<PAGE>
For Total Return
Blue Chip Fund
(photo of illustration from For Total Return brochure)
service and guidance
professional management
goals
1999
Semi-Annual
Report
DELAWARE(SM)
INVESTMENTS
- ---------------------
Philadelphia o London
<PAGE>
(various photos demonstrating service and guidance professional management
and goals)
professional management
professional management
More Than 70 Years
of investment experience has taught us that disciplined strategies and prudent
risk management are a sound approach to any market environment.
goals
goals
Whatever Your Goals,
the years ahead will be shaped by choices you make today. Delaware offers many
options that can be an appropriate part of a sound investment plan.
service and guidance
service and guidance
Delaware Believes That The Guidance
of a professional financial adviser is vital to your long-term success. We are
committed to providing you and your adviser with the highest quality information
and service.
<PAGE>
June 3, 1999
for total
return
1
Dear Shareholder:
The U.S. stock market has provided considerable capital appreciation since
November.
An intersection of robust growth, low inflation, low interest rates and
low unemployment generally propelled stock prices higher. Blue Chip Fund
capitalized on a fortuitous environment and provided a total return of +9.36 (A
Class shares at net asset value with distributions reinvested) for the six
months ended May 31, 1999.
Your Fund's subadviser, Vantage Investment Advisors of New York
anchors its investment process with computer-driven, quantitative stock
selection. Vantage's quantitative techniques are an essential part of Blue Chip
Fund's disciplined investment strategy - an approach that strives to identify
stocks with both growth and value characteristics. By combining growth and value
investing into one comprehensive strategy your Fund strives to find attractively
priced stocks with favorable long-term earnings prospects.
In December, at the start of fiscal 1999, we had concerns about
inflation in the U.S. and the effects of economic crises in Russia, Japan and
Latin America. Remarkably, consumer spending and corporate investment has
remained high. Low inflation enabled the Federal Reserve Board to keep interest
rates low, although the Fed has since expressed a policy bias towards raising
rates in the future.
By combining growth and value investing into one comprehensive strategy your
Fund strives to find attractively priced stocks with favorable long-term
earnings prospects.
Cumulative Total Return
- --------------------------------------------------------------------------------
For Periods Ended May 31, 1999
Six Months
- --------------------------------------------------------------------------------
Blue Chip Fund A Class +9.36%
- --------------------------------------------------------------------------------
Standard & Poor's 500 Index +12.62%
Lipper Growth and Income Fund Average (1,047 funds) +13.66%
- --------------------------------------------------------------------------------
Fund and Lipper performance quoted above is based on net asset value without the
effect of sales charges. The S&P 500 Index is an unmanaged composite of large
company stocks. SEC-mandated performance and fee waiver information for all
share classes can be found on page 8. Past performance does not guarantee future
results. You cannot invest directly in an index.
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for total
return
2
With strong economic growth and low inflation, we would anticipate the
stock market continuing to move higher in the second half of fiscal 1999.
However, we believe the progress will probably be tempered by high levels of
volatility and concern over speculative excesses in certain segments of the
market, particularly Internet stocks and the very largest stocks.
As the year progresses, we expect the overlooked and undervalued
segments of the market to regain investors' attention. We believe the market's
focus on the very largest stocks has created attractive opportunities in smaller
and more value-oriented stocks. If the economies in emerging markets remain
stable, stocks of companies with an international presence are also likely to
experience renewed interest from investors.
On the following pages your Fund's manager, T. Scott Wittman, President
and Chief Investment Officer at Vantage Investment Advisors, explains Blue Chip
Fund's strategy in detail and provides his outlook for the remainder of the 1999
fiscal year.
In closing, we thank you for choosing to make our technology-based
investment strategy part of your investment portfolio.
We believe the market's focus on the very largest stocks has created attractive
opportunities in smaller and more value-oriented stocks.
Sincerely,
/s/ Wayne A. Stork
- ------------------------------------
Wayne A. Stork
Chairman,
Delaware Investments Family of Funds
/s/ David K. Downes
- ------------------------------------
David K. Downes
President and Chief Executive Officer,
Delaware Investments Family of Funds
<PAGE>
for total
return
3
Portfolio Manager's Review
T. Scott Wittman
President, Senior Portfolio Manager
Vantage Investment Advisors, Inc.
Enrique Chang
Senior Vice President/
Chief Investment Officer
Vantage Investment Advisors, Inc.
Christopher P. Harvey
Assistant Vice President
Vantage Investment Advisors, Inc.
June 3, 1999
Overview
The Dow Jones Industrial Average closed above both the 10,000 and 11,000 marks
for the first time during the first six months of our fiscal year. While many on
Wall Street heralded these milestones, it is important to recognize that many
individual stocks did not share in the superior gains reported for the major
indexes. The success of these indexes was driven by stocks of some very large,
highly successful companies while medium size and smaller stocks have remained
on the sidelines. The Dow's record and even that of the S&P 500 show only the
success of larger stocks, not the market as a whole.
Some investors have taken the record highs as a signal that the market
is overvalued and it is time to sell. Our strategy is to examine economic
fundamentals and valuations to determine whether the market is fairly valued,
overvalued or undervalued.
Investment Strategy
Blue Chip Fund's stock picking technique evaluates some 1,200 mid and large cap
U.S. stocks every business day. We evaluate raw data from each company including
the price/earnings ratio of its stock, earnings estimates from many Wall Street
analysts and the amount of profit paid out as dividends each year. Each stock is
then compared and ranked against all other stocks in its industry sector. In our
view, if a stock has growth and value characteristics, it is a prime candidate
for Blue Chip Fund's investment portfolio.
This computer analysis leads to:
o Stocks with a low price/earnings ratio - stocks whose share price is low in
relation to its earnings per share; and
o Companies whose earnings growth rates are accelerating and/or whose earnings
results have risen above previous estimates.
Blue Chip Fund's stock picking technique evaluates some 1,200 mid and large cap
U.S. stocks every business day.
<PAGE>
for total
return
4
Strategic Positioning
The Continued Dominance of Super Caps
We reported in this Fund's annual report in January, that our avoidance of
"supercap" stocks - stocks of very large companies with relatively high
price/earnings ratios - had affected the Fund's performance. In the first half
of fiscal 1999 supercaps led the stock market just as they did throughout 1998.
And, we continued to shun most supercap stocks because they failed to rate
highly according to our growth and value investment parameters.
One supercap stock that did meet our investment parameters the last six
months was Microsoft. As you probably know, Microsoft develops, manufactures,
licenses, sells and supports software products. Lately, Microsoft has also been
spending considerable energy developing the "MSN" network of Internet products
and services. As of May 31, 1999, Microsoft had a price-to-earnings ratio of
64.8 and a stock price of $80 11/16, a boost from its six-month low of $66 7/8
on December 16, 1998. We were pleased with the performance of Blue Chip Fund's
top holding, which represents nearly 4% of net assets as of May 31, 1999. Most
importantly, we believe we own the stock at a reasonable price.
Our selection process tends to lead us to large and mid-cap stocks that
appear to have long-term growth potential but can be bought at reasonable share
prices.
Volatility in
Financial Stocks
Over 15% of your Fund's net assets was allocated to financial stocks - the
largest sector as of May 31, 1999. Some of our investments in the financial
sector recovered after stumbling in 1998, particularly Citigroup.
Citigroup, the New York based financial company, was originally formed
by a merger between Travelers and Citicorp in the spring of 1998 - creating the
world's largest financial services company.
Many investors became concerned that Citigroup's behemoth size would
present certain operational difficulties and the company's share price dropped.
Citigroup stock, our Fund's ninth largest holding, rebounded in the second
quarter of 1999, and remains attractive based on our criteria. We think that the
recent recovery of the stock price supports our conclusion that the company will
eventually benefit from economies of scale.
Opportunities in Technology
Bolstering your Fund's performance during the first half of fiscal 1999 were our
holdings in technology stocks. This sector was among the top performing sectors
in the S&P 500.
We were pleased with the performance of Apple Computer through the
first half of fiscal 1999, as we were in fiscal 1998. Apple has been very
successful in marketing its newest
<PAGE>
for total
return
5
addition to the company's line of computers - the iMac, a personal computer
competitive with other lower priced models. Apple also appears to have a number
of promising new products in the development pipeline. This could bode well for
the company's long-term profit and earnings growth in our view.
We've also been pleased with performance of International Business
Machines, which is Blue Chip Fund's third largest holding as of May 31, 1999.
IBM has shown us that traditional Internet companies won't be the only ones to
benefit from the growth of the Internet. IBM is integrating the Internet into
everything it does; their E-commerce business unit is growing rapidly.
One company that's delivered exciting returns for your Fund has been
Lexmark International Group. Lexmark, a spin-off company of IBM, is the number
two U.S. maker of computer printers. This young company develops, manufactures
and supplies low-cost laser and inkjet printers for the office and home markets.
On April 28, Lexmark released its Z11 Color Jetprinter, raising the bar for
color inkjet printers under $100. Many analysts believe that as more Americans
gain access to the Internet, they will want to print web pages in color, which
helps drive sales of Lexmark's color laser printers. We are looking for good
things from Lexmark in the remainder of fiscal 1999.
Consolidation in Healthcare
One factor included in our computer analysis is whether Wall Street analysts
have raised earnings expectations for a stock. Sometimes this factor leads us to
companies involved in mergers and/or acquisitions. One such company was Bergen
Brunswig Corp., the third largest U.S. drug wholesaler. Bergen purchased another
stock we held, PharMerica Inc., for $1.1 billion in stock and cash on April 26
to expand its sales to nursing homes. We acquired Bergen Brunswig stock in the
transaction and have seen its stock price appreciate though the stock's
price-to-earnings ratio of 19.3 on May 31, 1999 still puts it well within our
investment parameters.
Bergen Brunswick is primarily a supply channel management company that
provides pharmaceuticals, medical-surgical supplies and specialty products. The
company also provides information management solutions and outsourcing services.
In the month of May, this stock was awarded two "buy" recommendations,
from Raymond James Financial and Donaldson Lufkin & Jenrette. Although Bergen's
stock has declined somewhat, we believe this company is well positioned to move
up the ranks in the healthcare sector.
BUILDING A LONG-TERM PORTFOLIO
- --------------------------------------------------------------------------------
The Efficiency of Quantitative Investing
-------------------------------------------
Universe of 1,200 mid and large
capitalization companies
-------------------------------------------
-------------------------------------------
Computer-driven quantitative
fundamental analysis
-------------------------------------------
-------------------------------------------
Ranking of stocks based on
both growth and
value characteristics
-------------------------------------------
-------------------------------------------
134 stocks selected
for the portfolio*
-------------------------------------------
*As of May 31, 1999. The number of stocks selected will fluctuate.
<PAGE>
for total
return
6
Outlook
The positioning of Blue Chip Fund's portfolio over the past fiscal year has
helped it to benefit from U.S. economic growth while escaping the full impact of
struggling international markets. Many of the companies in the portfolio
generate the majority of their revenues from U.S. and/or European markets.
Since no country can remain an island in the global economy we believe
there could be some stock market volatility for the second half of fiscal 1999.
We believe that our quantitative investment strategy can endure the short-term
effects of market volatility and ultimately reward patient long-term investors.
The Dow's rise to 10,000 and then 11,000 may be a significant event in
the history of that index. However, the occasion should not be viewed as the
pinnacle of broad-based market success. Nor should it be viewed as clear
evidence that the market is overpriced. We believe economic fundamentals and
valuations are the best predictors of future success. In addition, we think that
consistent, long-term performance is produced by a bottom-up, quantitative style
of investing that systematically identifies undervalued stocks with above
average earnings prospects.
The current economic environment of low interest rates, strong, steady
growth and low inflation provides fertile ground for long-term stock market
growth. At this time we believe there is room for continued optimism for the
stock market. And, we believe Blue Chip Fund is well positioned to capitalize on
any market strength for the remainder of fiscal 1999.
We believe Blue Chip Fund is well positioned to capitalize on any market
strength for the remainder of fiscal 1999.
TOP TEN HOLDINGS--A COMPARISON
- --------------------------------------------------------------------------------
May 31, 1999
Blue Chip Fund Percentage of Net Assets Price to Earnings Ratio
- --------------------------------------------------------------------------------
Microsoft 3.7% 64.8x
General Electric Co. 3.0% 38.8x
IBM 1.8% 38.8x
Exxon Corp. 1.8% 34.4x
AT&T Corp. 1.7% 26.3x
Cisco Systems 1.6% 77.9x
Intel Corp. 1.6% 27.9x
Wal-Mart Stores. 1.5% 44.8x
Citigroup Inc. 1.4% 23.0x
Tyco International 1.4% 36.2x
*Price to earnings ratios are based on trailing earnings for the six months
ended May 31, 1999.
<PAGE>
for total
return
7
Performance Summary
BLUE CHIP FUND'S LIFETIME PERFORMANCE
- --------------------------------------------------------------------------------
Growth of a $10,000 Investment
February 24, 1997 Through May 31, 1999
Blue Chip Fund A Class
Feb-97 $ 9,421
Mar-97 $ 8,990
Jun-97 $10,227
Sep-97 $11,146
Dec-97 $11,375
Mar-98 $12,824
Jun-98 $12,812
Sep-98 $11,055
Dec-98 $13,447
Mar-99 $13,538
May-99 $13,687
Chart assumes $10,000 invested on February 24, 1997 and includes the effect of a
5.75% front-end sales charge and reinvestment of distributions. Returns for
other classes will differ due to different charges and expenses. Past
performance does not guarantee future results.
BLUE CHIP FUND PERFORMANCE
- --------------------------------------------------------------------------------
Average Annual Returns Through May 31, 1999
Lifetime One Year
- --------------------------------------------------------------------------------
Class A (Est. 2/24/97)
Excluding Sales Charge +16.69 +9.76
Including Sales Charge +13.67 +3.42
- --------------------------------------------------------------------------------
Class B (Est. 2/24/97)
Excluding Sales Charge +15.93 +9.10
Including Sales Charge +14.83 +4.10
- --------------------------------------------------------------------------------
Class C (Est. 2/24/97)
Excluding Sales Charge +15.93 +9.10
Including Sales Charge +15.93 +8.10
All performance includes reinvestment of distributions and applicable sales
charges as described below. Return and share value will fluctuate so that shares
when redeemed may be worth more or less than the original cost. Past performance
is not a guarantee of future results. Performance for Class B and C shares
excluding sales charges assumes either the investment was not redeemed or
contingent sales charges did not apply.
Class A shares have a 5.75% maximum front-end sales charge and a 12b-1 fee.
Class B shares do not carry a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a deferred sales
charge of up to 5% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If shares are
redeemed within 12 months, a 1% contingent deferred sales charge applies.
Expense limitations were in effect for the periods shown. Performance would have
been lower if the limitations were not in effect.
The average annual total return for the lifetime period and cumulative returns
for the one-year and six month periods ended May 31, 1999 for Blue Chip Fund's
Institutional Class, which is available without sales or asset-based
distribution charges only to certain eligible institutional accounts, were
+17.06%, +10.18% and +9.58% respectively.
<PAGE>
8 for total return
Financial Statements
Delaware Group Equity Funds II, Inc. -
Blue Chip Fund
Statement of Net Assets
May 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number Market
of Shares Value
-------------------------
COMMON STOCK - 95.38%
Aerospace & Defense - 2.14%
B.F. Goodrich ................................. 2,755 $ 111,578
*Gulfstream Aerospace .......................... 3,600 222,300
United Technologies ........................... 3,040 188,670
----------
522,548
----------
Automobiles & Auto Parts - 2.31%
Ford Motor .................................... 5,835 332,960
Hertz Corporation ............................. 2,400 131,850
*Navistar International ........................ 2,000 98,750
----------
563,560
----------
Banking, Finance & Insurance - 15.98%
A.G. Edwards .................................. 4,300 144,587
Allstate ...................................... 4,560 166,155
American International Group .................. 2,000 228,625
Associates First Capital ...................... 1,642 67,322
Bank of America ............................... 2,945 190,505
Bank One ...................................... 2,146 121,383
Countrywide Credit Industries ................. 3,600 148,050
Chase Manhattan ............................... 4,160 301,600
Citigroup ..................................... 5,340 353,775
Comerica ...................................... 1,955 118,155
Conseco ....................................... 4,000 122,250
Dime Bancorp .................................. 7,500 152,812
Fannie Mae .................................... 3,800 258,400
Fleet Financial Group ......................... 5,900 242,637
Golden West Financial ......................... 2,000 189,750
Loews ......................................... 1,300 105,706
J.P. Morgan ................................... 550 76,622
Morgan Stanley Dean Witter .................... 3,400 328,100
National City ................................. 1,500 99,281
PaineWebber Group ............................. 2,795 131,365
Reliance Group Holdings ....................... 6,100 60,619
SLM Holding ................................... 1,837 76,236
Washington Mutual ............................. 5,772 220,418
----------
3,904,353
----------
Buildings & Materials - 0.61%
USG ........................................... 950 53,794
Vulcan Materials .............................. 2,100 94,894
----------
148,688
----------
Cable, Media & Publishing - 2.45%
CBS ........................................... 3,800 158,650
Donnelley & Sons .............................. 700 25,375
Knight-Ridder ................................. 3,395 178,874
McGraw-Hill ................................... 2,850 147,844
New York Times ................................ 2,400 81,900
R.H. Donnelley ................................ 332 6,308
----------
598,951
----------
<PAGE>
Number Market
of Shares Value
-------------------------
COMMON STOCK (Continued)
Chemicals - 1.85%
Dow Chemical ................................ 2,435 $ 295,852
Engelhard ................................... 6,000 121,500
W.R. Grace & Co ............................. 2,000 35,625
----------
452,977
----------
Computers & Technology - 15.98%
*American Power Conversion ................... 1,950 75,806
Apple Computer .............................. 3,600 158,512
*BMC Software ................................ 4,100 202,566
*Cisco Systems ............................... 3,600 392,287
Computer Associates International ........... 4,400 208,175
*Compuware ................................... 6,300 195,497
*Dell Computer ............................... 4,800 165,150
Deluxe ...................................... 3,280 118,285
*EMC ......................................... 2,650 264,006
*Electronics Arts ............................ 2,100 102,637
International Business Machine .............. 3,800 441,988
*Lexmark International Group ................. 1,800 245,025
*Microsoft ................................... 11,200 904,050
*Oracle ...................................... 5,300 131,341
*Symantec .................................... 5,300 129,684
Xerox ....................................... 3,000 168,563
----------
3,903,572
----------
Consumer Products - 2.11%
Avon Products ............................... 2,300 113,706
Clorox ...................................... 2,060 207,931
Procter & Gamble ............................ 2,080 194,220
----------
515,857
----------
Electronics & Electrical - 5.23%
General Electric ............................ 7,170 729,099
Honeywell ................................... 1,785 168,906
Intel ....................................... 7,000 379,313
----------
1,277,318
----------
Energy - 6.17%
Ashland ..................................... 2,000 81,500
Atlantic Richfield .......................... 1,900 159,006
Enron ....................................... 3,500 249,812
Exxon ....................................... 5,400 431,325
Royal Dutch Petroleum ....................... 4,445 251,420
Sunoco ...................................... 4,400 133,925
Texaco ...................................... 3,070 201,085
----------
1,508,073
----------
Food, Beverage & Tobacco - 4.85%
Anheuser Busch .............................. 900 65,756
Coca Cola ................................... 3,420 233,629
Flowers Industries .......................... 6,300 140,175
General Mills ............................... 2,000 160,750
<PAGE>
for total return 9
Statement of Net Assets (Continued)
- --------------------------------------------------------------------------------
Number Market
of Shares Value
-------------------------
COMMON STOCK (Continued)
Food, Beverage & Tobacco (Continued)
Heinz (H.J.) .................................... 2,865 $ 138,415
Interstate Bakeries ............................. 4,100 89,688
Keebler Foods ................................... 3,200 107,200
Philip Morris ................................... 5,400 208,238
Quaker Oats ..................................... 400 26,425
Universal Foods ................................. 600 13,763
----------
1,184,039
----------
Healthcare & Pharmaceuticals - 10.92%
*Amgen ........................................... 3,960 250,594
Bristol-Myers Squibb ............................ 4,200 288,225
Eli Lilly ....................................... 2,400 171,450
Johnson & Johnson ............................... 2,700 250,088
*Lincare Holdings ................................ 1,670 41,019
McKesson ........................................ 1,921 65,434
Medtronic ....................................... 2,762 196,102
Merck & Co ...................................... 4,600 310,500
*Oxford Health Plans ............................. 1,500 28,547
Pfizer .......................................... 2,700 288,900
Pharmacia & Upjohn .............................. 1,800 99,788
*Rexall Sundown .................................. 3,700 62,900
Schering-Plough ................................. 4,620 208,189
*Steris .......................................... 2,500 41,406
Tyco International .............................. 3,900 340,763
Warner-Lambert .................................. 400 24,800
----------
2,668,705
----------
Industrial Machinery - 0.49%
Ingersoll-Rand .................................. 1,887 120,178
----------
120,178
----------
Leisure, Lodging & Entertainment - 1.80%
Carnival Cruise Lines ........................... 5,400 221,400
CKE Restaurants ................................. 2,090 38,404
Eastman Kodak ................................... 500 33,812
*Outback Steakhouse .............................. 4,050 145,167
----------
438,783
----------
Metals & Mining - 0.36%
Placer Dome ..................................... 2,600 28,925
USX-U.S. Steel Group ............................ 2,220 59,801
----------
88,726
----------
Paper & Forest Products - 0.87%
Fort James ...................................... 375 13,734
Georgia-Pacific ................................. 2,300 198,806
----------
212,540
----------
Retail - 5.91%
Gap ............................................. 3,262 204,079
Home Depot ...................................... 2,400 136,500
*Kroger .......................................... 2,000 117,125
Ross Stores ..................................... 2,330 106,816
*Safeway ......................................... 4,900 227,850
*Staples ......................................... 5,625 161,543
TJX ............................................. 4,370 131,100
Wal-Mart Stores ................................. 8,400 358,050
----------
1,443,063
----------
<PAGE>
Number Market
of Shares Value
-------------------------
COMMON STOCK (Continued)
Telecommunications - 11.81%
A T & T ....................................... 7,500 $ 416,250
ALLTEL ........................................ 1,500 107,531
Ameritech ..................................... 3,330 219,156
Bell Atlantic ................................. 2,870 157,132
BellSouth ..................................... 5,630 265,666
Centurytel .................................... 3,750 143,672
GTE ........................................... 1,835 115,720
*General Instrument ............................ 6,400 247,600
Lucent Technologies ........................... 5,800 329,875
*MCI Worldcom .................................. 3,700 319,472
SBC Communications ............................ 1,300 66,463
*Tellabs ....................................... 4,950 289,730
US West Communications Group .................. 3,820 206,519
----------
2,884,786
----------
Textiles, Apparel & Furniture - 0.62%
Miller (Herman) ............................... 1,250 25,195
*Tommy Hilfiger ................................ 1,665 124,979
----------
150,174
----------
Transportation & Shipping - 1.10%
Alaska Air Group .............................. 4,900 203,350
*AMR ........................................... 990 64,412
----------
267,762
----------
Utilities - 1.82%
AMEREN ........................................ 2,500 102,344
Energy East ................................... 5,610 155,677
General Public Utilities ...................... 2,570 111,956
Texas Utilities ............................... 1,180 53,100
Unicom ........................................ 500 21,156
----------
444,233
----------
Total Common Stock (cost $20,033,842) ......... 23,298,886
----------
Principal
Amount
---------
Repurchase Agreements - 3.85%
With Chase Manhattan 4.78% 06/01/99
(dated 05/28/99, collateralized by
$76,000 U.S. Treasury Notes 6.25%
due 02/28/02, market value $78,458
and $124,000 U.S. Treasury Notes
7.50% due 05/15/02, market value
$130,202 and $116,000 U.S. Treasury
Notes 5.50% due 02/28/03,
market value $117,001) ......................... $320,000 320,000
With PaineWebber 4.78% 06/01/99
(dated 05/28/99, collateralized by
$124,000 U.S. Treasury Notes 6.375%
due 5/15/00, market value $125,228
and $124,000 U.S. Treasury Notes
6.25% due 01/31/02, market value
$128,180 and $64,000 U.S. Treasury
Notes 5.375% due 06/30/03,
market value $64,535) .......................... 311,000 311,000
<PAGE>
10 for total return
Statement of Net Assets (Continued)
- --------------------------------------------------------------------------------
Principal Market
Amount Value
--------- --------
Repurchase Agreements (Continued)
With Prudential Securities 4.78% 06/01/99
(dated 05/28/99, collateralized by
$257,000 U.S. Treasury Notes 15.75%
due 11/15/01, market value $318,028) ............ $ 311,000 $ 311,000
-----------
Total Repurchase Agreements
(cost $942,000) ................................. 942,000
-----------
TOTAL MARKET VALUE OF SECURITIES - 99.23%
(COST $20,975,842) .............................. $24,240,886
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 0.77% ...................... 187,068
-----------
NET ASSETS APPLICABLE TO 2,049,987 SHARES
($1.00 par value) OUTSTANDING - 100.00% ......... $24,427,954
===========
NET ASSETS VALUE- BLUE CHIP A CLASS
($11,226,103 / 937,713 shares) .................. $11.97
======
NET ASSETS VALUE- BLUE CHIP B CLASS
($11,107,389 / 936,107 shares) .................. $11.87
======
NET ASSETS VALUE- BLUE CHIP C CLASS
($1,703,411 / 143,539 shares) ................... $11.87
======
NET ASSETS VALUE- BLUE CHIP INSTITUTIONAL CLASS
($391,051 / 32,628 shares) ...................... $11.99
======
- ----------
*Non-income producing security for the period ending May 31,1999.
COMPONENTS OF NET ASSETS AT MAY 31, 1999:
Common stock, $1.00 par value, 200,000,000 shares
allocated to the Fund with 100,000,000 shares
allocated to Blue Chip Fund A Class, 25,000,000 shares
allocated to Blue Chip Fund B Class, 25,000,000 shares
allocated to Blue Chip Fund C Class, 50,000,000 shares
allocated to Blue Chip Institutional Class .............. $21,393,038
Accumulated net investment loss ............................ (48,831)
Accumulated net realized loss on investments ............... (181,297)
Net unrealized appreciation on investments ................. 3,265,044
-----------
Total net assets ........................................... $24,427,954
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
BLUE CHIP FUND A CLASS
Net asset value A Class (A) ................................ $11.97
Sales charge (5.75% of offering price, or 6.10%
of amount invested per share) (B) ....................... 0.73
------
Offering price ............................................. $12.70
======
- ----------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the 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>
Delaware Group Equity Funds II, Inc. -
Blue Chip Fund
Statement of Operations
Six Months Ended May 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Dividends ......................................... $122,079
Interest .......................................... 22,491 $ 144,570
--------
Expenses:
Management fees ................................... 66,504
Dividend disbursing and transfer agent
fees and expenses .............................. 63,739
Distribution expense .............................. 57,369
Registration fees ................................. 43,133
Reports and statements to shareholders ............ 7,100
Accounting and administration ..................... 5,701
Professional fees ................................. 1,500
Directors' fees ................................... 660
Other ............................................. 236 245,942
--------
Less expenses absorbed or waived .................. (55,163)
Less expenses paid indirectly ..................... (236)
----------
Total expenses .................................... 190,543
----------
NET INVESTMENT LOSS ............................... (45,973)
----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments .................. 51,912
Net change in unrealized appreciation/depreciation
of investments ................................. 1,463,236
----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS ................................. 1,515,148
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................................ $1,469,175
==========
See accompanying notes
<PAGE>
for total return 11
Delaware Group Equity Funds II, Inc.
Blue Chip Fund
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
Six Months Year
Ended Ended
5/31/99 11/30/98
(Unaudited)
--------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) ...................... $ (45,973) $ 26,097
Net realized gain (loss) on investments ........... 51,912 (233,209)
Net change in unrealized appreciation/depreciation
of investments ................................. 1,463,236 1,236,839
----------- -----------
Net increase in net assets resulting
from operations ................................ 1,469,175 1,029,727
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class ........................................ (17,788) (10,143)
Institutional Class ............................ (5,697) (12,045)
Net realized gain on investments:
A Class ........................................ - (2,536)
B Class ........................................ - (1,558)
C Class ........................................ - (247)
Institutional Class ............................ - (1,853)
----------- -----------
(23,485) (28,382)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class ........................................ 4,135,747 5,622,460
B Class ........................................ 6,050,739 4,115,893
C Class ........................................ 578,366 1,065,889
Institutional Class ............................ 232,540 2,011,725
Net asset value of shares issued upon reinvestment
of dividends from net investment income and net
realized gain on investment transactions:
A Class ........................................ 16,844 11,735
B Class ........................................ - 1,509
C Class ........................................ - 247
Institutional Class ............................ 5,697 13,898
----------- -----------
11,019,933 12,843,356
----------- -----------
Cost of shares repurchased:
A Class ........................................ (1,134,331) (901,455)
B Class ........................................ (854,798) (439,060)
C Class ........................................ (205,734) (124,351)
Institutional Class ............................ (957,076) (3,054,298)
----------- -----------
(3,151,939) (4,519,164)
----------- -----------
Increase in net assets derived from capital
share transactions ............................. 7,867,994 8,324,192
----------- -----------
NET INCREASE IN NET ASSETS ........................ 9,313,684 9,325,537
NET ASSETS:
Beginning of period ............................... 15,114,270 5,788,733
----------- -----------
End of period ..................................... $24,427,954 $15,114,270
=========== ===========
See accompanying notes
<PAGE>
12 for total return
Delaware Group Equity Funds II, Inc. -
Blue Chip Fund
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Blue Chip Fund A Class Blue Chip Fund B Class
------------------------------------------------------------------------
Six Months Year 2/24/97(2) Six Months Year 2/24/97(2)
Ended Ended to Ended Ended to
5/31/99(1) 11/30/98 11/30/97 5/31/99(1) 11/30/98 11/30/97
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $10.970 $ 9.850 $8.500 $10.880 $ 9.800 $8.500
Income from investment operations:
Net investment income (loss)3 ........................ (0.007) 0.048 0.041 (0.048) (0.025) (0.009)
Net realized and unrealized gain
from investments ................................... 1.032 1.122 1.309 1.038 1.115 1.309
------- ------ ------ ------- ------ ------
Total from investment operations ..................... 1.025 1.170 1.350 0.990 1.090 1.300
------- ------ ------ ------- ------ ------
Less dividends and distributions:
Dividends from net investment income ................. (0.025) (0.040) - - - -
Distributions from net realized
gain on investments ................................ - (0.010) - - (0.010) -
------- ------- ------ ------- ------ ------
Total dividends and distributions .................... (0.025) (0.050) - 0.000 (0.010) -
------- ------- ------ ------- ------ ------
Net asset value, end of period .......................... $11.970 $10.970 $9.850 $11.870 $10.880 $9.800
======= ======= ====== ======= ======= ======
Total return(4) ......................................... 9.36% 11.94% 15.88% 9.10% 11.14% 15.29%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .............. $11,226 $ 7,480 $2,272 $11,107 $5,375 $1,444
Ratio of expenses to average net assets .............. 1.53% 1.50% 1.50% 2.23% 2.20% 2.20%
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly ........................... 2.06% 2.03% 2.95% 2.76% 2.73% 3.65%
Ratio of net investment income (loss)
to average net assets .............................. (0.11%) 0.45% 0.69% (0.81%) (0.25%) (0.01%)
Ratio of net investment income (loss)
to average net assets prior to
expense limitation and
expenses paid indirectly .......................... (0.64%) (0.08%) (0.76%) (1.34%) (0.78%) (1.46%)
Portfolio turnover ................................... 17% 27% 25% 17% 27% 25%
</TABLE>
- ------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(3) The average shares outstanding method has been applied for per share
information.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
See accompanying notes
<PAGE>
for total return 13
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Blue Chip Fund C Class Blue Chip Fund Institutional Class
-------------------------------------------------------------------------
Six Months Year 2/24/97(2) Six Months Year 2/24/97(2)
Ended Ended to Ended Ended to
5/31/99(1) 11/30/98 11/30/97 5/31/99(1) 11/30/98 11/30/97
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.880 $ 9.800 $8.500 $10.990 $ 9.870 $8.500
Income from investment operations:
Net investment income (loss)(3) .................... (0.048) (0.025) (0.011) 0.011 0.079 0.062
Net realized and unrealized gain
from investments ................................. 1.038 1.115 1.311 1.014 1.116 1.308
------- ------- ------ ------- ------- ------
Total from investment operations ................... 0.990 1.090 1.300 1.075 1.195 1.370
------- ------- ------ ------- ------- ------
Less dividends and distributions:
Dividends from net investment income ............... - - - (0.025) (0.065) -
Distributions from net realized
gain on investments .............................. - (0.010) - - (0.010) -
------- ------- ------ ------- ------- ------
Total dividends and distributions .................. 0.000 (0.010) - (0.025) (0.075) -
------- ------- ------ ------- ------- ------
Net asset value, end of period ........................ $11.870 $10.880 $9.800 $11.990 $10.990 $9.870
======= ======= ====== ======= ======= ======
Total return(4) ....................................... 9.10% 11.14% 15.29% 9.58% 12.31% 16.12%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............ $1,703 $1,217 $239 $391 $1,042 $1,834
Ratio of expenses to average net assets ............ 2.23% 2.20% 2.20% 1.23% 1.20% 1.20%
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly ......................... 2.76% 2.73% 3.65% 1.76% 1.73% 2.65%
Ratio of net investment income (loss)
to average net assets ............................ (0.81%) (0.25%) (0.01%) 0.19% 0.75% 0.99%
Ratio of net investment income (loss)
to average net assets prior
to expense limitation and
expenses paid indirectly ......................... (1.34%) (0.78%) (1.46%) (0.34%) 0.22% (0.46%)
Portfolio turnover ................................. 17% 27% 25% 17% 27% 25%
</TABLE>
- ------------------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(3) The average shares outstanding method has been applied for per share
information.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
See accompanying notes
<PAGE>
14 for total return
Delaware Group Equity Funds II, Inc. -
Blue Chip Fund
Notes to Financial Statements
May 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
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 Equity Income Fund, formally known as the Decatur
Income Fund, the Growth and Income Fund, formally known as 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 Blue
Chip Fund (the "Fund"). The Fund offers four classes of shares. The Blue Chip
Fund A Class carries a front-end sales charge of 5.75%. The Blue Chip Fund B
Class carries a back-end sales charge. The Blue Chip Fund C Class carries a
level load deferred sales charge and the Blue Chip Fund Institutional Class has
no sales charge.
The investment objective of the Fund is to achieve long-term capital
appreciation. Current income is a secondary objective. It seeks to achieve these
objectives by investing primarily in equity securities and any securities that
are convertible into equity securities.
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 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.
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.
<PAGE>
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. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $236 for the period ended May 31,
1999. In addition, the Fund receives earnings credits from its custodian when
positive cash balances are maintained, which are used to offset custody fees.
There were no earnings credits the period ended May 31, 1999. The expenses paid
under the above arrangements are included in their respective expense captions
on the statement of operations with the corresponding expense offset shown as
"expenses paid indirectly".
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, effective
April 1, 1999, 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, 0.60% on the next
$500 million, 0.55% on the next $1,500 million and 0.50% on the average daily
net assets in excess of $2,500 million. Prior to this, the annual fee was
calculated 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 May 31, 1999, the Fund had a liability for
such fees and other expenses payable to DMC of $4,507.
DMC has entered into a sub-advisory agreement with Vantage Investment Advisors,
Inc., an affiliate of DMC, with respect to the management of the Fund. For the
services provided to DMC, DMC pays the sub-adviser an annual fee which is
calculated at the rate of 0.15% of average daily net assets averaging one year
old or less, 0.20% of average daily net assets averaging two years or less but
greater than one year and 0.35% of average daily net assets averaging over two
years old. The Fund does not pay any fees to the sub-adviser.
DMC has elected to waive the portion, if any, of the management fee and
reimburse the Fund to the extent that annual operating expenses exclusive of
taxes, interest, brokerage commissions, extraordinary expenses and distribution
expenses exceed 1.25% of average daily net assets of the Fund through July 31,
1999. Prior to February 1, 1999, the expense waiver was 1.20% of average daily
net assets of the Fund.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to serve as dividend disbursing, transfer, accounting and administration
services agent. 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 May 31, 1999, the Fund had a liability for such fees and
other expenses payable to DSC of $10,353.
<PAGE>
for total return 15
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
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 Class.
For the period ended May 31, 1999, DDLP earned $9,897 for commissions on sales
of the Fund A Class shares.
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 May 31, 1999, the Fund made purchases of $9,149,599 and
sales of $1,612,230 of investment securities other than U.S. government
securities and temporary cash investments.
The cost of investments for federal income tax purposes approximates cost for
book purposes. At May 31,1999, the aggregate cost of securities was $20,975,842.
At May 31, 1999, net unrealized appreciation for federal income tax purposes
aggregated $3,265,044 of which $4,026,684 related to unrealized appreciation of
securities and $761,640 related to unrealized depreciation of securities.
4. Capital Stock
Transactions in capital stock shares were as follows:
Six Months Year
Ended Ended
5/31/99 11/30/98
------- --------
Shares sold:
A Class .................................... 349,335 536,572
B Class .................................... 514,330 388,656
C Class .................................... 48,973 99,187
Institutional Class ........................ 19,133 190,303
Shares issued upon reinvestment of dividends
from net investment income and net realized
gains from security transactions:
A Class .................................... 1,483 1,205
B Class .................................... -- 155
C Class .................................... -- 25
Institutional Class ........................ 501 1,428
------- ---------
933,755 1,217,531
------- ---------
Shares repurchased:
A Class .................................... (95,236) (86,361)
B Class .................................... (72,317) (42,074)
C Class .................................... (17,311) (11,741)
Institutional Class ........................ (81,743) (282,822)
------- ---------
(266,607) (422,998)
------- ---------
Net increase 667,148 794,533
======= =========
5. Lines of Credit
The Fund had a committed line of credit for $200,000. No amount was outstanding
at May 31, 1999 or at any time during the fiscal year.
<PAGE>
16 for total return
Proxy Results
(Unaudited)
- --------------------------------------------------------------------------------
For the six months ended May 31, 1999, The Delaware Group Equity Funds II, Inc.
shareholders voted on the following proposals at the annual meeting of
shareholders on March 17, 1999 or as adjourned. The description of each proposal
and number of shares voted are as follows:
1.To elect the Delaware Group Equity Funds II, Inc. Board of Directors:
Shares Shares Voted
Voted Withheld
For Authority
----------- ------------
Jeffrey J. Nick......................... 120,048,642 10,795,652
Walter P. Babich........................ 120,063,759 10,780,535
John H. Durham.......................... 120,200,558 10,643,736
Anthony D. Knerr........................ 120,239,747 10,604,547
Ann R. Leven............................ 120,273,627 10,570,667
Thomas F. Madison....................... 120,229,855 10,614,439
Charles E. Peck......................... 120,200,223 10,644,071
Wayne A. Stork.......................... 120,203,878 10,640,416
Jan L. Yeomans.......................... 120,291,396 10,552,898
2. To approve the reclassification of the Blue Chip Fund investment objective
from fundamental to non-fundamental.
For Against Abstain
------- ------- -------
596,574 29,145 34,144
3. To approve standardized fundamental investment restrictions for the Blue
Chip Fund (proposal involves separate votes on seven sub-proposals 3A-3G).
3A. To adopt a new fundamental investment restriction concerning concentration
of the investments in the same industry.
For Against Abstain
------- ------- -------
608,512 19,846 31,505
3B. To adopt a new fundamental investment restriction concerning borrowing money
and issuing senior securities
For Against Abstain
------- ------- -------
615,434 13,137 31,292
3C. To adopt a new fundamental investment restriction concerning underwriting.
For Against Abstain
------- ------- -------
608,285 10,011 41,567
<PAGE>
3D. To adopt a new fundamental investment restriction concerning investments in
real estate.
For Against Abstain
------- ------- -------
608,196 23,760 27,907
3E. To adopt a new fundamental investment restriction concerning investments in
commodities.
For Against Abstain
------- ------- -------
607,641 21,489 30,733
3F. To adopt a new fundamental investment restriction concerning lending by the
Fund.
For Against Abstain
------- ------- -------
616,413 12,458 30,992
3G. To reclassify all current fundamental investment restrictions as
non-fundamental.
For Against Abstain
------- ------- -------
597,213 27,632 35,017
4. To approve a new investment management agreement with Delaware Management
Company for the Blue Chip Fund.
For Against Abstain
------- ------- -------
787,235 19,669 31,457
5. To approve a new sub-advisory agreement with Delaware Management Company for
the Blue Chip Fund.
For Against Abstain
------- ------- -------
781,523 23,284 33,554
6. To ratify the selection of Ernst & Young LLP, as the independent auditors
for Delaware Group Equity Funds II, Inc.
For Against Abstain
----------- --------- ----------
119,683,560 1,112,584 10,048,147
7. To approve the restructuring of the Delaware Group Equity Funds II, Inc. from
a Maryland Corporation into a Delaware Business Trust.
For Against Abstain
----------- --------- ---------
102,472,943 3,703,745 8,483,875
<PAGE>
Delaware investments family of funds
For Growth of Capital
Aggressive Growth Fund
Trend Fund
DelCap Fund
Small Cap Value Fund
U.S. Growth Fund
Growth Stock Fund
Tax-Efficient Equity Fund
Social Awareness Fund
For Total Return
Blue Chip Fund
Devon Fund
Decatur Equity Income Fund
Growth and Income Fund
REIT Fund
Delaware Balanced Fund
For International Diversification
Emerging Markets Fund
New Pacific Fund
Overseas Equity Fund
International Equity Fund
Global Equity Fund
Global Bond Fund
For Current Income
Delchester Fund
High-Yield Opportunities Fund
Extended Duration Bond Fund
Strategic Income Fund
Corporate Bond Fund
U.S. Government Fund
U.S. Government Securities Fund
Limited-Term Government Fund
For Tax-Exempt Income
National High Yield Municipal Bond Fund
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
State Tax-Free Funds*
Money Market Funds
Delaware Cash Reserve
Tax-Free Money Fund
Asset Allocation Funds
Foundation Funds
Growth Portfolio
Balanced Portfolio
Income Portfolio
* Available for the following states: Arizona, California, Colorado, Florida,
Idaho, Iowa, Kansas, Minnesota, Missouri, North Dakota, New Jersey, New
Mexico, New York, Ohio, Oregon, Pennsylvania, Utah, Washington, Wisconsin.
Insured and intermediate bond funds are available in selected states.
funds
(photo of
computer keyboard)
Complete information on any fund offered by Delaware Investments can be found in
each fund's current prospectus. Prospectuses for all funds offered by Delaware
Investments are available from your financial adviser. Please read the
prospectus carefully before you invest or send money.
<PAGE>
This Semi-Annual Report is for the information of Blue Chip Fund shareholders,
but it may be used with prospective investors when preceded or accompanied by a
current Prospectus for Blue Chip Fund and the Delaware Investments Performance
Update for the most recently completed calendar quarter. The Prospectus sets
forth details about charges, expenses, investment objectives and operating
policies of the Fund. You should read the prospectus carefully before you invest
or send money. The figures in this report represent past results which are not a
guarantee of future results. The return and principal value of an investment in
the Fund will fluctuate so that shares, when redeemed, may be worth more or less
than their original cost.
- --------------------------------------------------------------------------------
Investment Manager
Delaware Management Company
Philadelphia, Pennsylvania
International Affiliate
Delaware International Advisers Ltd.
London, England
Subadviser
Vantage Investment Advisors
New York, New York
National Distributor
Delaware Distributors, L.P.
Philadelphia, Pennsylvania
Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
Philadelphia, Pennsylvania
1818 Market Street
Philadelphia, PA 19103-3682
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan; however, shares of the Fund are
not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union,
and involve investment risk, including the possible loss of the principal amount
invested. Shares of the Fund are not bank or credit union deposits.
(C) Delaware Distributors, L.P.
DELAWARE(SM)
INVESTMENTS
- ---------------------
Philadelphia o London
Printed in the USA
on recycled paper
(4918)
SA-143 [5/99] PP7/99
(1888)
