<PAGE>
DELAWARE(SM)
INVESTMENTS
============ Delaware Devon Fund
Total Return
2000 SEMI-ANNUAL REPORT
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<PAGE>
TABLE OF CONTENTS
-----------------
Letter to Shareholders 1
Portfolio Management
Review 3
Performance Summary 6
Financial Statements
Statement of Net Assets 7
Statement of Operations 9
Statements of Changes in
Net Assets 10
Financial Highlights 11
Notes to Financial
Statements 15
--------------------------------------------------------------------------------
A TRADITION OF SOUND INVESTING SINCE 1929
-----------------------------------------
A Commitment To Our Investors
Experienced
o Our seasoned investment professionals average more than 15 years'
experience.
o We opened our first mutual fund in 1938. For over 70 years, we have managed
money in a variety of investment styles that have weathered a full range of
economic and market environments.
Disciplined
o We follow strict investment policies and clear buy/sell guidelines.
o We strive to balance risk and reward in order to provide sound investment
alternatives within any given asset class.
Consistent
o We believe consistent processes are the best way to seek consistent
investment performance.
o Our commitment to style consistency has earned us the confidence of
discriminating institutional and individual investors to manage over $46
billion in assets as of March 31, 2000.
Comprehensive
o We offer more than 70 mutual funds in these asset classes.
o Large-cap equity o High-yield bonds
o Mid-cap equity o Investment grade bonds
o Small-cap equity o Municipal bonds (23 single-state funds)
o International equity o International fixed-income
o Balanced
o Our funds are available through financial advisers who can offer you
individualized attention and valuable investment advice.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the
principal amount invested.
(C)Delaware Distributors, L.P.
<PAGE>
Dear Shareholder
"OVER THE PAST SIX MONTHS, THE ONLY CERTAINTY IN THE U.S. FINANCIAL MARKET WAS
RECORD VOLATILITY."
--------------------------------------------------------------------------------
June 12, 2000
Recap of Events - Over the past six months, the only certainty in the U.S.
financial markets was record volatility. As has been the case for some time,
market performance was strongly momentum-driven, with technology stocks
providing the bulk of performance (Source: Bloomberg).
Tech stock euphoria took hold in November, 1999, pushing the Nasdaq Composite
Index to a string of record high closes. In December, after the Federal Reserve
Board declined to raise rates, the Nasdaq topped 4000 for the first time on
December 29th -- the same day the Dow Jones Industrial Average, the Standard &
Poor's 500 Index and the Russell 2000 Index all hit records.
Volatility accelerated in the first quarter of 2000 as record-loss and
record-gain days, along with two Fed interest rate hikes, whipsawed both the
stock and bond markets. The Nasdaq passed 5000 on March 9, 2000 and the S&P 500
Index hit a new high on March 24. In spite of these records, for much of the
time, performance was dominated by a narrow group of stocks, with the broader
market, value investors and bonds sitting on the sidelines. However, a
technology sell off that started during the last week of March has led to a
broadening of the market as investors began to pay attention to valuation levels
(Source: Bloomberg).
In mid-April, the divergence between the "old economy" and the "new economy"
became even more pronounced as the Nasdaq fell sharply while the broader market
held steady. During the last week of our fiscal period, the Dow and the Nasdaq
each surged more than 200 points, only to be ambushed by an unfavorable
inflation report and concern over the additional interest rate hike by the Fed
in May.
Delaware Devon Fund's performance lagged in this momentum-driven marketplace.
The Fund's total return for the six-month period ended April 30, 2000 was
-3.34%. This performance shortfall was due primarily to our continued
underweighting in the technology sector, where, in our opinion, P/E ratios
remained prohibitively high for much of the period.
Total Return
For Period Ended April 30, 2000 Six Months
-------------------------------------------------------------------------
Delaware Devon Fund Class A -3.34%
-------------------------------------------------------------------------
Lipper Multi-Cap Value Funds Average (521 funds) +3.86%
Standard & Poor's 500 Index +7.18%
-------------------------------------------------------------------------
All performance shown above is at net asset value without the effect of sales
charges and assumes reinvestment of dividends and capital gains. Performance
information for all Fund classes can be found on page 6. The Lipper category
represents the average returns of multi-cap value funds tracked by Lipper
Analytical (Source: Lipper Analytical Services, Inc.). The S&P 500 Index is an
unmanaged composite of mostly large-capitalization U.S. companies. You cannot
invest directly in an index. Past performance does not guarantee future results.
1
<PAGE>
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Market Outlook - The broadening of the market that began in late March, 2000 is
encouraging to us. We see the start of a flight to quality that, if it
continues, should benefit Delaware Devon Fund as investors rediscover the value
available from a broader spectrum of exceptional U.S. companies. We believe the
continued strength in the economy, low unemployment and strong earnings growth
across a wide spectrum of companies should work in your Fund's favor going
forward.
Sincerely,
/s/ Wayne A. Stork /s/ David K. Downes
------------------------------------ --------------------------------------
Wayne A. Stork David K. Downes
Chairman, President and Chief Executive Officer,
Delaware Investments Family of Funds Delaware Investments Family of Funds
2
<PAGE>
Francis X. Morris
Senior Portfolio Manager
June 12, 2000
"THE FUND'S INVESTMENT STRATEGY WAS EFFECTIVE IN MARCH AND APRIL OF THIS YEAR
WHEN THE MARKET'S ATTENTION SHIFTED TO VALUATIONS AND EARNINGS."
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT REVIEW
---------------------------
The Fund's Results
Delaware Devon Fund had a -3.34% total return for the six-month period ended
April 30, 2000. Our disappointing performance was due almost entirely to the
market's extremely narrow focus on momentum-driven, high-priced technology
stocks.
Although the markets have not favored our investing style recently, we remain
committed to our investment strategy and philosophy. Delaware Devon Fund
continues to concentrate on stocks of companies that we believe are undervalued
and that are demonstrating a growth rate in the mid-teens. We look for companies
with solid franchises, earnings stability and accelerated growth rates.
The Fund's investment strategy was effective in March and April of this year,
when the market's attention shifted to valuations and earnings. This benefited
your Fund as investors came to appreciate the value of many of our holdings. As
stock prices increased, we took the opportunity to sell some winners and to
purchase some new stocks, which we believed had become more reasonably valued.
Our additions spanned the full spectrum of market sectors, including technology.
Portfolio Highlights
While most of the Nasdaq's earnings came from growth stocks whose valuations did
not fit with our strategy, we were able to find some value stocks in the
technology sector. One example is Integrated Device Technology. We purchased
this undiscovered semi-conductor company late in 1999. Since then, its franchise
value has increased steadily and was recently trading 90% above our purchase
price. The company has completed its turnaround and is now experiencing an
attractive earnings growth rate. We've recently begun to reduce our holdings as
the stock is reaching what we consider to be its correct price.
Another technology stock, Intel, was one of the Fund's best performers for this
period. The stock's price had risen significantly over the past six months and
was approaching the full value. However, its price dropped when the technology
sector dipped in April, resulting in an attractive valuation. Hence, Intel
remained a core portfolio holding.
In the pharmaceutical sector, American Home Products has done quite well for us.
The stock had been temporarily depressed because of the litigation involving the
drug Phen-Fen. After intensive research to estimate the company's true earnings
growth potential, we determined the market had over-discounted the companies
intrinsic value.
3
<PAGE>
"SEVENTY-FIVE PERCENT OF THE COMPANIES WE'VE OWNED DURING THE FIRST QUARTER HAVE
EITHER MET OR EXCEEDED THE YEAR-OVER-YEAR EARNINGS GROWTH RATE."
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--------------------------------------------------------------------------------
Financial stocks, which lagged at the start of our fiscal period in November of
1999, have also experienced a considerable recovery and have begun to pay off
for us. We've tended to concentrate on companies with high earnings visibility
such as Federal Home Loan Mortgage (Freddie Mac), Fleet Boston Financial and
Wells Fargo. We also held MBNA, the credit card company, and Bank of New York.
Our holdings in energy stocks have also helped the Fund's performance. Growing
demand due to strong worldwide economic growth coupled with falling supplies has
led to opportunity for the Fund. We've added to our holdings in Anadarko
Petroleum, purchased Amarada Hess and increased our exposure to the oil service
sector by buying more of Schlumberger, a technical services company in the oil
and gas, utility, semiconductor, and smart cards, network and Internet solutions
industries. We also added Halliburton and Nabors Industries, suppliers of energy
and engineering equipment.
One of our largest holdings is a relatively unknown company called Viad Corp, a
Phoenix-based company with two primary businesses. The first is a money gram
business, which provides world-wide money wiring services and offers outsourcing
of check cashing by major banks. The second is a business that designs, sets up
and tears down convention exhibit areas. The company's earnings are growing at
about 25% a year. This is one of the best examples of the type of company that
your Fund looks for: a solid company with shareholder-friendly practices, strong
management and good cash flow, selling at a reasonable price.
The Fund has experienced disappointments with its newspaper stocks, which have
been adversely affected by rising newsprint prices. We reduced our holdings of
Knight-Ridder, although we're maintaining our position in Gannett, a
well-diversified media company that also owns NBC affiliates. We expect the
company to do well with the summer Olympics and election coverage through the
fall. We believe companies in this sector may begin to improve as the strong
economy increases the advertising revenue for newspapers.
The consumer staples area, which includes the food industry and consumer
products, also has not done well for us during the six-month period. Procter &
Gamble was especially unfortunate; we sold our position when the company
reported an earnings disappointment in March of 2000.
4
<PAGE>
--------------------------------------------------------------------------------
Outlook
We have a positive outlook toward the future. We believe that the movement back
to valuing companies based on their business models and earnings growth rates is
healthy, overdue and beneficial to the Fund. Seventy-five percent of the
companies we've owned during the first quarter have either met or exceeded
projected earnings per share. We expect that the Fed will continue to increase
interest rates in the coming months until the economy achieves what the Fed
believes is a sustainable rate of growth. We believe this will create an
environment that once again appreciates our investing style.
Top Portfolio Sectors
April 30, 2000
Industry Percentage of Net Assets
--------------------------------------------------------------------------------
1. Banking, Finance & Insurance 16.56%
--------------------------------------------------------------------------------
2. Energy 12.10%
--------------------------------------------------------------------------------
3. Electronics & Electrical Equipment 11.56%
--------------------------------------------------------------------------------
4. Telecommunications 10.93%
--------------------------------------------------------------------------------
5. Healthcare & Pharmaceuticals 10.55%
--------------------------------------------------------------------------------
6. Computers & Technology 8.41%
--------------------------------------------------------------------------------
7. Retail 4.00%
--------------------------------------------------------------------------------
8. Food, Beverage & Tobacco 3.97%
--------------------------------------------------------------------------------
9. Cable, Media & Publishing 3.67%
--------------------------------------------------------------------------------
10. Leisure, Lodging & Entertainment 3.30%
--------------------------------------------------------------------------------
5
<PAGE>
FUND BASICS
-----------
Fund Objectives
The Fund seeks to provide current income and capital appreciation.
Total Fund Assets
$209.87 million
Number of Holdings
65
Fund Start Date
December 29, 1993
Your Fund Manager
Francis X. Morris holds a bachelor's degree from Providence College and an MBA
degree from Widener University. He joined Delaware in 1997 after serving as Vice
President and Director of Equity Research at PNC Asset Management. Mr. Morris is
a past President of the Financial Analysts Society of Philadelphia and is a
member of the Association for Investment Management and Research and the
National Association of Petroleum Investment Analysts.
NASDAQ Symbols
Class A DDGAX
Class B DEVOX
Class C DECVX
--------------------------------------------------------------------------------
DELAWARE DEVON FUND PERFORMANCE
-------------------------------
Average Annual Total Returns
Through April 30, 2000 Lifetime Five Years One Year
--------------------------------------------------------------------------------
Class A (Est. 12/29/93)
Excluding Sales Charge +15.67% +16.47% -11.57%
Including Sales Charge +14.60% +15.10% -16.66%
--------------------------------------------------------------------------------
Class B (Est.9/6/94)
Excluding Sales Charge +15.04% +15.67% -12.20%
Including Sales Charge +14.95% +15.45% -16.59%
--------------------------------------------------------------------------------
Class C (Est. 11/29/95)
Excluding Sales Charge +13.71% -12.21%
Including Sales Charge +13.71% -13.09%
--------------------------------------------------------------------------------
Returns reflect reinvestment of distributions and any applicable sales charge as
noted below. Return and share value will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
results excluding sales charge assume either that contingent sales charges did
not apply or the investment was not redeemed. Past performance is not a
guarantee of future results.
Class A shares have a 5.75% maximum front-end sales charge and a 12b-1 fee.
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a contingent
deferred sales charge of up to 5% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
Institutional Class shares (Est. December 29, 1993) are available without sales
or asset-based distribution charges only to certain eligible institutional
accounts. The average annual returns for the lifetime, five-year and one-year
periods ended April 30, 2000 for Delaware Devon Fund's Institutional Class were
16.02%, 16.82% and -11.34%, respectively. Performance prior to that date is
based on Class A performance and was adjusted to eliminate the effect of the
sales charge, but not Class A's asset-based distribution charge.
NASDAQ Symbol Institutional Class: DEIVX
6
<PAGE>
Statement of Net Assets
DELAWARE DEVON FUND
-------------------
Number of Market
April 30, 2000 (Unaudited) Shares Value
--------------------------------------------------------------------------------
Common Stock - 96.14%
Aerospace & Defense - 1.92%
United Technologies ................................ 64,700 $ 4,023,531
-----------
4,023,531
-----------
Banking, Finance & Insurance - 16.56%
American International Group ....................... 30,762 3,374,207
Bank of New York ................................... 79,600 3,268,575
Citigroup .......................................... 81,900 4,867,931
Federal Home Loan Mortgage ......................... 120,500 5,535,469
Fleet Boston Financial ............................. 159,400 5,648,737
MBNA ............................................... 218,400 5,801,250
Unionbancal ........................................ 95,400 2,641,388
Wells Fargo ........................................ 88,100 3,617,606
-----------
34,755,163
-----------
Cable, Media & Publishing - 3.67%
Gannett ............................................ 74,300 4,745,912
+Knight-Ridder ...................................... 60,100 2,948,656
-----------
7,694,568
-----------
Chemicals - 3.25%
Avery Dennison ..................................... 53,700 3,524,062
Pharmacia .......................................... 66,045 3,298,122
-----------
6,822,184
-----------
Computers & Technology - 8.41%
+*CGS Systems International .......................... 68,200 3,145,725
Compaq Computer .................................... 80,500 2,354,625
Computer Associates International .................. 59,500 3,320,844
*Gateway ............................................ 32,900 1,817,725
International Business Machines .................... 43,900 4,900,337
Pitney Bowes ....................................... 51,800 2,117,325
-----------
17,656,581
-----------
Electronics & Electrical Equipment - 11.56%
*Atmel .............................................. 28,600 1,399,612
General Electric ................................... 17,400 2,736,150
Honeywell International ............................ 106,050 5,938,800
+*Integrated Device Technology ....................... 83,000 3,989,187
Intel .............................................. 40,100 5,085,181
*National Semiconductor ............................. 16,500 1,002,375
Symbol Technologies ................................ 50,300 2,804,225
Teleflex ........................................... 37,600 1,299,550
-----------
24,255,080
-----------
Energy - 12.10%
Amerada Hess ....................................... 34,800 2,214,150
+Anadarko Petroleum ................................. 74,800 3,249,125
Coastal ............................................ 85,600 4,296,050
Halliburton ........................................ 52,600 2,324,263
*Nabors Industries .................................. 53,900 2,125,681
Schlumberger ....................................... 37,700 2,886,406
Shell Transport & Trading .......................... 63,300 3,054,225
Tosco .............................................. 105,800 3,392,213
Unocal ............................................. 57,000 1,841,813
-----------
25,383,926
-----------
<PAGE>
Number of Market
Shares Value
--------------------------------------------------------------------------------
Common Stock (continued)
Environmental Services - 0.80%
Ecolab ............................................. 42,800 $ 1,671,875
-----------
1,671,875
-----------
Food, Beverage & Tobacco - 3.97%
Bestfoods .......................................... 62,100 3,120,525
*Kroger ............................................. 198,200 3,679,087
+*Suiza Foods ........................................ 39,400 1,534,138
-----------
8,333,750
-----------
Healthcare & Pharmaceuticals - 10.55%
American Home Products ............................. 55,700 3,129,644
Biomet ............................................. 71,500 2,551,656
Bristol-Myers Squibb ............................... 73,900 3,875,131
Cardinal Health .................................... 42,900 2,362,181
Johnson & Johnson .................................. 59,500 4,908,750
*Sybron International ............................... 120,300 3,744,338
*Watson Pharmaceutical .............................. 35,000 1,572,813
-----------
22,144,513
-----------
Industrial Machinery - 1.88%
Pentair ............................................ 103,000 3,939,750
-----------
3,939,750
-----------
Leisure, Lodging & Entertainment - 3.30%
Viad ............................................... 273,000 6,927,375
-----------
6,927,375
-----------
Metals & Mining - 0.85%
Reynolds Metals .................................... 26,800 1,782,200
-----------
1,782,200
-----------
Retail - 4.00%
Circuit City ....................................... 60,300 3,546,394
Lowe's Companies ................................... 56,800 2,811,600
Wal-Mart ........................................... 36,900 2,043,338
-----------
8,401,332
-----------
Telecommunications - 10.93%
A T & T ............................................ 96,000 4,482,000
ALLTEL ............................................. 64,100 4,270,662
GTE ................................................ 79,600 5,392,900
Motorola ........................................... 13,800 1,643,063
SBC Communications ................................. 109,000 4,775,563
*Tellabs ............................................ 43,500 2,384,344
-----------
22,948,532
-----------
Utilities - 2.39%
Columbia Energy Group .............................. 47,200 2,961,800
Unicom ............................................. 51,800 2,059,050
-----------
5,020,850
-----------
Total Common Stock (cost $194,122,510) 201,761,210
-----------
Convertible Preferred Stocks - 1.55%
Sealed Air ......................................... 60,985 3,262,698
-----------
Total Convertible Preferred Stocks
(cost $2,532,222) 3,262,698
-----------
7
<PAGE>
Statement of Net Assets (continued)
Principal
Delaware Devon Fund Amount
--------------------------------------------------------------------------------
Repurchase Agreements - 2.52%
With Chase Manhattan 5.68% 5/1/00
(dated 4/28/00, collateralized by
$1,825,000 U.S. Treasury Notes 4.75%
due 2/15/04, market value $1,730,258) .............. $1,689,000 $ 1,689,000
With J.P. Morgan Securities 5.70%
5/1/00 (dated 4/28/00, collateralized
by $1,258,000 U.S. Treasury Notes
5.875% due 10/31/01, market value
$1,280,220 and $547,000 U.S. Treasury
Notes 6.24% due 10/31/01, market
value $560,059) .................................... 1,803,000 1,803,000
With PaineWebber 5.70% 5/1/00 (dated
4/28/00, collateralized by $87,000
U.S. Treasury Notes 4.50% due 1/31/01,
market value $86,318 and $1,164,000
U.S. Treasury Notes 5.50% due 7/31/01,
market value $1,162,770 and $570,000
U.S. Treasury Notes 7.25% due 8/15/04,
market value $591,930) ............................. 1,803,000 1,803,000
------------
Total Repurchase Agreements
(cost $5,295,000) .................................. 5,295,000
------------
Total Market Value of Securities -
100.21%
(cost $201,949,732) ................................ 210,318,908
Liabilities Net of Receivables and
Other Assets - (0.21%) ............................. (451,046)
------------
Net Assets Applicable to 11,058,400
Shares Outstanding - 100.00% ....................... $209,867,862
============
Net Asset Value - Delaware Devon Fund
A Class ($88,665,680 / 4,645,144
Shares) ............................................ $19.09
------
Net Asset Value - Delaware Devon Fund
B Class ($86,357,064 / 4,578,872
Shares) ............................................ $18.86
------
Net Asset Value - Delaware Devon Fund
C Class ($18,502,774 / 982,038 Shares) ............. $18.84
------
Net Asset Value - Delaware Devon Fund
Institutional Class ($16,342,344 /
852,346 Shares) .................................... $19.17
------
----------------------
+Security out on loan.
*Non-income producing security for the six months ended April 30, 2000.
<PAGE>
Components of Net Assets at April 30, 2000:
Shares of beneficial interest (unlimited
authorization - no par) ............................ $207,651,046
Accumulated net investment loss ..................... (649,807)
Accumulated net realized loss on
investments ........................................ (5,502,553)
Net unrealized appreciation of investments .......... 8,369,176
------------
Total net assets .................................... $209,867,862
============
Net Asset Value and Offering Price Per
Share - Delaware Devon Fund
Net asset value A Class (A) ......................... $19.09
Sales charge (5.75% of offering price, or
6.08% of the amount invested per
share) (B) ......................................... 1.16
------
Offering price ...................................... $20.25
======
----------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption of purchase of shares.
(B) See the current prospectus for purchase of $50,000 of more.
See accompanying notes.
8
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
Six Months Ended April 30, 2000 (Unaudited) Delaware Devon Fund
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Dividends ................................................................. $1,708,360
Interest .................................................................. 149,975 $ 1,858,335
---------- ------------
Expenses:
Management fees ........................................................... 820,058
Distribution expense ...................................................... 794,984
Dividend disbursing and transfer agent fees and expenses .................. 636,600
Accounting and administration ............................................. 86,852
Reports and statements to shareholders .................................... 69,000
Registration fees ......................................................... 54,000
Professional fees ......................................................... 18,720
Taxes (other than taxes on income) ........................................ 9,900
Custodian fees ............................................................ 7,000
Trustees' fees ............................................................ 3,300
Other ..................................................................... 10,630
----------
2,511,044
----------
Less expenses paid indirectly ............................................. (2,902) 2,508,142
---------- ------------
Net Investment Loss ....................................................... (649,807)
------------
Net Realized and Unrealized Loss on Investments:
Net realized loss on investments .......................................... (3,077,527)
Net change in unrealized appreciation / depreciation of investments ....... (10,006,194)
------------
Net Realized and Unrealized Loss on Investments ........................... (13,083,721)
------------
Net Decrease in Net Assets Resulting from Operations ...................... $(13,733,528)
============
</TABLE>
See accompanying notes
9
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Delaware Devon Fund
------------------------------------------------------------------------------------------------------------------
Six Months Year
Ended Ended
04/30/2000 10/31/1999
(Unaudited)
<S> <C> <C>
Decrease in Net Assets from Operations:
Net investment loss ............................................................ $ (649,807) $ (365,620)
Net realized loss on investments ............................................... (3,077,527) (2,414,924)
Net change in unrealized appreciation/depreciation of investments .............. (10,006,194) (7,767,421)
------------ ------------
Net decrease in net assets resulting from operations ........................... (13,733,528) (10,547,965)
------------ ------------
Distributions to Shareholders from:
Net investment income:
A Class ..................................................................... -- (610,832)
B Class ..................................................................... -- --
C Class ..................................................................... -- --
Institutional Class ......................................................... -- (119,753)
Net realized gain on investments:
A Class ..................................................................... -- (1,272,835)
B Class ..................................................................... -- (904,198)
C Class ..................................................................... -- (213,389)
Institutional Class ......................................................... -- (100,864)
------------ ------------
-- (3,221,871)
------------ ------------
Capital Share Transactions:
Proceeds from shares sold:
A Class ..................................................................... 12,862,719 85,370,075
B Class ..................................................................... 10,617,393 95,416,834
C Class ..................................................................... 2,241,421 23,683,654
Institutional Class ......................................................... 3,343,318 25,830,155
Net asset value of shares issued upon reinvestment of distributions from net
investment income and net realized gain on investments:
A Class ..................................................................... (110) 1,832,153
B Class ..................................................................... (132) 846,833
C Class ..................................................................... -- 205,107
Institutional Class ......................................................... -- 220,602
------------ ------------
29,064,609 233,405,413
------------ ------------
Cost of shares repurchased:
A Class ..................................................................... (55,456,590) (66,130,439)
B Class ..................................................................... (50,299,760) (40,675,526)
C Class ..................................................................... (13,868,621) (11,034,698)
Institutional Class ......................................................... (8,063,918) (13,624,757)
------------ ------------
(127,688,889) (131,465,420)
------------ ------------
Increase (decrease) in net assets derived from capital share transactions ...... (98,624,280) 101,939,993
------------ ------------
Net Increase (Decrease) in Net Assets .......................................... (112,357,808) 88,170,157
Net Assets:
Beginning of period ............................................................ 322,225,670 234,055,513
------------ ------------
End of period .................................................................. $209,867,862 $322,225,670
============ ============
</TABLE>
See accompanying notes
10
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Devon Fund A Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
04/30/00(3) 10/31/99 10/31/98 10/31/97 10/31/96 10/31/95(1)
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................ $19.750 $20.090 $17.860 $14.610 $12.550 $10.830
Income (loss) from investment operations:
Net investment income (loss) ............................. (0.019) 0.047 0.121 0.182 0.216 0.207
Net realized and unrealized gain (loss) on investments ... (0.641) (0.114) 3.249 4.243 2.689 2.053
---------------------------------------------------------------------
Total from investment operations ......................... (0.660) (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 period .............................. $19.090 $19.750 $20.090 $17.860 $14.610 $12.550
=====================================================================
Total return(2) ............................................. (3.34%) (0.42%) 19.60% 32.11% 24.14% 21.98%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $88,666 $137,034 $120,506 $49,262 $14,907 $8,846
Ratio of expenses to average net assets .................. 1.67% 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 ....... 1.67% 1.45% 1.40% 1.42% 1.84% 2.29%
Ratio of net investment income (loss) to average
net assets ............................................ (0.18%) 0.22% 0.64% 1.14% 1.67% 1.82%
Ratio of net investment income (loss) to average net
assets prior to expenses paid indirectly .............. (0.18%) 0.14% 0.54% 0.97% 1.08% 0.78%
Portfolio turnover ....................................... 109% 82% 39% 64% 80% 99%
</TABLE>
----------------------
(1) 1995 per share information was 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.
(3) Ratios have been annualized and total return has not been annualized.
See accompanying notes
11
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Devon Fund B Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
04/30/00(3) 10/31/99 10/31/98 10/31/97 10/31/96 10/31/95(1)
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................ $19.580 $19.980 $17.800 $14.540 $12.500 $10.820
Income (loss) from investment operations:
Net investment income (loss) ............................. (0.084) (0.099) (0.003) 0.081 0.136 0.127
Net realized and unrealized gain (loss) on investments ... (0.636) (0.111) 3.223 4.219 2.664 2.053
---------------------------------------------------------------------
Total from investment operations ......................... (0.720) (0.210) 3.220 4.300 2.800 2.180
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ..................... -- -- (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 period .............................. $18.860 $19.580 $19.980 $17.800 $14.540 $12.500
=====================================================================
Total return(2) ............................................. (3.68%) (1.12%) 18.76% 31.21% 23.38% 21.09%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $86,357 $131,901 $82,927 $28,757 $3,399 $863
Ratio of expenses to average net assets .................. 2.37% 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 ....... 2.37% 2.15% 2.10% 2.12% 2.54% 2.99%
Ratio of net investment income (loss) to average net
assets ................................................ (0.88%) (0.48%) (0.06%) 0.44% 0.97% 1.12%
Ratio of net investment income (loss) to average net
assets prior to expenses paid indirectly .............. (0.88%) (0.56%) (0.16%) 0.27% 0.38% 0.08%
Portfolio turnover ....................................... 109% 82% 39% 64% 80% 99%
</TABLE>
----------------------
(1) 1995 per share information was 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.
(3) Ratios have been annualized and total return has not been annualized.
See accompanying notes
12
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Devon Fund C Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months Period
Ended Year Ended 11/29/96(1) to
04/30/00(3) 10/31/99 10/31/98 10/31/97 6/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............................... $19.560 $19.960 $17.790 $14.530 $13.020
Income (loss) from investment operations:
Net investment income (loss) .................................... (0.084) (0.099) 0.002 0.071 0.188
Net realized and unrealized gain (loss) on investments .......... (0.636) (0.111) 3.208 4.229 2.157
-------------------------------------------------------------
Total from investment operations ................................ (0.720) (0.210) 3.210 4.300 2.345
-------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............................ -- -- (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 ..................................... $18.840 $19.560 $19.960 $17.790 $14.530
=============================================================
Total return(2) .................................................... (3.68%) (1.12%) 18.71% 31.24% 18.94%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ......................... $18,503 $31,476 $20,141 $5,876 $1,056
Ratio of expenses to average net assets ......................... 2.37% 2.07% 2.00% 1.95% 1.95%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly .............. 2.37% 2.15% 2.10% 2.12% 2.54%
Ratio of net investment income (loss) to average net assets ..... (0.88%) (0.48%) (0.06%) 0.44% 0.97%
Ratio of net investment income (loss) to average net assets
prior to expenses paid indirectly ............................ (0.88%) (0.56%) (0.16%) 0.27% 0.38%
Portfolio turnover .............................................. 109% 82% 39% 64% 80%
</TABLE>
----------------------
(1) Date of initial public offering; ratios and total return have been
annualized.
(2) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
(3) Ratios have been annualized and total return has not been annualized.
See accompanying notes
13
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Devon Fund Institutional Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
04/30/00(3) 10/31/99 10/31/98 10/31/97 10/31/96 10/31/95(1)
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $19.810 $20.140 $17.930 $14.670 $12.590 $10.860
Income (loss) from investment operations:
Net investment income ................................... 0.010 0.109 0.134 0.211 0.267 0.241
Net realized and unrealized gain (loss) on investments .. (0.650) (0.109) 3.281 4.284 2.693 2.049
---------------------------------------------------------------------
Total from investment operations ........................ (0.640) 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 ............................. $19.170 $19.810 $20.140 $17.930 $14.670 $12.590
=====================================================================
Total return(2) ............................................ (3.23%) (0.09%) 19.89% 32.57% 24.56% 22.26%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $16,342 $21,815 $10,482 $5,749 $3,290 $2,870
Ratio of expenses to average net assets ................. 1.37% 1.07% 1.00% 0.95% 0.95% 0.95%
Ratio of expenses to average net assets prior to
expense limitation ................................... 1.37% 1.15% 1.10% 1.12% 1.54% 1.99%
Ratio of net investment income to average net assets .... 0.12% 0.52% 0.94% 1.44% 1.97% 2.12%
Ratio of net investment income to average net assets
prior to expenses paid indirectly ..................... 0.12% 0.44% 0.84% 1.27% 1.38% 1.08%
Portfolio turnover ...................................... 109% 82% 39% 64% 80% 99%
</TABLE>
----------------------
(1) 1995 per share information was 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.
(3) Ratios have been annualized and total return has not been annualized.
See accompanying notes
14
<PAGE>
Notes to Financial Statements
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
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 Delaware Business Trust 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 Fund is to seek current income and capital
appreciation.
1. Significant Accounting Policies
The following accounting policies are in accordance with accounting principles
generally accepted in the United States and are consistently followed by the
Fund.
Security Valuation - All equity securities are valued at the last quoted sales
price as of the close of the New York Stock Exchange (NYSE) on the valuation
date. If on a particular day an equity security does not trade, then the mean
between the bid and asked prices will be used. Money market instruments having
less than 60 days to maturity are valued at amortized cost, which approximates
market value. Other securities and assets for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the direction of the Fund's Board of Trustees.
Federal Income Taxes - The Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations, which may differ from accounting
principles generally accepted in the United States.
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
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 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.
<PAGE>
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. The Fund declares and pays dividends from net
investment income and from capital gains, if any, annually.
Certain expenses of the Fund are paid through commission arrangements with
brokers. These transactions are done subject to best execution. The amount of
these expenses was approximately $2,902 for the six months ended April 30, 2000.
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 $0 for the six months ended April 30, 2000. The expenses paid under the
above arrangements are included in their respective expense captions on the
Statement of Operations with the corresponding expense shown as "Expenses paid
indirectly".
2. Investment Management and Other Transactions with Affiliates
Commencing 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 April 30, 2000 the Fund had a
liability for Investment Management fees and other expenses payable to DMC of
$115,910.
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
April 30, 2000, the Fund had a liability for such fees and other expenses
payable to DSC for $71,249.
15
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
2. Investment Management and Other Transactions with Affiliates (continued)
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 April 30, 2000, the Fund had a liability for
distribution fees and other expenses payable to DDLP of $8,420.
For the six months ended April 30, 2000, DDLP earned $18,982 for commissions on
sales of the Fund A Class shares.
Certain officers of DMC, DSC and DDLP are officers, trustees and/or employees of
the Fund. These officers, trustees and employees are paid no compensation by the
Fund.
3. Investments
During the six months ended April 30, 2000, the Fund made purchases of
$135,610,366 and sales of $229,072,993 of investment securities other than U.S.
government securities and temporary cash investments.
The cost of investments for federal income tax purposes approximates cost for
book purposes. At April 30, 2000, unrealized appreciation for federal income tax
purposes aggregated $8,369,176 of which $18,091,991 related to unrealized
appreciation of securities and $9,722,815 related to unrealized depreciation of
securities. At April 30, 2000, the aggregate cost of securities for federal
income tax purposes was $201,949,732.
For federal income tax purposes, the fund had a capital loss carryforward
at April 30, 2000 of $2,189,111, which may be carry forward and applied against
future capital gains. The entire capital loss carryforward expires in 2007.
4. Capital Shares
Transactions in capital shares were as follows:
Six Months Year
Ended Ended
04/30/2000 10/31/1999
(Unaudited)
Shares sold:
A Class 680,951 4,045,168
B Class 563,454 4,544,332
C Class 119,654 1,131,539
Institutional Class 177,917 1,232,443
<PAGE>
4. Capital Shares
(continued)
Six Months Year
Ended Ended
04/30/2000 10/31/1999
(Unaudited)
Shares issued upon reinvestment of
distributions from net investment income
and net realized gain on investments:
A Class (5) 86,732
B Class (6) 40,098
C Class 0 9,721
Institutional Class 0 10,550
---------- ----------
1,541,965 11,100,583
---------- ----------
Shares repurchased:
A Class (2,974,471) (3,191,945)
B Class (2,720,678) (1,999,416)
C Class (746,584) (541,385)
Institutional Class (426,869) (662,081)
---------- ----------
(6,868,602) (6,394,827)
---------- ----------
Net Increase (decrease) (5,326,637) 4,705,756
========== ==========
5. Lines of Credit
The Fund, along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participate in a $683,500,000 revolving line of
credit facility to be used for temporary or emergency purposes as an additional
source of liquidity to fund redemptions of investor shares. The Participants are
charged an annual commitment fee, which is allocated across the Participants on
the basis of each Fund's allocation of the entire facility. The Participants may
borrow up to a maximum of one third of their net assets under the agreement. No
amount was outstanding at April 30, 2000, or at any time during the fiscal year.
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 102% 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
April 30, 2000 were $10,244,511 and $10,470,000, respectively.
<PAGE>
DELAWARE INVESTMENTS FAMILY OF FUNDS
====================================
Complete information on any fund offered by Delaware Investments can be found in
each fund's current prospectus. Prospectuses for all funds offered by Delaware
Investments are available from your financial adviser. Please read the
prospectus carefully before you invest or send money.
<TABLE>
<CAPTION>
<S> <C> <C>
Growth of Capital International and Global Tax-Exempt Income
o Technology and Innovation o Emerging Markets Fund o National High-Yield
Fund o New Pacific Fund Municipal Bond Fund
o Select Growth Fund o Overseas Equity Fund o Tax-Free USA Fund
o Trend Fund o International Equity Fund o Tax-Free Insured Fund
o Growth Opportunities Fund* o Global Equity Fund o Tax-Free USA
o Small Cap Value Fund o Global Bond Fund Intermediate Fund
o U.S. Growth Fund o State Tax-Free Funds**
o Tax-Efficient Equity Fund Current Income
o Social Awareness Fund o Delchester Fund Stability of Principal
o High-Yield o Cash Reserve
Total Return Opportunities Fund o Tax-Free Money Fund
o Blue Chip Fund o Strategic Income Fund
o Devon Fund o Corporate Bond Fund Asset Allocation
o Growth and Income Fund o Extended Duration o Foundation Funds
o Decatur Equity Bond Fund Growth Portfolio
Income Fund o American Government Balanced Portfolio
o REIT Fund Bond Fund Income Portfolio
o Balanced Fund o U.S. Government
Securities Fund
o Limited-Term
Government Fund
</TABLE>
* Formerly known as DelCap Fund.
** Available for the following states: Arizona, California, Colorado, Florida,
Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, New Jersey,
New Mexico, New York, Oregon, Pennsylvania and Wisconsin. Insured and
intermediate bond funds are available in selected states.
<PAGE>
DELAWARE(SM) For Shareholders
INVESTMENTS 1.800.523.1918
=====================
Philadelphia o London For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
This semi-annual report is for the information of Delaware 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
Investments Performance Update for the most recently completed calendar quarter.
The prospectus sets forth details about charges, expenses, investment objectives
and operating policies of the Fund. You should read the prospectus carefully
before you invest. The figures in this report represent past results which are
not a guarantee of future results. The return and principal value of an
investment in the Fund will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
BOARD OF TRUSTEES Charles E. Peck Investment Manager
Retired Delaware Management Company
Wayne A. Stork Fredericksburg, VA Philadelphia, PA
Chairman
Delaware Investments Family of Funds Janet L. Yeomans International Affiliate
Philadelphia, PA Vice President and Treasurer Delaware International Advisers Ltd.
3M Corporation London, England
Walter P. Babich St. Paul, MN
Board Chairman National Distributor
Citadel Constructors, Inc. Delaware Distributors, L.P.
King of Prussia, PA AFFILIATED OFFICERS Philadelphia, PA
David K. Downes Charles E. Haldeman, Jr. Shareholder Servicing, Dividend
President and Chief Executive Officer President and Chief Executive Officer Disbursing and Transfer Agent
Delaware Investments Family of Funds Delaware Management Holdings, Inc. Delaware Service Company, Inc.
Philadelphia, PA Philadelphia, PA Philadelphia, PA
John H. Durham Richard J. Flannery 1818 Market Street
Private Investor Executive Vice President Philadelphia, PA 19103-3682
Horsham, PA and General Counsel
Delaware Investments Family of Funds
Anthony D. Knerr Philadelphia, PA
Consultant, Anthony Knerr & Associates
New York, NY Bruce D. Barton
President and Chief Executive Officer
Ann R. Leven Delaware Distributors, L.P.
Former Treasurer, National Gallery of Art Philadelphia, PA
Washington, DC
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
</TABLE>
(3205) Printed in the USA
SA-039 [4/00] PPL 6/00 (J6022)
