<PAGE>
DELAWARE(SM)
INVESTMENTS
============ Delaware Growth Stock Fund
Growth of Capital
2000 ANNUAL REPORT
{Growth of Capital Artwork}
<PAGE>
TABLE OF CONTENTS
-----------------
Letter to Shareholders 1
Portfolio Management
Review 3
Performance Summary 6
Financial Statements
Statement of Net Assets 7
Statement of Operations 8
Statements of Changes in
Net Assets 9
Financial Highlights 10
Notes to Financial
Statements 14
Report of Independent
Auditors 16
--------------------------------------------------------------------------------
A TRADITION OF SOUND INVESTING SINCE 1929
-----------------------------------------
A Commitment To Our Investors
Experienced
o Our seasoned investment professionals average more than 15 years'
experience.
o We opened our first mutual fund in 1938. For over 70 years, we have managed
money in a variety of investment styles that have weathered a full range of
economic and market environments.
Disciplined
o We follow strict investment policies and clear buy/sell guidelines.
o We strive to balance risk and reward in order to provide sound investment
alternatives within any given asset class.
Consistent
o We believe consistent processes are the best way to seek consistent
investment performance.
o Our commitment to style consistency has earned us the confidence of
discriminating institutional and individual investors to manage over $46
billion in assets as of March 31, 2000.
Comprehensive
o We offer more than 70 mutual funds in these asset classes.
o Large-cap equity o High-yield bonds
o Mid-cap equity o Investment grade bonds
o Small-cap equity o Municipal bonds (23 single-state funds)
o International equity o International fixed-income
o Balanced
o Our funds are available through financial advisers who can offer you
individualized attention and valuable investment advice.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the
principal amount invested.
(C)Delaware Distributors, L.P.
<PAGE>
Dear Shareholder
June 12, 2000
Recap of Events -- At various times during the past 12 months, the U.S. stock
market seemed to offer something for everyone. In the opening days of Delaware
Growth Stock Fund's fiscal year, the Dow Jones Industrial Average passed the
11,000 milestone for the first time. The Standard & Poor's 500 Index was also
near its all time high. Although these well known stock market indexes were
rising substantially, most of the gains were limited to a handful of relatively
expensive stocks from very large, fast-growing companies (Source: Bloomberg).
In April of 1999, however, investors began to widen their focus as many foreign
economies began to recover after several years of economic recession. As the
global economy became stronger, investors anticipated faster earnings growth
from smaller, overlooked companies (Source: Bloomberg). The long-standing narrow
market leadership of large, growth stocks broadened to include less expensive
companies of all sizes.
As summer approached, however, rising labor costs and increased foreign demand
for U.S. products contributed to inflation concerns. The Federal Reserve Board
attempted to cool down the U.S. economy by raising interest rates a total of
five times during the Fund's fiscal year and once more this past May. Currently,
the federal Funds rate -- the rate banks charge each other for overnight loans
-- stands at 6.5%, its highest level since January of 1991.
Although higher interest rates seemed to have little impact on U.S. economic
growth, they appeared to send investors back to the most reliable source of
earnings growth -- large, rapidly expanding companies. As interest rates
continued to rise throughout the fiscal year, the stock market became
increasingly volatile, as investors alternated between the higher priced stocks
of large growing companies and the expensive small and mid-size company stocks.
One constant throughout the past 12 months, however, was the remarkable
performance of technology stocks from companies of all sizes. Tech stocks
benefited as investors anticipated explosive growth, particularly from
Internet-related companies. As the year progressed, soaring demand for
technology stocks and higher prices contributed significantly to the overall
market's gains.
Total Return
For Period Ended April 30, 2000 One Year
-------------------------------------------------------------------------
Delaware Growth Stock Fund Class A -4.84%
-------------------------------------------------------------------------
Lipper Multi-Cap Value Funds Average (523 funds) -0.35%
Standard & Poor's 500 Index +10.12%
-------------------------------------------------------------------------
All performance shown above is at net asset value without the effect of sales
charges and assumes reinvestment of dividends and capital gains. Performance for
all Fund classes can be found on page 6. The Lipper Multi-Cap Value Funds
Average represents the average returns of multi-cap value mutual funds tracked
by Lipper Analytical (Source: Lipper Analytical Services, Inc.). The Standard &
Poor's 500 Index is an unmanaged composite of mostly large-capitalization U.S.
companies. You cannot invest directly in an index. Past performance does not
guarantee future results.
1
<PAGE>
{Growth of Capital Artwork}
--------------------------------------------------------------------------------
During the first calendar quarter of 2000, higher energy prices and a tight
labor market pushed consumer and producer prices slightly higher. Inflation
concerns began to impact the performance of all market sectors, including
technology stocks. After passing the 5000 milestone in early March, the Nasdaq
Composite Index fell sharply several times during the month, but each time
recovered. In April, however, technology stocks were clearly trending downward
as the Nasdaq fell 25% from its record high.
Delaware Growth Stock Fund's returns were somewhat disappointing over the past
12 months as the stock market generally rewarded more aggressive investors. The
Fund focuses primarily on stocks rated A+ or A by Standard and Poor's.
Unfortunately, most of the market's best performing technology stocks did not
meet this rating criterion.
Our smaller allocation to technology stocks hurt Delaware Growth Stock Fund's
performance for the 12 months ended April 30, 2000. However, it is important to
remember that technology stock returns during the past year were highly unusual
and cannot be sustained. In fact, during March and April of 2000, the stocks of
higher rated, dividend-paying companies modestly outperformed many of the more
speculative technology-related companies (Source: Bloomberg).
Market Outlook -- We anticipate volatile stock market conditions as the Federal
Reserve uses higher interest rates to keep the U.S. economy from growing too
fast. Investors seem uncertain whether to back the fortunes of high-flying "new
economy" stocks in the Nasdaq Composite or the more familiar "old economy"
stocks in the Dow Jones Industrial Average.
Although no one is certain which market sector will prevail, we believe that
over the long term, high quality, dividend-paying companies, like those in
Delaware Growth Stock Fund, offer investors attractive opportunities for capital
appreciation and income. Nevertheless, we plan to maintain a slightly higher
allocation to technology companies in order to take advantage of opportunities
in that investment sector.
We thank you for your continued investment with Delaware Investments.
Sincerely,
/s/ Wayne A. Stork /s/ David K. Downes
------------------------------------ --------------------------------------
Wayne A. Stork David K. Downes
Chairman, President and Chief Executive Officer,
Delaware Investments Family of Funds Delaware Investments Family of Funds
2
<PAGE>
James King
Voyageur Asset
Management, LLC
Senior Portfolio Manager
June 12, 2000
--------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT REVIEW
---------------------------
The Fund's Results
Delaware Growth Stock Fund looks to invest in established, high-quality
companies rated A+ or A by Standard and Poor's. We also look for consistent
long-term earnings growth, dividend increases, and low stock prices relative to
earnings. Over the last 12 months, our conservative investment approach was
generally out of step with recent market trends.
Your Fund posted a -4.84% total return (Class A shares at net asset value with
distributions reinvested) for the 12 months ended April 30, 2000. This was
substantially less than the S&P 500 Index and the Lipper Multi-Cap Value Funds
Average. Our small allocation to technology stocks throughout the year was the
primary reason for our underperformance.
Historically, higher rated companies have most consistently expanded their
profits. Last year, however, a number of technology companies with low ratings
experienced remarkable price appreciation. In fact, over the last 12 months, the
lowest rated stocks (rated C and D by Standard & Poor's) substantially
outperformed higher quality issues.
Also working against Delaware Growth Stock Fund's performance relative to
the S&P 500 Index was our equal weighting of companies in the portfolio. Unlike
the S&P 500 Index, which weights performance according to the size of the
companies in the index, we hold nearly equal positions of each company in the
Fund. Although equal weighting has proven effective over the long-term, it
worked against the Fund this past year, especially during the early months of
the fiscal year when a few large-company stocks were capturing nearly all of the
market's gains (Source: Bloomberg).
Portfolio Highlights
Computers & Technology
Although we invested less significantly in technology companies than the S&P 500
Index, some of our best performing stocks over the past 12 months were in the
technology sector. Our holdings of Intel, the well-known manufacturer of
processing chips for computers and network servers, rose due to its strong
competitive position and expectations of rapid growth for Internet companies.
Hewlett-Packard was another technology company that performed well for Delaware
Growth Stock Fund during the fiscal year. Manufacturing a variety of computer
products, including printers and scanners, Hewlett-Packard benefited from
increased demand for technology stocks, particularly during the fall and winter
months of 1999. Our shares of Hewlett-Packard also increased in value due to
higher investor expectations after a new management team was hired to lead the
company.
3
<PAGE>
{Growth of Capital Artwork}
--------------------------------------------------------------------------------
Financial and Business Services
Financial services companies generally delivered disappointing performance
during the past six months, largely due to rising interest rates and concerns
about inflation. This lowered the value of our holdings of Jefferson-Pilot, an
insurance company, as investors became increasingly concerned that higher
interest rates would slow earnings growth.
Despite the disappointing short-term total returns of financial stocks, many of
our financial holdings offer a high dividend relative to the market. Given the
recent volatility of higher priced alternatives, we believe financial stocks
could become more attractive as investors seek reasonably-priced companies with
consistent earnings track records.
Consumer Stocks
Retail and consumer stocks were somewhat volatile during the first six months of
your Fund's fiscal year due to rising interest rates, higher labor costs and
Internet competition.
Our holdings of Albertson's, the nation's second largest retail grocer, fell as
it attempted to integrate newly acquired stores following a recent merger.
Nevertheless, we remain optimistic about Albertson's, and expect improved
performance once the company has had an opportunity to adjust to the merger.
During the fiscal year, we took advantage of reduced prices and added shares of
Newell Rubbermaid to the Delaware Growth Stock Fund portfolio. Following
Newell's acquisition of Rubbermaid, share prices fell while the companies worked
to profitably integrate their operations. We maintain a positive long-term
outlook for Newell Rubbermaid and anticipate improved performance once the
businesses are fully integrated and begin operating more efficiently.
Outlook
We believe technology stocks will be hard-pressed to match the momentum
generated throughout 1999. However, we expect to continue seeing relatively
strong returns in that sector. Over the past 12 months, we increased our
technology allocation from 8.45% to more than 19% of the Fund. Our current
allocation, while still significantly less than the S&P 500 Index, should help
us deliver more competitive returns if technology stocks experience additional
price rallies.
4
<PAGE>
The American economy, now in its tenth year of economic expansion, continues to
grow rapidly with relatively little inflation. The increased productivity of
American workers seems to be helping businesses absorb rising labor and
materials costs and avoid raising their prices. Still, we are encouraged that
the Federal Reserve is making policy decisions in an attempt to prevent future
inflation problems. Rising interest rates, however, could lead to more stock
market volatility.
Historically, funds that focus on stable, higher quality investments, like
Delaware Growth Stock Fund, have performed better during periods of slower
economic growth and less robust stock market performance. If interest rates
continue to rise, leading to less dramatic expansion, we anticipate improved
performance for many Delaware Growth Stock Fund holdings during the coming
months.
Top Portfolio Holdings
April 30, 2000
<TABLE>
<CAPTION>
Company Industry Percentage of Net Assets
----------------------------------------------------------------------------------------------
<S> <C> <C>
1. Oracle Computers & Technology 4.11%
----------------------------------------------------------------------------------------------
2. Automatic Data Processing Computers & Technology 3.97%
----------------------------------------------------------------------------------------------
3. General Electric Electronics & Electrical Equipment 3.86%
----------------------------------------------------------------------------------------------
4. Sherwin-Williams Retail 3.78%
----------------------------------------------------------------------------------------------
5. Jefferson-Pilot Banking, Finance & Insurance 3.72%
----------------------------------------------------------------------------------------------
6. Albertson's Retail 3.71%
----------------------------------------------------------------------------------------------
7. Intel Electronics & Electrical Equipment 3.69%
----------------------------------------------------------------------------------------------
8. Bemis Packaging & Containers 3.62%
----------------------------------------------------------------------------------------------
9. Abbott Laboratories Healthcare & Pharmaceuticals 3.53%
----------------------------------------------------------------------------------------------
10. Wal-Mart Stores Retail 3.47%
----------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
FUND BASICS
-----------
Fund Objective
The Fund seeks to provide long-term capital appreciation through investment in
equity securities diversified among individual companies and industries.
Total Fund Assets
$44.73 million
Number of Holdings
30
Fund Start Date
August 1, 1985
Your Fund Manager
James King is a Senior Portfolio Manager at Voyageur Asset Management, LLC with
over 30 years investment experience. Prior to joining Voyageur in 1993, he was
President and Chief Investment Officer of King Management Company. Mr. King is
also a lecturer at the Drake University School of Finance.
NASDAQ Symbols
Class A GRGSX
Class B DVGSX
Class C DVGRX
--------------------------------------------------------------------------------
<PAGE>
DELAWARE GROWTH STOCK FUND PERFORMANCE
--------------------------------------
Growth of a $10,000 Investment
April 30, 1990 through April 30, 2000
Delaware Growth Standard & Poor's
Stock Fund 500 Index
--------------- -----------------
Apr-90 $ 9,425 $10,000
Oct-90 $ 7,666 $ 9,363
Apr-91 $10,477 $11,762
Oct-91 $12,366 $12,499
Apr-92 $12,977 $13,412
Oct-92 $13,573 $13,743
Apr-93 $13,163 $14,651
Oct-93 $13,503 $15,797
Apr-94 $13,211 $15,430
Oct-94 $13,746 $16,408
Apr-95 $15,452 $18,126
Oct-95 $17,338 $20,746
Apr-96 $19,311 $23,602
Oct-96 $20,715 $25,745
Apr-97 $22,195 $29,534
Oct-97 $25,673 $34,012
Apr-98 $30,022 $41,662
Oct-98 $30,233 $41,491
Apr-99 $32,891 $50,758
Oct-99 $32,610 $52,146
Apr-00 $31,300 $55,898
Chart assumes $10,000 invested on April 30, 1990. Fund performance includes the
effect of a 5.75% front-end sales charge and reinvestment of all dividends and
capital gains. Performance of other Fund classes will vary due to different
charges and expenses. Past performance does not guarantee future results
<TABLE>
<CAPTION>
Average Annual Total Returns
Through April 30, 2000 Lifetime 10 Years Five Years One Year
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (Est. 8/1/85)
Excluding Sales Charge +14.75% +13.48% +15.16% -4.84%
Including Sales Charge +14.29% +12.81% +13.81% -10.32%
--------------------------------------------------------------------------------------------
Class B (Est. 9/8/95)
Excluding Sales Charge +13.48% -5.56%
Including Sales Charge +13.20% -9.61%
--------------------------------------------------------------------------------------------
Class C (Est. 10/21/95)
Excluding Sales Charge +12.81% -5.45%
Including Sales Charge +12.81% -6.26%
--------------------------------------------------------------------------------------------
</TABLE>
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 charge, assume either that contingent sales charges did
not apply or the investment was not redeemed. Past performance does not
guarantee future results.
Class A shares have a 5.75% maximum front-end sales charge and a 12b-1 fee.
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a contingent
deferred sales charge of up to 5% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
The average annual total returns for the lifetime, ten-year, five-year and
one-year periods ended April 30, 2000 for Delaware Growth Stock Fund's
Institutional Class were +14.84%, +13.60%, +15.41% and -4.59%, respectively.
The Institutional Class was originally made available without sales charges only
to certain eligible institutional accounts on August 29, 1997. Performance prior
to that date is based on Class A performance and was adjusted to eliminate the
effect of the sales charge, but not Class A's asset-based distribution charge.
NASDAQ Symbol Institutional Class: VOGIX
6
<PAGE>
Statement of Net Assets
Delaware Growth Stock Fund
--------------------------
Number of Market
April 30, 2000 Shares Value
--------------------------------------------------------------------------------
Common Stock - 96.64%
Automobiles & Automotive Parts - 3.46%
Genuine Parts ........................................ 59,000 $ 1,548,750
-----------
1,548,750
-----------
Banking, Finance & Insurance - 9.68%
Jefferson-Pilot ...................................... 25,000 1,664,062
KeyCorp .............................................. 77,000 1,424,500
SouthTrust ........................................... 52,000 1,241,500
-----------
4,330,062
-----------
Cable, Media & Publishing - 3.00%
Gannett .............................................. 21,000 1,341,375
-----------
1,341,375
-----------
Chemicals - 3.09%
Sigma-Aldrich ........................................ 47,000 1,380,625
-----------
1,380,625
-----------
Computers & Technology - 19.78%
Automatic Data Processing ............................ 33,000 1,775,812
*Cisco Systems ........................................ 22,000 1,525,218
Hewlett-Packard ...................................... 10,000 1,350,000
*Microsoft ............................................ 14,000 976,500
*Oracle ............................................... 23,000 1,838,563
*Sun Microsystems ..................................... 15,000 1,379,062
-----------
8,845,155
-----------
Electronics & Electrical Equipment - 10.99%
Emerson Electric ..................................... 28,000 1,536,500
General Electric ..................................... 11,000 1,729,750
Intel ................................................ 13,000 1,648,563
-----------
4,914,813
-----------
Energy - 6.42%
Royal Dutch Petroleum ................................ 24,000 1,377,000
Shell Transport & Trading - ADR ...................... 31,000 1,495,750
-----------
2,872,750
-----------
Food, Beverage & Tobacco - 6.53%
ConAgra .............................................. 75,000 1,415,625
Sysco ................................................ 40,000 1,505,000
-----------
2,920,625
-----------
Healthcare & Pharmaceuticals - 10.19%
Abbott Laboratories .................................. 41,000 1,575,938
Merck & Company ...................................... 22,000 1,529,000
Schering-Plough ...................................... 36,000 1,451,250
-----------
4,556,188
-----------
Industrial Machinery - 2.81%
Grainger (W.W.) ...................................... 29,000 1,257,875
-----------
1,257,875
-----------
Packaging & Containers - 6.92%
Bemis ................................................ 44,000 1,619,750
Illinois Tool Works .................................. 23,000 1,473,438
-----------
3,093,188
-----------
Retail - 10.96%
Albertson's .......................................... 51,000 1,660,688
Sherwin-Williams ..................................... 68,000 1,691,500
<PAGE>
Number of Market
April 30, 2000 Shares Value
--------------------------------------------------------------------------------
Common Stock (continued)
Wal-Mart Stores ....................................... 28,000 $ 1,550,500
-----------
4,902,688
-----------
Textiles, Apparel, & Furniture - 2.81%
Newell Rubbermaid ..................................... 50,000 1,259,375
-----------
1,259,375
-----------
Total Common Stock (cost $36,909,755) ................. 43,223,469
-----------
Short-Term Investments - 3.61%
Wells Fargo Treasury Fund ............................. 1,616,101 1,616,101
-----------
Total Short-Term Investments
(cost $1,616,101) ..................................... 1,616,101
-----------
Total Market Value of Securities -
100.25% (cost $38,525,856) ........................... 44,839,570
Liabilities Net of Receivables and Other
Assets - (0.25%) ..................................... (113,887)
-----------
Net Assets Applicable to 1,697,345
Shares Outstanding - 100.00% ......................... $44,725,683
-----------
Net Asset Value - Delaware Growth Stock
Fund A Class ($35,758,327 / 1,349,641
Shares) .............................................. $26.49
-----------
Net Asset Value - Delaware Growth Stock
Fund B Class ($5,558,371 / 217,002 Shares) ........... $25.61
-----------
Net Asset Value - Delaware Growth Stock
Fund C Class ($1,941,826 / 75,762 Shares) ............ $25.63
-----------
Net Asset Value - Delaware Growth Stock
Fund Institutional Class ($1,467,159 /
54,940 Shares) ....................................... $26.70
-----------
Components of Net Assets at April 30, 2000:
Shares of beneficial interest (unlimited
authorization - no par) .............................. $35,312,311
Accumulated net realized gain
on investments ....................................... 3,099,658
Net unrealized appreciation of investments ............ 6,313,714
-----------
Total net assets ...................................... $44,725,683
===========
----------
*Non-income producing security for the period ended April 30, 2000.
ADR - American Depository Receipt
Net Asset Value and Offering Price Per
Share - Delaware Growth Stock Fund
Net asset value A Class (A) $26.49
Sales charge (5.75% of offering price or 6.12%
of amount invested per share) (B) 1.62
-----------
Offering price $28.11
===========
----------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $50,000 or more. See
accompanying notes
7
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
Year Ended April 30, 2000 Delaware Growth Stock Fund
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Interest ................................................................... $ 89,090
Dividends .................................................................. 968,804 $ 1,057,894
--------
Expenses:
Management fees ............................................................ 325,944
Dividend disbursing and transfer agent fees and expenses ................... 207,540
Distribution expense ....................................................... 173,588
Registration fees .......................................................... 57,000
Reports and statements to shareholders ..................................... 23,000
Accounting and administration .............................................. 22,100
Professional fees .......................................................... 7,100
Trustees' fees ............................................................. 3,900
Custodian fees ............................................................. 3,600
Taxes (other than taxes on income) ......................................... 1,100
Other ...................................................................... 10,607
--------
835,479
Less expenses paid indirectly .............................................. (1,160)
--------
Total operating expenses ................................................... 834,319
Interest expenses .......................................................... 1,042 835,361
-------- -----------
Net Investment Income 222,533
-----------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments ........................................... 6,981,072
Net change in unrealized appreciation/depreciation of investments .......... (9,939,131)
-----------
Net Realized and Unrealized Loss on Investments ............................ (2,958,059)
-----------
Net Decrease in Net Assets Resulting from Operations ....................... $(2,735,526)
===========
</TABLE>
See accompanying notes
8
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Delaware Growth Stock Fund
----------------------------------------------------------------------------------------------------------
Year Ended
4/30/00 4/30/99
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations:
Net investment income ...................................................... $ 222,533 $ 87,104
Net realized gain on investments ........................................... 6,981,072 5,370,799
Net change in unrealized appreciation/depreciation of investments .......... (9,939,131) (1,052,537)
----------- -----------
Net (increase) decrease in net assets resulting from operations ............ (2,735,526) 4,405,366
----------- -----------
Distributions to Shareholders From:
Net investment income:
A Class .................................................................. (320,451) --
B Class .................................................................. -- --
C Class .................................................................. -- --
Institutional Class ...................................................... (22,344) --
Net realized gain on investments:
A Class .................................................................. (6,220,731) (2,792,065)
B Class .................................................................. (756,049) (171,753)
C Class .................................................................. (250,151) (85,614)
Institutional Class ...................................................... (263,843) (52,950)
----------- -----------
(7,833,569) (3,102,382)
----------- -----------
Capital Share Transactions:
Proceeds from shares sold:
A Class .................................................................. 5,914,835 10,358,617
B Class .................................................................. 3,158,686 2,905,442
C Class .................................................................. 945,024 701,988
Institutional Class ...................................................... 1,101,206 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 .................................................................. 6,238,901 2,653,394
B Class .................................................................. 708,831 154,045
C Class .................................................................. 248,425 77,672
Institutional Class ...................................................... 286,187 52,950
----------- -----------
18,602,095 18,124,115
----------- -----------
Cost of shares repurchased:
A Class .................................................................. (12,986,330) (9,955,086)
B Class .................................................................. (1,679,975) (637,390)
C Class .................................................................. (539,416) (293,684)
Institutional Class ...................................................... (1,391,242) (260,902)
----------- -----------
(16,596,963) (11,147,062)
----------- -----------
Increase in net assets derived from capital share transactions ............. 2,005,132 6,977,053
----------- -----------
Net Increase (Decrease) in Net Assets ...................................... (8,563,963) 8,280,037
Net Assets:
Beginning of period ........................................................ 53,289,646 45,009,609
----------- -----------
End of period .............................................................. $44,725,683 $53,289,646
----------- -----------
</TABLE>
See accompanying notes
9
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Growth Stock Fund A Class
-----------------------------------------------------------------------------------------------------------------------
Year Ended
4/30/00 4/30/99 4/30/98(1) 4/30/97 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $32.550 $31.830 $25.340 $23.660 $19.910
Income (loss) from investment operations:
Net investment income .................................... 0.157 0.075 0.029 0.160 0.080
Net realized and unrealized gain (loss) on investments ... (1.543) 2.790 8.591 3.360 4.820
---------------------------------------------------------
Total from investment operations ......................... (1.386) 2.865 8.620 3.520 4.900
---------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ..................... (0.227) none (0.113) (0.080) (0.110)
Distributions from net realized gain on investments ...... (4.447) (2.145) (2.017) (1.760) (1.040)
---------------------------------------------------------
Total dividends and distributions ........................ (4.674) (2.145) (2.130) (1.840) (1.150)
---------------------------------------------------------
Net asset value, end of period ............................. $26.490 $32.550 $31.830 $25.340 $23.660
---------------------------------------------------------
Total return(2)............................................. (4.84%) 9.56% 35.27% 15.27% 25.00%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $35,759 $45,342 $41,196 $34,255 $28,956
Ratio of expenses to average net assets .................. 1.56% 1.68% 1.75% 1.72% 1.78%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ................ 1.56% 1.71% 1.82% 1.72% 1.87%
Ratio of net investment income to average net assets ..... 0.54% 0.25% 0.07% 0.68% 0.36%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 0.54% 0.22% 0.00% 0.68% 0.27%
Portfolio turnover ....................................... 43% 36% 9% 29% 37%
</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. See accompanying
notes
See accompanying notes
10
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Growth Stock Fund B Class
-----------------------------------------------------------------------------------------------------------------------
Period
Year Ended 9/8/95(2) to
4/30/00 4/30/99 4/30/98(1) 4/30/97 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) ............................. (0.074) (0.149) (0.165) none 0.060
Net realized and unrealized gain (loss) on investments ... (1.479) 2.704 8.425 3.300 2.960
---------------------------------------------------------
Total from investment operations ......................... (1.553) 2.555 8.260 3.300 3.020
---------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ..................... none none none none (0.230)
Distributions from net realized gain on investments ...... (4.447) (2.145) (1.990) (1.760) (1.040)
---------------------------------------------------------
Total dividends and distributions ........................ (4.447) (2.145) (1.990) (1.760) (1.270)
---------------------------------------------------------
Net asset value, end of period ............................. $25.610 $31.610 $31.200 $24.930 $23.390
---------------------------------------------------------
Total return(3) ............................................ (5.56%) 8.72% 34.29% 14.50% 14.37%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $5,558 $4,457 $1,903 $1,182 $454
Ratio of expenses to average net assets .................. 2.31% 2.43% 2.50% 2.47% 2.41%
Ratio of expenses to average net assets prior to expens
limitation and expenses paid indirectly ................ 2.31% 2.46% 2.57% 2.47% 2.50%
Ratio of net investment loss to average net assets ....... (0.21%) (0.50%) (0.67%) (0.01%) (0.62%)
Ratio of net investment loss to average net assets prior to
expense limitation and expenses paid indirectly ........ (0.21%) (0.53%) (0.74%) (0.01%) (0.71%)
Portfolio turnover ....................................... 43% 36% 9% 29% 37%
</TABLE>
----------------------
(1) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(2) Date of commencement of operations; ratios have been annualized and total
return has not been annualized.
(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. See accompanying
notes
See accompanying notes
11
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Growth Stock Fund C Class
-----------------------------------------------------------------------------------------------------------------------
Period
Year Ended 10/21/95(2) to
4/30/00 4/30/99 4/30/98(1) 4/30/97 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) ............................. (0.070) (0.149) (0.192) 0.070 0.110
Net realized and unrealized gain (loss) on investments ... (1.453) 2.704 8.442 3.220 2.000
---------------------------------------------------------
Total from investment operations ......................... (1.523) 2.555 8.250 3.290 2.110
---------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ..................... none none none (0.030) (0.250)
Distributions from net realized gain on investments ...... (4.447) (2.145) (1.990) (1.760) (1.040)
---------------------------------------------------------
Total dividends and distributions ........................ (4.447) (2.145) (1.990) (1.790) (1.290)
---------------------------------------------------------
Net asset value, end of period ............................. $25.630 $31.600 $31.190 $24.930 $23.430
---------------------------------------------------------
Total return(3) ............................................ (5.45%) 8.72% 34.25% 14.42% 9.72%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $1,942 $1,631 $1,112 $712 $104
Ratio of expenses to average net assets .................. 2.31% 2.43% 2.50% 2.47% 2.35%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ................ 2.31% 2.46% 2.57% 2.47% 2.43%
Ratio of net investment income (loss) to average net assets (0.21%) (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 (0.21%) (0.53%) (0.74%) 0.14% (0.73%)
Portfolio turnover ....................................... 43% 36% 9% 29% 37%
</TABLE>
----------------------
(1) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(2) Date of commencement of operations; ratios have been annualized and total
return has not been annualized.
(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. See accompanying
notes
See accompanying notes
12
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Growth Stock Fund Institutional Class
---------------------------------------------------------------------------------------------------------
Period
Year Ended 8/29/97(1) to
4/30/00 4/30/99 4/30/98(2)
<S> <C> <C> <C>
Net asset value, beginning of period ................................ $32.840 $32.030 $27.520
Income (loss) from investment operations:
Net investment income ............................................. 0.229 0.153 0.047
Net realized and unrealized gain (loss) on investments ............ (1.547) 2.802 5.803
-----------------------------------
Total from investment operations .................................. (1.318) 2.955 5.850
-----------------------------------
Less dividends and distributions:
Dividends from net investment income .............................. (0.375) none (0.040)
Distributions from net realized gain on investments ............... (4.447) (2.145) (1.300)
-----------------------------------
Total dividends and distributions ................................. (4.822) (2.145) (1.340)
-----------------------------------
Net asset value, end of period ...................................... $26.700 $32.840 $32.030
-----------------------------------
Total return(3) ..................................................... (4.59%) 9.79% 21.41%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ........................... $1,467 $1,860 $799
Ratio of expenses to average net assets ........................... 1.31% 1.43% 1.50%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ......................... 1.31% 1.46% 1.57%
Ratio of net investment income to average net assets .............. 0.79% 0.50% 0.33%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly ........ 0.79% 0.47% 0.26%
Portfolio turnover .................................................. 43% 36% 9%
</TABLE>
----------------------
(1) Date of commencement of operations; 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.
See accompanying notes
13
<PAGE>
Notes to Financial Statements
April 30, 2000
--------------------------------------------------------------------------------
Voyageur Mutual Funds III (the "Company") is registered as a diversified
open-end investment company under the Investment Company Act of 1940, as
amended. The Company is organized as a Delaware Business Trust and offers three
series: Delaware Select Growth Fund (formerly Aggressive Growth Fund), Delaware
Growth Stock Fund and Delaware Tax-Efficient Equity Fund. These financial
statements and the related notes pertain to Delaware Growth Stock Fund (the
"Fund"). The Fund offers four classes of shares. The A Class carries a maximum
front-end sales charge of 5.75%. The B Class carries a back-end deferred sales
charge. The C Class carries a level load deferred sales charge and the
Institutional Class has no sales charge.
The 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 accounting principles
generally accepted in the United States and are consistently followed by the
Fund.
Security Valuation - All equity securities are valued at the last quoted sales
price as of the close of the New York Stock Exchange (NYSE) on the valuation
date. If on a particular day an equity security does not trade, then the mean
between the bid and asked prices will be used. Money market instruments having
less than 60 days to maturity are valued at amortized cost, which approximates
market value. Other securities and assets for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the direction of the Fund's Board of Trustees.
Federal Income Taxes - The Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations which may differ from accounting
principles generally accepted in the United States.
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
the Fund on the basis of daily net assets of each class. Distribution expenses
relating to a specific class are charged directly to that class.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
<PAGE>
--------------------------------------------------------------------------------
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. Original issue discounts are accreted to interest
income over the lives of the respective securities. The Fund declares and pays
dividends from net investment income and capital gains, if any, semi-annually.
Certain expenses of the Fund are paid through commission arrangements with
brokers. These transactions are done subject to best execution. The amount of
these expenses was approximately $1,160 for the year ended April 30, 2000. The
expenses paid under the above arrangement are included in the applicable expense
captions on the Statement of Operations with the corresponding expense offset
shown as "expenses paid indirectly."
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company ("DMC"), the Investment Manager of the Fund, an
annual fee which is calculated daily at the rate of 0.65% on the first $500
million of average daily net assets of the Fund, 0.60% on the next $500 million,
0.55% on the next $1,500 million and 0.50% on the average daily net assets in
excess $2,500 million. At April 30, 2000, the Fund had a liability for
Investment Management fees and other expenses payable to DMC of $24,573.
DMC has entered into a sub-advisory agreement with Voyageur Asset Management,
LLC with respect to the management of the Fund. The sub-advisor receives a
sub-advisory fee from DMC for its services. The Fund does not pay any fees to
the sub-advisor.
The Fund has engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting and
administration services. The Fund pays DSC a monthly fee based on the number of
shareholder accounts, shareholder transactions and average net assets, subject
to certain minimums. At April 30, 2000, the Fund had a liability for such fees
and other expense payable to DSC of $12,262.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. ("DDLP"), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.25% of the average daily net assets of the A Class and 1.00% of the
average daily net assets of the B and C Classes. At April 30, 2000, the Fund had
a liability for distribution fees and other expenses payable to DDLP of $5,184.
For the year ended April 30, 2000, DDLP earned $11,686 for commissions on sales
of the Fund A Class shares.
14
<PAGE>
Notes to Financial Statements (continued)
April 30, 2000
--------------------------------------------------------------------------------
2. Investment Management and Other Transactions with Affiliates (continued)
Certain officers of DMC, DSC and DDLP are officers, trustees and/or employees of
the Fund. These officers, trustees and employees are paid no compensation by the
Fund.
3. Investments
During the year ended April 30, 2000, the Fund made purchases of $20,824,841 and
sales of $23,757,534 of investment securities other than U.S. government
securities and temporary cash investments.
At April 30, 2000, net unrealized appreciation for federal income tax purposes
aggregated $6,173,548 of which $9,306,655 related to unrealized appreciation of
securities and $3,133,107 related to unrealized depreciation of securities. At
April 30, 2000, the aggregate cost of securities for federal income tax purposes
was $38,666,022.
4. Capital Shares
Transactions in capital shares were as follows:
Year Ended
4/30/00 4/30/99
Shares sold:
A Class ......................................... 204,573 334,779
B Class ......................................... 113,526 96,281
C Class ......................................... 34,884 23,019
Institutional Class ............................. 38,501 38,269
Shares issued upon reinvestment of
distributions from net investment income
and net realized gain on investments:
A Class ......................................... 217,621 86,732
B Class ......................................... 25,717 5,158
C Class ......................................... 8,936 2,601
Institutional Class ............................. 9,905 1,718
------- ------
653,663 588,557
------- -------
Shares repurchased:
A Class ....................................... (465,761) (322,631)
B Class ....................................... (63,238) (21,442)
C Class ....................................... (19,678) (9,654)
Institutional Class ........................... (50,093) (8,295)
-------- --------
(598,770) (362,022)
-------- --------
Net increase 54,893 226,535
======== ========
<PAGE>
--------------------------------------------------------------------------------
5. Line of Credit
Effective October 8, 1999, the Fund, along with certain other funds in the
Delaware Investments Family of Funds (the "Participants"), participate in a
$683,500,000 revolving line of credit facility to be used for temporary or
emergency purposes as an additional source of liquidity to fund redemptions of
investor shares. The Participants are charged an annual commitment fee, which is
allocated across the Participants on the basis of each Fund's allocation of the
entire facility. The Participants may borrow up to a maximum of one third of
their net assets under the agreement. Prior to October 8, 1999, the Delaware
Growth Stock Fund had a committed line of credit of $2,500,000. The Fund had no
amounts outstanding at April 30, 2000 or at any time during the fiscal year.
6. Tax Information (unaudited)
The information set forth below is for each Fund's fiscal year as required by
federal laws. Shareholders, however, must report distributions on a calendar
year basis for income tax purposes, which may include distributions for portions
of two fiscal years of the Fund. Accordingly, the information needed by
shareholders for income tax purposes is sent to them in January of each year.
Please consult your tax advisor for proper treatment of this information.
For the fiscal year ended April 30, 2000, the Fund designates as long term
capital gains and ordinary income distributions paid during the year as follows:
(A) (B)
Long-Term Ordinary (C)
Capital Gains Income Total (D)
Distributions Distributions Distributions Qualifying
(Tax Basis) (Tax Basis) (Tax Basis) Dividends(1)
------------- ------------- ------------- ------------
92% 8% 100% 100%
(A) and (B) are based on a percentage of the Fund's total distributions.
(D) is based on a percentage of ordinary income of the Fund.
----------------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
15
<PAGE>
Report of Independent Auditors
To the Shareholders and Board of Trustees
Voyageur Mutual Funds III - Delaware Growth Stock Fund
We have audited the accompanying statement of net assets of Delaware Growth
Stock Fund (the "Fund") as of April 30, 2000, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the three years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the
periods presented through April 30, 1997 were audited by other auditors whose
report dated June 13, 1997 expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of April 30, 2000, by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Growth Stock Fund at April 30, 2000, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and its financial highlights for each of the three years
in the period then ended, in conformity with accounting principles generally
accepted in the United States.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
June 5, 2000
16
<PAGE>
DELAWARE INVESTMENTS FAMILY OF FUNDS
Complete information on any fund offered by Delaware Investments can be found in
each fund's current prospectus. Prospectuses for all funds offered by Delaware
Investments are available from your financial adviser. Please read the
prospectus carefully before you invest or send money.
Growth of Capital
o Technology and
Innovation Fund
o Select Growth Fund
o Trend Fund
o Growth Opportunities
Fund*
o Small Cap Value Fund
o U.S. Growth Fund
o Tax-Efficient Equity Fund
o Social Awareness Fund
Total Return
o Blue Chip Fund
o Devon Fund
o Growth and Income Fund
o Decatur Equity
Income Fund
o REIT Fund
o Balanced Fund
International and Global
o Emerging Markets Fund
o New Pacific Fund
o Overseas Equity Fund
o International Equity Fund
o Global Equity Fund
o Global Bond Fund
Current Income
o Delchester Fund
o High-Yield
Opportunities Fund
o Strategic Income Fund
o Corporate Bond Fund
o Extended Duration
Bond Fund
o American Government
Bond Fund
o U.S. Government
Securities Fund
o Limited-Term
Government Fund
Tax-Exempt Income
o National High-Yield
Municipal Bond Fund
o Tax-Free USA Fund
o Tax-Free Insured Fund
o Tax-Free USA
Intermediate Fund
o State Tax-Free Funds**
Stability of Principal
o Cash Reserve
o Tax-Free Money Fund
Asset Allocation
o Foundation Funds
Growth Portfolio
Balanced Portfolio
Income Portfolio
* Formerly known as DelCap Fund.
** Available for the following states: Arizona, California, Colorado, Florida,
Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, New Jersey,
New Mexico, New York, Oregon, Pennsylvania and Wisconsin. Insured and
intermediate bond funds are available in selected states.
(C)Delaware Distributors, L.P.
<PAGE>
DELAWARE(SM)
INVESTMENTS
=====================
Philadelphia o London
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
This annual report is for the information of Delaware Growth Stock Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current prospectus for 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 the Fund. You should read the prospectus
carefully before you invest. The figures in this report represent past results
which are not a guarantee of future results. The return and principal value of
an investment in the Fund will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost.
--------------------------------------------------------------------------------
<PAGE>
BOARD OF TRUSTEES
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
Janet L. Yeomans
Vice President and Treasurer
3M Corporation
St. Paul, MN
AFFILIATED OFFICERS
Charles E. Haldeman, Jr.
President and Chief Executive Officer
Delaware Management Holdings, Inc.
Philadelphia, PA
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
Investment Manager
Delaware Management Company
Philadelphia, PA
International Affiliate
Delaware International Advisers Ltd.
London, England
Subadvisor
Voyageur Asset Management, LLC
Minneapolis, MN
National Distributor
Delaware Distributors, L.P.
Philadelphia, PA
Shareholder Servicing, Dividend
Disbursing and Transfer Agent
Delaware Service Company, Inc.
Philadelphia, PA
1818 Market Street
Philadelphia, PA 19103-3682
(3217) Printed in the USA
AR-409 [4/00] PPL 6/00 (J5937)
