
quoted sales price as of 4:00 pm on the valuation date. Securities not traded
are valued at the last quoted bid price. Securities not listed on an exchange
are valued at the mean of the last quoted bid and asked prices. Money market
instruments having less than 60 days to maturity are valued at amortized
cost.
FEDERAL INCOME TAXES - The Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes is required in the
financial statements.
REPURCHASE AGREEMENTS - The Fund may invest in a pooled cash account along
with other members of the Delaware Group Family of Funds. The aggregated
daily balance of the pooled cash account is invested in repurchase agreements
secured by obligations of the U.S. Government. The respective collateral is
held by the Fund's custodian bank until the maturity of the respective
repurchase agreements. Each repurchase agreement is 102% collateralized.
However, in the event of default or bankruptcy by the counterparty to the
agreement, realization of the collateral may be subject to legal proceedings.
CLASS ACCOUNTING - Investment income, common expenses and gain (loss) are
allocated to the various classes of the Fund on the basis of daily net assets
of each class. Distribution expenses relating to a specific class are charged
directly to that class.
OTHER - Expenses common to all Funds within the Delaware Group Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased
or sold (trade date). Costs used in calculating realized gains and losses on
the sale of investment securities are those of the specific securities sold.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on an accrual basis. The Fund declares and pays dividends from net
investment income on a quarterly basis.
<PAGE>
The Fund declared distributions from net investment income in the amount of
$0.08, $0.06 and $0.08 per share for the Decatur Total Return Fund A Class,
Decatur Total Return Fund B Class and Decatur Total Return Fund Institutional
Class, respectively, payable on July 10, 1995 to shareholders of record on
June 29, 1995. The ex-dividend date was June 30, 1995.
2. INVESTMENT MANAGEMENT AND DISTRIBUTION AGREEMENTS
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company, Inc. (DMC), the Investment Manager of the
Fund, an annual fee which is calculated daily at the rate of 0.60% on the
first $500 million of average daily net assets of the Fund, 0.575% on the
next $250 million, and 0.55% on the average daily net assets over $750
million, less fees paid to the independent directors. At May 31, 1995, the
Fund had a liability for Investment Management fees and other expenses
payable to DMC for $61,069.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors
L.P. (DDLP), the Distributor and an affiliate of DMC, an annual fee of 0.30%
of the average daily net assets of A Class and 1.00% of the average daily net
assets of B Class. At May 31, 1995, the Fund had a liability for distribution
fees and other expenses payable to DDLP for $28,293. For the six months ended
May 31, 1995, the Fund paid DDLP $106,708 for commissions earned on sales of
Decatur Total Return Fund A Class.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of
DMC, to serve as dividend disbursing and transfer agent for the Fund. For the
period ended May 31, 1995, the Fund has expensed $422,200 for these services.
At May 31, 1995, the Fund had a liability for such fees and other expenses
payable to DSC for $16,663.
Certain officers of the Investment Manager are officers, directors and/or
employees of the Fund. These officers, directors and employees are paid no
compensation by the Fund.
On April 3, 1995, Delaware Management Holdings, Inc., the indirect parent of
DMC, DDLP and DSC, through a merger transaction (the "Merger") became a
wholly-owned subsidiary of Lincoln National Corporation. Other than the
resulting change in ownership, the Merger will not materially change the
manner in which DMC, DDLP and DSC have heretofore conducted their
relationship with the Fund.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
An annual meeting of shareholders was held on March 29, 1995. The matters
submitted to a vote of shareholders were the election of directors, the
approval of a new investment management agreement and the ratification of the
selection of Ernst & Young LLP as independent auditors of the Fund. The new
investment management agreement was submitted for shareholder approval in
connection with the merger noted above because the Investment Company Act of
1940 requires shareholders to vote on a new investment management agreement
whenever there is a change in control of an investment manager.
The names of each director elected at the meeting along with the final vote
tabulation with respect to each nominee and each matter were as follows:
NUMBER OF VOTES
FOR AGAINST/WITHHELD ABSTENTIONS
Election of Directors*:
Wayne A. Stork .................... 70,402,214 2,124,457 --
Walter P. Babich .................. 70,396,277 2,130,394 --
Anthony D. Knerr .................. 70,394,910 2,131,761 --
Ann R. Leven ...................... 70,405,517 2,121,154 --
W. Thacher Longstreth ............. 70,381,788 2,144,883 --
Charles E. Peck ................... 70,395,020 2,131,651 --
Approval of the New Investment
Management Agreement .............. 17,800,255 371,447 1,160,882
Selection of Ernst & Young LLP as
Independent Auditors* ............. 67,759,636 644,276 4,122,758
*Voted upon by all shareholders of the Company
3. INVESTMENTS
During the six months ended May 31, 1995, the Fund made purchases of
$152,920,431 and sales of $148,727,825 of investment securities other than
U.S. Government securities and temporary cash investments.
At May 31, 1995, unrealized appreciation for financial reporting and federal
income tax purposes aggregated $49,062,491 of which $52,198,877 related to
unrealized appreciation of securities and $3,136,386 related to unrealized
depreciation of securities.
The realized gain for federal income tax purposes was $12,918,937 for the six
months ended May 31, 1995.
<PAGE>
4. CAPITAL STOCK
Transactions in capital stock shares were as follows:
SIX MONTHS YEAR
ENDED ENDED
5/31/95 11/30/94
Shares sold:
Decatur Total Return Fund A Class ................. 3,018,775 3,387,631
Decatur Total Return Fund B Class ................. 286,415 141,014
Decatur Total Return Fund Institutional Class ..... 519,332 53,343
Shares issued upon reinvestment of dividends from
net investment income and distributions of realized
gain from security transactions:
Decatur Total Return Fund A Class ................. 1,581,579 4,694,827
Decatur Total Return Fund B Class ................. 8,390 191
Decatur Total Return Fund Institutional Class ..... 9,388 11,332
---------- ----------
5,423,879 8,288,338
---------- ----------
Shares repurchased:
Decatur Total Return Fund A Class ................. (2,809,450) (5,385,395)
Decatur Total Return Fund B Class ................. (14,122) --
Decatur Total Return Fund Institutional Class ..... (8,526) (35,249)
---------- ----------
(2,832,098) (5,420,644)
---------- ----------
Net increase ....................................... 2,591,781 2,867,694
========== ==========
5. SECURITIES LENDING
The market value of securities on loan to broker/dealers at May 31, 1995, was
$18,173,838 for which the Fund received cash collateral of $18,292,500.
6. LINES OF CREDIT
The Fund has a committed line of credit $10,000,000. No amount was
outstanding at May 31, 1995, or at any time during the fiscal period.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
DECATUR TOTAL RETURN FUND A CLASS
--------------------------------------------------------------------
SIX MONTHS(1)
ENDED YEAR ENDED NOVEMBER 30,
5/31/95 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $ 12.32 $ 14.38 $ 13.98 $ 12.73 $ 11.71 $ 13.64
Income from investment of operations:
Net investment income ............................... 0.18 0.37 0.45 0.47 0.53 0.58
Net realized and unrealized gain (loss) from
security transactions .............................. 2.00 (0.34) 1.45 1.30 1.07 (1.44)
------- ------- ------- ------ ------ ------
Total from investment operations ..................... 2.18 0.03 1.90 1.77 1.60 (0.86)
Less distributions:
Dividends from net investment income ................ (0.20) (0.43) (0.45) (0.52) (0.58) (0.60)
Distributions from net realized gain on
security transactions .............................. (0.42) (1.66) (1.05) none none (0.47)
------- ------- ------- ------ ------ ------
Total distributions ................................. (0.62) (2.09) (1.50) (0.52) (0.58) (1.07)
------- ------- ------- ------ ------ ------
Net asset value, end of period ....................... $ 13.88 $ 12.32 $ 14.38 $ 13.98 $12.73 $ 11.71
======= ======= ======= ======= ====== =======
Total return(2) ...................................... 18.45% (0.04%) 14.74% 14.12% 13.94% (6.84%)
Ratios/supplemental data:
Net assets, end of period (000 omitted) ............. $478,814 $402,849 $431,638 $408,986 $394,338 $357,139
Ratio of expenses to average net assets ............. 1.23% 1.26% 1.22% 1.23% 1.23% 1.23%
Ratio of net investment income to average net assets. 2.87% 2.88% 3.15% 3.44% 4.20% 4.87%
Portfolio turnover rate ............................. 70% 74% 119% 98% 67% 54%
</TABLE>
- -------------
1 Ratios have been annualized and total return has not been annualized.
2 Does not reflect any maximum sales charges that are or were in effect nor
the 1% limited contingent deferred sales charge that would apply in the event
of certain redemptions within 12 months of purchase.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
DECATUR TOTAL DECATUR TOTAL
RETURN FUND RETURN FUND
B CLASS INSTITUTIONAL CLASS
------------------------------------------------------------------
SIX MONTHS(1) 9/6/94(2) SIX MONTHS(1) YEAR 7/26/93(2)
ENDED TO ENDED ENDED TO
5/31/95 11/30/94 5/31/95 11/30/94 11/30/93
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......................... $ 12.31 $ 13.11 $ 12.35 $ 14.40 $ 14.10
Income from investment of operations:
Net investment income ........................................ 0.14 0.12 0.20 0.43 0.15
Net realized and unrealized gain (loss) from
security transactions ....................................... 1.99 (0.82) 2.00 (0.37) 0.25
------- ------- ------ ------ ------
Total from investment operations .............................. 2.13 (0.70) 2.20 0.06 0.40
Less distributions:
Dividends from net investment income ......................... (0.18) (0.10) (0.24) (0.45) (0.10)
Distributions from net realized gain on security
transactions ................................................ (0.42) none (0.42) (1.66) none
------- ------- ------ ------ ------
Total distributions .......................................... (0.60) (0.10) (0.66) (2.11) (0.10)
------- ------- ------ ------ ------
Net asset value, end of period ................................ $ 13.84 $ 12.31 $ 13.89 $ 12.35 $ 14.40
======= ======= ======= ======= ======
Total return(3) ............................................... 18.02% (5.37%) 18.63% 0.19% 14.89%
Ratios/supplemental data
Net assets, end of period (000 omitted) ...................... $5,840 $1,738 $8,773 $1,376 $1,181
Ratio of expenses to average net assets ...................... 1.93% 1.96% 0.93% 0.96% 0.92%
Ratio of net investment income to average net assets ......... 2.17% 2.18% 3.17% 3.18% 3.45%
Portfolio turnover rate ...................................... 70% 74% 70% 74% 119%
</TABLE>
- -------------
1 Ratios have been annualized and total return has not been annualized.
2 Date of initial public offering; ratios and total return have been
annualized for Decatur Total Return Fund Institutional Class. Ratios have
been annualized and total return has not been annualized for Decatur Total
Return Fund B Class.
3 Does not include contingent deferred sales charge which varies from 1% - 4%
depending upon the holding period for Decatur Total Return Fund B Class.
- -------------------------------------------------------------------------------
This semi-annual report is for the information of Decatur Total Return Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current PROSPECTUS, which gives details about charges,
expenses, investment objectives and operating policies of the Fund. Summary
investment results are documented in the current STATEMENT OF ADDITIONAL
INFORMATION. If used with prospective investors after September 30, 1995,
this report must also be accompanied by a Decatur Total Return Fund
Performance Update for the most recently completed calendar quarter. The
figures in this report represent past results, and are not a guarantee of
future results. The return and principal value of an investment in the Fund
will fluctuate so that shares, when redeemed, may be worth more or less than
their original cost.
<PAGE>
- -------------------------------------------------------------------------------
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, tax-free funds, money market funds,
closed-end equity/income funds and global funds give investors the ability
to create a portfolio that fits their personal financial goals. For more
information, including a prospectus of any Delaware Group fund, contact
your financial adviser or call Delaware Group at 800-523-4640 or
215-988-1333 in Philadelphia. Read the prospectus carefully before
investing.
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING
INVESTMENTS. MUTUAL FUNDS CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN;
HOWEVER, SHARES OF THE FUND ARE NOT FDIC OR NCUSIF INSURED, ARE NOT
GUARANTEED BY ANY BANK OR ANY CREDIT UNION, ARE NOT OBLIGATIONS OF ANY
BANK OR ANY CREDIT UNION, AND INVOLVE INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE NOT BANK OR CREDIT
UNION DEPOSITS.
INVESTMENT MANAGER
Delaware Management Company, Inc.
INTERNATIONAL AFFILIATE
Delaware International Advisers Ltd.
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
- -------------------------------------------------------------------------------
SA-018 [5/95] PP7/95 Printed in the U.S.A.
DELAWARE GROUP
A TRADITION OF SOUND INVESTING SINCE 1929
GRAPHIC
|
1995 |
|
SEMI- |
|
ANNUAL |
|
REPORT | DELAWARE
| GROUP
| =============
| Decatur Total
| Return Fund
|-------------------|
| BULK RATE |
| U.S. POSTAGE |
| PAID |
| Permit No.145 |
| Conshohocken, PA |
|-------------------|
