<PAGE>
Delaware Devon Fund
(various photos demonstrating service and guidance,
professional management and goals)
service and guidance
professional management
1999
Annual Report
goals
F O R T O T A L R E T U R N
DELAWARE(SM)
INVESTMENTS
- ---------------------
Philadelphia o London
<PAGE>
A TRADITION OF SOUND INVESTING
commitment
A Commitment
To Our Investors
Delaware Investments has a tradition of money management that dates back to
1929. We have a long and distinguished history of helping individuals and
institutions--including some of America's largest pension funds--reach their
financial goals.
Headquartered in Philadelphia, a block from the nation's oldest stock
exchange, the Delaware organization established its first mutual fund in 1938.
Delaware International Advisers Ltd., our international affiliate, was
established in 1990 and is headquartered in London.
Delaware Investments offers a full range of mutual funds. We also manage
investments for variable annuities and closed-end funds as well as offer a wide
range of retirement plan services for individuals and businesses.
Delaware Investments has approximately $45 billion in mutual fund assets and
institutional advisory accounts under management for more than half-a-million
investors.
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.
(photo of computer keyboard)
(photo of illustration from total return brochure)
Delaware Devon Fund Objective
To seek current income and capital appreciation.
Table of Contents
LETTER TO SHAREHOLDERS Page 1
PORTFOLIO MANAGER'S REVIEW Page 4
PERFORMANCE SUMMARY Page 8
STATEMENT OF NET ASSETS Page 9
FINANCIAL HIGHLIGHTS Page 12
total
return
tradition
<PAGE>
November 17, 1999
for total
return
1
Dear Shareholder:
DURING THE PAST 12 MONTHS, INVESTORS preoccupation with the policymaking
decisions of the Federal Reserve Board translated into unpredictable mood swings
in U.S. securities markets.
As we began fiscal 1999 last November, the Federal Reserve had just reduced
its target for short-term interest rates twice in an effort to increase
liquidity in the investment markets and calm fears of a U.S. recession that had
arisen in the wake of worldwide economic strife. These rate reductions, combined
with a third rate cut in late November 1998, helped restore investor confidence
in the U.S. economy and led to substantial price appreciation in stocks of all
market capitalizations.
But as concerns about continued economic growth and the future growth of
corporate profits crept back into the picture in early 1999, investors generally
narrowed their stock selection to the largest companies. Apparently, they
believed these companies would be more likely to sustain earnings growth if the
economy weakened. The Dow Jones Industrial Average skyrocketed above 10,000 for
the first time in late March, led by a select group of large company growth
stocks.
The Dow topped 11,000 in early May after the release of strong economic data
boosted investors' expectations for a broader selection of stocks, particularly
those selling at attractive prices relative to company earnings.
Delaware Devon Fund thrived during the months of April, May and June as a
broad array of stocks participated in the market's price gains. The Fund's
emphasis on consistent growth at reasonable prices left it well-positioned to
benefit from a broad
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------------
FOR PERIODS ENDED OCTOBER 31, 1999
12 Months Lifetime
- --------------------------------------------------------------------------------------
<S> <C> <C>
Delaware Devon Fund A Class -0.42% +17.80%
Lipper Multi-Cap Value Fund Average +11.75% (484 funds) +15.02% (170 funds)
Standard & Poor's 500 Index +24.05% +20.18%
- --------------------------------------------------------------------------------------
</TABLE>
All performance shown above is at net asset value without the effect of sales
charges and assumes reinvestment of dividends and capital gains. Expense
limitations were in effect for the periods shown. Returns would have been lower
without the limitations. Performance information for all Fund classes can be
found on page 8. The Lipper category represents the annual returns of multi-cap
value funds tracked by Lipper Analytical. The Standard & Poor's 500 is an
unmanaged composite of mostly large capitalization U.S. companies. Source:
Lipper Analytical Services, Inc. It is not possible to invest directly in an
index. Past performance does not guarantee future results.
<PAGE>
for total
return
2
advance in the stock market. Our strong performance in late spring helped offset
significant underperformance of three of the Fund's top holdings that occurred
earlier in the fiscal year.
We were optimistic that the market's performance during the spring was the
beginning of a trend in which stock market performance would be driven by a
wider number of stocks. But, we also recognized that there might be a tug-of-war
between the very large growth stocks that had been leading the market and the
many other stocks that had been out-of-favor. This proved to be the case. As
summer heated up, the Fed moved to a more restrictive monetary policy, concerned
that the U.S. economy might overheat, leading to higher inflation. Between June
and August, the Fed raised short-term interest rates twice. Against this
backdrop, a very narrow group of stocks once again led the market as investors
focused almost exclusively on high-priced large company stocks.
The narrow market weighed heavily on Delaware Devon Fund's performance as we
concluded fiscal 1999. For the 12 months ended October 31, 1999, Delaware Devon
Fund returned -0.42% (for A Class shares at net asset value with distributions
reinvested). There were several key reasons that we were unable to keep pace
with the results of our Lipper peer group and our unmanaged benchmark.
o First, stocks of mid-size companies--those with market capitalizations between
$2 billion and $10 billion--comprised roughly one-third of the portfolio. This
segment of the market generally performed poorly at the beginning and end of
our reporting period because investors seemed to favor companies with the
largest capitalizations.
o Second, by adhering to Delaware Devon Fund's focus on consistent earnings
growth at reasonable prices, we had minimal holdings of technology and
cyclical stocks--sectors that delivered
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
AS OF OCTOBER 31, 1999
Median Market Capitalization $8.9 billion
Number of Stocks 59
Average Stock Price-to-Earnings Ratio* 20.2x
Top Sectors Banking, Finance & Insurance
Annual Portfolio Turnover Rate 82%
Beta** 0.81
- --------------------------------------------------------------------------------
* P/Es are based on analysts' year 2000 forward earnings estimates as reported
to First Call as of October 31, 1999.
** Beta is a measure of risk relative to the S&P 500 Index. A number less than
1.0 means less historical price volatility than the index. A number higher
than 1.0 means more historical volatility than the index.
<PAGE>
for total
return
3
the strongest returns between June and September. Cyclical companies, in
general, do not have consistent earnings and therefore, we typically do not
invest in them. Many technology stocks currently have very high
price-to-earnings ratios. Thus, most have not met our standard for "reasonable
prices."
On the pages that follow, Francis X. Morris, Delaware Devon Fund's senior
portfolio manager, reviews performance in the U.S. stock market over the past 12
months. He also shares his outlook for the year ahead.
We understand that the past year has been a difficult one for Delaware Devon
Fund and we appreciate your willingness to maintain a long-term perspective and
stay committed to your investment with us. While we can't predict when the stock
market's fixation with the narrow group of large company growth stocks will end,
we do believe that eventually the opportunities available from the many other
exceptional U.S. companies will capture the market's attention. We are confident
that our disciplined investment style has positioned Delaware Devon Fund to
benefit when a broadening occurs, just as it did earlier this year.
Sincerely,
/s/ Wayne A. Stork
- ---------------------------------------
WAYNE A. STORK
Chairman,
Delaware Investments Family of Funds
/s/ David K. Downes
- ---------------------------------------
DAVID K. DOWNES
President and Chief Executive Officer
Delaware Investments Family of Funds
discipline
<PAGE>
for total
return
4
Portfolio Manager's Review
BY FRANCIS X. MORRIS
Vice President/Senior Portfolio Manager
November 17, 1999
U.S. STOCKS: A HANDFUL OF WINNERS DOMINATE RETURNS
Early in our fiscal year, U.S. stocks of all sizes staged a strong rally after
the Federal Reserve reduced the federal funds rate--the interest rate charged
between banks for overnight loans--to help sustain U.S. economic growth. Still,
large-cap growth stocks produced the best returns of any market segment for all
of 1998, reflecting investors' fixation on the biggest, most successful stocks.
During the first few months of 1999, the stock market's gains continued to be
fueled by a select group of large-cap growth stocks. As a result,
price-to-earnings ratios, or P/Es, on some stocks within the Standard & Poor's
500 Index reached what we consider exaggerated levels. P/E is an indicator of
how much investors are willing to pay for a company's earning power, generally
the higher the P/E, the more they are paying; the lower the P/E, the less they
are paying.
In our view, with the exception of the top 20 stocks in the S&P 500, the
majority of stocks in the index were relatively inexpensive compared to
earnings. We believe this was also true of small and mid-size companies, which
had become significantly undervalued compared to large-cap issues.
Investors Expand Their Stock Selection
With the release of strong economic data in the spring, investors began to
reallocate their money to relatively undervalued areas of the market where
strong earnings growth potential could be bought at more reasonable prices.
Suddenly, a broad array of stocks was posting measurable gains. Delaware Devon
Fund benefited from this broader playing field.
Though we believed this marked the beginning of a trend in which a wider
number of stocks would participate in the market's performance, we knew there
was likely to be some resistance from large-cap stocks. Such was the case.
Between June and November, the Federal Reserve raised its target for short-term
interest rates three times. Investors began selling stocks of all market
capitalizations, apparently fearful of future rate increases. Once again, they
narrowed their focus to the largest growth companies, with a particular emphasis
on a few big technology companies.
SUDDENLY, A BROAD ARRAY OF STOCKS WAS POSTING MEASURABLE GAINS. DELAWARE DEVON
FUND BENEFITED FROM THIS BROADER PLAYING FIELD.
overview
<PAGE>
for total
return
5
(photo of couple talking to financial advisor)
STRATEGIC POSITIONING
Delaware Devon Fund adheres to a disciplined investment strategy that focuses on
what we call "transition stocks"--that is, stocks we believe are currently
selling below their true value with strong prospects for future growth. Our
expectation is that these stocks will be reasonably priced when we purchase them
and then appreciate in price as they "transition" from mid-size to large-size in
terms of market capitalization, or from being value stocks to being growth
stocks of either larger or mid-market capitalizations. Because our strategy is
to capture growth as stocks move through these transitions, we tend to own
stocks for relatively long time periods.
During fiscal 1999, our strategy precluded us from investing in the top tier
performers in the S&P 500, given that most of those stocks--including technology
stocks--had high P/E ratios, an indication that they were expensive relative to
their future earnings potential. This is the primary reason why the Fund did not
keep pace with the S&P 500 or mutual funds that hold the stocks that led the S&P
500.
Traditionally, technology is an area where we have less exposure than the
S&P 500. In fiscal 1999, this was due to exceptionally high prices that did not
meet our value-conscious investment criteria (see our stock selection checklist
below). As of October 31, the Fund's holdings in technology-related companies
were approximately half the weighting of the S&P 500. Our holdings included a
mix of mid-size companies, such as Symbol Technologies, BMC Software and
Computer Associates International, and large companies, such as IBM,
Hewlett-Packard and Intel.
Our strategy also typically steers us away from investing heavily in cyclical
industries--including paper, energy and chemicals--given that these areas have
historically had earnings spurts rather than the consistent growth we look for.
Whenever we do find cyclical stocks that meet our consistent growth discipline,
we try to add them to our holdings since we think these stocks may benefit from
the economic recovery that is underway in world markets.
positioning
Delaware Devon Fund's
Stock Selection Checklist
When we consider a stock for the portfolio, we ask ourselves the following
questions. Our goal is to select stocks from a broad spectrum of industries
where we can answer such questions positively.
o Is the stock selling at an attractive price relative to its potential earnings
growth?
o Has the company demonstrated that it can grow earnings consistently through a
variety of economic environments?
o Is the company generating excess cash flow that can be reinvested in the
business?
o Is there a company-specific event (i.e., an expansion or acquisition) that can
push earnings beyond expectations or support earnings if business conditions
in the industry weaken?
o Is the company under-researched by Wall Street stock analysts, so that the
market does not seem to be recognizing its potential?
<PAGE>
for total
return
6
Since spring, we have made some changes in the portfolio--reducing and, in
some cases, selling, many of the Fund's oldest and largest holdings because we
believed they had completed their transition from mid- to large-cap, and from
being undervalued to being fairly valued. For example, we reduced the Fund's
weighting in Ecolabs from about 3.75% to 1.4% of net assets between April 30 and
October 31. We also sold Rite Aid, Stewart Enterprises and Mylan Laboratories,
three of our top 10 holdings in April, as well as Service Corp. International.
While these stocks generally had a positive impact on the Fund during the
overall time that we held them, in the recent past, they had suffered due to
earnings disappointments and were sold under our sell discipline.
As we reduced and sold several names in the portfolio, we added stocks of
companies that we believe offer more attractive opportunities for capital
appreciation. These companies span a number of different industries, including
newspaper publishing and discount retailing. We also added selectively to our
financial holdings, with an emphasis on bank stocks where prices currently look
very attractive to us relative to the companies' future earnings growth
potential.
While health care stocks generally have relatively high P/Es, the recent
market correction brought a number of health care companies into our buying
universe. We recently added new positions in selected drug manufacturers and a
maker of reconstructive hip, knee and joint replacements, all of which sell
products aimed at the needs of America's aging population.
(photo of family on beach)
A LONG-TERM PERFORMANCE PERSPECTIVE:
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
Delaware Devon Fund Lipper Growth &
Class A Income Fund Average # Funds
------------------- ------------------- -------
12/31/93 to 12/31/94 5.63 -0.39 170
12/31/94 to 12/31/95 35.44 31.62 209
12/31/95 to 12/31/96 22.9 21.29 258
12/31/96 to 12/31/97 34.93 26.17 339
12/31/97 to 12/31/98 22.17 9.04 407
All performance shown above is at net asset value without the effect of sales
charges and assumes reinvestment of dividends and capital gains. Expense
limitations were in effect for the period shown. Returns would have been lower
without the limitations. Performance information for all Fund classes can be
found on page 8. Past performance does not guarantee future results. The Lipper
category represents the annual returns of multi-cap funds tracked by Lipper
Analytical Services, Inc.
<PAGE>
for total
return
7
(photo of computer keyboard)
Capital goods companies (such as electronics and electrical equipment
companies) became an increasingly attractive area for us to invest over the past
12 months. There are two reasons for this. First, P/Es on capital goods
companies, in general, have been depressed partially due to the narrowness of
the U.S. stock market. Second, we believe these companies will benefit from the
recent pick up in worldwide economic growth, particularly in Asia and Europe.
OUTLOOK
We expect stronger worldwide economic growth in the months ahead. Given that
outlook, we are trying to position the portfolio to benefit from such
anticipated growth. We are concentrating on capital goods, energy and selected
financial stocks which, based on our research, appear to have strong future
earnings potential and yet, are selling at relatively attractive prices.
Currently, the anticipated average earnings growth for stocks in the Delaware
Devon Fund portfolio is estimated to exceed 20% for fiscal 2000, versus 12% for
the average of companies in the S&P 500. We are excited about the growth
potential for these securities.
Over the long term, Delaware Devon Fund has consistently generated annual
returns that outperform the average multi-cap value fund as measured by Lipper
Analytical Services, Inc. We attribute this to our commitment to invest in
companies that are growing their earnings consistently, over time. Certainly,
there will be times, such as the recent past, that our strategy will be out of
favor. But we think our disciplined approach--and our adherence to that approach
throughout favorable and unfavorable market cycles--will prove very beneficial
to our shareholders over the long term.
outlook
"We stand behind what we believe are our best selections. As a result, Delaware
Devon Fund's top 10 holdings generally comprise about one-third of the
portfolio."
Frank X. Morris
TOP 10 HOLDINGS
- ------------------------------------
OCTOBER 31, 1999
Company Percent
- ------------------------------------
Symbol Technologies 4.23%
Federal Home Loan Mortgage 3.36%
Masco 3.08%
Washington Mutual 3.06%
Honeywell 2.94%
Intimate Brands 2.85%
SBC Communications 2.78%
American Home Products 2.73%
Knight-Ridder 2.72%
Dial 2.71%
TOP 10 SECTORS
- ----------------------------------------------
OCTOBER 31, 1999
Sector Percent
- ----------------------------------------------
Banking, Finance & Insurance 17.66%
Electronics & Electrical Equipment 10.11%
Telecommunications 9.14%
Energy 8.70%
Healthcare & Pharmaceuticals 8.55%
Retail 7.56%
Computers & Technology 5.43%
Cable, Media & Publishing 4.83%
Buildings & Materials 4.71%
Food, Beverage & Tobacco 2.83%
<PAGE>
for total
return
8
Performance Summary
DELAWARE DEVON FUND
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
DECEMBER 29, 1993 TO OCTOBER 31, 1999
Delaware Devon Fund Lipper Multi-Cap Value Standard & Poor's
A Class Fund Average 500 Index
------------------- ---------------------- -----------------
Dec. '93 $9,744 $9,984 $10,000
Feb. '94 9,755 9,692
Apr. '94 9,689 9,589
Jun. '94 10,340 10,235
Aug. '94 10,258 10,077 10,126
Oct. '94 9,955 9,800
Dec. '94 10,498 10,337
Feb. '95 11,021 10,861
Apr. '95 11,536 11,476
Jun. '95 12,013 11,991
Aug. '95 12,513 12,147 12,467
Oct. '95 13,483 12,858
Dec. '95 13,831 13,409
Feb. '96 14,010 13,816
Apr. '96 14,739 13,957
Jun. '96 14,453 13,771
Aug. '96 15,534 14,637 15,120
Oct. '96 16,571 15,533
Dec. '96 17,540 16,299
Feb. '97 17,371 16,264
Apr. '97 19,189 17,930
Jun. '97 20,060 18,742
Aug. '97 20,522 18,969 19,608
Oct. '97 22,359 19,763
Dec. '97 24,064 21,042
Feb. '98 24,904 22,084
Apr. '98 24,868 21,690
Jun. '98 21,830 17,832
Aug. '98 24,546 20,115 23,554
Oct. '98 27,315 21,702
Dec. '98 25,242 21,171
Feb. '99 26,711 23,318
Apr. '99 27,280 24,008
Jun. '99 24,845 22,531
Oct. '99 $24,443 $22,416 $29,219
Chart assumes $10,000 invested on December 29, 1993 and includes the effect of a
5.75% maximum front-end sales charge and the reinvestment of all distributions.
Performance of other classes of Delaware Devon Fund will vary due to differing
charges and expenses. Past performance does not guarantee future results. The
Standard & Poor's Index is an unmanaged composite of large-capitalization U.S
growth stocks. It is not possible to invest directly in any index.
<PAGE>
DELAWARE DEVON FUND PERFORMANCE
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH OCTOBER 31, 1999
Lifetime Five Years One Year
- --------------------------------------------------------------------------------
Class A (Est. 12/29/93)
Excluding Sales Charge +17.80% +18.96% -0.42%
Including Sales Charge +16.61% +17.57% -6.16%
- --------------------------------------------------------------------------------
Class B (Est. 9/6/94)
Excluding Sales Charge +17.46% +18.15% -1.12%
Including Sales Charge +17.36% +17.94% -6.02%
- --------------------------------------------------------------------------------
Class C (Est. 11/29/95)
Excluding Sales Charge +16.69% -1.12%
Including Sales Charge +16.69% -2.10%
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. Expense limitations were in effect for the periods
shown in both charts. Performance would have been lower without the limitations.
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 Institutional Class Returns Through October 31, 1999
Lifetime Five Years One Year
Delaware Devon Fund
Institutional Class (Est. 12/29/93) +18.15% +19.32% -0.09%
Institutional Class shares are available without sales or asset-based
distribution charges only to certain eligible institutional accounts.
<PAGE>
for total return 9
Financial Statements
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE DEVON FUND
STATEMENT OF NET ASSETS
OCTOBER 31, 1999
NUMBER MARKET
OF SHARES VALUE
--------- -----
COMMON STOCK - 95.43%
AEROSPACE & DEFENSE - 1.06%
United Technologies ............................ 56,500 $ 3,418,250
-----------
3,418,250
-----------
AUTOMOBILES & AUTO PARTS - 2.43%
Danaher ........................................ 94,500 4,565,531
Federal Signal ................................. 173,000 3,254,563
-----------
7,820,094
-----------
BANKING, FINANCE & INSURANCE - 17.66%
AFLAC .......................................... 132,600 6,779,175
American International Group ................... 43,762 4,504,751
Citigroup ...................................... 132,200 7,155,325
Federal Home Loan Mortgage ..................... 200,200 10,823,313
Fleet Boston ................................... 27,400 1,195,325
MBNA ........................................... 239,500 6,616,187
Nationwide Financial Services Class A .......... 179,400 6,794,775
Unionbancal .................................... 72,900 3,166,594
Washington Mutual .............................. 274,800 9,875,625
-----------
56,911,070
-----------
BUILDINGS & MATERIALS - 4.71%
Masco .......................................... 325,200 9,918,600
Premark International .......................... 96,000 5,256,000
-----------
15,174,600
-----------
CABLE, MEDIA & PUBLISHING - 4.83%
Gannett ........................................ 88,100 6,794,713
+Knight-Ridder .................................. 138,000 8,763,000
-----------
15,557,713
-----------
CHEMICALS - 1.62%
Avery Dennison ................................. 79,200 4,950,000
Valspar ........................................ 9,400 283,763
-----------
5,233,763
-----------
COMPUTERS & TECHNOLOGY - 5.43%
*BMC Software ................................... 79,400 5,094,006
Computer Associates International .............. 81,600 4,610,400
Hewlett-Packard ................................ 30,000 2,221,875
International Business Machines ................ 56,500 5,558,188
-----------
17,484,469
-----------
CONSUMER PRODUCTS - 2.71%
Dial ........................................... 373,000 8,718,874
-----------
8,718,874
-----------
ELECTRONICS & ELECTRICAL EQUIPMENT - 10.11%
Honeywell ...................................... 90,000 9,489,375
Intel .......................................... 71,000 5,495,844
Symbol Technologies ............................ 343,050 13,636,238
Teleflex ....................................... 116,300 3,961,469
-----------
32,582,926
-----------
<PAGE>
NUMBER MARKET
OF SHARES VALUE
--------- -----
COMMON STOCK (Continued)
ENERGY - 8.70%
Anadarko Petroleum ........................... 76,100 $ 2,344,831
BP Amoco - ADR ............................... 87,316 5,042,499
Coastal ...................................... 129,000 5,434,125
Schlumberger Limited ......................... 100,300 6,074,419
Tosco ........................................ 138,000 3,493,125
Unocal ....................................... 163,100 5,626,950
-----------
28,015,949
-----------
ENVIRONMENTAL SERVICES - 1.38%
Ecolab ....................................... 131,200 4,436,200
-----------
4,436,200
-----------
FOOD, BEVERAGE & TOBACCO - 2.83%
Bestfoods .................................... 62,100 3,648,375
+*Suiza Foods .................................. 123,700 4,460,931
Universal Foods .............................. 53,100 1,015,538
-----------
9,124,844
-----------
HEALTHCARE & PHARMACEUTICALS - 8.55%
American Home Products ....................... 168,700 8,814,575
Biomet ....................................... 142,900 4,300,397
Johnson & Johnson ............................ 57,200 5,991,700
Schering-Plough .............................. 95,700 4,737,150
*Watson Pharmaceutical ........................ 116,500 3,698,875
-----------
27,542,697
-----------
INDUSTRIAL MACHINERY - 2.17%
Black & Decker ............................... 67,500 2,902,500
Pentair ...................................... 109,100 4,104,886
-----------
7,007,386
-----------
LEISURE, LODGING & ENTERTAINMENT - 1.66%
Viad ......................................... 217,900 5,352,168
-----------
5,352,168
-----------
REAL ESTATE - 2.45%
CarrAmerica Realty ........................... 121,300 2,698,925
Developers Diversified Realty ................ 180,600 2,573,550
Sun Communities .............................. 82,700 2,636,063
-----------
7,908,538
-----------
RETAIL - 7.56%
*Blockbuster .................................. 247,800 3,004,575
+Intimate Brands .............................. 223,740 9,173,340
Lowe's Companies ............................. 74,300 4,086,500
TJX .......................................... 297,900 8,080,536
-----------
24,344,951
-----------
<PAGE>
10 for total return
STATEMENT OF NET ASSETS (CONTINUED)
NUMBER MARKET
OF SHARES VALUE
--------- -----
COMMON STOCK (CONTINUED)
TELECOMMUNICATIONS - 9.14%
ALLTEL ....................................... 93,400 $ 7,775,550
GTE .......................................... 79,600 5,970,000
*MCI Worldcom ................................. 78,800 6,759,563
SBC Communications ........................... 175,800 8,954,813
-----------
29,459,926
-----------
TEXTILES, APPAREL & FURNITURE - 0.43%
HON Industries ............................... 70,200 1,377,675
-----------
1,377,675
-----------
Total Common Stock (cost $289,498,006) ....... 307,472,093
-----------
CONVERTIBLE PREFERRED STOCKS - 1.27%
Freeport-McMoran Copper & Gold ............... 50,500 811,156
Sealed Air ................................... 60,985 3,293,190
-----------
Total Convertible Preferred Stocks
(cost $3,703,063) ......................... 4,104,346
-----------
PRINCIPAL
AMOUNT
----------
REPURCHASE AGREEMENTS - 2.04%
With Chase Manhattan 5.20% 11/1/99 (dated
10/29/99, collateralized by $2,134,000 U.S. ...
Treasury Notes 6.125% due 12/31/01,
market value $2,188,347) ...................... $2,134,000 2,134,000
With J.P. Morgan Securities 5.20% 11/1/99
(dated 10/29/99, collateralized by
$1,532,000 U.S. Treasury Notes 5.625% due
5/15/01, market value $1,567,596 and
$685,000 U.S. Treasury Notes 6.50% due
8/31/01, market value $699,882) ............... 2,221,000 2,221,000
With PaineWebber 5.20% 11/1/99 (dated
10/29/99, collateralized by $766,000 U.S. .....
Treasury Notes 6.25% due 10/31/01,
market value $795,822 and $1,441,000 U.S. .....
Treasury Notes 6.25% due 2/15/03,
market value $1,472,126) ...................... 2,222,000 2,222,000
----------
Total Repurchase Agreements
(cost $6,577,000) ............................. 6,577,000
----------
- ----------------------
Top ten holdings, representing 30.46% of net assets, are printed in bold.
<PAGE>
TOTAL MARKET VALUE OF SECURITIES OWNED
(cost $299,778,069) - 98.74% ............................... $318,153,439
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.26% ................................. 4,072,231
------------
NET ASSETS APPLICABLE TO 16,385,037 SHARES
($1 PAR VALUE) OUTSTANDING - 100.00% ....................... $322,225,670
============
NET ASSET VALUE - DELAWARE DEVON FUND A CLASS
($137,033,362 / 6,938,669 shares) ................................. $19.75
======
NET ASSET VALUE - DELAWARE DEVON FUND B CLASS
($131,901,323 / 6,736,102 shares) ................................. $19.58
======
NET ASSET VALUE - DELAWARE DEVON FUND C CLASS
($31,476,208 / 1,608,968 SHARES) .................................. $19.56
======
NET ASSET VALUE - DELAWARE DEVON FUND INSTITUTIONAL CLASS
($21,814,777 / 1,101,298 SHARES) .................................. $19.81
======
- ----------------------
+ Security out on loan.
* Non-income producing security for the year ended 10/31/99.
COMPONENTS OF NET ASSETS AT OCTOBER 31, 1999:
Common Stock, $1 par value, 125,000,000 shares
authorized to the Fund ...................................... 306,275,326
Accumulated net realized loss on investments ................... (2,425,026)
Net unrealized appreciation of investments ..................... 18,375,370
------------
Total net assets ............................................... $322,225,670
============
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
DELAWARE DEVON FUND
Net asset value A Class (A) .................................... $19.75
Sales charge (5.75% of offering price, or 6.08% of the
amount invested per share) (B) .............................. 1.20
------
Offering price ................................................. $20.95
======
- ----------------------
(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.
<PAGE>
for total return 11
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE DEVON FUND
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1999
INVESTMENT INCOME:
Dividends ........................................ $ 4,395,877
Interest ......................................... 963,102 $ 5,358,979
------------ ------------
EXPENSES:
Management fees .................................. 2,124,651
Distribution expense ............................. 2,109,428
Dividend disbursing and transfer agent fees
and expenses .................................. 1,297,614
Accounting and administration .................... 199,240
Reports and statements to shareholders ........... 108,544
Registration fees ................................ 86,000
Professional fees ................................ 25,150
Custodian fees ................................... 13,573
Taxes (other than taxes on income) ............... 9,784
Directors' fees .................................. 8,524
Other ............................................ 25,795
------------
6,008,303
Less expenses absorbed or waived ................. (267,957)
Less expenses paid indirectly .................... (15,747)
------------
Total expenses ................................... 5,724,599
------------
NET INVESTMENT LOSS .............................. (365,620)
------------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS:
Net realized loss on investments ................. (2,414,924)
Net change in unrealized appreciation/depreciation
of investments ................................ (7,767,421)
------------
NET REALIZED AND UNREALIZED
LOSS ON INVESTMENTS ........................... (10,182,345)
------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS ..................... $(10,547,965)
============
See accompanying notes
<PAGE>
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE DEVON FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
10/31/99 10/31/98
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) ....................... $ (365,620) $ 562,948
Net realized gain (loss) on investments ............ (2,414,924) 3,276,905
Net change in unrealized appreciation/depreciation
of investments .................................. (7,767,421) 16,771,911
------------- -------------
Net increase (decrease) in net assets
resulting from operations ....................... (10,547,965) 20,611,764
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class ......................................... (221,269) (433,936)
B Class ......................................... -- (17,778)
C Class ......................................... -- (3,847)
Institutional Class ............................. (37,307) (71,629)
Net realized gain on investments:
A Class ......................................... (1,272,835)
B Class ......................................... (904,198)
C Class ......................................... (213,389) (396,243)
Institutional Class ............................. (100,864) (354,447)
Return of capital:
A Class ......................................... (389,563) --
B Class ......................................... -- --
C Class ......................................... -- --
Institutional Class ............................. (82,446) --
------------- -------------
(3,221,871) (6,238,314)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
PROCEEDS FROM SHARES SOLD:
A Class ......................................... 85,370,075 82,073,340
B Class ......................................... 95,416,834 54,410,257
C Class ......................................... 23,683,654 15,601,378
Institutional Class ............................. 25,830,155 9,761,534
Net asset value of shares issued upon
reinvestment of distributions from net investment
income, net realized gain on investments and
return of capital:
A Class ......................................... 1,832,153 3,453,528
B Class ......................................... 846,833 1,765,306
C Class ......................................... 205,107 390,720
Institutional Class ............................. 220,602 426,047
------------- -------------
233,405,413 167,882,110
------------- -------------
Cost of shares repurchased:
A Class ......................................... (66,130,439) (22,386,795)
B Class ......................................... (40,675,526) (6,501,980)
C Class ......................................... (11,034,698) (2,650,180)
Institutional Class ............................. (13,624,757) (6,304,878)
------------- -------------
(131,465,420) (37,843,833)
------------- -------------
Increase in net assets derived from capital
share transactions .............................. 101,939,993 130,038,277
------------- -------------
NET INCREASE IN NET ASSETS ......................... 88,170,157 144,411,727
NET ASSETS:
Beginning of year .................................. 234,055,513 89,643,786
------------- -------------
End of year ........................................ $ 322,225,670 $ 234,055,513
============= =============
</TABLE>
See accompanying notes
<PAGE>
12 for total return
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE DEVON FUND
FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each year were
as follows:
<TABLE>
<CAPTION>
DELAWARE DEVON FUND A CLASS
----------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
10/31/99(1) 10/31/98 10/31/97 10/31/96 10/31/95(1)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ..................... $20.090 $17.860 $14.610 $12.550 $10.830
Income (loss) from investment operations:
Net investment income (loss) ........................ 0.047 0.121 0.182 0.216 0.207
Net realized and unrealized gain
(loss) on investments .............................. (0.114) 3.249 4.243 2.689 2.053
------- ------- ------- ------- -------
Total from investment operations .................... (0.067) 3.370 4.425 2.905 2.260
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment
income ............................................. (0.032) (0.110) (0.210) (0.205) (0.220)
Distributions from net realized gain
on investments ..................................... (0.190) (1.030) (0.965) (0.640) (0.320)
Return of capital ................................... (0.051) -- -- -- --
------- ------- ------- ------- -------
Total dividends and distributions ................... (0.273) (1.140) (1.175) (0.845) (0.540)
------- ------- ------- ------- -------
Net asset value, end of year ........................... $19.750 $20.090 $17.860 $14.610 $12.550
======= ======= ======= ======= =======
Total return(2) ........................................ (0.42%) 19.60% 32.11% 24.14% 21.98%
Ratios and supplemental data:
Net assets, end of year
(000 omitted) ...................................... $137,034 $120,506 $49,262 $14,907 $8,846
Ratio of expenses to average
net assets ......................................... 1.37% 1.30% 1.25% 1.25% 1.25%
Ratio of expenses to average net
assets prior to expense limitation
and expenses paid indirectly ....................... 1.45% 1.40% 1.42% 1.84% 2.29%
Ratio of net investment income (loss)
to average net assets .............................. 0.22% 0.64% 1.14% 1.67% 1.82%
Ratio of net investment income (loss)
to average net assets prior to
expense limitation and expenses
paid indirectly .................................... 0.14% 0.54% 0.97% 1.08% 0.78%
Portfolio turnover .................................. 82% 39% 64% 80% 99%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DELAWARE DEVON FUND B CLASS
----------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
10/31/99(1) 10/31/98 10/31/97 10/31/96 10/31/95(1)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ..................... $19.980 $17.800 $14.540 $12.500 $10.820
Income (loss) from investment operations:
Net investment income (loss) ........................ (0.099) (0.003) 0.081 0.136 0.127
Net realized and unrealized gain
(loss) on investments ............................... (0.111) 3.223 4.219 2.664 2.053
------- ------- ------- ------- -------
Total from investment operations .................... (0.210) 3.220 4.300 2.800 2.180
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment
income .............................................. 0.000 (0.010) (0.075) (0.120) (0.180)
Distributions from net realized gain
on investments ...................................... (0.190) (1.030) (0.965) (0.640) (0.320)
Return of capital ................................... -- -- -- -- --
------- ------- ------- ------- -------
Total dividends and distributions ................... (0.190) (1.040) (1.040) (0.760) (0.500)
------- ------- ------- ------- -------
Net asset value, end of year $19.580 $19.980 $17.800 $14.540 $12.500
======= ======= ======= ======= =======
Total return(2) ........................................ (1.12%) 18.76% 31.21% 23.38% 21.09%
Ratios and supplemental data:
Net assets, end of year
(000 omitted) ....................................... $131,901 $82,927 $28,757 $3,399 $863
Ratio of expenses to average
net assets .......................................... 2.07% 2.00% 1.95% 1.95% 1.95%
Ratio of expenses to average net
assets prior to expense limitation
and expenses paid indirectly ........................ 2.15% 2.10% 2.12% 2.54% 2.99%
Ratio of net investment income (loss)
to average net assets ............................... (0.48%) (0.06%) 0.44% 0.97% 1.12%
Ratio of net investment income (loss)
to average net assets prior to
expense limitation and expenses
paid indirectly ..................................... (0.56%) (0.16%) 0.27% 0.38% 0.08%
Portfolio turnover .................................. 82% 39% 64% 80% 99%
</TABLE>
- ----------------------
(1) Per share information based on the average shares outstanding method.
(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
<PAGE>
for total return 13
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
DELAWARE DEVON FUND C CLASS
---------------------------------------------
YEAR YEAR YEAR 11/29/95(1)
ENDED ENDED ENDED to
10/31/99(2) 10/31/98 10/31/97 10/31/96
<S> <C> <C> <C> <C>
Net asset value, beginning of period $19.960 $17.790 $14.530 $13.020
Income (loss) from investment operations:
Net investment income (loss) (0.099) 0.002 0.071 0.188
Net realized and unrealized gain (loss)
on investments (0.111) 3.208 4.229 2.157
------- ------- ------- -------
Total from investment operations (0.210) 3.210 4.300 2.345
------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income 0.000 (0.010) (0.075) (0.195)
Distributions from net realized gain
on investments (0.190) (1.030) (0.965) (0.640)
Return of capital -- -- -- --
------- ------- ------- -------
Total dividends and distributions (0.190) (1.040) (1.040) (0.835)
------- ------- ------- -------
Net asset value, end of period $19.560 $19.960 $17.790 $14.530
======= ======= ======= =======
Total return(3) (1.12%) 18.71% 31.24% 18.94%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $31,476 $20,141 $5,876 $1,056
Ratio of expenses to average net assets 2.07% 2.00% 1.95% 1.95%
Ratio of expenses to average net assets prior
to expense limitation and expenses
paid indirectly 2.15% 2.10% 2.12% 2.54%
Ratio of net investment income (loss) to average
net assets (0.48%) (0.06%) 0.44% 0.97%
Ratio of net investment income (loss) to average
net assets prior to expense limitation and
expenses paid indirectly (0.56%) (0.16%) 0.27% 0.38%
Portfolio turnover 82% 39% 64% 80%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DELAWARE DEVON FUND INSTITUTIONAL CLASS
---------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
10/31/99(2) 10/31/98 10/31/97 10/31/96 10/31/95(2)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $20.140 $17.930 $14.670 $12.590 $10.860
Income (loss) from investment operations:
Net investment income (loss) ........................... 0.109 0.134 0.211 0.267 0.241
Net realized and unrealized gain (loss)
on investments ......................................... (0.109) 3.281 4.284 2.693 2.049
------- ------- ------- ------- -------
Total from investment operations ....................... 0.000 3.415 4.495 2.960 2.290
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ................... (0.057) (0.175) (0.270) (0.240) (0.240)
Distributions from net realized gain
on investments ......................................... (0.190) (1.030) (0.965) (0.640) (0.320)
Return of capital ...................................... (0.083) -- -- -- --
------- ------- ------- ------- -------
Total dividends and distributions ...................... (0.330) (1.205) (1.235) (0.880) (0.560)
------- ------- ------- ------- -------
Net asset value, end of period ............................ $19.810 $20.140 $17.930 $14.670 $12.590
======= ======= ======= ======= =======
Total return(3) ........................................... (0.09%) 19.89% 32.57% 24.56% 22.26%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $21,815 $10,482 $5,749 $3,290 $2,870
Ratio of expenses to average net assets ................ 1.07% 1.00% 0.95% 0.95% 0.95%
Ratio of expenses to average net assets prior
to expense limitation and expenses
paid indirectly ........................................ 1.15% 1.10% 1.12% 1.54% 1.99%
Ratio of net investment income (loss) to average
net assets ............................................. 0.52% 0.94% 1.44% 1.97% 2.12%
Ratio of net investment income (loss) to average
net assets prior to expense limitation and
expenses paid indirectly ............................... 0.44% 0.84% 1.27% 1.38% 1.08%
Portfolio turnover ..................................... 82% 39% 64% 80% 99%
</TABLE>
- ----------------------
(1) Date of initial public offering. Ratios have been annualized and total
return has not been annualized.
(2) Per share information based on the average shares outstanding method.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
See accompanying notes
<PAGE>
14 for total return
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE DEVON FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
Delaware Group Equity Funds I, Inc. (the "Company") is registered as a
diversified open-end investment company under the Investment Company Act of
1940, as amended. The Company is organized as a Maryland Corporation and offers
two series: the Delaware Devon Fund and the Delaware Balanced Fund. These
financial statements and related notes pertain to the Delaware Devon Fund (the
"Fund"). The Fund offers 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 Devon Fund is to seek capital
appreciation and current income.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund.
Security Valuation - Securities listed on an exchange are valued at the last
quoted sales price as of the close of the NYSE on the valuation date. Securities
not traded or securities not listed on an exchange are valued at the mean of the
last quoted bid and asked prices. Money market instruments having less than 60
days to maturity are valued at amortized cost which approximates market value.
Other securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the company's Board of Directors.
Federal Income Taxes - The Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations, which may differ from generally
accepted accounting principles.
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
the Fund on the basis of daily net assets of each class. Distribution expenses
relating to a specific class are charged directly to that class.
Repurchase Agreements - The Fund may invest in a pooled cash account along with
other members of the Delaware Investments Family of Funds. The aggregate daily
balance of the pooled cash account is invested in repurchase agreements secured
by obligations of the U.S. government. The respective collateral is held by the
Fund's custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is at least 100% collateralized. However,
in the event of default or bankruptcy by the counterparty to the agreement,
realization of the collateral may be subject to legal proceedings.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. The Fund declares and pays dividends from net
investment income, and from capital gains, if any, annually.
<PAGE>
Certain expenses of the Fund are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $7,754 for the year ended October 31,
1999. In addition, the Fund receives earnings credits from its custodian when
positive balances are maintained, which are used to offset custody fees. These
credits were $7,993 for the year ended October 31, 1999. The expenses paid under
the above arrangements are included in their respective expense captions on the
Statement of Operations with the corresponding expense offset shown as "Expenses
paid indirectly".
2. Investment Management and Other Transactions with Affiliates
Effective April 1, 1999 and in accordance with the terms of the Investment
Management Agreement, the Fund pays Delaware Management Company ("DMC"), the
Investment Manager of the Fund, an annual fee which is calculated daily at the
rate of 0.65% on the first $500 million of average daily net assets of the Fund,
0.60% on the next $500 million, 0.55% on the next $1,500 million and 0.50% on
the average daily net assets in excess $2,500 million. Prior to April 1, 1999,
the Fund paid DMC an annual fee which was calculated 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. At October 31, 1999 the Fund had a
liability for Investment Management fees and other expenses payable to DMC of
$189,448.
DMC elected to waive the portion, if any, of the management fee and reimburse
the Fund to the extent that annual operating expenses, exclusive of taxes,
interest, brokerage commissions, distribution fees, and extraordinary expenses,
exceed 1.00% of average daily net assets of the Fund through June 30, 1999.
Effective July 1, 1999, DMC will no longer waive expenses of the Fund.
The Fund has engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting services. The
Fund pays DSC a monthly fee based on the number of shareholder accounts,
shareholder transactions and average net assets, subject to certain minimums. At
October 31, 1999, the Fund had a liability for such fees and other expenses
payable to DSC of $89,435.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. ("DDLP"), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.30% of the average daily net assets of the A Class and 1.00% of the
average daily net assets of the B and C Classes. No distribution expenses are
paid by the Institutional Class. At October 31, 1999, the Fund had a liability
for distribution fees and other expenses payable to DDLP of $196,306.
For the year ended October 31, 1999, DDLP earned $213,873 for commissions on
sales of the Fund A Class shares.
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Fund. These officers, directors and employees are paid no compensation by
the Fund.
3. Investments
During the year ended October 31, 1999, the Fund made purchases of $363,093,311
and sales of $255,792,876 of investment securities other than U.S. government
securities and temporary cash investments.
At October 31, 1999, unrealized appreciation for federal income tax purposes
aggregated $18,139,455 of which $33,387,612 related to unrealized appreciation
of securities and $15,248,157 related to unrealized depreciation of securities.
At October 31, 1999, the aggregate cost of securities for federal income tax
purposes was $300,013,984.
For federal income tax purposes, the Fund had a capital loss carryforward at
October 31, 1999 of $2,189,111, which may be carried forward and applied against
future capital gains. The entire capital loss carryforward expires in 2007.
<PAGE>
for total return 15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. Capital Stock
Transactions in capital stock shares were as follows:
YEAR YEAR
ENDED ENDED
10/31/99 10/31/98
----------- ----------
Shares sold:
A Class ................................. 4,045,168 4,207,557
B Class ................................. 4,544,332 2,771,835
C Class ................................. 1,131,539 795,063
Institutional Class ..................... 1,232,443 497,905
Shares issued upon reinvestment of
distributions from net investment income,
net realized gain on investments and
return of capital:
A Class ................................. 86,732 190,783
B Class ................................. 40,098 98,407
C Class ................................. 9,721 21,804
Institutional Class ..................... 10,550 23,450
----------- ----------
11,100,583 8,606,804
----------- ----------
Shares repurchased:
A Class ................................. (3,191,945)
B Class ................................. (1,999,416) (334,582)
C Class ................................. (541,385) (138,159)
Institutional Class ..................... (662,081) (321,665)
----------- ----------
(6,394,827) (1,951,866)
----------- ----------
Net Increase ............................... 4,705,756 6,654,938
=========== ==========
5. Lines of Credit
The Fund has a committed line of credit for $12.5 million. No amount was
outstanding at October 31, 1999, or at any time during the fiscal period.
6. Securities Lending
Security loans for the Fund are required at all times to be secured by U.S.
Treasury obligations and/or cash collateral at least equal to 100% of the market
value of the securities on loan. However, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings. In the event that the borrower
fails to return loaned securities, and the collateral being maintained by the
borrower is insufficient to cover the value of loaned securities and provided
such collateral insufficiency is not the result of investment losses, the
lending agent has agreed to pay the amount of the shortfall to the Fund or, at
the option of the lending agent, replace the loaned securities. The market value
of securities on loan to brokers and the related cash collateral received at
October 31, 1999 were $19,208,100 and $19,375,054, respectively. Net income from
securities lending was $110,942 and is included in interest income on the
Statement of Operations.
7. Tax Information (unaudited)
The information set forth is for the Fund's fiscal year as required by federal
laws. Shareholders, however, must report distributions on a calendar year basis
for income tax purposes, which may include distributions for portions of two
fiscal years of a fund. Accordingly, the information needed by shareholders for
income tax purposes will be sent to them in early 2000. Please consult your tax
advisor for proper treatment of the information.
For the fiscal year ended October 31, 1999, the Fund designates as ordinary
income and return of capital distributions paid during the year as follows:
(A) (B) (C)
ORDINARY RETURN TOTAL (D)
INCOME OF DISTRIBUTIONS QUALIFYING(1)
DISTRIBUTIONS CAPITAL (TAX BASIS) DIVIDENDS
------------- ------- ----------- ---------
85% 15% 100% 100%
* Item (A) is based on the percentage of the Fund's total distribution income.
** Item (D) is based on a percentage of ordinary income of the Fund.
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
<PAGE>
16 for total return
DELAWARE GROUP EQUITY FUNDS I, INC. - DELAWARE DEVON FUND
REPORT OF INDEPENDENT AUDITORS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
DELAWARE GROUP EQUITY FUNDS I, INC. - DELAWARE DEVON FUND
We have audited the accompanying statement of net assets of Delaware Devon Fund
(the "Fund") as of October 31, 1999, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1999, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Devon Fund at October 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and its financial highlights for each of the periods
indicated therein, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
------------------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
December 3, 1999
<PAGE>
THIS ANNUAL REPORT IS FOR THE INFORMATION OF DELAWARE DEVON FUND SHAREHOLDERS,
but it may be used with prospective investors when preceded or accompanied by a
current Prospectus for Delaware Devon Fund and the Delaware Investment
Performance Update for the most recently completed calendar quarter. The
Prospectus sets forth details about charges, expenses, investment objectives and
operating policies of the Fund. You should read the prospectus carefully before
you invest or send money. The figures in this report represent past results
which are not a guarantee of future results. The return and principal value of
an investment in the Fund will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost.
<TABLE>
<CAPTION>
Board of Directors Affiliated Officers
<S> <C>
WAYNE A. STORK RICHARD J. FLANNERY
Chairman Executive Vice President and General Counsel
Delaware Investments Family of Funds Delaware Investments Family of Funds
Philadelphia, PA Philadelphia, PA
WALTER P. BABICH BRUCE D. BARTON
Board Chairman, Citadel Constructors, Inc. President and Chief Executive Officer
King of Prussia, PA Delaware Distributors, L.P.
Philadelphia, PA
DAVID K. DOWNES
President and Chief Executive Officer ERIC E. MILLER
Delaware Investments Family of Funds Senior Vice President, Secretary
Philadelphia, PA and Deputy General Counsel
Delaware Investments Family of Funds
JOHN H. DURHAM Philadelphia, PA
Private Investor
Horsham, PA (photo of globes)
ANTHONY D. KNERR directors
Consultant, Anthony Knerr & Associates & officers
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
CHARLES E. PECK
Retired
Fredericksburg, VA
JAN L. YEOMANS
Vice President and Treasurer
3M Corporation
St. Paul, Minnesota
- ----------------------------------------------------------------------------------
INVESTMENT MANAGER SHAREHOLDER SERVICING,
Delaware Management Company DIVIDEND DISBURSING
Philadelphia, Pennsylvania AND TRANSFER AGENT
Delaware Service Company, Inc.
INTERNATIONAL AFFILIATE Philadelphia, Pennsylvania
Delaware International Advisers Ltd.
London, England 1818 Market Street
Philadelphia, PA 19103-3682
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia, Pennsylvania
</TABLE>
<PAGE>
(photo of globes)
When used with prospective investors, this report must be preceded or
accompanied by a current Delaware Devon Fund Prospectus and the Delaware
Investments Performance Update for the most recently completed calendar quarter.
For a prospectus of any other mutual fund from Delaware Investments, contact
your financial adviser or Delaware Investments.
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan; however, shares of the Fund are
not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union,
and involve investment risk, including the possible loss of the principal amount
invested. Shares of the Fund are not bank or credit union deposits.
(C) Delaware Distributors, L.P.
DELAWARE(SM)
INVESTMENTS
- ---------------------
Philadelphia o London
Printed in the USA
on recycled paper
(2393)
AR-039[10/99]PPL12/99
