<PAGE>
DELAWARE(SM)
INVESTMENTS
-----------
Delaware High-Yield Opportunities Fund
Current Income
(Current Income Artwork)
2000 ANNUAL REPORT
<PAGE>
A TRADITION OF SOUND INVESTING SINCE 1929
TABLE OF CONTENTS
Letter to Shareholders 1
Portfolio Management
Review 3
Performance Summary 5
Financial Statements
Statement of Net Assets 6
Statement of Operations 9
Statements of Changes in
Net Assets 10
Financial Highlights 11
Notes to Financial
Statements 14
Report of Independent
Auditors 17
A Commitment To Our Investors
Experienced
[] Our seasoned investment professionals average more than 15 years' experience.
[] We began managing investments in 1929 and opened our first mutual fund in
1938. Over the past 70 years, we have weathered a full range of economic and
market environments.
Disciplined
[] We follow strict investment policies and clear buy/sell guidelines.
[] We strive to balance risk and reward in order to provide sound investment
alternatives within any given asset class.
Consistent
[] We clearly articulate our investment policies and follow them consistently.
[] Our commitment to style consistency has earned us the confidence of
discriminating institutional and individual investors to manage approximately
$45 billion in assets as of June 30, 2000.
Comprehensive
[] 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
[] 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
September 11, 2000
Recap of Events - U.S. high-yield bonds continued to struggle during the
12-month period ended July 31, 2000, under the mounting pressure of reduced
investor demand, rising default rates, and poor trading conditions. Not since
1990 - when economic recession, the savings and loan crisis, and high default
rates led prices downward - had high-yield bonds experienced two consecutive
years of significant price decline (Source: Bloomberg).
The current market phase was set in motion during the summer of 1998 when
overseas turmoil precipitated a global flight to quality that sharply reduced
market liquidity. When demand for higher risk bonds is low, it becomes difficult
to trade in the market without suffering some losses. Liquidity problems
continued to plague the high-yield market throughout our fiscal year as other
asset classes - particularly growth-oriented technology stocks - may have
attracted investors' money. Higher default rates coupled with weak investor
demand for new bonds pushed high-yield bond prices lower (Source: Bloomberg).
The high-yield bond market experienced a brief turnaround in June 2000, however.
High-yield bonds delivered their best monthly performance in more than 18 months
and high-yield bond mutual fund flows turned positive (Source: AMG Data
Services). Like stocks, high-yield bond prices are highly sensitive to corporate
earnings. We believe the June rally was driven by strong corporate earnings
reports and rising stock prices. In addition, the rally may have been sparked by
perceptions that the Federal Reserve was finished raising short-term interest
rates. The Fed left the federal funds rate unchanged at 6.50% in June after
economic reports for the month of May indicated a slowing economy.
The rebound in high-yield bond prices was short-lived. Lukewarm reports in the
second half of the corporate earnings season may have had an effect on the
markets, as both stocks and high-yield bond prices generally turned downward
again. We believe a July report of better than expected growth in U.S. gross
domestic product (up to an annual rate of 5.2%) during the second calendar
quarter may have also stunted the rally, as Fed-watching investors seemed to
monitor every economic report with the future of interest rates in mind.
Total Return
For Period Ended July 31, 2000 One Year
--------------------------------------------------------------------------------
Delaware High-Yield Opportunities Fund Class A +3.28%
--------------------------------------------------------------------------------
Lipper High Current Yield Fund Average (351 funds) -0.62%
--------------------------------------------------------------------------------
Salomon Smith Barney High-Yield Cash Pay Index -0.85%
--------------------------------------------------------------------------------
All performance shown above is at net asset value without the effect of sales
charges and assumes reinvestment of all dividends and capital gains. Performance
information for all Fund classes can be found on page 5. The Lipper category
represents the average returns of high-yield bond funds tracked by Lipper
(Source: Lipper). The Salomon Smith Barney High-Yield Cash Pay Index is an
unmanaged index that generally tracks the performance of domestic high-yield
bonds. You cannot invest directly in an index. Past performance does not
guarantee future results.
1
<PAGE>
Delaware High-Yield Opportunities Fund finished fiscal 2000 ahead of its
performance benchmark, the Salomon Smith Barney High-Yield Cash Pay Index. It
also outperformed the average of its peer funds in the Lipper High Current Yield
Fund class. The Fund delivered a total return of +3.28% (Class A shares at net
asset value with distributions reinvested) for the 12 months ended July 31,
2000.
We attribute Delaware High-Yield Opportunities Fund's resiliency to its focus on
more stable industries within the high-yield bond market, as well as its ability
to invest in foreign high-yield bonds and domestic stocks. We also benefited
from our emphasis on quality. The Fund invests in the top tiers of
non-investment-grade bonds - those rated BB and B by credit rating agencies such
as Moody's and Standard & Poor's. All of these factors helped us to preserve
capital.
Market Outlook - Fixed-income investors have continued to fight an uphill battle
during the Fed's extended campaign of interest rate hikes. As of this writing
the impression on Wall Street is that the U.S. economy is approaching a more
moderate growth rate, without inflation, as desired by the Fed. In our opinion,
economic fundamentals remain strong in the U.S. and in many other parts of the
world. In addition, we would not be surprised if U.S. interest rates trended
downward over the next 18 months. We believe the outlook for the high-yield
market is becoming more promising, and that a turnaround could evolve in the
next year.
On the following pages, Delaware High-Yield Opportunities Fund's portfolio
manager Gerald Nichols discusses the Fund's results for fiscal 2000 in greater
detail and shares his outlook for the year ahead. We thank you for selecting
Delaware High-Yield Opportunities Fund and look forward to reporting to you
again in six months.
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
"WE BELIEVE THE
OUTLOOK FOR THE
HIGH-YIELD MARKET IS
BECOMING MORE
PROMISING, AND THAT A
TURNAROUND COULD
EVOLVE IN THE
NEXT YEAR."
(Current Income Artwork)
2
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
Gerald T. Nichols
Senior Portfolio Manager
September 11, 2000
The Fund's Results
During the 12-month period ended July 31, 2000, an imbalance between the supply
and demand of high-yield bonds weighed heavily on bond prices. Although the
supply of new high-yield bonds was much lower than in previous years, we felt
there was little appetite for what was being issued. In our opinion, an
uncertain economic outlook and rising default rates among high-yield bond issues
- caused by the inability of companies to repay principal and interest on their
debt - muted investors' interest in the high-yield bond market.
We believe Delaware High-Yield Opportunities Fund began the fiscal period
well-positioned to weather just this sort of market environment. We had taken
advantage of opportunities in the market a year earlier to restructure the
portfolio so that it had a stronger emphasis on quality. At the start of the
fiscal year, we were holding bond issues of companies with attractive
risk/reward profiles.
Early in the fiscal year, we benefited from having low portfolio turnover. This
meant that the Fund was less impacted by the market's lack of liquidity, a
condition which made it difficult to sell bonds without losing significant
value. Because the Fund was positioned much where we wanted it at the start of
our fiscal year, we had little need to make changes to our existing positions.
Portfolio Highlights
During the fiscal year, domestic high-yield bonds often detracted from
performance, while other investments fared better. The Fund benefited from our
focus on quality as well as from small positions in foreign high-yield bonds and
U.S. stocks. European high-yield bonds, which accounted for most of our foreign
exposure during the fiscal year, posted double-digit returns as a class for the
period, outperforming the domestic high-yield bond market (Source: Salomon Smith
Barney). Our equity position, representing 1.3% of total net assets as of July
31, 2000, also helped performance. Stocks, although frequently volatile during
the Fund's fiscal year, generally performed well.
Delaware High-Yield Opportunities Fund has two investment objectives. The first
is to seek long-term total return. Current income is a secondary objective.
Because the Fund is not as focused on securing the highest yields available in
the market, we can invest in higher-quality companies in industries that are
less affected by economic cycles, such as cable, media and publishing. Bonds
from these industries typically provide lower yields, but offer us the price
stability that is important to achieving the Fund's primary investment
objective.
Portfolio Characteristics
July 31, 2000
--------------------------------------------------------------------------------
Current 30-Day SEC Yield* 9.97%
--------------------------------------------------------------------------------
Average Effective Duration** 5.07 years
--------------------------------------------------------------------------------
Average Effective Maturity*** 7.09 years
--------------------------------------------------------------------------------
Portfolio Turnover 396%
--------------------------------------------------------------------------------
*For Class A shares measured according to Securities and Exchange Commission
(SEC) guidelines. Current 30-day SEC yields as of 7/31/00 for Class B and C
shares were 9.77% and 9.79%, respectively. The Institutional Class yield was
10.77%.
**Average effective duration is a common measure of a bond or bond fund's
sensitivity to interest rates.
***Average effective maturity is the average time remaining until scheduled
replacement by issuers of portfolio securities.
3
<PAGE>
Delaware High-Yield
Opportunities Fund
Top Ten Sectors
As of July 31, 2000
--------------------------------------------------------------------------------
Cable, Media & Publishing 15.66%
--------------------------------------------------------------------------------
Telecommunications 13.66%
--------------------------------------------------------------------------------
Enhanced Specialized
Mobile Radio/Personal
Communication Services 10.09%
--------------------------------------------------------------------------------
Energy 9.83%
--------------------------------------------------------------------------------
Leisure, Lodging & Entertainment 7.42%
--------------------------------------------------------------------------------
Building & Materials 5.22%
--------------------------------------------------------------------------------
Competitive Local Exchange Carriers 5.10%
--------------------------------------------------------------------------------
Food, Beverage & Tobacco 3.96%
--------------------------------------------------------------------------------
Industrial Machinery 3.68%
--------------------------------------------------------------------------------
Chemicals 3.15%
--------------------------------------------------------------------------------
(Current Income Artwork)
We believe that the Fund has a competitive edge over other high-yield bond
mutual funds. Part of our advantage stems from the Fund's relatively small asset
size - roughly $27.51 million as of July 31, 2000. The Fund's small size,
coupled with our focus on larger bond issues from well-known companies, gives us
the ability to move in and out of the markets quickly when need be. This can be
especially helpful when any of the markets in which we invest experience a
setback.
Outlook
The last two years have been unusually difficult for U.S. high-yield bonds.
Despite the fact that the U.S. economy has never been in better shape,
lower-rated issues in the high-yield bond market - which usually are more
sensitive to the economy - have performed poorly and had a high rate of default
(Source: Moody's Investors Service). In our opinion, much of the trouble stems
from the global financial crisis of 1998, which pushed down commodity prices
worldwide and caused many companies in commodity-based industries to default on
their debt obligations.
Since then, the default rate among high-yield bonds has been rising. In
November 1999, 6.1% of the companies issuing high-yield bonds were in default,
the highest level since 1992. The default rate leveled off at just above 5% by
mid-year 2000, still higher than the historic average (Source: Moody's Investors
Service). We believe the default rate was driven higher by an excess supply of
commodities in the world in general, and a more restrictive bank lending
environment. The result is that banks have been very reluctant to lend to
lower-rated issuers.
It appears to us that, after the short rally experienced earlier this summer,
long-hurting high-yield investors seem eager to stage a longer rally. If nothing
else, many investors seem to expect a rally based purely on market cycles
turning the compass in favor of high yield. We believe there are indicators
suggesting that a turnaround could evolve during the next year. For instance,
many analysts point to the similarities between the current period of rising
interest rates and 1994, when seven increases moved short-term rates upward by
3.0%. High-yield markets rallied throughout the following year (Source: Salomon
Smith Barney).
It appears to us there are both similarities and differences between the two
periods. Regardless of comparisons, we believe Delaware High-Yield Opportunities
Fund has a strong process in place for managing credit risk. We will continue to
focus on higher quality companies in less volatile industries. Many of these
same companies are represented in our equity allocation as well. In addition, we
expect to continue taking advantage of the increasing number of high-yield bond
investment opportunities overseas. Overall, we feel confident that this
diversified approach will make a positive contribution to the Fund's results.
4
<PAGE>
FUND BASICS
Fund Objectives
The Fund seeks total return, and as a secondary objective, high current income.
Total Fund Assets
$27.51 million
Number of Holdings
75
Fund Start Date
December 30, 1996
Your Fund Manager
Gerald T. Nichols is a graduate of the University of Kansas, where he received a
BS in Business Administration and an MS in finance. Prior to joining Delaware in
1989, Mr. Nichols worked at Waddell & Reed, Inc. and as an investment officer
for a merchant banking firm. He is a CFA charterholder.
Nasdaq Symbols
Class A: DHOAX
Class B: DHOBX
Class C: DHOCX
DELAWARE HIGH-YIELD OPPORTUNITIES
FUND PERFORMANCE
Growth of a $10,000 Investment
December 30, 1996 to July 31, 2000
Delaware High-Yield Opportunities Fund Growth of $10,000 investment chart
<TABLE>
<CAPTION>
Delaware High-Yield U.S. Consumer Salomon Smith Barney High-
Opportunities Fund A Class Price Index (Inflation) Yield Cash Pay Index
-------------------------- ------------------------ --------------------------
<S> <C> <C> <C>
12/31/96 $ 9,532 $10,000 $10,000
Jul-97 $10,562 $10,120 $10,835
Jul-98 $12,184 $10,290 $11,993
Jul-99 $11,666 $10,511 $11,968
Jul-00 $12,074 $10,883 $11,886
</TABLE>
Chart assumes $10,000 invested on December 30, 1996, a 4.75% front-end sales
charge and reinvestment of all distributions. Performance for other Fund classes
will vary due to differing charges and expenses. Values are plotted as of
month's end.
Average Annual Total Returns
Through July 31, 2000 Lifetime Three Years One Year
--------------------------------------------------------------------------------
Class A (Est. 12/30/96)
Excluding Sales Charge +6.81% +4.58% +3.28%
Including Sales Charge +5.40% +2.87% -1.71%
--------------------------------------------------------------------------------
Class B (Est. 2/17/98)
Excluding Sales Charge +0.42% +2.62%
Including Sales Charge -0.59% -1.17%
--------------------------------------------------------------------------------
Class C (Est. 2/17/98)
Excluding Sales Charge +0.41% +2.61%
Including Sales Charge +0.41% +1.66%
--------------------------------------------------------------------------------
The Fund invests primarily in high-yield bonds, which involve greater risk than
investing in higher quality fixed-income securities. Return and share value will
fluctuate so that shares, when redeemed, may be worth more or less than the
original cost. All results include reinvestment of distributions and sales
charges as noted below. Past performance is not a guarantee of future results.
Performance for Class B and Class C shares excluding sales charge assumes either
contingent deferred sales charges were not applied or the investment was not
redeemed.
Class A shares have a 4.75% maximum front-end sales charge and a 12b-1 fee.
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a deferred sales
charge of up to 4% if redeemed before the end of the sixth year.
<PAGE>
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
The average annual total returns for the lifetime, three-year and one-year
periods ended July 31, 2000 for Delaware High-Yield Opportunities Fund
Institutional Class (Est. 12/30/96) were +7.04%, +4.85% and +3.61%,
respectively. Institutional Class shares are available without sales or
asset-based distribution charges only to certain eligible institutional
accounts.
An expense limitation was in effect for all classes of Delaware High-Yield
Opportunities Fund during the period. Performance would have been lower if the
expense limitation was not in effect.
Nasdaq Symbol Institutional Class: DHOIX
5
<PAGE>
Statement of Net Assets
DELAWARE HIGH-YIELD OPPORTUNITIES FUND
--------------------------------------
Principal Market
July 31, 2000 Amount Value
--------------------------------------------------------------------------------
Corporate Bonds - 94.98%
Automobiles & Automotive Parts - 1.39%
American Axle & Manufacturing
9.75% 3/1/09 ..................................... $ 400,000 $ 381,000
----------
381,000
----------
Building & Materials - 5.22%
Henry 10.00% 4/15/08 ............................... 400,000 274,000
Nortek 9.25% 3/15/07 ............................... 250,000 236,875
Toll 8.125% 2/1/09 ................................. 600,000 561,000
Williams Scotsman 9.875% 6/1/07 .................... 400,000 364,000
----------
1,435,875
----------
Cable, Media & Publishing - 15.66%
Adelphia Communications 9.375% 11/15/09 ............ 450,000 411,750
+Charter Communication 11.75% 1/15/10 ............... 1,200,000 681,000
Echostar 9.25% 2/1/06 .............................. 500,000 486,250
Sinclair Broadcast 10.00% 9/30/05 .................. 600,000 586,500
Sullivan Graphics 12.75% 8/1/05 .................... 400,000 408,000
+Telewest 11.375% 2/1/10 ............................ 1,125,000 624,375
+United International 10.75% 2/15/08 ................ 750,000 549,375
United Pan-Europe Communications 11.25% 2/1/10 ..... 650,000 559,000
----------
4,306,250
----------
Chemicals - 3.15%
Avecia 11.00% 7/1/09 ................................ 400,000 404,000
Huntsman 9.50% 7/1/07 ............................... 500,000 462,500
----------
866,500
----------
Competitive Local Exchange Carriers - 5.10%
KMC Telecom Holdings 13.50% 5/15/09 ................ 450,000 401,060
Metromedia Fiber Network 10.00% 11/15/08 ........... 500,000 490,000
+Nextlink Communications 12.125% 12/1/09 ............ 900,000 513,000
----------
1,404,060
----------
Data/Internet Services - 1.90%
Globix 12.50% 2/1/10 ............................... 300,000 238,500
Psinet 10.50% 12/1/06 .............................. 350,000 283,500
----------
522,000
----------
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Corporate Bonds (continued)
Electronics & Electrical Equipment - 2.20%
Flextronics International 9.875% 7/1/10 ............ $ 400,000 $ 409,000
Protection One Alarm 7.375% 8/15/05 ................ 250,000 196,875
----------
605,875
----------
Enhanced Specialized Mobile Radio/
Personal Communication Services - 10.09%
+Microcell Telecommunications 14.00% 6/1/06 ......... 500,000 470,000
+Nextel Communications 10.65% 9/15/07 ............... 600,000 472,500
Nextel International 12.75% 8/1/10 ................. 500,000 497,500
+Nextel Partners 14.00% 2/1/09 ...................... 520,000 357,500
Telecorp PCS 10.625% 7/15/10 ........................ 250,000 253,750
+Telecorp PCS 11.625% 4/15/09 ....................... 275,000 184,250
Voicestream Wireless 10.375% 11/15/09 .............. 500,000 540,000
----------
2,775,500
----------
Energy - 9.83%
Chesapeake Energy 9.625% 5/1/05 .................... 500,000 490,000
Clark USA 10.875% 12/1/05 .......................... 250,000 138,438
Frontier Oil 11.75% 11/15/09 ....................... 500,000 516,250
Nuevo Energy 9.50% 6/1/08 .......................... 300,000 299,250
Parker Drilling 9.75% 11/15/06 ..................... 400,000 388,000
Plains Resources 10.25% 3/15/06 .................... 500,000 508,750
+Universal Compression 9.875% 2/15/08 ............... 500,000 363,750
----------
2,704,438
----------
Environmental Services - 1.11%
Allied Waste 10.00% 8/1/09 ......................... 350,000 304,938
----------
304,938
----------
Food, Beverage & Tobacco - 3.96%
Carrols 9.50% 12/1/08 .............................. 500,000 425,000
+Del Monte Foods 12.50% 12/15/07 .................... 650,000 492,375
Fleming 10.625% 7/31/07 ............................ 200,000 171,500
----------
1,088,875
----------
Healthcare & Pharmaceuticals - 1.78%
Tenet Healthcare 8.625% 1/15/07 .................... 500,000 490,875
----------
490,875
----------
6
<PAGE>
Statement of Net Assets (continued)
Principal Market
Delaware High-Yield Opportunities Fund Amount Value
--------------------------------------------------------------------------------
Corporate Bonds (continued)
Industrial Machinery - 3.68%
Blount 13.00% 8/1/09 ............................... $ 250,000 $ 252,813
Mark IV 7.75% 4/1/06 ............................... 400,000 388,500
National Equipment 10.00% 11/30/04 ................. 450,000 371,250
----------
1,012,563
----------
Leisure, Lodging & Entertainment - 7.42%
Hollywood Casino 11.25% 5/1/07 ..................... 400,000 410,000
Hollywood Casino 13.00% 8/1/06 ..................... 250,000 266,250
Mohegan Tribal Gaming 8.75% 1/1/09 ................. 400,000 388,000
+Premier Parks 10.00% 4/1/08 ........................ 750,000 498,750
Sports Club 11.375% 3/15/06 ........................ 500,000 477,500
----------
2,040,500
----------
Long Distance Services - 1.40%
+Viatel 12.50% 4/15/08 .............................. 1,000,000 385,000
----------
385,000
----------
Metals & Mining - 2.87%
Jorgensen 9.50% 4/1/05 ............................. 250,000 218,750
P&L Coal 9.625% 5/15/08 ............................ 300,000 285,750
WCI Steel 10.00% 12/1/04 ........................... 300,000 285,000
----------
789,500
----------
Paper & Forest Products - 1.38%
+SF Holdings 12.75% 3/15/08 ......................... 750,000 378,750
----------
378,750
----------
Retail - 0.75%
Advance Stores 10.25% 4/15/08 ...................... 250,000 207,500
----------
207,500
----------
Telecommunications - 13.66%
+Allegiance Telecom 11.75% 2/15/08 .................. 800,000 596,000
Crown Castle International 10.75% 8/1/11 ........... 300,000 308,250
Dobson Communications 10.875% 7/1/10 ............... 400,000 392,000
Exodus Communications 10.75% 12/15/09 .............. 500,000 483,750
Intermedia Communications 8.60% 6/1/08 ............. 500,000 412,500
Level 3 Communications 9.125% 5/1/08 ............... 500,000 436,250
Williams Communications 10.875% 10/1/09 ............ 500,000 480,000
Winstar Communications 12.75% 4/15/10 .............. 700,000 649,250
----------
3,758,000
----------
Transportation & Shipping - 2.43%
Atlas Air 9.375% 11/15/06 .......................... 350,000 350,875
Avis Rent A Car 11.00% 5/1/09 ...................... 300,000 318,000
----------
668,875
----------
Total Corporate Bonds (cost $26,845,457) ........... 26,126,874
----------
<PAGE>
Number of Market
Shares Value
--------------------------------------------------------------------------------
Common Stock - 1.30%
Energy - 0.42%
*Chesapeake Energy .................................. 20,000 $115,000
----------
115,000
----------
Paper & Forest Products - 0.02%
*SF Holdings Class C ................................ 1,050 4,725
----------
4,725
----------
Telecommunications - 0.86%
*Global Crossing .................................... 4,100 99,681
*McLeodUSA Class A .................................. 4,500 76,219
*Triton PCS Holdings Class A ........................ 1,200 60,225
----------
236,125
----------
Total Common Stock (cost $426,964) 355,850
----------
Convertible Preferred Stock - 0.41%
Psinet ............................................. 4,000 112,000
----------
Total Convertible Preferred Stock
(cost $200,000) .................................. 112,000
----------
Preferred Stock - 0.00%
*Nextel Communications .............................. 1,000 1,003
----------
Total Preferred Stock (cost $1,024) ................ 1,003
----------
Warrants - 0.00%
*Electronic Retailing ............................... 300 3
*Spincycle .......................................... 250 3
----------
Total Warrants (cost $12,017)
6
----------
7
<PAGE>
Statement of Net Assets (continued)
Principal Market
Delaware High-Yield Opportunities Fund Amount Value
--------------------------------------------------------------------------------
Repurchase Agreements - 2.95%
With Chase Manhattan 6.54% 8/1/00
(dated 7/31/00, collateralized by
$283,000 U.S. Treasury Notes 5.875%
due 11/15/04, market value $282,925) ............... $276,000 $ 276,000
With PaineWebber 6.54% 8/1/00
(dated 7/31/00, collateralized by $7,000
U.S. Treasury Notes 5.875%
due 11/30/01, market value $7,442 and
$176,000 U.S. Treasury Notes 6.50%
due 8/31/01, market value $180,282
and $88,000 U.S. Treasury Notes 6.625%
due 3/31/02, market value $89,829) ................. 272,000 272,000
With Prudential Securities 6.50% 8/1/00
(dated 7/31/00, collateralized by $85,000
U.S. Treasury Notes 5.00% due 4/30/01,
market value $85,596 and $176,000
U.S. Treasury Notes 7.75% due 2/15/01,
market value $183,014) ............................. 263,000 263,000
----------
Total Repurchase Agreements
(cost $811,000) .................................... 811,000
----------
Total Market Value of Securities - 99.64%
(cost $28,296,462) ................................. 27,406,733
Receivables and Other Assets
Net of Liabilities - 0.36% ......................... 99,906
----------
Net Assets Applicable to 5,671,679
Shares Outstanding - 100.00% ....................... $27,506,639
===========
Net Asset Value - Delaware High-Yield
Opportunities Fund A Class ($15,650,312 /
3,227,099 Shares) .................................. $4.85
-----
Net Asset Value - Delaware High-Yield
Opportunities Fund B Class ($9,588,601 /
1,977,006 Shares) .................................. $4.85
-----
Net Asset Value - Delaware High-Yield
Opportunities Fund C Class ($2,263,740 /
466,752 Shares) .................................... $4.85
-----
Net Asset Value - Delaware High-Yield
Opportunities Fund Institutional Class
($3,986 / 822 Shares) .............................. $4.85
-----
-------------------------
+ Zero coupon security as of July 31, 2000. The coupon shown is the step-up
rate.
* Non-income producing security for the period ended July 31, 2000.
<PAGE>
Components of Net Assets at July 31, 2000:
Shares of beneficial interest (unlimited
authorization - no par) ........................... $31,324,069
Undistributed net investment income** ............... 156,769
Accumulated net realized loss
on investments .................................... (3,079,324)
Net unrealized depreciation of investments
and foreign currencies ............................ (894,875)
-----------
Total net assets .................................... $27,506,639
===========
Net Asset Value and Offering Price per Share -
Delaware High-Yield Opportunities Fund
Net asset value A class (A) ......................... $4.85
Sales charge (4.75% of offering price
or 4.95% of the amount invested per share) (B) .... 0.24
-----
Offering price ...................................... $5.09
=====
-------------------------
** Undistributed net investment income includes net realized gains (losses) on
foreign currencies. Net realized gain (losses) on foreign currencies are
treated as net investment income in accordance with provisions of the
Internal Revenue Code.
(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 $100,000 or more.
See accompanying notes
8
<PAGE>
Statement of Operations
Year Ended July 31, 2000 Delaware High-Yield Opportunities Fund
--------------------------------------------------------------------------------
Investment Income:
Interest ........................................... $2,840,680
Dividends .......................................... 33,162 $2,873,842
---------- ----------
Expenses:
Management fees .................................... 177,604
Distribution expense ............................... 138,211
Registration fees .................................. 62,334
Dividend disbursing and transfer agent
fees and expenses ................................ 49,235
Reports and statements to shareholders ............. 28,093
Accounting and administration ...................... 12,026
Custodian fees ..................................... 8,446
Taxes (other than taxes on income) ................. 5,156
Trustees' fees ..................................... 2,373
Professional fees .................................. 1,626
Other .............................................. 4,660 489,764
---------- ----------
Less expenses absorbed or waived ................... (73,429)
Less expenses paid indirectly ...................... (1,557)
----------
Total expenses ..................................... 414,778
----------
Net Investment Income .............................. 2,459,064
----------
Net Realized and Unrealized Gain (Loss) on Investments
and Foreign Currencies:
Net realized loss on:
Investments ...................................... (2,260,873)
Foreign currencies ............................... (2,884)
----------
Net realized loss (2,263,757)
Net change in unrealized appreciation /
depreciation of investments and
foreign currencies ............................... 326,436
----------
Net Realized and Unrealized Loss on Investments
and Foreign Currencies ........................... (1,937,321)
----------
Net Increase in Net Assets Resulting
from Operations .................................. $ 521,743
==========
See accompanying notes
9
<PAGE>
Statements of Changes in Net Assets
Delaware High-Yield Opportunities Fund
--------------------------------------------------------------------------------
Year Ended
7/31/00 7/31/99
Increase (Decrease) in Net Assets from Operations:
Net investment income ............................... $ 2,459,064 $ 1,592,270
Net realized loss on investments
and foreign currencies ............................ (2,263,757) (818,418)
Net change in unrealized appreciation / depreciation
of investments and foreign currencies ............. 326,436 (1,440,010)
------------------------
Net increase (decrease) in net assets resulting
from operations ................................... 521,743 (666,158)
------------------------
Distributions to Shareholders from:
Net investment income:
A Class ........................................... (1,250,414) (929,578)
B Class ........................................... (617,811) (271,969)
C Class ........................................... (159,852) (90,611)
Institutional Class ............................... (277,926) (311,216)
Net realized gain on investments:
A Class ........................................... -- (219,201)
B Class ........................................... -- (58,238)
C Class ........................................... -- (18,815)
Institutional Class ............................... -- (69,788)
------------------------
(2,306,003) (1,969,416)
------------------------
Capital Share Transactions:
Proceeds from shares sold:
A Class ........................................... 14,532,641 6,326,031
B Class ........................................... 6,659,845 6,467,171
C Class ........................................... 2,034,559 1,946,694
Institutional Class ............................... 4,057 26,516
Net asset value of shares issued upon reinvestment
of distributions from net investment income and
net realized gain on investments:
A Class ........................................... 1,085,376 997,958
B Class ........................................... 339,143 160,232
C Class ........................................... 90,802 63,760
Institutional Class ............................... 286,260 356,221
------------------------
25,032,683 16,344,583
------------------------
Cost of shares repurchased:
A Class ........................................... (11,563,039) (2,872,684)
B Class ........................................... (3,265,393) (1,534,693)
C Class ........................................... (1,665,247) (502,146)
Institutional Class ............................... (3,705,898) --
------------------------
(20,199,577) (4,909,523)
------------------------
Increase in net assets derived from capital
share transactions ................................ 4,833,106 11,435,060
------------------------
Net Increase in Net Assets .......................... 3,048,846 8,799,486
Net Assets:
Beginning of period ................................. 24,457,793 15,658,307
------------------------
End of period ....................................... $27,506,639 $24,457,793
========================
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 High-Yield Opportunities Fund A Class
---------------------------------------------------------------------------------------------------------------------------------
12/30/96(1)
Year Ended to
7/31/00 7/31/99 7/31/98 7/31/97
<S> <C> <C> <C> <C>
Net asset value, beginning of period .............................................. $5.120 $5.920 $5.920 $5.500
Income (loss) from investment operations:
Net investment income(2) ........................................................ 0.455 0.434 0.523 0.290
Net realized and unrealized gain (loss) on investments and foreign currencies ... (0.296) (0.691) 0.336 0.299
---------------------------------------
Total from investment operations ................................................ 0.159 (0.257) 0.859 0.589
---------------------------------------
Less dividends and distributions:
Dividends from net investment income ............................................ (0.429) (0.438) (0.605) (0.169)
Distributions from net realized gain on investments ............................. -- (0.105) (0.254) --
---------------------------------------
Total dividends and distributions ............................................... (0.429) (0.543) (0.859) (0.169)
---------------------------------------
Net asset value, end of period .................................................... $4.850 $5.120 $5.920 $5.920
=======================================
Total return(3) ................................................................... 3.28% (4.26%) 15.66% 10.81%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ......................................... $15,650 $12,558 $9,670 $5,990
Ratio of expenses to average net assets ......................................... 1.30% 1.27% 1.14% 0.75%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ....................................... 1.57% 1.89% 1.44% 1.57%
Ratio of net investment income to average net assets ............................ 9.21% 8.02% 8.88% 8.53%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly ............................ 8.94% 7.39% 8.58% 7.70%
Portfolio turnover .............................................................. 396% 382% 317% 270%
</TABLE>
---------
(1) Date of initial public offering; ratios have been annualized but total
return has not been annualized. Total return for this short of a time period
may not be representative of longer term results.
(2) Per share information for the period ended July 31, 1997 and the year ended
July 31, 2000 was 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
11
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund Delaware High-Yield Opportunities Fund Delaware High-Yield Opportunities Fund
throughout each period outstanding were as follows: B Class C Class
------------------------------------------------------------------------------------------------------------------------------------
2/17/98(1) 2/17/98(1)
Year Ended to Year Ended to
7/31/00 7/31/99 7/31/98 7/31/00 7/31/99 7/31/98
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $5.120 $5.920 $5.870 $5.120 $5.920 $5.870
Income (loss) from investment operations:
Net investment income(2) ............................ 0.421 0.401 0.161 0.422 0.403 0.161
Net realized and unrealized gain (loss)
on investments and foreign currencies ............. (0.294) (0.694) 0.044 (0.295) (0.696) 0.044
-------------------------------------------------------------------
Total from investment operations .................... 0.127 (0.293) 0.205 0.127 (0.293) 0.205
-------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................ (0.397) (0.402) (0.155) (0.397) (0.402) (0.155)
Distributions from net realized
gain on investments ............................... -- (0.105) -- -- (0.105) --
-------------------------------------------------------------------
Total dividends and distributions ................... (0.397) (0.507) (0.155) (0.397) (0.507) (0.155)
-------------------------------------------------------------------
Net asset value, end of period ........................ $4.850 $5.120 $5.920 $4.850 $5.120 $5.920
===================================================================
Total return(3) ....................................... 2.62% (4.91%) 3.54% 2.61% (4.91%) 3.54%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............. $9,589 $6,296 $1,603 $2,264 $1,913 $547
Ratio of expenses to average net assets ............. 2.00% 1.97% 1.84% 2.00% 1.97% 1.84%
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly .......................... 2.27% 2.59% 2.14% 2.27% 2.59% 2.14%
Ratio of net investment income to
average net assets ................................ 8.51% 7.32% 8.18% 8.51% 7.32% 8.18%
Ratio of net investment income to
average net assets prior to expense
limitation and expenses paid indirectly ........... 8.24% 6.69% 7.88% 8.24% 6.69% 7.88%
Portfolio turnover .................................. 396% 382% 317% 396% 382% 317%
</TABLE>
---------------
(1) Date of initial public offering; ratios have been annualized but total
return has not been annualized. Total return for this short of a time period
may not be representative of longer term results.
(2) Per share information for the year ended July 31, 2000 was 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
12
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware High-Yield Opportunities Fund Institutional Class
-----------------------------------------------------------------------------------------------------------------------------------
12/30/96(1)
Year Ended to
7/31/00 7/31/99 7/31/98 7/31/97
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............................................. $5.120 $5.920 $5.920 $5.500
Income (loss) from investment operations:
Net investment income(2) ....................................................... 0.473 0.444 0.537 0.290
Net realized and unrealized gain (loss) on investments and foreign currencies .. (0.298) (0.684) 0.330 0.299
---------------------------------------
Total from investment operations ............................................... 0.175 (0.240) 0.867 0.589
---------------------------------------
Less dividends and distributions:
Dividends from net investment income ........................................... (0.445) (0.455) (0.613) (0.169)
Distributions from net realized gain on investments ............................ -- (0.105) (0.254) --
---------------------------------------
Total dividends and distributions .............................................. (0.445) (0.560) (0.867) (0.169)
---------------------------------------
Net asset value, end of period ................................................... $4.850 $5.120 $5.920 $5.920
=======================================
Total return(3) .................................................................. 3.61% (3.96%) 15.82% 10.81%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ........................................ $4 $3,691 $3,837 $3,330
Ratio of expenses to average net assets ........................................ 1.00% 0.97% 0.84% 0.75%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ...................................... 1.27% 1.59% 1.14% 1.27%
Ratio of net investment income to average net assets ........................... 9.51% 8.32% 9.18% 8.53%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly ........................... 9.24% 7.69% 8.88% 8.00%
Portfolio turnover ............................................................. 396% 382% 317% 270%
</TABLE>
-----------
(1) Date of initial public offering; ratios have been annualized but total
return has not been annualized. Total return for this short of a time period
may not be representative of longer term results.
(2) Per share information for the period ended July 31, 1997 and the year ended
July 31, 2000 was 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.
See accompanying notes
13
<PAGE>
Notes to Financial Statements
July 31, 2000
--------------------------------------------------------------------------------
Delaware Group Income Funds (the "Company") is organized as a Delaware business
trust and offers five funds: Delaware Corporate Bond Fund, Delaware Delchester
Fund, Delaware Extended Duration Bond Fund, Delaware High-Yield Opportunities
Fund and Delaware Strategic Income Fund. These financial statements and related
notes pertain to Delaware High-Yield Opportunities Fund (the "Fund"). Delaware
High-Yield Opportunities Fund is a diversified open-end investment company under
the Investment Company Act of 1940, as amended. The Fund offers four classes of
shares. The A Class carries a maximum front-end sales charge of 4.75%. 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 High-Yield Opportunities Fund is to seek total
return, and as a secondary objective, high current income.
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 regular close of the New York Stock Exchange 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. Long-term debt securities are
valued by an independent pricing service and such prices are believed to reflect
the fair value of such securities. Money market instruments having less than 60
days to maturity are valued at amortized cost, which approximates market value.
Other securities and assets for which market quotations are not readily
available are valued at fair 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 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>
Foreign Currency Transactions - Transactions denominated in foreign currencies
are recorded at the prevailing exchange rates on the valuation date. The value
of all assets and liabilities denominated in foreign currencies are translated
into U.S. dollars at the exchange rate of such currencies against the U.S.
dollar daily. Transaction gains or losses resulting from changes in exchange
rates during the reporting period or upon settlement of the foreign currency
transaction are reported in operations for the current period. The Fund isolates
that portion of gains and losses on investments in debt securities which are due
to changes in the foreign exchange rate from that which are due to changes in
market prices of debt securities. The Fund reports certain foreign currency
related transactions as components of realized gains (losses) for financial
reporting purposes, whereas such components are treated as ordinary income
(loss) for federal income tax purposes.
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. Original issue discounts are accreted to interest
income over the lives of the respective securities. The Fund declares and pays
dividends from net investment income monthly and distributions from net realized
gains on investments, 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 $629 for the year ended July 31, 2000. In
addition, the Fund receives earnings credits from its custodian when positive
cash balances are maintained, which are used to offset custody fees. The
earnings credits for the year ended July 31, 2000 were $928. 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".
14
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
2. Investment Management and Other Transactions with Affiliates
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 the average daily net assets, 0.60% on the next $500 million, 0.55%
on the next $1.5 billion, and 0.50% of the average net assets in excess of $2.5
billion. At July 31, 2000, the Fund had a liability for investment management
fees and other expenses payable to DMC of $16,762.
DMC has elected to waive that portion, if any, of the management fee
and reimburse the Fund to the extent that annual expenses, exclusive of taxes,
interest, brokerage commissions, distribution and extraordinary expenses, exceed
1.00% of average daily net assets of the Fund through September 30, 2001.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to provide dividend disbursing, transfer agent, accounting and administration
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 July 31, 2000, the Fund had a liability for such fees and other
expenses payable to DSC of $5,175.
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. At July 31, 2000, the Fund had
a liability for such fees and other expenses payable to DDLP of $9,376.
For the year ended July 31, 2000, DDLP earned $7,881 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 Funds. These officers, trustees and employees are paid no compensation by
the Fund.
3. Investments
During the year ended July 31, 2000, the Fund made purchases of $103,297,542 and
sales of $99,610,530 of investment securities other than U.S. government
securities and temporary cash investments.
At July 31, 2000, net unrealized depreciation for federal income tax purposes
aggregated $894,953 of which $437,706 related to unrealized appreciation of
securities and $1,332,659 related to unrealized depreciation of securities. At
July 31, 2000, the aggregate cost of securities for federal income tax purposes
was $28,301,686.
For federal income tax purposes, the Fund had accumulated capital losses of
$1,069,936 at July 31, 2000, which may be carried forward and applied against
future gains. The capital loss carryforward expires as follows: 2007 - $65,503
and 2008 - $1,004,433.
<PAGE>
4. Capital Shares
Transactions in capital shares were as follows:
Year Ended
7/31/00 7/31/99
Shares sold:
A Class ............................................. 2,934,531 1,173,029
B Class ............................................. 1,335,625 1,218,230
C Class ............................................. 408,692 364,066
Institutional Class ................................. 826 5,052
Shares issued upon reinvestment of
distributions from net investment income
and net realized gain on investments:
A Class ............................................. 220,942 187,800
B Class ............................................. 69,107 30,387
C Class ............................................. 18,426 12,081
Institutional Class ................................. 57,716 66,867
--------- ---------
5,045,865 3,057,512
--------- ---------
Shares repurchased:
A Class ............................................. (2,380,163) (543,858)
B Class ............................................. (656,876) (290,396)
C Class ............................................. (333,890) (95,113)
Institutional Class ................................. (778,354) --
--------- ---------
(4,149,283) (929,367)
--------- ---------
Net increase .......................................... 896,582 2,128,145
========= =========
5. Lines of Credit
Effective October 8, 1999, 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. Prior to October 8, 1999, the Fund had a
committed line of credit of $400,000. No amount was outstanding at July 31,
2000, or at any time during the fiscal year.
15
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
6. Credit and Market Risk
The Fund invests in high-yield fixed-income securities, which carry ratings of
BB or lower by S&P and/or Ba or lower by Moody's. Investments in these higher
yielding securities may be accompanied by a greater degree of credit risk than
higher rated securities. Additionally, lower rated securities may be more
susceptible to adverse economic and competitive industry conditions than
investment grade securities.
The Fund invests up to 15% of its total assets in illiquid securities which may
include securities with contractual restrictions on resale, securities exempt
from registration under Rule 144A of the Securities Act of 1933, as amended, and
other securities which may not be readily marketable. The relative illiquidity
of some of these securities may adversely affect the Fund's ability to dispose
of such securities in a timely manner and at a fair price when it is necessary
to liquidate such securities.
7. Tax Information (Unaudited)
The information set forth below is for the Fund's fiscal year as required by
federal laws. Shareholders, however, must report distributions on a calendar
year basis for income tax purposes, which may include distributions for portions
of two fiscal years of a fund. Accordingly, the information needed by
shareholders for income tax purposes will be sent to them in early 2001. Please
consult your tax adviser for proper treatment of this information.
For the fiscal year ended July 31, 2000, the Fund designates as long-term
capital gains and ordinary income distributions paid during the year as follows:
(A) (B)
Long-Term Ordinary (C)
Capital Gains Income Total (D)
Distributions Distributions Distributions Qualifying
(Tax Basis) (Tax Basis) (Tax Basis) Dividends(1)
------------- --------------- -------------- ------------
-- 100% 100% --
(A) and (B) are based on a percentage of the Fund's total distributions.
(D) is based on a percentage of ordinary income of the Fund.
----------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
16
<PAGE>
Report of Independent Auditors
--------------------------------------------------------------------------------
To the Shareholders and Board of Trustees
Delaware Group Income Funds - Delaware High-Yield Opportunities Fund
We have audited the accompanying statement of net assets of Delaware High-Yield
Opportunities Fund (the "Fund") as of July 31, 2000, 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 auditing standards generally accepted
in the United States. 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 July 31, 2000, 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 High-Yield Opportunities Fund at July 31, 2000, 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 accounting principles
generally accepted in the United States.
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
September 6, 2000
<PAGE>
DELAWARE(SM)
INVESTMENTS
---------------------
Philadelphia o London
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
This annual report is for the information of Delaware High-Yield Opportunities
Fund shareholders, but it may be used with prospective investors when preceded
or accompanied by a current Prospectus for Delaware High-Yield Opportunities
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. Affiliated Officers Delaware Distributors, L.P.
King of Prussia, PA Philadelphia, PA
Charles E. Haldeman, Jr.
David K. Downes President and Chief Executive Officer Shareholder Servicing, Dividend
President and Chief Executive Officer Delaware Management Holdings, Inc. Disbursing and Transfer Agent
Delaware Investments Family of Funds Philadelphia, PA Delaware Service Company, Inc.
Philadelphia, PA Philadelphia, PA
Richard J. Flannery
John H. Durham Executive Vice President 1818 Market Street
Private Investor and General Counsel Philadelphia, PA 19103-3682
Horsham, PA Delaware Investments Family of Funds
Philadelphia, PA
Anthony D. Knerr
Consultant, Anthony Knerr & Associates Bruce D. Barton
New York, NY President and Chief Executive Officer
Delaware Distributors, L.P.
Ann R. Leven Philadelphia, PA
Former Treasurer, National Gallery of Art
Washington, DC
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
</TABLE>
(3672) Printed in the USA
AR-137 [7/00] PPL 9/00 (J6281)
