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Previous: DELAWARE GROUP EQUITY FUNDS II INC, 485BPOS, 1999-01-29 |
Next: DELAWARE GROUP EQUITY FUNDS I INC, 24F-2NT, 1999-01-29 |
<PAGE>
December 18, 1998
Dear Shareholder:
We are pleased to present the 1998 annual report for the newest additions to
Delaware Investments' fleet of mutual funds - Global Opportunities Fund,
International Small Cap Fund, Retirement Income Fund and Diversified Value Fund.
The smooth sailing enjoyed by equities during the first half of the 1998
fiscal year turned rough when the Russian government defaulted on its debt last
summer. This generated waves that unsettled financial markets the world over.
A responsive Federal Reserve Board - concerned about a possible slowdown of
U.S. economic growth - reduced the Federal Funds rate last autumn. Several
European central banks followed suit, and many stocks weathered the storm and
generally rallied by fiscal year-end.
Global Opportunities Fund, in particular, benefited from the economic
growth potential spurred by lower interest rates and provided a total return of
+12.07%* (Class A shares at net asset value with distributions reinvested) for
the 12 months ended November 30, 1998. The Fund invests in a broad range of
stocks from around the world. We attempted to lessen potential volatility by
avoiding many Asian markets in fiscal 1998. We focused instead on established
European markets - particularly the United Kingdom which provided an island of
relative economic stability, in our view.
International Small Cap Fund also sought potentially rewarding investment
opportunities in the U.K. However, after last summer's market turmoil, many
investors apparently sought the relative safe haven of large cap stocks at the
expense of small caps. For just over 11 months ended November 30, 1998,
International Small Cap Fund provided a total return of +5.88%* (Class A shares
at net asset value with distributions reinvested). In the coming months, we
believe that many small cap stocks may be better able to adapt to changing
global economic conditions than their large cap counterparts. This bodes well
for the long-term capital appreciation potential of International Small Cap
Fund, in our view.
<PAGE>
=====
2
=====
Retirement Income Fund, which seeks to invest in a combination of dividend
paying U.S. stocks and income generating domestic bonds, did not benefit from
last autumn's stock market rally to the extent of other Funds in this report.
Retirement Income Fund's two largest equity sectors as of November 30, 1998 -
financials and real estate investment trusts (REITs) - were slow to recover from
last summer's market volatility. Some banks and investment companies suffered
from bad overseas investments, which made banks more cautious lenders. Reduced
availability of capital curtailed REITs' ability to borrow and acquire new
properties. For the 12 months ended November 30, 1998, Retirement Income Fund
had a total return of +2.22%* (Class A shares at net asset value with
distributions reinvested).
The inception of Diversified Value Fund on September 15, 1998 proved to be
fortuitous timing. We were able to employ our value-oriented stock selection
strategy just prior to the autumn rebound in stock prices. The Fund provided a
total return of +12.24%* (Class A shares at net asset value with distributions
reinvested) for just under three months ended November 30, 1998. We at Delaware
Investments thank you for the confidence you have shown in our new Fund
offerings.
Sincerely,
Jeffrey J. Nick Paul A. Matlack
Chairman, President and Delaware Management Company
Chief Executive Officer Fixed Income
Delaware Investments Family of Funds Retirement Income Fund
Robert L. Arnold Timothy W. Sanderson
Delaware Management Company Delaware International Advisers
Domestic Equities International Small Cap Fund
Global Opportunities Fund
Babak Zenouzi
Elizabeth A. Desmond Delaware Management Company
Delaware International Advisers Equities
Overseas Equities Retirement Income Fund
Global Opportunities Fund
J. Paul Dokas
Delaware Management Company
Diversified Value Fund
* Refer to complete performance information on the individual fund performance
chart on the pages that follow.
This annual report is for the information of Global Opportunities Fund,
International Small Cap Fund, Retirement Income Fund and Diversified Value Fund
shareholders. The current prospectus for each Fund sets forth details about
charges, expenses, investment objectives and operating policies of each Fund.
You should read any prospectus carefully before you invest. Summary investment
results are documented in each Fund's current Statement of Additional
Information.
<PAGE>
=====
3
=====
Performance Summary
GLOBAL OPPORTUNITIES FUND
GROWTH OF A $10,000 INVESTMENT
JULY 22, 1997 TO NOVEMBER 30, 1998
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Global Opportunities Fund MSCI World Index
------------------------- ----------------
Jul. '97 $ 9,423 $10,000
Aug. '97 9,057 9,333
Sep. '97 9,656 9,841
Oct. '97 9,035 9,325
Nov. '97 9,124 9,491
Dec. '97 9,326 9,608
Jan. '98 9,394 9,877
Feb. '98 9,922 10,547
Mar. '98 10,416 10,994
Apr. '98 10,304 11,103
May. '98 10,292 10,966
Jun. '98 10,304 11,228
Jul. '98 10,203 11,211
Aug. '98 8,944 9,718
Sep. '98 9,237 9,891
Oct. '98 9,810 10,787
Nov. '98 10,226 11,430
The chart above assumes a $10,000 investment in the Fund from July 22, 1997
through November 30, 1998 and includes the impact of the maximum 5.75% front-end
sales charge and reinvestment of distributions. Performance of the Institutional
class will vary due to differing charges and expenses. Past performance is not a
guarantee of future results. The performance above includes the effect of
expense limitations which have been in effect since the Fund's inception.
Without the limitation, performance would have been lower.
The maximum front-end sales charge for Class A shares is 5.75%. Shares may be
purchased at net asset value under certain circumstances. Class A shares have a
12b-1 fee that has been waived since inception. Voluntary expense caps have been
in effect. Returns would have been lower without the expense waivers.
International stock involve greater risks than investing in U.S. stocks. Return
and share value will fluctuate so that shares, when redeemed, may be worth more
or less than the original cost.
Global Opportunities Fund
- --------------------------------------------------------------------------------
Average Annual/Total Returns Through November 30, 1998
Lifetime One Year
- --------------------------------------------------------------------------------
Class A (Est. 7/22/97)
Excluding Sales Charge +6.17% +12.07%
Including Sales Charge +1.65% +5.63%
- --------------------------------------------------------------------------------
Institutional Class +6.08% +11.95%
<PAGE>
=====
4
=====
INTERNATIONAL SMALL CAP FUND
GROWTH ON A $10,000 INVESTMENT
DECEMBER 19, 1997 TO NOVEMBER 30, 1998
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
International Small Cap Fund Morgan Stanley EAFE Index
---------------------------- -------------------------
Dec. '97 $ 9,424 $10,000
Dec. '97 9,512 10,090
Jan. '98 9,545 10,553
Feb. '98 10,687 11,233
Mar. '98 10,920 11,581
Apr. '98 11,098 11,676
May. '98 10,832 11,622
Jun. '98 9,978 11,712
Jul. '98 9,778 11,834
Aug. '98 8,481 10,370
Sep. '98 8,459 10,055
Oct. '98 9,368 11,106
Nov. '98 9,978 11,678
The chart above assumes a $10,000 investment in the Fund from December 19, 1997
through December 31, 1998 and includes the impact of the maximum 5.75% front-end
sales charge and reinvestment of distributions. Performance of the Institutional
class will vary due to differing charges and expenses. Past performance is not a
guarantee of future results. The performance above includes the effect of
expense limitations which have been in effect since the Fund's inception.
Without the limitation, performance would have been lower.
The maximum front-end sales charge for Class A shares is 5.75%. Shares may be
purchased at net asset value under certain circumstances. Class A shares have a
12b-1 fee that has been waived since inception. Voluntary expense caps have been
in effect. Returns would have been lower without the expense waivers.
International stocks involve greater risks than investing in U.S. stocks. Return
and share value will fluctuate so that shares, when redeemed, may be worth more
or less than the original cost.
International Small Cap Fund
- --------------------------------------------------------------------------------
Total Returns Through November 30, 1998
Lifetime
- --------------------------------------------------------------------------------
Class A (Est. 12/19/97)
Excluding Sales Charge +5.88%
Including Sales Charge -0.22%
- --------------------------------------------------------------------------------
Institutional Class +5.88%
<PAGE>
=====
5
=====
RETIREMENT INCOME FUND
GROWTH OF A $10,000 INVESTMENT
DECEMBER 2, 1996 TO NOVEMBER 30, 1998
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Retirement Income Fund S&P 500
---------------------- -------
Dec. '96 $ 9,424 $10,000
Feb. '97 10,572 10,496
May. '97 10,951 11,315
Aug. '97 12,198 12,047
Nov. '97 13,034 12,851
Dec. '97 13,034 13,072
Feb. '98 13,808 14,170
May. '98 13,953 14,787
Aug. '98 12,443 13,023
Nov. '98 13,336 15,892
The chart above assumes a $10,000 investment in the Fund from December 2, 1996
through November 30, 1998 and includes the impact of the maximum 5.75% front-end
sales charge and reinvestment of distributions. Performance of the Institutional
class will vary due to differing charges and expenses. Past performance is not a
guarantee of future results. The performance above includes the effect of
expense limitations which have been in effect since the Fund's inception.
Without the limitation, performance would have been lower.
The maximum front-end sales charge for Class A shares is 5.75%. Shares may be
purchased at net asset value under certain circumstances. Class A shares have a
12b-1 fee that has been waived since inception. Voluntary expense caps have been
in effect. Returns would have been lower without the expense waivers.
International stocks involve greater risks than investing in U.S. stocks. Return
and share value will fluctuate so that shares, when redeemed, may be worth more
or less than the original cost.
Retirement Income Fund
- --------------------------------------------------------------------------------
Average Annual/Total Returns Through November 30, 1998
Lifetime One Year
- --------------------------------------------------------------------------------
Class A (Est. 12/2/96)
Excluding Sales Charge +18.93% +2.22%
Including Sales Charge +15.45% -3.63%
- --------------------------------------------------------------------------------
Institutional Class +18.88% +2.22%
<PAGE>
=====
6
=====
DIVERSIFIED VALUE FUND
GROWTH OF A $10,000 INVESTMENT
SEPTEMBER 15, 1998 TO NOVEMBER 30, 1998
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Diversified Value Fund S&P 500
---------------------- -------
Sep. '98 $ 9,425 $10,000
Oct. '98 10,122 10,813
Nov. '98 10,577 11,469
The chart above assumes a $10,000 investment in the Fund from September 15, 1998
through November 30, 1998 and includes the impact of the maximum 5.75% front-end
sales charge and reinvestment of distributions. Performance of the Institutional
class will vary due to differing charges and expenses. Past performance is not a
guarantee of future results. The performance above includes the effect of
expense limitations which have been in effect since the Fund's inception.
Without the limitation, performance would have been lower. Performance for this
short time period is not representative of longer term results.
The maximum front-end sales charge for Class A shares is 5.75%. Shares may be
purchased at net asset value under certain circumstances. Class A shares have a
12b-1 fee that has been waived since inception. Voluntary expense caps have been
in effect. Returns would have been lower without the expense waivers.
International stocks involve greater risks than investing in U.S. stocks. Return
and share value will fluctuate so that shares, when redeemed, may be worth more
or less than the original cost.
Diversified Value Fund
- --------------------------------------------------------------------------------
Total Returns Through November 30, 1998
Lifetime
- --------------------------------------------------------------------------------
Class A (Est. 9/15/98)
Excluding Sales Charge +12.24%
Including Sales Charge +5.77%
- --------------------------------------------------------------------------------
Institutional Class +12.24%
<PAGE>
DELAWARE GROUP EQUITY FUNDS V, INC. -
RETIREMENT INCOME FUND
STATEMENT OF NET ASSETS
November 30, 1998
<TABLE>
<CAPTION>
Number Market
of Shares Value
--------- ------
<S> <C> <C>
COMMON STOCK - 37.56%
Automobiles & Automotive Parts - 2.93%
General Motors 1,200 $ 84,000
----------
84,000
----------
Banking, Finance & Insurance - 7.73%
BankAmerica 1,018 66,361
Mellon Bank 1,400 88,113
Summit Bancorp 1,600 66,900
----------
221,374
----------
Chemicals - 1.85%
DuPont (E.I.) deNemours 900 52,875
----------
52,875
----------
Energy - 1.75%
Chevron 600 50,175
----------
50,175
----------
Food, Beverage & Tobacco - 2.34%
Philip Morris 1,200 67,125
----------
67,125
----------
Industrial Machinery - 2.44%
Deere & Co. 2,000 69,875
----------
69,875
----------
Metals & Mining - 2.85%
Aluminum Company of America 1,100 81,538
----------
81,538
----------
Paper & Forest Products - 1.88%
Temple-Inland 1,000 53,688
----------
53,688
----------
Real Estate - 6.19%
Corporate Office Properties 5,500 38,156
Grove Property Trust 8,000 86,000
Starwood Hotels & Resorts Trust 1,750 53,156
----------
177,312
----------
Retail - 2.55%
Dollar General (STRYPES) 2,100 72,975
----------
72,975
----------
Transportation & Shipping - 1.76%
Alexander & Baldwin 2,200 50,325
----------
50,325
----------
Telecommunications - 0.16%
Winstar Communications 159 4,450
----------
4,450
----------
</TABLE>
Page 1
<PAGE>
RETIREMENT INCOME FUND
STATEMENT OF NET ASSETS (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
--------- ------
<S> <C> <C>
COMMON STOCK - (continued)
Miscellaneous - 3.13%
Pitney Bowes 1,600 $ 89,600
----------
89,600
----------
Total Common Stock (cost $971,564) 1,075,312
----------
CONVERTIBLE PREFERRED STOCK - 27.76%
Banking, Finance & Insurance - 5.10%
Newell Financial Trust I 5.25% 12/01/27 2,600 145,925
----------
145,925
----------
Cable, Media & Publishing - 2.92%
Tribune 6.25% 3,000 83,625
----------
83,625
----------
Chemicals - 3.00%
Monsanto 6.50% 1,900 85,975
----------
85,975
----------
Real Estate - 4.03%
General Growth Properties 7.25% 2,600 66,950
Reckson Associates Realty 7.625% 2,200 48,400
----------
115,350
----------
Telecommunications - 2.83%
* Winstar Communications PIK 7.00% 2,000 81,000
----------
81,000
----------
Transportation - 1.81%
Union Pacific Capital Trust 6.25% 1,100 51,838
----------
51,838
----------
Utilities - 6.39%
Houston Industries 7.00% 1,200 110,400
Texas Utilities 9.25% 1,300 72,475
----------
182,875
----------
Miscellaneous - 1.68%
Ingersoll-Rand 6.75% 2,000 48,125
----------
48,125
----------
Total Convertible Preferred Stock (cost $737,142) 794,713
----------
<CAPTION>
Principal
Amount
---------
<S> <C> <C>
CORPORATE BONDS - 21.17%
Aerospace & Defense - 0.84%
Roller Bearing 9.625% 06/15/07 $ 25,000 24,063
----------
24,063
----------
Buildings & Materials - 1.73%
American Builders and Contractors sr sub nts 10.625% 05/15/07 25,000 23,875
Clark Materials Handling 10.75% 11/15/06 25,000 25,625
----------
49,500
----------
</TABLE>
Page 2
<PAGE>
RETIREMENT INCOME FUND
STATEMENT OF NET ASSETS (Continued)
<TABLE>
<CAPTION>
Principal Market
CORPORATE BONDS - (Continued) Amount Value
--------- ------
<S> <C> <C>
Chemicals - 0.85%
Precise Technology unsec sr sub nts 11.125% 06/15/07 $ 25,000 $ 24,250
----------
24,250
----------
Computers & Technology - 0.22%
** Decisionone Holdings units 11.50% 08/01/08 25,000 6,250
----------
6,250
----------
Consumer Products - 3.65%
Consumers International sr nts 10.25% 04/01/05 25,000 25,906
Riddell Sports 10.50% 07/15/07 25,000 23,875
William Carter 10.375% 12/01/06 50,000 54,750
----------
104,531
----------
Electronics & Electrical Equipment - 1.54%
Fairchild Semiconductor 10.125% 03/15/07 20,000 19,900
HCC Industries sr sub nts 10.75% 05/15/07 25,000 24,250
----------
44,150
----------
Energy - 0.74%
Panaco 10.625% 10/01/04 25,000 21,281
----------
21,281
----------
Environmental Services - 1.74%
Hydrochem Industrial Services 10.375% 08/01/07 50,000 49,750
----------
49,750
----------
Industrial Machinery - 2.67%
Burke Industries unsec sr nts 10.00% 08/15/07 25,000 24,625
Motors and Gears sr nts 10.75% 11/15/06 50,000 51,750
----------
76,375
----------
Leisure, Lodging & Entertainment - 2.87%
AFC Enterprises 10.25% 05/15/07 10,000 10,425
Town Sports International 9.75% 10/15/04 25,000 24,688
Trump-Atlantic City 11.25% 05/01/06 50,000 47,250
----------
82,363
----------
Packaging & Containers - 0.87%
Huntsman Packaging 9.125% 10/01/07 25,000 25,000
----------
25,000
----------
Retail - 2.71%
Fleming sr sub nts 10.625% 12/15/01 50,000 51,500
Leslie's Poolmart 10.375% 07/15/04 25,000 26,000
----------
77,500
----------
Telecommunications - 0.74%
ITC Deltacom 9.75% 11/15/08 20,000 21,125
----------
21,125
----------
Total Corporate Bonds (cost $618,782) 606,138
----------
</TABLE>
Page 3
<PAGE>
RETIREMENT INCOME FUND
STATEMENT OF NET ASSETS (Continued)
<TABLE>
<CAPTION>
Principal Market
Amount Value
--------- ------
<S> <C> <C>
CONVERTIBLE BONDS - 17.69%
Automobiles & Automotive Parts - 2.25%
Magna International 4.875% 02/15/05 $ 60,000 $ 64,275
----------
64,275
----------
Banking, Finance & Insurance - 2.34%
Bell Atlantic Financial Services 5.75% 04/01/03 65,000 66,950
----------
66,950
----------
Cable, Media & Publishing - 1.77%
World Color Press 6.00% 10/01/07 50,000 50,688
----------
50,688
----------
Computers & Technology - 1.96%
Platinum Technology 6.25% 12/15/02 65,000 56,225
----------
56,225
----------
Industrial Machinery - 5.08%
Mail-Well 5.00% 11/01/02 100,000 92,000
Thermo Fibertek 4.50% 07/15/04 65,000 53,381
----------
145,381
----------
Metals & Mining - 2.55%
MascoTech 4.50% 12/15/03 90,000 73,013
----------
73,013
----------
Miscellaneous - 1.74%
Mentamor Worldwide 2.94% 08/15/04 65,000 49,888
----------
49,888
----------
Total Convertible Bonds (cost $526,872) 506,420
----------
TOTAL MARKET VALUE OF SECURITIES - 104.18%
(cost $2,854,360) $2,982,583
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (4.18%)*** (119,688)
----------
NET ASSETS APPLICABLE TO 281,929 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% $2,862,895
==========
NET ASSET VALUE - RETIREMENT INCOME FUND A CLASS
($22,811 / 2,245 shares) $ 10.16
==========
NET ASSET VALUE - RETIREMENT INCOME FUND INSTITUTIONAL CLASS
($2,840,084 / 279,684 shares) $ 10.15
==========
COMPONENTS OF NET ASSETS AT NOVEMBER 30, 1998:
Common stock, $0.01 par value, 200,000,000 shares
authorized to the Fund with 100,000,000 shares allocated to Retirement
Income Fund A Class, 25,000,000 shares allocated to Retirement Income
Fund B Class, 25,000,000 shares allocated to Retirement Income Fund C
Class and 50,000,000 shares allocated
to Retirement Income Fund Institutional Class $2,463,403
Undistributed net investment income 162,736
Accumulated net realized gain on investments 108,533
Net unrealized appreciation of investments 128,223
----------
Total net assets $2,862,895
==========
</TABLE>
Page 4
<PAGE>
RETIREMENT INCOME FUND
STATEMENT OF NET ASSETS (Continued)
- -------------------------------------------------------------------------------
* Non-income producing security for the year ended November 30,1998.
** Zero coupon security as of November 30, 1998. The coupon rate shown is the
step up rate.
*** Of this amount $225,968 represents payable for securities purchased at
November 30,1998.
nts - notes sub - subordinate sr - senior unsec- unsecured
PIK- Pay-in-kind
STRYPES - Structured Yield Product Exchangeable for Stock
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
RETIREMENT INCOME FUND:
Net asset value A Class (A) $ 10.16
Sales charge (5.75% of offering price or 6.10%
of the amount invested per share)(B) 0.62
==========
Offering price $ 10.78
==========
</TABLE>
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases of $50,000 or
more.
See accompanying notes
Page 5
<PAGE>
DELAWARE GROUP EQUITY FUNDS V, INC.
RETIREMENT INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 106,568
Dividends 90,915 $ 197,483
----------- -----------
EXPENSES:
Management fees 18,686
Reports and statements to shareholders 5,010
Custodian fees 3,618
Dividend disbursing and transfer agent fees and expenses 2,274
Registration fees 2,166
Directors' fees 2,013
Professional fees 1,793
Accounting and administration 1,133
Taxes (other than taxes on income) 194
Other 1,334 38,221
----------- -----------
Less expenses absorbed or waived by Delaware Management
Company (16,702)
-----------
Total expenses 21,519
-----------
NET INVESTMENT INCOME 175,964
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 108,694
Net change in unrealized appreciation/depreciation of investments (219,218)
-----------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (110,524)
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 65,440
===========
</TABLE>
See accompanying notes
Page 1
<PAGE>
DELAWARE GROUP EQUITY FUNDS V, INC.
RETIREMENT INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
12/2/96*
Year ended to
11/30/98 11/30/97
----------- -----------
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income $ 175,964 $ 131,919
Net realized gain on investments 108,694 284,110
Net change in unrealized appreciation/depreciation of investments (219,218) 347,441
----------- -----------
Net increase in net assets resulting from operations 65,440 763,470
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class (263) (1)
Institutional Class (134,766) (10,117)
Net realized gain on investments:
A Class (553) --
Institutional Class (283,718) --
----------- -----------
(419,300) (10,118)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class 21,843 8,266
Institutional Class 13,498 2,000,007
Net asset value of shares issued upon reinvestment
of distributions from net investment income and net
realized gain on investments:
A Class 816 1
Institutional Class 418,484 10,117
----------- -----------
454,641 2,018,391
----------- -----------
Cost of shares repurchased:
A Class (7,629) --
Institutional Class (2,000) --
----------- -----------
(9,629) --
----------- -----------
Increase in net assets derived from capital
share transactions 445,012 2,018,391
----------- -----------
NET INCREASE IN NET ASSETS 91,152 2,771,743
NET ASSETS:
Beginning of period 2,771,743 --
----------- -----------
End of period $ 2,862,895 $ 2,771,743
=========== ===========
</TABLE>
- ----------
* Date of commencement of trading.
See accompanying notes
Page 1
<PAGE>
DELAWARE GROUP EQUITY FUNDS V, INC.
RETIREMENT INCOME FUND
FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Retirement Income Fund A Class Retirement Income Fund Institutional Class
12/02/96(2) 12/02/96(2)
Year ended to Year ended to
11/30/98 11/30/97 11/30/98 11/30/97
------------- ------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.700 $ 8.500 $ 11.690 $ 8.500
Income from investment operations:
Net investment income (1) 0.632 0.558 0.632 0.558
Net realized and unrealized gain (loss)
on investments (0.402) 2.685 (0.402) 2.675
-------- -------- -------- --------
Total from investment operations 0.230 3.243 0.230 3.233
-------- -------- -------- --------
Less dividends and distributions:
Dividends from net investment income (0.570) (0.043) (0.570) (0.043)
Distributions from net realized gain
on investments (1.200) none (1.200) none
-------- -------- -------- --------
Total dividends (1.770) (0.043) (1.770) (0.043)
-------- -------- -------- --------
Net asset value, end of period $ 10.160 $ 11.700 $ 10.150 $ 11.690
======== ======== ======== ========
Total return (3) 2.22% 38.31% 2.22% 38.19%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 23 $ 9 $ 2,840 $ 2,763
Ratio of expenses to average net assets 0.75% 0.75% 0.75% 0.75%
Ratio of expenses to average net assets
prior to expense limitation 1.62% 2.18% 1.32% 1.88%
Ratio of net investment income to
average net assets 6.01% 5.48% 6.01% 5.48%
Ratio of net investment income to average
net assets prior to expense limitation 5.14% 4.05% 5.44% 4.35%
Portfolio turnover 91% 196% 91% 196%
</TABLE>
(1) Per share information was based on the average shares outstanding method.
(2) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
See accompanying notes
Page 1
<PAGE>
DELAWARE GROUP EQUITY FUNDS II, INC.
DIVERSIFIED VALUE FUND
STATEMENT OF NET ASSETS
NOVEMEBER 30, 1998
<TABLE>
<CAPTION>
Number Market
of Shares Value
--------- ------
<S> <C> <C>
COMMON STOCK - 99.63%
Aerospace & Defense - 2.38%
AlliedSignal 300 $ 13,200
Northrop Grumman 100 8,125
United Technologies 300 32,155
----------
53,480
----------
Automobiles & Auto Parts - 3.73%
Autoliv 300 10,875
DaimlerChrysler (Germany) 1 73
Ford Motor 700 38,675
General Motors 300 21,000
Goodrich (B.F.) 200 7,587
TRW 100 5,506
----------
83,716
----------
Banking - 16.31%
BankAmerica 500 32,594
BankBoston 100 4,163
Chase Manhattan 1,000 63,437
Commerce Bancshares 105 4,663
First Union 1,000 60,750
Fleet Financial Group 1,200 50,025
MBNA 1,950 44,241
Old Kent Financial 200 8,594
PNC Financial Group 800 41,250
Popular 300 8,906
Suntrust Banks 500 34,906
UnionBanCal Corporation 100 9,981
Washington Federal 100 2,556
----------
366,066
----------
Buildings & Materials - 2.25%
Carlisle Companies 100 4,431
Centex 200 7,138
Fluor 200 8,563
* International Specialty Products 200 2,625
Johns Manville 400 5,775
Lafarge 200 7,413
Premark International 200 6,713
Worthington Industries 300 3,683
York International 100 4,200
----------
50,541
----------
Cable, Media & Publishing - 1.68%
* Borders Group 200 4,850
* Chris-Craft Industries 100 4,625
Knight-Ridder 200 10,288
* Metro-Goldwyn-Mayer 200 2,538
Reynolds & Reynolds Class A 100 2,113
* Viacom Class B 200 13,313
----------
37,727
----------
</TABLE>
Page 1
<PAGE>
DIVERSIFIED VALUE FUND
STATEMENT OF NET ASSETS (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
--------- ------
<S> <C> <C>
Chemicals - 2.90%
Beckman Coulter 100 $ 4,825
Great Lakes Chemical 200 7,988
IMC Fertilizer Group 300 6,863
Lyondell Petrochemicals 100 1,863
Olin 100 3,055
Praxair 400 15,275
Rohm & Haas 500 17,469
RPM 100 1,638
* The Learning Company 100 2,906
* W.R. Grace & Company 200 3,300
----------
65,182
----------
Computers & Technology - 4.95%
* Adaptec 300 4,894
* Cabletron Systems 400 5,600
Comdisco 400 7,300
Hewlett-Packard 100 6,275
International Business Machines 200 33,000
* NCR 300 11,175
* Oracle 300 10,283
* Seagate Technology 600 17,700
* Sun Microsystems 200 14,800
----------
111,027
----------
Consumer Products - 0.15%
* Blyth Industries 100 3,394
----------
3,394
----------
Electronics & Electrical Equipment - 2.72%
* Advanced Micro Devices 200 5,538
* Arrow Electronics 200 4,350
* Atmel 300 3,647
IKON Office Solutions 400 3,900
Intel 100 10,758
Motorola 100 6,200
Rockwell International 400 19,575
Western Resources 200 6,987
----------
60,955
----------
Energy - 11.41%
Amerada Hess 100 5,550
Ashland 200 9,725
* BJ Services 200 2,763
* Calenergy 200 6,263
Chevron 600 50,175
Coastal 600 20,925
Diamond Offshore Drilling 400 8,950
Donnelley & Sons 400 16,975
El Paso Energy 300 10,238
Exxon 800 60,050
Kerr-McGee 100 3,950
Phillips Petroleum 100 4,200
Texaco 800 46,050
Transocean Offshore 200 4,938
US Industries 300 5,250
----------
256,002
----------
</TABLE>
Page 2
<PAGE>
DIVERSIFIED VALUE FUND
STATEMENT OF NET ASSETS (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
--------- ------
<S> <C> <C>
Environmental Services - 1.07%
Honeywell 300 $ 23,981
----------
23,981
----------
Finance - 2.54%
Federal Home Loan Mortgage Corp. 400 24,200
Federal National Mortgage Association 300 21,825
Financial Security Assurance Holdings Limited 100 5,487
PMI Group 100 5,468
----------
56,980
----------
Food, Beverage & Tobacco - 3.84%
Archer-Daniels-Midland 700 12,863
CKE Restaurants 100 2,444
ConAgra 400 12,575
Darden Restaurants 400 6,325
IBP 200 5,075
Philip Morris 700 39,156
SUPERVALU 300 7,744
----------
86,182
----------
Healthcare & Pharmaceuticals - 3.06%
Bergen Brunswig Class A 100 6,225
Columbia/HCA Healthcare 600 14,775
Dentsply International 100 2,694
Mallinckrodt 200 6,463
* MedPartners 500 2,250
Mylan Laboratories 300 9,956
* PacifiCare Health Systems Class B 100 7,547
* Total Renal Care Holdings 200 5,313
United Healthcare 300 13,538
----------
68,761
----------
Industrial Machinery - 1.67%
Black & Decker 200 10,838
Crane Company 100 3,231
Harnischfeger Industries 100 1,000
Ingersoll-Rand 400 18,725
Pentair 100 3,769
----------
37,563
----------
Insurance - 9.94%
Allstate 1,200 48,900
American General 300 21,131
American International Group 500 47,000
Cigna 600 46,688
Everest Reinsurance Holdings 100 3,755
Jefferson-Pilot 300 20,475
Marsh & McLennan 200 11,638
Old Republic International 100 2,131
Transamerica 200 21,250
----------
222,968
----------
</TABLE>
Page 3
<PAGE>
DIVERSIFIED VALUE FUND
STATEMENT OF NET ASSETS (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
--------- ------
<S> <C> <C>
Leisure, Lodging & Entertainment - 1.28%
Callaway Golf 200 $ 2,675
* Circus Circus Enterprises 200 2,313
Eastman Kodak 100 7,256
Fleetwood Enterprises 100 3,369
Hilton Hotels 600 13,050
----------
28,663
----------
Packaging & Containers - 0.40%
Sonoco Products 300 8,981
----------
8,981
----------
Paper & Forest Products - 0.33%
The St. Joe Company 100 2,355
Weyerhaeuser 100 5,013
----------
7,368
----------
Real Estate - 1.13%
AMB Property 300 6,674
Crescent Real Estate Equities 300 7,444
Equity Office Properties Trust 300 7,538
Spieker Properties 100 3,613
----------
25,269
----------
Retail - 3.27%
Albertson's 200 11,413
* OfficeMax 200 2,125
* Payless Shoe Source 100 4,875
Sears,Roebuck 900 42,694
Tandy 100 4,505
Weis Markets 100 3,813
Wendy's International 200 4,000
----------
73,425
----------
Telecommunications - 13.46%
Ameritech 1,000 54,125
AT&T 1,100 68,544
GTE 1,000 62,000
* Paging Network 300 1,846
* QUALCOMM 200 10,981
SBC Communications 1,400 67,113
U.S.West 600 37,350
----------
301,959
----------
Textiles, Apparel & Furniture - 0.59%
* Fruit of the Loom 200 2,950
Miller (Herman) 200 4,281
Shaw Industries 300 6,074
----------
13,305
----------
</TABLE>
Page 4
<PAGE>
DIVERSIFIED VALUE FUND
STATEMENT OF NET ASSETS (Continued)
<TABLE>
<CAPTION>
Number Market
of Shares Value
--------- ------
<S> <C> <C>
Transportation & Shipping - 1.71%
* Continental Airlines Class B 100 $ 3,531
CSX 100 4,168
Delta Air Lines 200 10,738
GATX 100 3,781
* UAL 100 6,369
Union Pacific 200 9,725
----------
38,312
----------
Utilities - 6.61%
Allegheny Energy 300 10,125
Ameren 400 16,475
Central & South West 600 16,500
* Citizens Utilities 705 5,642
DTE Energy 100 4,363
Energy East 200 10,613
FPL Group 100 6,125
Potomac Electric Power 300 7,819
Public Service Enterprise Group 600 23,400
Southern 1,600 47,200
----------
148,262
----------
Miscellaneous - 0.25%
Kelly Services 100 2,906
Ogden 100 2,656
----------
5,562
----------
Total Common Stock (cost $2,009,715) $2,235,631
----------
<CAPTION>
Principal Market
Amount Value
--------- ------
<S> <C> <C>
REPURCHASE AGREEMENT - 0.18%
With Chase Manhattan 5.25% 12/1/98
(dated 11/30/98, collateralized by $600
U.S. Treasury Notes 5.50% due 2/28/03, market
value $584 and $900 U.S. Treasury Notes 6.25% due 10/31/01,
market value $916) $ 1,470 $ 1,470
With J.P. Morgan Securities 5.15% 12/1/98
(dated 11/30/98, collateralized by $300
U.S. Treasury Notes 5.75% due 10/31/00,
market value $300 and $400 U.S. Treasury
Notes 6.375% due 8/15/02, market value $469 and
$400 U.S. Treasury Notes 7.50% due 11/15/01,
market value $387) 1,130 1,130
With PaineWebber 5.29% 12/1/98
(dated 11/30/98, collateralized by $900
U.S. Treasury Bills due 2/18/99,
market value $864 and $400 U.S. Treasury
Notes 5.875% due 11/15/99, market value $442
and $100 U.S. Treasury Notes 5.875% 2/15/00,
market value $118) 1,400 1,400
----------
Total Repurchase Agreements (cost $4,000) 4,000
----------
</TABLE>
Page 5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
DIVERSIFIED VALUE FUND
STATEMENT OF NET ASSETS (Continued)
TOTAL MARKET VALUE OF SECURITIES - 99.81%
(cost $2,013,715) $2,239,631
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.19% 4,196
----------
NET ASSETS APPLICABLE TO 235,296 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% $2,243,827
==========
NET ASSET VALUE - DIVERSIFIED VALUE FUND A CLASS
($9.54 / 1 share) $ 9.54
==========
NET ASSET VALUE - DIVERSIFIED VALUE FUND INSTITUTIONAL CLASS
($2,243,817 / 235,295 shares) $ 9.54
==========
COMPONENTS OF NET ASSETS AT NOVEMBER 30, 1998:
Common stock, $0.01 par value, 200,000,000 shares authorized to the Fund
100,000,000 shares allocated to Diversified Value Fund A Class, 25,000,000
shares allocated to Diversified Value Fund B Class, 25,000,000 shares
allocated to Diversified Value Fund C Class, and 50,000,000 shares
allocated to Diversified Value Fund
Institutional Class $2,000,017
Undistributed net investment income 6,131
Accumulated net realized gain on investments 11,763
Net unrealized appreciation of investments 225,916
----------
Total Net Assets $2,243,827
==========
* Non-income producing security for the period ended November 30,1998.
-----------------------------------------------------------------------------
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
DIVERSIFIED VALUE FUND
Net asset value A Class (A) $ 9.54
Sales charge (5.75% of offering price or 6.08% of the amount
invested per share) (B) 0.58
----------
Offering price $ 10.12
==========
</TABLE>
(A) Net asset value per share, as illustrated, is the estimated amount
which would be paid upon redemption or repurchase of shares.
(B) See How to Buy Shares in the current Prospectus for purchases of
$50,000 or more.
See accompanying notes
Page 6
<PAGE>
DELAWARE GROUP EQUITY FUNDS II, INC. -
DIVERSIFIED VALUE FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD SEPTEMBER 15, 1998* THROUGH NOVEMBER 30, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 8,665
Interest 691 $ 9,356
--------- ---------
EXPENSES:
Management fees 2,794
Custodian fees 814
Registration fees 446
Reports and statements to shareholders 383
Directors' fees 244
Dividend disbursing and transfer agent fees and expenses 235
Professional fees 164
Accounting and administration 163
Taxes (other than taxes on income) 50
Other 33 5,326
--------- ---------
Less expenses absorbed or waived by Delaware Management Company (2,101)
---------
Total expenses 3,225
---------
NET INVESTMENT INCOME 6,131
---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments 11,763
Net change in unrealized appreciation of
investments 225,916
---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 237,679
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 243,810
=========
</TABLE>
- ----------
* Date of commencement of operations.
See accompanying notes
Page 7
<PAGE>
DELAWARE GROUP EQUITY FUNDS II, INC. -
DIVERSIFIED VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD SEPTEMBER 15, 1998* THROUGH NOVEMBER 30, 1998
OPERATIONS:
Net investment income $ 6,131
Net realized gain on investments 11,763
Net change in unrealized appreciation of investments 225,916
----------
Net increase in net assets resulting from operations 243,810
----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class 9
Institutional Class 2,000,008
----------
2,000,017
----------
Increase in net assets derived from capital
share transactions 2,000,017
----------
NET INCREASE IN NET ASSETS 2,243,827
NET ASSETS:
Beginning of period --
----------
End of period $2,243,827
==========
- ----------
* Date of commencement of operations.
See accompanying notes
Page 8
<PAGE>
DELAWARE GROUP EQUITY FUNDS II, INC. -
DIVERSIFIED VALUE FUND
FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout the period were
as follows:
<TABLE>
<CAPTION>
Diversified Value Fund Institutional Class
------------------------------------------
9/15/98 (1)
to
11/30/98
----------
<S> <C>
Net asset value, beginning of period $ 8.500
Income from investment operations:
Net investment income 0.026
Net realized and unrealized gain on investments 1.014
--------
Total from investment operations 1.040
--------
Net asset value, end of period $ 9.540
========
Total return 12.24%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 2,244
Ratio of expenses to average net assets 0.75%
Ratio of expenses to average net assets prior to expense
limitation 1.24%
Ratio of net investment income to average net assets 1.41%
Ratio of net investment income to average net assets prior
to expense limitation 0.92%
Portfolio turnover 74%
</TABLE>
- ----------
(1) Date of commencement of operations; ratios have been annualized and total
return has not been annualized.
As of November 30,1998, the A Class had one share outstanding, representing the
initial seed purchase. Data for this class is excluded because the data is not
believed to be meaningful.
See accompanying notes
Page 9
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
GLOBAL OPPORTUNITIES SERIES
STATEMENT OF NET ASSETS
NOVEMBER 30, 1998
Market
Number Value
of Shares (U.S. $)
--------- ---------
COMMON STOCK - 96.90%
Australia - 8.01%
Amcor 11,410 $ 49,709
CSR 19,460 46,787
Foster's Brewing Group 31,440 82,301
National Australia Bank 3,920 58,616
Orica 4,400 24,306
---------
261,719
---------
Belgium - 2.44%
Electrabel 206 79,525
---------
79,525
---------
France - 5.16%
Alcatel 200 26,480
Compagnie de Saint Gobain 250 36,973
Elf Aquitaine 502 62,664
Societe Generale 268 42,278
---------
168,395
---------
Germany - 8.81%
Bayer 1,460 62,397
Bayerische Vereinsbank 900 81,019
RWE 1,180 62,829
Siemens 1,150 81,529
---------
287,774
---------
Hong Kong - 1.84%
Hong Kong Electric 9,500 31,595
Wharf Holdings 18,000 28,479
---------
60,074
---------
Japan - 3.60%
Canon 1,000 22,082
Eisai Co. Limited 1,000 15,425
Koito Manufacturing 5,000 20,865
Matsushita Electric Industrial 1,000 16,075
West Japan Railway 10 43,272
---------
117,719
---------
Malaysia - 0.64%
Sime Darby Berhad 30,000 20,947
---------
20,947
---------
Netherlands - 2.93%
Elsevier 3,000 39,429
Royal Dutch Petroleum 1,170 56,118
---------
95,547
---------
New Zealand - 2.56%
Carter Holt Harvey Limited 20,160 19,163
Telecom Corporation of New Zealand 13,620 57,936
Telecom Corporation of New Zealand IR 3,070 6,562
---------
83,661
---------
Page 1
<PAGE>
GLOBAL OPPORTUNITIES SERIES
STATEMENT OF NET ASSETS (Continued)
Market
Number Value
of Shares (U.S. $)
--------- ----------
COMMON STOCK (Continued)
Spain - 3.01%
Iberdrola 2,420 $ 40,151
Telefonica de Espana 1,232 57,987
----------
98,138
----------
United Kingdom - 21.83%
Associated British Food 4,500 45,660
Bass 4,705 65,055
Blue Circle Industry 10,251 52,006
Boots 6,000 97,308
Cable & Wireless 7,880 100,756
GKN 7,140 79,043
Glaxo Wellcome 3,660 116,240
PowerGen 7,000 97,127
Taylor Woodrow 22,500 59,766
----------
712,961
----------
United States - 36.07%
American Home Products 1,400 74,550
Aon 800 46,100
BankAmerica 905 58,995
Baxter International 900 57,206
Browning Ferris 1,500 44,250
DuPont (E.I.) de Nemours 800 47,000
Federal National Mortgage Association 900 65,475
First Union 900 54,675
Ford Motor 1,100 60,775
Fortune Brands 1,600 54,500
GTE 1,000 62,000
Hewlett-Packard 1,200 75,300
Jardine Matheson Holdings Limited 6,800 23,120
Lockheed Martin 600 62,250
May Department Stores 1,000 60,313
McGraw-Hill 800 71,600
Philip Morris 1,400 78,313
Pitney Bowes 1,400 78,400
USX-Marathon Group 1,800 51,075
Williams 1,800 51,863
----------
1,177,760
----------
Total Common Stock (cost $3,082,393) 3,164,220
----------
WARRANTS - 0.00%
Hong Kong - 0.00%
* Wharf Holdings Warrants 900 106
----------
Total Warrants (cost $0) 106
----------
Page 2
<PAGE>
GLOBAL OPPORTUNITIES SERIES
STATEMENT OF NET ASSETS (Continued)
<TABLE>
<CAPTION>
Market
Principal Value
Amount (U.S. $)
---------- ----------
<S> <C> <C>
REPURCHASE AGREEMENTS - 2.79%
With Chase Manhattan 5.25% 12/01/98
(dated 11/30/98, collateralized by $13,000
U.S. Treasury Notes 5.50% due 02/28/03,
market value $13,276 and $20,000
U.S. Treasury Notes 6.25% due 10/31/01,
market value $20,820) $ 33,400 $ 33,400
With J.P. Morgan Securities 5.15% 12/01/98
(dated 11/30/98, collateralized by $7,000
U.S. Treasury Notes 5.75% due 10/31/00,
market value $6,941 and $8,000 U.S.
Treasury Notes 7.50% due 11/15/01,
market value $8,797 and $10,000 U.S.
Treasury Notes 6.375% due 08/15/02,
market value $10,675) 25,800 25,800
With PaineWebber 5.29% 12/01/98
(dated 11/30/98, collateralized by $10,000
U.S. Treasury Notes 5.875% due 11/15/99,
market value $10,066 and $20,000
U.S. Treasury Bills due 02/18/99,
market value $19,666 and $3,000
U.S.Treasury Notes 5.875% due 02/15/00,
market value $2,692) 31,800 31,800
----------
Total Repurchase Agreements (cost $91,000) 91,000
----------
TOTAL MARKET VALUE OF SECURITIES - 99.69%
(cost $3,173,393) $3,255,326
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.31% 10,108
----------
NET ASSETS APPLICABLE TO 359,124 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% $3,265,434
==========
NET ASSET VALUE - GLOBAL OPPORTUNITIES SERIES A CLASS
($12,682 / 1,394 shares) $ 9.10
==========
NET ASSET VALUE - GLOBAL OPPORTUNITIES SERIES INSTITUTIONAL CLASS
($3,252,752 / 357,730 shares) $ 9.09
==========
COMPONENTS OF NET ASSETS AT NOVEMBER 30, 1998:
Common stock, $0.01 par value, 200,000,000 shares
authorized to the Series with 100,000,000 shares allocated to Global
Opportunities Series A Class, 25,000,000 shares allocated to Global
Opportunities Series B Class, 25,000,000 shares allocated to Global
Opportunities Series C Class and 50,000,000 shares allocated to Global
Opportunities Series Institutional Class $3,050,462
Undistributed net investment income ** 67,475
Accumulated net realized gain on investments 60,018
Net unrealized appreciation of investments and foreign currencies 87,479
----------
Total net assets $3,265,434
==========
</TABLE>
Page 3
<PAGE>
GLOBAL OPPORTUNITIES SERIES
STATEMENT OF NET ASSETS (Continued)
- ----------
* Non-income producing security for the year ended November 30,1998.
** Undistributed net investment income includes net realized gains (losses) on
foreign currencies. Net realized gains (losses) on foreign currencies are
treated as net investment income in accordance with provisions of the
Internal Revenue Code.
IR - Installment Receipts
<TABLE>
<S> <C>
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
GLOBAL OPPORTUNITIES SERIES:
Net asset value A Class (A) $ 9.10
Sales charge ( 5.75% of offering price or 6.15% of the amount invested per share) (B) 0.56
------
Offering price $ 9.66
======
</TABLE>
(A) Net asset value per share, as illustrated, is the estimated amount
which would be paid upon redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases of
$50,000 or more.
See accompanying notes
Page 4
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
INTERNATIONAL SMALL CAP SERIES
STATEMENT OF NET ASSETS
NOVEMBER 30, 1998
Market
Number Value
of Shares (U.S. $)
--------- ---------
COMMON STOCK - 99.31%
Argentina - 0.82%
Transportadora de Gas del sur,Class B 13,000 $ 26,134
---------
26,134
---------
Australia - 6.13%
David Jones 29,500 33,704
GIO Australia Holdings 18,000 58,644
National Foods 28,000 48,565
Orica 5,800 32,040
Village Roadshow 15,000 21,657
---------
194,610
---------
Belgium - 1.42%
ARBED 270 18,221
Bekaert 50 26,880
---------
45,101
---------
Brazil - 0.92%
Rossi Residential 3,600 5,246
Usinas Sider Minas ADR 8,800 23,888
---------
29,134
---------
Chile - 0.56%
Banco BHIF ADR 1,800 17,775
---------
17,775
---------
Egypt - 0.71%
Paints and Chemical GDR 3,000 22,425
---------
22,425
---------
France - 7.32%
Clarins 1,068 82,717
* Club Mediterranee 690 57,134
* Remy Cointreau 1,810 31,708
Societe Francaise d'Investissements et Deestion 880 60,766
---------
232,325
---------
Germany - 5.40%
AGIV fuer Industrie und Verkehrswesen 3,000 68,888
Escada 350 50,928
KSB-Vorzug 150 25,855
Moebel Walther 610 25,566
---------
171,237
---------
Greece - 1.68%
Attica Enterprises 6,240 53,483
---------
53,483
---------
Page 1
<PAGE>
INTERNATIONAL SMALL CAP SERIES
STATEMENT OF NET ASSETS (Continued)
Market
Number Value
of Shares (U.S. $)
--------- ---------
COMMON STOCK (Continued)
Hong Kong - 6.79%
Guangdong Kelon Electric Holding 56,000 $ 48,821
IDT International 300,000 44,172
Shenzhen Expressway 156,000 37,275
South China Morning Post (Holdings) 64,000 35,544
Varitronix International 26,000 49,700
---------
215,512
---------
India - 1.55%
Larsen & Toubro GDR 3,100 20,770
Tata Engineering & Locom GDR 10,200 28,560
---------
49,330
---------
Indonesia - 2.04%
PT Ramayana Lestari Sentosa 66,000 13,532
PT Semen Gresik 46,000 51,333
---------
64,865
---------
Japan - 17.80%
Arcland Sakamoto 5,000 36,533
Asahi Printing & Packaging 4,000 27,571
Chudenko 2,000 42,216
Copal Electronics 7,000 42,054
Daitec 2,000 31,338
Getz Brothers 7,000 29,551
Kayaba Industry 21,000 32,222
Koito Manufacturing 12,000 50,075
Nichido Fire & Marine 9,000 45,301
Seikagaku 6,000 33,221
Tokyo Denpa 4,000 29,227
Ube-Nitto Kasei 14,000 51,147
York-Benimaru 4,000 114,634
---------
565,090
---------
Malaysia - 1.42%
Kumpulan Guthrie 54,000 25,136
* Leader Universal Holdings 93,000 19,994
---------
45,130
---------
Netherlands - 1.77%
Koninklijke Van Ommeren 1,760 56,217
---------
56,217
---------
New Zealand - 4.34%
* Auckland International Airport 31,000 34,350
Fisher & Paykel Industries 9,700 30,309
Fletcher Challenge Building 14,534 18,318
The Warehouse Group 19,800 54,797
---------
137,774
---------
Page 2
<PAGE>
INTERNATIONAL SMALL CAP SERIES
STATEMENT OF NET ASSETS (Continued)
Market
Number Value
of Shares (U.S. $)
--------- ---------
COMMON STOCK (Continued)
Peru - 0.61%
Creditcorp LTD 1,760 $ 19,360
---------
19,360
---------
Philippines - 1.33%
* Aboitiz Equity Ventures 992,000 42,352
---------
42,352
---------
Singapore - 7.28%
DBS Land 28,000 39,915
Mandarin Oriental International 75,000 59,250
Overseas Union Bank 21,000 84,713
Rothmans Industries 8,300 47,328
---------
231,206
---------
South Africa - 3.52%
Anglo American Coal 1,298 74,729
Iscor 154,000 37,077
---------
111,806
---------
Spain - 8.40%
Aumar-Autopistas del Mare 3,300 80,180
Corporacion Mapfre 1,430 39,708
Dragados & Construcciones 1,600 51,815
Empresa Nacional de Celulosa 2,000 32,211
Zardoya Otis 2,041 62,413
---------
266,327
---------
Taiwan - 1.28%
* Yageo GDR 5,600 40,600
---------
40,600
---------
Thailand - 1.40%
* Hana Microelectronics 13,000 32,365
* K.R. Precision 13,600 12,227
---------
44,592
---------
United Kingdom - 14.82%
Arriva 5,180 35,723
Avon Rubber 2,800 18,894
Booker 5,600 6,236
Charter 4,900 23,081
Dairy Crest Group 7,000 42,154
Delta 14,000 29,219
Glynwed International 18,000 49,891
Greenalls Group 8,200 48,568
Page 3
<PAGE>
INTERNATIONAL SMALL CAP SERIES
STATEMENT OF NET ASSETS (Continued)
<TABLE>
<CAPTION>
Market
Number Value
of Shares (U.S. $)
---------- ----------
COMMON STOCK (Continued)
United Kingdom - (Continued)
Ibstock 34,400 $ 32,918
Keller Group 9,300 29,920
Matthew Clark 10,350 41,153
Mirror Group 18,200 43,840
Taylor Woodrow 25,900 68,797
----------
470,394
----------
Total Common Stock (cost $3,067,044) 3,152,779
----------
<CAPTION>
Principal
Amount
---------
<S> <C> <C>
REPURCHASE AGREEMENTS - 0.69%
With Chase Manhattan 5.25% 12/01/98
(dated 11/30/98, collateralized by $5,000
U.S. Treasury Notes 6.25% due 10/31/01,
market value $5,034 and $3,000 U.S. Treasury
Notes 5.50% due 02/28/03, market value $3,210) $ 8,080 8,080
With J.P. Morgan Securities 5.15% 12/01/98
(dated 11/30/98, collateralized by $2,000
U.S. Treasury Notes 5.75% due 10/31/00,
market value $1,678 and $2,000 U.S.
Treasury Notes 7.50% due 11/15/01,
market value $2,127 and $2,000 U.S.
Treasury Notes 6.375% due 08/15/02,
market value $2,581) 6,240 6,240
With PaineWebber 5.29% 12/01/98
(dated 11/30/98, collateralized by $5,000
U.S. Treasury Bills due 02/18/99,
market value $4,755 and $2,000
U.S. Treasury Notes 5.875% due 11/15/99,
market value $2,434 and $1,000
U.S. Treasury Notes 5.875%
due 02/15/00, market value $651) 7,680 7,680
----------
Total Repurchase Agreements (cost $22,000) 22,000
----------
TOTAL MARKET VALUE OF SECURITIES - 100.00%
(cost $3,089,044) $3,174,779
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES- 0.00% 9
----------
NET ASSETS APPLICABLE TO 352,943 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% $3,174,788
==========
NET ASSET VALUE - INTERNATIONAL SMALL CAP SERIES A CLASS
($9 / 1 share) $ 9.00
==========
NET ASSET VALUE - INTERNATIONAL SMALL CAP SERIES INSTITUTIONAL CLASS
($3,174,779 / 352,942 shares) $ 9.00
==========
</TABLE>
Page 4
<PAGE>
INTERNATIONAL SMALL CAP SERIES
STATEMENT OF NET ASSETS (Continued)
<TABLE>
<S> <C>
COMPONENTS OF NET ASSETS AT NOVEMBER 30, 1998:
Common stock, $0.01 par value, 150,000,000 shares
authorized to the Series with 50,000,000 shares allocated to
International Small Cap Series A Class, 25,000,000 shares allocated to
International Small Cap Series B Class, 25,000,000 shares allocated to
International Small Cap Series C Class and
50,000,000 shares allocated to International
Small Cap Series Institutional Class $2,999,852
Undistributed net investment income** 62,486
Accumulated net realized gain on investments 26,614
Net unrealized appreciation of investments and foreign currencies 85,836
----------
Total net assets $3,174,788
==========
</TABLE>
- ----------
* Non-income producing security for the period ended November 30, 1998.
** Undistributed net investment income includes net realized gains (losses) on
foreign currencies. Net realized gains (losses) on foreign currencies are
treated as net investment income in accordance with provisions of the
Internal Revenue Code
ADR - American Depository Receipt
GDR - Global Depository Receipt
<TABLE>
<S> <C>
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
INTERNATIONAL SMALL CAP SERIES
Net asset value A Class (A) $ 9.00
Sales charge (5.75% of offering price or 6.11% of the amount invested
per share)(B) 0.55
----------
Offering price $ 9.55
==========
</TABLE>
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases of $50,000 or
more.
See accompanying notes
Page 5
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
International
Global Opportunities Small Cap
Series Series
Year ended 12/19/97* to
11/30/98 11/30/98
-------------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 4,702 $ 14,068
Dividends 100,712 99,089
Foreign tax withheld (4,830) (9,739)
--------- ---------
100,584 103,418
--------- ---------
EXPENSES:
Management fees 25,114 37,005
Custodian fees 3,641 10,161
Registration fees 2,190 3,140
Professional fees 2,480 2,570
Accounting and administration 1,260 1,138
Reports and statements to shareholders 1,625 2,710
Dividend disbursing and transfer agent fees and expenses 1,418 782
Directors' fees 728 595
Taxes (other than taxes on income) 645 199
Other 361 2,044
--------- ---------
39,462 60,344
Less expenses absorbed or waived by Delaware International Advisers Ltd (14,237) (23,551)
--------- ---------
Total expenses 25,225 36,793
--------- ---------
NET INVESTMENT INCOME 75,359 66,625
--------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investments 68,463 26,614
Foreign currencies (881) (4,139)
--------- ---------
Net realized gain 67,582 22,475
Net change in unrealized appreciation /
depreciation of investments and foreign currencies 207,851 85,836
--------- ---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS AND FOREIGN CURRENCIES 275,433 108,311
--------- ---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 350,792 $ 174,936
========= =========
</TABLE>
* Date of commencement of operations.
See accompanying notes
Page 1
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
International
Small Cap
Global Opportunities Series Series
Year ended 7/22/97* to 12/19/97* to
11/30/98 11/30/97 11/30/98
----------- ----------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 75,359 $ 19,984 $ 66,625
Net realized gain on investments and foreign currencies 67,582 3,448 22,475
Net change in unrealized appreciation / depreciation of
investments and foreign currencies 207,851 (120,372) 85,836
----------- ----------- -----------
Net increase (decrease) in net assets resulting from operations 350,792 (96,940) 174,936
----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class (57) -- --
Institutional Class (38,823) -- --
----------- ----------- -----------
(38,880) -- --
----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class 7,781 6,308 5,661
Institutional Class -- 3,000,009 3,000,009
Net asset value of shares issued upon reinvestment
of dividends from net investment income:
A Class 57 -- --
Institutional Class 38,823 -- --
----------- ----------- -----------
46,661 3,006,317 3,005,670
----------- ----------- -----------
Cost of shares repurchased:
A Class (2,516) -- (5,818)
Institutional Class -- -- --
----------- ----------- -----------
(2,516) -- (5,818)
----------- ----------- -----------
Increase in net assets derived from capital
share transactions 44,145 3,006,317 2,999,852
----------- ----------- -----------
NET INCREASE IN NET ASSETS 356,057 2,909,377 3,174,788
NET ASSETS:
Beginning of period 2,909,377 -- --
----------- ----------- -----------
End of period $ 3,265,434 $ 2,909,377 $ 3,174,788
=========== =========== ===========
</TABLE>
- ----------
* Date of commencement of operations.
See accompanying notes
Page 1
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
FINANCIAL HIGHLIGHTS
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Global Opportunities Series
A Class Institutional Class
--------------------------- ---------------------------
Year 7/22/97 (1) Year 7/22/97 (1)
Ended To Ended To
11/30/98 11/30/97 11/30/98 11/30/97
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.230 $ 8.500 $ 8.230 $ 8.500
Income (loss) from investment operations:
Net investment income (2) 0.210 0.056 0.210 0.056
Net realized and unrealized gain (loss) on investments
and foreign currencies 0.770 (0.326) 0.760 (0.326)
----------- ----------- ----------- -----------
Total from investment operations 0.980 (0.270) 0.970 (0.270)
----------- ----------- ----------- -----------
Less dividends:
Dividends from net investment income (0.110) -- (0.110) --
----------- ----------- ----------- -----------
Total dividends (0.110) -- (0.110) --
----------- ----------- ----------- -----------
Net asset value, end of period $ 9.100 $ 8.230 $ 9.090 $ 8.230
=========== =========== =========== ===========
Total return (3) 12.07% (3.18%) 11.95% (3.18%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) $13 $6 $3,253 $2,903
Ratio of expenses to average net assets 0.80% 0.80% 0.80% 0.80%
Ratio of expenses to average net assets prior to expense
limitation 1.55% 2.16% 1.25% 1.86%
Ratio of net investment income to average net assets 2.40% 1.86% 2.40% 1.86%
Ratio of net investment income to average net assets prior
to expense limitation 1.65% 0.50% 1.95% 0.80%
Portfolio turnover 50% 25% 50% 25%
<CAPTION>
International
Small Cap Series (4)
Institutional Class
--------------------
12/19/97 (1)
To
11/30/98
----------
<S> <C>
Net asset value, beginning of period $ 8.500
Income (loss) from investment operations:
Net investment income (2) 0.191
Net realized and unrealized gain (loss) on investments
and foreign currencies 0.309
----------
Total from investment operations 0.500
----------
Less dividends:
Dividends from net investment income --
----------
Total dividends --
----------
Net asset value, end of period $ 9.000
==========
Total return (3) 5.88%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $3,175
Ratio of expenses to average net assets 1.25%
Ratio of expenses to average net assets prior to expense
limitation 2.05%
Ratio of net investment income to average net assets 2.25%
Ratio of net investment income to average net assets prior
to expense limitation 1.45%
Portfolio turnover 4%
</TABLE>
- ----------
(1) Date of commencement of operations; ratios have been annualized and total
return has not been annualized.
(2) Per share information was based on the average shares outstanding method.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(4) As of November 30, 1998, the A Class had one share outstanding,
representing the initial seed purchase. Data for this class is excluded
because the data is not believed to be meaningful.
See accompanying notes
Page 1
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998
Delaware Group Global & International Funds, Inc. (the "Fund") is registered as
a Maryland corporation and offers six series: the International Equity Series,
the Global Bond Series, the Global Equity Series (formerly the Global Assets
Series), the Emerging Markets Series, the Global Opportunities Series (formerly
the Global Equity Series) and the International Small Cap Series. These
financial statements and the related notes pertain to the Global Opportunities
Series and the International Small Cap Series (the "Series"). The Global
Opportunities Series and the International Small Cap Series are registered as
diversified open-end investment companies under the Investment Company Act of
1940, as amended. Each Series offers four classes of shares. The A Class carries
a front-end sales charge of 5.75%. The B Class carries a back-end deferred sales
charge, the C Class carries a level load sales charge and the Institutional
Class has no sales charge. As of November 30, 1998, only the A and Institutional
Classes have commenced operations.
The investment objective of each Series is as follows:
Global Opportunities Series: To seek long-term growth without undue risk to
principal by investing primarily in U.S. and foreign equity securities with the
potential for capital appreciation and income.
International Small Cap Series: To seek long-term capital appreciation by
investing primarily in equity securities of small non-U.S. companies which may
include companies located or operating in established or emerging countries.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund.
Security Valuation - Securities listed on an exchange are valued at the last
quoted sales price as of the close of the NYSE on the valuation date. Securities
not traded or securities not listed on an exchange are valued at the mean of the
last quoted bid and asked prices. Securities listed on a foreign exchange are
valued at the last quoted sales price before each Series is valued. Money market
instruments having less than 60 days to maturity are valued at amortized cost,
which approximates market value. Other securities and assets for which market
quotations are not readily available are valued at fair value as determined in
good faith by or under the direction of the Fund's Board of Directors.
Page 13
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Significant Accounting Policies (Continued)
Federal Income Taxes - Each Series intends to qualify or to continue to qualify
as a regulated investment company and make the requisite distributions to
shareholders. Accordingly, no provision for federal income taxes has been made
in the financial statements. Income and capital gain distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles.
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
each Series on the basis of daily net assets of each class. Distribution
expenses relating to a specific class are charged directly to that class.
Repurchase Agreements - Each Series may invest in a pooled cash account along
with other members of the Delaware Investments Family of Funds. The aggregate
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 custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is at least 100% 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.
Foreign Currency Transactions - Transactions denominated in foreign currencies
are recorded at the prevailing exchange rates on the valuation date. The value
of all assets and liabilities denominated in foreign currencies are translated
into U.S. dollars at the exchange rate of such currencies against the U.S.
dollar as of 3:00 PM EST. Transaction gains or losses resulting from changes in
exchange rates during the reporting period or upon settlement of the foreign
currency transaction are reported in operations for the current period. It is
not practical to isolate that portion of both realized and unrealized gains and
losses on investments in equity securities in the statement of operations that
result from fluctuations in foreign currency exchange rates. The Series report
certain foreign currency related transactions as components of realized gains
(losses) for financial reporting purposes, whereas such components are treated
as ordinary income (loss) for federal income tax purposes.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Page 14
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Significant Accounting Policies (Continued)
Other - Expenses common to all funds within the Delaware Investments 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 the accrual basis. Foreign dividends are also recorded on the
ex-dividend date or as soon after the ex-dividend date that the Series are aware
of such dividends, net of all non-rebatable tax withholdings. Withholding taxes
on foreign dividends have been provided for in accordance with the Series'
understanding of the applicable country's tax rules and rates. Each Series
declares and pays dividends from net investment income capital gains annually
and from capital gains, if any, annually.
Certain expenses of the Series are paid through "soft dollar" arrangements with
brokers. The amount of these expenses is less than 0.01% of each Series' average
daily net assets.
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, each Series
pays Delaware International Advisers Ltd. ("DIAL"), the Investment Manager, an
annual fee based on its net assets. DIAL has entered into a sub-advisory
agreement with Delaware Management Company ("DMC"), an affiliate, with respect
to the management of the Global Opportunities Series' investments in U.S.
securities. DMC receives 50% of the management fee paid to DIAL for managing the
U.S. securities portion of the Global Opportunities Series. The management fee
rates are as follows:
Global International
Opportunities Small Cap
Series Series
--------------------------------
Management fee as a
percentage of average
daily net assets (per annum) 0.80% 1.25%
DIAL has elected to waive its fees and reimburse each Series to the extent that
annual operating expenses, exclusive of taxes, interest, brokerage commissions,
extraordinary expenses and distribution expenses, exceed 0.80% for each class of
the Global Opportunities Series and 1.25% for each class of the International
Small Cap Series of the average daily net assets for each Series through May 31,
1999.
The Series have engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting services.
Each Series pays DSC a monthly fee based on the number of shareholder accounts,
shareholder transactions and average net assets, subject to certain minimums.
Page 15
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Investment Management and Other Transactions with Affiliates (Continued)
On November 30, 1998, the Series had payables to affiliates as follows:
Global International
Opportunities Small Cap
Series Series
---------------------------------
Investment Management fee
payable to DIAL ........................... $ 703 $ 1,522
Dividend disbursing, transfer
agent fees, accounting fees and
other expenses payable to DSC ............. 254 186
Pursuant to the Distribution Agreement, each Series pays Delaware Distributors,
L.P. ("DDLP"), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.30% of the average daily net assets of the A Class and 1.00% of the
average daily net assets of the B and C Classes. DDLP has elected voluntarily to
waive such fees through May 31, 1999.
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Fund. These officers, directors and employees are paid no compensation by
the Fund.
3. Investments
During the period ended November 30, 1998, each Series made purchases and sales
of investment securities other than U.S. government securities and temporary
cash investments as follows:
Global International
Opportunities Small Cap
Series Series
---------------------------------
Purchases .............................. $1,607,593 $3,149,319
Sales .................................. 1,514,176 107,116
At November 30, 1998, the aggregate cost of securities and unrealized
appreciation (depreciation) for federal income tax purposes for each Series were
as follows:
Global International
Opportunities Small Cap
Series Series
---------------------------------
Cost of investments ................ $3,173,393 $3,089,044
=================================
Aggregate unrealized appreciation $ 394,874 $ 478,203
Aggregate unrealized depreciation (312,941) (392,468)
---------------------------------
Net unrealized appreciation ........ $ 81,933 $ 85,735
=================================
Page 16
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
4. Capital Stock
Transactions in capital stock shares were as follows:
Global International
Opportunities Small Cap
Series Series
------------- -------------
Year Ended 7/22/97* to 12/19/97* to
11/30/98 11/30/97 11/30/98
----------------------------------------------
Shares sold:
A Class 942 740 598
Institutional Class - 352,943 352,942
------- ------- -------
Shares issued upon reinvestment of dividends from
net investment income:
A Class 7 - -
Institutional Class 4,787 - -
------- ------- -------
5,736 353,683 353,540
------- ------- -------
Shares repurchased:
A Class (295) - (597)
Institutional Class - - -
------- ------- -------
(295) - (597)
------- ------- -------
Net increase 5,441 353,683 352,943
======= ======= =======
* Date of commencement of operations.
5. Lines of Credit
The Global Opportunities Series has a committed line of credit of $100,000. No
amounts were outstanding at November 30, 1998, or at any time during the fiscal
year.
6. Foreign Exchange Contracts
A Series will generally enter into forward foreign currency contracts as a way
of managing foreign exchange rate risk. A Series may enter into these contracts
to fix the U.S. dollar value of a security that it has agreed to buy or sell for
the period between the date the trade was entered into and the date the security
is delivered and paid for. A Series may also use these contracts to hedge the
U.S. dollar value of securities it already owns denominated in foreign
currencies.
Forward foreign currency contracts are valued at the mean between the bid and
asked prices of the contracts and are marked-to-market daily. Interpolated
values are derived when the settlement date of the contract is an interim date
for which quotations are not available. The change in market value is recorded
as an unrealized gain or loss. When the contract is closed, a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed is recorded.
Page 17
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
6. Foreign Exchange Contracts (Continued)
The use of forward foreign currency contracts does not eliminate fluctuations in
the underlying prices of the securities, but it does establish a rate of
exchange that can be achieved in the future. Although forward foreign currency
contracts limit the risk of loss due to a decline in the value of the hedged
currency, they also limit any potential gain that might result should the value
of the currency increase. In addition, a Series could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts.
The following forward foreign currency contracts were outstanding at November
30, 1998:
Global Opportunities Series
Value of
Contracts to In Exchange Contract at Settlement Unrealized
Deliver For 11/30/98 Date Appreciation
------- --- -------- ---- ------------
145,344 British Pounds $245,000 $239,204 1/29/99 $5,796
7. Market and Credit Risk
Some countries in which the Series may invest require governmental approval for
the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
temporary restrictions on foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially smaller,
less liquid and more volatile than the major securities markets in the United
States. Consequently, acquisition and disposition of securities by the Series
may be inhibited. In addition, a significant proportion of the aggregate market
value of equity securities listed on the major securities exchanges in emerging
markets are held by a smaller number of investors. This may limit the number of
shares available for acquisition or disposition by the Series.
Each Series may invest up to 10% of its total assets in illiquid securities
which may include securities with contractual restrictions on resale, securities
exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, and other securities which may not be readily marketable. The relative
illiquidity of some of these securities may adversely affect the Series' ability
to dispose of such securities in a timely manner and at a fair price when it is
necessary to liquidate such securities.
Page 18
<PAGE>
Report of Independent Auditors
To the Shareholders and Board of Directors Delaware Group Global & International
Funds, Inc.
We have audited the accompanying statements of net assets of Delaware Group
Global & International Funds, Inc. (Global Opportunities Series and
International Small Cap Series) (the "Funds") as of November 30, 1998, and the
related statements of operations, statements of changes in net assets and
financial highlights for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of November 30, 1998, by correspondence with the Funds'
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective series of Delaware Group Global & International Funds, Inc. at
November 30, 1998, and the results of their operations, the changes in their net
assets and their financial highlights for each of the periods indicated therein,
in conformity with generally accepted accounting principles.
/s/Ernst & Young LLP
Philadelphia, Pennsylvania
January 8, 1999
Page 19
<PAGE>
DELAWARE GROUP EQUITY FUNDS V, INC. - RETIREMENT INCOME FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998
Delaware Group Equity Funds V, Inc. is registered as a diversified open-end
investment company under the Investment Company Act of 1940, as amended.
Delaware Group Equity Funds V, Inc. currently offers two Funds: Small Cap Value
Fund and Retirement Income Fund. These financial statements and related notes
pertain to Retirement Income Fund (the "Fund"). The Fund is organized as a
Maryland Corporation and offers four classes of shares. The Retirement Income
Fund A Class carries a front-end sales charge of 5.75%. The Retirement Income
Fund B Class carries a back-end deferred sales charge. The Retirement Income
Fund C Class carries a level load deferred sales charge and Retirement Income
Fund Institutional Class has no sales charge. As of November 30, 1998, only the
Retirement Income Fund A Class and the Retirement Income Fund Institutional
Class have commenced operations.
The objective of the Fund is to seek to provide investors with high current
income and an investment that has the potential for capital appreciation.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund.
Security Valuation- Securities listed on an exchange are valued at the last
quoted sales price as of the close of the NYSE on the valuation date. Securities
not traded or securities not listed on an exchange are valued at the mean of the
last quoted bid and asked prices. Long-term debt securities are valued by an
independent pricing service and such prices are believed to reflect the fair
value of such securities. Other securities and assets for which market
quotations are not readily available are valued at fair value as determined in
good faith by or under the direction of the Fund's Board of Directors.
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 has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations, which may differ from generally
accepted accounting principles.
Class Accounting- Investment income, common expenses and realized and unrealized
gain (loss) on investments 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.
Use of Estimates- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Other- Expenses common to all funds within the Delaware Investments 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 the accrual basis. Original issue discounts are accreted to interest
income over the lives of the respective securities.
Certain Fund expenses are paid through "soft dollar" arrangements with brokers.
The amount of these expenses is less than 0.01% of the Fund's average daily net
assets.
Page 9
<PAGE>
DELAWARE GROUP EQUITY FUNDS V, INC. - RETIREMENT INCOME FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Investment Management and Other Transactions with Affiliates In accordance
with the terms of the Investment Management Agreement, the Fund pays Delaware
Management Company (DMC), the Investment Manager of the Fund, an annual fee
which is calculated daily at the rate of 0.65% on the first $500 million of
average daily net assets, 0.625% on the next $500 million and 0.60% on the
average daily net assets in excess of $1 billion. At November 30, 1998 the Fund
had a liability for expenses payable to DMC of $388.
DMC has elected to waive that portion if any of the management fee and reimburse
the Fund to the extent that annual operating expenses exclusive of taxes,
interest, distribution fees, brokerage commissions and extraordinary expenses,
exceed 0.75% of average daily net assets of the Fund through May 31, 1999.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to provide dividend disbursing, transfer agent and accounting services. The Fund
pays DSC a monthly fee based on the number of shareholder accounts, shareholder
transactions and average net assets, subject to certain minimums. At November
30, 1998, the Fund had a liability for such fees and other expenses payable to
DSC of $175.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. (DDLP), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.30% of the average daily net assets of the A Class and 1.00% of the
average daily net assets of the B and C Classes. DDLP has elected voluntarily to
waive its rights to receive 12b-1 Plan fees (including service fees) from the
commencement of operations of A Class shares of the Fund through May 31, 1999.
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Fund. These officers, directors and employees are paid no compensation by
the Fund.
3. Investments
During the year ended November 30, 1998, the Fund made purchases of $2,932,989
and sales of $2,561,477 of investment securities other than U.S. government
securities and temporary cash investments.
At November 30, 1998, the aggregate cost of securities for federal income tax
purposes was $2,854,360.
At November 30, 1998, net unrealized appreciation for federal income tax
purposes aggregated $128,223 of which $243,903 related to unrealized
appreciation of securities and $115,680 related to unrealized depreciation of
securities.
Page 10
<PAGE>
DELAWARE GROUP EQUITY FUNDS V, INC. - RETIREMENT INCOME FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
4. Capital Stock
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
12/02/96 *
Year Ended to
11/30/98 11/30/97
-------- --------
<S> <C> <C>
Shares sold:
A Class 2,120 742
Institutional Class 1,251 235,295
Shares issued upon reinvestment of distributions from net
investment income and net realized gain on investments:
A Class 83 --
Institutional Class 42,186 1,137
-------- --------
45,640 237,174
-------- --------
Shares repurchased:
Retirement Income Fund A Class (700) --
Retirement Income Fund Institutional Class (185) --
-------- --------
(885) --
-------- --------
Net increase 44,755 237,174
======== ========
</TABLE>
* Date of commencement of operations.
5. Line of Credit
The Fund has a committed line of credit for $100,000. No amount was outstanding
at November 30, 1998, or at anytime during the fiscal year.
6. Market and Credit Risk
The Fund may invest up to 15% of its total assets in illiquid securities which
may include securities with contractual restrictions on resale, securities
exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, and other securities which may not be readily marketable. The relative
illiquidity of some of these securities may adversely affect the Fund's ability
to dispose of such securities in a timely manner and at a fair price when it is
necessary to liquidate such securities.
Page 11
<PAGE>
Report of Independent Auditors
To the Shareholders and Board of Directors
Delaware Group Equity Funds V, Inc. - Retirement Income Fund
We have audited the accompanying statement of net assets of Delaware Group
Equity Funds V, Inc. - Retirement Income Fund (the "Fund") as of November 30,
1998, and the related statement of operations for the year then ended, and the
statements of changes in net assets and financial highlights for each of the
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of November 30, 1998, by correspondence with the Fund's
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Group Equity Funds V, Inc. - Retirement Income Fund at November 30,
1998, and the results of its operations for the year then ended, and the changes
in its net assets and its financial highlights for each of the periods indicated
therein, in conformity with generally accepted accounting principles.
/s/Ernst & Young LLP
Philadelphia, Pennsylvania
January 8, 1999
Page 12
<PAGE>
Report of Independent Auditors
To the Shareholders and Board of Directors
Delaware Group Equity Funds II, Inc. - Diversified Value Fund
We have audited the accompanying statement of net assets of Delaware Group
Equity Funds II, Inc. - Diversified Value Fund (the "Fund") as of November 30,
1998, and the related statement of operations, the statement of changes in net
assets, and the financial highlights for the period September 16, 1998
(commencement of operations) to November 30, 1998. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of November 30, 1998, by correspondence with the Fund's custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Group Equity Funds II, Inc. - Diversified Value Fund at November 30,
1998, and the results of its operations, the changes in its net assets, and its
financial highlights for the period September 16, 1998 (commencement of
operations) to November 30, 1998, in conformity with generally accepted
accounting principles.
/s/Ernst & Young LLP
Philadelphia, Pennsylvania
January 8, 1999
Page 13
<PAGE>
DELAWARE GROUP EQUITY FUNDS II, INC. - DIVERSIFIED VALUE FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998
Delaware Group Equity Funds II, Inc. (the "Company") is registered as a
diversified open-end investment company under the Investment Company Act of
1940, as amended. The Company is organized as a Maryland Corporation and offers
five series: the Decatur Income Fund, the Decatur Total Return Fund, the Blue
Chip Fund, the Social Awareness Fund and the Diversified Value Fund. These
financial statements and related notes pertain to the Diversified Value Fund
(the "Fund"). The Fund offers four classes of shares. The Diversified Value Fund
A Class carries a front-end sales charge of 5.75%. The Diversified Value Fund B
Class carries a back-end deferred sales charge. The Diversified Value Fund C
Class carries a level load deferred sales charge and the Diversified Value Fund
Institutional Class has no sales charge. As of November 30, 1998 only the A and
Institutional Classes have commenced operations.
The objective of the Fund is capital appreciation with current income as a
secondary objective.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund.
Security Valuation- Securities listed on an exchange are valued at the last
quoted sales price as of the close of the NYSE on the valuation date. Securities
not traded or 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, which approximates market value.
Other securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Fund's Board of Directors.
Federal Income Taxes- The Fund intends to qualify as a regulated investment
company and make the requisite distributions to shareholders. Accordingly, no
provision for federal income taxes has been made in the financial statements.
Income and capital gain distributions are determined in accordance with federal
income tax regulations which may differ from generally accepted accounting
principles.
Class Accounting- Investment income, common expenses and realized and unrealized
gain (loss) on investments 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.
Page 10
<PAGE>
DELAWARE GROUP EQUITY FUNDS II, INC. - DIVERSIFIED VALUE FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Significant Accounting Policies (Continued)
Repurchase Agreements- The Fund may invest in a pooled cash account along with
other members of the Delaware Investments Family of Funds. The aggregate 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 at least 100% 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.
Use of Estimates- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Other- Expenses common to all funds within the Delaware Investments 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 the accrual basis. The Fund declares and pays dividends from net
investment income and capital gains, if any, annually.
Certain expenses of the Fund are paid through "soft dollar" arrangements with
brokers. The amount of these expenses is less than 0.01% of the Fund's average
daily net assets.
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company (DMC), the Investment Manager of the Fund, an
annual fee which is calculated at the rate of 0.65% on the first $500 million of
average daily net assets, 0.60% on the next $500 million, 0.55% on the next $1.5
billion and 0.50% on average daily net assets in excess of $2.5 billion. At
November 30, 1998, the Fund had a liability for other expenses payable to DMC of
$688.
DMC has elected to waive that portion, if any, of the management fee and
reimburse the Fund to the extent that annual operating expenses, exclusive of
taxes, interest, distribution fees, brokerage commissions and extraordinary
expenses, exceed 0.75% of average daily net assets of the Fund through May 31,
1999.
Page 11
<PAGE>
DELAWARE GROUP EQUITY FUNDS II, INC. - DIVERSIFIED VALUE FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Investment Management and Other Transactions with Affiliates (Continued)
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to provide dividend disbursing, transfer agent and accounting and administration
services. The Fund pays DSC a monthly fee based on the number of shareholder
accounts, shareholder transactions and average net assets, subject to certain
minimums. At November 30, 1998, the Fund had a liability for such fees and other
expenses payable to DSC of $147.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. (DDLP), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.30% of the average daily assets of the A Class and 1.00% of the average
daily net assets of the B and C Classes. DDLP has elected voluntarily to waive
such fees through May 31,1999.
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Fund. These officers, directors and employees are paid no compensation by
the Fund.
3. Investments
During the period ended November 30, 1998, the Fund made purchases of $2,325,348
and sales of $327,633 of investment securities other than U.S. government
securities and temporary cash investments.
At November 30, 1998, the aggregate cost of securities for federal income tax
purposes was $2,013,779.
At November 30, 1998, the net unrealized appreciation for federal income tax
purposes aggregated was $225,852 of which $244,115 related to unrealized
appreciation of securities and $18,263 related to unrealized depreciation of
securities.
4. Capital Stock
Transactions in capital stock shares were as follows:
9/15/98*
to
11/30/98
-------
Shares sold:
A Class 1
Institutional Class 235,295
-------
Net increase 235,296
=======
* Date of commencement of operations.
Page 12
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