<PAGE>
DELAWARE(SM)
INVESTMENTS
============
Delaware Decatur Equity Income Fund
Delaware Growth and Income Fund
(Total Return Artwork)
Total Return
Investing
1999 ANNUAL REPORT
<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 6
Delaware Growth and Income Fund 7
Financial Statements
Statements of Net Assets 12
Financial Highlights 20
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 then 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
ONCE AGAIN, INVESTORS CONCENTRATED ON A SELECT GROUP OF LARGE-CAP GROWTH
STOCKS--MOSTLY TECHNOLOGY COMPANIES.
(Total Return Artwork)
December 2, 1999
Recap of Events - As we began our fiscal year in December 1998, instability
in emerging markets had fueled concerns about a U.S. recession and U.S.
companies' ability to sustain earnings growth. The Federal Reserve had responded
by lowering its short-term interest rate target three times to foster continued
U.S. growth. Uncertain of the future economic landscape, cautious investors
focused almost exclusively on stocks of the largest, fastest growing companies.
As a result, only a handful of stocks - mostly large technology and
internet-related companies - enjoyed substantial price gains through early 1999.
Strong economic data in April set the stage for a broader selection of stocks -
including economically-sensitive paper, energy, metal and chemical companies -
to advance. Many investors were attracted to these companies because their
strong earnings growth potential was available at more reasonable prices.
We believed the market's performance would broaden further, especially against
a backdrop of stronger worldwide economic growth, and we expected more price
volatility. Stock prices fell in the summer and fall as the Fed took back all
three of its 1998 interest rate reductions in an effort to head off inflation.
However, once again, investors concentrated on a select group of large-cap
growth stocks - mostly technology companies.
Delaware Decatur Equity Income Fund - For the 12 months ended November 30, 1999,
Delaware Decatur Equity Income Fund trailed the average return of its peers in
the Lipper Equity Income category. We attribute our lower relative return to the
poor performance of high-yield bonds, which represented 14% of the portfolio,
and to our avoidance of technology companies. With very high prices and very low
dividend yields, most technology companies do not meet our investment criteria,
which include having a dividend yield greater than the average dividend yield of
the S&P 500 Index.
Performance Overview
For Periods Ended November 30, 1999
<TABLE>
<CAPTION>
Average Annual Total Returns at Net Asset Value One Year Three Years
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Delaware Decatur Equity Income Fund Class A -2.50% +10.87%
Delaware Growth and Income Fund Class A -2.00% +11.45%
- ------------------------------------------------------------------------------------------------
Lipper Equity Income Fund Average + 4.43% (222 funds) +12.44% (162 funds)
Standard & Poor's 500 Index +20.91% +24.32%
S&P 500/BARRA Value Index +12.46% +16.79%
- ------------------------------------------------------------------------------------------------
</TABLE>
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 6 and 7. 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.
1
<PAGE>
[Total Return Artwork]
Delaware Growth and Income Fund provided a modestly better total return, though
this was still less than the average return of funds in our Lipper category. As
in Delaware Decatur Equity Income Fund, our stock selection discipline, which
demands high dividend yields, steered us away from technology stocks, thus
limiting our return.
Market Outlook - On the pages that follow, senior portfolio manager John B.
Fields reviews the Funds' strict buy and sell disciplines. Because these
disciplines have guided us to strong performance over the long term, we remain
committed to them even during periods like the most recent one when the stock
market was not working in our favor. Mr. Fields also discusses the Funds'
current positioning and shares his outlook for the large-cap, value-oriented
investment strategy he uses to manage Delaware Decatur Equity Income Fund and
Delaware Growth and Income Fund.
We believe the stage is set for continued worldwide economic recovery and for
the spread of good earnings growth to U.S. companies in a variety of industries.
We believe Delaware Decatur Equity Income Fund and Delaware Growth and Income
Fund are well positioned to benefit if these trends occur and we look forward to
sharing our results with you next spring.
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
2
<PAGE>
John B. Fields
Senior Portfolio Manager
December 2, 1999
WE BELIEVE OUR DIVERSIFIED APPROACH WORKS TO REDUCE CERTAIN RISKS WHICH CAN HELP
PROVIDE A MORE ATTRACTIVE TOTAL RETURN THROUGH A FULL MARKET CYCLE.
[Total Return Artwork]
PORTFOLIO MANAGEMENT REVIEW
===========================
The Funds' Results
The Funds' results for fiscal 1999 were hindered by a market environment in
which fewer than a dozen stocks - mostly technology companies - drove the return
of the benchmark S&P 500. (Source: Bloomberg) This concentrated market
leadership worked against Delaware Decatur Equity Income Fund and Delaware
Growth and Income Fund for several reasons.
o Our strict buy and sell guidelines (see page 10) target stocks with dividend
yields above the average yield of the S&P 500. This prevented us from
investing in many technology stocks, the year's top performing sector.
Typically, technology companies have little, or no, dividend yield and
therefore, have generally not been eligible for purchase by either Delaware
Decatur Equity Income Fund or Delaware Growth and Income Fund.
o Some of our competitors do not have as clearly defined portfolio disciplines
as we do and, as a result, many were able to fit these technology stocks into
their definition of "value." For this reason, the Funds also lagged the
average return of their peers in the Lipper Equity Income Fund Average.
o In managing Delaware Decatur Equity Income Fund and Delaware Growth and Income
Fund, we try to diversify our holdings so that no single security or sector
weighs too heavily - positively or negatively - on performance. While this can
put us at a disadvantage when a select group of stocks is appreciating
rapidly, we believe our diversified approach works to reduce certain risks
which can help provide a more attractive total return through a full market
cycle.
High-Yield Bonds In Delaware Decatur Equity Income Fund
High-yield bonds detracted from performance in the Delaware Decatur Equity
Income Fund portfolio. The Fund held a steady 14% allocation to high-yield
bonds, which is part of our standard strategy of supplementing income from our
stock holdings with high-yielding, higher risk corporate bonds. These bonds
performed poorly as investors worried about rising interest rates and the
possibility of credit problems in the high-yield bond market. We believe these
fears have already been factored into bond prices, so we see little reason to
alter the Fund's high-yield bond position at this time.
Earnings Growth Broadens
Last spring, we were hopeful that the April broadening of stock market
leadership would continue. We thought this broadening would embrace a wide range
of economically sensitive companies. We anticipated this for two reasons. First,
we believed these companies would report very positive earnings given an
improving
3
<PAGE>
[Total Return Artwork]
Delaware Decatur
Equity Income Fund
Sector Allocation
As of November 30, 1999
Banking & Insurance 18.45%
High-Yield Bonds 14.53%
Energy 12.86%
Other 19.01%
Metals &
Mining 3.54%
Electronics &
Electrical 4.02%
Paper & Forest
Products 4.09%
Consumer Products 4.60%
Food & Tobacco 5.20%
Pharmaceutical 5.99%
Telecommunications 7.71%
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.
Ten other sectors, cash and other assets, account for the remaining 19.01% of
net assets.
global economy. Second, the stocks of these companies appeared to be selling at
very low prices given the earnings "explosion" that seemed to be just ahead.
While a broad range of economically sensitive companies - including energy,
paper, metals, auto and chemical companies - have reported better than expected
earnings, investors have not rewarded that earnings growth. Instead, the Federal
Reserve's interest rate increases led investors to fixate again on a narrow
group of the largest growth companies. So although earnings growth has
broadened, performance leadership within the market has not.
Portfolio Highlights
As we enter a new century of investing, we believe the quality of the holdings
in Delaware Decatur Equity Income Fund and Delaware Growth and Income Fund has
never been higher. Nor have such quality stocks been available to us at such low
prices relative to their earnings growth potential. We are genuinely excited
about the stocks and, in the case of Delaware Decatur Equity Income Fund, the
high-yield bonds that we own.
By increasing our holdings in economically sensitive companies, we have
positioned both portfolios to benefit from the recovering global economy. We
have already begun to profit from several aluminum, paper and energy companies
that have been managing their businesses more efficiently. (See page 11 for a
profile of aluminum giant Alcoa Inc.). We believe these companies offer the
potential for substantial positive earnings gains in fiscal 2000.
We have reduced the Funds' positions in interest-rate sensitive sectors of the
market, including banks and insurance companies. We continue to be selective in
this area, focusing on companies that appear to be poised for strong earnings
growth.
Outlook
Our analysis of the companies we own tells us that there is a strong likelihood
that many will beat analysts' earnings and dividend growth expectations. We
think their growth will be driven by global economic recovery.
While we expect the stock market to exhibit some significant price swings in the
coming months due to interest rate concerns, we believe investors will
inevitably
4
<PAGE>
Delaware Growth
and Income Fund
Sector Allocation
As of November 30, 1999
Banks & Insurance 21.68%
Energy 14.95%
Telcommunications 8.74%
Other 20.31%
Electronics &
Electrical 3.41%
Consumer Products 3.80%
Metals & Mining 4.16%
Chemcials 4.72%
Paper & Forest Products 5.12%
Food & Tobacco 6.43%
Healthcare & Pharmaceuticals 7.13%
Nine other sectors, account for the remaining 20.31% of net assets.
seek out companies and industries where solid earnings growth is available at
deep price discounts. In our opinion, Delaware Decatur Equity Income Fund and
Delaware Growth and Income Fund are well positioned to benefit if this
broadening trend occurs.
Over the last 24 years, we have experienced four periods of concentrated market
leadership similar to the one we now face - in the mid-1970s, the early 1980s
and twice in the 1990s. In each case, we suffered a short period of poor
relative performance followed by a more prolonged period of good relative
performance. Although the past is not a guarantee of future performance, we are
optimistic that Delaware Decatur Equity Income Fund and Delaware Growth and
Income Fund will perform in a similar way as the current market cycle
progresses.
Top Portfolio Holdings
November 30, 1999
<TABLE>
<CAPTION>
As a Percentage of Net Assets**
Delaware Delaware
Dividend Growth and Decatur Equity
Company Yield* Industry Income Fund Income Fund
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
McGraw-Hill Cos. 1.4% Publishing 3.0% 2.4%
- --------------------------------------------------------------------------------------------------------------
International Paper 1.8% Paper/Wood Products 2.8% 2.4%
- --------------------------------------------------------------------------------------------------------------
American General Corp. 2.1% Insurance 2.6% 2.2%
- --------------------------------------------------------------------------------------------------------------
Kimberly-Clark 1.6% Consumer Products 2.4% 2.2%
- --------------------------------------------------------------------------------------------------------------
Weyerhaeuser 2.3% Paper/Wood Products 2.3% 1.7%
- --------------------------------------------------------------------------------------------------------------
ExxonMobil 2.2% Energy 2.3% 2.0%
- --------------------------------------------------------------------------------------------------------------
ALLTEL 1.6% Telecommunications 2.3% 2.1%
- --------------------------------------------------------------------------------------------------------------
Alcoa 1.0% Aluminum Products 2.3% 1.9%
- --------------------------------------------------------------------------------------------------------------
Chevron 2.9% Energy 2.1% 1.8%
- --------------------------------------------------------------------------------------------------------------
Royal Dutch Petroleum 2.7% Energy 2.1% 1.8%
- --------------------------------------------------------------------------------------------------------------
S&P 500 1.15%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
*Source: Bloomberg
**Portfolio percentages are shown as a percentage of net assets for Delaware
Growth and Income Fund and as a percentage of net equity assets for Delaware
Decatur Equity Income Fund. Holdings are listed in order of size as a
percentage of net assets in Delaware Growth and Income Fund. Holdings are
subject to change.
5
<PAGE>
Delaware Decatur Equity Income Fund
FUND BASICS
===========
Fund Objectives
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.
Assets Under Management
$1.9 Billion
Number of Holdings
168
Fund Start Date
March 18, 1957
Your Fund Manager
John B. Fields has 27 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
FUND PERFORMANCE
================
Growth of a $10,000 Investment
December 1, 1989 - November 30, 1999
- -------------------------------------------------------------------------------
Delaware Decatur Equity Income Fund (separate chart)
Delaware Growth and Income Fund (separate chart)
Growth of a $10,000 Investment 10 Years Ended November 30, 1999
Delaware Decatur Equity Income Fund
Standard & Poor's 500 Index
Lipper Equity Income Funds (222 funds)
<TABLE>
<CAPTION>
11/30/1989 11/30/1990 11/30/1991 11/30/1992 11/30/1993 11/30/1994 11/30/1995 11/30/1996 11/30/1997 11/30/1998 11/30/99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
S&P 500
Index 10,000 9,313 10,845 12,467 13,347 13,113 17,497 21,880 27,614 33,632 40,148
Lipper
Equity
Index 10,000 9,205 11,063 12,906 14,714 14,624 18,785 22,944 28,272 31,463 32,467
Delaware
Decatur
Equity
Income Fund 9,427 8,291 9,573 10,996 12,704 12,631 16,549 20,598 25,703 28,795 28,077
</TABLE>
Chart assumes $10,000 invested on December 1, 1989. 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. Past performance does not guarantee future results.
<PAGE>
Average Annual Returns
Through November 30, 1999
<TABLE>
<CAPTION>
Lifetime Ten Years Five Years One Year
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (Est. 3/18/57)
Excluding Sales Charge +12.22% +11.53% +17.32% -2.50%
Including Sales Charge +12.07% +10.87% +15.94% -8.12%
- ------------------------------------------------------------------------------------------------
Class B (Est. 9/6/94)
Excluding Sales Charge +14.36% +16.34% -3.27%
Including Sales Charge +14.26% +16.13% -7.29%
- ------------------------------------------------------------------------------------------------
Class C (Est. 11/29/95)
Excluding Sales Charge +13.17% -3.25%
Including Sales Charge +13.17% -4.06%
- ------------------------------------------------------------------------------------------------
</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 charge assume either that contingent 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 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.
Average Annual Returns Through November 30, 1999
<TABLE>
<CAPTION>
Lifetime Ten Years Five Years One Year
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional Class +12.25% +11.64% +17.52% -2.27%
</TABLE>
SEC yields for A, B, C and Institutional Class Shares were 2.51%, 1.90%, 1.88%
and 2.89%, respectively, as of November 30, 1999. Institutional Class shares are
available without sales or asset-based distribution charges only to certain
eligible institutional accounts. Institutional Class performance prior to
1/13/94 for Delaware Decatur Equity Income Fund is based on Class A performance
adjusted to eliminate the sales charges.
NASDAQ Symbol Institutional Class: DEDIX
[Total Return Artwork]
6
<PAGE>
Delaware Growth and Income Fund
FUND BASICS
===========
Fund Objectives
To achieve long-term growth by investing primarily in securities that provide
the potential for income and capital appreciation
without undue risk to principal.
Assets Under Management
$1.2 Billion
Number of Holdings
68
Fund Start Date
August 27, 1986
Your Fund Manager
John B. Fields
NASDAQ Symbols
Class A DEDTX
Class B DEOBX
Class C DTRCX
FUND PERFORMANCE
================
Growth of a $10,000 Investment
December 1, 1989 - November 30, 1999
- -------------------------------------------------------------------------------
Delaware Decatur Equity Income Fund (separate chart)
Delaware Growth and Income Fund (separate chart)
Growth of a $10,000 Investment 10 Years Ended November 30, 1999
Delaware Decatur Equity Income Fund
Standard & Poor's 500 Index
Lipper Equity Income Funds (222 funds)
<TABLE>
<CAPTION>
11/30/1989 11/30/1990 11/30/1991 11/30/1992 11/30/1993 11/30/1994 11/30/1995 11/30/1996 11/30/1997 11/30/1998 11/30/99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Delaware
Growth and
Income Fund $ 9,426 $8,782 $10,006 $11,419 $13,102 $13,096 $17,638 $22,028 $27,607 $31,113 $30,493
S&P 500
Index $10,000 $9,313 $10,845 $12,467 $13,347 $13,113 $17,497 $21,880 $27,614 $33,632 $40,148
Lipper
Equity
Index $10,000 $9,205 $11,063 $12,906 $14,714 $14,624 $18,785 $22,944 $28,272 $31,463 $32,467
Delaware
Decatur
Equity
Income Fund $ 9,427 $8,291 $ 9,573 $10,996 $12,704 $12,631 $16,549 $20,598 $25,703 $28,795 $28,077
</TABLE>
Chart assumes $10,000 invested on December 1, 1989. 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. Past performance does not guarantee future results.
<PAGE>
Average Annual Returns
Through November 30, 1999
<TABLE>
<CAPTION>
Lifetime Ten Years Five Years One Year
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (Est. 8/27/86)
Excluding Sales Charge +13.09% +12.46% +18.42% -2.00%
Including Sales Charge +12.59% +11.79% +17.03% -7.65%
Class B (Est. 9/6/94)
Excluding Sales Charge +15.51% +17.59% -2.72%
Including Sales Charge +15.40% +17.38% -6.99%
Class C (Est. 11/29/95)
Excluding Sales Charge +13.86% -2.71%
Including Sales Charge +13.86% -3.57%
</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 charge assume either that contingent 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 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 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.
Average Annual Returns Through November 30, 1999
<TABLE>
<CAPTION>
Lifetime Ten Years Five Years One Year
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Institutional Class +13.25% +12.67% +18.78% -1.68%
</TABLE>
SEC yields for A, B, C and Institutional Class Shares were 1.14%, 0.51%, 0.51%
and 1.51%, respectively, as of November 30, 1999. Institutional Class shares are
available without sales or asset-based distribution charges only to certain
eligible institutional accounts. Institutional Class performance prior to
7/26/93 is based on Class A performance adjusted to eliminate the sales charge,
but not the impact of 12b-1 fees that were in effect.
NASDAQ Symbol Institutional Class: DERIX
7
<PAGE>
Long-Term Performance
Average Annual Returns
from March 18, 1957 to Nov. 30, 1999
- ------------------------------------
Delaware Decatur Equity
Income Fund A Class 12.12%
S&P 500 8.41%
Consumer Price Index 4.31%
(Inflation)
- ------------------------------------
Includes reinvestment of dividends and capital gains. See page 6 for complete
Fund performance. Source: CDA Weisenberger.
EACH DOLLAR INVESTED IN DELAWARE DECATUR EQUITY INCOME FUND AT INCEPTION 42
YEARS AGO WOULD HAVE GROWN TO MORE THAN $132 AS OF NOVEMBER 30, 1999, WITH
DIVIDENDS AND CAPITAL GAINS REINVESTED.
(Total Return Artwork)
Delaware Decatur Equity Income Fund
Growth of a $100,000 Investment Since March 18, 1957
- --------------------------------------------------------------------------------
Decatur Equity
Income Fund
First Offered on
March 18, 1957
Dow Jones
Industrial
Average
at 597
Berlin
Wall Built
Kennedy
Assassinated
Vietnam
War
Escalates
First Man
on the
Moon
Wage and
Price
Controls
8
<PAGE>
Performance of other classes of Delaware Decatur Equity Income Fund differ from
the performance reflected below due to different charges and expenses. See page
6 for complete performance information.
A $100,000 investment in Delaware Growth and Income Fund from its inception on
August 27, 1986 through November 30, 1999 would have grown to $491,936 with
dividends and capital gains reinvested.
Past performance does not guarantee future results.
Steepest
Market
Decline in
Four
Decades
Dow at 993
Interest
Rates at
All-Time
Highs
Start of the
Great Bull
Market of
the 80s
Dow
Nears
2000
Sharpest
One-Day
Decline in
Market
History
Persian
Gulf Crisis
Worldwide
Recession
Break
up of the
Soviet
Union
Fed Begins
Raising
Short-Term
Interest
Rates
Dow
Reaches
6500
Global
Economic
Crisis
Dow
Surpasses
11,000
9
<PAGE>
<TABLE>
<CAPTION>
Delaware Delaware Decatur Consumer Consumer Price S & P 500 S & P 500
Decatur Equity Inc Equity Income A Price Index Index - US Composite Composite
Period End A Mrkt Val Percent Change - US Value Percent Change Value Percent Change
- -------------------------- ------------------ ---------------- ----------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
03/18/1957 $16,000,000 $ 96,288 $100,000 $ 100,000
11/30/1957 10,000,000 $ 86,631 -10.03% $102,158 2.16% $ 94,582 -5.42%
11/30/1958 1,000,000 $ 114,844 32.57% $104,317 2.11% $ 118,975 25.79%
11/30/1959 100,000 $ 130,203 13.37% $105,755 1.38% $ 132,124 11.05%
11/30/1960 $ 130,958 0.58% $107,194 1.36% $ 125,912 -4.7%
11/30/1961 $ 158,997 21.41% $107,914 0.67% $ 161,687 28.41%
11/30/1962 $ 155,871 -1.97% $109,353 1.33% $ 141,147 -12.7%
11/30/1963 $ 177,748 14.04% $110,791 1.32% $ 166,017 17.62%
11/30/1964 $ 220,711 24.17% $112,230 1.3% $ 191,385 15.28%
11/30/1965 $ 256,706 16.31% $114,029 1.6% $ 207,685 8.52%
11/30/1966 $ 239,495 -6.7% $118,345 3.79% $ 182,385 -12.18%
11/30/1967 $ 312,785 30.6% $121,583 2.74% $ 213,104 16.84%
11/30/1968 $ 422,415 35.05% $127,338 4.73% $ 245,681 15.29%
11/30/1969 $ 362,060 -14.29% $134,892 5.93% $ 212,673 -13.44%
11/30/1970 $ 367,192 1.42% $142,446 5.6% $ 197,688 -7.05%
11/30/1971 $ 422,481 15.06% $147,122 3.28% $ 213,081 7.79%
11/30/1972 $ 486,916 15.25% $152,518 3.67% $ 264,498 24.13%
11/30/1973 $ 401,747 -17.49% $165,108 8.25% $ 217,547 -17.75%
11/30/1974 $ 369,110 -8.12% $185,252 12.2% $ 158,626 -27.08%
11/30/1975 $ 479,719 29.97% $198,921 7.38% $ 206,847 30.4%
11/30/1976 $ 636,920 32.77% $208,633 4.88% $ 231,467 11.9%
11/30/1977 $ 678,022 6.45% $222,662 6.72% $ 214,985 -7.12%
11/30/1978 $ 690,338 1.82% $242,446 8.89% $ 214,691 -0.14%
11/30/1979 $ 845,143 22.42% $273,022 12.61% $ 240,671 12.1%
11/30/1980 $ 1,099,663 30.12% $307,554 12.65% $ 318,567 32.37%
11/30/1981 $ 1,178,823 7.2% $337,050 9.59% $ 286,443 -10.08%
11/30/1982 $ 1,424,730 20.86% $352,518 4.59% $ 314,056 9.64%
11/30/1983 $ 1,800,422 26.37% $364,029 3.27% $ 377,239 20.12%
11/30/1984 $ 1,898,486 5.45% $378,777 4.05% $ 370,846 -1.69%
11/30/1985 $ 2,395,958 26.2% $392,086 3.51% $ 458,331 23.59%
11/30/1986 $ 3,097,369 29.27% $397,122 1.28% $ 564,997 23.27%
11/30/1987 $ 2,958,646 -4.48% $415,108 4.53% $ 522,104 -7.59%
11/30/1988 $ 3,704,315 25.2% $432,734 4.25% $ 620,494 18.84%
11/30/1989 $ 4,439,186 19.84% $452,878 4.66% $ 784,380 26.41%
11/30/1990 $ 3,904,504 -12.04% $481,295 6.27% $ 730,492 -6.87%
11/30/1991 $ 4,508,271 15.46% $495,683 2.99% $ 850,646 16.45%
11/30/1992 $ 5,164,044 14.55% $510,791 3.05% $ 977,896 14.96%
11/30/1993 $ 5,982,402 15.85% $524,460 2.68% $1,046,905 7.06%
11/30/1994 $ 5,948,107 -0.57% $538,489 2.67% $1,028,542 -1.75%
11/30/1995 $ 7,793,133 31.02% $552,518 2.61% $1,372,410 33.43%
11/30/1996 $ 9,700,208 24.47% $570,504 3.26% $1,716,209 25.05%
11/30/1997 $12,103,885 24.78% $580,935 1.83% $2,165,949 26.21%
11/30/1998 $13,560,084 12.03% $589,928 1.55% $2,638,019 21.8%
11/30/1999 $13,221,924 -2.49% $606,125 2.75% $3,149,105 19.37%
</TABLE>
<PAGE>
Our Disciplined Approach
WE BELIEVE THAT A STOCK'S DIVIDEND
YIELD CAN BE A GOOD INDICATOR OF A STOCK'S FUTURE VALUE.
(Total Return Artwork)
USING DIVIDEND YIELD AS A MEASURE OF OPPORTUNITY
================================================
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 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.
We narrow our selection to stocks that make up the segment of the stock market
that has historically provided the highest total return over the long term. We
call this the "high" yield category, as shown in the chart below. It is
identified by dividing the universe of dividend-paying stocks into five
categories ranked by yield. The "high" category represents stocks with the
second highest dividend yields.
Our Sell Discipline
When a stock's yield falls below the average yield of the S&P 500, we view that
as a signal that the stock is fairly priced and future appreciation potential is
no longer attractive relative to possible risks. This is when we typically 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.
Long-Term Returns of Dividend Paying Stocks
1929-1999
Income Capital Capital
Appreciation Income Appreciation Total
-------------- ------ ------------ -----
Lowest Yield 15.0% 2.8% 7.4% 10.2%
Low Yield 12.0% 4.0% 6.7% 10.7%
Mid Yield 9.0% 4.9% 6.9% 11.8%
High Yield 6.0% 5.9% 7.1% 13.0%
Highest Yield 3.0% 7.5% 3.3% 10.9%
Source: Delaware Investments
10
<PAGE>
Our Buy/Sell Discipline at Work
ALCOA INC. IMPROVES EFFICIENCY USING TECHNOLOGY
===============================================
While technology companies typically don't meet our yield-based stock selection
criteria due to low dividend yields, we often find opportunities with companies
that use technology to lower their cost structures and improve their
competitiveness. Alcoa Inc., the world's leading aluminum manufacturer, has done
just that and, as a result, has boosted its earnings and dividend growth beyond
consensus expectations.
Alcoa launched an aggressive cost and efficiency savings program in mid-1998. We
bought the stock around that time when its dividend yield was about 1.44% and
its price per share was $35. We added to our position in Alcoa in fiscal 1999,
based on our belief that analysts' forecasts for the company's earnings growth
were unnecessarily low. As of November 30, Alcoa's share price had increased to
$65. Its dividend declined to 1.23%,* but since it is still above the average
yield of the S&P 500, we can continue to hold the stock in our portfolios.
We are pleased with Alcoa's progress. In 1999, Alcoa reported much stronger than
expected earnings and dividend growth because the application of technology to
its business allowed it to reduce costs and improve efficiency. We think Alcoa
will continue to achieve favorable results in 2000 given the slated acquisition
of Reynolds Metal Company, the world's second largest aluminum producer. The
merger is expected to provide even greater efficiencies and cost reductions.
Alcoa Inc. Stock Price and Yield Relative to the S&P 500
----------------------------------------------------------
Price Yield
-----------------------------------------------------------
Alcoa S&P Alcoa S&P Relative
Inc. 500 Inc. 500 Yield
----------------------------------------------------------
12/30/1988 14.00% 277.72% 2.77% 3.84% 0.72%
01/06/1989 14.41% 280.67% 2.78% 3.94% 0.71%
01/13/1989 14.91% 283.87% 2.68% 3.89% 0.69%
01/20/1989 15.47% 286.63% 2.59% 3.86% 0.67%
01/27/1989 16.16% 293.82% 2.48% 3.76% 0.66%
02/03/1989 15.88% 296.97% 2.52% 3.72% 0.68%
02/10/1989 15.38% 292.02% 2.60% 3.78% 0.69%
02/17/1989 15.75% 296.76% 2.54% 3.72% 0.68%
02/24/1989 15.38% 237.13% 2.60% 3.85% 0.68%
03/03/1989 15.38% 291.18% 2.60% 3.79% 0.69%
03/10/1989 15.35% 292.88% 2.61% 3.77% 0.69%
03/17/1989 15.22% 292.69% 2.63% 3.78% 0.70%
03/24/1989 14.44% 288.98% 2.77% 3.82% 0.73%
03/31/1989 14.97% 294.87% 2.67% 3.84% 0.70%
04/07/1989 15.10% 297.16% 2.65% 3.81% 0.70%
04/14/1989 16.06% 301.36% 2.49% 3.76% 0.66%
04/21/1989 15.91% 309.61% 2.51% 3.66% 0.69%
04/28/1989 15.81% 309.64% 2.53% 3.66% 0.69%
05/05/1989 15.72% 307.61% 2.54% 3.68% 0.69%
05/12/1989 16.06% 313.84% 2.49% 3.61% 0.69%
05/19/1989 16.81% 321.24% 2.38% 3.52% 0.68%
05/26/1989 16.19% 321.59% 2.47% 3.52% 0.70%
06/02/1989 16.56% 325.52% 2.42% 3.48% 0.70%
06/09/1989 17.00% 326.69% 2.35% 3.47% 0.68%
06/16/1989 16.53% 321.35% 2.42% 3.52% 0.69%
06/23/1989 17.25% 328.00% 2.32% 3.45% 0.67%
06/30/1989 16.03% 317.98% 2.50% 3.67% 0.68%
07/07/1989 16.16% 324.91% 2.48% 3.59% 0.69%
07/14/1989 17.03% 331.84% 2.35% 3.52% 0.67%
07/21/1989 16.75% 335.90% 2.39% 3.47% 0.69%
07/28/1989 17.25% 342.15% 2.32% 3.41% 0.68%
08/04/1989 17.88% 343.92% 2.24% 3.39% 0.66%
08/11/1989 17.91% 344.74% 2.23% 3.39% 0.66%
08/18/1989 18.63% 346.03% 2.15% 3.37% 0.64%
08/25/1989 19.25% 350.52% 2.08% 3.33% 0.62%
09/01/1989 19.19% 353.73% 2.08% 3.30% 0.63%
09/08/1989 18.72% 348.76% 2.14% 3.35% 0.64%
09/15/1989 18.66% 345.06% 2.14% 3.38% 0.63%
09/22/1989 18.56% 347.05% 2.15% 3.36% 0.64%
09/29/1989 19.19% 349.15% 2.08% 3.34% 0.62%
10/06/1989 19.91% 358.78% 2.07% 3.30% 0.63%
10/1311989 18.03% 333.62% 2.29% 3.55% 0.65%
10/20/1989 18.22% 347.16% 2.27% 3.41% 0.67%
10/27/1989 17.50% 335.06% 2.36% 3.53% 0.67%
11/03/1989 17.35% 337.62% 2.38% 3.51% 0.68%
11/10/1989 17.19% 339.10% 2.40% 3.49% 0.69%
11/17/1989 17.53% 341.61% 2.36% 3.47% 0.68%
<PAGE>
Alcoa Inc. Stock Price and Yield Relative to the S&P 500
----------------------------------------------------------
Price Yield
-----------------------------------------------------------
Alcoa S&P Alcoa S&P Relative
Inc. 500 Inc. 500 Yield
----------------------------------------------------------
11/24/1989 18.13% 343.97% 2.28% 3.44% 0.66%
12101/1989 18.44% 350.63% 2.24% 3.38% 0.66%
12/08/1989 18.81% 348.69% 2.20% 3.40% 0.65%
12/15/1989 18.59% 350.14% 2.22% 3.38% 0.66%
12/22/1989 18.31% 347.42% 2.26% 3.41% 0.66%
12/29/1989 18.75% 353.40% 2.20% 3.35% 0.66%
01/05/1990 19.03% 352.20% 2.17% 3.44% 0.63%
01/12/1990 18.50% 339.93% 2.23% 3.56% 0.63%
01/19/1990 16.44% 339.15% 2.51% 3.57% 0.70%
01/26/1990 15.63% 325.80% 2.64% 3.71% 0.71%
02/02/1990 15.50% 330.92% 2.66% 3.66% 0.73%
02/09/1990 15.56% 333.62% 2.65% 3.63% 0.73%
02/16/1990 15.69% 332.72% 2.63% 3.64% 0.72%
02/23/1990 15.59% 324.15% 2.65% 3.73% 0.71%
03/02/1990 16.66% 335.54% 2.48% 3.61% 0.69%
03/09/1990 16.41% 337.93% 2.52% 3.58% 0.70%
03/16/1990 16.75% 341.91% 2.47% 3.54% 0.70%
03/23/1990 16.41% 337.22% 2.52% 3.59% 0.70%
03/30/1990 16.19% 339.94% 2.55% 3.56% 0.72%
04/06/1990 15.50% 340.08% 2.66% 3.56% 0.75%
04/13/1990 16.16% 344.34% 2.56% 3.52% 0.73%
04/20/1990 15.69% 335.12% 2.63% 3.62% 0.73%
04/27/1990 15.81% 329.11% 2.61% 3.68% 0.71%
05/04/1990 15.63% 338.39% 2.64% 3.58% 0.74%
05/11/1990 16.06% 352.00% 2.57% 3.44% 0.75%
05/18/1990 16.44% 354.64% 2.51% 3.42% 0.73%
05/2511990 16.25% 354.58% 2.54% 3.42% 0.74%
06/01/1990 16.69% 363.16% 2.47% 3.34% 0.74%
06/08/1990 16.75% 358.71% 2.47% 3.38% 0.73%
06/15/1990 16.50% 362.91% 2.50% 3.34% 0.75%
06/22/1990 16.28% 355.43% 2.54% 3.41% 0.74%
06/29/1990 15.94% 358.02% 2.59% 3.39% 0.76%
07/0611990 16.63% 358.42% 2.48% 3.39% 0.73%
07/13/1990 17.19% 367.31% 2.40% 3.31% 0.73%
07/20/1990 16.56% 361.61% 2.49% 3.36% 0.74%
07/27/1990 17.09% 353.44% 2.42% 3.44% 0.70%
08/03/1990 16.38% 344.86% 2.52% 3.52% 0.72%
08/10/1990 15.81% 335.52% 2.61% 3.62% 0.72%
08/17/1990 15.75% 327.83% 2.62% 3.71% 0.71%
08/24/1990 15.31% 311.51% 2.70% 3.90% 0.69%
08/31/1990 16.09% 322.56% 2.57% 3.77% 0.68%
09/07/1990 16.69% 323.40% 2.47% 3.76% 0.66%
09/14/1990 16.66% 316.83% 2.48% 3.83% 0.65%
09/21/1990 16.88% 311.32% 2.45% 3.90% 0.63%
09/28/1990 15.66% 306.05% 2.64% 3.97% 0.66%
10/05/1990 15.50% 311.50% 2.58% 3.94% 0.65%
10/12/1990 13.38% 300.03% 2.99% 4.09% 0.73%
10/19/1990 13.59% 312.48% 2.94% 3.93% 0.75%
10/26/1990 13.78% 304.71% 2.90% 4.03% 0.72%
<PAGE>
Alcoa Inc. Stock Price and Yield Relative to the S&P 500
----------------------------------------------------------
Price Yield
-----------------------------------------------------------
Alcoa S&P Alcoa S&P Relative
Inc. 500 Inc. 500 Yield
----------------------------------------------------------
11/02/1990 13.56% 311.85% 2.95% 3.94% 0.75%
11/09/1990 12.63% 313.74% 3.17% 3.91% 0.81%
11/16/1990 13.25% 317.12% 3.02% 3.87% 0.78%
11/23/1990 13.53% 315.10% 2.96% 3.90% 0.76%
11/30/1990 13.72% 322.22% 2.92% 3.81% 0.77%
12/0711990 14.09% 327.75% 2.84% 3.75% 0.76%
12/14/1990 14.44% 326.82% 2.77% 3.76% 0.74%
12/21/1990 14.72% 331.75% 2.72% 3.70% 0.74%
12/28/1990 14.28% 328.72% 2.80% 3.74% 0.75%
01/04/1991 14.09% 321.00% 2.84% 3.80% 0.75%
01111/1991 13.91% 315.23% 2.88% 3.87% 0.74%
01/18/1991 14.94% 332.23% 2.68% 3.67% 0.73%
01/25/1991 14.81% 336.07% 2.70% 3.63% 0.74%
02/01/1991 16.31% 343.05% 2.45% 3.56% 0.69%
02/08/1991 16.31% 359.35% 2.45% 3.40% 0.72%
02/1511991 17.00% 369.06% 2.35% 3.31% 0.71%
02/22/1991 16.19% 365.65% 2.47% 3.34% 0.74%
03/01/1991 16.44% 370.47% 2.43% 3.29% 0.74%
03/08/1991 16.88% 374.95% 2.37% 3.25% 0.73%
03/15/1991 16.97% 373.59% 2.36% 3.27% 0.72%
03/22/1991 16.41% 367.48% 2.44% 3.32% 0.73%
03/29/1991 16.38% 375.22% 2.44% 3.25% 0.75%
04/05/1991 16.22% 375.36% 2.47% 3.28% 0.75%
04/12/1991 15.56% 380.40% 2.57% 3.24% 0.79%
04/19/1991 16.84% 384.20% 2.37% 3.21% 0.74%
04/26/1991 16.75% 379.02% 2.39% 3.25% 0.74%
05/03/1991 17.63% 380.80% 2.27% 3.24% 0.70%
05/10/1991 17.84% 375.74% 2.24% 3.28% 0.68%
05/17/1991 16.47% 372.39% 2.43% 3.31% 0.73%
05/24/1991 16.94% 377.49% 2.36% 3.26% 0.72%
05/31/1991 17.78% 389.83% 2.25% 3.16% 0.71%
06/07/1991 17.19% 379.43% 2.33% 3.25% 0.72%
06/14/1991 16.88% 382.29% 2.37% 3.22% 0.74%
06/21/1991 17.28% 377.75% 2.31% 3.26% 0.71%
06/28/1991 16.88% 371.16% 2.37% 3.32% 0.71%
07/05/1991 16.84% 374.08% 2.37% 3.29% 0.72%
07/12/1991 17.59% 380.25% 2.27% 3.24% 0.70%
07/19/1991 18.06% 384.22% 2.21% 3.21% 0.69%
07/26/1991 17.75% 380.93% 2.25% 3.23% 0.70%
08/02/1991 17.38% 387.18% 2.30% 3.18% 0.72%
08/09/1991 17.09% 387.12% 2.34% 3.18% 0.74%
08/1611991 16.88% 385.58% 2.37% 3.20% 0.74%
08/23/1991 17.38% 394.17% 2.30% 3.13% 0.73%
08/30/1991 17.31% 395.43% 2.31% 3.12% 0.74%
09/06/1991 16.88% 389.10% 2.37% 3.17% 0.75%
09/13/1991 16.53% 383.59% 2.42% 3.21% 0.75%
09/20/1991 16.50% 387.92% 2.42% 3.18% 0.76%
09/27/1991 15.94% 385.90% 2.51% 3.19% 0.79%
10/04/1991 14.63% 381.25% 2.74% 3.25% 0.84%
10/11/1991 15.28% 381.45% 2.62% 3.25% 0.81%
<PAGE>
Alcoa Inc. Stock Price and Yield Relative to the S&P 500
----------------------------------------------------------
Price Yield
-----------------------------------------------------------
Alcoa S&P Alcoa S&P Relative
Inc. 500 Inc. 500 Yield
----------------------------------------------------------
10/18/1991 16.00% 392.50% 2.50% 3.16% 0.79%
10/25/1991 15.47% 384.20% 2.59% 3.22% 0.80%
11/01/1991 15.75% 391.32% 2.54% 3.17% 0.80%
11/08/1991 15.72% 392.89% 2.54% 3.15% 0.81%
11/1511991 14.91% 382.62% 2.68% 3.24% 0.83%
11/22/1991 14.53% 376.14% 2.75% 3.29% 0.84%
11/29/1991 14.63% 375.22% 2.74% 3.30% 0.83%
12106/1991 14.72% 379.10% 2.72% 3.27% 0.83%
12/13/1991 14.34% 384.47% 2.79% 3.22% 0.87%
12/20/1991 14.84% 387.04% 2.69% 3.20% 0.84%
12/27/1991 16.34% 406.46% 2.45% 3.05% 0.80%
01/03/1992 16.16% 419.34% 2.48% 2.95% 0.84%
01/10/1992 15.69% 415.10% 2.55% 2.98% 0.86%
01/17/1992 17.25% 418.86% 2.32% 2.96% 0.78%
01/24/1992 16.59% 415.48% 2.41% 2.98% 0.81%
01/31/1992 16.13% 408.78% 2.43% 3.03% 0.82%
02/07/1992 16.00% 411.09% 2.50% 3.01% 0.83%
02/14/1992 16.94% 412.48% 2.36% 3.00% 0.79%
02/21/1992 17.44% 411.43% 2.29% 3.01% 0.76%
02/28/1992 17.34% 412.70% 2.31% 3.00% 0.77%
03/06/1992 17.38% 404.44% 2.30% 3.06% 0.75%
03/13/1992 17.28% 405.84% 2.31% 3.05% 0.76%
03/20/1992 17.59% 411.30% 2.27% 3.01% 0.75%
03/27/1992 17.72% 403.50% 2.26% 3.07% 0.74%
04/03/1992 17.00% 401.55% 2.35% 3.11% 0.76%
04/10/1992 17.00% 404.29% 2.35% 3.09% 0.76%
04/17/1992 19.16% 416.04% 2.09% 3.00% 0.70%
04/24/1992 19.16% 409.02% 2.09% 3.05% 0.69%
05/01/1992 19.03% 412.53% 2.10% 3.03% 0.69%
05/08/1992 18.94% 416.05% 2.11% 3.00% 0.70%
05/15/1992 18.91% 410.09% 2.12% 3.04% 0.70%
05/22/1992 19.22% 414.02% 2.08% 3.01% 0.69%
05/29/1992 19.41% 415.35% 2.06% 3.00% 0.69%
06/05/1992 19.75% 413.48% 2.03% 3.02% 0.67%
06/12/1992 19.13% 409.76% 2.09% 3.05% 0.69%
06/19/1992 18.38% 403.67% 2.18% 3.09% 0.71%
06/26/1992 18.44% 403.45% 2.17% 3.09% 0.70%
07/03/1992 18.78% 411.77% 2.13% 3.04% 0.70%
07/10/1992 18.25% 414.62% 2.19% 3.02% 0.73%
07/17/1992 18.19% 415.62% 2.20% 3.01% 0.73%
07/24/1992 18.06% 411.60% 2.21% 3.04% 0.73%
07/31/1992 18.44% 424.21% 2.17% 2.95% 0.74%
08/07/1992 17.59% 418.88% 2.27% 2.99% 0.76%
08/14/1992 17.09% 419.91% 2.34% 2.98% 0.79%
08/21/1992 16.19% 414.85% 2.47% 3.02% 0.82%
08/28/1992 16.56% 414.84% 2.42% 3.02% 0.80%
09/04/1992 16.63% 417.08% 2.41% 3.00% 0.80%
09/11/1992 17.06% 419.58% 2.34% 2.98% 0.79%
09/18/1992 17.13% 422.93% 2.34% 2.96% 0.79%
<PAGE>
Alcoa Inc. Stock Price and Yield Relative to the S&P 500
----------------------------------------------------------
Price Yield
-----------------------------------------------------------
Alcoa S&P Alcoa S&P Relative
Inc. 500 Inc. 500 Yield
----------------------------------------------------------
09/25/1992 16.59% 414.35% 2.41% 3.02% 0.80%
10/02/1992 16.13% 410.47% 2.48% 3.05% 0.81%
10/09/1992 16.03% 402.66% 2.50% 3.11% 0.80%
10/16/1992 16.50% 411.73% 2.42% 3.04% 0.80%
10/23/1992 17.13% 414.10% 2.34% 3.02% 0.77%
10/30/1992 17.44% 418.68% 2.29% 2.99% 0.77%
11/06/1992 17.22% 417.58% 2.32% 3.00% 0.77%
11/13/1992 16.63% 422.43% 2.41% 2.96% 0.81%
11/20/1992 16.63% 426.65% 2.41% 2.93% 0.82%
11/27/1992 17.16% 430.16% 2.33% 2.91% 0.80%
12/04/1992 17.53% 432.06% 2.28% 2.90% 0.79%
12/11/1992 17.97% 433.73% 2.23% 2.89% 0.77%
12/18/1992 18.03% 441.28% 2.22% 2.84% 0.78%
12/25/1992 17.75% 439.77% 2.25% 2.85% 0.79%
01/01/1993 17.91% 435.71% 2.23% 2.89% 0.77%
01/08/1993 17.63% 429.05% 2.27% 2.93% 0.77%
01/15/1993 17.41% 437.15% 2.30% 2.88% 0.80%
01/22/1993 17.56% 436.11% 2.28% 2.88% 0.79%
01/29/1993 18.59% 438.78% 2.15% 2.87% 0.75%
02/05/1993 19.41% 448.93% 2.06% 2.80% 0.74%
02/12/1993 18.50% 444.58% 2.16% 2.83% 0.76%
02/19/1993 17.78% 434.22% 2.25% 2.90% 0.78%
02/26/1993 17.53% 443.38% 2.28% 2.84% 0.80%
03/05/1993 17.47% 446.11% 2.29% 2.82% 0.81%
03/12/1993 17.38% 449.83% 2.30% 2.80% 0.82%
03/19/1993 17.53% 450.18% 2.28% 2.79% 0.82%
03/26/1993 17.00% 447.78% 2.35% 2.81% 0.84%
04/02/1993 16.13% 441.39% 2.48% 2.88% 0.86%
04/09/1993 15.09% 441.84% 2.65% 2.88% 0.92%
04/16/1993 15.94% 448.94% 2.51% 2.83% 0.89%
04/23/1993 15.97% 437.03% 2.50% 2.91% 0.86%
04/30/1993 16.53% 440.19% 2.42% 2.89% 0.84%
05/0711993 15.91% 442.31% 2.51% 2.87% 0.87%
05/14/1993 16.44% 439.56% 2.43% 2.89% 0.84%
05/21/1993 16.91% 445.84% 2.37% 2.85% 0.83%
05/28/1993 16.88% 450.19% 2.37% 2.82% 0.84%
06/04/1993 17.44% 450.06% 2.29% 2.82% 0.81%
06/11/1993 16.59% 447.26% 2.41% 2.84% 0.85%
06/18/1993 16.88% 443.68% 2.37% 2.86% 0.83%
06/25/1993 17.09% 447.60% 2.34% 2.84% 0.82%
07/02/1993 17.88% 445.84% 2.24% 2.88% 0.78%
07/09/1993 17.88% 448.13% 2.24% 2.87% 0.78%
07/16/1993 17.53% 445.75% 2.28% 2.88% 0.79%
07/23/1993 17.63% 447.10% 2.27% 2.87% 0.79%
07/30/1993 17.81% 448.13% 2.25% 2.87% 0.78%
08/0611993 17.91% 448.68% 2.23% 2.86% 0.78%
08/13/1993 17.91% 450.14% 2.23% 2.85% 0.78%
08/20/1993 18.59% 456.16% 2.15% 2.81% 0.77%
<PAGE>
Alcoa Inc. Stock Price and Yield Relative to the S&P 500
----------------------------------------------------------
Price Yield
-----------------------------------------------------------
Alcoa S&P Alcoa S&P Relative
Inc. 500 Inc. 500 Yield
----------------------------------------------------------
08/27/1993 18.94% 460.54% 2.11% 2.79% 0.76%
09/03/1993 18.59% 461.34% 2.15% 2.78% 0.77%
09/10/1993 17.91% 461.72% 2.23% 2.78% 0.80%
09/17/1993 17.88% 458.83% 2.24% 2.80% 0.80%
09/24/1993 17.00% 457.63% 2.35% 2.81% 0.84%
10/01/1993 17.19% 461.29% 2.33% 2.80% 0.83%
10/08/1993 16.94% 460.31% 2.36% 2.81% 0.84%
10/15/1993 16.69% 469.50% 2.40% 2.75% 0.87%
10/22/1993 17.25% 463.27% 2.32% 2.79% 0.83%
10/29/1993 17.00% 467.83% 2.35% 2.76% 0.85%
11/05/1993 17.00% 459.57% 2.35% 2.81% 0.84%
11/1211993 17.41% 465.39% 2.30% 2.78% 0.83%
11/19/1993 17.56% 462.60% 2.28% 2.80% 0.81%
11/26/1993 17.78% 463.06% 2.25% 2.79% 0.81%
12/03/1993 17.38% 464.89% 2.30% 2.78% 0.83%
12110/1993 18.09% 463.93% 2.21% 2.79% 0.79%
12/17/1993 17.47% 466.38% 2.29% 2.77% 0.83%
12/24/1993 17.06% 467.38% 2.34% 2.77% 0.84%
12/31/1993 17.34% 466.45% 2.31% 2.83% 0.82%
01/07/1994 18.06% 469.90% 2.21% 2.80% 0.79%
01/14/1994 18.25% 474.91% 2.19% 2.78% 0.79%
01/21/1994 18.47% 474.72% 2.17% 2.78% 0.78%
01/28/1994 19.19% 478.70% 2.08% 2.75% 0.76%
02/04/1994 19.03% 469.81% 2.10% 2.81% 0.75%
02/11/1994 19.53% 470.18% 2.05% 2.80% 0.73%
02/18/1994 19.50% 467.69% 2.05% 2.82% 0.73%
02/25/1994 19.06% 466.07% 2.10% 2.83% 0.74%
03/04/1994 18.78% 464.74% 2.13% 2.84% 0.75%
03/11/1994 18.50% 466.44% 2.16% 2.83% 0.76%
03/18/1994 19.28% 471.06% 2.07% 2.80% 0.74%
03/25/1994 19.06% 460.58% 2.10% 2.86% 0.73%
04/01/1994 17.91% 445.77% 2.31% 2.96% 0.78%
04/0811994 17.84% 447.10% 2.31% 2.95% 0.78%
04/15/1994 16.94% 446.18% 2.44% 2.95% 0.83%
04/22/1994 16.94% 447.63% 2.44% 2.94% 0.83%
04/29/1994 17.00% 450.91% 2.43% 2.92% 0.83%
05/0611994 17.09% 447.82% 2.42% 2.94% 0.82%
05/13/1994 17.16% 444.14% 2.41% 2.97% 0.81%
05/20/1994 17.84% 454.92% 2.31% 2.90% 0.80%
05/27/1994 17.56% 457.33% 2.35% 2.88% 0.82%
06/03/1994 17.66% 460.13% 2.34% 2.86% 0.82%
06/10/1994 18.25% 458.67% 2.26% 2.87% 0.79%
06/17/1994 18.66% 458.45% 2.21% 2.87% 0.77%
06/24/1994 18.13% 442.80% 2.28% 2.98% 0.77%
07/0111994 18.88% 446.20% 2.26% 3.00% 0.75%
07/08/1994 19.72% 449.55% 2.16% 2.97% 0.73%
07/15/1994 20.09% 454.16% 2.12% 2.94% 0.72%
07/22/1994 19.84% 453.11% 2.15% 2.95% 0.73%
07/29/1994 19.56% 458.26% 2.18% 2.92% 0.75%
<PAGE>
Alcoa Inc. Stock Price and Yield Relative to the S&P 500
----------------------------------------------------------
Price Yield
-----------------------------------------------------------
Alcoa S&P Alcoa S&P Relative
Inc. 500 Inc. 500 Yield
----------------------------------------------------------
08/05/1994 19.66% 457.09% 2.17% 2.93% 0.74%
08/12/1994 19.50% 461.95% 2.18% 2.89% 0.75%
08/19/1994 19.22% 463.68% 2.22% 2.88% 0.77%
08/26/1994 20.28% 473.80% 2.10% 2.82% 0.74%
09/02/1994 20.66% 470.99% 2.06% 2.84% 0.73%
09/09/1994 20.72% 468.18% 2.06% 2.86% 0.72%
09/16/1994 21.63% 471.19% 1.97% 2.84% 0.69%
09/23/1994 21.16% 459.67% 2.01% 2.91% 0.69%
09/30/1994 21.19% 462.69% 2.07% 2.94% 0.70%
10/07/1994 21.09% 455.10% 2.08% 2.98% 0.70%
10/14/1994 21.75% 469.10% 2.02% 2.89% 0.70%
10/21/1994 22.19% 464.89% 1.98% 2.92% 0.68%
10/28/1994 21.28% 473.77% 2.06% 2.87% 0.72%
11/04/1994 20.94% 462.28% 2.10% 2.94% 0.71%
11/11/1994 20.25% 462.35% 2.17% 2.94% 0.74%
11/18/1994 20.94% 461.47% 2.10% 2.94% 0.71%
11/25/1994 20.09% 452.29% 2.18% 3.00% 0.73%
12/02/1994 20.50% 453.30% 2.14% 3.00% 0.71%
12/09/1994 19.72% 446.96% 2.23% 3.04% 0.73%
12/1611994 20.88% 458.80% 2.10% 2.96% 0.71%
12/23/1994 21.03% 459.83% 2.09% 2.95% 0.71%
12/30/1994 21.66% 459.27% 2.03% 2.96% 0.69%
01/06/1995 21.91% 460.68% 2.06% 2.99% 0.69%
01/13/1995 22.28% 465.97% 2.03% 2.96% 0.69%
01120/1995 21.53% 464.78% 2.10% 2.97% 0.71%
01/27/1995 20.25% 470.39% 2.23% 2.93% 0.76%
02/03/1995 20.97% 478.64% 2.16% 2.88% 0.75%
02/10/1995 20.06% 481.46% 2.25% 2.86% 0.79%
02/17/1995 20.19% 481.97% 2.24% 2.86% 0.78%
02/24/1995 20.25% 488.11% 2.23% 2.83% 0.79%
03/03/1995 19.63% 485.42% 2.30% 2.84% 0.81%
03/10/1995 19.13% 489.57% 2.36% 2.82% 0.84%
03/17/1995 18.81% 495.52% 2.40% 2.78% 0.86%
03/24/1995 20.44% 500.97% 2.21% 2.75% 0.80%
03/31/1995 20.75% 500.71% 2.18% 2.82% 0.77%
04/07/1995 20.94% 506.44% 2.16% 2.78% 0.78%
04/14/1995 22.38% 509.23% 2.02% 2.77% 0.73%
04/21/1995 22.38% 508.49% 2.02% 2.77% 0.73%
04/28/1995 22.44% 514.71% 2.01% 2.74% 0.73%
05/05/1995 20.81% 520.12% 2.17% 2.71% 0.80%
05/12/1995 23.31% 525.55% 1.94% 2.68% 0.72%
05/19/1995 23.50% 519.19% 1.92% 2.72% 0.71%
05/2611995 23.38% 523.65% 1.93% 2.69% 0.72%
06/02/1995 22.50% 532.51% 2.01% 2.65% 0.76%
06/09/1995 22.38% 527.94% 2.02% 2.67% 0.76%
06/16/1995 22.38% 539.83% 2.02% 2.61% 0.77%
06/23/1995 23.69% 549.71% 1.91% 2.56% 0.75%
06/30/1995 25.06% 544.75% 1.80% 2.62% 0.69%
07/07/1995 28.00% 556.37% 1.61% 2.56% 0.63%
<PAGE>
Alcoa Inc. Stock Price and Yield Relative to the S&P 500
----------------------------------------------------------
Price Yield
-----------------------------------------------------------
Alcoa S&P Alcoa S&P Relative
Inc. 500 Inc. 500 Yield
----------------------------------------------------------
07/14/1995 28.63% 559.89% 1.58% 2.55% 0.62%
07/21/1995 27.50% 553.62% 1.64% 2.58% 0.64%
07/28/1995 28.44% 562.93% 1.59% 2.53% 0.63%
08/04/1995 28.31% 558.94% 1.60% 2.55% 0.63%
08/11/1995 28.38% 555.11% 1.59% 2.57% 0.62%
08/18/1995 29.06% 559.21% 1.56% 2.55% 0.61%
08/25/1995 29.38% 560.10% 1.54% 2.55% 0.60%
09/01/1995 28.44% 563.84% 1.59% 2.53% 0.63%
09/08/1995 29.13% 572.68% 1.55% 2.49% 0.62%
09/15/1995 28.25% 583.35% 1.60% 2.45% 0.65%
09/22/1995 26.56% 581.73% 1.70% 2.45% 0.69%
09/29/1995 26.44% 584.41% 1.71% 2.44% 0.70%
10/06/1995 26.56% 582.49% 1.70% 2.52% 0.67%
10/13/1995 25.81% 584.50% 1.75% 2.51% 0.70%
10/20/1995 25.56% 587.46% 1.77% 2.50% 0.71%
10/27/1995 24.63% 579.70% 1.84% 2.53% 0.73%
11/03/1995 26.00% 590.57% 1.74% 2.48% 0.70%
11/10/1995 27.06% 592.72% 1.67% 2.47% 0.68%
11/17/1995 26.25% 600.07% 1.72% 2.44% 0.70%
11/24/1995 29.00% 599.97% 1.56% 2.44% 0.64%
12/01/1995 28.69% 606.98% 1.58% 2.42% 0.65%
12108/1995 28.00% 617.48% 1.61% 2.37% 0.68%
12115/1995 27.31% 616.34% 1.65% 2.38% 0.69%
12/22/1995 26.69% 611.96% 1.69% 2.40% 0.70%
12/29/1995 26.44% 615.93% 1.71% 2.38% 0.72%
01/05/1996 27.69% 616.71% 1.63% 2.42% 0.67%
01/1211996 25.50% 601.81% 1.77% 2.48% 0.71%
01/19/1996 26.25% 611.83% 1.72% 2.44% 0.70%
01/2611996 26.44% 621.62% 1.71% 2.40% 0.71%
02/0211996 28.00% 635.84% 1.61% 2.34% 0.69%
02/09/1996 28.19% 656.37% 1.60% 2.27% 0.70%
02/16/1996 27.88% 647.98% 1.62% 2.30% 0.70%
02/23/1996 29.00% 659.08% 1.56% 2.26% 0.69%
03/01/1996 28.63% 644.37% 1.58% 2.31% 0.68%
03108/1996 29.06% 633.50% 1.56% 2.35% 0.66%
03/15/1996 30.50% 641.43% 1.48% 2.32% 0.64%
03/22/1996 31.19% 650.62% 1.45% 2.29% 0.63%
03/29/1996 31.31% 645.50% 1.44% 2.31% 0.62%
04/05/1996 31.00% 655.86% 1.46% 2.30% 0.63%
04/12/1996 32.63% 636.71% 1.39% 2.37% 0.59%
04/19/1996 31.75% 645.07% 1.42% 2.33% 0.61%
04/26/1996 31.31% 653.46% 1.44% 2.30% 0.63%
05/03/1996 31.38% 641.63% 1.44% 2.35% 0.61%
05/10/1996 32.94% 652.09% 1.37% 2.31% 0.59%
05/17/1996 32.56% 668.91% 1.39% 2.25% 0.62%
05/24/1996 31.38% 678.51% 1.44% 2.22% 0.65%
05/31/1996 30.81% 669.12% 1.47% 2.25% 0.65%
06/07/1996 29.81% 673.31% 1.52% 2.24% 0.68%
06/14/1996 29.31% 665.85% 1.54% 2.26% 0.68%
<PAGE>
Alcoa Inc. Stock Price and Yield Relative to the S&P 500
----------------------------------------------------------
Price Yield
-----------------------------------------------------------
Alcoa S&P Alcoa S&P Relative
Inc. 500 Inc. 500 Yield
----------------------------------------------------------
06/21/1996 29.56% 666.84% 1.53% 2.26% 0.68%
06/28/1996 28.69% 670.63% 1.58% 2.25% 0.70%
07/05/1996 28.00% 657.44% 1.66% 2.31% 0.72%
07/12/1996 28.81% 646.19% 1.61% 2.35% 0.69%
07119/1996 28.19% 638.73% 1.65% 2.37% 0.70%
07/2611996 28.63% 635.90% 1.62% 2.38% 0.68%
08102/1996 30.38% 662.49% 1.53% 2.29% 0.67%
08/09/1996 30.38% 662.10% 1.53% 2.29% 0.67%
08/16/1996 30.81% 665.21% 1.51% 2.28% 0.66%
08/23/1996 31.88% 667.03% 1.46% 2.27% 0.64%
08/30/1996 31.06% 651.99% 1.49% 2.33% 0.64%
09/06/1996 31.06% 655.68% 1.49% 2.31% 0.65%
09/13/1996 31.00% 680.54% 1.50% 2.23% 0.67%
09/20/1996 30.25% 687.02% 1.53% 2.21% 0.69%
09/27/1996 29.44% 686.19% 1.58% 2.21% 0.71%
10/04/1996 30.00% 701.46% 1.59% 2.19% 0.73%
10/11/1996 29.19% 700.66% 1.63% 2.19% 0.74%
10/18/1996 29.81% 710.82% 1.60% 2.16% 0.74%
10/25/1996 29.88% 700.92% 1.59% 2.19% 0.73%
11/01/1996 29.69% 703.77% 1.60% 2.18% 0.73%
11/08/1996 30.00% 730.82% 1.59% 2.10% 0.76%
11/15/1996 30.75% 737.62% 1.55% 2.08% 0.75%
11/22/1996 31.19% 748.73% 1.53% 2.05% 0.75%
11/29/1996 31.81% 757.02% 1.50% 2.03% 0.74%
12/06/1996 31.44% 739.60% 1.51% 2.07% 0.73%
12/13/1996 31.50% 728.64% 1.51% 2.10% 0.72%
12/20/1996 31.69% 748.87% 1.50% 2.05% 0.73%
12/27/1996 31.13% 756.79% 1.53% 2.03% 0.75%
01/03/1997 34.00% 748.03% 1.44% 2.07% 0.70%
01/10/1997 35.63% 759.50% 1.37% 2.04% 0.67%
01/17/1997 36.50% 776.17% 1.34% 2.00% 0.67%
01/24/1997 33.88% 770.52% 1.44% 2.01% 0.72%
01/31/1997 34.50% 786.16% 1.41% 1.97% 0.72%
02/07/1997 33.81% 789.56% 1.44% 1.96% 0.73%
02/14/1997 34.63% 808.48% 1.41% 1.92% 0.73%
02/21/1997 35.56% 801.77% 1.37% 1.93% 0.71%
02/28/1997 35.63% 790.82% 1.37% 1.96% 0.70%
03107/1997 36.19% 804.97% 1.35% 1.92% 0.70%
03/14/1997 37.31% 793.17% 1.31% 1.95% 0.67%
03/21/1997 36.06% 784.10% 1.35% 1.98% 0.68%
03/28/1997 34.31% 773.88% 1.42% 2.00% 0.71%
04104/1997 33.81% 757.90% 1.48% 2.06% 0.72%
04/11/1997 32.94% 737.65% 1.52% 2.12% 0.72%
04/18/1997 34.19% 766.34% 1.46% 2.04% 0.72%
04/25/1997 34.75% 765.37% 1.44% 2.04% 0.71%
05/02/1997 35.13% 812.97% 1.42% 1.92% 0.74%
05/09/1997 35.69% 824.78% 1.40% 1.90% 0.74%
05/16/1997 36.63% 829.75% 1.37% 1.88% 0.73%
05/23/1997 36.88% 847.03% 1.36% 1.85% 0.74%
<PAGE>
Alcoa Inc. Stock Price and Yield Relative to the S&P 500
----------------------------------------------------------
Price Yield
-----------------------------------------------------------
Alcoa S&P Alcoa S&P Relative
Inc. 500 Inc. 500 Yield
----------------------------------------------------------
05/30/1997 36.81% 848.28% 1.36% 1.84% 0.74%
06/06/1997 37.38% 858.01% 1.34% 1.82% 0.74%
06/13/1997 38.81% 893.27% 1.29% 1.75% 0.74%
06/20/1997 38.00% 898.70% 1.32% 1.74% 0.76%
06/27/1997 38.00% 887.30% 1.32% 1.76% 0.75%
07/04/1997 38.50% 916.92% 1.30% 1.74% 0.75%
07/11/1997 38.56% 916.68% 1.30% 1.74% 0.75%
07118/1997 40.53% 915.30% 1.23% 1.74% 0.71%
07/25/1997 42.16% 938.79% 1.19% 1.70% 0.70%
08/01/1997 43.75% 947.14% 1.14% 1.68% 0.68%
08/08/1997 43.34% 933.54% 1.15% 1.71% 0.67%
08/15/1997 40.81% 900.81% 1.23% 1.77% 0.69%
08/22/1997 42.41% 923.55% 1.18% 1.73% 0.68%
08/29/1997 41.13% 899.47% 1.22% 1.77% 0.69%
09105/1997 41.75% 929.05% 1.20% 1.72% 0.70%
09/12/1997 39.31% 923.91% 1.27% 1.73% 0.73%
09/19/1997 41.53% 950.51% 1.20% 1.68% 0.71%
09/26/1997 40.16% 945.22% 1.25% 1.69% 0.74%
10/03/1997 40.69% 965.03% 1.23% 1.67% 0.74%
10/10/1997 39.84% 966.98% 1.25% 1.67% 0.75%
10/17/1997 39.66% 944.16% 1.26% 1.71% 0.74%
10/24/1997 38.22% 941.64% 1.31% 1.72% 0.76%
10/31/1997 36.50% 914.62% 1.37% 1.77% 0.77%
11/07/1997 35.06% 927.51% 1.43% 1.74% 0.82%
11/14/1997 35.00% 928.35% 1.43% 1.74% 0.82%
11/21/1997 34.88% 963.09% 1.43% 1.68% 0.85%
11/28/1997 33.63% 955.40% 1.49% 1.69% 0.88%
12/05/1997 34.91% 983.79% 1.43% 1.64% 0.87%
12/12/1997 33.88% 953.39% 1.48% 1.69% 0.88%
12/19/1997 34.88% 946.78% 1.43% 1.71% 0.84%
12/26/1997 34.25% 936.46% 1.46% 1.72% 0.85%
01/02/1998 35.63% 975.04% 1.40% 1.66% 0.84%
01/09/1998 33.13% 927.69% 1.51% 1.75% 0.86%
01/16/1998 33.25% 961.51% 1.50% 1.68% 0.89%
01/23/1998 34.56% 957.59% 1.45% 1.69% 0.86%
01/3011998 38.19% 980.28% 1.31% 1.65% 0.79%
02/06/1998 37.97% 1012.46% 1.32% 1.60% 0.83%
02/13/1998 38.44% 1020.09% 1.30% 1.59% 0.82%
02/20/1998 36.13% 1034.21% 1.38% 1.57% 0.88%
02/27/1998 36.69% 1049.34% 1.36% 1.54% 0.88%
03/06/1998 35.81% 1055.69% 1.40% 1.53% 0.92%
03/13/1998 34.97% 1068.61% 1.43% 1.52% 0.94%
03/20/1998 36.59% 1099.16% 1.37% 1.47% 0.93%
03/27/1998 35.38% 1095.44% 1.41% 1.48% 0.95%
04/03/1998 34.50% 1122.70% 1.63% 1.47% 1.11%
04/10/1998 35.03% 1110.67% 1.61% 1.48% 1.09%
04/17/1998 38.31% 1122.72% 1.47% 1.47% 1.00%
04/24/1998 39.03% 1107.90% 1.44% 1.48% 0.97%
05/01/1998 38.91% 1121.00% 1.45% 1.47% 0.99%
<PAGE>
Alcoa Inc. Stock Price and Yield Relative to the S&P 500
----------------------------------------------------------
Price Yield
-----------------------------------------------------------
Alcoa S&P Alcoa S&P Relative
Inc. 500 Inc. 500 Yield
----------------------------------------------------------
05/08/1998 37.75% 1108.14% 1.49% 1.48% 1.01%
05/15/1998 37.00% 1108.73% 1.52% 1.48% 1.03%
05/22/1998 35.66% 1110.47% 1.58% 1.48% 1.07%
05/29/1998 34.69% 1090.82% 1.62% 1.51% 1.07%
06/05/1998 34.34% 1113.86% 1.64% 1.48% 1.11%
06/12/1998 32.50% 1098.84% 1.73% 1.50% 1.15%
06119/1998 32.22% 1100.65% 1.75% 1.49% 1.17%
06/26/1998 32.88% 1133.20% 1.71% 1.45% 1.18%
07/03/1998 33.13% 1146.42% 1.93% 1.43% 1.35%
07/10/1998 32.19% 1164.33% 1.99% 1.41% 1.41%
07/17/1998 36.28% 1186.75% 1.76% 1.39% 1.27%
07/24/1998 35.31% 1140.80% 1.81% 1.44% 1.26%
07/31/1998 34.66% 1120.67% 1.84% 1.47% 1.25%
08/07/1998 33.38% 1089.45% 1.91% 1.51% 1.26%
08/14/1998 31.59% 1062.75% 2.02% 1.55% 1.30%
08/21/1998 33.22% 1081.24% 1.92% 1.52% 1.26%
08/28/1998 30.31% 1027.14% 2.11% 1.60% 1.32%
09/04/1998 31.88% 973.89% 2.00% 1.69% 1.18%
09/11/1998 34.03% 1009.06% 1.88% 1.63% 1.15%
09/18/1998 33.91% 1020.09% 1.88% 1.61% 1.17%
09/25/1998 35.88% 1044.75% 1.78% 1.57% 1.13%
10/02/1998 34.56% 1002.60% 2.07% 1.66% 1.25%
10/09/1998 38.97% 984.39% 1.83% 1.69% 1.08%
10/16/1998 39.63% 1056.42% 1.80% 1.58% 1.14%
10/23/1998 38.03% 1070.67% 1.88% 1.55% 1.21%
10/30/1998 39.63% 1098.67% 1.80% 1.51% 1.19%
11/06/1998 39.69% 1141.01% 1.80% 1.46% 1.23%
11/13/1998 39.44% 1125.72% 1.81% 1.48% 1.22%
11/20/1998 39.91% 1163.55% 1.79% 1.43% 1.25%
11/27/1998 39.09% 1192.33% 1.83% 1.40% 1.31%
12/04/1998 36.03% 1176.74% 1.98% 1.41% 1.40%
12/11/1998 36.47% 1166.46% 1.96% 1.43% 1.37%
12118/1998 34.69% 1188.03% 2.06% 1.40% 1.47%
12/25/1998 36.16% 1226.27% 1.98% 1.36% 1.46%
01/01/1999 37.28% 1229.23% 2.09% 1.37% 1.53%
01/08/1999 42.56% 1275.09% 1.83% 1.32% 1.39%
01/15/1999 43.03% 1243.26% 1.81% 1.35% 1.34%
01/22/1999 40.63% 1225.19% 1.92% 1.37% 1.40%
01/29/1999 41.78% 1279.64% 1.86% 1.31% 1.42%
02/05/1999 44.75% 1239.40% 1.74% 1.36% 1.28%
02/1211999 42.34% 1230.13% 1.84% 1.37% 1.34%
02/19/1999 41.50% 1239.22% 1.87% 1.36% 1.38%
02/26/1999 40.50% 1238.33% 1.92% 1.36% 1.41%
03/05/1999 40.19% 1275.47% 1.94% 1.32% 1.47%
03/12/1999 37.38% 1294.59% 2.08% 1.30% 1.60%
03/19/1999 42.38% 1299.29% 1.84% 1.29% 1.43%
03/26/1999 40.50% 1282.80% 1.92% 1.31% 1.47%
04/02/1999 40.88% 1293.72% 1.94% 1.31% 1.48%
04/09/1999 43.81% 1348.35% 1.81% 1.26% 1.44%
<PAGE>
Alcoa Inc. Stock Price and Yield Relative to the S&P 500
----------------------------------------------------------
Price Yield
-----------------------------------------------------------
Alcoa S&P Alcoa S&P Relative
Inc. 500 Inc. 500 Yield
----------------------------------------------------------
04/16/1999 52.69% 1319.00% 1.50% 1.29% 1.16% $80
04/23/1999 1.6x 54.00% 1356.85% 1.47% 1.25% 1.18%
04/30/1999 62.25% 1335.18% 1.27% 1.27% 1.00%
05/07/1999 63.88% 1345.00% 1.24% 1.26% 0.98%
05/14/1999 1.4x 62.50% 1337.80% 1.27% 1.27% 1.00%
05/21/1999 59.94% 1330.29% 1.32% 1.27% 1.04% $70
05/28/1999 55.00% 1301.84% 1.44% 1.30% 1.11%
06/04/1999 1.3x 61.94% 1327.75% 1.28% 1.28% 1.00%
06/11/1999 63.00% 1293.64% 1.26% 1.31% 0.96%
06/18/1999 67.56% 1342.84% 1.17% 1.26% 0.93%
06/25/1999 1.0x 62.63% 1315.31% 1.26% 1.29% 0.98% $60
07/02/1999 62.75% 1391.22% 1.26% 1.22% 1.03%
07/09/1999 62.63% 1403.28% 1.26% 1.21% 1.04%
07/16/1999 0.8x 61.06% 1418.78% 1.30% 1.19% 1.09%
07/23/1999 59.50% 1356.94% 1.33% 1.25% 1.06%
07/30/1999 59.88% 1328.72% 1.32% 1.27% 1.04% $50
08/06/1999 0.6x 62.63% 1300.29% 1.26% 1.30% 0.97%
08/13/1999 66.50% 1327.68% 1.19% 1.28% 0.93%
08/20/1999 67.69% 1336.61% 1.17% 1.27% 0.92%
08/27/1999 0.4x 63.81% 1348.27% 1.24% 1.26% 0.98% $40
09/03/1999 64.31% 1357.24% 1.23% 1.25% 0.98%
09/10/1999 65.81% 1351.66% 1.20% 1.25% 0.96%
09/17/1999 0.2x 65.50% 1335.42% 1.21% 1.27% 0.95%
09/24/1999 59.88% 1277.36% 1.32% 1.33% 0.99%
10/01/1999 60.25% 1282.81% 1.31% 1.30% 1.01% $30
10/08/1999 61.63% 1336.02% 1.28% 1.25% 1.02%
10/15/1999 61.50% 1247.41% 1.29% 1.33% 0.97%
10/22/1999 62.81% 1301.65% 1.26% 1.28% 0.98%
10/29/1999 60.75% 1362.93% 1.30% 1.22% 1.07% $20
11/05/1999 61.19% 1370.23% 1.29% 1.21% 1.07%
11/12/1999 62.31% 1396.06% 1.27% 1.19% 1.07%
11119/1999 63.81% 1422.00% 1.24% 1.17% 1.06%
11/26/1999 65.25% 1416.62% 1.21% 1.17% 1.03%
12103/1999 71.19% 1433.30% 1.11% 1.16% 0.96% $10
12/10/1999
12/17/1999
12/24/1999
Nov '94 Nov '95 Nov '96 Nov '97 Nov '98 Nov '99
*Alcoa's 1.23% dividend yield as of November 30 excludes the annual payment of
an extra dividend tied to company earnings. We include this extra dividend in
our analysis of Alcoa's relative dividend yield so that it actually exceeds
1.23%.
11
<PAGE>
Statements of Net Assets
Delaware Group Equity Funds II -- DELAWARE DECATUR EQUITY INCOME FUND
===================================
Number Market
November 30, 1999 of Shares Value
- --------------------------------------------------------------------------------
Common Stock - 84.32%
Aerospace & Defense - 1.54%
General Dynamics ................................ 574,900 $29,643,281
-------------
29,643,281
-------------
Automobiles & Automotive Parts - 2.85%
Dana ............................................ 383,600 10,644,900
General Motors .................................. 415,700 29,930,400
TRW ............................................. 270,900 14,137,594
-------------
54,712,894
-------------
Banking, Finance & Insurance - 18.45%
American General ................................ 569,900 41,780,794
Aon ............................................. 796,275 28,417,064
BankAmerica ..................................... 576,582 33,730,047
Bank of New York ................................ 459,000 18,302,625
Bank One ........................................ 611,160 21,543,390
Block (H&R) ..................................... 413,600 17,784,800
Chase Manhattan ................................. 309,300 23,893,425
Federal National Mortgage ....................... 304,200 20,267,325
First Union ..................................... 603,800 23,359,513
Fleet Boston Financial .......................... 204,700 7,740,219
Marsh & McLennan ................................ 303,300 23,846,963
Mellon Bank ..................................... 942,200 34,331,412
Merrill Lynch & Company ......................... 109,300 8,812,312
Morgan (J.P.) ................................... 62,200 8,179,300
Summit Bancorp .................................. 408,200 13,317,525
U.S. Bancorp .................................... 838,200 28,655,962
-------------
353,962,676
-------------
Cable, Media & Publishing - 3.29%
Knight-Ridder ................................... 298,000 16,259,625
McGraw-Hill ..................................... 827,400 46,903,238
-------------
63,162,863
-------------
Chemicals - 3.49%
Dow Chemical .................................... 283,800 33,240,075
DuPont (E.I.) deNemours ......................... 144,019 8,560,129
Imperial Chemical ADR ........................... 615,100 25,142,213
-------------
66,942,417
-------------
Computers & Technology - 1.45%
Pitney Bowes .................................... 581,600 27,880,450
-------------
27,880,450
-------------
Consumer Products - 4.60%
Clorox .......................................... 509,300 22,695,681
Kimberly-Clark .................................. 664,900 42,470,487
Minnesota Mining & Manufacturing ................ 241,500 23,078,344
-------------
88,244,512
-------------
<PAGE>
Number Market
of Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
Electronics & Electrical Equipment - 4.02%
Eaton ........................................... 145,400 $11,259,413
Emerson Electric ................................ 232,000 13,224,000
Raytheon-Class B ................................ 445,700 13,677,419
Rockwell International .......................... 414,600 20,574,525
Thomas & Betts .................................. 448,700 18,396,700
-------------
77,132,057
-------------
Energy - 12.86%
Baker Hughes .................................... 935,900 23,631,475
Bp Amoco ADR .................................... 377,468 23,001,956
Chevron ......................................... 389,700 34,512,806
Conoco Class B .................................. 592,013 15,503,340
El Paso Energy .................................. 971,300 37,395,050
Mobil ........................................... 369,400 38,533,037
Royal Dutch Petroleum ........................... 587,700 34,086,600
Unocal .......................................... 866,600 28,760,287
Williams ........................................ 333,600 11,259,000
-------------
246,683,551
-------------
Food, Beverage & Tobacco - 5.20%
Bestfoods ....................................... 356,500 19,540,656
Heinz (H.J.) .................................... 432,450 18,108,844
PepsiCo ......................................... 704,300 24,342,369
Philip Morris ................................... 806,800 21,228,925
RJR Nabisco Holdings ............................ 1,425,200 16,478,875
-------------
99,699,669
-------------
Healthcare & Pharmaceuticals - 5.99%
American Home Products .......................... 608,000 31,616,000
AstraZeneca ADR ................................. 394,800 17,568,600
Baxter International ............................ 461,200 31,159,825
Glaxo Wellcome ADR .............................. 234,400 13,932,150
Pharmacia & Upjohn .............................. 377,200 20,628,125
-------------
114,904,700
-------------
Industrial Machinery - 2.25%
Caterpillar ..................................... 220,000 10,202,500
Deere & Co. ..................................... 769,300 33,031,819
-------------
43,234,319
-------------
Metals & Mining - 3.54%
Alcan Aluminum .................................. 921,500 31,331,000
Alcoa ........................................... 557,500 36,516,250
-------------
67,847,250
-------------
Paper & Forest Products - 4.09%
International Paper ............................. 871,718 45,492,783
Weyerhaeuser .................................... 537,100 32,897,375
-------------
78,390,158
-------------
Retail - 1.11%
May Department Stores ........................... 633,800 21,311,525
-------------
21,311,525
-------------
12
<PAGE>
Number Market
Delaware Decatur Equity Income Fund of Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
Telecommunications - 7.71%
AT&T ............................................ 521,800 $29,155,575
Alltel .......................................... 457,800 39,599,700
Cable & Wireless ADR ............................ 571,200 22,705,200
GTE ............................................. 392,700 28,667,100
SBC Communications .............................. 535,564 27,815,855
-------------
147,943,430
-------------
Transportation & Shipping - 0.74%
British Airways ADR ............................. 239,300 14,163,569
-------------
14,163,569
-------------
Utilities - 1.14%
Duke Energy ..................................... 433,300 21,962,894
-------------
21,962,894
-------------
Total Common Stock (cost $1,531,226,395) 1,617,822,215
-------------
Preferred Stock - 0.32%
Granite Broadcasting 12.75% 04/01/09 ............ 6,260 6,134,584
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 $5,590,555) 6,134,794
-------------
Warrants - 0.00%
American Banknote Warrant ....................... 500 5,000
-------------
Total Warrants (cost $5,038) 5,000
-------------
Principal
Amount
---------
Corporate Bonds - 14.53%
Automobiles & Automotive Parts - 0.64%
American Axle & Manufacturing
9.75% 03/01/09 ............................... $5,500,000 5,555,000
Genetek 144A 11.00% 08/01/09 .................... 3,600,000 3,672,000
HDA Parts System sr sub nts
12.00% 08/01/05 .............................. 3,000,000 2,992,500
-------------
12,219,500
-------------
Banking, Finance & Insurance - 0.38%
RBF Finance 11.38% 03/15/09 ..................... 2,000,000 2,147,500
Renters Choice 11.00% 08/15/08 .................. 5,000,000 5,075,000
-------------
7,222,500
-------------
Building & Materials - 0.50%
Advanced Fiberglass 9.88% 01/15/09 .............. 5,000,000 4,625,000
Maxim Group sr nts 9.25% 10/15/07 ............... 2,500,000 2,118,750
Wesco Distribution 9.13% 06/01/08 ............... 3,000,000 2,820,000
-------------
9,563,750
-------------
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Corporate Bonds (continued)
Cable, Media & Publishing - 1.24%
Adelphia Communications
9.38% 11/15/09 ............................... $7,000,000 $6,991,250
American Lawyer Media 9.75% 12/15/07 ............ 575,000 544,813
American Media Operations 10.25% 05/01/09 ....... 700,000 700,000
Charter Communications 8.63% 04/01/09 ........... 5,000,000 4,743,750
Echostar Debs 9.25% 02/01/06 .................... 5,000,000 5,025,000
Hollinger International Publishing
sr sub nts 9.25% 03/15/07 .................... 2,000,000 1,965,000
Mail-Well 8.75% 12/15/08 ........................ 700,000 675,500
Telewest Communications sr debs
9.63% 10/01/06 ............................... 3,000,000 3,045,000
-------------
23,690,313
-------------
Chemicals - 0.48%
BPC Holding sr nts 12.50% 06/15/06 .............. 2,000,000 1,845,000
General Chemical 10.63% 05/01/09 ................ 700,000 686,000
Huntsman sr sub nts 9.50% 07/01/07 .............. 2,000,000 1,890,000
Octel Developments unsec sr nts
10.00% 05/01/06 .............................. 2,000,000 2,057,500
Sterling Chemicals sr sub nts
11.25% 04/01/07 .............................. 2,000,000 1,300,000
Sterling Chemicals sr sub nts
11.75% 08/15/06 .............................. 1,950,000 1,394,250
-------------
9,172,750
-------------
Consumer Products - 0.25%
Fedders North America sr sub nts
9.38% 08/15/07 ............................... 1,000,000 967,500
Outboard Marine 10.75% 06/01/08 ................. 3,000,000 2,250,000
Spinnaker Industries sr nts
10.75% 10/15/06 .............................. 2,000,000 1,567,500
-------------
4,785,000
-------------
Electronics & Electrical Equipment - 0.14%
Geologistics sr unsec nts 9.75% 10/15/07 ........ 4,000,000 2,600,000
-------------
2,600,000
-------------
Energy - 0.02%
First Wave Marine sr nts 11.00% 02/01/08 ........ 500,000 352,500
-------------
352,500
-------------
Food, Beverage & Tobacco - 1.00%
Advantica Restaurant 11.25% 01/15/08 ............ 1,495,000 1,166,100
Ameriserv Food Distributors sr nts
8.88% 10/15/06 ............................... 5,500,000 2,915,000
Avado Brands 11.75% 06/15/09 .................... 4,000,000 2,700,000
Burhman US 144A 12.25% 11/01/09 ................. 5,000,000 5,125,000
Cott sr nts 8.50% 05/01/07 ...................... 3,000,000 2,715,000
Delta Beverage Group sr nts
9.75% 12/15/03 ............................... 4,500,000 4,500,000
-------------
19,121,100
-------------
13
<PAGE>
Statements of Net Assets (Continued)
Principal Market
Delaware Decatur Equity Income Fund Amount Value
- --------------------------------------------------------------------------------
Corporate Bonds (continued)
Healthcare & Pharmaceuticals - 0.08%
Paracelsus Healthcare sr sub nts
10.00% 08/15/06 .............................. $1,455,000 $887,550
Pueblo Xtra International 9.50% 08/01/03 ........ 950,000 665,000
-------------
1,552,550
-------------
Industrial Machinery - 0.55%
DeCrane Aircraft 12.00% 09/30/08 ................ 6,000,000 5,955,000
United Rentals 9.00% 04/01/09 ................... 5,000,000 4,625,000
-------------
10,580,000
-------------
Leisure, Lodging & Entertainment - 2.02%
AFC Enterprises sr sub nts
10.25% 05/15/07 .............................. 1,450,000 1,453,625
Aztar 8.88% 05/15/07 ............................ 5,400,000 5,238,000
Bally Total Fitness 9.88% 10/15/07 .............. 5,000,000 4,862,500
Cinemark USA Series C sr sub nts
9.63% 08/01/08 ............................... 5,000,000 4,725,000
Cinemark USA sr sub nts 9.63% 08/01/08 .......... 2,000,000 1,720,000
Hollywood Casino 11.25% 05/01/07 ................ 7,000,000 7,245,000
Hollywood Park 9.25% 02/15/07 ................... 5,000,000 4,950,000
Park Place Entertainment sr sub nts
7.88% 12/15/05 ............................... 5,000,000 4,775,000
Town Sports International unsec sr nts
9.75% 10/15/04 ............................... 3,000,000 2,880,000
United Artists Theatre 9.75% 04/15/08 ........... 5,000,000 1,000,000
-------------
38,849,125
-------------
Metals & Mining - 0.70%
Armco sr nts 8.88% 12/01/08 ..................... 1,300,000 1,313,000
Great Lakes Carbon 10.25% 05/15/08 .............. 1,600,000 1,484,000
P and L Coal Holdings 9.63% 05/15/08 ............ 4,000,000 3,950,000
Republic Technology Unit
13.75% 07/15/09 .............................. 5,000,000 3,800,000
Schuff Steel unsec sr nts
10.50% 06/01/08 .............................. 1,750,000 1,518,125
Weirton Steel sr nts 11.38% 07/01/04 ............ 1,500,000 1,372,500
-------------
13,437,625
-------------
Packaging & Containers - 0.67%
Container Corporation of America
11.25% 05/01/04 .............................. 5,000,000 5,225,000
Huntsman Packaging sr sub nts
9.13% 10/01/07 ............................... 3,325,000 3,150,438
Riverwood International unsec sr sub nts
10.88% 04/01/08 .............................. 650,000 650,000
Stone Container sr nts 10.75% 10/01/02 .......... 3,785,000 3,903,281
-------------
12,928,719
-------------
Paper & Forest Products - 0.16%
Doman Industries Limited sr nts
8.75% 03/15/04 ............................... 3,120,000 2,652,000
US Timberlands 9.63% 11/15/07 ................... 400,000 372,000
-------------
3,024,000
-------------
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Corporate Bonds (continued)
Real Estate - 0.27%
HMH Properties 7.88% 08/01/08 ................... $5,700,000 $5,158,500
-------------
5,158,500
-------------
Retail - 0.56%
Cole National Group sr sub nts
9.88% 12/31/06 ............................... 250,000 195,000
Fleming sr nts 10.63% 12/15/01 .................. 5,000,000 5,062,500
Frank's Nursery & Crafts 10.25% 03/01/08 ........ 500,000 415,000
Shoppers Food Warehouse sr nts
9.75% 06/15/04 ............................... 2,000,000 2,125,000
Wilsons The Leather Expert sr nts
11.25% 08/15/04 .............................. 2,950,000 2,950,000
-------------
10,747,500
-------------
Telecommunications - 1.60%
Global Crossing 9.50% 11/15/09 .................. 5,000,000 4,937,500
Intermedia Communication
8.60% 06/01/08 ............................... 5,000,000 4,550,000
Level 3 Communications sr nts
9.13% 05/01/08 ............................... 3,900,000 3,695,250
Mcleodusa 8.13% 02/15/09 ........................ 5,625,000 5,273,438
Nextel Communications 9.38% 11/15/09 ............ 5,000,000 4,968,750
RCN sr nts 10.00% 10/15/07 ...................... 5,000,000 5,000,000
RSL Communications 10.50% 11/15/08 .............. 2,500,000 2,387,500
-------------
30,812,438
-------------
Textiles, Apparel & Furniture - 0.24%
GFSI sr sub nts 9.63% 03/01/07 .................. 1,100,000 836,000
Norton McNaughton unsec sr nts
12.50% 06/01/05 .............................. 1,000,000 850,000
Ntex 11.50% 06/01/06 ............................ 2,000,000 1,100,000
Synthetic Industries sr sub nts
9.25% 02/15/07 ............................... 1,750,000 1,890,000
-------------
4,676,000
-------------
Transportation & Shipping - 0.55%
Amer Comm Lines 10.25% 06/30/08 ................. 1,375,000 1,299,375
Atlantic Express sr sec nts
10.75% 02/01/04 .............................. 900,000 873,000
MTL 10.00% 06/15/06 ............................. 2,500,000 2,362,500
Stena Line AB sr nts 10.63% 06/01/08 ............ 1,050,000 588,000
Worldwide Flight 12.25% 08/15/07 ................ 5,600,000 5,488,000
-------------
10,610,875
-------------
Utilities - 0.27%
AES sr sub nts 10.25% 07/15/06 .................. 3,000,000 3,045,000
Midland Funding II sr sub debs
11.75% 07/23/05 .............................. 2,000,000 2,185,000
-------------
5,230,000
-------------
14
<PAGE>
Principal Market
Delaware Decatur Equity Income Fund Amount Value
- --------------------------------------------------------------------------------
Corporate Bonds (continued)
Miscellaneous - 2.21%
Allied Waste NA 7.38% 01/01/04 .................. $700,000 $640,500
Allied Waste NA 144A 10.00% 08/01/09 ............ 5,000,000 4,562,500
Budget Group Inc 9.13% 04/01/06 ................. 1,400,000 1,260,000
Caithness Coso Fund 9.05% 12/15/09 .............. 3,000,000 2,955,000
Knoll sr sub nts 10.88% 03/15/06 ................ 1,298,000 1,440,780
Loomis Fargo sr sub nts 10.00% 01/15/04 ......... 7,695,000 7,637,288
Neff 10.25% 06/01/08 ............................ 5,100,000 4,972,500
Pierce Leahy Command sr unsec nts
8.13% 05/15/08 ............................... 2,000,000 1,837,500
Repap New Brunswick 9.00% 06/01/04 .............. 5,000,000 4,912,500
Rayovac sr sub nts 10.25% 11/01/06 .............. 3,252,000 3,455,250
Spanish Broadcasting 9.63% 11/01/09 ............. 5,000,000 5,018,750
World Color Press 7.75% 02/15/09 ................ 4,000,000 3,810,000
--------------
42,502,568
--------------
Total Corporate Bonds (cost $299,535,895) 278,837,313
==============
Repurchase Agreements - 0.41%
With Chase Manhattan 5.64% 12/01/99
(dated 11/30/99, collateralized by
$1,900,000 U.S. Treasury Notes 7.875%
due 11/15/04, market value $2,039,587 and
$1,136,000 U.S. Treasury Notes 5.50% due
02/28/03, market value $1,132,414) ........... 3,092,000 3,092,000
With JP Morgan Securities 5.63% 12/01/99
(dated 11/30/99, collateralized by
$1,304,000 U.S. Treasury Notes 5.50%
due 03/31/03, market value $1,292,583
and $1,140,000 U.S. Treasury Notes 6.25%
due 02/15/03, market value $1,165,056) ....... 2,406,500 2,406,500
With Paine Webber 5.63% 12/01/99 (dated
11/30/99, collateralized by $2,451,000
U.S. Treasury Notes 5.50% due 01/31/03,
market value $2,455,501) ..................... 2,406,500 2,406,500
--------------
Total Repurchase Agreements
(cost $7,905,000) ............................ 7,905,000
==============
Total Market Value of Securities - 99.58%
(cost $1,844,262,883) ..................................... $1,910,704,322
Receivables and Other Assets Net of
Liabilities - 0.42% ....................................... 7,962,929
--------------
Net Assets Applicable to 111,601,206 Shares
($1 Par Value) Outstanding - 100.00% ...................... $1,918,667,251
==============
<PAGE>
- -----------------------------------------------------------------------------
Net Asset Value - Delaware Decatur
Equity Income Fund A Class
($1,658,695,830 / 96,446,686 shares) ...................... $17.20
======
Net Asset Value - Delaware Decatur
Equity Income Fund B Class
($151,332,174 / 8,838,753 shares) ......................... $17.12
======
Net Asset Value - Delaware Decatur
Equity Income Fund C Class
($19,511,110 / 1,133,153 shares) .......................... $17.22
======
Net Asset Value - Delaware Decatur
Equity Income Fund Institutional Class
($89,128,137 / 5,182,614 shares) .......................... $17.20
======
- -------------------------
Summary of Abbreviations:
ADR - American Depository Receipt
debs - debentures
nts - notes
sec - secured
sr - senior
sub - subordinated
unsec - unsecured
Components of Net Assets at November 30, 1999:
Common stock, $1 par value, 250,000,000 shares
authorized to the Fund with 100,000,000 shares
allocated to Delaware Decatur Equity Income
Fund A Class, 50,000,000 shares allocated to
Delaware Decatur Equity Income Fund B Class,
50,000,000 shares allocated to Delaware
Decatur Equity Income Fund C Class, and
50,000,000 shares allocated to Delaware
Decatur Equity Income Fund Institutional
Class ..................................................... $1,803,237,574
Undistributed net investment income .......................... 2,179,752
Accumulated net realized gain on investments ................. 46,808,486
Net unrealized appreciation of investments ................... 66,441,439
--------------
Total net assets ............................................. $1,918,667,251
==============
Net Asset Value and Offering Price Per Share -
Delaware Decatur Equity Income Fund
Net asset value A Class (A) .................................. $17.20
Sales charge (5.75% of offering price or 6.10% of
the amount invested per share) (B) ........................ 1.05
------
Offering price ............................................... $18.25
======
- --------------
(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
15
<PAGE>
Statements of Net Assets (Continued)
Delaware Group Equity Funds II -- DELAWARE GROWTH and INCOME FUND
===============================
Number Market
November 30, 1999 of Shares Value
- --------------------------------------------------------------------------------
Common Stock - 99.22%
Aerospace & Defense - 1.78%
General Dynamics ................................ 430,100 $22,177,031
-------------
22,177,031
-------------
Automobiles & Automotive Parts - 4.66%
Dana ............................................ 292,400 8,114,100
General Motors .................................. 335,100 24,127,200
Rockwell International .......................... 301,600 14,966,900
TRW ............................................. 208,200 10,865,438
-------------
58,073,638
-------------
Banking, Finance & Insurance - 21.68%
American General ................................ 434,000 31,817,625
Aon ............................................. 605,625 21,613,242
Bank of America ................................. 443,548 25,947,558
Bank of New York ................................ 353,100 14,079,863
Bank One ........................................ 520,986 18,364,757
Block (H&R) ..................................... 304,700 13,102,100
Chase Manhattan ................................. 237,400 18,339,150
Federal National Mortgage ....................... 236,600 15,763,475
First Union ..................................... 463,500 17,931,656
Fleet Boston Financial .......................... 157,500 5,955,469
Marsh & McLennan ................................ 233,200 18,335,350
Mellon Financial ................................ 690,400 25,156,450
Merrill Lynch & Company ......................... 84,100 6,780,563
Morgan (J.P.) ................................... 47,800 6,285,700
Summit Bancorp .................................. 314,420 10,257,953
U.S. Bancorp .................................... 605,700 20,707,369
-------------
270,438,280
-------------
Cable, Media & Publishing - 4.05%
Knight-Ridder ................................... 229,300 12,511,181
McGraw-Hill ..................................... 669,900 37,974,956
-------------
50,486,137
-------------
Chemicals - 4.27%
Dow Chemical .................................... 218,100 25,544,963
DuPont (E.I.) de Nemours ........................ 150,390 8,938,804
Imperial Chemical ADR ........................... 460,100 18,806,588
-------------
53,290,355
-------------
Computers & Technology - 1.56%
Pitney Bowes .................................... 405,600 19,443,450
-------------
19,443,450
-------------
Consumer Products - 3.80%
Clorox .......................................... 391,900 17,464,044
Kimberly-Clark .................................. 470,900 30,078,738
-------------
47,542,782
-------------
<PAGE>
Number Market
of Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
Electronics & Electrical Equipment - 3.41%
Eaton ........................................... 111,700 $8,649,769
Emerson Electric ................................ 176,500 10,060,500
Raytheon-Class B ................................ 341,800 10,488,988
Thomas & Betts .................................. 326,700 13,394,700
-------------
42,593,957
-------------
Energy - 14.95%
Baker Hughes .................................... 719,200 18,159,800
BP Amoco ........................................ 290,144 17,680,650
Chevron ......................................... 299,300 26,506,756
Conoco Class B .................................. 454,863 11,911,736
El Paso Energy .................................. 678,600 26,126,100
Mobil ........................................... 277,300 28,925,856
Royal Dutch Petroleum ........................... 455,800 26,436,400
Unocal .......................................... 666,000 22,102,875
Williams ........................................ 256,300 8,650,125
-------------
186,500,298
-------------
Food, Beverage & Tobacco - 6.43%
Bestfoods ....................................... 273,900 15,013,144
Heinz (H.J.) .................................... 359,950 15,072,906
Nabisco Group Holdings .......................... 1,048,700 12,125,594
PepsiCo ......................................... 608,000 21,014,000
Philip Morris ................................... 645,200 16,976,825
-------------
80,202,469
-------------
Healthcare & Pharmaceuticals - 7.13%
American Home Products .......................... 477,900 24,850,800
Astrazeneca ..................................... 303,800 13,519,100
Baxter International ............................ 355,200 23,998,200
Glaxo Wellcome ADR .............................. 180,400 10,722,525
Pharmacia & Upjohn .............................. 290,400 15,881,250
-------------
88,971,875
-------------
Industrial Machinery - 2.66%
Caterpillar ..................................... 168,900 7,832,738
Deere & Co. ..................................... 588,900 25,285,894
-------------
33,118,632
-------------
Metals & Mining - 4.16%
Alcan Aluminum .................................. 700,200 23,806,800
Aloca ........................................... 428,300 28,053,650
-------------
51,860,450
-------------
Paper & Forest Products - 5.12%
International Paper ............................. 665,290 34,719,822
Weyerhaeuser .................................... 475,900 29,148,875
-------------
63,868,697
-------------
Retail - 1.25%
May Department Stores ........................... 463,000 15,568,375
-------------
15,568,375
-------------
16
<PAGE>
Number Market
Delaware Growth and Income Fund of Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
Telecommunications - 8.74%
AT&T ............................................ 353,100 $19,729,463
Alltel .......................................... 327,000 28,285,500
Cable & Wireless ADR ............................ 444,000 17,649,000
GTE ............................................. 301,400 22,002,200
SBC Communications .............................. 410,811 21,336,496
-------------
109,002,659
-------------
Transportation & Shipping - 0.85%
British Airways ADR ............................. 178,200 10,547,213
-------------
10,547,213
-------------
Utilities - 1.30%
Duke Energy ..................................... 318,800 16,159,175
-------------
16,159,175
-------------
Miscellaneous - 1.42%
Minnesota Mining & Manufacturing ................ 184,700 17,650,394
17,650,394
-------------
Total Common Stock (cost $1,171,383,996) ........ 1,237,495,867
=============
Principal
Amount
---------
Repurchase Agreements - 0.20%
With Chase Manhattan 5.64% 12/01/99
(dated 11/30/99, collateralized by $614,545
U.S. Treasury Notes 7.875% due 11/15/04,
market value $659,654 and $367,457
U.S. Treasury Notes 5.50% due 02/28/03,
market value $366,251) ....................... $1,001,000 1,001,000
With JP Morgan Securities 5.63%
12/01/99 (dated 11/30/99, collateralized
by $421,767 U.S. Treasury Notes 5.50%
due 03/31/03, market value $418,054
and $368,612 U.S. Treasury Notes 6.25%
due 02/15/03, market value $376,809) ........ 778,000 778,000
With PaineWebber 5.63% 12/01/99
(dated 11/30/99, collateralized by
$792,723 U.S. Treasury Notes 5.50%
due 01/31/03, market value $794,172) ......... 778,000 778,000
-------------
Total Repurchase Agreements
(cost $2,557,000) ............................ 2,557,000
=============
Total Market Value of Securities - 99.42%
(cost $1,173,940,996) ..................................... $1,240,052,867
Receivables and Other Assets Net of
Liabilities - 0.58% ....................................... 7,292,792
-------------
Net Assets Applicable to 76,332,551 Shares
($1 Par Value) Outstanding - 100.00% ...................... $1,247,345,659
==============
<PAGE>
Net Asset Value - Delaware Growth and Income Fund
A Class ($871,409,432 / 53,296,711 shares) ....................... $16.35
======
Net Asset Value - Delaware Growth and Income Fund
B Class ($213,533,291 / 13,096,719 shares) ....................... $16.30
======
Net Asset Value - Delaware Growth and Income Fund
C Class ($45,025,618 / 2,767,068 shares) ......................... $16.27
======
Net Asset Value - Delaware Growth and Income Fund
Institutional Class ($117,377,318 / 7,172,053 shares) ............ $16.37
======
- ----------
ADR - American Depository Receipt
Components of Net Assets at November 30, 1999:
Common stock, $1 par value, 250,000,000 shares
authorized to the Fund with 100,000,000 shares
allocated to Delaware Growth and Income Fund
A Class, 50,000,000 shares allocated to Delaware
Growth and Income Fund B Class, 50,000,000
shares allocated to Delaware Growth and Income
Fund C Class, and 50,000,000 shares allocated
to Delaware Growth and Income Fund
Institutional Class ....................................... $1,122,838,375
Undistributed net investment income .......................... 4,853,212
Accumulated net realized gain on investments ................. 53,542,201
Net unrealized appreciation of investment .................... 66,111,871
--------------
Total net assets ............................................. $1,247,345,659
==============
Net Asset Value and Offering Price Per Share -
Delaware Growth and Income Fund
Net asset value A Class (A) .......................................... $16.35
Sales charge (5.75% of offering price or 6.12%
of the amount invested per share) (B) ............................. 1.00
------
Offering price ....................................................... $17.35
======
- --------------
(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
17
<PAGE>
Statements of Operations
Delaware Group Equity Funds II
<TABLE>
<CAPTION>
Delaware Decatur Delaware Growth
Year Ended November 30, 1999 Equity Income Fund and Income Fund
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Interest ............................................................ $ 34,318,928 $1,149,931
Dividends ........................................................... 46,488,094 33,128,654
--------------------------------------
80,807,022 34,278,585
--------------------------------------
Expenses:
Management fees ..................................................... 12,266,738 8,188,088
Distribution expense ................................................ 6,155,119 5,706,448
Dividend disbursing and transfer agent fees and expenses ............ 3,285,375 2,884,448
Accounting and administration ....................................... 894,814 554,358
Reports and statements to shareholders .............................. 593,120 334,840
Taxes (other than taxes on income) .................................. 232,057 110,250
Registration fees ................................................... 110,900 60,000
Professional fees ................................................... 162,500 74,800
Custodian fees ...................................................... 93,127 52,641
Trustees fees ....................................................... 37,184 22,569
Other ............................................................... 419,259 243,753
--------------------------------------
24,250,193 18,232,195
Less expenses paid directly ......................................... (103,988) (43,342)
--------------------------------------
Total expenses ...................................................... 24,146,205 18,188,853
--------------------------------------
Net Investment Income ............................................... 56,660,817 16,089,732
--------------------------------------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments .................................... 49,473,330 54,074,540
Net change in unrealized appreciation/depreciation of investments ... (143,194,415) (97,961,790)
--------------------------------------
Net Realized and Unrealized Loss on Investments ..................... (93,721,085) (43,887,250)
--------------------------------------
Net Decrease in Net Assets Resulting from Operations ................ ($37,060,268) ($27,797,518)
======================================
</TABLE>
See accompanying notes
18
<PAGE>
#
Statements of Changes in Net Assets
Delaware Group Equity Funds II
<TABLE>
<CAPTION>
Delaware Decatur Delaware Growth
Equity Income Fund and Income Fund
- --------------------------------------------------------------------------------------------------------------------------------
Year Ended November 30, Year Ended November 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations:
Net investment income ........................................... $56,660,817 $64,187,398 $16,089,732 $18,339,682
Net realized gain on investments ................................ 49,473,330 361,584,308 54,074,540 161,450,447
Net change in unrealized appreciation/depreciation of investments (143,194,415) (154,044,350) (97,961,790) (36,538,962)
--------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations . (37,060,268) 271,727,356 (27,797,518) 143,251,167
--------------------------------------------------------------
Distributions to Shareholders from:
Net investment income:
A Class ...................................................... (53,754,869) (45,727,459) (12,967,053) (12,123,443)
B Class ...................................................... (3,558,336) (2,136,896) (1,605,468) (916,994)
C Class ...................................................... (475,045) (281,715) (353,918) (192,210)
Institutional Class .......................................... (5,683,913) (6,528,308) (2,003,568) (1,562,741)
Net realized gain on investments:
A Class ...................................................... (294,241,867) (258,801,828) (115,549,988) (93,765,337)
B Class ...................................................... (25,790,323) (17,106,645) (25,411,948) (15,012,718)
C Class ...................................................... (3,465,186) (2,124,083) (5,698,352) 2,946,081)
Institutional Class .......................................... (36,564,567) (39,093,334) (12,829,309) (8,735,336)
--------------------------------------------------------------
(423,534,106) (371,800,268) (176,419,604) (135,254,860)
--------------------------------------------------------------
Capital Share Transactions:
Proceeds from shares sold:
A Class ...................................................... 103,910,710 168,201,945 134,692,759 195,303,575
B Class ...................................................... 35,124,624 57,047,914 59,662,781 88,711,551
C Class ...................................................... 6,725,629 9,894,966 16,593,807 26,672,866
Institutional Class .......................................... 39,592,772 58,405,474 45,606,633 54,756,372
Netasset value of shares issued upon reinvestment of distributions
from net investment income and net realized gain on
investments:
A Class ...................................................... 310,051,493 272,677,435 121,904,186 100,880,624
B Class ...................................................... 26,706,173 17,281,260 25,856,559 15,076,377
C Class ...................................................... 3,599,933 2,166,924 5,826,826 3,040,923
Institutional Class .......................................... 42,224,197 45,289,349 14,832,682 10,297,967
--------------------------------------------------------------
567,935,531 630,965,267 424,976,233 494,740,255
--------------------------------------------------------------
Cost of Shares Repurchased:
A Class ...................................................... (337,518,150) (296,579,034) (245,500,507) (158,209,478)
B Class ...................................................... (45,782,453) (22,666,310) (57,084,372) (22,393,120)
C Class ...................................................... (9,189,647) (3,726,339) (18,852,423) (7,597,150)
Institutional Class .......................................... (201,670,952) (126,067,562) (38,265,745) (32,883,578)
--------------------------------------------------------------
(594,161,202) (449,039,245) (359,703,047) (221,083,326)
--------------------------------------------------------------
Increase (decrease) in net assets derived from capital share
transactions ................................................. (26,225,671) 181,926,022 65,273,186 273,656,929
--------------------------------------------------------------
Net increase (decrease) in net assets ........................... (486,820,045) 81,853,110 (138,943,936) 281,653,236
Net Assets:
Beginning of year ............................................... 2,405,487,296 2,323,634,186 1,386,289,595 1,104,636,359
--------------------------------------------------------------
End of year ..................................................... $1,918,667,251 $2,405,487,296 $1,247,345,659 $1,386,289,595
==============================================================
</TABLE>
See accompanying notes
19
<PAGE>
Financial Highlights
Delaware Group Equity Funds II
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding throughout
each period was as follows: Delaware Decatur Equity Income Fund A Class
- -----------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $21.400 $22.580 $21.320 $19.070 $15.570
Income (loss) from investment operations:
Net investment income(1) ............................... 0.476 0.569 0.600 0.650 0.700
Net realized and unrealized gain (loss) on investments . (0.916) 1.811 3.940 3.630 3.910
------------------------------------------------------------
Total from investment operations ....................... (0.440) 2.380 4.540 4.280 4.610
------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................... (0.540) (0.490) (0.600) (0.690) (0.690)
Distributions from net realized gain on investments .... (3.220) (3.070) (2.680) (1.340) (0.420)
------------------------------------------------------------
Total dividends and distributions ...................... (3.760) (3.560) (3.280) (2.030) (1.110)
------------------------------------------------------------
Net asset value, end of period ............................ $17.200 $21.400 $22.580 $21.320 $19.070
============================================================
Total return(2) ........................................... (2.50%) 12.03% 24.78% 24.47% 31.02%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................$1,658,696 $1,969,181 $1,906,726 $1,616,315 $1,382,693
Ratio of expenses to average net assets ................ 1.03% 0.90% 0.88% 0.85% 0.87%
Ratio of net investment income to average net assets ... 2.59% 2.68% 2.87% 3.40% 4.03%
Portfolio turnover ..................................... 92% 94% 90% 101% 74%
</TABLE>
- --------------------------------------------------------------------------------
(1) The average shares outstanding method has been applied for per share
information for the year ended November 30, 1999.
(2) 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
20
<PAGE>
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding throughout
each period was as follows: Delaware Decatur Equity Income Fund B Class
- -----------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $21.320 $22.480 $21.260 $19.030 $15.550
Income (loss) from investment operations:
Net investment income(1) ................................ 0.333 0.403 0.450 0.500 0.560
Net realized and unrealized gain (loss) on investments .. (0.918) 1.797 3.900 3.610 3.890
----------------------------------------------------------
Total from investment operations ........................ (0.585) 2.200 4.350 4.110 4.450
----------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income .................... (0.395) (0.290) (0.450) (0.540) (0.550)
Distributions from net realized gain on investments ..... (3.220) (3.070) (2.680) (1.340) (0.420)
Total dividends and distributions ....................... (3.615) (3.360) (3.130) (1.880) (0.970)
----------------------------------------------------------
Net asset value, end of period ............................. $17.120 $21.320 $22.480 $21.260 $19.030
==========================================================
Total return(2) ............................................ (3.27%) 11.14% 23.73% 23.43% 29.85%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $151,332 $169,985 $123,180 $60,689 $19,665
Ratio of expenses to average net assets ................. 1.81% 1.70% 1.68% 1.69% 1.74%
Ratio of net investment income to average net assets .... 1.81% 1.88% 2.07% 2.56% 3.16%
Portfolio turnover ...................................... 92% 94% 90% 101% 74%
</TABLE>
- --------
(1) The average shares outstanding method has been applied for per share
information for the year ended November 30, 1999.
(2) 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
21
<PAGE>
Financial Highlights (Continued)
Delaware Group Equity Funds II
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding throughout
each period was as follows: Delaware Decatur Equity Income Fund C Class
- -----------------------------------------------------------------------------------------------------------------------
Year Ended November 30, 11/29/95 (3)
1999 1998 1997 1996 to 11/30/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $21.420 $22.570 $21.330 $19.080 $19.150
Income (loss) from investment operations:
Net investment income(1) ................................ 0.332 0.402 0.460 0.510 0.040
Net realized and unrealized gain (loss) on investments .. (0.917) 1.808 3.910 3.630 (0.060)
---------------------------------------------------------
Total from investment operations ........................ (0.585) 2.210 4.370 4.140 (0.020)
---------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income .................... (0.395) (0.290) (0.450) (0.550) (0.050)
Distributions from net realized gain on investments ..... (3.220) (3.070) (2.680) (1.340) -
---------------------------------------------------------
Total dividends and distributions ....................... (3.615) (3.360) (3.130) (1.890) (0.050)
---------------------------------------------------------
Net asset value, end of period ............................. $17.220 $21.420 $22.570 $21.330 $19.080
=========================================================
Total return(2) ............................................ (3.25%) 11.14% 23.75% 23.47% (4)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $19,511 $23,076 $15,343 $4,833 $5
Ratio of expenses to average net assets ................. 1.81% 1.70% 1.68% 1.69% (4)
Ratio of net investment income to average net assets .... 1.81% 1.88% 2.07% 2.56% (4)
Portfolio turnover ...................................... 92% 94% 90% 101% (4)
</TABLE>
- ----------------
(1) The average shares outstanding method has been applied for per share
information for the year ended November 30, 1999.
(2) 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.
(3) Date of initial public offering.
(4) 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.
See accompanying notes
22
<PAGE>
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding throughout
each period was as follows: Delaware Decatur Equity Income Fund Institutional Class
- -----------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $21.400 $22.570 $21.310 $19.060 $15.590
Income (loss) from investment operations:
Net investment income(1) ............................... 0.516 0.612 0.650 0.690 0.710
Net realized and unrealized gain (loss) on investments . (0.913) 1.808 3.930 3.620 3.920
---------------------------------------------------------
Total from investment operations ....................... (0.397) 2.420 4.580 4.310 4.630
---------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................... (0.583) (0.520) (0.640) (0.720) (0.740)
Distributions from net realized gain on investments .... (3.220) (3.070) (2.680) (1.340) (0.420)
---------------------------------------------------------
Total dividends and distributions ...................... (3.803) (3.590) (3.320) (2.060) (1.160)
---------------------------------------------------------
Net asset value, end of period ............................ $17.200 $21.400 $22.570 $21.310 $19.060
=========================================================
Total return .............................................. (2.27%) 12.25% 25.02% 24.65% 31.14%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $89,128 $243,245 $278,384 $244,048 $211,049
Ratio of expenses to average net assets ................ 0.81% 0.70% 0.68% 0.69% 0.74%
Ratio of net investment income to average net assets ... 2.81% 2.88% 3.07% 3.56% 4.16%
Portfolio turnover ..................................... 92% 94% 90% 101% 74%
</TABLE>
- ----------
(1) The average shares outstanding method has been applied for per share
information for the year ended November 30, 1999.
See accompanying notes
23
<PAGE>
Financial Highlights (Continued)
Delaware Group Equity Funds II
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding throughout
each period was as follows: Delaware Growth and Income Fund A Class
- ------------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $19.120 $ 19.230 $17.520 $15.610 $12.320
Income (loss) from investment operations:
Net investment income (1) .............................. 0.221 0.280 0.280 0.340 0.370
Net realized and unrealized gain (loss) on investments . (0.556) 1.930 3.610 3.210 3.700
---------------------------------------------------------
Total from investment operations ....................... (0.335) 2.210 3.890 3.550 4.070
---------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................... (0.235) (0.240) (0.330) (0.350) (0.360)
Distributions from net realized gain on investments .... (2.200) (2.080) (1.850) (1.290) (0.420)
---------------------------------------------------------
Total dividends and distributions ...................... (2.435) (2.320) (2.180) (1.640) (0.780)
---------------------------------------------------------
Net asset value, end of period ............................ $16.350 $ 19.120 $19.230 $17.520 $15.610
=========================================================
Total return(2) ........................................... (2.00%) 12.70% 25.26% 24.89% 34.68%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $871,409 $1,006,642 $863,855 $670,912 $534,342
Ratio of expenses to average net assets ................ 1.20% 1.13% 1.13% 1.11% 1.19%
Ratio of net investment income to average net assets ... 1.28% 1.52% 1.60% 2.21% 2.72%
Portfolio turnover ..................................... 94% 87% 69% 87% 81%
</TABLE>
- ------------
(1) The average shares outstanding method has been applied for per share
information for the year ended November 30, 1999.
(2) 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
24
<PAGE>
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding throughout
each period was as follows: Delaware Growth and Income Fund B Class
- ------------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $19.090 $ 19.200 $17.460 $15.560 $12.310
Income (loss) from investment operations:
Net investment income(1) ............................... 0.100 0.151 0.170 0.230 0.300
Net realized and unrealized gain (loss) on investments (0.560) 1.917 3.600 3.200 3.670
---------------------------------------------------------
Total from investment operations ....................... (0.460) 2.068 3.770 3.430 3.970
---------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................... (0.130) (0.098) (0.180) (0.240) (0.300)
Distributions from net realized gain on investments .... (2.200) (2.080) (1.850) (1.290) (0.420)
---------------------------------------------------------
Total dividends and distributions ...................... (2.330) (2.178) (2.030) (1.530) (0.720)
---------------------------------------------------------
Net asset value, end of period ............................ $16.300 $ 19.090 $19.200 $17.460 $15.560
=========================================================
Total return(2) ........................................... (2.72%) 11.92% 24.45% 24.01% 33.79%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $213,533 $218,584 $135,737 $53,467 $14,745
Ratio of expenses to average net assets ................ 1.90% 1.83% 1.83% 1.81% 1.89%
Ratio of net investment income to average net assets ... 0.58% 0.82% 0.90% 1.53% 2.02%
Portfolio turnover ..................................... 94% 87% 69% 87% 81%
</TABLE>
- ----------
(1) The average shares outstanding method has been applied for per share
information for the year ended November 30, 1999.
(2) 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
25
<PAGE>
Financial Highlights (Continued)
Delaware Group Equity Funds II
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding throughout
each period was as follows: Delaware Growth and Income Fund C Class
- ------------------------------------------------------------------------------------------------------------------------
Year Ended November 30, 11/29/95 (3)
1999 1998 1997 1996 to 11/30/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................ $19.050 $19.160 $17.430 $15.610 $15.610
Income (loss) from investment operations:
Net investment income(1) ................................. 0.100 0.153 0.170 0.330 --
Net realized and unrealized gain (loss) on investments ... (0.550) 1.915 3.590 3.100 --
---------------------------------------------------------
Total from investment operations ......................... (0.450) 2.068 3.760 3.430 --
---------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ..................... (0.130) (0.098) (0.180) (0.320) --
Distributions from net realized gain on investments ...... (2.200) (2.080) (1.850) (1.290) --
---------------------------------------------------------
Total dividends and distributions ........................ (2.330) (2.178) (2.030) (1.610) --
---------------------------------------------------------
Net asset value, end of period .............................. $16.270 $19.050 $19.160 $17.430 $15.610
=========================================================
Total return(2) ............................................. (2.71%) 12.00% 24.44% 24.04% (4)
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $45,026 $48,683 $26,231 $7,591 $5
Ratio of expenses to average net assets .................. 1.90% 1.83% 1.83% 1.81% (4)
Ratio of net investment income to average net assets ..... 0.58% 0.82% 0.90% 1.53% (4)
Portfolio turnover ....................................... 94% 87% 69% 87% (4)
</TABLE>
- -----------
(1) The average shares outstanding method has been applied for per share
information for the year ended November 30, 1999.
(2) 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.
(3) Date of initial public offering.
(4) 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.
See accompanying notes
26
<PAGE>
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding throughout
each period was as follows: Delaware Growth and Income Fund Institutional Class
- -----------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $19.150 $19.260 $17.570 $15.650 $12.350
Income (loss) from investment operations:
Net investment income(1) ................................ 0.273 0.346 0.350 0.370 0.470
Net realized and unrealized gain (loss) on investments .. (0.553) 1.917 3.600 3.230 3.650
---------------------------------------------------------
Total from investment operations ........................ (0.280) 2.263 3.950 3.600 4.120
---------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income .................... (0.300) (0.293) (0.410) (0.390) (0.400)
Distributions from net realized gain on investments ..... (2.200) (2.080) (1.850) (1.290) (0.420)
---------------------------------------------------------
Total dividends and distributions ....................... (2.500) (2.373) (2.260) (1.680) (0.820)
---------------------------------------------------------
Net asset value, end of period ............................. $16.370 $19.150 $19.260 $17.570 $15.650
=========================================================
Total return ............................................... (1.68%) 13.07% 25.65% 25.24% 35.13%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $117,377 $112,381 $78,813 $45,958 $11,520
Ratio of expenses to average net assets ................. 0.90% 0.83% 0.83% 0.81% 0.89%
Ratio of net investment income to average net assets .... 1.58% 1.82% 1.90% 2.53% 3.02%
Portfolio turnover ...................................... 94% 87% 69% 87% 81%
</TABLE>
- ---------------
(1) The average shares outstanding method has been applied for per share
information for the year ended November 30, 1999.
See accompanying notes
27
<PAGE>
Notes to Financial Statements
November 30, 1999
- --------------------------------------------------------------------------------
Delaware Group Equity Funds II is registered as a diversified open-end
investment company under the Investment Company Act of 1940, as amended. The
Fund is organized as a Delaware Business Trust and offers five series: the
Delaware Decatur Equity Income Fund (formerly Decatur Income Fund), the Delaware
Growth and Income Fund (formerly 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
Decatur Equity Income Fund and Delaware Growth and Income Fund (collectively,
the "Funds" and individually, a "Fund"). 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 securities
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 generally accepted
accounting principles and are consistently followed by the Funds.
Security Valuation - Securities listed on an exchange are valued at the
last quoted sales price as of the close of the NYSE on the valuation date.
Securities not traded or securities not listed on an exchange are valued at the
mean of the last quoted bid and asked prices. Long-term debt securities are
valued by an independent pricing service and such prices are believed to reflect
the fair value of such securities. 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 by 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 generally
accepted accounting principles.
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
each 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
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. 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.
28
<PAGE>
- --------------------------------------------------------------------------------
Certain expenses of the Fund are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. In
addition, the 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 year ended November 30, 1999, are as follows:
Delaware Decatur Delaware Growth
Equity Income Fund and Income Fund
- ------------------------------------------------------------------------
"Soft Dollar" expenses $51,411 $31,795
Earnings Credits 52,577 11,547
2. Investment Management and Other Transactions with Affiliates
Effective April 1, 1999, 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 Growth
Equity Income Fund and Income Fund
- --------------------------------------------------------------------------------
On the first $500 million 0.650% On the first $500 million 0.650%
On the next $500 million 0.600% On the next $500 million 0.600%
On the next $1.5 billion 0.550% On the next $1.5 billion 0.550%
In excess of $2.5 billion 0.500% In excess of $2.5 billion 0.500%
Prior to April 1, 1999, DMC was paid an annual fee based upon each Fund's
average daily net assets, less fees paid to the unaffiliated directors, at the
following rates:
Delaware Decatur Delaware Growth
Equity Income Fund and Income Fund
- --------------------------------------------------------------------------------
On the first $100 million 0.600% On the first $500 million 0.600%
On the next $150 million 0.525% On the next $250 million 0.575%
On the next $250 million 0.500% Over $750 million 0.550%
Over $500 million 0.475%
At November 30, 1999, the liabilities for investment management fees and other
expenses payable to DMC were as follows:
Delaware Decatur Delaware Growth
Equity Income Fund and Income Fund
- --------------------------------------------------------------------------------
$134,498 $184,493
The Funds have 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 Funds had liabilities for such fees and other expenses
payable to DSC as follows:
Delaware Decatur Delaware Growth
Equity Income Fund and Income Fund
- --------------------------------------------------------------------------------
$92,740 $208,949
<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 November 30,
1999, the Funds had liabilties for such fees and other expenses payable to DDLP
as follows:
Delaware Decatur Delaware Growth
Equity Income Fund and Income Fund
- --------------------------------------------------------------------------------
$53,271 $38,449
For the year ended November 30, 1999, DDLP earned commissions on sales of the A
Class shares for each Fund as follows:
Delaware Decatur Delaware Growth
Equity Income Fund and Income Fund
- --------------------------------------------------------------------------------
$231,746 $268,466
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 year ended November 30, 1999, the Funds made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments as follows:
Delaware Decatur Delaware Growth
Equity Income Fund and Income Fund
- --------------------------------------------------------------------------------
Purchases $2,011,149,056 $1,263,280,895
Sales 2,375,401,791 1,340,534,083
At November 30, 1999, the aggregate cost of securities and unrealized
appreciation (depreciation) for federal income tax purposes for each Fund were
as follows:
Delaware Delaware
Decatur Equity Growth and
Income Fund Income Fund
- --------------------------------------------------------------------------------
Cost of investments $1,850,988,690 $1,177,725,528
====================================
Aggregate unrealized appreciation $ 181,312,418 $ 139,044,764
Aggregate unrealized depreciation (121,596,786) (76,717,425)
------------------------------------
Net unrealized appreciation $ 59,715,632 $ 62,327,339
====================================
29
<PAGE>
Notes to Financial Statements (Continued)
<TABLE>
<CAPTION>
Delaware Decatur Delaware Growth
Transactions in capital stock shares were as follows: Equity Income Fund and Income Fund
- ------------------------------------------------------------------------------------------------------------
4. Capital Stock
Transactions in capital stock shares were as follows: Year Ended November 30, Year Ended November 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Shares sold:
A Class 5,617,963 8,073,531 7,708,751 10,467,477
B Class 1,902,665 2,711,292 3,447,377 4,734,652
C Class 360,611 466,462 961,557 1,427,894
Institutional Class 2,144,984 2,749,580 2,629,956 2,935,169
Shares issued upon reinvestment of distributions
from net investment income and net realized gain
on investments:
A Class 17,179,047 13,673,317 7,252,187 5,773,026
B Class 1,487,643 871,584 1,541,065 866,511
C Class 199,407 108,759 348,107 175,049
Institutional Class 2,339,463 2,272,599 882,059 588,141
------------------------------------------------------
31,231,783 30,927,124 24,771,059 26,967,919
------------------------------------------------------
Shares repurchased:
A Class (18,379,357) (14,169,464) (14,318,557) (8,496,811)
B Class (2,525,183) (1,089,271) (3,343,966) (1,220,198)
C Class (504,200) (177,735) (1,097,749) (416,767)
Institutional Class (10,668,998) (5,990,464) (2,208,817) (1,746,666)
------------------------------------------------------
(32,077,738) (21,426,934) (20,969,089) (11,880,442)
------------------------------------------------------
Net increase (decrease) (845,955) 9,500,190 3,801,970 15,087,477
======================================================
</TABLE>
30
<PAGE>
- --------------------------------------------------------------------------------
5. Lines of Credit
Committed lines of credit were $72.8 million for Delaware Decatur Equity Income
Fund and $48.0 million for Delaware Growth and Income Fund. No amounts were
outstanding at November 30, 1999 or at any time during the fiscal year.
6. Market and 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.
The Delaware Decatur Equity Income Fund may invest up to 10% of its total assets
in illiquid securities which may include securities with contractual
restrictions on resale, securities exempt from registration under Rule 144A of
the Securities Act of 1933, as amended, and other securities which may not be
readily marketable. The relative illiquidity of some of these securities may
adversely affect the Funds' ability to dispose of such securities in a timely
manner and at a fair price when it is necessary to liquidate such securities.
7. Subsequent Events
Distributions were declared from net realized gain on investments in the amount
of $0.472 and $0.768 per share for all classes of the Delaware Decatur Equity
Income Fund and Delaware Growth and Income Fund, respectively, payable on
December 28, 1999 to shareholders of record on December 21, 1999. The
ex-dividend date was December 22, 1999.
8. Tax Information (Unaudited)
The information set forth below is for the Funds' fiscal year as required by
federal laws. Shareholders, however, must report distributions on a calendar
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 advisor for proper treatment of this information.
For the fiscal year ended November 30, 1999, each Fund designates as long term
capital gains and ordinary income distributions paid during the year as follows:
Delaware Delaware
Decatur Equity Growth and
Income Fund Income Fund
- --------------------------------------------------------------------------------
(A) Long Term Capital Gains
Distributions (Tax Basis) 70% 78%
(B) Ordinary Income Distributions (Tax Basis) 30% 22%
(C) Total Distributions (Tax Basis) 100% 100%
(D) Qualifying Dividends(1) 82% 100%
- ------------
(A) and (B) are based on a percentage of the Fund's total distributions.
(D) is based on percentage of ordinary income of the Fund
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
31
<PAGE>
Report of Independent Auditors
To the Shareholders and Board of Trustees
Delaware Group Equity Funds II
- --------------------------------------------------------------------------------
We have audited the accompanying statements of net assets of Delaware Group
Equity Funds II (Delaware Decatur Equity Income Fund and Delaware Growth and
Income Fund) (the "Funds") as of November 30, 1999, and the related statements
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 Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of November 30, 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 each
of the above listed funds of Delaware Group Equity Funds II at November 30,
1999, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended, and their
financial highlights for each of the periods indicated therein, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
January 7, 2000
32
<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
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.
33
<PAGE>
DELAWARE
INVESTMENTS
===========
PhiladelphiaoLondon
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 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, 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. National Distributor
King of Prussia, PA AFFILIATED OFFICERS Delaware Distributors, L.P.
Richard J. Flannery Philadelphia, Pennsylvania
David K. Downes Executive Vice President and
President and Chief Executive Officer General Counsel Shareholder Servicing, Dividend
Delaware Investments Family of Funds Delaware Investments Family of Funds Disbursing and Transfer Agent
Philadelphia, PA Philadelphia, PA Delaware Service Company, Inc.
Philadelphia, Pennsylvania
John H. Durham Bruce D. Barton
Private Investor President and Chief Executive Officer 1818 Market Street
Horsham, PA Delaware Distributors, L.P. Philadelphia, PA 19103-3682
Philadelphia, PA
Anthony D. Knerr
Consultant, Anthony Knerr & Associates
New York, NY
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
(2526) (J5429)
AR-118 [11/99] PPL 1/00
