DELAWARE GROUP EQUITY FUNDS II, N-30D, 2000-07-21

DELAWARE GROUP EQUITY FUNDS II
N-30D, 2000-07-21

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<PAGE>
DELAWARE(SM)
INVESTMENTS
============

Delaware Decatur Equity Income Fund

Delaware Growth and Income Fund

Total Return

2000 SEMI-ANNUAL REPORT

{Total Return Artwork}

<PAGE>

A TRADITION OF SOUND INVESTING SINCE 1929
-----------------------------------------

TABLE OF CONTENTS
-----------------
Letter to Shareholders 1

Portfolio Management
Review 3

Performance Summary

Delaware Decatur Equity
Income Fund 7

Delaware Growth and
Income Fund 8

Financial Statements

Statements of Net Assets 9

Statements of Operations 15

Statements of Changes in
Net Assets 16

Financial Highlights 17

Notes to Financial
Statements 25

A Commitment To Our Investors

Experienced
o Our seasoned investment professionals average more than 15 years' experience.
o We began managing investments in 1929 and opened our first mutual fund in
1938. Over the past 70 years, we have weathered a full range of economic and
market environments.

Disciplined
o We follow strict investment policies and clear buy/sell guidelines.
o We strive to balance risk and reward in order to provide sound investment
alternatives within any given asset class.

Consistent
o We clearly articulate our investment policies and follow them consistently.
o Our commitment to consistency has earned us the confidence of discriminating
institutional and individual investors to manage approximately $45 billion in
assets as of June 30, 2000.

Comprehensive
o We offer more than 70 mutual funds in these asset classes.
o Large-cap equity o High-yield bonds
o Mid-cap equity o Investment grade bonds
o Small-cap equity o Municipal bonds (23 single-state funds)
o International equity o International fixed-income
o Balanced
o Our funds are available through financial advisers who can offer you
individualized attention and valuable investment advice.

Funds are not FDIC insured and are not guaranteed. It is possible to lose the
principal amount invested.
(C)Delaware Distributors, L.P.

<PAGE>

"[A] SHIFT IN INVESTOR PSYCHOLOGY LED TO A BROADENING OF MARKET LEADERSHIP THAT
PUT VALUE INVESTING - THE INVESTING STYLE FOLLOWED BY BOTH DELAWARE DECATUR
EQUITY INCOME FUND AND DELAWARE GROWTH AND INCOME FUND - BACK IN THE SPOTLIGHT."

--------------------------------------------------------------------------------
Dear Shareholder

July 10, 2000

Recap of Events - The Fund's fiscal year began on December 1, 1999 with an
encore performance from last year's high-flying technology sector. Investors
continued to place big bets on stocks of companies deemed to be direct
beneficiaries of the Internet. The Nasdaq Composite Index, which includes stocks
of some of the hottest technology companies, rose above 5000 for the first time
in early March, 2000. Meanwhile, stocks in most other market sectors floundered
as a result of the technology craze.

On March 10, 2000, just after crossing its new milestone, the Nasdaq peaked.
With technology stocks hitting lofty price levels, it seems investors finally
began to question the extreme valuations and earnings outlook for the sector.
They also began to see the attractiveness of many non-technology companies that
have improving earnings fundamentals and low valuations. This shift in investor
psychology led to a broadening of market leadership that put value investing -
the investment style followed by both Delaware Decatur Equity Income Fund and
Delaware Growth and Income Fund - back in the spotlight.

The market remained volatile for the rest of our fiscal period. As of May 31,
2000, the halfway point in our fiscal year, the Nasdaq was down 32% from its
March 10th record. Investor uncertainty about the direction of interest rates
contributed to the already volatile investing climate. The Federal Reserve Board
has raised interest rates six times since June, 1999 in an effort to slow U.S.
economic growth and cool down the financial markets. The 0.50% rate hike on May
16th (the latest as of this writing) boosted the Federal Funds rate to 6.5%, its
highest level since January, 1991.

Total Return
For the Period Ended May 31, 2000 Six Months
-----------------------------------------------------------------------------
Delaware Decatur Equity Income Fund Class A -2.05%
Delaware Growth and Income Fund Class A -1.54%
-----------------------------------------------------------------------------
Lipper Equity Income Funds Average (221 funds) +1.34%
-----------------------------------------------------------------------------
S&P 500/BARRA Value Index +3.63%
Standard & Poor's 500 Index +2.90%
-----------------------------------------------------------------------------

All performance shown above is at net asset value without the effect of sales
charges and assumes reinvestment of dividends and capital gains. Performance
information for all Fund classes can be found on pages 7 and 8. The Lipper
category represents the average returns of equity income funds tracked by Lipper
Analytical (Source: Lipper Analytical Services, Inc.). The Standard & Poor's 500
Index is an unmanaged composite of mostly large-capitalization U.S. companies.
The unmanaged S&P 500/BARRA Value Index measures the performance of S&P 500
stocks that meet BARRA International's definition of value stocks. You cannot
invest directly in an index. Past performance does not guarantee future results.

<PAGE>

{Total Return Artwork}

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

Delaware Decatur Equity Income Fund finished behind its peers in the Lipper
Equity Income Funds Average for the six-month period ended May 31, 2000. Though
the Fund made up lost ground in March, April and May as the market broadened -
returning +11.6%* (Class A Shares at net asset value with distributions
reinvested) from March 10th through May 31st - this gain was not enough to
offset weak performance early in the period. Our limited exposure to the
technology, biotech and wireless telecommunications sectors, which dominated the
market's returns through March, significantly hurt your Fund's performance.

Delaware Growth and Income Fund delivered similar results since it employs many
of the same stock selection disciplines as Delaware Decatur Equity Income Fund.
The Fund returned -1.54% (Class A shares at net asset value with distributions
reinvested) for the six-month period ended May 31, 2000. Our focus on stocks
selling at low relative valuations and dividend yields resulted in the Fund
having fewer technology and Internet stocks than the S&P 500 Index. Until March
this positioning hindered our results. On the upside, your Fund began to benefit
from the market's broadening in the spring.

Market Outlook - While our investment discipline steered us away from owning the
market's hottest technology stocks, both Delaware Decatur Equity Income Fund and
Delaware Growth and Income Fund have been positioned to benefit indirectly from
the Internet and high-tech revolution. Senior portfolio manager John B. Fields
talks more about this strategy in the Portfolio Management Review section of
this report. He also shares his expectations for the remainder of fiscal 2000.

As we write this report, the Fed's efforts to moderate economic growth and cool
the financial markets are showing signs of success. In addition, we believe
strong economic expansion in the rest of the world will provide the catalyst for
a series of positive earnings surprises by companies in a broad range of
industries. We believe Delaware Decatur Equity Income Fund and Delaware Growth
and Income Fund are well positioned to benefit in an environment of moderate
growth.

*Performance information for all Fund classes can be found on pages 7 and 8.

Sincerely,

/s/ Wayne A. Stork /s/ David K. Downes
------------------------------------ --------------------------------------
Wayne A. Stork David K. Downes
Chairman, President and Chief Executive Officer,
Delaware Investments Family of Funds Delaware Investments Family of Funds

<PAGE>

John B. Fields
Senior Portfolio Manager

July 10, 2000

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

PORTFOLIO MANAGEMENT REVIEW
---------------------------

The Funds' Results
The first half of fiscal 2000 started in familiar fashion with technology stocks
continuing to dominate U.S. stock performance. Just as in 1999, this
concentrated market leadership hindered the Funds' results because our large-cap
value style of investing, which focuses on low relative valuation and dividend
yield, restricted us from owning such richly valued stocks.

Our Buy Discipline
Delaware Decatur Equity Income Fund and Delaware Growth and Income Fund use
dividend yield as a measure of opportunity. We believe that a stock's dividend
yield can be a good indicator of a stock's future value. We generally focus on
stocks yielding more than the average dividend yield of the unmanaged Standard &
Poor's 500 Index in an effort to uncover companies selling below their
underlying worth. We also believe the income from dividends can support total
return while we wait for a stock to appreciate.

In sectors of the market where dividend yields are usually below average - such
as telecommunications and technology - we use relative valuation measures, such
as price-to-earnings ratios and growth rate to price-to-earnings ratios in
addition to dividend yields, to identify attractive stocks.

Our Sell Discipline
When a stock's yield falls below the average yield of the S&P 500 Index, we view
that as a signal that the stock may be fairly priced and future appreciation
potential may no longer be attractive relative to the possible risks. This is
when we typically begin to sell the stock.

Though a low yield is usually our basis for selling, we may sell a stock with an
above-average yield because of negative changes affecting the individual
company, which might potentially reduce its future growth.

As we wrote in our report to shareholders last December, market leading
technology stocks typically have had little or no dividend yield, and have been
selling at very high relative valuations. As a result, most have not been
eligible for purchase by either Delaware Decatur Equity Income Fund or Delaware
Growth and Income Fund. Our low exposure to this sector was the Fund's primary
performance obstacle through early March, 2000.

3
<PAGE>

{Total Return Artwork}
--------------------------------------------------------------------------------

The March 10th peak by the Nasdaq Composite, however, represented an important
shift in the marketplace. Technology stocks tumbled sharply as investors began
to focus on stocks in more traditional industries where, in our view, solid
earnings growth was available at bargain prices. Delaware Decatur Equity Income
Fund and Delaware Growth and Income Fund benefited from this broadening in the
market in March, April and May, as reflected below.
<TABLE>
<CAPTION>

Delaware Decatur Equity Delaware Growth and
Total Returns* Income Fund Class A Income Fund Class A
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Before technology peak 12/1/99 - 3/10/00 -11.8% -14.0%
-------------------------------------------------------------------------------------------------------
After technology peak 3/10/00 - 5/31/00 +11.6% +14.8%
-------------------------------------------------------------------------------------------------------
</TABLE>
*SEC performance information for the Funds can be found on pages 7 and 8.

Bond Results for Delaware Decatur Equity Income Fund
Delaware Decatur Equity Income Fund began the fiscal period on
December 1, 1999 with a 14% allocation to high-yield bonds. We include bonds in
the portfolio to supplement the income from our stock holdings. Our bond
holdings offered us some stability early in the period when our value stocks
were out of favor. More recently, we started to reduce the Fund's bond
allocation to take advantage of the more favorable opportunities that we
anticipate in the equity markets. As of May 31st, high-yield bonds accounted for
roughly 10% of the portfolio's assets. We plan to continue to reduce our bond
position in the near term.

Top Portfolio Holdings
May 31, 2000
<TABLE>
<CAPTION>
Six-Month As a Percentage of Net Assets+
Dividend Delaware Decatur Delaware Growth
Company Yield** Industry Equity Income Fund and Income Fund
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
McGraw-Hill 1.8% Cable, Media & Publishing 2.7% 2.7%
-------------------------------------------------------------------------------------------------------------------
Royal Dutch Petroleum 2.4% Energy 2.7% 2.7%
-------------------------------------------------------------------------------------------------------------------
Pitney Bowes 2.6% Computers & Technology 2.7% 2.7%
-------------------------------------------------------------------------------------------------------------------
Exxon Mobil 2.1% Energy 2.6% 2.7%
-------------------------------------------------------------------------------------------------------------------
Chevron 2.8% Energy 2.6% 2.6%
-------------------------------------------------------------------------------------------------------------------
Marsh & McLennan 1.6% Banking, Finance & Insurance 2.5% 2.6%
-------------------------------------------------------------------------------------------------------------------
Federal National Mortgage 1.9% Banking, Finance & Insurance 2.4% 2.5%
-------------------------------------------------------------------------------------------------------------------
Chase Manhattan 2.6% Banking, Finance & Insurance 2.4% 2.4%
-------------------------------------------------------------------------------------------------------------------
PepsiCo 1.3% Food, Beverage & Tobacco 2.4% 2.3%++
-------------------------------------------------------------------------------------------------------------------
El Paso Energy 1.6% Energy 2.3% 2.0%
-------------------------------------------------------------------------------------------------------------------
S&P 500 1.4%
-------------------------------------------------------------------------------------------------------------------
</TABLE>
**Source: Bloomberg.

+ Portfolio percentages are shown as a percentage of net equity assets for
Delaware Decatur Equity Income Fund and as a percentage of net assets for
Delaware Growth and Income Fund. Holdings are listed in order of size as a
percentage of net assets in Delaware Decatur Equity Income Fund. Holdings are
subject to change.

++ For Delaware Growth and Income Fund, actual 9th holding is Kimberly-Clark,
Consumer Products, at 2.3%; 10th holding is PepsiCo.

4
<PAGE>

Delaware Decatur Equity
Income Fund
Sector Allocation
As of May 31, 2000

Consumer Products 5.23%
Utilities 4.86%
Chemicals 3.85%
Industrial Machinery 2.71%
Paper & Forest Products 2.44%
Banking, Finance & Insurance 20.83%

[Graphic Omitted]

Other 15.10%
Energy 13.33%
High-Yield Bonds 10.65%
Healthcare & Pharmaceuticals 8.63%
Telecommunications 6.56%
Food, Beverage & Tobacco 5.81%

Please note that the sector percentages for Delaware Decatur Equity Income Fund
represent the percentage of the equity portion of the Fund that is invested in
that sector. The sector percentages do not include bond holdings. Bonds are
reported as a separate category as noted above. Other sectors, cash and other
assets account for the remaining 15.10% of net assets.

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

Portfolio Highlights
While many investors have been pursuing Internet stocks - which we believe is
the high-risk way to participate in the high-tech revolution - we have taken a
more conservative approach. For more than a year, a standard part of our company
research has been to look at how companies are using the Internet and applying
other modern technologies to improve their competitiveness and to lower their
cost structures.

Our research has uncovered a number of companies in more traditional
"old economy" industries - such as basic industry, auto manufacturing and
financial services - that we believe stand to benefit from the use of these
technologies. We expect to see these companies convert these benefits into
better-than-expected earnings growth.

Examples of this within the Delaware Decatur Equity Income Fund and
Delaware Growth and Income Fund portfolios are General Motors, Chase Manhattan
Bank and Dow Chemical. Each of these companies has been applying new
technologies to their business models and, consequently, has been delivering
attractive earnings.

At the end of fiscal 1999, we had reduced both Funds' positions in interest-rate
sensitive sectors of the market, including banks and insurance companies. Since
then, we have modestly increased this allocation and, as of May 31, banking,
finance and insurance was the largest sector allocation in each portfolio. One
area of focus in this sector has been on high quality companies in the property
and casualty insurance industry. This area of the market, which performed poorly
in 1999, has seen significant price improvement in 2000.

5
<PAGE>

Delaware Growth and Income Fund
Sector Allocation
As of May 31, 2000

Consumer Products 6.00%
Utilities 5.09%
Chemicals 4.13%
Industrial Machinery 2.87%
Paper & Forest Products 2.82%
Banking, Finance & Insurance 23.63%

[Graphic Omitted]

Other 16.62%
Energy 14.76%
Healthcare & Pharmaceuticals 9.98%
Telecommunications 7.51%
Food, Beverage & Tobacco 6.59%

Other sectors, cash and other assets account for the remaining 16.62% of net
assets.

{Total Return Artwork}
--------------------------------------------------------------------------------

Outlook

Economic data released in early June showed visible signs that the U.S. economy
is slowing. This came as welcome news for Wall Street, which hopes the Federal
Reserve will end its campaign of raising interest rates to slow the economy and
head off inflation. Should these hopes be realized, we believe this could have
positive implications for our value strategy; namely, investor interest may
continue to broaden across a wider spectrum of stocks.

We believe that accelerating growth in economies around the world will also
provide a supportive backdrop for a broad range of companies to deliver solid
earnings growth. In particular, we believe that globally competitive companies
in the basic industry, energy, capital goods, food and beverage sectors of the
market will have positive earnings surprises.

We continue to look for high quality stocks that have dividend yields and the
potential for significant price appreciation. While we expect continued
volatility in the stock market, we feel that both the Delaware Decatur Equity
Income Fund and Delaware Growth and Income Fund are well positioned to benefit
if the broadening of market leadership that began this past spring continues.

<PAGE>

FUND BASICS
-----------

Fund Objective
The Fund seeks to achieve the highest possible current income by investing
primarily in common stocks that provide the potential for income and capital
appreciation without undue risk to principal.

Total Fund Assets
$1.51 billion

Number of Holdings
137

Fund Start Date
March 18, 1957

Your Fund Manager
John B. Fields has 28 years experience in investment management. He holds a
bachelor's degree and an MBA from Ohio State University. Before joining Delaware
Investments in 1992, he was Director of Domestic Equity Risk Management at
DuPont. Mr. Fields is a Chartered Financial Analyst.

Nasdaq Symbols
Class A DELDX
Class B DEIBX
Class C DECCX

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

DELAWARE DECATUR EQUITY INCOME FUND PERFORMANCE
-----------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns
Through May 31, 2000 Lifetime 10 Years Five Years One Year
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (Est. 3/18/57)
Excluding Sales Charge +12.02% +11.21% +13.16% -8.01%
Including Sales Charge +11.86% +10.55% +11.83% -13.29%
------------------------------------------------------------------------------------------------
Class B (Est. 9/6/94)
Excluding Sales Charge +12.56% +12.23% -8.69%
Including Sales Charge +12.47% +12.00% -13.03%
------------------------------------------------------------------------------------------------
Class C (Est. 11/29/95)
Excluding Sales Charge +11.03% -8.69%
Including Sales Charge +11.03% -9.56%
------------------------------------------------------------------------------------------------
</TABLE>

Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share value will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
results, excluding sales charges, assume either that contingent deferred sales
charges did not apply or the investment was not redeemed. Past performance is
not a guarantee of future results.

Class A shares have a 5.75% maximum front-end sales charge and have had a 12b-1
fee since May 1, 1994.

Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a contingent
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 redeemed within
12 months, a 1% contingent deferred sales charge applies.

The average annual total returns for lifetime, 10-year, five-year and one-year
periods ended May 31, 2000 for Delaware Decatur Equity Income Fund Institutional
Class were +12.05%, +11.34%, +13.38% and -7.74%, respectively. The Institutional
Class (est. January 31, 1994) is available without sales or asset-based
distribution charges only to certain eligible institutional accounts.
Institutional Class performance prior to January 13, 1994 for Delaware Decatur
Equity Income Fund is based on Class A performance and was adjusted to eliminate
the sales charges. 30-day SEC yields for A, B, C and Institutional Class shares
were 2.52%, 1.96%, 1.94% and 2.93%, respectively, as of May 31, 2000.

Nasdaq Symbol Institutional Class: DEDIX.

<PAGE>
FUND BASICS
-----------

Fund Objective
The Fund seeks long-term growth by investing primarily in securities that
provide the potential for income and capital appreciation without undue risk to
principal.

Total Fund Assets
$979.53 million

Number of Holdings
61

Fund Start Date
August 27, 1986

Your Fund Manager
John B. Fields

Nasdaq Symbols
Class A DEDTX
Class B DEOBX
Class C DTRCX
--------------------------------------------------------------------------------

DELAWARE GROWTH AND INCOME FUND PERFORMANCE
-------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns
Through May 31, 2000 Lifetime 10 Years Five Years One Year
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (Est. 8/27/86)
Excluding Sales Charge +12.46% +12.23% +14.12% -7.47%
Including Sales Charge +11.98% +11.57% +12.77% -12.80%
----------------------------------------------------------------------------------------------
Class B (Est. 9/6/94)
Excluding Sales Charge +13.70% +13.33% -8.09%
Including Sales Charge +13.61% +13.09% -12.43%
----------------------------------------------------------------------------------------------
Class C (Est. 11/29/95)
Excluding Sales Charge +11.77% -8.10%
Including Sales Charge +11.77% -8.97%
----------------------------------------------------------------------------------------------
</TABLE>

Class A shares have a 5.75% maximum front-end sales charge and a 12b-1 fee.

Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.

The average annual total returns for lifetime, 10-year, five-year and one-year
periods ended May 31, 2000 for Delaware Growth and Income Fund Institutional
Class were +12.62%, +12.45%, +14.46% and -7.17%, respectively. The Institutional
Class (est. July 26, 1993) is available without sales or asset-based
distribution charges only to certain eligible institutional accounts.
Institutional Class performance prior to July 26, 1993 for Delaware Growth and
Income Fund is based on Class A performance adjusted to eliminate sales charges,
but not the impact of 12b-1 fees that were in effect. 30-day SEC yields for A,
B, C and Institutional Class shares were 1.14%, 0.54%, 0.54% and 1.50%,
respectively, as of May 31, 2000.

Nasdaq Symbol Institutional Class: DERIX.

8
<PAGE>

Statement of Net Assets

DELAWARE DECATUR EQUITY INCOME FUND

Number of Market
May 31, 2000 (Unaudited) Shares Value
--------------------------------------------------------------------------------
Common Stock - 86.59%
Aerospace & Defense - 1.29%
Boeing ............................................ 282,000 $ 11,015,625
Textron ........................................... 136,100 8,540,275
------------
19,555,900
------------
Automobiles & Automotive Parts - 2.16%
General Motors .................................... 310,000 21,893,750
TRW ............................................... 225,200 10,922,200
------------
32,815,950
------------
Banking, Finance & Insurance - 20.83%
American General .................................. 481,200 30,826,875
Aon ............................................... 799,775 28,092,097
BankAmerica ....................................... 532,082 29,563,806
Bank of New York .................................. 551,500 25,886,031
Chase Manhattan ................................... 424,500 31,704,844
Federal National Mortgage ......................... 534,300 32,124,788
First Union ....................................... 424,100 14,923,019
Fleet Boston Financial ............................ 688,900 26,049,031
MBNA .............................................. 379,700 10,584,138
Marsh & McLennan .................................. 304,300 33,492,019
Mellon Financial .................................. 739,700 28,524,681
Morgan (J.P.) ..................................... 94,200 12,128,250
XL Capital Ltd. - Class A ......................... 210,400 12,518,800
------------
316,418,379
------------
Cable, Media & Publishing - 2.37%
McGraw-Hill ....................................... 700,700 36,042,256
------------
36,042,256
------------
Chemicals - 3.85%
Dow Chemical ...................................... 138,100 14,785,331
DuPont (E.I.) deNemours ........................... 181,919 8,914,031
Imperial Chemical ADR ............................. 790,700 24,709,375
Praxair ........................................... 239,100 10,042,200
------------
58,450,937
------------
Computer & Technology - 2.31%
Pitney Bowes ...................................... 807,100 35,108,850
------------
35,108,850
------------
Consumer Products - 5.23%
Avon Products ..................................... 342,700 14,157,794
Clorox ............................................ 591,800 23,450,075
Kimberly-Clark .................................... 512,900 31,030,450
Minnesota Mining & Manufacturing .................. 126,300 10,830,225
------------
79,468,544
------------
Electronics & Electrical Equipment - 2.19%
Eaton ............................................. 338,600 24,569,663
Rockwell International ............................ 211,100 8,655,100
------------
33,224,763
------------
Energy - 13.33%
Baker Hughes ...................................... 836,900 30,337,625
Chevron ........................................... 372,100 34,395,994

<PAGE>

Number of Market
Shares Value
--------------------------------------------------------------------------------
Common Stock (continued)
Energy (continued)
Conoco Class B .................................... 729,213 $ 20,782,571
El Paso Energy .................................... 602,900 31,049,350
Exxon Mobil ....................................... 414,663 34,546,611
Royal Dutch Petroleum ............................. 569,400 35,551,913
Williams .......................................... 381,500 15,856,094
--------------
202,520,158
--------------
Food, Beverage & Tobacco - 5.81%
Anheuser Busch .................................... 381,700 29,581,750
Bestfoods ......................................... 139,400 8,991,300
General Mills ..................................... 457,500 18,157,031
PepsiCo ........................................... 773,700 31,479,919
--------------
88,210,000
--------------
Healthcare & Pharmaceuticals - 8.63%
Abbott Laboratories ............................... 632,400 25,730,775
American Home Products ............................ 491,400 26,474,175
AstraZeneca ADR ................................... 346,100 14,557,831
Baxter International .............................. 378,700 25,183,550
Bristol-Myers Squibb .............................. 384,500 21,171,531
Glaxo Wellcome ADR ................................ 131,600 7,410,725
Pharmacia ......................................... 205,145 10,654,718
--------------
131,183,305
--------------
Industrial Machinery - 2.71%
Caterpillar ....................................... 421,600 16,126,200
Deere & Co. ....................................... 603,500 25,082,969
--------------
41,209,169
--------------
Metals & Mining - 2.02%
Alcoa ............................................. 526,200 30,749,812
--------------
30,749,812
--------------
Paper & Forest Products - 2.44%
International Paper ............................... 622,218 21,660,964
Weyerhaeuser ...................................... 311,700 15,468,113
--------------
37,129,077
--------------
Telecommunications - 6.56%
AT&T .............................................. 311,300 10,798,219
Alltel ............................................ 356,200 23,308,837
Cable & Wireless ADR .............................. 304,500 15,110,813
GTE ............................................... 348,100 22,017,325
SBC Communications ................................ 649,364 28,369,090
--------------
99,604,284
--------------
Utilities - 4.86%
Dominion Resources ................................ 429,800 19,663,350
Duke Energy ....................................... 227,800 13,269,350
PG&E .............................................. 515,200 13,363,000
TXU ............................................... 768,900 27,488,174
--------------
73,783,874
--------------
Total Common Stock
(cost $1,183,677,813) .......................... 1,315,475,258
--------------

<PAGE>

Statement of Net Assets (continued)

Number of Market
Delaware Decatur Equity Income Fund Shares Value
--------------------------------------------------------------------------------
Preferred Stock - 0.39%
Granite Broadcasting 12.75% 4/01/09 ............... 66,588 $5,876,373
TCR Holdings Class B .............................. 3,511 35
TCR Holdings Class C .............................. 1,931 19
TCR Holdings Class D .............................. 5,092 51
TCR Holdings Class E .............................. 10,534 105
----------
Total Preferred Stock (cost $5,975,590) ........... 5,876,583
----------

Warrants - 0.00%
American Banknote Warrant ......................... 6,241 5,000
WorldWide Flight Warrants 144A3 ................... 2,600 2,600
----------
Total Warrants (cost $30,396) ..................... 7,600
----------

Principal
Amount
---------
Corporate Bonds - 10.65%
Automobiles & Automotive Parts - 0.57%
American Axle & Manufacturing
9.75% 3/1/09 ................................... $3,000,000 2,790,000
Fleetpride 12.00% 8/1/05 .......................... 3,000,000 2,175,000
Gentek 11.00% 8/1/09 .............................. 3,600,000 3,609,000
----------
8,574,000
----------
Banking, Finance & Insurance - 0.33%
RBF Finance 11.375% 3/15/09 ....................... 1,900,000 2,023,500
Renters Choice 11.00% 8/15/08 ..................... 3,000,000 2,955,000
----------
4,978,500
----------
Building & Materials - 0.51%
Advanced Fiberglass 9.875% 1/15/09 ................ 3,000,000 2,752,500
Venture Holdings 11.00% 6/1/07 .................... 3,000,000 2,325,000
Wesco Distribution 9.125% 6/1/08 .................. 3,000,000 2,715,000
----------
7,792,500
----------
Cable, Media & Publishing - 0.95%
Adephia Communications 9.375% 11/15/09 ............ 3,000,000 2,711,250
American Lawyer Media 9.75% 12/15/07 .............. 1,575,000 1,437,187
American Media Operations
10.25% 5/1/09 .................................. 800,000 762,000
Charter Communications 8.625% 4/1/09 .............. 4,000,000 3,360,000
Echostar debs 9.25% 2/1/06 ........................ 3,000,000 2,842,500
Sinclair Broadcast Group 10.00% 9/30/05 ........... 3,600,000 3,357,000
----------
14,469,937
----------
Chemicals - 0.24%
BPC Holding sr nts 12.50% 6/15/06 ................. 2,132,498 1,817,955
Huntsman sr sub nts 9.50% 7/1/07 .................. 2,000,000 1,790,000
----------
3,607,955
----------

<PAGE>

Principal Market
Amount Value
--------------------------------------------------------------------------------
Corporate Bonds (continued)
Consumer Products - 0.06%
Fedders North America sr sub nts
9.375% 8/15/07 ................................. $1,000,000 $ 935,000
----------
935,000
----------
Electronics & Electrical Equipment - 0.06%
Geologistics sr unsec nts 9.75% 10/15/07 .......... 4,000,000 820,000
----------
820,000
----------
Energy - 0.46%
First Wave Marine sr nts 11.00% 2/1/08 ............ 500,000 297,500
Parker Drilling 9.75% 11/15/06 .................... 3,000,000 2,797,500
Plains Resources 10.25% 3/15/06 ................... 4,000,000 3,980,000
----------
7,075,000
----------
Food, Beverage & Tobacco - 0.47%
Buhrman US 144A 12.25% 11/1/09 .................... 2,500,000 2,593,750
Cott sr nts 8.50% 5/1/07 .......................... 2,000,000 1,820,000
Delta Beverage Group sr nts
9.75% 12/15/03 ................................. 2,825,000 2,669,625
----------
7,083,375
----------
Healthcare & Pharmaceuticals - 0.09%
Fisher Scientific International
9.00% 2/1/08 ................................... 1,500,000 1,342,500
----------
1,342,500
----------
Industrial Machinery - 0.37%
National Equipment 10.00% 11/30/04 ................ 4,000,000 3,620,000
United Rentals 9.00% 4/1/09 ....................... 2,500,000 2,062,500
----------
5,682,500
----------
Leisure, Lodging & Entertainment - 1.26%
Bally Total Fitness 9.875% 10/15/07 ............... 3,000,000 2,715,000
Cinemark USA Series C sr sub nts
9.625% 8/1/08 .................................. 1,525,000 861,625
Cinemark USA sr sub nts 9.625% 8/1/08 ............. 2,000,000 1,130,000
Hollywood Casino 11.25% 5/1/07 .................... 4,000,000 4,060,000
Hollywood Park 9.25% 2/15/07 ...................... 4,000,000 3,980,000
Town Sports International unsec sr nts
9.75% 10/15/04 ................................. 3,000,000 2,880,000
Yankeenets llc 12.75% 3/1/07 ...................... 3,700,000 3,459,500
----------
19,086,125
----------
Metals & Mining - 0.37%
Great Lakes Carbon 10.25% 5/15/08 ................. 1,600,000 1,380,000
P and L Coal Holdings 9.625% 5/15/08 .............. 3,000,000 2,685,000
Weirton Steel sr nts 11.375% 7/1/04 ............... 1,500,000 1,511,250
----------
5,576,250
----------

<PAGE>

Statement of Net Assets (continued)

Principal Market
Delaware Decatur Equity Income Fund Amount Value
--------------------------------------------------------------------------------
Corporate Bonds (continued)
Packaging & Containers - 0.62%
Container Corporation of America
11.25% 5/1/04 .................................. $3,000,000 $ 3,041,250
Huntsman Packaging sr sub nts
9.125% 10/1/07 ................................. 3,325,000 3,557,750
Stone Container sr nts 10.75% 10/1/02 ............ 2,785,000 2,840,700
-----------
9,439,700
-----------
Paper & Forest Products - 0.11%
Doman Industries Limited sr nts
8.75% 3/15/04 .................................. 2,120,000 1,717,200
-----------
1,717,200
-----------
Retail - 0.26%
Fleming sr nts 10.625% 12/15/01 .................. 2,550,000 2,534,062
Flooring America 9.25% 10/15/07 .................. 1,849,000 1,481,511
-----------
4,015,573
-----------
Telecommunications - 1.96%
Global Crossing 9.50% 11/15/09 ................... 3,000,000 2,857,500
Intermedia Communication 8.60% 6/1/08 ............ 3,000,000 2,662,500
Level 3 Comm Inc 144A
11.25% 3/15/10 ................................. 2,100,000 2,005,500
Level 3 Communications sr nts
9.125% 5/1/08 .................................. 1,900,000 1,643,500
Mcleodusa 8.125% 2/15/09 ......................... 3,075,000 2,736,750
Nextel Communications 9.375% 11/15/09 ............ 4,000,000 3,780,000
*Nextel Partners 14.00% 2/1/09 .................... 3,246,000 2,061,210
Psinet 11.00% 8/1/09 ............................. 3,500,000 3,167,500
RCN sr nts 10.00% 10/15/07 ....................... 2,175,000 1,761,750
RSL Communications 10.50% 11/15/08 ............... 2,500,000 1,712,500
Rural Cellular 9.625% 5/15/08 .................... 4,000,000 3,920,000
Teligent sr nts 11.50% 12/1/07 ................... 2,010,000 1,517,550
-----------
29,826,260
-----------

<PAGE>

Principal Market
Amount Value
--------------------------------------------------------------------------------
Corporate Bonds (continued)
Transportation & Shipping - 0.37%
Amer Comm Lines 10.25% 6/30/08 .................... $1,375,000 $ 1,106,875
Atlantic Express sr sec nts 10.75% 4/1/06 ......... 900,000 769,500
MTL 10.00% 6/15/06 ................................ 2,500,000 1,962,500
Worldwide Flight 12.25% 8/15/07 ................... 2,600,000 1,755,000
------------
5,593,875
------------
Utilities - 0.33%
AES sr sub nts 10.25% 7/15/06 ..................... 3,000,000 2,932,500
Midland Funding II sr sub debs
11.75% 7/23/05 ................................. 2,000,000 2,110,000
------------
5,042,500
------------
Miscellaneous - 1.26%
Budget Group Inc 9.125% 4/1/06 .................... 1,400,000 973,000
Caithness Coso Fund 9.05% 12/15/09 ................ 3,000,000 2,865,000
Knoll sr sub nts 10.875% 3/15/06 .................. 1,298,000 1,304,490
Loomis Fargo sr sub nts 10.00% 1/15/04 ............ 3,745,000 3,632,650
Neff 10.25% 6/1/08 ................................ 5,100,000 3,340,500
Pierce Leahy Command sr unsec nts
8.125% 5/15/08 ................................. 2,000,000 1,750,000
Repap New Brunswick 9.00% 6/1/04 .................. 2,500,000 2,375,000
Spanish Broadcasting 9.625% 11/1/09 ............... 3,000,000 2,910,000
------------
19,150,640
------------
Total Corporate Bonds
(cost $181,895,149) ............................ 161,809,390
------------

<PAGE>

Statement of Net Assets (continued)

Principal Market
Delaware Decatur Equity Income Fund Amount Value
--------------------------------------------------------------------------------
Repurchase Agreements - 1.15%
With Chase Manhattan 6.33% 6/1/00
(dated 5/31/00, collateralized by
$6,016,000 U.S. Treasury Notes
5.875% due 11/15/04,
market value $5,859,346) ....................... $5,715,000 $ 5,715,000
With J.P. Morgan Securities 6.33% 6/1/00
(dated 5/31/00, collateralized by
$2,269,400 U.S.Treasury Notes 6.50%
due 5/31/01, market value $2,263,389
and $1,589,000 U.S. Treasury Notes
6.625% due 6/30/01, market value
$1,629,810 and $354,000
U.S. Treasury Notes 6.50% due 8/31/01,
market value $358,151 and
$1,762,000 U.S. Treasury Notes
6.375% due 9/30/01,
market value $1,771,838) ....................... 5,901,000 5,901,000
With PaineWebber 6.33% 6/1/00
(dated 5/31/00, collateralized by
$2,269,000 U.S. Treasury Notes 5.00%
due 4/30/01, market value $2,244,226
and $1,444,000 U.S. Treasury Notes
6.25% due 1/31/02, market value
$1,461,618 and $2,269,000
U.S. Treasury Notes 7.25% due
5/15/04, market value $2,322,669) .............. 5,900,000 5,900,000
--------------
Total Repurchase Agreements
(cost $17,516,000) ............................. 17,516,000
--------------
Total Market Value of Securities - 98.78%
(cost $1,389,094,948) .......................... $1,500,684,831
Receivables and Other Assets
Net of Liabilities - 1.22% ..................... 18,441,191
--------------
Net Assets Applicable to 94,135,571
Shares Outstanding - 100.00% ................... $1,519,126,022
==============

<PAGE>

--------------------------------------------------------------------------------
Net Asset Value - Delaware Decatur Equity
Income Fund A Class
($1,344,865,847 / 83,305,684 shares) ........... $16.14
------
Net Asset Value - Delaware Decatur Equity
Income Fund B Class
($110,407,750 / 6,874,015 shares) .............. $16.06
------
Net Asset Value - Delaware Decatur Equity
Income Fund C Class
($12,347,911 / 764,254 shares) ................. $16.16
------
Net Asset Value - Delaware Decatur Equity
Income Fund Institutional Class
($51,504,514 / 3,191,618 shares) ............... $16.14
------
----------------------
*Zero coupon security as of May 31, 2000. The coupon shown is the step-up rate.

Summary of Abbreviations
ADR - American Depository Receipt
debs - debentures
nts - notes
sec - secured
sr - senior
sub - subordinated
unsec - unsecured

Components of Net Assets at May 31, 2000:
Shares of beneficial interest (unlimited
authorization - no par) ........................ $1,530,377,897
Undistributed net investment income ............... 1,080,789
Accumulated net realized
loss on investments ............................ (123,922,547)
Net unrealized appreciation of investments ........ 111,589,883
--------------
Total net assets .................................. $1,519,126,022
==============

Net Asset Value and Offering Price Per Share -
Delaware Decatur Equity Income Fund
Net asset value A Class (A) ....................... $16.14
Sales charge (5.75% of offering price or 6.07%
of the amount invested per share) .............. 0.98
------
Offering price .................................... $17.12
======

----------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $50,000 or more.

See accompanying notes

<PAGE>

Statement of Net Assets (continued)

DELAWARE GROWTH AND INCOME FUND

Number of Market
May 31, 2000 (Unaudited) Shares Value
--------------------------------------------------------------------------------
Common Stock - 97.48%
Aerospace & Defense - 1.50%
Boeing ............................................ 207,700 $ 8,113,281
Textron ........................................... 104,700 6,569,925
------------
14,683,206
------------
Automobiles & Automotive Parts - 2.62%
General Motors .................................... 224,300 15,841,188
TRW ............................................... 202,400 9,816,400
------------
25,657,588
------------
Banking, Finance & Insurance - 23.63%
American General .................................. 352,300 22,569,219
Aon ............................................... 613,225 21,539,528
Bank of America ................................... 375,448 20,860,829
Bank of New York .................................. 386,900 18,160,119
Chase Manhattan ................................... 310,900 23,220,344
Federal National Mortgage ......................... 405,200 24,362,650
First Union ....................................... 310,000 10,908,125
Fleet Boston Financial ............................ 503,900 19,053,719
MBNA .............................................. 264,300 7,367,363
Marsh & McLennan .................................. 227,500 25,039,219
Mellon Financial .................................. 535,300 20,642,506
Morgan (J.P.) ..................................... 65,100 8,381,625
XL Capital Ltd. - Class A ......................... 157,000 9,341,500
------------
231,446,746
------------
Cable, Media & Publishing - 2.71%
McGraw-Hill ....................................... 515,900 26,536,606
------------
26,536,606
------------
Chemicals - 4.13%
Dow Chemical ...................................... 105,100 11,252,269
DuPont (E.I.) deNemours ........................... 137,490 6,737,010
Imperial Chemical ADR ............................. 482,000 15,062,500
Praxair ........................................... 174,900 7,345,800
------------
40,397,579
------------
Computers & Technology - 2.67%
Pitney Bowes ...................................... 601,700 26,173,950
------------
26,173,950
------------
Consumer Products - 6.00%
Avon Products ..................................... 264,700 10,935,419
Clorox ............................................ 430,400 17,054,600
Kimberly-Clark .................................... 376,200 22,760,100
Minnesota Mining & Manufacturing .................. 93,500 8,017,625
------------
58,767,744
------------
Electronics & Electrical Equipment - 2.37%
Eaton ............................................. 229,000 16,616,812
Rockwell International ............................ 161,300 6,613,300
------------
23,230,112
------------
Energy - 14.76%
Baker Hughes ...................................... 603,400 21,873,250
Chevron ........................................... 278,700 25,762,331

<PAGE>

Number of Market
Shares Value
--------------------------------------------------------------------------------
Common Stock (continued)
Energy (continued)
Conoco Class B .................................... 477,964 $ 13,621,974
El Paso Energy .................................... 398,700 20,533,050
Exxon Mobil ....................................... 312,877 26,066,565
Royal Dutch Petroleum ............................. 427,000 26,660,813
Williams .......................................... 241,000 10,016,563
------------
144,534,546
------------
Food, Beverage & Tobacco - 6.59%
Anheuser Busch .................................... 273,100 21,165,250
Bestfoods ......................................... 100,300 6,469,350
General Mills ..................................... 358,400 14,224,000
PepsiCo ........................................... 557,500 22,683,281
------------
64,541,881
------------
Healthcare & Pharmaceuticals - 9.98%
Abbott Laboratories ............................... 460,000 18,716,250
American Home Products ............................ 368,000 19,826,000
AstraZeneca ADR ................................... 261,700 11,007,756
Baxter International .............................. 285,900 19,012,350
Bristol-Myers Squibb .............................. 282,500 15,555,156
Glaxo Wellcome ADR ................................ 99,500 5,603,094
Pharmacia ......................................... 155,002 8,050,416
------------
97,771,022
------------
Industrial Machinery - 2.87%
Caterpillar ....................................... 335,500 12,832,875
Deere & Co. ....................................... 368,500 15,315,781
------------
28,148,656
------------
Metals & Mining - 2.23%
Alcoa ............................................. 374,600 21,890,687
------------
21,890,687
------------
Paper & Forest Products - 2.82%
International Paper ............................... 461,690 16,072,583
Weyerhaeuser ...................................... 233,300 11,577,513
------------
27,650,096
------------
Telecommunications - 7.51%
AT&T .............................................. 234,000 8,116,875
Alltel ............................................ 256,800 16,804,350
Cable & Wireless ADR .............................. 238,200 11,820,675
GTE ............................................... 262,100 16,577,825
SBC Communications ................................ 464,411 20,288,956
------------
73,608,681
------------
Utilities - 5.09%
Dominion Resources ................................ 291,000 13,313,250
Duke Energy ....................................... 165,800 9,657,850
PG&E .............................................. 375,100 9,729,156
TXU ............................................... 479,600 17,145,700
------------
49,845,956
------------
Total Common Stock
(cost $848,458,544) ............................ 954,885,056
------------

<PAGE>

Statement of Net Assets (continued)

Principal Market
Delaware Growth and Income Fund Amount Value
--------------------------------------------------------------------------------
Repurchase Agreements - 1.78%
With Chase Manhattan 6.33% 6/1/00
(dated 5/31/00, collateralized by
$5,996,000 U.S. Treasury Notes
5.875% due 11/15/04,
market value $5,840,279) ....................... $5,697,000 $ 5,697,000
With J.P. Morgan Securities 6.33% 6/1/00
(dated 5/31/00, collateralized by
$2,262,000 U.S. Treasury Notes 6.50%
due 5/31/01, market value $2,256,024
and $1,583,000 U.S. Treasury Notes
6.625% due 6/30/01, market value
$1,624,506 and $352,000 U.S. Treasury
Notes 6.50% due 8/31/01, market value
$356,986 and $1,757,000 U.S. Treasury
Notes 6.375% due 9/30/01,
market value $1,766,072) ....................... 5,881,000 5,881,000
With PaineWebber 6.33% 6/1/00 (dated
5/31/00, collateralized by $2,262,000
U.S. Treasury Notes 5.00% due 4/30/01,
market value $2,236,923 and $1,439,000
U.S. Treasury Notes 6.25% due 1/31/02,
market value $1,456,862 and $2,262,000
U.S. Treasury Notes 7.25% due 5/15/04,
market value $2,315,110) ....................... 5,881,000 5,881,000
------------
Total Repurchase Agreements
(cost $17,459,000) ............................. 17,459,000
------------
Total Market Value of Securities - 99.26%
(cost $865,917,544) ............................ $972,344,056
Receivables and Other Assets
Net of Liabilities - 0.74% ..................... 7,190,783
------------
Net Assets Applicable to 64,474,526
Shares Outstanding - 100.00% ................... $979,534,839
============
Net Asset Value - Delaware Growth and
Income Fund A Class
($683,337,251 / 44,952,533 shares) ............. $15.20
------
Net Asset Value - Delaware Growth and
Income Fund B Class
($159,692,858 / 10,535,231 shares) ............. $15.16
------
Net Asset Value - Delaware Growth and
Income Fund C Class
($32,416,503 / 2,143,155 shares) ............... $15.13
------
Net Asset Value - Delaware Growth and
Income Fund Institutional Class
($104,088,227 / 6,843,607 shares) .............. $15.21
------
------------------------
ADR - American Depository Receipt

<PAGE>

--------------------------------------------------------------------------------
Components of Net Assets at May 31, 2000:
Shares of beneficial interest (unlimited
authorization - no par) ........................ $951,833,755
Undistributed net investment income ............... 3,110,005
Accumulated net realized loss
on investments ................................. (81,835,433)
Net unrealized appreciation of investments ........ 106,426,512
------------
Total net assets .................................. $979,534,839
============

Net Asset Value and Offering Price Per Share -
Delaware Growth and Income Fund
Net asset value A Class (A) ....................... $15.20
Sales charge (5.75% of offering price or 6.12%
of the amount invested per share) .............. 0.93
------
Offering price .................................... $16.13
======

------------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $50,000 or more.

See accompanying notes

14
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Delaware Delaware
Decatur Equity Growth and
Six Months Ended May 31, 2000 (Unaudited) Income Fund Income Fund
--------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Interest ..................................................... $13,657,960 $256,907
Dividends .................................................... 18,115,461 13,474,883
------------ ------------
31,773,421 13,731,790
------------ ------------

Expenses:
Management fees .............................................. 4,868,626 3,253,158
Distribution expenses ........................................ 2,377,513 2,151,829
Dividend disbursing and transfer agent fees and expenses ..... 1,536,000 1,497,615
Accounting and administration ................................ 335,352 209,584
Reports and statements to shareholders ....................... 207,000 135,860
Taxes (other than taxes on income) ........................... 153,000 60,200
Registration fees ............................................ 75,000 42,500
Professional fees ............................................ 62,300 43,100
Custodian fees ............................................... 44,811 31,000
Trustees' fees ............................................... 24,200 20,000
Other ........................................................ 192,994 74,286
------------ ------------
9,876,796 7,519,132
Less expenses paid indirectly ................................ (21,592) (12,044)
------------ ------------
Total expenses ............................................... 9,855,204 7,507,088

Net Investment Income ........................................ 21,918,217 6,224,702
------------ ------------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments ............................. (119,048,704) (78,136,396)
Net change in unrealized appreciation/depreciation
of investments ............................................. 45,148,444 40,314,641
------------ ------------
Net Realized and Unrealized Loss on Investments .............. (73,900,260) (37,821,755)
------------ ------------
Net Decrease in Net Assets Resulting from Operations ......... $(51,982,043) $(31,597,053)
============ ============
</TABLE>

See accompanying notes

15
<PAGE>

Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Delaware Decatur Delaware Growth
Equity Income Fund and Income Fund
------------------------------------------------------------------------------------------------------------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
5/31/00 11/30/99 5/31/00 11/30/99
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations:
Net investment income ...................................... $ 21,918,217 $ 56,660,817 $ 6,224,702 $ 16,089,732
Net realized gain (loss) on investments .................... (119,048,704) 49,473,330 (78,136,396) 54,074,540
Net change in unrealized appreciation/depreciation
of investments ........................................... 45,148,444 (143,194,415) 40,314,641 (97,961,790)
---------------------------------------------------------------
Net decrease in net assets resulting from operations ....... (51,982,043) (37,060,268) (31,597,053) (27,797,518)
---------------------------------------------------------------

Distributions to Shareholders from:
Net investment income:
A Class ................................................. (20,529,893) (53,754,869) (5,947,227) (12,967,053)
B Class ................................................. (1,364,762) (3,558,336) (795,961) (1,605,468)
C Class ................................................. (160,673) (475,045) (166,868) (353,918)
Institutional Class ..................................... (961,852) (5,683,913) (1,057,853) (2,003,568)

Net realized gain on investments:
A Class ................................................. (44,716,955) (294,241,867) (40,009,417) (115,549,988)
B Class ................................................. (4,057,926) (25,790,323) (9,736,999) (25,411,948)
C Class ................................................. (498,555) (3,465,186) (2,029,409) (5,698,352)
Institutional Class ..................................... (2,408,893) (36,564,567) (5,465,413) (12,829,309)
---------------------------------------------------------------
(74,699,509) (423,534,106) (65,209,147) (176,419,604)
---------------------------------------------------------------
Capital Share Transactions:
Proceeds from shares sold:
A Class ................................................. 24,802,605 103,910,710 46,375,082 134,692,759
B Class ................................................. 7,533,117 35,124,624 15,469,152 59,662,781
C Class ................................................. 1,662,868 6,725,629 5,939,568 16,593,807
Institutional Class ..................................... 6,690,426 39,592,772 20,732,232 45,606,633

Net asset value of shares issued upon reinvestment of
distributions from net investment income and net
realized gain on investments:
A Class ................................................. 57,350,164 310,051,493 43,522,813 121,904,186
B Class ................................................. 4,869,497 26,706,173 10,050,056 25,856,559
C Class ................................................. 602,453 3,599,933 2,123,882 5,826,826
Institutional Class ..................................... 3,362,689 42,224,197 6,523,266 14,832,682
---------------------------------------------------------------
106,873,819 567,935,531 150,736,051 424,976,233
---------------------------------------------------------------
Cost of shares repurchased:
A Class ................................................. (286,611,902) (337,518,150) (210,490,785) (245,500,507)
B Class ................................................. (42,948,625) (45,782,453) (62,193,620) (57,084,372)
C Class ................................................. (8,086,485) (9,189,647) (17,085,475) (18,852,423)
Institutional Class ..................................... (42,086,484) (201,670,952) (31,970,791) (38,265,745)
---------------------------------------------------------------
(379,733,496) (594,161,202) (321,740,671) (359,703,047)
---------------------------------------------------------------
Increase (decrease) in net assets derived from capital
share transactions ...................................... (272,859,677) (26,225,671) (171,004,620) 65,273,186
---------------------------------------------------------------
Net Decrease in Net Assets ................................. (399,541,229) (486,820,045) (267,810,820) (138,943,936)

Net Assets:
Beginning of period ........................................ 1,918,667,251 2,405,487,296 1,247,345,659 1,386,289,595
---------------------------------------------------------------
End of period .............................................. $1,519,126,022 $1,918,667,251 $ 979,534,839 $1,247,345,659
===============================================================
</TABLE>
See accompanying notes

<PAGE>

Financial Highlights

<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Decatur Equity Income Fund A Class
------------------------------------------------------------------------------------------------------------------------------------

Six Months
Ended Year Ended
5/31/00(1) 11/30/99 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $17.200 $21.400 $22.580 $21.320 $19.070 $15.570

Income (loss) from investment operations:
Net investment income(2) ............................. 0.217 0.476 0.569 0.600 0.650 0.700
Net realized and unrealized gain (loss) on investments (0.578) (0.916) 1.811 3.940 3.630 3.910
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations ..................... (0.361) (0.440) 2.380 4.540 4.280 4.610
---------- ---------- ---------- ---------- ---------- ----------

Less dividends and distributions:
Dividends from net investment income ................. (0.227) (0.540) (0.490) (0.600) (0.690) (0.690)
Distributions from net realized gain on investments .. (0.472) (3.220) (3.070) (2.680) (1.340) (0.420)
---------- ---------- ---------- ---------- ---------- ----------
Total dividends and distributions .................... (0.699) (3.760) (3.560) (3.280) (2.030) (1.110)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period .......................... $16.140 $17.200 $21.400 $22.580 $21.320 $19.070
========== ========== ========== ========== ========== ==========
Total return(3) ......................................... (2.05%) (2.50%) 12.03% 24.78% 24.47% 31.02%

Ratios and supplemental data:
Net assets, end of period (000 omitted) .............. $1,344,866 $1,658,696 $1,969,181 $1,906,726 $1,616,315 $1,382,693
Ratio of expenses to average net assets .............. 1.15% 1.03% 0.90% 0.88% 0.85% 0.87%
Ratio of net investment income to average net assets . 3.80% 2.59% 2.68% 2.87% 3.40% 4.03%
Portfolio turnover ................................... 72% 92% 94% 90% 101% 74%
</TABLE>

----------
(1) Ratios have been annualized and total return has not been annualized.
(2) The average shares outstanding method has been applied for per share
information for the year ended November 30, 1999 and the period ended
May 31, 2000.
(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>

Financial Highlights (continued)

<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Decatur Equity Income Fund B Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
5/31/00(1) 11/30/99 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $17.120 $21.320 $22.480 $21.26 $19.030 $15.550

Income (loss) from investment operations:
Net investment income(2) ............................... 0.156 0.333 0.403 0.450 0.500 0.560
Net realized and unrealized gain (loss) on investments . (0.569) (0.918) 1.797 3.900 3.610 3.890
-------- -------- -------- -------- ------- -------
Total from investment operations ....................... (0.413) (0.585) 2.200 4.350 4.110 4.450
-------- -------- -------- -------- ------- -------

Less dividends and distributions:
Dividends from net investment income ................... (0.175) (0.395) (0.290) (0.450) (0.540) (0.550)
Distributions from net realized gain on investments .... (0.472) (3.220) (3.070) (2.680) (1.340) (0.420)
-------- -------- -------- -------- ------- -------
Total dividends and distributions ...................... (0.647) (3.615) (3.360) (3.130) (1.880) (0.970)
-------- -------- -------- -------- ------- -------

Net asset value, end of period ............................ $16.060 $17.120 $21.320 $22.480 $21.260 $19.030
======== ======== ======== ======== ======= =======

Total return(3) ........................................... (2.39%) (3.27%) 11.14% 23.73% 23.43% 29.85%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $110,408 $151,332 $169,985 $123,180 $60,689 $19,665
Ratio of expenses to average net assets ................ 1.93% 1.81% 1.70% 1.68% 1.69% 1.74%
Ratio of net investment income to average net assets ... 3.02% 1.81% 1.88% 2.07% 2.56% 3.16%
Portfolio turnover ..................................... 72% 92% 94% 90% 101% 74%
</TABLE>

See accompanying notes

<PAGE>

Financial Highlights (continued)

<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Decatur Equity Income Fund C Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months Period
Ended Year Ended 11/29/95(2) to
5/31/00(1) 11/30/99 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $17.220 $21.420 $22.570 $21.330 $19.080 $19.150

Income (loss) from investment operations:
Net investment income(3) ................................ 0.155 0.332 0.402 0.460 0.510 0.040
Net realized and unrealized gain (loss) on investments .. (0.568) (0.917) 1.808 3.910 3.630 (0.060)
------- ------- ------- ------- ------- -------
Total from investment operations ........................ (0.413) (0.585) 2.210 4.370 4.140 (0.020)
------- ------- ------- ------- ------- -------

Less dividends and distributions:
Dividends from net investment income .................... (0.175) (0.395) (0.290) (0.450) (0.550) (0.050)
Distributions from net realized gain on investments ..... (0.472) (3.220) (3.070) (2.680) (1.340) -
------- ------- ------- ------- ------- -------
Total dividends and distributions ....................... (0.647) (3.615) (3.360) (3.130) (1.890) (0.050)
------- ------- ------- ------- ------- -------
Net asset value, end of period ............................. $16.160 $17.220 $21.420 $22.570 $21.330 $19.080
======= ======= ======= ======= ======= =======

Total return(4) ............................................ (2.37%) (3.25%) 11.14% 23.75% 23.47% -

Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $12,348 $19,511 $23,076 $15,343 $4,833 $5
Ratio of expenses to average net assets ................. 1.93% 1.81% 1.70% 1.68% 1.69% -
Ratio of net investment income to average net assets .... 3.02% 1.81% 1.88% 2.07% 2.56% -
Portfolio turnover ...................................... 72% 92% 94% 90% 101% -
</TABLE>

----------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of initial public offering. The ratios of expenses and net investment
income to average net assets, portfolio turnover and total return have been
omitted as management believes that such ratios and return for this
relatively short period are not meaningful.
(3) The average shares outstanding method has been applied for per share
information for the year ended November 30, 1999 and the period ended
May 31, 2000.
(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

19
<PAGE>

Financial Highlights (continued)

<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Decatur Equity Income Fund Institutional Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
5/31/00(1) 11/30/99 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......................... $17.200 $21.400 $22.570 $21.310 $19.060 $15.590

Income (loss) from investment operations:
Net investment income(2) ................................... 0.235 0.516 0.612 0.650 0.690 0.710
Net realized and unrealized gain (loss) on investments ..... (0.571) (0.913) 1.808 3.930 3.620 3.920
------- ------- ------- ------- ------- -------
Total from investment operations ........................... (0.336) (0.397) 2.420 4.580 4.310 4.630
------- ------- ------- ------- ------- -------

Less dividends and distributions:
Dividends from net investment income ....................... (0.252) (0.583) (0.520) (0.640) (0.720) (0.740)
Distributions from net realized gain on investments ........ (0.472) (3.220) (3.070) (2.680) (1.340) (0.420)
------- ------- ------- ------- ------- -------
Total dividends and distributions .......................... (0.724) (3.803) (3.590) (3.320) (2.060) (1.160)
------- ------- ------- ------- ------- -------

Net asset value, end of period ................................ $16.140 $17.200 $21.400 $22.570 $21.310 $19.060
======= ======= ======= ======= ======= =======

Total return .................................................. (1.90%) (2.27%) 12.25% 25.02% 24.65% 31.14%

Ratios and supplemental data:
Net assets, end of period (000 omitted) .................... $51,504 $89,128 $243,245 $278,384 $244,048 $211,049
Ratio of expenses to average net assets .................... 0.93% 0.81% 0.70% 0.68% 0.69% 0.74%
Ratio of net investment income to average net assets ....... 4.02% 2.81% 2.88% 3.07% 3.56% 4.16%
Portfolio turnover ......................................... 72% 92% 94% 90% 101% 74%
</TABLE>

See accompanying notes

20
<PAGE>

Financial Highlights (continued)

<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Growth and Income Fund A Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
5/31/00(1) 11/30/99 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $16.350 $19.120 $19.230 $17.520 $15.610 $12.320

Income (loss) from investment operations:
Net investment income(2) ................................ 0.246 0.221 0.280 0.280 0.340 0.370
Net realized and unrealized gain (loss) on investments .. (0.511) (0.556) 1.930 3.610 3.210 3.700
-------- -------- ---------- -------- -------- --------
Total from investment operations ........................ (0.265) (0.335) 2.210 3.890 3.550 4.070
-------- -------- ---------- -------- -------- --------

Less dividends and distributions:
Dividends from net investment income .................... (0.117) (0.235) (0.240) (0.330) (0.350) (0.360)
Distributions from net realized gain on investments ..... (0.768) (2.200) (2.080) (1.850) (1.290) (0.420)
-------- -------- ---------- -------- -------- --------
Total dividends and distributions ....................... (0.885) (2.435) (2.320) (2.180) (1.640) (0.780)
-------- -------- ---------- -------- -------- --------

Net asset value, end of period ............................. $15.200 $16.350 $19.120 $19.230 $17.520 $15.610
======== ======== ========== ======== ======== ========

Total return(3) ............................................ (1.54%) (2.00%) 12.70% 25.26% 24.89% 34.68%

Ratios and supplemental data:
Net assets, end of period (000 omitted) .................$683,337 $871,409 $1,006,642 $863,855 $670,912 $534,342
Ratio of expenses to average net assets ................. 1.33% 1.20% 1.13% 1.13% 1.11% 1.19%
Ratio of net investment income to average net assets .... (0.02%) 1.28% 1.52% 1.60% 2.21% 2.72%
Portfolio turnover ...................................... 76% 94% 87% 69% 87% 81%
</TABLE>

See accompanying notes

<PAGE>

Financial Highlights (continued)

<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Growth and Income Fund B Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
5/31/00(1) 11/30/99 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................ $16.300 $19.090 $19.200 $17.460 $15.560 $12.310

Income (loss) from investment operations:
Net investment income(2) ................................. 0.194 0.100 0.151 0.170 0.230 0.300
Net realized and unrealized gain (loss) on investments ... (0.501) (0.560) 1.917 3.600 3.200 3.670
------- ------- ------- ------- ------- -------
Total from investment operations ......................... (0.307) (0.460) 2.068 3.770 3.430 3.970
------- ------- ------- ------- ------- -------

Less dividends and distributions:
Dividends from net investment income ..................... (0.065) (0.130) (0.098) (0.180) (0.240) (0.300)
Distributions from net realized gain on investments ...... (0.768) (2.200) (2.080) (1.850) (1.290) (0.420)
------- ------- ------- ------- ------- -------
Total dividends and distributions ........................ (0.833) (2.330) (2.178) (2.030) (1.530) (0.720)
------- ------- ------- ------- ------- -------

Net asset value, end of period .............................. $15.160 $16.300 $19.090 $19.200 $17.460 $15.560
======= ======= ======= ======= ======= =======

Total return(3) ............................................. (1.83%) (2.72%) 11.92% 24.45% 24.01% 33.79%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ..................$159,693 $213,533 $218,584 $135,737 $53,467 $14,745
Ratio of expenses to average net assets .................. 2.03% 1.90% 1.83% 1.83% 1.81% 1.89%
Ratio of net investment income to average net assets ..... (0.72%) 0.58% 0.82% 0.90% 1.53% 2.02%
Portfolio turnover ....................................... 76% 94% 87% 69% 87% 81%
</TABLE>

See accompanying notes

22
<PAGE>

Financial Highlights (continued)

<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Growth and Income Fund C Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months Period
Ended Year Ended 11/29/95(2) to
5/31/00(1) 11/30/99 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......................... $16.270 $19.050 $19.160 $17.430 $15.610 $15.610

Income (loss) from investment operations:
Net investment income(3) .................................. 0.194 0.100 0.153 0.170 0.330 -
Net realized and unrealized gain (loss) on investments .... (0.501) (0.550) 1.915 3.590 3.100 -
------- ------- ------- ------- ------- -------
Total from investment operations .......................... (0.307) (0.450) 2.068 3.760 3.430 -
------- ------- ------- ------- ------- -------

Less dividends and distributions:
Dividends from net investment income ...................... (0.065) (0.130) (0.098) (0.180) (0.320) -
Distributions from net realized gain on investments ....... (0.768) (2.200) (2.080) (1.850) (1.290) -
------- ------- ------- ------- ------- -------
Total dividends and distributions ......................... (0.833) (2.330) (2.178) (2.030) (1.610) -
------- ------- ------- ------- ------- -------

Net asset value, end of period ............................... $15.130 $16.270 $19.050 $19.160 $17.430 $15.610
======= ======= ======= ======= ======= =======

Total return(4) .............................................. (1.84%) (2.71%) 12.00% 24.44% 24.04% -

Ratios and supplemental data:
Net assets, end of period (000 omitted) ................... $32,416 $45,026 $48,683 $26,231 $7,591 $5
Ratio of expenses to average net assets ................... 2.03% 1.90% 1.83% 1.83% 1.81% -
Ratio of net investment income to average net assets ...... (0.72%) 0.58% 0.82% 0.90% 1.53% -
Portfolio turnover ........................................ 76% 94% 87% 69% 87% -
</TABLE>

See accompanying notes

<PAGE>

Financial Highlights (continued)

<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Growth and Income Fund Institutional Class
-----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
5/31/00(1) 11/30/99 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................ $16.370 $19.150 $19.260 $17.570 $15.650 $12.350

Income (loss) from investment operations:
Net investment income(2) ................................. 0.268 0.273 0.346 0.350 0.370 0.470
Net realized and unrealized gain (loss) on investments ... (0.513) (0.553) 1.917 3.600 3.230 3.650
-------- -------- -------- ------- ------- -------
Total from investment operations ......................... (0.245) (0.280) 2.263 3.950 3.600 4.120
-------- -------- -------- ------- ------- -------

Less dividends and distributions:
Dividends from net investment income ..................... (0.147) (0.300) (0.293) (0.410) (0.390) (0.400)
Distributions from net realized gain on investments ...... (0.768) (2.200) (2.080) (1.850) (1.290) (0.420)
-------- -------- -------- ------- ------- -------
Total dividends and distributions ........................ (0.915) (2.500) (2.373) (2.260) (1.680) (0.820)
-------- -------- -------- ------- ------- -------

Net asset value, end of period .............................. $15.210 $16.370 $19.150 $19.260 $17.570 $15.650
======== ======== ======== ======= ======= =======

Total return ................................................ (1.40%) (1.68%) 13.07% 25.65% 25.24% 35.13%

Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $104,088 $117,377 $112,381 $78,813 $45,958 $11,520
Ratio of expenses to average net assets .................. 1.03% 0.90% 0.83% 0.83% 0.81% 0.89%
Ratio of net investment income to average net assets ..... 0.28% 1.58% 1.82% 1.90% 2.53% 3.02%
Portfolio turnover ....................................... 76% 94% 87% 69% 87% 81%
</TABLE>

See accompanying notes

<PAGE>

Notes to Financial Statements

May 31, 2000 (Unaudited)
--------------------------------------------------------------------------------

Delaware Group Equity Funds II is organized as a Delaware business trust and
offers five series: Delaware Decatur Equity Income Fund, Delaware Growth and
Income Fund, Delaware Blue Chip Fund, Delaware Social Awareness Fund, and
Delaware Diversified Value Fund. These financial statements and related notes
pertain to Delaware Decatur Equity Income Fund and Delaware Growth & Income
Fund, (collectively, the "Funds" and individually, a "Fund"). The Funds are
registered as diversified open-end investment companies under the Investment
Company Act of 1940, as amended. The Funds offer 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 deferred sales charge
and the Institutional Class has no sales charge.

The investment objective of the Delaware Decatur Equity Income Fund is to
achieve the highest possible current income by investing primarily in common
stocks that provide the potential for income and capital appreciation without
undue risk to principal.

The investment objective of the Delaware Growth and Income Fund is to achieve
long-term growth by investing primarily in securities that provide the potential
for income and capital appreciation without undue risk to principal.

1. Significant Accounting Policies
The following accounting policies are in accordance with accounting principles
generally accepted in the United States and are consistently followed by the
Funds.

Security Valuation - All equity securities are valued at the last quoted sales
price as of the regular close of the New York Stock Exchange (NYSE) on the
valuation date. If on a particular day an equity security does not trade, then
the mean between the bid and asked prices will be used. Long-term debt
securities are valued by an independent pricing service and such prices are
believed to reflect the fair value of such securities. 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 market value as
determined in good faith or under direction of the Funds' Board of Trustees.

Federal Income Taxes - Each 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 accounting
principles generally accepted in the United States.

Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
each 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 - Each 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 each
Fund's custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is 102% collateralized. However, in the
event of default or bankruptcy by the counterparty to the agreement, realization
of the collateral may be subject to legal proceedings.

Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States 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. The Delaware Decatur Equity
Income Fund declares and pays dividends from net investment income on a monthly
basis and capital gains, if any, annually. The Delaware Growth and Income Fund
declares and pays dividends from net investment income on a quarterly basis and
capital gains, if any, annually.

<PAGE>

Notes to Financial Statements (continued)

--------------------------------------------------------------------------------
1. Significant Accounting Policies (continued)
Certain expenses of the Funds are paid through commission arrangements with
brokers. These transactions are done subject to best execution. In addition,
each Fund receives earnings credits from its custodian when positive cash
balances are maintained, which are used to offset custody fees. 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". The amount of these expenses and credits
for the period ended May 31, 2000, are as follows:

Delaware Decatur Delaware
Equity Income Growth and Income
Fund Fund
---------------- -----------------
Commission expenses ............... $18,781 $12,044
Earnings Credits .................. 2,811 -

2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Funds
pay Delaware Management Company ("DMC"), the Investment Manager of each Fund, an
annual fee based upon each Fund's average daily net assets at the following
annual rates:

Delaware Decatur Delaware
Equity Income Growth and Income
Fund Fund
---------------- -----------------
On the first $500 million ......... 0.650% 0.650%
On the next $500 million .......... 0.600% 0.600%
On the next $1.5 million .......... 0.550% 0.550%
In excess of $2.5 million ......... 0.500% 0.500%

At May 31, 2000, the liability for investment management fees and other expenses
payable to DMC were as follows:

Delaware Decatur Delaware
Equity Income Growth and Income
Fund Fund
---------------- -----------------
$182,231 $66,435

The Funds have engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting services.
Each 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, 2000, the Funds had liabilities for such fees and other expenses payable
to DSC as follows:

Delaware Decatur Delaware
Equity Income Growth and Income
Fund Fund
---------------- -----------------
$48,692 $143,208

<PAGE>

Pursuant to the Distribution Agreement, the Funds pay 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 for each Fund. At May 31, 2000,
the Funds had liabilities for such fees and other expenses payable to DDLP as
follows:

Delaware Decatur Delaware
Equity Income Growth and Income
Fund Fund
---------------- -----------------
$61,648 $81,658

For the period ended May 31, 2000, DDLP earned commissions on sales of the A
Class shares for each Fund as follows:

Delaware Decatur Delaware
Equity Income Growth and Income
Fund Fund
---------------- -----------------
$49,339 $60,899

Certain officers of DMC, DSC and DDLP are officers, trustees and/or employees of
the Funds. These officers, trustees and employees are paid no compensation by
the Funds.

3. Investments
During the period ended May 31, 2000, the Funds made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments as follows:

Delaware Decatur Delaware
Equity Income Growth and Income
Fund Fund
---------------- -----------------
Purchases ......................... $584,715,147 $399,457,394
Sales ............................. 930,504,579 644,191,037

The cost of investments for federal income tax purposes approximates the cost
for book purposes. At May 31, 2000 the aggregate cost of securities and
unrealized appreciation (depreciation) for federal income tax purposes for each
Fund were as follows:

Delaware Decatur Delaware
Equity Income Growth and Income
Fund Fund
---------------- -----------------
Cost of investments ............... $1,389,094,948 $865,917,544
-------------- ------------
Aggregate unrealized
appreciation ................... $ 176,930,522 $132,925,430
Aggregate unrealized
depreciation ................... (65,340,639) (26,498,918)
-------------- ------------
Net unrealized appreciation ....... $ 111,589,883 $106,426,512
============== ============

<PAGE>

Notes to Financial Statements (continued)

--------------------------------------------------------------------------------
4. Capital Shares
Transactions in capital shares were as follows:

Delaware Decatur
Equity Income Fund
------------------------
Six Months Year
Ended Ended
5/31/00 11/30/99
(Unaudited)
Shares sold:
A Class ........................................ 1,563,889 5,617,963
B Class ........................................ 477,321 1,902,665
C Class ........................................ 104,378 360,611
Institutional Class ............................ 421,646 2,144,984

Shares issued upon reinvestment of
distributions from net investment income
and net realized gain on investments:
A Class ........................................ 3,553,758 17,179,047
B Class ........................................ 302,523 1,487,643
C Class ........................................ 37,178 199,407
Institutional Class ............................ 208,152 2,339,463
------------ ------------
6,668,845 31,231,783
------------ ------------

Shares repurchased:
A Class ........................................ (18,258,649) (18,379,357)
B Class ........................................ (2,744,582) (2,525,183)
C Class ........................................ (510,455) (504,200)
Institutional Class ............................ (2,620,794) (10,668,998)
------------ ------------
(24,134,480) (32,077,738)
------------ ------------
Net decrease ................................... (17,465,635) (845,955)
============ ============

Delaware Growth
and Income Fund
------------------------
Six Months Year
Ended Ended
5/31/00 11/30/99
(Unaudited)
Shares sold:
A Class ........................................ 3,198,140 7,708,751
B Class ........................................ 1,050,209 3,447,377
C Class ........................................ 409,281 961,557
Institutional Class ............................ 1,432,462 2,629,956

Shares issued upon reinvestment of
distributions from net investment income
and net realized gains on investments
A Class ........................................ 2,893,093 7,252,187
B Class ........................................ 668,023 1,541,065
C Class ........................................ 141,491 348,107
Institutional Class ............................ 434,313 882,059
------------ ------------
10,227,012 24,771,059
------------ ------------

Shares repurchased:
A Class ........................................ (14,435,411) (14,318,557)
B Class ........................................ (4,279,720) (3,343,966)
C Class ........................................ (1,174,685) (1,097,749)
Institutional Class ............................ (2,195,221) (2,208,817)
------------ ------------
(22,085,037) (20,969,089)
------------ ------------
Net decrease ................................... (11,858,025) 3,801,970
============ ============
<PAGE>

5. Lines of Credit
Each Fund along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participate in a $683,500,000 revolving line of
credit facility to be used for temporary or emergency purposes as an additional
source of liquidity to fund redemptions of investor shares. The Participants are
charged an annual commitment fee, which is allocated across the Participants on
the basis of each Fund's allocation of the entire facility. The Participants may
borrow up to a maximum of one-third of their net assets under the agreement. No
amount was outstanding at May 31, 2000, or at any time during the period.

6. Credit Risk
The Delaware Decatur Equity Income Fund may invest in high-yield
fixed-income securities which carry ratings of BB or lower by S&P and/or Ba or
lower by Moody's. Investments in these higher yielding securities may be
accompanied by a greater degree of credit risk than higher rated securities.
Additionally, lower rated securities may be more susceptible to adverse economic
and competitive industry conditions than investment grade securities.

27
<PAGE>

DELAWARE INVESTMENTS FAMILY OF FUNDS
--------------------------------------------------------------------------------

More 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.
<TABLE>
<CAPTION>
<S> <C> <C>
Growth of Capital International and Global Tax-Exempt Income
o Technology and Innovation o Emerging Markets Fund o National High-Yield
Fund o New Pacific Fund Municipal Bond Fund
o Select Growth Fund o Overseas Equity Fund o Tax-Free USA Fund
o Trend Fund o International Equity Fund o Tax-Free Insured Fund
o Growth Opportunities Fund* o Global Equity Fund o Tax-Free USA
o Small Cap Value Fund o Global Bond Fund Intermediate Fund
o U.S. Growth Fund o State Tax-Free Funds**
o Tax-Efficient Equity Fund Current Income
o Social Awareness Fund o Delchester Fund Stability of Principal
o High-Yield o Cash Reserve
Total Return Opportunities Fund o Tax-Free Money Fund
o Blue Chip Fund o Strategic Income Fund
o Devon Fund o Corporate Bond Fund Asset Allocation
o Growth and Income Fund o Extended Duration o Foundation Funds
o Decatur Equity Bond Fund Growth Portfolio
Income Fund o American Government Balanced Portfolio
o REIT Fund Bond Fund Income Portfolio
o Balanced Fund o U.S. Government
Securities Fund
o Limited-Term
</TABLE> Government Fund

* Formerly known as DelCap Fund.

** Available for the following states: Arizona, California, Colorado, Florida,
Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, New Jersey,
New Mexico, New York, Oregon, Pennsylvania and Wisconsin. Insured and
intermediate bond funds are available in selected states.

<PAGE>

DELAWARE(SM)
INVESTMENTS
---------------------
Philadelphia o London

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

This semi-annual report is for the information of Delaware Decatur Equity Income
Fund and Delaware Growth and Income Fund shareholders, but it may be used with
prospective investors when preceded or accompanied by a current prospectus for
each 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 each Fund. You should
read the prospectus carefully before you invest. 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 each Fund will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BOARD OF TRUSTEES Charles E. Peck Investment Manager
Retired Delaware Management Company
Wayne A. Stork Fredericksburg, VA Philadelphia, PA
Chairman
Delaware Investments Family of Funds Janet L. Yeomans International Affiliate
Philadelphia, PA Vice President and Treasurer Delaware International Advisers Ltd.
3M Corporation London, England
Walter P. Babich St. Paul, MN
Board Chairman National Distributor
Citadel Constructors, Inc. AFFILIATED OFFICERS Delaware Distributors, L.P.
King of Prussia, PA Philadelphia, PA
Charles E. Haldeman, Jr.
David K. Downes President and Chief Executive Officer Shareholder Servicing, Dividend
President and Chief Executive Officer Delaware Management Holdings, Inc. Disbursing and Transfer Agent
Delaware Investments Family of Funds Philadelphia, PA Delaware Service Company, Inc.
Philadelphia, PA Philadelphia, PA
Richard J. Flannery
John H. Durham Executive Vice President 1818 Market Street
Private Investor and General Counsel Philadelphia, PA 19103-3682
Horsham, PA Delaware Investments Family of Funds
Philadelphia, PA
Anthony D. Knerr
Consultant, Anthony Knerr & Associates Bruce D. Barton
New York, NY President and Chief Executive Officer
Delaware Distributors, L.P.
Ann R. Leven Philadelphia, PA
Former Treasurer, National Gallery of Art
Washington, DC

Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
</TABLE>

(3342) Printed in the USA
SA-118[5/00]PP 7/00 (J6029)