<PAGE>
DELAWARE(sm)
INVESTMENTS
- ------------
Delaware Blue Chip Fund
(Total Return Artwork)
Total
Return
1999 ANNUAL REPORT
<PAGE>
A TRADITION OF SOUND INVESTING SINCE 1929
- -----------------------------------------
TABLE OF CONTENTS
- -----------------
Letter to Shareholders 1
Portfolio Management
Review 3
Performance Summary 5
Financial Statements
Statement of Net Assets 6
Financial Highlights 11
<PAGE>
A Commitment To Our Investors
Experienced
[ ] Our seasoned investment professionals average more than 15 years'
experience.
[ ] For over 70 years, we have managed money in a variety of investment styles
that have weathered a full range of economic and market environments.
Disciplined
[ ] We follow strict investment policies and clear buy/sell guidelines.
[ ] We strive to balance risk and reward in order to provide relatively
conservative investment alternatives within any given asset class.
Consistent
[ ] We believe consistent processes are the best way to seek consistent
investment performance.
[ ] Our commitment to style consistency has earned us the confidence of
discriminating institutional and individual investors to manage
approximately $47 billion in assets as of December 31, 1999.
Comprehensive
[ ] We offer more than 60 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 (24 single-state funds)
o International equity o International fixed-income
o Balanced
[ ] 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>
Dear Shareholder
December 7, 1999
Recap of Events -- The U.S. stock market has provided considerable capital
appreciation since the start of our fiscal year on December 1, 1998. Initially,
there were concerns about the effects of economic crises in Asia, Russia, Japan
and Latin America. However, three Federal Reserve interest rate cuts sent many
investments bouncing back from the financial losses suffered in the summer and
fall of 1998.
Since that date, the stock market has recovered in dramatic fashion. The Dow
Jones Industrial Average closed above both the 10,000 and 11,000 marks for the
first time in the spring of 1999. Low inflation enabled the Federal Reserve to
keep interest rates low and the U.S. stock market moved steadily higher.
Strong economic activity and a booming stock market heightened inflationary
concerns. The Federal Reserve responded by raising interest rates on June 30th,
August 24th and November 16th, effectively taking back all three rate reductions
of the previous year. As of this writing, the Federal funds target rate on
overnight loans between banks stands at 5.50%, the same level as 14 months ago.
Delaware Blue Chip Fund -- We capitalized on a fortuitous environment and
provided a total return of +16.30% (Class A shares at net asset value with
distributions reinvested) for the one-year period ended November 30, 1999.
We attribute Delaware Blue Chip Fund's positive performance to strong stock
selection in the technology sector. Your Fund's subadviser, Vantage Investment
Advisors of New York, anchors its investment process with computer-driven,
quantitative stock selection. Vantage's quantitative techniques are an essential
part of Delaware Blue Chip Fund's disciplined investment strategy - an approach
that strives to emphasize stocks with both growth and value characteristics. By
combining growth and value investing into one comprehensive strategy we believe
your Fund can seek attractively priced stocks with favorable long-term earnings
prospects.
WE ATTRIBUTE DELAWARE
BLUE CHIP FUND'S
POSITIVE PERFORMANCE TO
STRONG STOCK SELECTION
IN THE TECHNOLOGY
SECTOR.
(Total Return Artwork)
Average Annual Total Returns
For Periods Ended November 30, 1999 One Year Lifetime*
- --------------------------------------------------------------------------------
Delaware Blue Chip Fund Class A +16.30% +16.02%
- --------------------------------------------------------------------------------
Standard & Poor's 500 Index +20.83% +31.25%
Lipper Multi-Cap Core Funds Average +19.12% (365 funds) +18.07% (253 funds)
All performance shown above is at net asset value without the effect of sales
charges and assumes reinvestment of distributions. Performance information for
all other Fund classes can be found on page 5. The S&P 500 Index is an unmanaged
composite of large company stocks. The Lipper Multi-Cap Core Funds Average is
the average of all multi-cap core funds tracked by Lipper Analytical. You cannot
invest directly in an index. Past performance does not guarantee future results.
*February 24, 1997 (commencement of operations).
1
<PAGE>
(Total Return Artwork)
Market Outlook -- Despite strong performance through most of the year, the U.S.
stock market suffered in the third quarter of 1999. In October and November,
consumer and manufacturing reports suggested our economy might be overheating.
Regardless, your Fund's managers believe the current economic environment of low
interest rates, steady growth and low inflation provides fertile ground for
long-term stock market growth. On the pages that follow, Delaware Blue Chip
Fund's portfolio managers share their outlook and concerns for the U.S. economy
in the coming year. They also review their investment selection process and
discuss some of the individual investments that impacted Fund performance in
fiscal 1999.
With many opportunities still ahead, we look forward to working with you to make
the most of your investments. Thank you for your continued confidence in
Delaware Blue Chip Fund and Delaware Investments.
Sincerely,
/s/ Wayne A. Stork /s/ David K. Downes
- ----------------------------------- -------------------------------------
Wayne A. Stork David K. Downes
Chairman, President and Chief Executive Officer,
Delaware Investments Delaware Investments
2
<PAGE>
(Total Return Artwork)
Enrique Chang
Senior Vice President/
Chief Investment Officer
Vantage Investment Advisors
Christopher P. Harvey
Vice President
Vantage Investment Advisors
December 7, 1999
Quantitative Investing
Harnessing the Power of Technology
Universe of mid- and large capitalization companies
Computer-driven quantitative fundamental analysis
Ranking of stocks based on both growth and value characteristics
144 stocks selected for the portfolio*
*As of November 30, 1999. The number of stocks selected will fluctuate.
PORTFOLIO MANAGEMENT REVIEW
- ---------------------------
Delaware Blue Chip Fund delivered a +16.30% return for the year ended November
30, 1999 (Class A shares at net asset value with distributions reinvested).
Driving your Fund's strong performance was our stock picking technique which
evaluates a large number of mid- and large-cap U.S. stocks every day. We
evaluate raw data from each company, including the price/earnings ratio of its
stock, earnings estimates from many Wall Street analysts, and a number of other
factors. Each stock is then ranked against all other stocks in its industry
sector. This computer analysis is designed to lead us to:
o Stocks with a low price/earnings ratio - stocks whose share price is low in
relation to earnings per share; and
o Companies whose earnings growth rates are accelerating and/or whose earnings
results have risen above previous estimates.
Highlights
As we reported in Delaware Blue Chip Fund's semi-annual report in June 1999, we
tend to avoid many "super cap" stocks - very large company stocks with
relatively high price/earnings ratios - because they fail to rate highly
according to our growth and value investment parameters. One super cap stock
that did meet our investment parameters this past year was Microsoft. As many
know, Microsoft develops, sells and supports software products. Lately,
Microsoft has also been spending considerable energy developing the "MSN"
network of Internet services. In a crushing blow to Microsoft's antitrust case,
a federal judge ruled on November 5th that the software company does indeed hold
a monopoly thanks to its pervasive Windows operating systems. Because appeals
are likely to keep the case in court - and delay any sanctions - for several
years, we believe we will continue to hold this stock. One of the most popular
options the Justice Department is considering is breaking up the world's largest
software company into identical spinoffs, dubbed "Baby Bills," and set them to
compete against each other. Despite the antitrust case, we were pleased with the
performance of Delaware Blue Chip Fund's top holding and believe we own the
stock at a reasonable price.
Our technology holdings helped boost your Fund's performance during fiscal 1999.
We were pleased with the performance of Apple Computer throughout the period.
Apple has been successful in marketing its newest addition to the company's line
of computers - the iMac(TM), a personal computer competitive with other
lower-priced models. Apple is also taking a cue from Dell Computer and is now
selling built-to-order systems online. Over the past five quarters, Apple's
average earnings percentage increase has been over 36.0% (Source: Bloomberg). We
believe this bodes well for the company's future.
3
<PAGE>
WE BELIEVE THE CURRENT
ECONOMIC ENVIRONMENT
OF LOW INTEREST RATES,
STEADY GROWTH AND LOW
INFLATION PROVIDES
FERTILE GROUND FOR
LONG-TERM STOCK MARKET
GROWTH.
Financial stocks proved to be a disappointing sector for your Fund throughout
fiscal 1999. The past year was a challenging one for these companies as they
dealt with a changing interest rate environment and increased pricing
competition. Of the stocks we hold in this sector, Allstate, which provides
property-liability insurance, was a laggard. The largest U.S. publicly traded
car and home insurer saw its profit margins squeezed by competitive price cuts,
higher costs and storm losses.
In the past, your Fund has strived to approximately match the sector weightings
of the Standard & Poor's 500 Index, a capitalization-weighted index of 500
stocks. Not surprisingly, the financial sector was also a poor performer for the
S&P 500 for the one-year period ending November 30, 1999.
Going forward we plan to compare our sector weightings to the Russell Top 200
Index, which includes the 200 largest stocks from the Russell 1000 Index. The
Russell Top 200 Index more closely represents the Fund's emphasis on the largest
U.S. companies. The S&P 500 remains our benchmark for performance comparisons.
Outlook
In our view, the current economic environment of low interest rates, steady
growth and low inflation provides fertile ground for long-term stock market
growth. The positioning of Delaware Blue Chip Fund's portfolio over the past
fiscal year has helped it benefit from U.S. economic growth while escaping the
impact of struggling international markets. Many of the companies in the
portfolio generate the majority of their revenues from U.S. and/or European
markets. At this time we think there is room for continued optimism for the
stock market and believe Delaware Blue Chip Fund is well positioned to
capitalize on any market strength in the first half of fiscal 2000.
Top Portfolio Holdings
November 30, 1999
Company Industry Percent of Net Assets
- --------------------------------------------------------------------------------
1. Microsoft Computers & Technology 3.9%
- --------------------------------------------------------------------------------
2. General Electric Electronics & Electrical Equipment 3.3%
- --------------------------------------------------------------------------------
3. Cisco Systems Computers & Technology 2.2%
- --------------------------------------------------------------------------------
4. Wal-Mart Stores Retail 1.9%
- --------------------------------------------------------------------------------
5. Lucent Technologies Telecommunications 1.8%
- --------------------------------------------------------------------------------
6. Intel Electronics & Electrical Equipment 1.7%
- --------------------------------------------------------------------------------
7. Exxon Mobil Energy 1.7%
- --------------------------------------------------------------------------------
8. EMC Computers & Technology 1.6%
- --------------------------------------------------------------------------------
9. Citigroup Banking, Finance & Insurance 1.5%
- --------------------------------------------------------------------------------
10. SBC Communications Telecommunications 1.4%
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(Total Return artwork)
4
<PAGE>
Delaware Blue Chip Fund
FUND BASICS
- -----------
Fund Objectives
To achieve long-term capital appreciation. Current income is a secondary
objective.
Assets Under Management
$38 million
Number of Holdings
144
Fund Start Date
February 24, 1997
Your Fund Managers
Enrique Chang holds a B.A. from Fairleigh Dickinson University and an M.S. and
M.B.A. from New York University. He has 11 years of Wall Street experience.
Christopher P. Harvey holds a B.S. degree from Bucknell University and an M.B.A.
from New York University. He has eight years of Wall Street experience.
NASDAQ Symbols
Class A DEBAX
Class B DEBBX
Class C DEBCX
<PAGE>
FUND PERFORMANCE
- ----------------
Delaware Blue Chip Fund
Growth of a $10,000 Investment
February 24, 1997 through November 30, 1999
<TABLE>
<CAPTION>
Feb-97 May-97 Nov-97 May-98 Nov-98 May-99 Nov-99
<S> <C> <C> <C> <C> <C> <C> <C>
S&P 500 Index 10,000 10,727 12,081 13,794 14,714 16,462 $17,565
Lipper Multi-Cap Core Funds Average (253 funds) 10,000 10,449 11,805 13,163 13,128 14,785 $15,871
Delaware Blue Chip Fund Class A 9,421 9,898 11,180 12,470 12,516 13,687 $14,556
</TABLE>
Chart assumes $10,000 invested on February 24, 1997. Fund performance includes
the effect of a 5.75% front-end sales charge and reinvestment of all
distributions. Performance for other Fund classes will vary due to different
charges and expenses. The S&P 500 Index is an unmanaged composite of large
company stocks. The Lipper Multi-Cap Core Funds Average is the average of all
multi-cap core funds tracked by Lipper Analytical. Past performance does not
guarantee future results. You cannot invest directly in an index.
Average Annual Returns
Through November 30, 1999 Lifetime One Year
- -------------------------------------------------------------- -----------------
Class A (Est. 2/24/97)
Excluding Sales Charge +16.02% +16.30%
Including Sales Charge +13.56% +9.61%
- --------------------------------------------------------------------------------
Class B (Est. 2/24/97)
Excluding Sales Charge +15.26% +15.63%
Including Sales Charge +14.41% +10.63%
- --------------------------------------------------------------------------------
Class C (Est. 2/24/97)
Excluding Sales Charge +15.26% +15.63%
Including Sales Charge +15.26% +14.63%
- --------------------------------------------------------------------------------
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 that either the investment was not
redeemed or contingent sales charges did not apply. Past performance is not a
guarantee of future results.
Class A shares have a 5.75% maximum front-end sales charge and a 12b-1 fee.
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 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.
An expense limitation was in effect for all classes of Delaware Blue Chip Fund
during the period. Performance would have been lower if the expense limitation
was not in effect.
Institutional Class shares are available without sales or asset-based
distribution charges only to certain eligible institutional accounts.
Average Annual Returns Through November 30, 1999 Lifetime One Year
- --------------------------------------------------------------------------------
Institutional Class (Est. 2/24/97) 16.39% 16.70%
NASDAQ Symbol Institutional Class: DEBIX
5
<PAGE>
Statement of Net Assets
Delaware Group Equity Funds II -- DELAWARE BLUE CHIP FUND
November 30, 1999 Number of Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock - 93.61%
Aerospace & Defense - 1.70%
B.F. Goodrich ......................................... 7,655 $ 172,716
General Dynamics ...................................... 3,600 185,625
United Technologies ................................... 5,240 296,060
----------
654,401
----------
Automobiles & Auto Parts - 1.50%
Ford Motor ............................................ 6,735 340,118
Hertz - Class A ....................................... 2,400 101,550
*Navistar International ................................ 3,600 133,875
----------
575,543
----------
Banking, Finance & Insurance - 17.24%
A.G. Edwards .......................................... 11,000 327,250
Allstate .............................................. 4,560 119,415
Ambac Financial Group ................................. 3,700 201,650
American Financial Group .............................. 5,700 153,544
*American International Group .......................... 3,925 405,256
Associates First Capital .............................. 1,642 54,597
Bank of America ....................................... 5,345 312,683
Bank One .............................................. 2,146 75,647
Chase Manhattan ....................................... 5,160 398,610
Citigroup ............................................. 10,410 560,839
Comerica .............................................. 3,655 193,715
Conseco ............................................... 4,000 81,000
Countrywide Credit Industries ......................... 3,600 101,250
Dime Bancorp .......................................... 7,500 136,875
Fannie Mae ............................................ 3,800 253,175
Fleet Boston Financial ................................ 5,900 223,094
General Electric ...................................... 9,770 1,270,100
Golden West Financial ................................. 2,000 201,875
J.P. Morgan ........................................... 2,200 289,300
Loews ................................................. 1,300 83,200
Morgan Stanley Dean Witter ............................ 4,300 518,688
National City ......................................... 3,000 74,813
PMI Group ............................................. 2,500 124,844
Paine Webber Group .................................... 5,295 207,498
SLM Holding ........................................... 1,837 91,046
Washington Mutual ..................................... 5,772 167,388
----------
6,627,352
----------
Buildings & Materials - 0.24%
USG ................................................... 1,850 91,806
----------
91,806
----------
Cable, Media & Publishing - 2.42%
*CBS ................................................... 3,800 197,600
Donnelley & Sons ...................................... 1,900 45,600
Knight-Ridder ......................................... 4,795 261,627
McGraw-Hill ........................................... 2,850 161,559
New York Times ........................................ 6,600 253,688
*Pac-West Telecommunication ............................ 220 5,713
R.H. Donnelley ........................................ 332 6,184
----------
931,971
----------
<PAGE>
November 30, 1999 Number of Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
Chemicals - 1.83%
Dow Chemical .......................................... 3,035 $ 355,474
Englehard ............................................. 8,700 146,269
Lubrizol .............................................. 3,100 84,863
*W.R. Grace & Company .................................. 8,700 118,538
----------
705,144
----------
Computers & Technology - 17.47%
*American Power Conversion ............................. 3,900 92,747
*Apple Computer ........................................ 3,600 352,238
*BMC Software .......................................... 4,100 298,659
*Cisco Systems ......................................... 9,300 829,153
Computer Associates International ..................... 4,400 286,000
*Compuware ............................................. 6,300 213,216
*Dell Computer ......................................... 7,900 339,947
Deluxe ................................................ 4,780 125,176
*EMC ................................................... 7,200 601,650
*Electronic Arts ....................................... 2,100 220,238
International Business Machines ....................... 4,900 505,006
*Lexmark International Group - Class A ................. 3,600 298,800
*Microsoft ............................................. 16,300 1,483,809
*Oracle ................................................ 6,900 467,691
*Safeguard Scientifics ................................. 3,200 355,600
*Symantec .............................................. 5,300 247,278
----------
6,717,208
----------
Consumer Products - 2.90%
Avon Products ......................................... 2,300 83,806
Clorox ................................................ 4,120 183,598
Procter & Gamble ...................................... 3,830 413,640
Tyco International .................................... 10,800 432,675
----------
1,113,719
----------
Electronics & Electrical Equipment - 3.78%
Honeywell ............................................. 1,785 199,808
Intel ................................................. 8,500 651,313
otorola ............................................... 2,300 262,775
Texas Instruments ..................................... 3,550 341,022
----------
1,454,918
----------
Energy - 6.13%
Atlantic Richfield .................................... 1,900 183,113
Conoco - Class B ...................................... 3,800 99,513
Enron ................................................. 7,000 266,438
Exxon Mobil ........................................... 8,200 650,363
Kerr-McGee ............................................ 4,600 263,350
Murphy Oil ............................................ 3,800 214,700
Royal Dutch Petroleum ................................. 7,445 431,810
Texaco ................................................ 4,070 248,016
----------
2,357,303
----------
6
<PAGE>
Delaware Blue Chip Fund Number of Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
Food, Beverage & Tobacco - 4.02%
Anheuser Busch ....................................... 900 $ 67,331
CKE Restaurants ...................................... 2,090 13,454
Coca Cola ............................................ 4,720 317,715
Flowers Industries ................................... 4,300 70,413
General Mills ........................................ 5,400 203,513
Heinz (H.J.) ......................................... 5,065 212,097
*Keebler Foods ........................................ 7,300 201,206
Philip Morris ........................................ 5,400 142,088
Quaker Oats .......................................... 4,900 319,725
----------
1,547,542
----------
Healthcare & Pharmaceuticals - 9.42%
Allergan ............................................. 2,000 196,750
*Amgen ................................................ 9,720 442,564
Bausch & Lomb ........................................ 2,400 131,550
Bristol-Myers Squibb ................................. 6,500 474,906
Eli Lilly ............................................ 2,400 172,200
Johnson & Johnson .................................... 4,100 425,375
*Lincare Holdings ..................................... 1,670 47,282
McKesson ............................................. 1,921 44,903
Medtronic ............................................ 5,524 214,746
Merck & Company ...................................... 6,700 525,950
*Oxford Health Plans .................................. 6,300 92,334
Pfizer ............................................... 11,400 412,538
Pharmacia & Upjohn ................................... 1,800 98,438
*Rexall Sundown ....................................... 3,700 37,809
Schering-Plough ...................................... 4,620 236,198
*Steris ............................................... 2,500 32,500
Warner-Lambert ....................................... 400 35,875
----------
3,621,918
----------
Industrial Machinery - 0.64%
*Applied Materials .................................... 1,600 155,950
Ingersoll-Rand ....................................... 1,887 91,402
----------
247,352
----------
Leisure, Lodging & Entertainment - 1.97%
Carnival Cruise Lines ................................ 5,400 238,275
Eastman Kodak ........................................ 2,100 129,938
*Mandalay Resorts Group ............................... 10,800 251,775
*Outback Steakhouse ................................... 5,750 135,844
----------
755,832
----------
Paper & Forest Products - 1.69%
Georgia-Pacific ...................................... 4,600 183,138
International Paper .................................. 3,300 172,219
Temple-Inland ........................................ 300 17,175
Weyerhaeuser ......................................... 4,500 275,625
----------
648,157
----------
<PAGE>
Delaware Blue Chip Fund Number of Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
Retail - 5.53%
*CDW Computer Centers ................................. 1,600 $ 112,450
Gap .................................................. 4,893 198,167
Home Depot ........................................... 4,500 355,781
*Kroger ............................................... 1,900 40,494
Lowe's ............................................... 2,000 99,625
Ross Stores .......................................... 4,660 89,559
*Safeway .............................................. 6,500 239,688
*Staples .............................................. 5,625 131,836
TJX .................................................. 4,370 114,439
Wal-Mart Stores ...................................... 12,900 743,363
----------
2,125,402
----------
Telecommunications - 12.26%
AT&T ................................................. 9,100 508,463
Alltel ............................................... 2,700 233,550
Bell Atlantic ........................................ 4,270 270,344
BellSouth ............................................ 7,430 343,173
CenturyTel ........................................... 3,750 172,500
GTE .................................................. 4,135 301,855
*General Instrument ................................... 3,800 248,900
Lucent Technologies .................................. 9,200 672,175
*MCI Worldcom ......................................... 5,400 446,513
Nortel Networks ...................................... 4,500 333,000
SBC Communications ................................... 10,393 539,791
*Tellabs .............................................. 6,250 405,469
U.S.West ............................................. 3,820 237,079
----------
4,712,812
----------
Textiles, Apparel & Furniture - 0.56%
Miller (Herman) ...................................... 1,250 28,555
*Tommy Hilfiger ....................................... 7,630 187,889
----------
216,444
----------
Transportation & Shipping - 0.89%
*Alaska Air Group ..................................... 4,900 186,200
Delta Air Lines ...................................... 3,200 157,600
----------
343,800
----------
Utilities - 1.42%
Ameren ............................................... 4,000 138,500
Energy East .......................................... 5,610 131,835
General Public Utilities ............................. 2,570 82,240
Texas Utilities ...................................... 2,280 81,653
Unicom ............................................... 3,500 111,781
----------
546,009
----------
Total Common Stock (cost $30,677,139) ................ 35,994,633
==========
7
<PAGE>
Statement of Net Assets (continued)
Delaware Blue Chip Fund Principal Market
Amount Value
- --------------------------------------------------------------------------------
Repurchase Agreements - 5.24%
With Chase Manhattan 5.64% 12/1/99
(dated 11/30/99, collateralized by $289,000
U.S. Treasury Notes 5.50% due 2/28/03,
market value $288,475 and $484,000
U.S. Treasury Notes 7.875% due 11/15/04,
market value $519,571) .............................. $788,000 $ 788,000
With J.P. Morgan Securities 5.63% 12/1/99
(dated 11/30/99, collateralized by $332,000
U.S. Treasury Notes 5.50% due 3/31/03,
market value $329,277 and $290,000
U.S. Treasury Notes 6.25% due 2/15/03,
market value $296,790) ............................... 613,000 613,000
With PaineWebber 5.63% 12/1/99
(dated 11/30/99, collateralized by $624,000
U.S. Treasury Notes 5.50% due 1/31/03,
market value $625,522) ............................... 613,000 613,000
-----------
Total Repurchase Agreements
(cost $2,014,000) .................................... 2,014,000
===========
Total Market Value of Securities - 98.85%
(cost $32,691,139) ................................... $38,008,633
Receivables and Other Assets
Net of Liabilities - 1.15% ........................... 440,719
-----------
Net Assets Applicable to 3,042,461 Shares
($1 par value) Outstanding - 100.00% ................. $38,449,352
===========
Net Asset Value - Delaware Blue Chip Fund
A Class ($14,257,288 / 1,119,640 Shares) ............. $12.73
------
Net Asset Value - Delaware Blue Chip Fund
B Class ($21,114,813 / 1,678,779 Shares) ............. $12.58
------
Net Asset Value - Delaware Blue Chip Fund
C Class ($2,578,060 / 204,942 Shares) ................ $12.58
------
Net Asset Value - Delaware Blue Chip Fund
Instititutional Class
($499,191 / 39,100 Shares) .......................... $12.77
------
- ---------------
* Non-income producing security for the year ended November 30, 1999.
<PAGE>
- --------------------------------------------------------------------------------
Components of Net Assets at November 30, 1999:
Common stock, $1 par value, 200,000,000 shares
authorized to the Fund with 100,000,000 shares
allocated to Delaware Blue Chip Fund A Class,
25,000,000 shares allocated to Delaware Blue
Chip Fund B Class, 25,000,000 shares allocated
to Delaware Blue Chip Fund C Class, 50,000,000
shares allocated to Delaware Blue Chip Fund
Institutional Class ........................................ $33,433,331
Accumulated net realized loss on investments ................. (301,473)
Net unrealized appreciation of investments ................... 5,317,494
------------
Total net assets ............................................. $38,449,352
============
Net Asset Value and Ofering Price Per Share--
Delaware Blue Chip Fund
Net asset value A Class (A) .................................. $12.73
Sales charge (5.75% of offering price, or 6.13%
of amount invested per share) (B) .......................... 0.78
------
Offering price ............................................... $13.51
======
- ----------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See How to Buy Shares in the current Prospectus for purchases of $50,000 or
more.
See accompanying notes
8
<PAGE>
Statement of Operations
Delaware Group Equity Funds II
Year ended November 30, 1999
Delaware Blue Chip Fund
- --------------------------------------------------------------------------------
Year Ended 11/30/99
Investment Income:
Dividends ................................................ $ 295,308
Interest ................................................. 68,112 $363,420
---------
Expenses:
Management fees .......................................... 166,399
Distribution expense ..................................... 156,534
Dividend disbursing and transfer agent fees and expenses . 155,850
Registration fees ........................................ 74,300
Reports and statements to shareholders ................... 26,900
Accounting and administration ............................ 10,092
Professional fees ........................................ 8,250
Taxes (other than taxes on income) ....................... 2,190
Custodian fees ........................................... 1,660
Trustees' fees ........................................... 1,039
Other .................................................... 3,972
---------
607,186
Less expenses absorbed or waived ......................... (117,272)
Less expenses paid indirectly ............................ (616)
---------
Total expenses ........................................... 489,298
----------
Net Investment Loss ...................................... (125,878)
----------
Net Realized And Unrealized Gain (Loss)
on Investments:
Net realized loss on investments ......................... (68,264)
Net change in unrealized appreciation/depreciation
of investments ......................................... 3,515,686
----------
Net Realized and Unrealized Gain on Investments .......... 3,447,422
----------
Net Increase in Net Assets Resulting from Operations ..... $3,321,544
==========
See accompanying notes
9
<PAGE>
Statements of Changes in Net Assets
Delaware Group Equity Funds II
Delaware Blue Chip Fund
- --------------------------------------------------------------------------------
Year Ended
11/30/99 11/30/98
Increase (Decrease) in Net Assets from Operations:
Net investment income (loss) ......................... $ (125,878) $ 26,097
Net realized loss on investments ..................... (68,264) (233,209)
Net change in unrealized appreciation/depreciation
of investments ..................................... 3,515,686 1,236,839
-----------------------
Net increase in net assets resulting from operations . 3,321,544 1,029,727
-----------------------
Distributions to Shareholders from:
Net investment income:
A Class ............................................ (17,788) (10,143)
B Class ............................................ -- --
C Class ............................................ -- --
Institutional Class ................................ (5,697) (12,045)
Net realized gain on investments:
A Class ............................................ -- (2,536)
B Class ............................................ -- (1,558)
C Class ............................................ -- (247)
Institutional Class ................................ -- (1,853)
-----------------------
(23,485) (28,382)
-----------------------
Capital Share Transactions:
Proceeds from shares sold:
A Class ............................................ 8,682,916 5,622,460
B Class ............................................ 16,976,477 4,115,893
C Class ............................................ 1,663,367 1,065,889
Institutional Class ................................ 693,527 2,011,725
Net asset value of shares issued upon reinvestment
of distributions from net investment income and
net realized gain on investments:
A Class ............................................ 16,844 11,735
B Class ............................................ -- 1,509
C Class ............................................ -- 247
Institutional Class ................................ 5,697 13,898
-----------------------
28,038,828 12,843,356
-----------------------
Cost of shares repurchased:
A Class ............................................ (3,435,862) (901,455)
B Class ............................................ (2,685,785) (439,060)
C Class ............................................ (541,156) (124,351)
Institutional Class ................................ (1,339,002) (3,054,298)
-----------------------
(8,001,805) (4,519,164)
---------- ----------
Increase in net assets derived from capital share
transactions ....................................... 20,037,023 8,324,192
-----------------------
Net Increase in Net Assets ........................... 23,335,082 9,325,537
Net Assets:
Beginning of year .................................... 15,114,270 5,788,733
-----------------------
End of year .......................................... $38,449,352 $15,114,270
========================
See accompanying notes
10
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Blue Chip Fund A Class Delaware Blue Chip Fund B Class
- ------------------------------------------------------------------------------------------------------------------------------------
2/24/97(1) 2/24/97(1)
Year Ended to Year Ended to
11/30/99 11/30/98 11/30/97 11/30/99 11/30/98 11/30/97
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $10.970 $ 9.850 $8.500 $10.880 $ 9.800 $8.500
Income (loss) from investment operations:
Net investment income (loss)(2) .......................... (0.015) 0.048 0.041 (0.099) (0.025) (0.009)
Net realized and unrealized gain on investments .......... 1.800 1.122 1.309 1.799 1.115 1.309
---------------------------------------------------------------------
Total from investment operations ......................... 1.785 1.170 1.350 1.700 1.090 1.300
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ..................... (0.025) (0.040) -- -- -- --
Distributions from net realized gain on investments ...... -- (0.010) -- -- (0.010) --
---------------------------------------------------------------------
Total dividends and distributions ........................ (0.025) (0.050) -- -- (0.010) --
---------------------------------------------------------------------
Net asset value, end of period ............................. $12.730 $10.970 $9.850 $12.580 $10.880 $9.800
=====================================================================
Total return(3) ............................................ 16.30% 11.94% 15.88% 15.63% 11.14% 15.29%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $14,257 $7,480 $2,272 $21,115 $5,375 $1,444
Ratio of expenses to average net assets .................. 1.54% 1.50% 1.50% 2.24% 2.20% 2.20%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ......... 2.00% 2.03% 2.95% 2.70% 2.73% 3.65%
Ratio of net investment income (loss) to average
net assets .............................................. (0.12%) 0.45% 0.69% (0.82%) (0.25%) (0.01%)
Ratio of net investment income (loss) to average
net assets prior to expense limitation and
expenses paid indirectly ................................ (0.58%) (0.08%) (0.76%) (1.28%) (0.78%) (1.46%)
Portfolio turnover ....................................... 11% 27% 25% 11% 27% 25%
</TABLE>
- -------------------
(1) Date of commencement of operations; ratios have been annualized and total
return has not been annualized.
(2) The average shares outstanding method has been applied for per share
information.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
See accompanying notes
11
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding Delaware Blue Chip Fund
throughout each period were as follows: Delaware Blue Chip Fund C Class Institutional Class
- ------------------------------------------------------------------------------------------------------------------------------------
2/24/97(1) 2/24/97(1)
Year Ended to Year Ended to
11/30/99 11/30/98 11/30/97 11/30/99 11/30/98 11/30/97
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $10.880 $ 9.800 $8.500 $10.990 $ 9.870 $8.500
Income (loss) from investment operations:
Net investment income (loss)(2) ......................... (0.098) (0.025) (0.011) 0.022 0.079 0.062
Net realized and unrealized gain on investments ......... 1.798 1.115 1.311 1.818 1.116 1.308
---------------------------------------------------------------------
Total from investment operations ........................ 1.700 1.090 1.300 1.840 1.195 1.370
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income .................... -- -- -- (0.060) (0.065) --
Distributions from net realized gain on investments ..... -- (0.010) -- -- (0.010) --
---------------------------------------------------------------------
Total dividends and distributions ....................... -- (0.010) -- (0.060) (0.075) --
---------------------------------------------------------------------
Net asset value, end of period ............................ $12.580 $10.880 $9.800 $12.770 $10.990 $9.870
=====================================================================
Total return(3) ........................................... 15.63% 11.14% 15.29% 16.70% 12.31% 16.12%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $2,578 $1,217 $239 $499 $1,042 $1,834
Ratio of expenses to average net assets ................. 2.24% 2.20% 2.20% 1.24% 1.20% 1.20%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ........ 2.70% 2.73% 3.65% 1.70% 1.73% 2.65%
Ratio of net investment income (loss) to average
net assets ............................................. (0.82%) (0.25%) (0.01%) 0.18% 0.75% 0.99%
Ratio of net investment income (loss) to average
net assets prior to expense limitation and
expenses paid indirectly ............................... (1.28%) (0.78%) (1.46%) (0.28%) 0.22% (0.46%)
Portfolio turnover ........................................ 11% 27% 25% 11% 27% 25%
</TABLE>
- ------------------
(1) Date of commencement of operations; ratios have been annualized and total
return has not been annualized.
(2) The average shares outstanding method has been applied for per share
information.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
See accompanying notes
12
<PAGE>
Notes to Financial Statements
November 30, 1999
Delaware Group Equity Funds II Delaware Blue Chip Fund
- --------------------------------------------------------------------------------
Delaware Group Equity Funds II (the "Company") is registered as a diversified
open-end investment company under the Investment Company Act of 1940, as
amended. The Company is organized as a Delaware Business Trust and offers five
series: the Delaware Decatur Equity Income Fund (formerly known as the Decatur
Income Fund), the Delaware Growth and Income Fund (formerly known as the Decatur
Total Return Fund), the Delaware Blue Chip Fund, the Delaware Social Awareness
Fund and the Delaware Diversified Value Fund. These financial statements and
related notes pertain to the Delaware Blue Chip Fund (the "Fund"). The Fund
offers four classes of shares. The Delaware Blue Chip Fund A Class carries a
front-end sales charge of 5.75%. The Delaware Blue Chip Fund B Class carries a
back-end sales charge. The Delaware Blue Chip Fund C Class carries a level load
deferred sales charge and the Delaware Blue Chip Fund Institutional Class has no
sales charge.
The investment objective of the Fund is to achieve long-term capital
appreciation. Current income is a secondary objective. It seeks to achieve these
objectives by investing primarily in equity securities and any securities that
are convertible into equity securities.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund.
Security Valuation - Securities listed on an exchange are valued at the last
quoted sales price as of the close of the NYSE on the valuation date. Securities
not traded or securities not listed on an exchange are valued at the mean of the
last quoted bid and asked prices. Money market instruments having less than 60
days to maturity are valued at amortized cost, which approximates market value.
Other securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Fund's Board of Trustees.
Federal Income Taxes - The Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations, which may differ from generally
accepted accounting principles.
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
the Fund on the basis of daily net assets of each class. Distribution expenses
relating to a specific class are charged directly to that class.
Repurchase Agreements - The Fund may invest in a pooled cash account along with
other members of the Delaware Investments Family of Funds. The aggregate daily
balance of the pooled cash account is invested in repurchase agreements secured
by obligations of the U.S. government. The respective collateral is held by the
Fund's custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is at least 100% collateralized. However,
in the event of default or bankruptcy by the counterparty to the agreement,
realization of the collateral may be subject to legal proceedings.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. The Fund declares and pays dividends from net
investment income and capital gains, if any, annually.
Certain expenses of the Fund are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was $589 for the year ended November 30, 1999. In
addition, the Fund receives earnings credits from its custodian when positive
cash balances are maintained, which are used to offset custody fees. These
credits were $27 for the year ended November 30, 1999. The expenses paid under
the above arrangements are included in their respective expense captions on the
Statement of Operations with the corresponding expense offset shown as "Expenses
paid indirectly".
13
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
2. Investment Management and Other Transactions with Affiliates
Effective April 1, 1999 and in accordance with the terms of the Investment
Management Agreement, the Fund pays Delaware Management Company ("DMC"), the
Investment Manager of the Fund, an annual fee which is calculated daily at the
rate of 0.65% on the first $500 million of average daily net assets of the Fund,
0.60% on the next $500 million, 0.55% on the next $1,500 million and 0.50% on
the average daily net assets in excess of $2,500 million. Prior to April 1,
1999, the Fund paid DMC an annual fee which was calculated at the rate of 0.65%
on the first $500 million of average daily net assets, 0.625% on the next $500
million and 0.60% on the average daily net assets in excess of $1 billion. At
November 30, 1999, the Fund had a liability for Investment Management fees and
other expenses payable to DMC of $27,743.
DMC has entered into a sub-advisory agreement with Vantage Investment Advisors,
Inc., an affiliate of DMC, with respect to the management of the Fund. For the
services provided to DMC, DMC pays the sub-adviser an annual fee which is
calculated at the rate of 0.15% of average daily net assets averaging one year
old or less, 0.20% of average daily net assets averaging two years or less but
greater than one year old and 0.35% of average daily net assets averaging over
two years old. The Fund does not pay any fees to the sub-adviser.
DMC has elected to waive the portion, if any, of the management fee and
reimburse the Fund to the extent that annual operating expenses exclusive of
taxes, interest, brokerage commissions, distribution fees and extraordinary
expenses exceed 1.25% of average daily net assets of the Fund through July 31,
2000. Prior to February 1, 1999, the expense limitation was 1.20% of the Fund's
average daily net assets.
The Fund has engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting services. The
Fund pays DSC a monthly fee based on the number of shareholder accounts,
shareholder transactions and average net assets, subject to certain minimums. At
November 30, 1999, the Fund had a liability for such fees and other expenses
payable to DSC of $12,417.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. ("DDLP"), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.30% of the average daily net assets of the A Class and 1.00% of the
average daily net assets of the B and C Classes. The Institutional Class pays no
distribution expenses. At November 30, 1999, the Fund had a liability for
distribution fees and other expenses payable to DDLP of $15,819.
For the year ended November 30, 1999, DDLP earned $19,977 for commissions on
sales of the Fund A Class shares.
Certain officers of DMC, DSC and DDLP are officers, trustees and/or employees of
the Fund. These officers, trustees and employees are paid no compensation by the
Fund.
3. Investments
During the year ended November 30, 1999, the Fund made purchases of $20,913,893
and sales of $2,613,049 of investment securities other than U.S. government
securities and temporary cash investments.
At November 30, 1999, net unrealized appreciation for federal income tax
purposes aggregated $5,317,494 of which $7,007,399 related to unrealized
appreciation of securities and $1,689,905 related to unrealized depreciation of
securities. At November 30, 1999, the aggregate cost of securities for federal
income tax purposes was $32,691,139.
For federal income tax purposes, the Fund has capital loss carryforwards of
$233,209 and $68,264 expiring in 2006 and 2007, respectively, which may be
carried forward and applied against future gains.
<PAGE>
4. Capital Stock
Transactions in capital stock shares were as follows:
Year Ended
11/30/99 11/30/98
Shares sold:
A Class ....................................... 717,877 536,572
B Class ....................................... 1,407,012 388,656
C Class ....................................... 137,849 99,187
Institutional Class ........................... 56,172 190,303
Shares issued upon reinvestment of
distributions from net investment income
and net realized gain on investments:
A Class ....................................... 1,483 1,205
B Class ....................................... -- 155
C Class ....................................... -- 25
Institutional Class ........................... 501 1,428
--------- ---------
2,320,894 1,217,531
--------- ---------
Shares repurchased:
A Class ....................................... (281,851) (86,361)
B Class ....................................... (222,327) (42,074)
C Class ....................................... (44,784) (11,741)
Institutional Class ........................... (112,310) (282,822)
--------- ---------
(661,272) (422,998)
--------- ---------
Net increase .................................... 1,659,622 794,533
========= =========
14
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
5. Lines of Credit
The Fund has a committed line of credit for $1,100,000. No amount was
outstanding at November 30, 1999 or at any time during the fiscal year.
6. Tax Information (unaudited)
The information set forth below is for the Fund's fiscal year as required by
federal laws. Shareholders, however, must report distributions on a calendar
year basis for income tax purposes, which may include distributions for portions
of two fiscal years of a fund. Accordingly, the information needed by
shareholders for income tax purposes will be sent to them in early 2000. Please
consult your tax adviser for proper treatment of this information.
For the fiscal year ended November 30, 1999, the Fund designates as long-term
capital gains and ordinary income as follows:
(A) (B)
Long-Term Ordinary (C)
Capital Gains Income Total (D)
Distributions Distributions Distributions Qualifying
(Tax Basis) (Tax Basis) (Tax Basis) Dividends(1)
- ------------- ------------- ------------- -------------
-- 100% 100% --
(A) and (B) are based on a percentage of the Fund's total distributions.
(D) is based on a percentage of ordinary income of the Fund.
- -----------------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
15
<PAGE>
Report of Independent Auditors
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees
Delaware Group Equity Funds II - Delaware Blue Chip Fund
We have audited the accompanying statement of net assets of Delaware Blue Chip
Fund (the "Fund") as of November 30, 1999, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of November 30, 1999, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Blue Chip Fund at November 30, 1999, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and its financial highlights for each of the periods
indicated therein, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
January 7, 2000
16
<PAGE>
DELAWARE INVESTMENTS FAMILY OF FUNDS
- ------------------------------------
Complete information on any fund offered by Delaware Investments can be found in
each fund's current prospectus. Prospectuses for all funds offered by Delaware
Investments are available from your financial adviser. Please read the
prospectus carefully before you invest or send money.
[GRAPHIC OMITTED: BUILDING BLOCKS OF A DIVERSIFIED PORTFOLIO "HOUSE"]
Building Blocks of a Diversified Portfolio
GROWTH OF CAPITAL
Aggressive Growth Equity Funds
Growth Equity Funds
o Select Growth Fund
o Trend Fund
o DelCap Fund
o Small Cap Value Fund
o U.S. Growth Fund
o Growth Stock Fund
o Tax-Efficient Equity Fund
o Social Awareness Fund
TOTAL RETURN
Moderate Growth Equity Funds
o Blue Chip Fund
o Devon Fund
o Growth and Income Fund
o Decatur Equity Income Fund
o REIT Fund
o Balanced Fund
INTERNATIONAL AND GLOBAL
International and Global Funds
o Emerging Markets Fund
o New Pacific Fund
o Overseas Equity Fund
o International Equity Fund
o Global Equity Fund
o Global Bond Fund
CURRENT INCOME
Taxable Bond Funds
o Delchester Fund
o High-Yield Opportunities Fund
o Strategic Income Fund
o Corporate Bond Fund
o Extended Duration Bond Fund
o American Government Bond Fund
o U.S. Government Securities Fund
o Limited-Term Government Fund
<PAGE>
TAX-EXEMPT INCOME
Tax-Exempt Bond Funds
o National High-Yield Municipal Bond Fund
o Tax-Free USA Fund
o Tax-Free Insured Fund
o Tax-Free USA Intermediate Fund
o State Tax-Free Funds*
STABILITY OF PRINCIPAL
Stability of Principal
o Cash Reserve
o Tax-Free Money Fund
ASSET ALLOCATION
Asset Allocation Funds
(varying levels of income and growth potential)
o Foundation Funds
Growth Portfolio
Balanced Portfolio
Income Portfolio
*Available for the following states: Arizona, California, Colorado, Florida,
Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, New Jersey,
New Mexico, New York, Ohio, Oregon, Pennsylvania and Wisconsin. Insured and
Intermediate Funds are available in selected states.
<PAGE>
DELAWARE
INVESTMENTS
- -------------------
Philadelphia * 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 annual report is for the information of Delaware Blue Chip Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current Prospectus for Delaware Blue Chip Fund and the Delaware
Investments Performance Update for the most recently completed calendar quarter.
The prospectus sets forth details about charges, expenses, investment objectives
and operating policies of the Fund. You should read the prospectus carefully
before you invest. The figures in this report represent past results which are
not a guarantee of future results. The return and principal value of an
investment in the Fund will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BOARD OF TRUSTEES Charles E. Peck Investment Manager
Retired Delaware Management Company
Wayne A. Stork Fredericksburg, VA Philadelphia, Pennsylvania
Chairman
Delaware Investments Family of Funds Jan L. Yeomans International Affiliate
Philadelphia, PA Vice President and Treasurer Delaware International Advisers Ltd.
3M Corporation London, England
Walter P. Babich St. Paul, Minnesota
Board Chairman, Citadel Constructors, Inc. Subadviser
King of Prussia, PA Vantage Investment Advisors, Inc.
AFFILIATED OFFICERS New York, NY
David K. Downes
President and Chief Executive Officer Richard J. Flannery National Distributor
Delaware Investments Family of Funds Executive Vice President Delaware Distributiors, L.P.
Philadelphia, PA and General Counsel Philadelphia, PA
Delaware Investments Family of Funds
John H. Durham Philadelphia, PA
Private Investor Shareholder Servicing, Dividend
Horsham, PA Bruce D. Barton Disbursing and Transfer Agent
President and Chief Executive Officer Delaware Service Company, Inc.
Anthony D. Knerr Delaware Distributors, L.P. Philadelphia, PA
Consultant, Anthony Knerr & Associates Philadelphia, PA
New York, NY 1818 Market Street
Philadelphia, PA 19103-3682
Ann R. Leven
Former Treasurer, National Gallery of Art
Washington, DC
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
</TABLE>
Printed in the USA
(2525)
AR-143 [11/99] PPL 1/00
