<PAGE> 1
(PHOTO OF COLONIAL OBJECTS)
May 31, 1995
Dear Shareholder:
When last we wrote to you in the 1994 Annual Report, the Federal Reserve had
raised short-term interest rates five times in an effort to slow economic growth
and control the pace of inflation. This had precipitated a decline in the
financial markets that significantly impacted investors' 1994 returns. In the
six months since then--November 1, 1994, through April 30, 1995--the Fed boosted
short-term interest rates twice. Following the February 1995 increase, long-term
interest rates declined steadily and the stock market, having accomplished
little in our first fiscal quarter, responded positively to a brighter investing
environment.
For the six-month period, Dividend Growth Fund A Class had a total
return (capital change plus income) that fell short of the performance of the
broad equity market but was competitive with that of its peer group. The
table below shows the Fund's results for the fiscal period compared with the
returns of the unmanaged S&P 500 Stock Index and the Lipper Growth & Income
Fund Average, which includes 407 growth and income funds tracked by Lipper
Analytical Services. Effective March 31, 1995, the quarterly dividend for
Dividend Growth Fund A Class rose from $0.03 to $0.04 per share, an increase of
33%.
--------------------------------------------------------
TOTAL RETURN
SIX MONTHS ENDED
APRIL 30, 1995
Dividend Growth Fund A Class +7.47%
Standard & Poor's 500 Stock Index +10.46%
Lipper Growth & Income Fund Average +7.66%
Dividend Growth Fund and Lipper Growth & Income Fund
performance is based on net asset value without impact of
sales charge. Performance information for all classes of
the Fund can be found on page 4.
--------------------------------------------------------
This year's change in the interest rate environment was spurred by an almost
unbroken string of government statistics, which fueled the markets' perceptions
of a slowing economy. Data showed that producer level and commodity price
increases of the past year had not been passed on to the consumer, thereby
keeping inflation low. While we expected the Federal Reserve's restrictive
monetary policy to eventually moderate economic growth, we were surprised at the
speed and uniformity of the economy's response.
As the financial markets have risen in calendar 1995, this has translated into
strong gains for the overall equity market and for Dividend Growth Fund. In the
second fiscal quarter of 1995 (February 1, 1995, through April 30, 1995) your
Fund was up +10.60%, a significant improvement over the -2.83% return in the
first fiscal quarter of 1995 (November 1, 1994, through January 31, 1995).
This report contains an update from the senior portfolio manager of the Fund,
who discusses the Fund's positioning and how it impacted performance over our
fiscal six months. As we move toward completing the Fund's second year of
serving shareholders, we will make every effort to warrant your continued
support.
/s/ WAYNE A. STORK /s/ BRIAN F. WRUBLE
- ---------------------------- -------------------------------------
Wayne A. Stork Brian F. Wruble
Chairman, Board of Directors President and Chief Executive Officer
Dividend Growth Fund Dividend Growth Fund
1
<PAGE> 2
(PHOTO OF COLONIAL OBJECTS)
PORTFOLIO MANAGER'S MARKET REVIEW
Over the past six months, the stock market has favored large market
capitalization companies (which dominate the Standard & Poor's 500) over small
and mid-size ones. This is due, in part, to the fact that large companies'
earnings momentum has increased dramatically, allowing them to keep pace with
the rapid earnings growth typical of smaller companies. Consequently, we have
seen a significant disparity between the performance of large-cap stocks versus
mid- and small-cap stocks. We believe this represents an increasing opportunity
for Dividend Growth Fund, which has a large percentage of assets invested in
mid-size companies.
We believe that, as long as a company's business objectives are focused, its
smaller size will work to its advantage. This is because small companies usually
have more acquisition opportunities that are often large enough to significantly
enhance their earnings. Reynolds & Reynolds, Service Corporation International
and Tyco International are good examples of holdings with acquisition strategies
that have been beneficial to earnings and still have the potential to grow
meaningfully through additional purchases.
Inside Your Fund's Portfolio
When we consider a stock for purchase, in addition to looking at quantitative
statistics, such as historical earnings, dividend growth and price/earnings
multiples, we ask ourselves the following qualitative questions:
* Can the company's business perform reasonably well in most economic
environments?
* Is there a company-specific event (e.g., a merger or restructuring) which
can push earnings beyond current expectations or support earnings if
business conditions within the industry soften?
* Is the company generating excess cash, and if so, can the company invest
this cash in their core business in a low-risk manner and grow dividends?
Our goal is to select stocks within the broad spectrum of industries where we
can answer such questions positively. For example, the highly cyclical auto and
truck parts industry isn't usually well represented in our equity portfolio, yet
we have a significant position in Eaton Corporation (1.49% of net assets).
Eaton, a leading manufacturer of heavy duty auto and truck parts, is in the
midst of consolidating a major acquisition in the electronic process controls
industry which, when folded into their current operations, could result in
significant cost savings. Further, the addition of this new revenue should
moderate the cyclical influences on Eaton's earnings, making the long-term value
of the stock more attractive in our judgment.
2
<PAGE> 3
Defensive Positioning in Technology Stocks Holds Back Fund Return
Among the industry groups that have led the rise in the equity market over the
past six months have been technology stocks, up, on average, more than 18%.
However, using the qualitative questions on page 2 and our corresponding answers
to evaluate investment opportunities for Dividend Growth Fund has steered us
away from investing in such stocks. Technology companies tend to have little, or
no, dividend yield and are highly sensitive to broad economic and competitive
industry dynamics. We believe that for a relatively conservative fund, the
combination of high unit growth and profitability (which attracts competition),
as well as technological change (which can make large investments quickly
obsolete), makes long-term stock selection too difficult to offset the risks
inherent in these stocks.
Our avoidance of the technology sector was the primary reason that the Fund
did not participate fully in the broad market's appreciation over the past six
months. Usually, technology stocks rise strongly in a good market and decline
steeply in a bad one. Our long-term stance on this group tends to enhance the
defensiveness of your Fund's portfolio, as shown in the first half of 1994 when
technology stocks underperformed the broad market.
Strong Performance of Financial Stocks Contributes to Fund Return
On the other hand, our emphasis on financial stocks, another top performing
industry group, was a significant positive influence on performance. As
long-term interest rates began to decline, perceptions that financial company
earnings would be squeezed by higher interest costs abated. The Fund's financial
holdings (10.01% of net assets) were centered around two specialized credit card
companies, MBNA and First USA, as well as two mortgage finance agencies, Fannie
Mae and Freddie Mac. We concentrated on these companies because of their focused
business strategies and increasing market shares.
Higher credit losses coupled with moderating loan growth may inhibit financial
companies' earnings growth as the economic cycle moves into its later stages.
Therefore, we have begun to trim our overall holdings in this sector.
/s/ GEORGE H. BURWELL
- ------------------------
George H. Burwell
Senior Portfolio Manager
3
<PAGE> 4
(PHOTO OF COLONIAL OBJECTS)
LONG-TERM PERFORMANCE
DIVIDEND GROWTH FUND
CLASS A CLASS B
Average Annual Total Returns(1) Aggregate Total Returns(2)
Lifetime +7.87% Lifetime +6.59%
Excluding Sales Charge
1 Year +6.51% Lifetime +2.59%
Including Sales Charge
Through April 30, 1995
RETURN AND SHARE VALUE FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THE ORIGINAL INVESTMENT. PAST PERFORMANCE IS NOT A GUARANTEE
OF FUTURE RESULTS.
(1) Class A returns reflect the 5.75% maximum sales charge and a 12b-1 fee, and
the reinvestment of all distributions.
(2) Class B returns including deferred sales charge reflect the reinvestment of
all distributions, the impact of the maximum 4% contingent deferred sales
charge and a 1% annual distribution and service fee, for the period from
introduction of Class B on September 6, 1994, through April 30, 1995. Class
B return for the six-month period ended April 30, 1995, was +7.08%
(excluding sales charge). Returns excluding the deferred sales charge assume
that the investment was not redeemed. Performance for this short time period
may not be representative of longer term performance of this Class.
The average annual total returns for Dividend Growth Fund's Institutional Class,
which is available without sales or asset-based distribution charges only to
certain eligible institutional accounts, were +13.06% and +13.29%, respectively,
for the lifetime and one-year periods ended April 30, 1995. The aggregate return
for the six-month period ended April 30, 1995, was +7.56%.
4
<PAGE> 5
FINANCIAL STATEMENTS
DELAWARE GROUP DIVIDEND GROWTH FUND(1)
STATEMENT OF NET ASSETS
April 30, 1995
(Unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK-87.67%
CAPITAL EQUIPMENT & SERVICES-11.68%
Corning................................ 3,000 $ 100,500
Diebold................................ 3,100 128,650
Eaton.................................. 2,500 143,438
Foster Wheeler......................... 1,600 59,200
+General Electric...................... 3,400 190,400
+Lockheed Martin....................... 3,700 213,675
Rockwell International................. 2,400 104,700
+WMX Technologies...................... 6,800 185,300
---------
1,125,863
---------
CHEMICALS-4.11%
Air Products & Chemical................ 1,200 60,450
duPont (EI) de Nemours................. 1,600 105,400
Loctite................................ 2,000 99,500
Lubrizol............................... 1,500 52,313
Praxair................................ 3,300 78,375
---------
396,038
---------
COMMUNICATIONS-6.76%
ALLTEL................................. 5,600 138,600
AT&T................................... 2,100 106,575
Banta.................................. 3,000 99,375
General Motors Class E................. 900 38,925
Tele Danmark ADR....................... 4,600 120,750
Tribune................................ 2,500 147,813
---------
652,038
---------
CONSUMER CYCLICAL-12.17%
Dayton Hudson.......................... 2,000 134,250
*Federated Department Stores........... 3,500 73,938
Gap.................................... 2,500 79,688
May Department Stores.................. 3,600 130,500
Rite Aid............................... 7,000 162,750
Sbarro................................. 6,000 154,500
Singer................................. 3,500 88,813
Sunbeam-Oster.......................... 5,400 116,775
+Wal-Mart Stores....................... 9,800 232,750
---------
1,173,964
---------
CONSUMER GROWTH-15.73%
American Greetings Class A............. 3,400 92,225
American Stores........................ 3,700 94,813
ConAgra................................ 4,300 142,975
+Philip Morris......................... 2,600 176,150
+Procter & Gamble...................... 3,800 265,525
<PAGE> 6
NUMBER MARKET
OF SHARES VALUE
RJR Nabisco Holdings................... 3,200 $ 87,600
+Reynolds & Reynolds................... 8,900 235,850
+Service International................. 10,300 290,975
Wallace Computer Service............... 3,900 130,163
---------
1,516,276
---------
ENERGY-10.15%
Dresser Industries..................... 1,800 39,375
Illinova............................... 2,000 46,500
Imperial Oil Limited................... 2,400 85,800
Kerr-McGee............................. 1,700 88,188
Royal Dutch Petroleum.................. 1,400 173,600
SCEcorp................................ 4,500 75,375
Sonat.................................. 4,000 121,500
Southwestern Energy.................... 3,000 45,750
Sun.................................... 1,300 39,163
TOTAL S.A.-ADR......................... 3,000 94,125
Unocal................................. 3,800 109,250
Zeigler Coal Holding................... 5,300 60,288
---------
978,914
---------
FINANCIAL & BANKING-10.01%
Bank of New York....................... 1,400 46,025
+Federal Home Loan..................... 3,400 221,850
Federal National Mortgage Association.. 1,300 114,725
First USA.............................. 4,100 174,250
Green Tree Financial................... 1,400 57,225
MBNA................................... 5,800 175,450
Mellon Bank............................ 1,300 51,025
*PMI Group............................. 2,000 74,500
Wilmington Trust....................... 2,000 50,000
---------
965,050
---------
INSURANCE & HEALTH CARE-4.61%
Abbott Laboratories.................... 3,100 122,063
Bard (C.R.)............................ 2,700 78,638
Equitable of Iowa...................... 1,000 36,625
Pfizer................................. 500 43,313
SAFECO................................. 700 39,463
SmithKline Beecham ADR Unit............ 3,200 124,400
---------
444,502
---------
MANUFACTURING-6.23%
AlliedSignal........................... 3,200 126,800
Danaher................................ 1,200 35,700
Fleetwood Enterprises.................. 3,600 82,800
5
<PAGE> 7
NUMBER MARKET
OF SHARES VALUE
Rival.................................. 2,500 $ 40,313
+Tyco International.................... 6,000 315,000
---------
600,613
---------
REAL ESTATE-4.58%
Associated Estates Realty.............. 1,600 31,600
Colonial Properties Trust.............. 1,300 29,738
Developers Diversified Realty.......... 4,800 132,000
Health Care Property Investors......... 2,200 66,550
Nationwide Health Properties........... 1,400 50,575
Security Capital Industrial Trust...... 1,888 29,500
Storage Trust Realty................... 900 18,338
Storage USA............................ 1,200 34,350
Sun Communities........................ 2,300 49,163
---------
441,814
---------
TECHNOLOGY-0.81%
General Motors Class H................. 2,000 78,250
---------
78,250
---------
TRANSPORTATION-0.83%
CSX.................................... 1,000 79,625
---------
79,625
---------
TOTAL COMMON STOCK (COST $7,864,995)... 8,452,947
---------
CONVERTIBLE PREFERRED STOCK-1.62%
Freeport McMoRan Copper & Gold
5.00% pfd cv.......................... 2,000 43,000
RJR Nabisco Holdings
$0.6012 pfd cv........................ 10,000 60,000
Reynolds Metals
7.00% pfd cv.......................... 1,100 53,075
---------
TOTAL CONVERTIBLE PREFERRED STOCK
(COST $167,910)....................... 156,075
---------
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENTS-14.89%
With Deutsche Bank 5.875% 5/1/95
(dated 4/28/95, collateralized by
$310,000 U.S. Treasury Notes
5.875% due 5/31/96, market value
$316,181 and $169,000 U.S.
Treasury Notes 7.125% due 9/30/99,
market value $171,667)................ $478,000 478,000
- ----------
+Ten largest common stock investments representing 24.37% of total net assets.
<PAGE> 8
PRINCIPAL MARKET
AMOUNT VALUE
Repurchase Agreements (Continued)
With J.P. Morgan Securities 5.875%
5/1/95 (dated 4/28/95, collateralized
by $310,000 U.S. Treasury Notes 6.875%
due 2/28/97, market value $315,630 and
$171,000 U.S. Treasury Notes 7.125%
due 10/15/98, market value $174,155)..$ 480,000 $ 480,000
With PaineWebber 5.875% 5/1/95
(dated 4/28/95, collateralized by
$474,000 U.S. Treasury Notes 7.25%
due 2/15/98, market value $487,917)... 478,000 478,000
---------
TOTAL REPURCHASE AGREEMENTS
(COST $1,436,000)..................... 1,436,000
---------
TOTAL MARKET VALUE OF
SECURITIES OWNED -104.18%
(COST $9,468,905)........................... 10,045,022
LIABILITIES NET OF RECEIVABLES
AND OTHER ASSETS - (4.18%).................. (402,760)
----------
NET ASSETS APPLICABLE TO
866,095 SHARES ($1.00 PAR VALUE)
OUTSTANDING -100.00%........................ $9,642,262
==========
NET ASSET VALUE -
DIVIDEND GROWTH FUND A CLASS
($6,880,301 / 618,257 SHARES)............... $11.13
======
NET ASSET VALUE -
DIVIDEND GROWTH FUND B CLASS
($450,270 / 40,557 SHARES).................. $11.10
======
NET ASSET VALUE - DIVIDEND GROWTH
FUND INSTITUTIONAL CLASS
($2,311,691 / 207,281 SHARES)............... $11.15
======
- ------------
* Non-income producing security for the six months ended April 30, 1995.
COMPONENTS OF NET ASSETS AT APRIL 30, 1995:
Common stock, $1 par value, 125,000,000
shares authorized to the Dividend
Growth Fund................................. $8,925,684
Accumulated undistributed income:
Net investment income....................... 22,983
Net realized gain on investments............ 117,478
Net unrealized appreciation of investments.. 576,117
----------
Total net assets............................. $9,642,262
==========
See accompanying notes
6
<PAGE> 9
DELAWARE GROUP DIVIDEND GROWTH FUND
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1995
(Unaudited)
INVESTMENT INCOME:
Dividends.............................. $99,282
Interest............................... 18,682 $117,964
-------
EXPENSES:
Management fees ....................... 22,061
Federal and state registration fees.... 15,815
Dividend disbursing and transfer
agent fees and expenses................ 10,630
Reports to shareholders................ 9,895
Distribution expenses.................. 9,191
Directors' fees........................ 8,491
Amortization of organization expenses.. 6,905
Professional fees...................... 5,102
Custodian fees......................... 3,485
Taxes (other than taxes on income)..... 929
Salaries............................... 867
Other.................................. 2,543
-------
95,914
Less expenses absorbed by
Delaware Management Company, Inc. (52,235) 43,679
------- --------
NET INVESTMENT INCOME.................. 74,285
--------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain from security
transactions......................... 120,457
Net unrealized appreciation of
investments during the period........ 394,442
--------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS.................... 514,899
--------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.............. $589,184
========
See accompanying notes
<PAGE> 10
DELAWARE GROUP DIVIDEND GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS PERIOD
ENDED 12/29/93*
4/30/95 TO
(UNAUDITED) 10/31/94
OPERATIONS:
Net investment income ................................ $ 74,285 $ 101,183
Net realized gain from security transactions.......... 120,457 196,985
Unrealized appreciation during the period............. 394,442 181,675
---------- ----------
Net increase in net assets resulting
from operations..................................... 589,184 479,843
---------- ----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
Dividend Growth Fund A Class........................ (67,833) (32,915)
Dividend Growth Fund B Class........................ (3,071) (85)
Dividend Growth Fund Institutional Class............ (25,836) (22,745)
Net realized gain from security transactions:
Dividend Growth Fund A Class........................ (144,950) --
Dividend Growth Fund B Class........................ (7,067) --
Dividend Growth Fund Institutional Class............ (47,947) --
---------- ----------
(296,704) (55,745)
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Dividend Growth Fund A Class........................ 2,738,289 5,237,687
Dividend Growth Fund B Class........................ 304,076 114,216
Dividend Growth Fund Institutional Class............ 720,898 3,193,830
Net asset value of shares issued upon
reinvestment of dividends from net
investment income and net realized
gain from security transactions:
Dividend Growth Fund A Class........................ 210,740 32,824
Dividend Growth Fund B Class........................ 9,388 85
Dividend Growth Fund Institutional Class............ 73,783 22,745
---------- ----------
4,057,174 8,601,387
---------- ----------
Cost of shares repurchased:
Dividend Growth Fund A Class........................ (889,291) (906,247)
Dividend Growth Fund B Class........................ (50) --
Dividend Growth Fund Institutional Class............ (1,049,193) (888,096)
---------- ----------
(1,938,534) (1,794,343)
---------- ----------
Increase in net assets derived from
capital share transactions.......................... 2,118,640 6,807,044
---------- ----------
NET INCREASE IN NET ASSETS............................ 2,411,120 7,231,142
NET ASSETS:
Beginning of period................................... 7,231,142 --
---------- ----------
End of period (including undistributed net
investment income of $22,983 and $45,438,
respectively)....................................... $9,642,262 $7,231,142
========== ==========
- ------------
* Date of initial public offering.
See accompanying notes
7
<PAGE> 11
DELAWARE GROUP DIVIDEND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 1995
(Unaudited)
Delaware Group Dividend Growth Fund ("the Fund"), a series of Delaware Group
Delaware Fund, Inc., is registered as a diversified open-end investment company
under the Investment Company Act of 1940. The Fund is organized as a Maryland
corporation and offers three classes of shares.
1. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund for financial
statement preparation:
SECURITY VALUATION - Securities listed on an exchange are valued at the last
quoted sales price as of 4:00 pm on the valuation date. Securities not traded
are valued at the last quoted bid price. 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 when 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.
FEDERAL INCOME TAXES - The Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes is required in the financial
statements.
REPURCHASE AGREEMENTS - The Fund may invest in a pooled cash account along with
other members of the Delaware Group Family of Funds. The aggregate daily balance
of the pooled cash account is invested in repurchase agreements secured by
obligations of the U.S. Government. The respective collateral is held by the
Fund's custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is 102% collateralized. However, in the
event of default or bankruptcy by the counterparty to the agreement, realization
of the collateral may be subject to legal proceedings.
CLASS ACCOUNTING - Investment income, common expenses and gain (loss) are
allocated to the various classes of the Fund on the basis of daily net assets.
Distribution expenses relating to a specific class are charged directly to that
class.
OTHER - Expenses common to all funds within the Delaware Group 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 an
accrual basis.
2. INVESTMENT MANAGEMENT AND DISTRIBUTION AGREEMENTS
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company, Inc. (DMC), the investment manager of the
Fund, an annual fee which is calculated daily at the rate of 0.60% on the first
$500 million of average daily net assets of the Fund and 0.50% on the average
daily net assets over $500 million.
DMC has elected voluntarily to waive its fee and reimburse the Fund to the
extent that annual operating expenses, exclusive of taxes, interest, brokerage
commissions, extraordinary expenses and 12b-1 expenses exceed 0.95% of average
net assets for each class through June 30, 1995. Total expenses absorbed by DMC
for the six months ended April 30, 1995, were $52,235.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. (DDLP), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.30% of the average daily net assets of A Class and 1.00% of the average
daily net assets of B Class. No distribution expenses are paid by the
Institutional Class. For the six months ended April 30, 1995, the Fund paid DDLP
$4,656 for commissions earned on sales of Dividend Growth Fund A Class shares.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to serve as dividend disbursing and transfer agent for the Fund. For the six
months ended April 30, 1995, the Fund expensed $10,630 for these services.
On April 30, 1995, the Fund has expenses payable relating to operations to DMC
and its affiliates of $38,875.
Certain officers of the Investment Manager are officers, directors and/or
employees of the Fund. These officers, directors and employees are paid no
compensation by the Fund.
On April 3, 1995, Delaware Management Holdings, Inc., the indirect parent of
DMC, DDLP and DSC, through a merger transaction (the "Merger") became a
wholly-owned subsidiary of Lincoln National Corporation. Other than the
resulting change in ownership, the Merger will not materially change the manner
in which DMC has heretofore conducted its relationship with the Fund. The same
personnel who managed the operation and affairs of the Fund before the Merger
have continued to manage its operations and affairs since the Merger.
8
<PAGE> 12
3. INVESTMENTS
During the six months ended April 30, 1995, the Fund made purchases of
$5,518,311 and sales of $4,237,519 of investment securities other than U.S.
Government securities and temporary cash investments.
At April 30, 1995, unrealized appreciation for federal income tax purposes
aggregated $574,597 of which $687,524 related to unrealized appreciation of
securities and $112,927 related to unrealized depreciation of securities.
The realized gain for federal income tax purposes was $120,457 for the six
months ended April 30, 1995.
4. CAPITAL STOCK
Transactions in capital stock shares were as follows:
SIX PERIOD
MONTHS 12/29/93*
ENDED TO
4/30/95 10/31/94
Shares sold:
Dividend Growth Fund A Class........................ 255,869 509,283
Dividend Growth Fund B Class........................ 29,040 10,585
Dividend Growth Fund Institutional Class............ 67,505 314,972
Shares issued upon reinvestment of
dividends from net investment
income and net realized gain from
security transactions:
Dividend Growth Fund A Class........................ 20,839 3,171
Dividend Growth Fund B Class........................ 929 8
Dividend Growth Fund Institutional Class............ 7,288 2,201
---------- ----------
381,470 840,220
---------- ----------
Shares repurchased:
Dividend Growth Fund A Class........................ (83,241) (87,664)
Dividend Growth Fund B Class........................ (5) --
Dividend Growth Fund Institutional Class (99,292) (85,393)
---------- ----------
(182,538) (173,057)
---------- ----------
Net increase........................................ 198,932 667,163
========== ==========
- ------------
* Date of initial public offering.
5. LINES OF CREDIT
The Fund has a committed line of credit for $500,000. No amount was outstanding
at April 30, 1995, or at any time during the last fiscal period.
9
<PAGE> 13
6. FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
DIVIDEND GROWTH FUND DIVIDEND GROWTH FUND DIVIDEND GROWTH FUND
A CLASS B CLASS INSTITUTIONAL CLASS
------------------------- ------------------------- -------------------------
SIX MONTHS(1) 12/29/93(2) SIX MONTHS(1) 9/06/94(8) SIX MONTHS(1) 12/29/93(2)
ENDED TO ENDED TO ENDED TO
4/30/95 10/31/94 4/30/95 10/31/94 4/30/95 10/31/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $10.830 $10.000 $10.820 $10.900 $10.860 $10.000
Income (loss) from investment operations:
Net investment income........................... 0.099 0.136 0.094 0.027 0.148 0.201
Net realized and unrealized gain (loss) from
security transactions......................... 0.661 0.784 0.626 (0.077) 0.622 0.749
------- ------- ------- ------- ------- -------
Total from investment operations................ 0.760 0.920 0.720 (0.050) 0.770 0.950
Less distributions:
Dividends from net investment income............ (0.140) (0.090) (0.120) (0.030) (0.160) (0.090)
Distributions from net realized gain on security
transactions.................................. (0.320) -- (0.320) -- (0.320) --
------- ------- ------- ------- ------- -------
Total distributions............................. (0.460) (0.090) (0.440) (0.030) (0.480) (0.090)
------- ------- ------- ------- ------- -------
Net asset value, end of period.................. $11.130 $10.830 $11.100 $10.820 $11.150 $10.860
======= ======= ======= ======= ======= =======
Total return(3)................................... 7.47% 11.09% 7.08% (0.46%) 7.56% 11.45%
Ratios/supplemental data:
Net assets, end of period (000 omitted)......... $6,880 $4,600 $450 $115 $2,312 $2,516
Ratio of expenses to average net assets......... 1.25%(4) 1.25%(4) 1.95%(6) 1.95%(6) 0.95%(9) 0.95%(9)
Ratio of net investment income to average
net assets.................................... 2.00%(5) 1.96%(5) 1.30%(7) 1.26%(7) 2.30%(10) 2.26%(10)
Portfolio turnover.............................. 122% 180% 122% 180% 122% 180%
</TABLE>
- ------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of initial public offering; ratios and total return have been
annualized.
(3) Total return does not include maximum sale charges of 5.75% nor the 1%
limited contingent deferred sales charge that would apply in the event of
certain redemptions within 12 months of purchase for Dividend Growth Fund A
Class or the contingent deferred sales charge which varies from 1%-4%
depending upon the holding period for Dividend Growth Fund B Class.
(4) Ratio of expenses to average net assets prior to expense limitation was
2.68% for the six months ended April 30, 1995, and 3.26% for the period
ended October 31, 1994.
(5) Ratio of net investment income (loss) to average net assets prior to
expense limitation was 0.57% for the six months ended April 30, 1995, and
-0.05% for the period ended October 31, 1994.
(6) Ratio of expenses to average net assets prior to expense limitation was
3.38% for the six months ended April 30, 1995, and 3.96% for the period
ended October 31, 1994.
(7) Ratio of net investment loss to average net assets prior to expense
limitation was -0.13% for the six months ended April 30, 1995, and -0.75%
for the period ended October 31, 1994.
(8) Date of initial public offering; ratios have been annualized and total
return has not been annualized.
(9) Ratio of expenses to average net assets prior to expense limitation was
2.38% for the six months ended April 30, 1995, and 2.96% for the period
ended October 31, 1994.
(10) Ratio of net investment income to average net assets prior to expense
limitation was 0.87% for the six months ended April 30, 1995, and 0.25% for
the period ended October 31, 1994.
10
<PAGE> 14
<TABLE>
<CAPTION>
<S> <C> <C>
BOARD MEMBERS OTHER AFFILIATED OFFICERS
MR. WAYNE A. STORK MS. ANN R. LEVEN MR. KEITH E. MITCHELL
Chairman Treasurer President and CEO
Delaware Group of Funds National Gallery of Art Delaware Distributors, L.P.
Philadelphia, PA Washington, DC
MR. DAVID K. DOWNES
MR. WALTER P. BABICH MR. W. THACHER LONGSTRETH President
Board Chairman Vice Chairman Delaware Management Trust Company
Citadel Constructors, Inc. Packquisition Corp.
King of Prussia, PA Philadelphia, PA MR. GEORGE M. CHAMBERLAIN, JR.
Secretary
MR. ANTHONY D. KNERR MR. CHARLES E. PECK Delaware Group of Funds
Consultant Secretary of Enterprise Homes, Inc
Anthony Knerr & Associates Fredricksburg, VA MR. BRIAN F. WRUBLE
New York, NY former Chairman and CEO President and CEO
The Ryland Group, Inc. Delaware Group of Funds
Columbia, MD Philadelphia, PA
</TABLE>
This semi-annual report is for the information of shareholders of Dividend
Growth Fund, but it may be used with prospective investors when preceded or
accompanied by a current PROSPECTUS, which gives details about charges,
expenses, investment objectives and operating policies of the Fund. Summary
investment results are documented in the current STATEMENT OF ADDITIONAL
INFORMATION. If used with prospective investors after June 30, 1995, this report
must also be accompanied by a Dividend Growth Fund Performance Update for the
most recently completed calendar quarter. The figures in this report represent
past results which are not a guarantee of future results. The return and
principal value of an investment in the Fund will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
<PAGE> 15
The Delaware Group includes DELAWARE GROUP funds with a wide range of A
TRADITION OF SOUND INVESTING SINCE 1929 investment objectives. Stock funds,
income funds, tax-free funds, money market funds, closed-end equity/income funds
and global funds give investors the ability to create a portfolio that fits
their personal financial goals. For more information, including a prospectus of
any Delaware Group fund, contact your financial adviser or call Delaware Group
at 800-523-4640 or 215-988-1333 in Philadelphia. Read the prospectus
carefully before investing.
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENTS. MUTUAL
FUNDS CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES OF THE FUND
ARE NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY BANK OR ANY CREDIT
UNION, ARE NOT OBLIGATIONS OF ANY BANK OR ANY CREDIT UNION, AND INVOLVE
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND
ARE NOT BANK OR CREDIT UNION DEPOSITS.
DELAWARE GROUP
(PHOTO OF COLONIAL OBJECTS)
INVESTMENT MANAGER |
Delaware Management Company, Inc. |
Philadelphia |
INTERNATIONAL AFFILIATE |
Delaware International Advisers Ltd. |
London 1995 |
NATIONAL DISTRIBUTOR |
Delaware Distributors, L.P. SEMI- |
Philadelphia |
SHAREHOLDER SERVICING, ANNUAL |
DIVIDEND DISBURSING |
AND TRANSFER AGENT REPORT | DELAWARE
Delaware Service Company, Inc. | GROUP
Philadelphia | ========
| Dividend
| Growth Fund
SA-039[4/30]PP695 |
