VOYAGEUR MUTUAL FUNDS III INC /MN/, N-30D, 1999-12-30

VOYAGEUR MUTUAL FUNDS III INC /MN/
N-30D, 1999-12-30

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For Growth of Capital

Delaware Select Growth Fund
Delaware Growth Stock Fund

(Photo of illustration from Growth of Capital brochure)

service and guidance

professional management

goals

2000

Semi-Annual Report

DELAWARE(SM)
INVESTMENTS
- -------------------------
Philadelphia o London

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November 17, 1999

Dear Shareholder:

At the start of our 2000 fiscal year, the outlook appeared positive. Just a few
days into the year, the Dow Jones Industrial Average crossed the 11,000 mark for
the first time in the history of the U.S. stock market. However, worries over
inflation, a weakening dollar and fears of higher interest rates sent the market
into a quick retreat.

As the summer heated up, the Fed moved to a more restrictive monetary policy,
concerned that the U.S. economy might overheat, leading to higher inflation.
Between June and November, the Fed raised short-term interest rates three times.
Against this backdrop, a very narrow group of stocks once again led the market
as investors focused almost exclusively on high-priced large company stocks.

We are pleased to report that Delaware Select Growth Fund, which invests in
companies of all sizes, had a total return of 18.12% for the six-month period
ended October 31, 1999 (for Class A shares at net asset value with distributions
reinvested). Delaware Select Growth Fund outperformed the S&P 500 and comparable
growth funds, as shown below.

We attribute Delaware Select Growth Fund's superior performance to our strong
stock selection in the technology, telecommunications and consumer services
industries.

We were optimistic that the market's performance during the spring was the
beginning of a trend in which stock market performance would be driven by a
wider number of stocks - a scenario that would be more favorable for Delaware
Growth Stock Fund. However, we recognized that there might be a tug-of-war
between the very large growth stocks that had been leading the market and the
many other stocks that had been out-of-favor. This proved to be the case. As
interest rates increased, the market narrowed once again. This unfavorable
market environment hindered Delaware Growth Stock Fund's performance during the
first half of our fiscal year.

Delaware Growth Stock Fund had a total return of -0.86% for the period (for

CUMULATIVE TOTAL RETURNS
- --------------------------------------------------------------------------------
Six Months Ended
October 31, 1999
- --------------------------------------------------------------------------------
Delaware Select Growth Fund A Class 18.12%
Lipper Multi-Cap Growth Fund Average (375 funds) 9.38%
- --------------------------------------------------------------------------------
Delaware Growth Stock Fund A Class -0.86%
Lipper Multi-Cap Value Fund Average (514 funds) -3.55%
- --------------------------------------------------------------------------------
Standard & Poor's 500 Index 2.08%

All performance shown is at net asset value without the effect of sales charges
and assumes reinvestment of distributions. Fee limitations were in effect for
the period shown. Returns would have been lower without the limitations.
Performance for all Fund classes can be found on pages 9 and 10. The Lipper
categories represent the average returns of the multi-cap growth funds and the
multi-cap value funds tracked by Lipper Analytical. The Standard & Poor's 500 is
an unmanaged composite of mostly large-capitalization U.S. companies. You cannot
invest directly in an index. Source: Lipper Analytical Services, Inc. Past
performance does not guarantee future results.

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Class A shares at net asset value with distributions reinvested), compared to
2.08% for the S&P 500. Our strategy for this Fund is to invest in stocks with
A+, A or A- ratings by Standard & Poor's. Because the majority of technology
companies do not meet the S&P's criteria to be rated A+, A or A-, most
technology stocks have not met our selection guidelines for the Delaware Growth
Stock Fund portfolio. Considering that technology stock returns dominated the
Index's performance throughout the period, our smaller allocation to this sector
was the primary reason for Delaware Growth Stock Fund's underperformance.

On the pages that follow, Delaware Select Growth Fund's lead portfolio
manager, Gerald S. Frey, and Delaware Growth Stock Fund's portfolio manager,
James King, review their selection processes and discuss some of the investments
that affected fund performance during the last six months. They also share their
outlook for the next six months.

As we start the second half of our fiscal year, U.S. economic growth appears
to be moving forward, with high employment and relatively stable inflation. We
believe the new millennium will bring many opportunities for investors and we
are committed to working with you to achieve your goals.

Sincerely,

/s/ Wayne A. Stork
- ----------------------------------------
Wayne A. Stork
Chairman,
Delaware Investments Family of Funds

/s/ David K. Downes
- ----------------------------------------
David K. Downes
President and Chief Executive Officer
Delaware Investments Family of Funds

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Portfolio Manager Reviews

Delaware Select Growth Fund
Gerald S. Frey
Senior Portfolio Manager
November 17, 1999

Delaware Select Growth Fund
Delaware Select Growth Fund's results for the past six months were very strong.
For the period ended October 31, 1999, the Fund posted an 18.12% return. (Class
A shares with distributions reinvested and without the effect of the sales
charge.)

We attribute Delaware Select Growth Fund's performance primarily to our
sector allocation and individual stock selection. While the overall market was
somewhat volatile throughout the period, your Fund performed well due to our
high concentration of technology and telecommunications stocks. These sectors
held up very well, providing the Fund some protection when the market dipped and
boosting performance during the upturns. As a result, your Fund performed fairly
well in both up and down market periods.

Technology was our best performing stock group as Internet companies
continued to provide strong returns. In addition, significant holdings in the
telecommunications sector, which had strong returns during the period, boosted
your Fund's performance. The Fund also benefited from the solid performance of
our stock selections in the consumer services industry, including popular
restaurant chains, vacation and hospitality companies and fitness centers. We
allocated about 15% of our portfolio to this sector, a higher concentration than
in the S&P 500.

Low Exposure to Financial and Healthcare Companies Enhances Performance
We reduced our exposure to financial stocks over the past 18 months or so, as
this sector struggled with interest rate concerns and a weakening dollar. Our
lower concentration in this sector helped our performance. The holdings we had
in the financial services sector were primarily large companies whose diverse
revenue sources - for instance, credit card, banking, insurance and investment

DELAWARE SELECT GROWTH FUND'S HOLDINGS BY MARKET CAPITALIZATION
- -------------------------------------------------------------------------
As of October 31, 1999
Percentage of
Company Market Capitalization Portfolio Assets
- -------------------------------------------------------------------------
Under $1 billion 15.0%
$1 billion - $5 billion 27.4%
$5 billion - $10 billion 16.6%
$10 billion and over 41.0%

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services - give them a stronger competitive position.

Limited exposure to health care stocks also worked in our favor, as this
sector continued to struggle with Medicare changes and trying to make a profit.
We do have some holdings of biotech companies, which we believe are positioned
to deliver consistent earnings growth.

We will continue to seek out investment opportunities in the health care and
financial sectors, and increase our holdings when we find companies with
potential for reliable earnings growth.

Since the spring, we have made some changes to our portfolio. Genentech is a
biotech company that is making the transition to being a full-scale
pharmaceutical company. We bought the stock at its initial public offering in
July. The company's stock offering was highly anticipated because they have a
large pipeline of new drugs and there aren't many pharmaceutical companies doing
stock offerings. The company had been acquired by Roche Holding earlier in the
year, and high expectations caused its price to soar. The company was selling at
a much higher price than similar companies. We decided to sell the stock and
lock in our profits. Subsequently, the price dropped and we added the company to
our portfolio again.

TCA Cable, a small rural cable provider, had been selling at a price below
industry averages when we acquired its stock. The company was considered an
unlikely takeover candidate, but they did well with their customer base and they
were growing their cashflow so we thought they were a sound investment. TCA
Cable was acquired by Cox Communications at a substantially higher price than
its stock was selling for. We took the opportunity to sell our holdings at a
profit.

In addition, we sold Qualcom, a wireless technology company. While the
company's earnings in 1999 had increased 10-fold from last year, almost half
their revenues were generated by the

DELAWARE SELECT GROWTH FUND
SECTOR ALLOCATION AND PORTFOLIO HIGHLIGHTS

October 31, 1999

Technology 20.3%
Retail 15.5%
Cable, Media & Publishing 13.3%
Electronics & Electrical Equipment 11.6%
Telecommunications 8.0%
Leisure, Lodging & Entertainment 6.9%
Federal Agency (Discounted) 6.5%
Computers 4.9%
Business Services 4.0%
Banking, Finance & Insurance 3.4%
Consumer Products 2.8%
Healthcare & Pharmaceuticals 2.6%
Other 0.2%

Delaware Select
Growth Fund
- -------------------------------------------------
Median Market Capitalization $6.4 billion
Number of Stocks 75
Top Sector Technology
Beta* 1.49

*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 1.49 beta means the Fund's historical
volatility has been 49% higher than the index.
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Delaware Select Growth Fund's
Disciplined Stock Selection Process

All Market Capitalizations
\/
High and Consistent, or
Accelerating Earnings Growth Rates
\/
Industry Specific Special
Dynamics Situations
\/ \/
Delaware Select
Growth Fund Portfolio

Delaware Select Growth Fund's management focuses on long-term capital
appreciation by evaluating companies of all sizes and selecting only those
stocks it believes have the greatest potential for high or accelerating earnings
growth.

production of microchips rather than their core competency - wireless
communications. We believe this more narrow focus may indicate a higher risk and
we'd like to see more of a track record on their microchip production so we can
be more confident that their earnings from that business will be steady.
Therefore, we sold our holdings.

There were some companies that did not perform well for the Fund. These
included Consolidated Graphics, a printing company, Republic Services, a waste
disposal company, and Global Crossing, a telecommunications company. All of the
companies had lowered their earnings expectations following acquisitions. After
careful analysis, we decided to keep Consolidated Graphics, but sell Republic
Services and Global Crossing.

Outlook
We believe that technology stocks will continue to play a dominant role in the
market, at least through the first quarter of 2000. In our view, companies are
likely to allocate a healthy percentage of their resources to technology,
possibly redirecting resources from Y2K readiness efforts to systems upgrades
that had been put on hold. We also believe that anticipated expansion of the
internet will cause the telecommunications sector to grow significantly over the
next several years.

We believe the market could remain volatile, with fluctuations becoming even
more dramatic. In this environment, we believe our disciplined investment style
can help position Delaware Select Growth Fund to take advantage of the
opportunities available.

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Delaware Growth Stock Fund
James King
Voyageur Asset Management, LLC
Senior Portfolio Manager

November 17, 1999

The six-month period ended October 31, 1999 was a rocky period for equity
investors, as markets remained volatile. The Dow Jones Industrials and the S&P
500 both hit record highs, but then slipped, embarking on a cycle of gains and
losses that continued throughout the period. The S&P 500 finished the period
with a 2.08% gain. Contributing to the market's uncertainty were concerns about
interest rates, a weaker dollar (leading to record trade deficits), and worries
over companies' ability to sustain strong earnings growth.

Sector-by-sector, there were few avenues for success. Technology was the
strongest sector (up 21%), with capital goods coming in a distant second (up
8%). With fear of rising interest rates, financials were hit hard (down 5%) as
were consumer nondurables (down 6%). Source: FactSet.

The Delaware Growth Stock Fund outperformed the Lipper Multi-cap Value Fund
average, but underperformed the S&P 500 for the six months covered by this
report. This has been a period when our investment discipline of owning very
high quality growth stocks has worked to our disadvantage. Through our stock
selection process we look for stocks that have:
o A+, A or A- earnings ratings by Standard & Poor's;
o Consistency of long-term earnings growth and dividend increases (measured
over a 10-year period);
o Low stock prices relative to earnings.

In fact, for the period covered by this report, the lowest rated stocks,
those rated C and D by Standard & Poor's, actually outperformed stocks rated A+,
by a remarkable 40%. Source: FactSet. Because we do not believe that C and D
rated stocks offer the best long-term potential for growth, we maintained our
focus on stocks rated A+, A and A-.

The narrow market focus and the strong showing by the technology sector
worked against us. Relative to the S&P 500, the Delaware Growth Stock Fund has a
lower concentration of technology stocks and a higher concentration in consumer
nondurable companies, such as food, beverage and tobacco. These stocks meet our
selection criteria because companies in these sectors have traditionally
increased their dividends and earnings more consistently.

Because the majority of technology companies have not generated the long-term
consistency in earnings growth necessary to achieve an A rating from Standard &
Poor's, most technology stocks have not met our selection guidelines. Although
we have increased our holdings of technology stocks over the last nine months,
our lower concentration compared to that of the S&P 500 continues to be a factor
in our underperformance relative to the Index.
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Portfolio Positioning
and Outlook
Delaware Growth Stock Fund's overall investment philosophy is that an investor
can achieve superior performance over a full market cycle by purchasing stocks
of high quality companies and participating in their long-term earnings and
dividend growth. In order to provide an objective definition of quality, we
primarily select stocks rated either A+, A or A- by Standard & Poor's. Our
studies indicate that over full market cycles, this group of stocks has
outperformed the broader market, especially when viewed in the context of the
risk taken to generate performance.

During the past six months we added to our holdings of Philip Morris, which
represented about 4.2% of net assets as of October 31, 1999. The stock price had
dropped sharply following the announcement of the U.S. Justice Department's
lawsuit against the tobacco industry. In our opinion, the market over-reacted to
the lawsuit. Since the stock was selling at a low price relative to its
earnings, we decided to add to our holdings. We believe the price will
ultimately increase, which would give us the opportunity to sell at a profit. We
sold U.S. Tobacco, one of our long-term holdings. The stock's performance had
been slipping, so we sold the stock to balance our purchase of Philip Morris and
maintain the level of the Fund's overall holdings in tobacco-related companies.

We purchased Emerson Electric, an electronics and electrical equipment
company, Newell Rubbermaid, a consumer durable company, and Jefferson Pilot, an
insurance company, all of which met our criteria for high quality companies with
consistent earnings and dividend growth.

We remain convinced that our investment philosophy of purchasing what we
believe to be high quality stocks and participating in their long-term earnings
and dividend growth will offer investors substantial opportunities for capital
appreciation. However, there will be times, such as the recent past, when our
strategy will be out of favor.

As long as technology stocks continue to lead the stock market, it may be a
struggle for us to keep up with the S&P 500. However, we believe that we will be
rewarded if the market performance spreads to a wider array of stocks. We also
think we could be in a better position to withstand any price declines should we
encounter more volatility in the stock market.

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Delaware Growth Stock Fund
Stock Selection Process

S&P Quality Rating
A+, A, A-
468 Companies*
\/
Capitalization Greater
Than $2.5 Billion
201 Companies
\/
Companies Selling
in the Lower Quintile
Of Historical Valuation Range
\/
Fundamental Research
Analysis
\/
Delaware Growth Stock
Portfolio

*By prospectus, 75% of the Fund's net assets must be invested in stocks rated A+
or A by Standard & Poor's.

DELAWARE GROWTH STOCK FUND PERFORMANCE
- --------------------------------------------------------------------------------
Average Annual Total Returns Through October 31, 1999

Lifetime Ten Years Five Years One Year
- --------------------------------------------------------------------------------
Class A (Est. 8/1/85)
Excluding Sales Charge 15.64% 13.52% 18.85% 7.86%
Including Sales Charge 15.16% 12.85% 17.46% 1.67%
- --------------------------------------------------------------------------------
Class B (Est. 9/8/95)
Excluding Sales Charge 16.46% 7.07%
Including Sales Charge 16.16% 2.27%
- --------------------------------------------------------------------------------
Class C (Est. 10/21/95)
Excluding Sales Charge 15.76% 7.07%
Including Sales Charge 15.76% 6.11%

Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share values will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
results excluding sales charges assume either that contingent deferred sales
charges did not apply or the investment was not redeemed. Past performance is
not a guarantee of future results.

Class A shares have a 5.75% maximum front-end sales charge and a 12b-1 fee.
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are subject to a contingent deferred
sales charge of up to 5% if redeemed before the end of the sixth year.
Class C shares have no front-end sales charge and a 1% annual distribution and
service fee. If redeemed within 12 months, a 1% contingent deferred sales charge
applies.

Expense limitations were in effect for the fund for the periods shown above.
Performance would have been lower if the limitations were not in effect.

The average annual total return for the lifetime period and the annual return
for the one-year period for Delaware Growth Stock Fund's Institutional Class
(Est. 8/29/97), which is available without sales or asset-based distribution
charges only to certain eligible institutional accounts, were 15.72% and 8.16%,
respectively.

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DELAWARE SELECT GROWTH FUND
A LONG-TERM PERFORMANCE PERSPECTIVE
Annual Returns

Delaware Select Lipper Multi-Cap
Growth Fund A Growth Fund Average
------------- -------------------

Lifetime 30.47% 21.14% (126 funds)
5 Years 32.38% 22.15% (148 funds)
3 Years 41.82% 22.92% (232 funds)
1 Year 69.71% 43.90% (348 funds)

Performance does not include the impact of any sales charges.

DELAWARE SELECT GROWTH FUND PERFORMANCE
- --------------------------------------------------------------------------------
Average Annual Total Returns Through October 31, 1999

Lifetime Five Years Three Years One Year
- --------------------------------------------------------------------------------
Class A (Est. 5/16/94)
Excluding Sales Charge 30.47% 32.38% 41.82% 69.71%
Including Sales Charge 29.07% 30.82% 39.05% 59.96%
- --------------------------------------------------------------------------------
Class B (Est. 4/16/96)
Excluding Sales Charge 40.38% 40.41% 68.46%
Including Sales Charge 40.02% 39.91% 63.46%
- --------------------------------------------------------------------------------
Class C (Est. 5/20/94)
Excluding Sales Charge 29.55% 31.38% 40.69% 68.48%
Including Sales Charge 29.55% 31.38% 40.69% 67.48%

Expense limitations were in effect for the fund for the periods shown above.
Performance would have been lower if the limitations were not in effect.

The average annual total return for the lifetime period and the annual return
for the one-year period for Delaware Select Growth Fund's Institutional Class
(Est. 8/29/97), which is available without sales or asset-based distribution
charges only to certain eligible institutional accounts, were 30.63% and 70.13%,
respectively.

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Financial Statements
Voyageur Mutual Funds III, Inc.
Delaware Select Growth Fund
Statement of Net Assets
October 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of Market
Shares Value
--------- ------

COMMON STOCK - 97.93%
Banking, Finance & Insurance - 3.41%
Citigroup ..................................... 191,600 $10,370,350
*Internet Capital Group ........................ 58,200 6,762,113
MBNA .......................................... 195,700 5,406,213
-----------
22,538,676
-----------
Business Services - 4.02%
First Data .................................... 251,100 11,472,131
*Hall,Kinion & Associates ...................... 103,200 1,464,150
*Luminant Worldwide ............................ 206,100 8,153,831
*Mobile Mini ................................... 250,000 5,492,188
-----------
26,582,300
-----------

Cable, Media & Publishing - 13.30%
*Adelphia Communications CL A .................. 258,300 14,085,422
*AMFM .......................................... 109,500 7,665,000
*CBS ........................................... 238,000 11,617,375
*Clear Channel Communications .................. 135,000 10,850,625
*Consolidated Graphics ......................... 394,200 7,884,000
*InterPublic Group ............................. 206,000 8,368,750
Omnicom Group ................................. 157,700 13,877,600
*Univision Communications-A .................... 62,400 5,307,900
*Young and Rubicam ............................. 181,300 8,294,475
-----------
87,951,147
-----------
Capital Goods - 1.48%
*Mettler-Toledo International .................. 328,800 9,802,350
-----------
9,802,350
-----------
Computers & Technology - 25.17%
*America Online ................................ 77,000 9,985,938
*BE Incorporated ............................... 150,000 853,125
*BMC Software .................................. 48,800 3,130,825
*Brio Technology ............................... 257,400 6,274,125
*Cisco Systems ................................. 158,800 11,756,163
*Citrix Systems ................................ 211,000 13,523,781
*Commerce One .................................. 38,200 6,556,075
*Internap Network Services ..................... 81,300 7,494,844
*Intuit ........................................ 350,000 10,193,750
*JDS Uniphase .................................. 74,000 12,346,438
*Legato Systems ................................ 274,400 14,731,850
*Microsoft ..................................... 57,400 5,313,088
*Mission Critical Software ..................... 101,900 5,973,888
*Network Appliance ............................. 106,000 7,847,313
*Oracle ........................................ 96,800 4,607,075
*Peregrine Systems ............................. 305,000 13,400,938
*Realnetworks .................................. 59,800 6,561,181
*Stamps.com .................................... 138,700 7,983,919
*VeriSign ...................................... 43,200 5,335,200
*Veritas Software .............................. 116,900 12,606,934
-----------
166,476,450
-----------
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Number of Market
Shares Value
--------- ------

COMMON STOCK (Continued)
Consumer Products - 2.83%
*Gemstar International Group Limited ........... 215,900 $18,729,325
-----------
18,729,325
-----------
Electronics & Electrical Equipment - 11.62%
*Altera ........................................ 120,100 5,839,863
*Amtel Corp .................................... 148,300 5,723,453
*Applied Materials ............................. 126,500 11,365,234
*Applied Micro Circuits ........................ 101,300 7,885,572
*Integrated Device Technology .................. 314,400 6,455,025
*Micrel ........................................ 351,900 19,002,600
*Sun Microsystems .............................. 69,800 7,383,531
Texas Instruments ........................... 46,700 4,191,325
*Xilinx ........................................ 114,300 8,983,266
-----------
76,829,869
-----------
Energy - 1.22%
*AES ........................................... 143,600 8,104,425
-----------
8,104,425
-----------
Healthcare & Pharmaceuticals - 2.56%
*Akorn Inc. .................................... 48,300 187,917
*Genentech Inc. ................................ 62,400 9,094,800
*United Therapeutics ........................... 257,700 7,618,256
-----------
16,900,973
-----------

Leisure, Lodging & Entertainment - 6.93%
*Bally Total Fitness Holdings .................. 410,400 9,875,250
*Extended Stay America ......................... 316,300 2,629,244
*Outback Steakhouse ............................ 337,000 7,740,469
*Papa John's International ..................... 325,700 12,162,859
Royal Caribbean Cruises ....................... 253,600 13,456,650
-----------
45,864,472
-----------
Retail - 15.46%
*American Eagle Outfitters ..................... 267,400 11,456,419
*Bed Bath & Beyond ............................. 167,700 5,581,266
*Best Buy ...................................... 168,500 9,362,281
*Cost Plus ..................................... 252,900 9,262,463
CVS Corporation ............................... 215,000 9,339,063
Home Depot .................................... 210,500 15,892,750
*Hot Topic ..................................... 87,900 3,285,263
Intimate Brands ............................... 158,680 6,505,880
*Kohl's ........................................ 138,000 10,324,125
*P.F.Chang's China Bistro ...................... 354,300 7,606,378
*Staples ....................................... 509,200 11,281,963
*Ticketmaster Online-City Class B .............. 103,600 2,327,763
-----------
102,225,614
-----------
Telecommunication - 7.99%
*American Tower-Class A ........................ 602,900 11,492,781
*Concord Communications ........................ 242,900 12,623,209
*Nextlink Communications-A ..................... 109,500 6,559,734

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12 for growth of capital

Statement of Net Assets (Continued)
- --------------------------------------------------------------------------------
Number of Market
Shares Value
--------- ------

COMMON STOCK (Continued)
Telecommunication (Continued)
*Pinnacle Holdings ............................. 359,200 $ 8,665,700
*PMC - Sierra .................................. 67,000 6,312,656
*Sycamore Networks ............................. 33,600 7,205,100
-------------
52,859,180
-------------
Transportation - 1.94%
*Expeditors International ...................... 342,600 12,815,381
-------------
12,815,381
-------------
Total Common Stock (cost $544,281,034) ........ 647,680,162
-------------
Principal
Amount
---------
FEDERAL AGENCY (DISCOUNTED NOTES) - 6.54%
Federal Home Loan Bank
5.16% 11/12/99 .............................. $ 4,095,000 4,088,525
Federal Home Loan Mortgage Corporation
5.16% 12/03/99 .............................. 11,485,000 11,432,322
Federal Home Loan Mortgage Corporation
5.22% 11/23/99 .............................. 15,530,000 15,480,521
Federal Home Loan Mortgage Corporation
5.23% 11/15/99 .............................. 8,075,000 8,058,659
Federal National Mortgage Association
5.18% 12/06/99 .............................. 3,240,000 3,223,683
Federal National Mortgage Association
5.18% 12/08/99 .............................. 980,000 974,782
-------------
Total Federal Agency - (cost of $43,258,492)... 43,258,492
-------------
SHORT-TERM INVESTMENTS - 0.00%

Norwest Advantage Treasury Fund ............. 577 577
-------------
Total Short-Term Investments (cost $577) .... 577
-------------

TOTAL MARKET VALUE OF SECURITIES - 104.47%
(COST $587,540,103) ........................................ $690,939,231
LIABILITIES NET OF RECEIVABLES AND
OTHER ASSETS - (4.47%) ..................................... (29,560,541)
------------
NET ASSETS APPLICABLE TO 22,835,550 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% .................... $661,378,690
============

NET ASSET VALUE - DELAWARE SELECT GROWTH FUND A CLASS
($270,315,737 / 9,109,271 SHARES) .......................... $29.68
======
NET ASSET VALUE - DELAWARE SELECT GROWTH FUND B CLASS
($270,111,007 / 9,485,337 SHARES) .......................... $28.48
======
NET ASSET VALUE - DELAWARE SELECT GROWTH FUND C CLASS
($95,502,650 / 3,389,411 SHARES) ........................... $28.18
======
NET ASSET VALUE - DELAWARE SELECT GROWTH FUND
INSTITUTIONAL CLASS ($25,449,296 / 851,531 SHARES).......... $29.89
======

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COMPONENTS OF NET ASSETS AT OCTOBER 31, 1999:
Common stock, $.01 par value, 10,000,000,000
shares authorized to the Fund with
1,000,000,000 shares allocated to the
Delaware Select Growth Fund A Class,
1,000,000,000 shares allocated to the
Delaware Select Growth Fund B Class,
1,000,000,000 shares allocated to the
Delaware Select Growth Fund C Class,
and 1,000,000,000 shares allocated to the
Delaware Select Growth Fund Institutional
Class....................................................... $538,505,114
Accumulated net investment loss ............................... (1,882,435)
Accumulated net realized gain on investments .................. 21,356,883
Net unrealized appreciation of investments .................... 103,399,128
------------
Total net assets .............................................. $661,378,690
============
- ------------
Top ten holdings, representing 22.61% of net assets, printed in bold.
*Non-income producing security for the period ended October 31, 1999.

NET ASSET VALUE AND OFFERING PRICE PER SHARE -
DELAWARE SELECT GROWTH FUND A CLASS
Net asset value A Class (A) ................................... $29.68
Sales Charge (5.75% of offering price or 6.10%, of
the amount invested per share) (B) ......................... 1.81
------
Offering Price ................................................ $31.49
======
- -------------------
(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 $50,000 or
more.
See accompanying notes

<PAGE>
for growth of capital 13

Voyageur Mutual Funds III, Inc.
Delaware Growth Stock Fund
Statement of Net Assets
October 31, 1999
(Unaudited)
- --------------------------------------------------------------------------------
Number of Market
Shares Value
--------- ------
COMMON STOCK - 96.49%
Automobiles & Auto Parts - 3.83%
Genuine Parts .................................. 78,000 $2,032,875
----------
2,032,875
----------
Banking, Finance & Insurance - 11.94%
Jefferson-Pilot Corp ........................... 28,000 2,101,750
KeyCorp ........................................ 77,000 2,151,188
SouthTrust ..................................... 52,000 2,078,375
----------
6,331,313
----------
Cable, Media & Publishing - 3.78%
Gannett ........................................ 26,000 2,005,250
----------
2,005,250
----------
Chemicals - 3.60%
Sigma-Aldrich .................................. 67,000 1,907,406
----------
1,907,406
----------
Computers & Technology - 7.59%
Automatic Data Processing ...................... 42,000 2,023,875
Hewlett-Packard ................................ 27,000 1,999,688
----------
4,023,563
----------
Electronics & Electrical Equipment - 7.86%
Emerson Electric ............................... 32,000 1,922,000
Intel .......................................... 29,000 2,244,779
----------
4,166,779
----------
Energy - 7.34%
Royal Dutch Petroleum .......................... 32,000 1,918,000
Shell Transport and Trading - ADR .............. 43,000 1,972,625
----------
3,890,625
----------
Food, Beverage & Tobacco - 12.24%
ConAgra ........................................ 80,000 2,085,000
Philip Morris .................................. 88,000 2,216,500
Sysco .......................................... 57,000 2,190,938
----------
6,492,438
----------
Healthcare & Pharmaceuticals - 11.72%
Abbott Laboratories ............................ 50,000 2,018,750
Merck & Company ................................ 26,000 2,068,625
Schering-Plough ................................ 43,000 2,128,500
----------
6,215,875
----------
Industrial Machinery - 3.76%
Grainger (W.W.) ................................ 47,000 1,991,625
----------
1,991,625
----------
Packaging & Containers - 7.49%
Bemis .......................................... 55,000 1,921,563
Illinois Tool Works ............................ 28,000 2,051,000
----------
3,972,563
----------
Retail - 10.90%
Albertson's .................................... 47,000 1,706,688
Sherwin-Williams ............................... 90,000 2,013,750
Wal-Mart Stores ................................ 36,000 2,056,500
----------
5,776,938
----------
Textiles, Appparel & Furniture - 4.44%
Newell Rubbermaid .............................. 68,000 2,354,500
----------
2,354,500
----------
Total Common Stock (cost $39,394,906) .......... 51,161,750
----------

<PAGE>

Number of Market
Shares Value
--------- ------

SHORT-TERM INVESTMENTS - 3.39%
Norwest Advantage Treasury Fund ................ 1,798,336 $1,798,336
-----------
Total Short-Term Investments (cost $1,798,336).. 1,798,336
-----------
MONEY MARKET INSTRUMENTS - 1.83%
US Treasury Bill................................ 1,000,000 972,104
-----------
Total Money Market Instruments
(cost $972,104).......................................... 972,104
-----------
TOTAL MARKET VALUE OF SECURITIES - 101.71%
(COST $42,165,346)....................................... $53,932,190
LIABILITIES NET OF RECEIVABLES AND
OTHER ASSETS - (1.71%)................................... (908,229)
-----------
NET ASSETS APPLICABLE TO 1,770,975 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00%.................. $53,023,961
===========
NET ASSET VALUE - DELAWARE GROWTH STOCK FUND A CLASS
($43,863,862 / 1,458,669 SHARES)......................... $30.07
======
NET ASSET VALUE - DELAWARE GROWTH STOCK FUND B CLASS
($5,561,089 / 191,220 SHARES)............................ $29.08
======
NET ASSET VALUE - DELAWARE GROWTH STOCK FUND C CLASS
($1,705,030 / 58,636 SHARES)............................. $29.08
======
NET ASSET VALUE - DELAWARE GROWTH STOCK FUND
INSTITUTIONAL CLASS ($1,893,980 / 62,450 SHARES)......... $30.33
======
COMPONENTS OF NET ASSETS AT OCTOBER 31, 1999:
Common stock, $0.01 par value, 10,000,000,000
shares authorized to the Fund with
1,000,000,000 shares allocated to the
Delaware Growth Stock Fund A Class,
1,000,000,000 shares allocated to the
Delaware Growth Stock Fund B Class,
1,000,000,000 shares allocated to the
Delaware Growth Stock Fund C Class, and
1,000,000,000 shares allocated to the
Delaware Growth Stock Fund
Institutional Class...................................... $37,245,521
Undistributed net investment income ........................ 196,862
Accumulated net realized gain on investments ............... 3,814,734
Net unrealized appreciation of investments ................. 11,766,844
-----------
Total Net Assets ........................................... $53,023,961
===========
- --------------
Top ten holdings, representing 40.77% of net assets, are printed in bold.
ADR - American Depository Receipt

NET ASSET VALUE AND OFFERING PRICE PER SHARE
DELAWARE GROWTH STOCK FUND A CLASS
Net asset value A Class (A) ................................ $30.07
Sales Charge (5.75% of offering price or 6.09%, of
the amount invested per share) (B) ...................... 1.83
------
Offering price ............................................. $31.90
======
- --------------
(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 $50,000 or
more.

See accompanying notes

<PAGE>
14 for growth of capital

Voyageur Mutual Funds III, Inc.
Statements of Operations
Six Months Ended October 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Delaware Select Delaware Growth
Growth Fund Stock Fund
--------------- ---------------
<S> <C> <C>
INVESTMENT INCOME:
Interest ........................................................................... $ 1,196,127 $ 66,530
Dividends .......................................................................... 385,328 512,441
----------- ---------
1,581,455 578,971
----------- ---------
EXPENSES:
Management fees .................................................................... 1,539,089 174,438
Distribution expense ............................................................... 1,330,702 90,270
Dividend disbursing and transfer agent fees and expenses ........................... 488,000 85,940
Accounting and administration ...................................................... 55,000 9,100
Reports and statements to shareholders ............................................. 26,200 5,000
Registration fees .................................................................. 15,700 14,000
Professional fees .................................................................. 3,500 2,000
Custodian fees ..................................................................... 500 600
Directors' fees .................................................................... 500 900
Other .............................................................................. 8,277 2,082
----------- ---------
3,467,468 384,330
Less expenses paid indirectly ...................................................... (4,957) (1,235)
----------- ---------
Total operating expenses ........................................................... 3,462,511 383,095
Interest expense ................................................................... 1,379 --
----------- ---------
Total expenses ..................................................................... 3,463,890 383,095
----------- ---------

NET INVESTMENT INCOME (LOSS) ....................................................... (1,882,435) 195,876

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments ................................................... 22,200,772 3,817,493
Net change in unrealized appreciation/depreciation of investments .................. 59,605,741 (4,486,001)
----------- ---------

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ............................ 81,806,513 (668,508)
----------- ---------

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .................... $79,924,078 $(472,632)
=========== =========
</TABLE>

See accompanying notes

<PAGE>

for growth of capital 15

Voyageur Mutual Funds III, Inc.
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Delaware Select Growth Fund Delaware Growth Stock Fund
------------------------------- ---------------------------------
Six months Year Six months Year
Ended Ended Ended Ended
10/31/99 4/30/99 10/31/99 4/30/99
(Unaudited) (Unaudited)

<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss) ................. $ (1,882,435) $ (1,705,187) $ 195,876 $ 87,104
Net realized gain on investments ............. 22,200,772 12,710,334 3,817,493 5,370,799
Net change in unrealized appreciation/
depreciation of investments ............... 59,605,741 37,910,776 (4,486,001) (1,052,537)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations ................. 79,924,078 48,915,923 (472,632) 4,405,366
------------- ------------- ------------- -------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
A Class ................................... -- -- (78,227) --
B Class ................................... -- -- -- --
C Class ................................... -- -- -- --
Institutional Class ....................... -- -- (7,891) --

Net realized gain on investments:
A Class ................................... (4,827,987) (759,414) (3,070,053) (2,792,065)
B Class ................................... (4,108,837) (495,438) (323,631) (171,753)
C Class ................................... (1,338,981) (167,011) (120,839) (85,614)
Institutional Class ....................... (605,381) (52,267) (130,754) (52,950)
------------- ------------- ------------- -------------
(10,881,186) (1,474,130) (3,731,395) (3,102,382)
------------- ------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class ................................... 130,710,521 107,585,600 3,346,524 10,358,617
B Class ................................... 144,620,630 76,339,435 1,688,977 2,905,442
C Class ................................... 56,311,004 24,808,778 336,547 701,988
Institutional Class ....................... 12,431,332 20,041,360 489,178 1,220,007
Net asset value of shares issued upon
reinvestment of distributions from net
investment income and net realized gain
on investments:
A Class ................................... 4,626,011 729,836 2,994,884 2,653,394
B Class ................................... 3,924,491 469,818 303,286 154,045
C Class ................................... 1,278,113 160,488 119,619 77,672
Institutional Class ....................... 605,381 52,267 138,645 52,950
------------- ------------- ------------- -------------
354,507,483 230,187,582 9,417,660 18,124,115
------------- ------------- ------------- -------------
Cost of shares repurchased:
A Class ................................... (30,320,353) (28,350,998) (4,328,739) (9,955,086)
B Class ................................... (8,855,114) (6,688,642) (493,480) (637,390)
C Class ................................... (3,716,328) (3,619,801) (234,480) (293,684)
Institutional Class ....................... (8,415,912) (6,581,557) (422,619) (260,902)
------------- ------------- ------------- -------------
(51,307,707) (45,240,998) (5,479,318) (11,147,062)
------------- ------------- ------------- -------------
Increase (decrease) in net assets derived from
capital share transactions ................ 303,199,776 184,946,584 3,938,342 6,977,053
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS ........ 372,242,668 232,388,377 (265,685) 8,280,037

NET ASSETS:
Beginning of period .......................... 289,136,022 56,747,645 53,289,646 45,009,609
------------- ------------- ------------- -------------
End of period ................................ $ 661,378,690 $ 289,136,022 $ 53,023,961 $ 53,289,646
============= ============= ============= =============
</TABLE>

See accompanying notes

<PAGE>

16 for growth of capital

Voyageur Mutual Funds III, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
was as follows:
<TABLE>
<CAPTION>

Delaware Select Growth Fund A Class
-------------------------------------------------------------------------
Six Months Year Year Year Year Period
Ended Ended Ended Ended Ended From
10/31/99(4,6) 4/30/99 4/30/98(2) 4/30/97 4/30/96 5/16/94(1)
(Unaudited) to 4/30/95

<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $ 25.910 $ 20.570 $ 11.770 $ 13.080 $ 10.400 $ 10.000
Income (loss) from investment operations:
Net investment loss(5) ............................. (0.004) (0.203) (0.052) (0.180) (0.100) (0.090)
Net realized and unrealized gain on investments .... 4.593 5.910 11.127 0.960 3.270 0.490
---------- ---------- ---------- ---------- -------- ----------
Total from investment operations ................... 4.589 5.707 11.075 0.780 3.170 0.400
---------- ---------- ---------- ---------- -------- ----------
Less distributions:
Distributions from net realized gain on investments (0.829) (0.367) (2.275) (2.090) (0.400) --
Return of capital .................................. -- -- -- -- (0.090) --
---------- ---------- ---------- ---------- -------- ----------
Total distributions ................................ (0.829) (0.367) (2.275) (2.090) (0.490) --
---------- ---------- ---------- ---------- -------- ----------

Net asset value, end of period ........................ $ 29.670 $ 25.910 $ 20.570 $ 11.770 $ 13.080 $ 10.400
========== ========== ========== ========== ======== ==========

Total return(3) ....................................... 18.12% 28.43% 98.60% 4.34% 31.02% 4.00%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ............ $ 270,316 $ 135,865 $ 31,926 $ 4,944 $ 4,334 $ 2,189
Ratio of expenses to average net assets ............ 1.21% 1.67% 1.75% 1.84% 2.01% 1.74%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly 1.21% 2.06% 2.29% 2.65% 2.74% 2.97%
Ratio of net investment loss to average net assets . (0.50%) (0.95%) (0.69%) (1.38%) (1.00%) (1.21%)
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ...................................... (0.50%) (1.34%) (1.23%) (2.19%) (1.73%) (2.44%)
Portfolio turnover ................................. 202% 313% 356% 180% 166% 88%
</TABLE>
- ------------

(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) 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 the sales charge.
(4) Effective September 29, 1999, the Fund was renamed the Select Growth Fund
(formerly the Aggressive Growth Fund).
(5) Per share information for the period ended October 31, 1999 was based on the
average shares outstanding method.
(6) Ratios have been annualized and total return has not been annualized.

See accompanying notes

<PAGE>

for growth of capital 17

Delaware Select Growth Fund B Class
---------------------------------------------------------------
Six Months Year Year Year Period
Ended Ended Ended Ended From
10/31/99(4,6) 4/30/99 4/30/98(2) 4/30/97 4/16/96(1)
(Unaudited) to 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $ 24.990 $ 20.000 $ 11.570 $ 13.060 $ 11.910

Income (loss) from investment operations:
Net investment loss(5) ............................. (0.004) (0.350) (0.061) (0.210) (0.010)
Net realized and unrealized gain on investments .... 4.323 5.707 10.766 0.810 1.160
---------- ---------- --------- -------- --------
Total from investment operations ................... 4.319 5.357 10.705 0.600 1.150
---------- ---------- --------- -------- --------
Less distributions:
Distributions from net realized gain on investments (0.829) (0.367) (2.275) (2.090) --
Return of capital .................................. -- -- -- -- --
---------- ---------- --------- -------- --------
Total distributions ................................ (0.829) (0.367) (2.275) (2.090) --
---------- ---------- --------- -------- --------

Net asset value, end of period ........................ $ 28.480 $ 24.990 $ 20.000 $ 11.570 $ 13.060
========== ========== ========= ======== ========

Total return(3) ....................................... 17.65% 27.41% 97.12% 2.84% 9.66%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ............ $ 270,111 $ 103,299 $ 16,539 $ 95 $ 0
Ratio of expenses to average net assets ............ 1.96% 2.42% 2.50% 2.57% 1.86%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly... 1.96% 2.81% 3.04% 3.37% 1.86%
Ratio of net investment loss to average net assets.. (1.25%) (1.70%) (1.44%) (1.97%) (1.39%)
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ....................................... (1.25%) (2.09%) (1.98%) (2.77%) (1.39%)
Portfolio turnover ................................. 202% 313% 356% 180% 166%

</TABLE>
- ------------
(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) 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 the sales charge.
(4) Effective September 29, 1999, the Fund was renamed the Select Growth Fund
(formerly the Aggressive Growth Fund).
(5) Per share information for the period ended October 31, 1999 was based on the
average shares outstanding method.
(6) Ratios have been annualized and total return has not been annualized.

See accompanying notes

<PAGE>

18 for growth of capital

Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
was as follows:
<TABLE>
<CAPTION>

Delaware Select Growth Fund C Class
-------------------------------------------------------------------------
Six Months Year Year Year Year Period
Ended Ended Ended Ended Ended From
10/31/99(4,6) 4/30/99 4/30/99(2) 4/30/97 4/30/96 5/20/94(1)
(Unaudited) to 4/30/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $24.740 $19.800 $11.470 $12.880 $10.330 $10.000

Income (loss) from investment operations:
Net investment loss(5) ............................ (0.004) (0.345) (0.071) (0.230) (0.210) (0.160)
Net realized and unrealized gain on investments ... 4.273 5.652 10.676 0.910 3.250 0.490
------- ------- ------- ------- ------- -------
Total from investment operations .................. 4.269 5.307 10.605 0.680 3.040 0.330
------- ------- ------- ------- ------- -------
Less distributions:
Distributions from net realized gain on investments (0.829) (0.367) (2.275) (2.090) (0.400) -
Return of capital ................................. - - - - (0.090) -
------- ------- ------- ------- ------- -------
Total distributions ............................... (0.829) (0.367) (2.275) (2.090) (0.490) -
------- ------- ------- ------- ------- -------

Net asset value, end of period ....................... $28.180 $24.740 $19.800 $11.470 $12.880 $10.330
======= ======= ======= ======= ======= =======
Total return(3) ...................................... 17.68% 27.45% 96.99% 3.58% 29.96% 3.30%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ........... $95,503 $32,235 $5,892 $222 $150 $128
Ratio of expenses to average net assets ........... 1.96% 2.42% 2.50% 2.62% 2.77% 2.40%
Ratio of expenses to average net assets prior
to expense limitation and expenses paid
indirectly ...................................... 1.96% 2.81% 3.04% 3.43% 3.50% 3.50%
Ratio of net investment loss to average net assets (1.25%) (1.70%) (1.44%) (2.02%) (1.73%) (1.80%)
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ...................................... (1.25%) (2.09%) (1.98%) (2.83%) (2.46%) (2.90%)
Portfolio turnover ................................ 202% 313% 356% 180% 166% 88%
</TABLE>
- ----------------
(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) 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 the sales charge.
(4) Effective September 29, 1999, the Fund was renamed the Select Growth Fund
(formerly the Aggressive Growth Fund).
(5) Per share information for the period ended October 31, 1999 was based on the
average shares outstanding method.
(6) Ratios have been annualized and total return has not been annualized.

See accompanying notes

<PAGE>

for growth of capital 19

Delaware Select Growth Fund Institutional Class
-----------------------------------------------

Six Months Year Period
Ended Ended From
10/31/99(4,6) 4/30/99 8/29/97(1,2)
(Unaudited) to 4/30/98
<S> <C> <C> <C>
Net asset value, beginning of period ................. $ 26.060 $ 20.640 $ 17.150

Income (loss) from investment operations:
Net investment loss(5) ............................ (0.001) (0.155) (0.019)
Net realized and unrealized gain on investments ... 4.660 5.942 5.539
--------- ---------- ----------
Total from investment operations .................. 4.659 5.787 5.520
--------- ---------- ----------

Less distributions:
Distributions from net realized gain on investments (0.829) (0.367) (2.030)
Return of capital ................................. -- -- --
--------- ---------- ----------
Total distributions ............................... (0.829) (0.367) (2.030)
--------- ---------- ----------

Net asset value, end of period ....................... $ 29.890 $ 26.060 $ 20.640
========= ========== ==========

Total return(3) ...................................... 18.25% 28.73% 34.68%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ........... $ 25,449 $ 17,737 $ 2,391
Ratio of expenses to average net assets ........... 0.96% 1.42% 1.50%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly.. 0.96% 1.81% 2.04%
Ratio of net investment loss to average net assets. (0.25%) (0.70%) (0.44%)
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ...................................... (0.25%) (1.09%) (0.98%)
Portfolio turnover ................................ 202% 313% 356%
</TABLE>
- -----------
(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) 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 the sales charge.
(4) Effective September 29, 1999, the Fund was renamed the Select Growth Fund
(formerly the Aggressive Growth Fund).
(5) Per share information for the period ended October 31, 1999 was based on the
average shares outstanding method.
(6) Ratios have been annualized and total return has not been annualized.

See accompanying notes
<PAGE>

20 for growth of capital

Delaware Growth Stock Fund A Class
-----------------------------------------------------------------------
Six Months Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
10/31/99(3) 4/30/99 4/30/98(1) 4/30/97 4/30/96 4/30/95
(Unaudited)

<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................... $32.550 $31.830 $25.340 $23.660 $19.910 $17.510

Income (loss) from investment operations:
Net investment income (loss) ........................ (0.313) 0.075 0.029 0.160 0.080 0.150
Net realized and unrealized gain on investments ..... 0.127 2.790 8.591 3.360 4.820 2.770
------- ------- ------- ------- ------- -------
Total from investment operations .................... (0.186) 2.865 8.620 3.520 4.900 2.920
------- ------- ------- ------- ------- -------

Less dividends and distributions:
Dividends from net investment income ................ (0.057) - (0.113) (0.080) (0.110) (0.130)
Distributions from net realized gain on investments . (2.237) (2.145) (2.017) (1.760) (1.040) (0.390)
------- ------- ------- ------- ------- -------
Total dividends and distributions ................... (2.294) (2.145) (2.130) (1.840) (1.150) (0.520)
------- ------- ------- ------- ------- -------

Net asset value, end of period ......................... $30.070 $32.550 $31.830 $25.340 $23.660 $19.910
======= ======= ======= ======= ======= =======

Total return(2) ........................................ (0.86%) 9.56% 35.27% 15.27% 25.00% 17.04%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ............. $43,864 $45,342 $41,196 $34,255 $28,956 $23,651
Ratio of expenses to average net assets ............. 1.33% 1.68% 1.75% 1.72% 1.78% 1.90%
Ratio of expenses to average net assets prior
to expense limitation and expenses paid indirectly 1.33% 1.71% 1.82% 1.72% 1.87% 1.99%
Ratio of net investment income (loss) to average
net assets ....................................... 0.81% 0.25% 0.07% 0.68% 0.36% 0.75%
Ratio of net investment income (loss) to average
net assets prior to expense limitation and
expenses paid indirectly ......................... 0.81% 0.22% 0.00% 0.68% 0.27% 0.66%
Portfolio turnover .................................. 36% 36% 9% 29% 37% 22%
</TABLE>
- -----------------
(1) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(2) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of the sales charge.
(3) Ratios have been annualized and total return has not been annualized.

See accompanying notes

<PAGE>

for growth of capital 21

Delaware Growth Stock Fund B Class
------------------------------------------------------------
Six Months Year Year Year Period
Ended Ended Ended Ended From
10/31/99(4) 4/30/99 4/30/98(2) 4/30/97 9/8/9(1)
(Unaudited) to 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $31.610 $31.200 $24.930 $23.390 $21.640

Income (loss) from investment operations:
Net investment income (loss) ...................... (0.335) (0.149) (0.165) - 0.060
Net realized and unrealized gain on investments ... 0.042 2.704 8.425 3.300 2.960
------- ------- ------- ------- -------
Total from investment operations .................. (0.293) 2.555 8.260 3.300 3.020
------- ------- ------- ------- -------

Less dividends and distributions:
Dividends from net investment income .............. - - - - (0.230)
Distributions from net realized gain on investments (2.237) (2.145) (1.990) (1.760) (1.040)
------- ------- ------- ------- -------
Total dividends and distributions ................. (2.237) (2.145) (1.990) (1.760) (1.270)
------- ------- ------- ------- -------

Net asset value, end of period ....................... $29.080 $31.610 $31.200 $24.930 $23.390
======= ======= ======= ======= =======

Total return(3) ...................................... (1.23%) 8.72% 34.29% 14.50% 14.37%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ........... $5,561 $4,457 $1,903 $1,182 $454
Ratio of expenses to average net assets ........... 2.08% 2.43% 2.50% 2.47% 2.41%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly.. 2.08% 2.46% 2.57% 2.47% 2.50%
Ratio of net investment income (loss) to average net
assets .......................................... 0.06% (0.50%) (0.67%) (0.01%) (0.62%)
Ratio of net investment income (loss) to average net
assets prior to expense limitation and expenses
paid indirectly ................................. 0.06% (0.53%) (0.74%) (0.01%) (0.71%)
Portfolio turnover ................................ 36% 36% 9% 29% 37%
</TABLE>
- ----------
(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) 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 the sales charge.
(4) Ratios have been annualized and total return has not been annualized.

See accompanying notes

<PAGE>

22 for growth of capital

Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period was
as follows:
<TABLE>
<CAPTION>
Delaware Growth Stock Fund C Class
-------------------------------------------------------------
Six Months Year Year Year Period
Ended Ended Ended Ended From
10/31/99(4) 4/30/99 4/30/98(2) 4/30/97 10/21/95(1)
(Unaudited) to 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $31.600 $31.190 $24.930 $23.430 $22.610

Income (loss) from investment operations:
Net investment income (loss) ...................... (0.315) 0.149 (0.192) 0.070 0.110
Net realized and unrealized gain on investments ... 0.032 2.704 8.442 3.220 2.000
------- ------- ------- ------- -------
Total from investment operations .................. (0.283) 2.555 8.250 3.290 2.110
------- ------- ------- ------- -------

Less dividends and distributions:
Dividends from net investment income .............. - - - (0.030) (0.250)
Distributions from net realized gain on investments (2.237) (2.145) (1.990) (1.760) (1.040)
------- ------- ------- ------- -------
Total dividends and distributions ................. (2.237) (2.145) (1.990) (1.790) (1.290)
------- ------- ------- ------- -------

Net asset value, end of period ....................... $29.080 $31.600 $31.190 $24.930 $23.430
======= ======= ======= ======= =======

Total return(3) ...................................... (1.20%) 8.72% 34.25% 14.42% 9.72%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ........... $ 1,705 $1,631 $1,112 $712 $104
Ratio of expenses to average net assets ........... 2.08% 2.43% 2.50% 2.47% 2.35%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly.. 2.08% 2.46% 2.57% 2.47% 2.43%
Ratio of net investment income (loss) to average net
assets .......................................... 0.06% (0.50%) (0.67%) 0.14% (0.65%)
Ratio of net investment income (loss) to average net
assets prior to expense limitation and expenses
paid indirectly ................................. 0.06% (0.53%) (0.74%) 0.14% (0.73%)
Portfolio turnover ................................ 36% 36% 9% 29% 37%
</TABLE>
- ---------------
(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) 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 the sales charge.
(4) Ratios have been annualized and total return has not been annualized.

See accompanying notes
<PAGE>

for growth of capital 23

Delaware Growth Stock Fund Institutional Class
----------------------------------------------

Six Months Year Period
Ended Ended From
10/31/99(4) 4/30/99 8/29/97(1)
(Unaudited) to 4/30/98
------- ------- ----------

<S> <C> <C> <C>
Net asset value, beginning of period ..................... $32.840 $32.030 $27.520

Income (loss) from investment operations:
Net investment income (loss) .......................... (0.308) 0.153 0.047
Net realized and unrealized gain on investments ....... 0.170 2.802 5.803
------- ------- -------
Total from investment operations ...................... (0.138) 2.955 5.850
------- ------- -------

Less dividends and distributions:
Dividends from net investment income .................. (0.135) - (0.040)
Distributions from net realized gain on investments ... (2.237) (2.145) (1.300)
------- ------- -------
Total dividends and distributions ..................... (2.372) (2.145) (1.340)
------- ------- -------

Net asset value, end of period ........................... $30.330 $32.840 $32.030
======= ======= =======
Total return(3) .......................................... (0.70%) 9.79% 21.41%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $1,894 $1,860 $799
Ratio of expenses to average net assets ............... 1.08% 1.43% 1.50%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ... 1.08% 1.46% 1.57%
Ratio of net investment income to average net assets .. 1.06% 0.50% 0.33%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid
indirectly ........................................ 1.06% 0.47% 0.26%
Portfolio turnover .................................... 36% 36% 9%

</TABLE>
- --------------
(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) 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 the sales charge.
(4) Ratios have been annualized and total return has not been annualized.

See accompanying notes
<PAGE>

24 for growth of capital

Voyageur Mutual Funds III, Inc.
Notes to Financial Statements
October 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Voyageur Mutual Funds III, Inc. is registered as a Delaware Business Trust and
offers three series: Delaware Select Growth Fund (formerly Aggressive Growth
Fund), Delaware Growth Stock Fund and Tax-Efficient Equity Fund. These financial
statements and the related notes pertain to Delaware Select Growth Fund and
Growth Stock Fund (each referred to as a "Fund" or collectively as the "Funds").
The Funds are registered as diversified open-end investment companies under the
Investment Company Act of 1940, as amended. Each Fund offers four classes of
shares. The A Class carries a front end sales charge of 5.75%. The B Class
carries a back end sales charge. The C Class carries a level load deferred sales
charge and the Institutional Class has no sales charge.

The Delaware Select 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 Delaware
Growth Stock Fund's objective is to seek long-term capital appreciation through
investment in equity securities diversified through companies and industries.

1. 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.

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
each Fund on the basis of daily net assets of each class. Distribution expenses
relating to a specific class are charged directly to that class.

Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. 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, if any, semi-annually.

Certain Fund expenses are paid through "soft dollar" arrangements with brokers.
These transactions are done subject to best price and execution. The amount of
these expenses was $4,957 for Select Growth Fund and $1,235 for Growth Stock
Fund for the period ended October 31, 1999. The "soft dollar" reimbursement is
combined as expenses paid indirectly in the Statement of Operations with the
corresponding expense offset as "expenses paid indirectly."

<PAGE>

2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Funds
pay Delaware Management Company (DMC), the Investment Manager of the Funds, an
annual fee which is calculated daily on the net assets, less fees paid to
unaffiliated directors as follows:

Delaware Select Growth Fund Delaware Growth Stock Fund
--------------------------- --------------------------
On the first $500 million.... 0.75% On the first $500 million.... 0.65%
On the next $500 million..... 0.70% On the next $500 million..... 0.60%
On the next $1,500 million... 0.65% On the next $1,500 million... 0.55%
Over $2,500 million.......... 0.60% Over $2,500 million.......... 0.50%

DMC has entered into a sub-advisory agreement with Voyageur Asset Management,
Inc. with respect to the management of the Delaware Growth Stock Fund. The
sub-advisor receives a sub-advisory fee from DMC for their services. The
Delaware 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 the
Delaware Select Growth Fund to the extent that annual operating expenses
exclusive of taxes, interest, brokerage commissions, extraordinary expenses and
distribution expenses, exceed 1.50% of each Funds average daily net assets
through June 30, 2000.

The Funds have engaged DSC, an affiliate of DMC, to provide dividend disbursing,
transfer agent and accounting services. Each Fund pays DSC a monthly fee based
on the number of shareholder accounts, shareholder transactions and average net
assets, subject to certain minimums.

On October 31, 1999, the Funds had payables to affiliates as follows:

Delaware Delaware
Select Growth
Growth Stock
Fund Fund
-------- --------
Investment Management fee payable to DMC ........... $282,906 $ 43,313
Dividend disbursing, transfer agent fees, accounting
fees and other expenses payable to DSC .......... $178,165 14,326
Other expenses payable to DMC and affiliates ....... 104,726 10,734

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. No distribution expenses are paid by the Institutional Class.

For the period ended October 31, 1999, DDLP earned commissions on sales of the A
Class shares for each Fund as follows:

Delaware Delaware
Select Growth
Growth Stock
Fund Fund
-------- --------
$283,708 $6,768

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.

3. Investments
During the period ended October 31, 1999, the Funds made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments for each Fund as follows:

Delaware Delaware
Select Growth
Growth Stock
Fund Fund
-------- --------
Purchases ...................................... $706,958,855 $11,752,694
Sales .......................................... 400,676,913 9,034,686

<PAGE>

for growth of capital 25

Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
At October 31, 1999, the Funds aggregate cost of securities and unrealized
appreciation (depreciation) for federal income tax purposes for each Fund were
as follows:

Delaware Delaware
Select Growth
Growth Stock
Fund Fund
-------- --------

Cost of investments .......................... $587,540,103 $42,165,346
Aggregate unrealized appreciation ............ 120,086,498 13,201,354
Aggregate unrealized depreciation ............ (16,687,370) (1,434,510)
Net unrealized appreciation .................. 103,399,128 11,766,844

4. Capital Stock
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>

Delaware Select Growth Fund Delaware Growth Stock Fund
--------------------------- ----------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
10/31/99 4/30/99 10/31/99 4/30/99
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Shares sold:
A Class ......................................... 4,813,831 5,016,591 107,600 334,779
B Class ......................................... 5,539,017 3,616,171 56,521 96,281
C Class ......................................... 2,179,370 1,179,159 10,969 23,019
Institutional Class ............................. 457,853 875,879 15,525 38,269

Shares issued upon reinvestment of distributions
from net investment income and net realized
gain on investments:
A Class ......................................... 176,027 38,251 95,592 86,732
B Class ......................................... 155,180 25,354 9,980 5,158
C Class ......................................... 51,083 8,751 3,938 2,601
Institutional Class ............................. 22,896 2,729 4,392 1,718
---------- ---------- --------- ---------
13,395,257 10,762,885 304,517 588,557
---------- ---------- --------- ---------
Shares repurchased:
A Class ......................................... (1,123,457) (1,364,098) (137,731) (322,631)
B Class ......................................... (342,224) (334,921) (16,278) (21,442)
C Class ......................................... (144,199) (182,318) (7,891) (9,654)
Institutional Class ............................. (309,790) (313,880) (14,094) (8,295)
---------- ---------- --------- ---------
(1,919,670) (2,195,217) (175,994) (362,022)
---------- ---------- --------- ---------

Net increase ....................................... 11,475,587 8,567,668 128,523 226,535
========== ========= ========= =========

</TABLE>

5. Lines of Credit

The committed lines of credit are $22,300,000 and $2,500,000 for the Delaware
Select Growth Fund and the Delaware Growth Stock Fund, respectively. No amounts
were outstanding at October 31, 1999, or at any time during the fiscal year.

<PAGE>

Delaware investments family of funds

For Growth of Capital
Delaware Select Aggressive Growth Fund
Delaware Trend Fund
Delaware DelCap Fund
Delaware Small Cap Value Fund
Delaware U.S. Growth Fund
Delaware Growth Stock Fund
Delaware Tax-Efficient Equity Fund
Delaware Social Awareness Fund

For Total Return
Delaware Blue Chip Fund
Delaware Devon Fund
Delaware Decatur Equity Income Fund
Delaware Growth and Income Fund
Delaware REIT Fund
Delaware Balanced Fund

For International Diversification
Delaware Emerging Markets Fund
Delaware New Pacific Fund
Delaware Overseas Equity Fund
Delaware International Equity Fund
Delaware Global Equity Fund
Delaware Global Bond Fund

For Current Income
Delaware Delchester Fund
Delaware High-Yield Opportunities Fund
Delaware Extended Duration Bond Fund
Delaware Strategic Income Fund
Delaware Corporate Bond Fund
Delaware American Government Bond Fund
Delaware U.S. Government Securities Fund
Delaware Limited-Term Government Fund

<PAGE>

For Tax-Exempt Income
Delaware National High Yield
Municipal Bond Fund Delaware Tax-Free USA Fund
Delaware Tax-Free Insured Fund
Delaware Tax-Free USA Intermediate Fund
Delaware State Tax-Free Funds*

Money Market Funds
Delaware Cash Reserve
Delaware Tax-Free Money Fund

Asset Allocation Funds
Delaware Foundation Funds
Growth Portfolio
Balanced Portfolio
Income Portfolio

* Available for the following states: Arizona, California, Colorado, Florida,
Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, New Jersey, New
Mexico, New York, Ohio, Oregon, Pennsylvania, Wisconsin. Insured and
intermediate bond funds are available in selected states.

funds

Complete information on any fund offered by Delaware Investments can be found in
each fund's current prospectus. Prospectuses for all funds offered by Delaware
Investments are available from your financial adviser. Please read the
prospectus carefully before you invest or send money.

(photo of computer keyboard)

<PAGE>

Board of Directors

Wayne A. Stork
Chairman
Delaware Investments Family of Funds
Philadelphia, PA

Walter P. Babich
Board Chairman, Citadel Constructors, Inc.
King of Prussia, PA

David K. Downes
President and Chief Executive Officer
Delaware Investments Family of Funds
Philadelphia, PA

John H. Durham
Private Investor
Horsham, PA

Anthony D. Knerr
Consultant, Anthony Knerr & Associates
New York, NY

Ann R. Leven
Former Treasurer, National Gallery of Art
Washington, DC

Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN

Charles E. Peck
Retired
Fredericksburg, VA

Jan L. Yeomans
Vice President and Treasurer
3M Corporation
St. Paul, MN

<PAGE>

Affiliated Officers

Richard J. Flannery
Executive Vice President and General Counsel
Delaware Investments Family of Funds
Philadelphia, PA

Bruce D. Barton
President and Chief Executive Officer
Delaware Distributors, L.P.
Philadelphia, PA

Eric E. Miller
Senior Vice President/Secretary
and Deputy General Counsel
Delaware Investments Family of Funds
Philadelphia, PA

(photo of globes)

<PAGE>

This Semi-Annual Report is for the information of Delaware Select Growth Fund
and Delaware Growth Stock Fund shareholders, but it may be used with prospective
investors when preceded or accompanied by a current Prospectus for Delaware
Select Growth Fund and Delaware Growth Stock 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 each 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
each Fund will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost.

Investment Manager
Delaware Management Company
Philadelphia, Pennsylvania

International Affiliate
Delaware International Advisers Ltd.
London, England

National Distributor
Delaware Distributors, L.P.
Philadelphia, Pennsylvania

Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
Philadelphia, Pennsylvania

1818 Market Street
Philadelphia, PA 19103-3682

(photo of globes)

<PAGE>

For Shareholders
1.800.523.1918

For Securities Dealers
1.800.362.7500

For Financial Institutions
Representatives Only
1.800.659.2265

www.delawareinvestments.com

Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan; however, shares of the 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.

DELAWARE(SM)
INVESTMENTS
- ---------------------
Philadelphia o London

Printed in the USA
on recycled paper

SA-316 [10/99] PP12/99
(2443) (J5348)