AGGRESSIVE GROWTH FUND
GROWTH STOCK FUND
[GRAPHICS OMITTED: VARIOUS PHOTOS DEMONSTRATING SERVICE AND GUIDANCE,
PROFESSIONAL MANAGEMENT AND GOALS]
FOR GROWTH OF CAPITAL
service and guidance
goals
professional management
1998
Annual
Report
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
A TRADITION OF SOUND INVESTING
Commitment
A Commitment To Our Investors
Delaware Investments has a tradition of money management that dates
back to 1929. We have a long and distinguished history of helping
individuals and institutions - including some of America's largest
pension funds - reach their financial goals.
Headquartered in Philadelphia, a block from the nation's oldest
stock exchange, the Delaware organization established its first mutual
fund in 1938. Delaware International Advisers Ltd., our international
affiliate, was established in 1990 and is headquartered in London.
Delaware Investments offers a full range of mutual funds. We also
manage investments for variable annuity products, unit investment
trusts and closed-end funds, and offer retirement plan services for
individuals and businesses.
Delaware manages more than $45 billion in mutual fund assets and
institutional advisory accounts for more than half-a-million
investors. We're part of a global financial service and investment
management business owned by Lincoln Financial Group, whose
subsidiaries manage more than $120 billion in assets.
growth of capital
[GRAPHIC OMITTED: PHOTO OF KEYBOARD]
[GRAPHIC OMITTED: ILLUSTRATION OF HOUSE AND TREES]
Aggressive Growth Fund Objective
To seek long-term capital appreciation by investing primarily in
equity securities of companies which the Fund manager believes have
the potential for high earnings growth.
Growth Stock Fund Objective
To seek long-term capital appreciation through investment in equity
securities diversified through companies and industries.
professional
management
professional management
[GRAPHICS OMITTED: VARIOUS PHOTOS DEMONSTRATING SERVICE AND GUIDANCE,
PROFESSIONAL MANAGEMENT AND GOALS]
MORE THAN 69 YEARS OF
INVESTMENT EXPERIENCE
has taught us that disciplined strategies and
prudent risk management are a sound approach
to any market environment.
goals
goals
WHATEVER YOUR GOALS,
the years ahead will be shaped by choices
you make today. Delaware offers many options
that can be an appropriate part of a sound
investment plan.
service and guidance
service and guidance
DELAWARE BELIEVES THAT THE
GUIDANCE of a professional financial
adviser is vital to your long-term success.
We are committed to providing you and
your adviser with the hightest quality
information and service.
for growth of
capital
2
DEAR SHAREHOLDER: MAY 8, 1998
FISCAL 1998 WAS A SPECTACULAR PERIOD for the U.S. stock market. We are
pleased to report that Aggressive Growth Fund and Growth Stock Fund
provided exceptional results for their first year under the
stewardship of Delaware Investments.
AGGRESSIVE GROWTH FUND
Aggressive Growth Fund achieved a total return of +98.60% for the 12
months ended April 30, 1998 (for A Class shares at net asset value
with distributions reinvested). This was more than double the +41.06%
total return of the unmanaged Standard & Poor's 500 Index for the
period.
Nearly doubling one's money in a single year is a brilliant - and
rare - accomplishment. Aggressive Growth Fund was in the right place
at the right time. The Fund had strong weightings in technology,
retailing and consumer service stocks that performed well in fiscal
1998 and higher-than-average cash positions prior to periods of market
weakness.
Market appreciation and new investments nearly tripled the size
of Aggressive Growth Fund during the second fiscal half. The Fund's
positive cash flow helped the portfolio manager, Gerald S. Frey,
quickly move in and out of stocks of all sizes to maximize capital
appreciation potential. This strategy, while providing high returns in
fiscal 1998, also generated a high portfolio turnover rate of 356%.
The Fund's sterling results for fiscal 1998 represented a
combination of favorable market forces and prudent stock picking, in
our view. Since its inception, the Fund's returns have consistently
been in the top 5% of an increasingly competitive class - growth-
oriented mutual funds. According to Lipper Analytical Services, the
Fund's results ranked #1 of 860 growth funds, 6th out of 536 growth
funds and 19th out of 423 growth funds, respectively, for the 12-
month, 36-month and lifetime periods ended April 30, 1998 (ranking
based on total return at net asset value).
GROWTH STOCK FUND
Delaware Investments recognizes that some growth-oriented investors
are concerned about short-term market volatility. We offer Growth
Stock Fund as a more tempered method of growth-style investing. The
Fund provided a respectable return of +35.27% for the 12 months ended
April 30, 1998.
TOTAL RETURN
12 MONTHS ENDED
APRIL 30, 1998
- -------------------------------------------------------------------
Aggressive Growth Fund A Class +98.60%
Growth Stock Fund A Class +35.27%
Lipper Growth Fund Average (860 funds) +39.12%
Standard & Poor's 500 Index +41.06%
- -------------------------------------------------------------------
All performance shown above is based on net asset value without effect
of sales charges and assumes reinvestment of distributions.
Performance information for all classes of each Fund can be found on
pages 10 and 11. Past performance does not guarantee future results.
for growth of
capital
3
Growth Stock Fund has a strict focus on stocks with the highest
Standard & Poor's quality ratings. During fiscal 1998 stocks of large
domestic-oriented companies fared well while shares of some
multinational companies lagged the S&P 500 Index. In general,
investors feared that some global giants would face reduced earnings
from Asia.
THE FUND'S STERLING RESULTS DURING FISCAL 1998 REPRESENT A COMBINATION
OF MARKET FORCES AND PRUDENT STOCK PICKING, IN OUR VIEW.
Given the unprecedented stock appreciation since the mid-1990s,
we doubt the year ahead will be quite as dynamic as fiscal 1998, but
it could prove rewarding nonetheless. Many economic factors in the
U.S. remain positive, especially for growth stocks. Inflation appears
caged at less than 2% per year. Business spending on technology to
improve productivity remains substantial. Economic weakness in Asia
appears to be having less of an effect on U.S. growth than investors
feared last autumn.
For nearly seven decades, Delaware Investments has built a solid
reputation among institutional and individual investors by taking a
disciplined, value-oriented approach to equity investing. With the
addition of more options for growth-oriented investors, we believe we
are making our mark as a fund family that offers a full line of
choices to help people meet their long-term goals.
Sincerely,
/s/ Wayne A. Stork
WAYNE A. STORK
Chairman
/s/Jeffrey J. Nick
JEFFREY J. NICK
President and Chief Executive Officer
YOUR FUNDS' PORTFOLIO MANAGERS
AGGRESSIVE GROWTH FUND
GERALD S. FREY has 18 years of investment experience. Prior to
joining Delaware in June 1996, he was a senior director with Morgan
Grenfell Management in New York. He holds a bachelor's degree in
economics from Bloomsburg University. Mr. Frey is assisted by
Marshall T. Bassett, John A. Heffern, Jeffrey Hynoski and Lori Wachs.
GROWTH STOCK FUND
JAMES KING has more than 30 years of investment experience. He
has been with Voyageur Asset Management since 1990. Prior to that he
was President and Chief Investment Officer of King Management Co. Mr.
King is a lecturer at the Drake University School of Finance.
for growth of
capital
4
PORTFOLIO MANAGERS' REVIEWS
AGGRESSIVE GROWTH FUND
In managing Aggressive Growth Fund, we believe it is imperative to pay
constant and careful attention to risk, to foresee danger ahead and
adapt quickly to changing market conditions.
Although inflation and interest rates fell to near record lows in
fiscal 1998, Aggressive Growth Fund's management team faced a
challenging stock selection environment. Some industries, notably
health care, were battered by operating and/or regulatory problems.
Stock market volatility increased amid recession along the Pacific
Rim. Among some domestic-oriented companies, particularly technology
firms, earnings growth stagnated.
Still, we achieved remarkable success. Your Fund's results
outpaced both the unmanaged S&P 500 Index and all of our growth fund
peers. We chose stocks that helped us outperform many industry groups,
as shown below.
While we acquired a solid portfolio from the Voyageur fund family
in April 1997, Aggressive Growth Fund's best performing stocks this
past year were our own selections. Only two of the 50 stocks in the
Fund's portfolio a year ago were still in the portfolio as of April
30, 1998 - WELLS FARGO AND ASCEND COMMUNICATIONS.
In our view, the Fund's relatively high 356% portfolio turnover
rate this past year was a byproduct of ebullient market conditions. We
believe it prudent to realize capital gains to reduce risk rather than
allow the Fund's portfolio to become overheated with overvalued
stocks.
growth
Our positioning in COMPUSA in fiscal 1998 illustrated this
philosophy. We purchased shares of the computer retailer in late
spring of 1997. The stock did well and we liquidated our position in
late autumn as it became clear that the company's fundamental
prospects were not as strong as we expected.
PERFORMANCE BY SECTOR
AGGRESSIVE GROWTH FUND VS. S&P 500 INDEX
MAY 1, 1997, TO APRIL 30, 1998
INDUSTRY GROUP AGGRESSIVE GROWTH FUND S&P 500 INDEX
Capital Goods +86.6% +29.7%
Technology +86.3% +45.9%
Consumer Services +82.1% +41.9%
Business Services +82.0% +45.4%
Consumer Goods* +52.7% +38.9%
Financials +45.6% +51.1%
Health Care +10.4% +52.1%
Performance is based on prices of stock holdings and index components
and does not include expenses. The sectors shown here represent more
than 87% of Aggressive Growth Fund's equity holdings and 79% of the
unmanaged S&P 500 Index as of April 30, 1998. *Non-durable products
such as processed food, clothing and newspapers. For complete Fund
performance, see page 10.
for growth of
capital
5
Aggressive Growth Fund invests in small, medium or large
companies whose earnings growth rate appears to be accelerating or
consistently high. Typically, we look for companies whose profits can
grow at least 20% per year. We favor industries likely to benefit from
changes in consumer or business buying habits.
When appropriate, we also try to capitalize on situations that
temporarily depress a growth stock's price. We look for fundamentally
sound, growth companies whose prices have been affected by short-term
earnings disappointments, management turnover or regulatory problems.
WE BELIEVE IT PRUDENT TO REALIZE CAPITAL GAINS TO REDUCE RISK RATHER
THAN ALLOW THE FUND'S PORTFOLIO TO BECOME OVERHEATED WITH OVERVALUED
STOCKS.
Many stocks with high capital appreciation potential have a high
risk profile. Your Fund's relatively high beta, or historical price
volatility as shown on page 6, reflects an aggressive strategy
suitable for investors who understand the risks involved.
INCREASED DIVERSIFICATION
At the start of fiscal 1998, more than 50% of the Fund's holdings were
in technology-related industries. We diversified the portfolio by
adding retail, entertainment and health care companies and reduced our
technology exposure to approximately 24% of net assets by year's end.
Among our top performing holdings were large companies such as:
(bullet) LUCENT TECHNOLOGIES, AT&T's spin off of the former Bell Labs;
(bullet) mid-size companies such as KEANE INC., an applications
software company that manages computer help desks; and,
(bullet) small companies such as AMAZON.COM INC., a direct mail book
seller.
Health care was our problem child. We underperformed other S&P
500 stocks in this industry group because we held positions in two
physician practice management firms negatively affected by a failed
merger - MEDPARTNERS AND PHYCOR. We jettisoned our position in
Medpartners, but have kept Phycor, which we believe has superior
earnings potential.
[GRAPHIC OMITTED: AGGRESSIVE GROWTH FUND'S STOCK SELECTION PROCESS]
AGGRESSIVE GROWTH FUND'S STOCK SELECTION PROCESS
COMPANIES OF ALL SIZES
HIGH AND CONSISTENT, OR ACCELLERATING = AGGRESSIVE GROWTH FUND
EARNINGS GROWTH RATES PORTFOLIO
INDUSTRY - SPECIFIC DYNAMICS;
SPECIAL SITUATIONS/FALLEN ANGELS
for growth of
capital
6
OUTLOOK
It is unrealistic to expect the Fund to duplicate its fiscal 1998
triumph in the year ahead. Nevertheless, we are optimistic about your
Fund's prospects, especially relative to mutual funds with a narrow
focus.
Aggressive Growth Fund's approach gives us the flexibility to
invest in any size company that we believe possesses superior capital
appreciation potential. In our view, it is better to hold stocks in
many companies of different sizes than attempt to predict when one
asset class will outperform another.
diverse
Overall, we believe the single most important factor that will
affect your Fund's results in fiscal 1999 will be the fact that we are
a disciplined team working toward a common goal. As part of our
fundamental spadework with executives in face-to-face meetings, we
ask:
(bullet) What controls are there over a business?
(bullet) How confident is management in a company's earnings
prospects?
(bullet) How candid is management when discussing competitors,
pricing, sales and growth?
Today's fast paced equity market requires the agility of a pit
crew. Our team of four experienced analysts and I carefully examine
potential stock selections to see what makes a company run. We believe
expert knowledge of a particular industry and competitive environment
can help us distinguish between companies likely to do well in 1999
and those likely to run out of gas.
GERALD S. FREY
Senior Portfolio Manager
May 8, 1998
[GRAPHIC OMITTED: PIE CHART OF AGGRESSIVE GROWTH FUND SECTOR
ALLOCATION AND PORTFOLIO HIGHLIGHTS]
AGGRESSIVE GROWTH FUND
SECTOR ALLOCATION AND PORTFOLIO HIGHLIGHTS
APRIL 30, 1998
Other Capital Goods 5.5%
Technology 24.3%
Retailing 4.7%
Media 4.9%
Consumer Products 5.9%
Leisure/Lodging 5.7%
Telecommunications/Utilities 6.9%
Credit Sensitive 10.4%
Food 7.9%
Consumer & Business Services 16.4%
Cash 7.4%
AGGRESSIVE S&P 500
GROWTH FUND INDEX
Median Market Capitalization $1.2 billion $7.7 billion
Number of Stocks 65 500
Average Stock Price-to-
Earnings Ratio 39x 24x
Top Sector Technology Capital Goods
Beta* 1.3 1.0
P/Es are based on analysts' earnings estimates as reported
to First Call.
*A measure of risk relative to the S&P 500 Index. A number less than
1.0 means less historical price volatility than the Index. A number
higher than 1.0 means more historical volatility. Thus a 1.3 beta
means the Fund's historical volatility has been 30% higher than large
company stocks, on average.
for growth of
capital
7
GROWTH STOCK FUND
INVESTMENT STRATEGY
Growth Stock Fund maintains a concentrated portfolio of no more than
30 stocks with a near equal weighting in each security. This number
gives us a diverse yet highly manageable portfolio that we believe has
greater potential to perform well over time.
We select stocks based on four criteria:
(bullet) High Standard & Poor's quality ratings;
(bullet) Strong earnings growth potential;
(bullet) Above-average dividend growth potential; and,
(bullet) Low stock prices relative to earnings.
strategy
Your Fund invests only in companies with Standard and Poor's
quality ratings of A+ or A. Stock quality ratings are based on 10-year
earnings, with companies rated A+ and A having the most historical
consistency in expanding their profits. While a high rating doesn't
imply a stock is a good buy at a particular moment, we believe S&P
ratings are a valuable starting point that helps us determine which
stocks merit further research.
From a universe of approximately 200 to 250 A and A+ rated
companies, we look for businesses with strong earnings growth
potential based on a consensus of analysts' estimates. Along with
dividend growth potential, we believe earnings prospects indicate
capital appreciation potential.
Finally, we focus on companies whose stock prices relative to
earnings (P/E ratios) are in the bottom 20% of their historical range.
We consider this an indication that a stock is undervalued.
Your Fund's average holding period for a stock has historically
been about four years. This long-term approach is reflected in the
Fund's modest portfolio turnover rate, which has historically been
lower than the average of similar funds that also focus on large
company stocks with a blend of growth and value characteristics,
according to Morningstar.
Historically, Growth Stock Fund has outperformed the unmanaged
S&P 500 Index during periods of increased market volatility and
underperformed during periods of rapid price appreciation. We believe
this has occurred because the earnings performance of companies with
high S&P quality ratings tends to be less dependent on overall
economic growth than other companies in the S&P 500.
When the economy or stock market is performing well, investors
tend to increase their risk profile by seeking companies likely to
have robust earnings growth. High quality and consistency tend to
become less important than a rapid rise in profits. However, once
uncertainties such as higher interest rates or international problems
enter the picture - as happened this past spring and last autumn -
investors tend to covet earnings consistency. We therefore believe
the current stock market environment - with its concerns about
Federal Reserve Board tightening and the impact of the Pacific
Rim recession - bodes well for your Fund.
A LONG-TERM, LOW TURNOVER APPROACH
PORTFOLIO TURNOVER RATES 1997 1996 1995 1994 1993
Growth Stock Fund 29% 37% 22% 34% 17%
Morningstar Large-Cap
Blend Category 61% 72% 70% 68% 66%
Number of Funds in Category 403 380 342 310 279
Source: Morningstar Mutual Funds.
Morningstar data is for calendar years and represent the latest
figures available.
for growth of
capital
8
STRATEGIC POSITIONING AND OUTLOOK
By our estimate, some 93% of stocks that met our S&P quality criteria
were selling within the upper 20% of their historical price range
relative to earnings as of
outlook
April 30, 1998. While this has made stock selection a challenge, we believe
that it does not necessarily mean a major market decline is at hand.
During fiscal 1998, both U.S. inflation and long-term interest
rates fell to historical lows. This helped support stock prices.
Consumer prices rose just 1.4% during fiscal 1998, the smallest rise
since the 1960s. Equally important is that many government economic
indicators suggested no sign of inflation on the horizon.
AS OF YEAR'S END, THE AVERAGE P/E RATIO OF STOCKS IN THE FUND'S
PORTFOLIO WAS 22 TIMES TRAILING EARNINGS, ABOUT A 20% DISCOUNT TO THE
OVERALL STOCK MARKET.
Still, we believe it was prudent to consider the stock market's
downside risks. We upgraded the average quality rating of stocks in
the Fund's portfolio in the past year. As of year's end, about two-
thirds of the stocks in the Fund's portfolio had quality ratings of
A+, the highest available. The average P/E ratio of stocks in the
Fund's portfolio was 22 times trailing earnings, about a 20% discount
to the overall stock market.
[GRAPHIC OMITTED: PIE CHART OF GROWTH STOCK FUND SECTOR ALLOCATION AND
PORTFOLIO HIGHLIGHTS]
GROWTH STOCK FUND
SECTOR ALLOCATION AND PORTFOLIO HIGHLIGHTS
APRIL 30, 1998
Cash 4.2%
Chemicals 7.1%
Capital Goods 7.4%
Auto Parts 6.9%
Retailing 15.3%
Technology 7.5%
Energy 6.6%
Pharmaceuticals 11.9%
Finance 7.9%
Newspapers 3.9%
Food, Beverage & Tobacco 21.3%
Median Market Capitalization $26 billion
Number of Stocks 26
Average Stock Price-to-Earnings Ratio 22x
Top Sector Food, Beverage
& Tobacco
Beta* 0.81
P/Es are based on analysts' earnings estimates as reported to First
Call.
*A measure of risk relative to the S&P 500 Index. A number less than
1.0 means less historical price volatility than the index. A number
higher than 1.0 means more historical volatility.
for growth of
capital
9
Generally, we sell companies when their P/E reaches a historical
peak and replace them with companies within the same sector that are
trading at historically low P/Es. During the early autumn, for
example, we sold SUNTRUST BANKS, a Georgia regional bank, to purchase
NORWEST CORP., a Minnesota regional bank. In the spring, we sold
PITNEY BOWES, the office equipment company, and boosted our position
in computer and printer maker HEWLETT-PACKARD.
In fiscal 1998, our strategy sometimes negatively affected our
short-term results because some of the stock market's best performers
were companies with high valuations. However, we are confident that
over the long run our growth and value approach will put us in a good
position should we encounter challenging market conditions in the year
ahead.
JAMES KING
Senior Portfolio Manager
May 8, 1998
GROWTH STOCK FUND
TOP 10 HOLDINGS
APRIL 30, 1998
COMPANY P/E S&P QUALITY RATING PERCENT OF NET ASSETS
Albertson's 22.1x A+ 4.6%
Merck & Co. 26.7x A+ 4.3%
Home Depot Inc. 33.7x A+ 4.2%
SouthTrust 18.7x A 4.1%
Hewlett-Packard 22.7x A 4.0%
Sara Lee Corp. 23.1x A 4.0%
Wal-Mart Stores 25.8x A+ 3.9%
Gannett Inc. 21.7x A 3.9%
Schering-Plough Corp. 35.8x A+ 3.9%
ConAgra 21.3x A 3.9%
Total 40.8%
Sources: Bloomberg Business News. Price-to-earnings ratios based on
trailing earnings for the 12 months ended April 30, 1998.
[GRAPHIC OMITTED: PHOTO OF PEOPLE ON BEACH]
Q.
What is a Standard & Poor's quality rating and how is it different
from a debt rating?
a.
S&P quality ratings show how consistently a company's earnings have
grown. Debt ratings are based on a company's ability to pay its
obligations based on leverage and economic conditions.
for growth of
capital
10
[GRAPHIC OMITTED: WORM CHART OF AGGRESSIVE GROWTH FUND PERFORMANCE]
AGGRESSIVE GROWTH FUND PERFORMANCE
GROWTH OF A $10,000 INVESTMENT
MAY 16, 1994 TO APRIL 30, 1998
Month Aggressive Growth Standard & Poor's Lipper Growth
and Year Fund A Class 500 Index Fund Average (423 funds)
May 1994 $ 9,524 $10,000 $10,000
April 1995 $ 9,905 $11,557 $11,375
April 1996 $12,977 $15,049 $14,737
April 1997 $13,518 $18,831 $17,377
April 1998 $26,846 $26,564 $22,438
Chart assumes $10,000 invested on April 30, 1988, and includes the
effect of a 4.75% front-end sales charge and the reinvestment of all
distributions. Performance of other classes will vary due to differing
charges and expenses.
AGGRESSIVE GROWTH FUND PERFORMANCE
AVERAGE ANNUAL RETURNS THROUGH APRIL 30, 1998
LIFETIME ONE YEAR
Class A (Est. 5/16/94)
Excluding Sales Charge +29.92% +98.60%
Including Sales Charge +28.83% +89.11%
Class B (Est. 4/16/96)
Excluding Sales Charge +47.77% +97.12%
Including Sales Charge +46.49% +93.12%
Class C (Est. 5/20/94)
Excluding Sales Charge +29.02% +96.99%
Including Sales Charge +29.02% +95.99%
AGGRESSIVE GROWTH FUND'S RETURN AND SHARE VALUE FLUCTUATE SO THAT
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. RETURNS
REFLECT REINVESTMENT OF DISTRIBUTIONS AND SALES CHARGES AS NOTED
BELOW. PERFORMANCE EXCLUDING SALES CHARGE FOR B AND C CLASSES ASSUMES
THE INVESTMENT WAS NOT REDEEMED OR THAT CONTINGENT SALES CHARGES DID
NOT APPLY.
CLASS A shares have a 4.75% maximum front-end sales charge and a 12b-1
fee.
CLASS B shares do not carry a front-end sales charge, but are subject
to a 1% annual distribution and service fee. They are subject to a
deferred sales charge of up to 4% if redeemed before the end of the
sixth year.
CLASS C shares have a 1% annual distribution and service fee and a 1%
contingent deferred sales charge if redeemed within 12 months.
Cumulative return for Aggressive Growth Fund's Institutional Class,
which is made available without sales or asset-based distribution
charges only to certain eligible institutional accounts, was +34.68%
for the lifetime period ended April 30, 1998.
for growth of
capital
11
[GRAPHIC OMITTED: WORM CHART OF GROWTH STOCK FUND PERFORMANCE]
GROWTH STOCK FUND PERFORMANCE
GROWTH OF A $10,000 INVESTMENT
APRIL 30, 1988 TO APRIL 30, 1998
Month Growth Stock Standard & Poor's Lipper Growth
and Year Fund A Class 500 Index Fund Average (181 funds)
April 1988 $ 9,527 $10,000 $10,000
April 1989 $11,520 $12,292 $12,025
April 1990 $13,186 $13,589 $14,224
April 1991 $14,660 $15,984 $15,974
April 1992 $18,158 $18,227 $17,654
April 1993 $18,418 $19,910 $19,876
April 1994 $18,485 $20,969 $20,902
April 1995 $21,620 $24,632 $23,776
April 1996 $27,020 $32,074 $30,803
April 1997 $31,055 $40,135 $36,321
April 1998 $42,007 $56,616 $49,990
Chart assumes $10,000 invested on May 16, 1994, and includes the
effect of a 4.75% front-end sales charge and the reinvestment of all
distributions. Performance of other classes will vary due to differing
charges and expenses.
GROWTH STOCK FUND PERFORMANCE
AVERAGE ANNUAL RETURNS THROUGH APRIL 30, 1998
LIFETIME TEN YEARS FIVE YEARS ONE YEAR
Class A (Est. 8/1/85)
Excluding Sales Charge +16.88% +15.82% +17.73% +35.27%
Including Sales Charge +16.43% +15.26% +16.58% +28.84%
Class B (Est. 9/8/95)
Excluding Sales Charge +23.61% +34.29%
Including Sales Charge +22.81% +30.29%
Class C (Est. 10/21/95)
Excluding Sales Charge +22.76% +34.25%
Including Sales Charge +22.76% +33.25%
GROWTH STOCK FUND'S RETURN AND SHARE VALUE FLUCTUATE SO THAT SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. RETURNS REFLECT
REINVESTMENT OF DISTRIBUTIONS AND SALES CHARGES AS NOTED BELOW.
PERFORMANCE EXCLUDING SALES CHARGE FOR B AND C CLASSES ASSUMES EITHER
THE INVESTMENT WAS NOT REDEEMED OR THAT CONTINGENT SALES CHARGES DID
NOT APPLY.
CLASS A shares have a 4.75% maximum front-end sales charge and a 12b-1
fee.
CLASS B shares do not carry a front-end sales charge, but are subject
to a 1% annual distribution and service fee. They are subject to a
deferred sales charge of up to 4% if redeemed before the end of the
sixth year.
CLASS C shares have a 1% annual distribution and service fee and a 1%
contingent deferred sales charge if redeemed within 12 months.
Average annual returns for Growth Stock Fund's Institutional Class,
which is made available without sales or asset-based distribution
charges only to certain eligible institutional accounts, were +36.10%,
+17.87%, +15.90% and +16.93% for the one-year, five-year, 10-year and
lifetime periods ended April 30, 1998.
12 for growth of capital
FINANCIAL STATEMENTS
VOYAGEUR MUTUAL FUNDS III, INC. -
AGGRESSIVE GROWTH FUND
STATEMENT OF NET ASSETS
APRIL 30, 1998
NUMBER OF MARKET
SHARES VALUE
COMMON STOCK - 92.38%
AEROSPACE AND DEFENSE - 1.88%
* Micrel 27,000 $ 1,066,500
------------
1,066,500
------------
BANKING, FINANCE & INSURANCE - 10.37%
Doral Financial 30,000 1,051,875
* Firstplus Financial Group 15,000 727,500
First American (Tennessee) 23,500 1,156,641
* First Sierra Financial 13,800 346,725
Henry(Jack) & Associates 21,500 736,375
INMC Mortgage Holdings 30,000 727,500
PMI Group 8,600 698,750
Wells Fargo 1,200 442,200
------------
5,887,566
------------
BUILDINGS AND MATERIALS - 3.55%
* Comfort Systems USA 40,000 935,000
* White Cap Industries 50,000 1,078,125
------------
2,013,125
------------
CABLE, MEDIA & PUBLISHING - 4.86%
* CHANCELLOR MEDIA-A 27,500 1,303,672
* Snyder Communications 16,500 701,250
* World Color Press 23,500 752,000
------------
2,756,922
------------
COMPUTERS & TECHNOLOGY - 21.78%
* America Online 10,000 800,000
* ASCEND COMMUNICATIONS 30,000 1,305,937
* CGS Systems International 10,000 456,250
* Citrix Systems 18,000 1,118,813
* Clarify 39,500 540,656
Compaq Computer 40,000 1,122,500
* Compuware 11,500 561,703
* Exodus Communications 5,000 190,156
* FlexInternational Software 35,000 439,688
* Gateway 2000 20,000 1,173,750
* Gemstar International Group Limited 11,000 425,563
* J.D. Edwards 21,500 768,625
* NOVA 40,000 1,360,000
* Network Associates 17,500 1,199,844
* VeriSign 9,000 344,813
* Veritas Software 10,000 550,000
------------
12,358,298
------------
- ------------
Top ten holdings, representing 23.47% of net assets, are in boldface.
CONSUMER PRODUCTS - 5.86%
* CDNOW 42,500 1,358,672
* CENDANT 50,000 1,250,000
* The Learning Company 25,000 715,625
------------
3,324,297
------------
ELECTRONICS & ELECTRICAL - 3.75%
* Analog Devices 27,500 1,070,781
Texas Instruments 16,500 1,057,031
------------
2,127,812
------------
ENVIRONMENTAL SERVICES - 2.28%
* REPUBLIC INDUSTRIES 46,500 1,293,281
------------
1,293,281
------------
FOOD, BEVERAGE & TOBACCO - 7.91%
* OUTBACK STEAKHOUSE 33,300 1,267,481
* PAPA JOHN'S INTERNATIONAL 29,600 1,232,100
* RARE Hospitality International 70,000 901,250
* ShowBiz Pizza Time 20,000 772,500
* Sonic Corp. 10,000 320,625
------------
4,493,956
------------
HEALTHCARE & PHARMACEUTICALS - 1.35%
* Phycor 33,900 768,047
------------
768,047
------------
LEISURE, LODGING & ENTERTAINMENT - 5.72%
* Ambassadors International 25,000 754,688
* Preview Travel 30,000 855,937
* Prime Hospitality 40,000 827,500
* Ritchie Brothers Auctioneers 30,000 808,125
------------
3,246,250
------------
PAPER & FOREST PRODUCTS - 1.83%
* Consolidated Graphics 18,000 1,038,375
------------
1,038,375
------------
REAL ESTATE - 1.79%
* Brookdale Living Communities 16,000 436,000
* Capital Senior Living 20,000 298,750
Resource Asset Investment Trust 15,000 279,375
------------
1,014,125
------------
RETAIL - 4.74%
* Brauns Fashions 70,000 901,250
* Hot Topic 22,800 662,625
* Saks Holdings 24,100 537,731
* Sports Authority 33,400 586,585
------------
2,688,191
------------
for growth of capital 13
TECHNOLOGY - 2.47%
Intel 10,000 808,438
* Yahoo 5,000 594,531
------------
1,402,969
------------
TELECOMMUNICATIONS - 4.93%
* Advanced Fibre Communications 15,000 634,688
* Excel Switching 14,000 299,250
* Pacific Gateway Exchange 14,000 798,875
* PairGain Technologies 31,000 570,594
* Tellabs 7,000 495,906
------------
2,799,313
------------
TRANSPORTATION & SHIPPING - 3.07%
* Coach USA 21,000 996,188
* Interpool 47,000 743,188
------------
1,739,376
------------
UTILITIES - 1.95%
* AES 20,000 1,103,750
------------
1,103,750
------------
MISCELLANEOUS - 2.29%
* ROBERT HALF INTERNATIONAL 24,000 1,299,000
------------
1,299,000
------------
TOTAL COMMON STOCK (cost $46,538,542) 52,421,153
------------
SHORT-TERM INVESTMENTS - 0.68%
Norwest Advantage Municipal
Money Market Fund 385,019 385,019
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $385,019) 385,019
------------
PRINCIPAL
AMOUNT
FEDERAL AGENCY (DISCOUNTED) - 5.21%
Federal Home Loan Mortgage
5.37% 05/06/98 $ 515,000 514,610
FEDERAL NATIONAL MORTGAGE ASSOCIATION
5.42% 05/07/98 1,650,000 1,648,510
Federal National Mortgage Association
5.44% 05/11/98 800,000 798,791
------------
TOTAL FEDERAL AGENCY (cost $2,961,911) 2,961,911
------------
TOTAL MARKET VALUE OF SECURITIES - 98.27%
(COST $49,885,472) $ 55,768,083
RECEIVABLES AND OTHER ASSETS NET
OF LIABILITIES - 1.73% 979,562
------------
NET ASSETS APPLICABLE TO 2,792,295 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% $ 56,747,645
============
NET ASSET VALUE - AGGRESSIVE GROWTH FUND A CLASS
($31,925,917/1,552,126 SHARES) $20.57
============
NET ASSET VALUE - AGGRESSIVE GROWTH FUND B CLASS
($16,539,054/826,760 SHARES) $20.00
============
NET ASSET VALUE - AGGRESSIVE GROWTH FUND C CLASS
($5,891,877/297,565 SHARES) $19.80
============
NET ASSET VALUE - AGGRESSIVE GROWTH FUND
INSTITUTIONAL CLASS ($2,390,797/115,844 SHARES) $20.64
============
COMPONENTS OF NET ASSETS AT APRIL 30, 1998:
Common stock, $.01 par value, 10,000,000,000 shares
authorized to the Fund with 1,000,000,000 shares
allocated to the Aggressive Growth Fund A Class,
1,000,000,000 shares allocated to the Aggressive
Growth Fund B Class, 1,000,000,000 shares allocated
to the Aggressive Growth Fund C Class, and
1,000,000,000 shares allocated to the Aggressive
Growth Fund Institutional Class $ 50,358,754
Accumulated net realized gain on investments 506,280
Net unrealized appreciation of investments 5,882,611
------------
Total net assets $ 56,747,645
============
- ------------
* Non-income producing security for the year ended 4/30/98.
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
AGGRESSIVE GROWTH FUND A CLASS
Net asset value A Class (A) $20.57
Sales Charge (4.75% of offering price or 5.01%
of the amount invested per share) (B) 1.03
------------
Offering Price $21.60
============
- ------------
(A) Net Asset Value per share, as illustrated, is the estimated amount
which would be paid upon redemption or repurchase shares.
(B) See How to Buy Shares in the current prospectus for purchases
of $100,000 or more.
See accompanying notes
14 for growth of capital
VOYAGEUR MUTUAL FUNDS III, INC. -
GROWTH STOCK FUND
STATEMENT OF NET ASSETS
APRIL 30, 1998
NUMBER OF MARKET
SHARES VALUE
COMMON STOCK - 95.82%
AUTOMOBILES & AUTO PARTS - 6.94%
Bandag 27,000 $ 1,503,563
Genuine Parts 45,000 1,620,000
------------
3,123,563
------------
BANKING, FINANCE & INSURANCE - 7.91%
Norwest 43,000 1,706,563
SOUTHTRUST 43,500 1,855,547
------------
3,562,110
------------
CABLE, MEDIA & PUBLISHING - 3.92%
GANNETT 26,000 1,766,375
------------
1,766,375
------------
CHEMICALS - 7.08%
Great Lakes Chemical 30,000 1,507,500
Sigma-Aldrich 42,000 1,677,375
------------
3,184,875
------------
COMPUTERS & TECHNOLOGY - 7.46%
Electronic Data Systems 36,000 1,548,000
HEWLETT-PACKARD 24,000 1,807,500
------------
3,355,500
------------
ENERGY - 6.62%
Royal Dutch Petroleum 26,000 1,470,625
Shell Transport and Trading 34,000 1,510,875
------------
2,981,500
------------
FOOD, BEVERAGE & TOBACCO - 21.25%
Anheuser - Busch Cos. 31,000 1,420,188
CONAGRA 60,000 1,751,250
Philip Morris 44,000 1,641,750
SARA LEE 30,000 1,786,875
Sysco 70,000 1,666,875
UST 47,000 1,295,438
------------
9,562,376
------------
HEALTHCARE & PHARMACEUTICALS - 11.94%
Abbott Laboratories 23,000 1,681,875
MERCK & COMPANY 16,000 1,928,000
SCHERING-PLOUGH 22,000 1,762,750
------------
5,372,625
------------
- ------------
Top ten holdings, representing 40.80% of net assets, are in boldface.
INDUSTRIAL MACHINERY - 3.87%
Grainger (W.W.) 16,000 1,743,000
------------
1,743,000
------------
PACKAGING & CONTAINERS - 3.56%
Bemis 36,000 1,602,000
------------
1,602,000
------------
RETAIL - 15.27%
ALBERTSON'S 41,000 2,050,000
Dillard 32,000 1,172,000
HOME DEPOT 27,000 1,879,875
WAL-MART STORE 35,000 1,769,685
------------
6,871,560
------------
TOTAL COMMON STOCK
(COST $25,820,102) 43,125,484
------------
SHORT-TERM INVESTMENTS - 4.89%
Norwest Advantage Municipal
Money Market Fund 2,202,883 2,202,883
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $2,202,883) 2,202,883
------------
TOTAL MARKET VALUE OF SECURITIES - 100.71%
(COST $28,022,985) $ 45,328,367
LIABILITIES NET OF RECEIVABLES
AND OTHER ASSETS - (0.71%) (318,758)
------------
NET ASSETS APPLICABLE TO 1,415,917 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% $ 45,009,609
============
NET ASSET VALUE - GROWTH STOCK FUND A CLASS
($41,195,898/1,294,328 SHARES) $31.83
============
NET ASSET VALUE - GROWTH STOCK FUND B CLASS
($1,903,060/61,000 SHARES) $31.20
============
NET ASSET VALUE - GROWTH STOCK FUND C CLASS
($1,112,101/35,654 SHARES) $31.19
============
NET ASSET VALUE - GROWTH STOCK FUND INSTITUTIONAL
CLASS ($798,550/24,935 SHARES) $32.03
============
for growth of capital 15
COMPONENTS OF NET ASSETS AT APRIL 30,1998:
Common stock, $0.01 par value, 10,000,000,000 shares
authorized to the Fund with 1,000,000,000 shares
allocated to the Growth Stock Fund A Class,
1,000,000,000 shares allocated to the Growth
Stock Fund B Class, 1,000,000,000 shares allocated
to the Growth Stock Fund C Class, and 1,000,000,000
shares allocated to the Growth Stock Fund
Institutional Class $ 26,330,126
Accumulated net realized gain on investments 1,374,101
Net unrealized appreciation of investments 17,305,382
------------
Total Net Assets $ 45,009,609
============
MARKET
VALUE
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
GROWTH STOCK FUND A CLASS
Net asset value A Class (A) $31.83
Sales Charge (4.75% of offering price or 5.00%
of the amount invested per share) (B) 1.59
------
Offering price $33.42
======
- ------------
(A) Net Asset Value per share, as illustrated, is the estimated amount
which would be paid upon redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases
of $100,000 or more.
See accompanying notes
VOYAGEUR MUTUAL FUNDS III, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED APRIL 30, 1998
AGGRESSIVE GROWTH
GROWTH FUND STOCK FUND
INVESTMENT INCOME:
Interest $ 113,934 $ 46,870
Dividends 46,250 706,430
------------ ------------
160,184 753,300
------------ ------------
EXPENSES:
Management fees 155,146 412,380
Distribution expense 70,542 118,482
Dividend disbursing and transfer agent
fees and expenses 69,714 69,973
Registration fees 29,715 36,558
Reports and statements to shareholders 14,930 41,007
Accounting and administration 7,749 23,611
Professional fees 8,868 22,843
Custodian fees 9,456 14,988
Taxes (other than taxes on income) 630 8,842
Directors' fees 2,507 3,049
Other 14,675 17,541
------------ ------------
383,932 769,274
Less expenses waived or absorbed (83,957) (33,831)
------------ ------------
Total expenses 299,975 735,443
------------ ------------
NET INVESTMENT INCOME (LOSS) (139,791) 17,857
------------ ------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments 2,274,789 3,217,814
Net change in unrealized appreciation of
investments 5,806,360 8,777,754
------------ ------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 8,081,149 11,995,568
------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 7,941,358 $ 12,013,425
============ ============
See accompanying notes
<TABLE>
<CAPTION>
16 for growth of capital
VOYAGEUR MUTUAL FUNDS III, INC.
STATEMENTS OF CHANGES IN NET ASSETS
AGGRESSIVE GROWTH FUND GROWTH STOCK FUND
-------------------------- --------------------------
YEAR ENDED YEAR ENDED
4/30/98 4/30/97 4/30/98 4/30/97
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) $ (139,791) $ (80,183) $ 17,857 $ 218,850
Net realized gain
on investments 2,274,789 1,050,816 3,217,814 2,360,603
Net change in unrealized
appreciation/depreciation
of investments 5,806,360 (904,641) 8,777,754 2,070,120
------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 7,941,358 65,992 12,013,425 4,649,573
------------ ------------ ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income:
A Class -- -- (147,399) (96,623)
B Class -- -- -- --
C Class -- -- -- (526)
Institutional Class -- -- -- --
Net realized gain on
investment transactions:
A Class (1,197,178) (823,497) (2,640,914) (2,225,694)
B Class (302,775) (11,522) (83,774) (67,421)
C Class (121,344) (14,534) (64,003) (32,506)
Institutional Class (75,818) -- (1) --
------------ ------------ ------------ ------------
(1,697,115) (849,553) (2,936,091) (2,422,770)
------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class 31,439,897 2,592,893 8,650,407 6,323,206
B Class 15,982,839 177,549 739,470 697,999
C Class 5,425,395 186,497 294,728 730,728
Institutional Class 3,291,956 -- 828,889 --
Net asset value of shares
issued upon reinvestment
of dividends from net
investment income and net
realized gain on investment
transactions:
A Class 1,077,585 801,188 2,660,669 2,176,239
B Class 283,448 6,145 78,013 55,265
C Class 116,190 11,804 63,798 32,495
Institutional Class 75,818 -- 1 --
------------ ------------ ------------ ------------
57,693,128 3,776,076 13,315,975 10,015,932
------------ ------------ ------------ ------------
Cost of shares repurchased:
A Class (10,065,175) (2,035,066) (12,995,728) (5,369,765)
B Class (881,725) (69,487) (385,466) (70,952)
C Class (403,052) (112,429) (148,914) (168,125)
Institutional Class (1,099,659) -- (2,000) --
------------ ------------ ------------ ------------
(12,449,611) (2,216,982) (13,532,108) (5,608,842)
------------ ------------ ------------ ------------
Increase (decrease) in net
assets derived from capital
share transactions 45,243,517 1,559,094 (216,133) 4,407,090
------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS 51,487,760 775,533 8,861,201 6,633,893
NET ASSETS:
Beginning of year 5,259,885 4,484,352 36,148,408 29,514,515
------------ ------------ ------------ ------------
End of year $ 56,747,645 $ 5,259,885 $ 45,009,609 $ 36,148,408
============ ============ ============ ============
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
for growth of capital 17
VOYAGEUR MUTUAL FUNDS III, INC.
FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each period were as
follows:
AGGRESSIVE GROWTH A CLASS
---------------------------------------
5/16/94 1
YEAR ENDED APRIL 30, TO
1998 2 1997 1996 4/30/95
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.770 $13.080 $10.400 $10.000
Income from investment operations:
Net investment loss (0.052) (0.180) (0.100) (0.090)
Net realized and unrealized
gain on investments 11.127 0.960 3.270 0.490
------- ------- ------- -------
Total from investment operations 11.075 0.780 3.170 0.400
------- ------- ------- -------
Less distributions:
Distributions from net realized
gains on investment transactions (2.275) (2.090) (0.400) --
Return of capital -- -- (0.090) --
------- ------- ------- -------
Total distributions (2.275) (2.090) (0.490) --
------- ------- ------- -------
Net asset value, end of period $20.570 $11.770 $13.080 $10.400
======= ======= ======= =======
Total return 3 98.60% 4.34% 31.02% 4.00%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $31,926 $4,944 $4,334 $2,189
Ratio of expenses to average net assets 1.75% 1.84% 2.01% 1.74%
Ratio of expenses to average net assets
prior to expense limitation 2.29% 2.65% 2.74% 2.97%
Ratio of net investment loss
to average net assets (0.69%) (1.38%) (1.00%) (1.21%)
Ratio of net investment loss to average
net assets prior to expense limitation (1.23%) (2.19%) (1.73%) (2.44%)
Portfolio turnover 356% 180% 166% 88%
Average commission rate paid 4 $0.0600 $0.0600 N/A N/A
AGGRESSIVE GROWTH B CLASS
------------------------------------
YEAR ENDED 4/16/96 1
APRIL 30, TO
1998 2 1997 4/30/96
Net asset value, beginning of period $11.570 $13.060 $11.910
Income from investment operations:
Net investment loss (0.061) (0.210) (0.010)
Net realized and unrealized
gain on investments 10.766 0.810 1.160
------- ------- -------
Total from investment operations 10.705 0.600 1.150
------- ------- -------
Less distributions:
Distributions from net realized
gains on investment transactions (2.275) (2.090) --
Return of capital -- -- --
------- ------- -------
Total distributions (2.275) (2.090) --
------- ------- -------
Net asset value, end of period $20.000 $11.570 $13.060
======= ======= =======
Total return 3 97.12% 2.84% 9.66%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $16,539 $95 $0
Ratio of expenses to average net assets 2.50% 2.57% 1.86%
Ratio of expenses to average net assets
prior to expense limitation 3.04% 3.37% 1.86%
Ratio of net investment loss
to average net assets (1.44%) (1.97%) (1.39%)
Ratio of net investment loss to average
net assets prior to expense limitation (1.98%) (2.77%) (1.39%)
Portfolio turnover 356% 180% 166%
Average commission rate paid 4 $0.0600 $0.0600 N/A
1 Date of initial public offering; ratios have been annualized and total
return has not been annualized.
2 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.
3 Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class. Does not include contingent deferred
sales charge which varies from 1-4% depending upon the holding period for
B Class shares.
4 Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a commission
charged.
18 for growth of capital
FINANCIAL HIGHLIGHTS (CONTINUED)
AGGRESSIVE GROWTH C CLASS
---------------------------------------
5/20/94 1
YEAR ENDED APRIL 30, TO
1998 2 1997 1996 4/30/95
Net asset value, beginning of period $11.470 $12.880 $10.330 $10.000
Income from investment operations:
Net investment loss (0.071) (0.230) (0.210) (0.160)
Net realized and unrealized
gain on investments 10.676 0.910 3.250 0.490
------- ------- ------- -------
Total from investment operations 10.605 0.680 3.040 0.330
------- ------- ------- -------
Less distributions:
Distributions from net realized
gains on investment transactions (2.275) (2.090) (0.400) none
Return of capital none none (0.090) none
------- ------- ------- -------
Total distributions (2.275) (2.090) (0.490) none
------- ------- ------- -------
Net asset value, end of period $19.800 $11.470 $12.880 $10.330
======= ======= ======= =======
Total return 3 96.99% 3.58% 29.96% 3.30%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $5,892 $222 $150 $128
Ratio of expenses to average net assets 2.50% 2.62% 2.77% 2.40%
Ratio of expenses to average net assets
prior to expense limitation 3.04% 3.43% 3.50% 3.50%
Ratio of net investment loss
to average net assets (1.44%) (2.02%) (1.73%) (1.80%)
Ratio of net investment loss to average
net assets prior to expense limitation (1.98%) (2.83%) (2.46%) (2.90%)
Portfolio turnover 356% 180% 166% 88%
Average commission rate paid 4 $0.0600 $0.0600 N/A N/A
AGGRESSIVE GROWTH INSTITUTIONAL CLASS
---------------------------------------
8/29/97 1
TO
4/30/98 2
Net asset value, beginning of period $17.150
Income from investment operations:
Net investment loss (0.019)
Net realized and unrealized
gain on investments 5.539
-------
Total from investment operations 5.520
-------
Less distributions:
Distributions from net realized
gains on investment transactions (2.030)
Return of capital none
-------
Total distributions (2.030)
-------
Net asset value, end of period $20.640
=======
Total return 3 34.68%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $2,391
Ratio of expenses to average net assets 1.50%
Ratio of expenses to average net assets
prior to expense limitation 2.04%
Ratio of net investment loss
to average net assets (0.44%)
Ratio of net investment loss to average
net assets prior to expense limitation (0.98%)
Portfolio turnover 356%
Average commission rate paid 4 $0.0600
1 Date of initial public offering; ratios have been annualized and total return
has not been annualized.
2 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.
3 Does not include contingent deferred sales charge which varies from 1-4%
depending upon the holding period for C Class shares.
4 Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a commission
charged.
for growth of capital 19
FINANCIAL HIGHLIGHTS (CONTINUED)
GROWTH STOCK A CLASS
-------------------------------------------
YEAR ENDED APRIL 30,
1998 2 1997 1996 1995 1994
Net asset value, beginning of period $25.340 $23.660 $19.910 $17.510 $17.810
Income from investment operations:
Net investment income (loss) 0.029 0.160 0.080 0.150 0.070
Net realized and unrealized
gain (loss) on investments 8.591 3.360 4.820 2.770 (0.160)
------- ------- ------- ------- -------
Total from investment operations 8.620 3.520 4.900 2.920 (0.090)
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income (0.113) (0.080) (0.110) (0.130) (0.060)
Distributions from net realized
gain on investment transactions (2.017) (1.760) (1.040) (0.390) (0.150)
------- ------- ------- ------- -------
Total dividends and distributions (2.130) (1.840) (1.150) (0.520) (0.210)
------- ------- ------- ------- -------
Net asset value, end of period $31.830 $25.340 $23.660 $19.910 $17.510
======= ======= ======= ======= =======
Total return 3 35.27% 15.27% 25.00% 17.04% (0.52%)
Ratios and supplemental data:
Net assets, end of period
(000 omitted) $41,196 $34,255 $28,956 $23,651 $28,518
Ratio of expenses
to average net assets 1.75% 1.72% 1.78% 1.90% 1.90%
Ratio of expenses
to average net assets prior
to expense limitation 1.82% 1.72% 1.87% 1.99% 2.13%
Ratio of net investment income
(loss) to average net assets 0.07% 0.68% 0.36% 0.75% 0.40%
Ratio of net investment income
(loss) to average net assets prior
to expense limitation -- 0.68% 0.27% 0.66% 0.17%
Portfolio turnover 9% 29% 37% 22% 34%
Average commission rate paid 4 $0.0600 $0.0600 N/A N/A N/A
GROWTH STOCK B CLASS
-------------------------
YEAR ENDED 9/8/95 1
APRIL 30, TO
1998 2 1997 4/30/96
Net asset value, beginning of period $24.930 $23.390 $21.640
Income from investment operations:
Net investment income (loss) (0.165) -- 0.060
Net realized and unrealized
gain (loss) on investments 8.425 3.300 2.960
------- ------- -------
Total from investment operations 8.260 3.300 3.020
------- ------- -------
Less dividends and distributions:
Dividends from net investment income -- -- (0.230)
Distributions from net realized
gain on investment transactions (1.990) (1.760) (1.040)
------- ------- -------
Total dividends and distributions (1.990) (1.760) (1.270)
------- ------- -------
Net asset value, end of period $31.200 $24.930 $23.390
======= ======= =======
Total return 3 34.29% 14.50% 14.37%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) $1,903 $1,182 $454
Ratio of expenses
to average net assets 2.50% 2.47% 2.41%
Ratio of expenses to average
net assets prior
to expense limitation 2.57% 2.47% 2.50%
Ratio of net investment income
(loss) to average net assets (0.67%) (0.01%) (0.62%)
Ratio of net investment income
(loss) to average net assets prior
to expense limitation (0.74%) (0.01%) (0.71%)
Portfolio turnover 9% 29% 37%
Average commission rate paid 4 $0.0600 $0.0600 N/A
1 Date of initial public offering; ratios have been annualized and total return
has not been annualized.
2 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.
3 Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class. Does not include contingent deferred
sales charge which varies from 1-4% depending upon the holding period for
B Class shares.
4 Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a commission
charged.
20 for growth of capital
FINANCIAL HIGHLIGHTS (CONTINUED)
GROWTH STOCK C CLASS
------------------------------
YEAR ENDED 10/31/95 1
APRIL 30, TO
1998 2 1997 4/30/96
Net asset value, beginning of period $24.930 $23.430 $22.610
Income from investment operations:
Net investment income (loss) (0.192) 0.070 0.110
Net realized and unrealized
gain (loss) on investments 8.442 3.220 2.000
------- ------- -------
Total from investment operations 8.250 3.290 2.110
------- ------- -------
Less dividends and distributions:
Dividends from net investment income none (0.030) (0.250)
Distributions from net realized
gain on investment transactions (1.990) (1.760) (1.040)
------- ------- -------
Total dividends and distributions (1.990) (1.790) (1.290)
------- ------- -------
Net asset value, end of period $31.190 $24.930 $23.430
======= ======= =======
Total return 3 34.25% 14.42% 9.72%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $1,112 $712 $104
Ratio of expenses to average net assets 2.50% 2.47% 2.35%
Ratio of expenses to average net assets
prior to expense limitation 2.57% 2.47% 2.43%
Ratio of net investment income
(loss) to average net assets (0.67%) 0.14% (0.65%)
Ratio of net investment income
(loss) to average net assets prior
to expense limitation (0.74%) 0.14% (0.73%)
Portfolio turnover 9% 29% 37%
Average commission rate paid 4 $0.0600 $0.0600 N/A
GROWTH STOCK INSTITUTIONAL CLASS
--------------------------------
8/29/97 1
TO
4/30/98 2
Net asset value, beginning of period $27.520
Income from investment operations:
Net investment income (loss) 0.047
Net realized and unrealized
gain (loss) on investments 5.803
-------
Total from investment operations 5.850
-------
Less dividends and distributions:
Dividends from net investment income (0.040)
Distributions from net realized
gain on investment transactions (1.300)
-------
Total dividends and distributions (1.340)
-------
Net asset value, end of period $32.030
=======
Total return 3 21.41%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $799
Ratio of expenses to average net assets 1.50%
Ratio of expenses to average net assets
prior to expense limitation 1.57%
Ratio of net investment income
(loss) to average net assets 0.33%
Ratio of net investment income
(loss) to average net assets prior
to expense limitation 0.26%
Portfolio turnover 9%
Average commission rate paid 4 $0.0600
1 Date of initial public offering; ratios have been annualized and total return
has not been annualized.
2 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.
3 Does not include contingent deferred sales charge which varies from 1-4%
depending upon the holding period for C Class shares.
4 Computed by dividing the total amount of commissions paid by the total number
of shares purchased and sold during the period for which there was a commission
charged.
</TABLE>
for growth of capital 21
VOYAGEUR MUTUAL FUNDS III, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998
Delaware - Voyageur Aggressive Growth Fund (formerly Voyageur
Aggressive Growth Fund) and Delaware - Voyageur Growth Stock Fund
(formerly Voyageur Growth Stock Fund), series within Voyageur Mutual
Funds III, Inc. (each referred to as a "Fund" or collectively as the
"Funds") are registered as diversified open-end investment companies
under the Investment Company Act of 1940, as amended. The Funds are
organized as Maryland Corporations and each offers four classes of
shares. The A Class carries a front end sales charge of 4.75%. The B
Class carries a back end sales charge. The C Class carries a level
load deferred sales charge and the Institutional Class has no sales
charge.
The Aggressive Growth Fund's objective is to seek long-term capital
appreciation by investing primarily in equity securities of companies
which the Fund manager believes have the potential for high earnings
growth. The Growth Stock Fund's objective is to seek long-term capital
appreciation through investment in equity securities diversified
through companies and industries.
1. FUND REORGANIZATION
On April 30, 1997, Lincoln National Corporation ("LNC") acquired
Voyageur Fund Managers Inc.'s ("Voyageur") parent, Dougherty Financial
Group, Inc. ("DFG"), pursuant to an agreement and plan of merger dated
January 15, 1997, in which LNC acquired DFG including the mutual fund
investment advisory business of DFG conducted by Voyageur. Upon
completion of the acquisition, Delaware Management Company, Inc.
("DMC") became the investment advisor to the Funds, Delaware
Distributors, L.P. ("DDLP") became the distributor for the Funds, and
Delaware Service Company, Inc. ("DSC") became the transfer, dividend-
disbursing, shareholder servicing and accounting service agent for the
Funds.
2. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with generally
accepted accounting principles and are consistently followed by the
Funds.
SECURITY VALUATION - Securities listed on an exchange are valued at
the last quoted sales price as of the close of the NYSE on the
valuation date. Securities not traded or securities not listed on an
exchange are valued at the mean of the last quoted bid and asked
prices. 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 Directors.
FEDERAL INCOME TAXES - Each Fund intends to continue to qualify as a
regulated investment company and make the requisite distributions to
shareholders. Accordingly, no provision for federal income taxes has
been made in the financial statements. Income and capital gain
distributions are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting
principles.
CLASS ACCOUNTING - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various
classes of the Funds on the basis of daily net assets of each class.
Distribution expenses relating to a specific class are charged
directly to that class.
OTHER - Expenses common to all funds within the Delaware Investments
Family of Mutual 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. Each Fund declares
and pays dividends from net investment income and capital gains
annually.
Certain Fund expenses are paid through "soft dollar" arrangements with
brokers. The amount of these expenses is less than 0.01% of the Fund's
average daily net assets.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
3. INVESTMENT MANAGEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Commencing May 1, 1997, and in accordance with the terms of the
Investment Management Agreement, the Funds pay DMC, the Investment
Manager of the Funds, an annual fee of 1.00% of average net assets,
which is calculated daily on the net assets of each Fund.
DMC has entered into a sub-advisory agreement with Voyageur Asset
Management Inc. with respect to the management of the Growth Stock
Fund. The sub-advisor receives a sub-advisory fee from DMC for their
services. The Growth Stock Fund does not pay any fees to the sub-
advisor.
DMC has elected to waive that portion of the management fee and
reimburse each Fund to the extent that annual operating expenses,
exclusive of taxes, interest, brokerage commissions and extraordinary
expenses, exceed 1.75% of each Fund's average daily net assets
attributable to Class A shares, 1.50% of each Fund's average daily net
assets attributable to Institutional Class shares, and 2.50% of each
Funds average daily net assets attributable to Class B and Class C
shares. Total expenses absorbed by DMC for the year ended April 30,
1998 are as follows:
AGGRESSIVE GROWTH
GROWTH FUND STOCK FUND
------------- -------------
Total expenses absorbed by DMC $83,957 $33,831
Commencing May 1, 1997, the Funds have engaged DSC, an affiliate of
DMC, to serve as dividend disbursing, transfer agent, and accounting
services agent for each Fund. For the year ended April 30, 1998, the
amounts expensed for each Fund were as follows:
AGGRESSIVE GROWTH
GROWTH FUND STOCK FUND
------------- -------------
Dividend disbursing, transfer
agent fees and other expenses $69,714 $69,973
Accounting fees 6,073 17,076
On April 30, 1998, the Funds had payables to affiliates as follows:
AGGRESSIVE GROWTH
GROWTH FUND STOCK FUND
------------- -------------
Investment Management fee
payable to DMC. $15,053 $68,658
Dividend disbursing, transfer
agent fees, accounting fees and
other expenses payable to DSC 30,587 9,938
Other expenses payable to DMC
and affiliates 36,775 20,599
22 for growth of capital
Commencing May 1, 1997, and pursuant to the Distribution Agreement,
the Funds pay DDLP, the Distributor and an affiliate of DMC, an annual
fee not to exceed 0.25% of the average daily net assets of the A Class
and 1.00% of the average daily net assets of the B and C Class.
For the year ended April 30, 1998, DDLP earned commissions on sales of
the Fund A Class shares for each Fund as follows:
AGGRESSIVE GROWTH
GROWTH FUND STOCK FUND
------------- -------------
$90,708 $8,978
Certain officers of DMC, DSC and DDLP are officers, directors and/or
employees of the Fund. These officers, directors and employees are
paid no compensation by the Funds.
4. INVESTMENTS
During the year ended April 30, 1998, the Funds made purchases and
sales of investment securities other than U.S. government securities
and temporary cash investments for each Fund as follows:
AGGRESSIVE GROWTH
GROWTH FUND STOCK FUND
------------- -------------
Purchases $90,475,932 $3,578,633
Sales 51,065,101 7,970,187
At April 30, 1998, the Fund's aggregate cost of securities and
unrealized appreciation (depreciation) for federal income tax purposes
were as follows:
AGGRESSIVE GROWTH
GROWTH FUND STOCK FUND
------------- -------------
Cost of Investments $50,842,603 $28,038,102
============= =============
Aggregate unrealized appreciation $ 5,912,263 $17,729,640
Aggregate unrealized depreciation 986,783 439,375
------------- -------------
Net unrealized appreciation $ 4,925,480 $17,290,265
============= =============
5. CAPITAL STOCK
Transactions in capital stock shares were as follows:
AGGRESSIVE GROWTH FUND
------------------------
YEAR ENDED
4/30/98 4/30/97
------------------------
Shares sold:
A Class 1,644,240 190,978
B Class 849,561 12,754
C Class 292,993 14,452
Institutional Class 170,504 --
Shares issued upon reinvestment of
dividends from net investment income
and net realized gains on investment
transactions:
A Class 62,779 61,299
B Class 16,905 474
C Class 7,005 924
Institutional Class 4,398 --
--------- ---------
3,048,385 280,881
--------- ---------
Shares repurchased:
A Class (575,071) (163,480)
B Class (47,894) (5,065)
C Class (21,760) (7,682)
Institutional Class (59,058) --
--------- ---------
(703,783) (176,227)
--------- ---------
Net increase (decrease) 2,344,602 104,654
========= =========
GROWTH STOCK FUND
------------------------
YEAR ENDED
4/30/98 4/30/97
------------------------
Shares sold:
A Class 289,387 253,700
B Class 24,380 28,484
C Class 10,214 29,726
Institutional Class 24,996 --
Shares issued upon reinvestment of
dividends from net investment income
and net realized gains on investment
transactions:
A Class 90,233 90,300
B Class 2,689 2,328
C Class 2,198 1,367
Institutional Class -- --
--------- ---------
444,097 405,905
--------- ---------
Shares repurchased:
A Class (437,377) (215,895)
B Class (13,459) (2,827)
C Class (5,301) (6,993)
Institutional Class (61) --
--------- ---------
(456,198) (225,715)
--------- ---------
Net increase (decrease) (12,101) 180,190
========= =========
6. CREDIT AND MARKET RISK
The Fund may invest 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.
for growth of capital 23
VOYAGEUR MUTUAL FUNDS III, INC.
REPORT OF INDEPENDENT AUDITORS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
VOYAGEUR MUTUAL FUNDS III, INC. - AGGRESSIVE GROWTH FUND
VOYAGEUR MUTUAL FUNDS III, INC. - GROWTH STOCK FUND
We have audited the accompanying statements of net assets of
Aggressive Growth Fund and Growth Stock Fund (the "Funds") as of April
30, 1998, and the related statements of operations, statements of
changes in net assets and financial highlights for the year then
ended. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits. The statements of changes in net
assets for the year ended April 30, 1997 and the financial highlights
for the periods presented through April 30, 1997 were audited by other
auditors whose report thereon dated June 13, 1997 expressed an
unqualified opinion on those statements and financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements and financial highlights.
Our procedures included confirmation of securities owned as of April
30, 1998, 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 audit provides a
reasonable basis for our opinion.
In our opinion, the 1998 financial statements and financial highlights
present fairly, in all material respects, the financial position of
each of the respective Funds at April 30, 1998, and the results of
their operations, the changes in their net assets, and their financial
highlights for the year then ended, in conformity with generally
accepted accounting principles.
/S/ERNST & YOUNG LLP
Philadelphia, Pennsylvania
May 29, 1998
DELAWARE INVESTMENTS FAMILY OF FUNDS
FOR GROWTH OF CAPITAL
Aggressive Growth Fund
Trend Fund
DelCap Fund
Small Cap Value Fund
U.S. Growth Fund
Growth Stock Fund
Tax-Efficient Equity Fund
FOR TOTAL RETURN
Social Awareness Fund
Blue Chip Fund
Devon Fund
Decatur Total Return Fund
Decatur Income Fund
REIT Fund
Delaware Fund
FOR INTERNATIONAL DIVERSIFICATION
Emerging Markets Fund
New Pacific Fund
Overseas Equity Fund
International Equity Fund
Global Bond Fund
FOR CURRENT INCOME
Delchester Fund
High-Yield Opportunities Fund
Strategic Income Fund
U.S. Government Fund
Delaware-Voyageur
U.S. Government Securities Fund
Limited-Term Government Fund
FOR TAX-EXEMPT CURRENT INCOME
National High Yield Municipal Bond Fund
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
State Tax-Free Funds*
MONEY MARKET FUNDS
Delaware Cash Reserve
Tax-Free Money Fund
ASSET ALLOCATION FUNDS
Growth Portfolio
Balanced Portfolio
Income Portfolio
* Available for the following states: Arizona, California,
Colorado, Florida, Idaho, Iowa, Kansas, Minnesota, Missouri, North
Dakota, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania,
Utah, Washington, Wisconsin. Insured and intermediate bond funds are
available in selected states.
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.
THIS ANNUAL REPORT IS FOR THE INFORMATION OF AGGRESSIVE GROWTH FUND'S
AND GROWTH STOCK FUND'S SHAREHOLDERS, BUT IT MAY BE USED WITH
PROSPECTIVE INVESTORS WHEN PRECEDED OR ACCOMPANIED BY CURRENT
PROSPECTUSES FOR AGGRESSIVE GROWTH FUND AND GROWTH STOCK FUND, WHICH
SET FORTH DETAILS ABOUT CHARGES, EXPENSES, INVESTMENT OBJECTIVES AND
OPERATING POLICIES OF EACH FUND. YOU SHOULD READ EACH PROSPECTUS
CAREFULLY BEFORE YOU INVEST. SUMMARY INVESTMENT RESULTS ARE DOCUMENTED
IN EACH FUND'S CURRENT STATEMENT OF ADDITIONAL INFORMATION. THE
FIGURES IN THIS REPORT REPRESENT PAST RESULTS WHICH ARE NOT A
GUARANTEE OF FUTURE RESULTS. THE RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN EACH FUND WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED,
MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
BOARD OF DIRECTORS
WAYNE A. STORK
Chairman
Delaware Investments Family of Funds
Philadelphia, PA
JEFFREY J. NICK
President and Chief Executive Officer
Delaware Investments Family of Funds
Philadelphia, PA
WALTER P. BABICH
Board Chairman, Citadel Constructors, Inc.
King of Prussia, PA
ANTHONY D. KNERR
Consultant, Anthony Knerr & Associates
New York, NY
ANN R. LEVEN
Treasurer, National Gallery of Art
Washington, DC
W. THACHER LONGSTRETH
City Councilman
Philadelphia, PA
THOMAS F. MADISON
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
CHARLES E. PECK
Secretary/Treasurer, Enterprise Homes, Inc.
Fredericksburg, VA
AFFILIATED OFFICERS
DAVID K. DOWNES
Executive Vice President, Chief Financial Officer
and Chief Operating Officer
Delaware Investments Family of Funds
Philadelphia, PA
GEORGE M. CHAMBERLAIN, JR.
Senior Vice President, Secretary
and General Counsel
Delaware Investments Family of Funds
Philadelphia, PA
BRUCE D. BARTON
President and Chief Executive Officer
Delaware Distributors, L.P.
Philadelphia, PA
DIRECTORS
& OFFICERS
INVESTMENT MANAGER
Delaware Management Company
Philadelphia, Pennsylvania
INTERNATIONAL AFFILIATE
Delaware International Advisers Ltd.
London, England
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia, Pennsylvania
SUBADVISER
Voyageur Asset Management LLC
Minneapolis, Minn.
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
Philadelphia, Pennsylvania
1818 Market Street
Philadelphia, PA 19103-3682
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY CURRENT AGGRESSIVE
GROWTH FUND AND GROWTH STOCK FUND PROSPECTUS AND THE DELAWARE
INVESTMENTS FUND PERFORMANCE UPDATE FOR THE MOST RECENTLY COMPLETED
CALENDAR QUARTER. FOR A PROSPECTUS OF ANY OTHER DELAWARE INVESTMENTS
FUND, CONTACT YOUR FINANCIAL ADVISER OR DELAWARE INVESTMENTS.
FOR SHAREHOLDERS
1.800.523.1918
FOR SECURITIES DEALERS
1.800.362.7500
FOR FINANCIAL INSTITUTIONS
Representatives Only
1.800.659.2265
www.delawarefunds.com
Be sure to consult your financial adviser when making investments.
Mutual funds can be a valuable part of your financial plan; however,
shares of the Funds are not FDIC or NCUSIF insured, are not guaranteed
by any bank or any credit union, and involve investment risk,
including the possible loss of the principal amount invested. Shares
of the Funds are not bank or credit union deposits.
[copyright] Delaware Distributors, L.P.
[GRAPHIC OMITTED: DELAWARE INVESTMENTS LOGO]
Printed in the USA
on recycled paper
(767)
AR-316[4/98]TKO6/98
