<PAGE>
DELAWARE(SM)
INVESTMENTS
-----------
Delaware Growth Stock Fund
Growth of Capital
2001 SEMI-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
<PAGE>
A TRADITION OF SOUND INVESTING SINCE 1929
-----------------------------------------
A Commitment To Our Investors
Experienced
[ ] Our seasoned investment professionals average 11 years' experience.
[ ] We began managing investments in 1929 and opened our first mutual fund in
1938. Over the past 70 years, we have weathered a full range of economic and
market environments.
Disciplined
[ ] We follow strict investment policies and clear buy/sell guidelines.
[ ] We strive to balance risk and reward in order to provide sound investment
alternatives within any given asset class.
Consistent
[ ] We clearly articulate our investment policies and follow them consistently.
[ ] Our commitment to consistency has earned us the confidence of
discriminating institutional and individual investors to manage more than
$44 billion in assets as of September 30, 2000.
Comprehensive
[ ] We offer more than 70 mutual funds in these asset classes.
o Large-cap equity o High-yield bonds
o Mid-cap equity o Investment grade bonds
o Small-cap equity o Municipal bonds (23 single-state funds)
o International equity o International fixed-income
o Balanced
[ ] Our funds are available through financial advisers who can offer you
individualized attention and valuable investment advice.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the
principal amount invested.
(C)Delaware Distributors, L.P.
<PAGE>
"...IT APPEARS INVESTORS HAVE BEGUN TO FOCUS ON COMPANIES THAT ARE MOST LIKELY
TO DELIVER CONTINUED EARNINGS GROWTH."
Dear Shareholder
December 4, 2000
Recap of Events-- Delaware Growth Stock Fund's fiscal year began on
May 1, 2000, amid concerns about the direction of the economy and interest
rates. The Federal Reserve Board had raised short-term interest rates five times
since June 1999 in an effort to stave off inflation and temper economic growth.
Another half-percentage-point increase by the Fed on May 16, 2000 came just as
the U.S. stock market was in the final weeks of a two-month-long downturn. Many
technology stocks had suffered big losses as investors were scrutinizing the
extreme valuations and earnings outlook for that sector.
When the Fed decided not to raise rates over the summer, a more positive outlook
emerged and stock prices began rebounding. But the volatility would continue
throughout the first six months of our fiscal year. The positive momentum
gathered by the end of August was reversed during September and October, as
rising energy prices and early warnings of corporate earnings shortfalls pushed
major stock market indexes back into negative territory year-to-date for 2000.
Again, technology stocks were hard hit, contributing to the worst October point
loss ever for the technology-heavy Nasdaq Composite Index (-8.25%) (Source:
Bloomberg).
Delaware Growth Stock Fund provided a return of +1.92% for the six months ended
October 31, 2000 (Class A shares at net asset value with distributions
reinvested), reflecting the period's volatile market conditions. On a relative
basis, the Fund outpaced its benchmark, the S&P 500 Index (-1.59%), as well as
the average return of its peers in the Lipper Multi-Cap Growth Funds Average
(-0.87%). We attribute Delaware Growth Stock Fund's outperformance of its
benchmark to the Fund's allocations to certain strong-performing sectors, as
well as to favorable stock selection in general.
Total Return
For the Period Ended October 31, 2000 Six Months
--------------------------------------------------------------------------------
Delaware Growth Stock Fund Class A +1.92%
--------------------------------------------------------------------------------
Standard & Poor's 500 Index -1.59%
Lipper Multi-Cap Growth Fund Average -0.87%
--------------------------------------------------------------------------------
All performance shown above is at net asset value without 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 Growth Funds
Average represents the average returns of multi-cap growth mutual funds tracked
by Lipper. (Source: Lipper, 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>
Market Outlook -- In response to the volatility of the past six months, it
appears investors have begun to focus on companies that are most likely to
deliver continued earnings growth. This has always been the focus of your Fund's
stock selection process. By definition, Delaware Growth Stock Fund's strategy is
to invest in companies that offer the potential for high earnings growth and are
recognized leaders in their respective industries. On the following pages,
Delaware Growth Stock Fund manager James King talks more about the Fund's recent
performance and shares his outlook for the markets.
We realize that day-to-day swings in the equity markets may have prompted you to
reflect on your own investments. We believe that relying on basic, sound
principles of investing is the best approach for weathering the unexpected.
These principles include sticking to a regular investment plan, diversifying
your assets, and keeping a long-term outlook, as well as considering your own
risk tolerance and financial goals.
We thank you for staying the course over the past six months, and for your
continued confidence in 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
(Growth of Capital Artwork)
2
<PAGE>
Michael Lee
Voyageur Asset Management, LLC
Vice President and
Senior Portfolio Manager
Jerold Stodden
Voyageur Asset Management, LLC
Vice President and
Senior Portfolio Manager
December 4, 2000
PORTFOLIO MANAGEMENT REVIEW
---------------------------
The Fund's Results
Strategies that worked against the Fund in the recent past worked for the Fund
during the first six months of this fiscal year. While the technology boom was
going strong last winter, we continued to focus heavily on stocks of blue chip
companies such as Merck & Company, Microsoft, General Electric, and Wal-Mart
Stores. These industry leaders comprise a core of companies that we expect to
provide stable long-term growth.
Over the past six months, however, the markets were quite volatile and many
highly priced technology stocks experienced hard times. Now, the philosophy of
looking for "growth at any price" is often being abandoned. As many investors
adjust to the volatility, they have taken to searching for the more reasonable
"growth at a price."
Your Fund is built with the latter philosophy in mind. Staying the course, we
stuck to buying and holding established, highly regarded companies during the
six months ended October 31, 2000. For the period, Delaware Growth Stock Fund
returned +1.92% (Class A shares at net asset value with distributions
reinvested), outpacing the Standard & Poor's 500 Index, which fell 1.59% over
the same time span.
The positive performance versus the benchmark is attributed, in part, to sector
strengths and weaknesses, and our allocations within those sectors. The Fund had
less holdings than the benchmark in some sectors where performance lagged, and
more than the benchmark in other sectors that performed well.
Portfolio Highlights
The Fund is well-diversified across industries. We do not lean on particular
sectors in an attempt to enhance performance during periods of market strength
in one area. While this strategy is usually effective over the long term, it can
occasionally drag down relative performance in a "narrow" market where one
sector captures huge gains.
During the past six months, diversification worked in favor of your Fund.
Although computers and technology is the Fund's biggest sector (17.9% of the
portfolio as of October 31, 2000), we hold a smaller percentage of these stocks
than our benchmark, the S&P 500 Index. With this sector performing negatively
overall during the period, our portfolio saw lesser declines than did the
benchmark.
3
<PAGE>
Delaware Growth Stock Fund
Sector Allocation
As of October 31, 2000
Food, Beverage & Tobacco 8.5%
Energy 6.8%
Cable, Media & Publishing 6.2%
Packaging & Containers 5.6%
Other 5.5%
Leisure, Lodging & Entertainment 3.7%
Computers & Technology 17.9%
Retail 9.1%
Banking, Finance & Insurance 11.3%
Electronics & Electrical Equipment 11.6%
Healthcare & Pharmaceuticals 13.8%
Among technology holdings, Microsoft and Cisco Systems -- two high-profile
large-cap stocks -- failed to show strong performance over the six-month period.
Yet the Fund was buoyed by its lack of exposure to telecommunications stocks,
many of which performed poorly during the period.
There were sectors where the Fund missed out on strong performance as well. For
example, the Fund did not benefit from the strong performance generally seen
among utilities and transportation stocks. We typically have little or no
exposure to these sectors because we don't view them as long-term growth areas.
Individual stock selection is crucial, too, of course, and it also played a role
in the outperformance of the benchmark during the period. This is apparent in
sectors where our percentage of holdings is approximately equal to that in the
S&P 500 Index.
For example, the Fund and the S&P 500 are about equally weighted in the
healthcare sector, but our healthcare holdings fared better than the overall
performance of healthcare stocks in the index. This strong showing was due
mainly to the Fund's focus on pharmaceutical companies, which are the only type
of healthcare company we own, and which were strong performers as a sub-sector
during the six months. Our top healthcare holding, Abbott Labs, was also the
Fund's biggest holding overall by percentage as of October 31, 2000. Abbott Labs
gained more than 25% during the fiscal period.
Our financial stocks, which were strong performers as a group during the period,
also returned more than the overall gain that was posted by financial stocks in
the benchmark.
Among detractor's from overall performance during the period were Albertson's, a
supermarket and drug store chain, and Newell Rubbermaid. Both companies are
currently struggling with changes. Newell bought Rubbermaid about one year ago,
and the stock has lagged while the company adjusts to the changes brought on by
the merger. Similarly, Albertson's is busy integrating its newest acquisition,
American Stores, into its operations. We remain optimistic that both companies
will emerge from the changes as stronger companies, and that the stock prices
will rebound in time.
Turnover in the portfolio remained very low until near the end of the period,
when we added some new names, including McDonald's, Pitney Bowes, and Omnicom
Group. Going forward, we will continue with our strategy of buying and holding
the stocks of established, highly regarded companies from a variety of
industries.
(Growth of Capital Artwork)
4
<PAGE>
Outlook
The U.S. stock market's average price-to-earnings ratio has dropped from 34 one
year ago to about 24 today (Source: Barron's), signaling the onset of generally
more reasonable values for stock prices. However, we think that figure could
lower further, to historical levels of around 18. Even amidst any further
volatility, we expect to see reasonably stable performance within the Fund. Our
portfolio is built to take advantage of a more broadly traded market, which is
something we have seen this year. We also believe that our blue chip holdings,
including those that did not perform strongly over the past six months, will
prosper as the market regains its balance and rewards those companies with
strong fundamentals.
Top 10 Holdings
As of October 31, 2000
<TABLE>
<CAPTION>
Company Industry Percentage of Net Assets
<S> <C> <C>
-------------------------------------------------------------------------------------------
1. Abbott Labs Healthcare & Pharmaceuticals 5.0%
-------------------------------------------------------------------------------------------
2. Sysco Food, Beverage & Tobacco 4.8%
-------------------------------------------------------------------------------------------
3. Emerson Electric Electronics & Electrical Equipment 4.7%
-------------------------------------------------------------------------------------------
4. Merck & Company Healthcare & Pharmaceuticals 4.5%
-------------------------------------------------------------------------------------------
5. Schering Plough Healthcare & Pharmaceuticals 4.3%
-------------------------------------------------------------------------------------------
6. General Electric Electronics & Electrical Equipment 4.2%
-------------------------------------------------------------------------------------------
7. Jefferson-Pilot Banking, Finance & Insurance 3.9%
-------------------------------------------------------------------------------------------
8. Southtrust Banking, Finance & Insurance 3.9%
-------------------------------------------------------------------------------------------
9. Sun Microsystems Computers & Technology 3.8%
-------------------------------------------------------------------------------------------
10. McDonald's Leisure, Lodging & Entertainment 3.7%
-------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
FUND BASICS
-----------
Fund Objectives
Seeks to provide long-term capital appreciation through investment in equity
securities diversified among individual companies and industries.
Total Fund Assets
as of October 31, 2000
$43.6 million
Number of Holdings
29
Fund Start Date
August 1, 1985
Your Fund Management
Mike Lee is Chairman of the Large Cap Core Equity Committee and has served as
primary equity analyst for Voyageur's High Quality Growth Equity strategy since
1993. Prior to joining Voyageur in 1993, he was a strategic systems developer
for Northwest Airlines. He earned a BA from DePauw University and an MBA from
the University of Minnesota. Mr. Lee is a Chartered Financial Analyst.
Jerold Stodden joined Voyageur in 1999 as part of the Large Cap Growth Equity
team. Mr. Stodden is a 33-year industry veteran and had previously been with
Chicago Trust for his entire career. Mr. Stodden holds a BA from Western
Michigan University, an MBA from Indiana University, and is a Chartered
Financial Analyst.
Nasdaq Symbols
Class A: GRGSX
Class B: DVGSX
Class C: DVGRX
<PAGE>
DELAWARE GROWTH STOCK FUND PERFORMANCE
--------------------------------------
Average Annual Total Returns
Through October 31, 2000 Lifetime Five Years One Year
--------------------------------------------------------------------------------
Class A (Est. 8/1/85)
Excluding Sales Charge +14.38% +12.97% -2.18%
Including Sales Charge +13.93% +11.64% -7.79%
--------------------------------------------------------------------------------
Class B (Est. 9/8/95)
Excluding Sales Charge +12.42% +12.13% -2.91%
Including Sales Charge +12.30% +11.88% -7.04%
--------------------------------------------------------------------------------
Class C (Est. 10/21/95)
Excluding Sales Charge +11.79% +12.14% -2.88%
Including Sales Charge +11.79% +12.14% -3.70%
--------------------------------------------------------------------------------
Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share value will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
results excluding sales charge assume either that contingent sales charges did
not apply or the investment was not redeemed. Past performance is not a
guarantee of future results.
Class A shares have a 5.75% maximum front-end sales charge and a 12b-1 fee.
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are subject to a 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.
An expense limitation was in effect for all classes of Delaware Growth Stock
Fund during the period. Performance would have been lower if the expense
limitation was not in effect.
The average annual total returns for the lifetime, five-year, and one-year
periods ended October 31, 2000, for Delaware Growth Stock Fund's Institutional
Class were +14.46%, +13.23%, and -1.97%, respectively. The Institutional Class
was originally made available without sales charge 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
October 31, 2000 (Unaudited) Shares Value
--------------------------------------------------------------------------------
Common Stock - 99.39%
Automobiles & Automotive Parts - 2.89%
Genuine Parts .................................... 59,000 $1,257,438
----------
1,257,438
----------
Banking, Finance & Insurance - 11.26%
Jefferson-Pilot .................................. 25,000 1,718,750
KeyCorp .......................................... 61,000 1,505,937
SouthTrust ....................................... 52,000 1,683,500
----------
4,908,187
----------
Cable, Media & Publishing - 6.18%
Gannett .......................................... 21,000 1,218,000
Omnicom Group .................................... 16,000 1,476,000
----------
2,694,000
----------
Computers & Technology - 17.94%
*Cisco Systems ................................... 22,000 1,185,250
Hewlett-Packard ................................. 20,000 928,750
*Microsoft ....................................... 14,000 964,250
*Oracle .......................................... 46,000 1,518,000
Pitney Bowes .................................... 52,500 1,558,594
*Sun Microsystems ................................ 15,000 1,663,125
----------
7,817,969
----------
Electronics & Electrical Equipment - 11.55%
Emerson Electric ................................ 28,000 2,056,250
General Electric ................................ 33,000 1,808,812
Intel ........................................... 26,000 1,170,000
----------
5,035,062
----------
Energy - 6.77%
Royal Dutch Petroleum ........................... 24,000 1,425,000
Shell Transport and Trading - ADR ............... 31,000 1,524,813
----------
2,949,813
----------
Food, Beverage & Tobacco - 8.47%
ConAgra ......................................... 75,000 1,603,125
Sysco ........................................... 40,000 2,087,500
----------
3,690,625
----------
Healthcare & Pharmaceuticals - 13.78%
Abbott Laboratories ............................. 41,000 2,165,312
Merck & Company ................................. 22,000 1,978,625
Schering-Plough ................................. 36,000 1,860,750
----------
6,004,687
----------
Leisure, Lodging & Entertainment - 3.73%
McDonald's ...................................... 52,500 1,627,500
----------
1,627,500
----------
Packaging & Containers - 5.55%
Bemis ........................................... 44,000 1,138,500
Illinois Tool Works ............................. 23,000 1,277,937
----------
2,416,437
----------
<PAGE>
Number of Market
Shares Value
--------------------------------------------------------------------------------
Common Stock (continued)
Retail - 9.07%
Albertson's ..................................... 51,000 $ 1,208,063
Sherwin-Williams ................................ 68,000 1,474,750
Wal-Mart Stores ................................. 28,000 1,270,500
------------
3,953,313
------------
Textiles, Apparel & Furniture - 2.20%
Newell Rubbermaid ............................... 50,000 959,375
------------
959,375
------------
Total Common Stock (cost $36,712,303) ........... 43,314,406
------------
Total Market Value Securities - 99.39%
(cost $36,712,303) ............................ 43,314,406
Receivables and Other Assets
Net of Liabilities - 0.61% .................... 267,594
------------
Net Assets Applicable to 1,755,859
Shares Outstanding - 100.00% .................. $ 43,582,000
------------
Net Asset Value - Delaware Growth Stock Fund
A Class ($33,902,272 / 1,357,432 Shares) ...... $24.98
Net Asset Value - Delaware Growth Stock
Fund B Class (5,314,060 / 221,554 Shares) ..... $23.99
Net Asset Value - Delaware Growth Stock
Fund C Class ($1,875,617 / 78,146 Shares) ..... $24.00
Net Asset Value - Delaware Growth Stock
Fund Institutional Class
($2,490,051 / 98,727 Shares) .................. $25.22
Components of Net Assets at October 31, 2000:
Shares of beneficial interest
(Unlimited authorization - no par) ............ $ 36,615,512
Accumulated net investment loss ................. (50,926)
Accumulated net realized gain on investments .... 415,311
Net unrealized appreciation of investments ...... 6,602,103
------------
Total Net Assets ................................ $ 43,582,000
============
------------
* Non-income producing security for the period ended October 31, 2000.
ADR - American Depository Receipt
Net Asset Value and Offering Price Per
Share - Delaware Growth Stock Fund
Net asset value A class (A) ..................... $24.98
Sales charge (5.75% of offering price, or
6.08% of amount invested per share) (B) ....... 1.52
------
Offering price .................................. $26.50
======
------------
(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
Six Months Ended October 31, 2000 (Unaudited) Delaware Growth Stock Fund
--------------------------------------------------------------------------------
Investment Income:
Interest .............................................. $ 24,531
Dividends ............................................. 364,086 $ 388,617
---------
Expenses:
Management fees ....................................... 142,027
Dividend disbursing and transfer agent fees
and expenses ........................................ 118,171
Distribution expense .................................. 79,140
Reports and statements to shareholders ................ 40,800
Registration fees ..................................... 36,000
Accounting and administration ......................... 11,500
Custodian fees ........................................ 2,850
Trustees' fees ........................................ 2,850
Taxes (other than taxes on income) .................... 1,107
Other ................................................. 5,603
---------
440,048
Less expenses paid indirectly ......................... (505)
---------
Total operating expenses .............................. 439,543
---------
Net Investment Loss ................................... (50,926)
---------
Net Realized and Unrealized Gain on Investments:
Net realized gain on investments ...................... 563,290
Net change in unrealized appreciation/depreciation
of investments ..................................... 288,389
---------
Net Realized and Unrealized Gain on Investments ....... 851,679
---------
Net Increase in Net Assets Resulting from Operations .. $ 800,753
=========
See accompanying notes
8
<PAGE>
Statements of Changes in Net Assets
Delaware Growth Stock Fund
--------------------------------------------------------------------------------
Six Months
Ended Year Ended
10/31/00 4/30/00
(Unaudited)
Increase (Decrease) in Net Assets From Operations:
Net investment income (loss) ..................... $ (50,926) $ 222,533
Net realized gain on investments ................. 563,290 6,981,072
Net change in unrealized appreciation/
depreciation of investments .................... 288,389 (9,939,131)
---------------------------
Net increase in net assets resulting from
operations ..................................... 800,753 (2,735,526)
---------------------------
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 ........................................ (2,584,234)
B Class ........................................ (417,370) (756,049)
C Class ........................................ (147,981) (250,151)
Institutional Class ............................ (98,052) (263,843)
---------------------------
(3,247,637) (7,833,569)
---------------------------
Capital Share Transactions:
Proceeds from shares sold:
A Class ........................................ 1,740,859 5,914,835
B Class ........................................ 590,322 3,158,686
C Class ........................................ 314,627 945,024
Institutional Class ............................ 1,550,893 1,101,206
Net asset value of shares issued upon reinvestment
of distributions:
A Class ........................................ 2,441,302 6,238,901
B Class ........................................ 400,469 708,831
C Class ........................................ 122,383 248,425
Institutional Class ............................ 98,052 286,187
---------------------------
7,258,907 18,602,095
---------------------------
Cost of shares repurchased:
A Class ........................................ (4,087,920) (12,986,330)
B Class ........................................ (896,717) (1,679,975)
C Class ........................................ (381,668) (539,416)
Institutional Class ............................ (589,401) (1,391,242)
---------------------------
(5,955,706) (16,596,963)
---------------------------
Increase in net assets derived from capital
share transactions ............................. 1,303,201 2,005,132
---------------------------
Net Decrease in Net Assets ....................... (1,143,683) (8,563,963)
Net Assets:
Beginning of period .............................. 44,725,683 53,289,646
---------------------------
End of period .................................... $ 43,582,000 $ 44,725,683
===========================
See accompanying notes
9
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Growth Stock Fund A Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Ended
Ended 10/31/00 4/30/00 4/30/99 4/30/98(1) 4/30/97 4/30/96
(Unaudited)(3)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $26.490 $32.550 $31.830 $25.340 $23.660 $19.910
Income (loss) from investment operations:
Net investment income (loss) ........................... (0.015) 0.157 0.075 0.029 0.160 0.080
Net realized and unrealized gain (loss) on investments.. 0.465 (1.543) 2.790 8.591 3.360 4.820
---------------------------------------------------------------------
Total from investment operations ....................... 0.450 (1.386) 2.865 8.620 3.520 4.900
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................... -- (0.227) -- (0.113) (0.080) (0.110)
Distributions from net realized gain on investments .... (1.960) (4.447) (2.145) (2.017) (1.760) (1.040)
---------------------------------------------------------------------
Total dividends and distributions ...................... (1.960) (4.674) (2.145) (2.130) (1.840) (1.150)
---------------------------------------------------------------------
Net asset value, end of period ........................... $24.980 $26.490 $32.550 $31.830 $25.340 $23.660
=====================================================================
Total return(2) .......................................... 1.92% (4.84%) 9.56% 35.27% 15.27% 25.00%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $33,902 $35,759 $45,342 $41,196 $34,255 $28,956
Ratio of expenses to average net assets ................ 1.88% 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 ...... 1.88% 1.56% 1.71% 1.82% 1.72% 1.87%
Ratio of net investment income (loss) to average net
assets ............................................... (0.12%) 0.54% 0.25% 0.07% 0.68% 0.36%
Ratio of net investment income (loss) to average
net assets prior to expense limitation and
expenses paid indirectly ............................. (0.12%) 0.54% 0.22% 0.00% 0.68% 0.27%
Portfolio turnover ..................................... 10% 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.
(3) Ratios have been annualized and total return has not been annualized.
See accompanying notes
10
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Growth Stock Fund B Class
------------------------------------------------------------------------------------------------------------------------------------
Period From
Six Months Year Ended 9/8/95(1) to
Ended 10/31/00 4/30/00 4/30/99 4/30/98(2) 4/30/97 4/30/96
(Unaudited)(4)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $25.610 $31.610 $31.200 $24.930 $23.390 $21.640
Income (loss) from investment operations:
Net investment income (loss) ........................... (0.105) (0.074) (0.149) (0.165) -- 0.060
Net realized and unrealized gain (loss) on investments.. 0.445 (1.479) 2.704 8.425 3.300 2.960
---------------------------------------------------------------------
Total from investment operations ....................... 0.340 (1.553) 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 .... (1.960) (4.447) (2.145) (1.990) (1.760) (1.040)
---------------------------------------------------------------------
Total dividends and distributions ...................... (1.960) (4.447) (2.145) (1.990) (1.760) (1.270)
---------------------------------------------------------------------
Net asset value, end of period ........................... $23.990 $25.610 $31.610 $31.200 $24.930 $23.390
=====================================================================
Total return(3) .......................................... 1.53% (5.56%) 8.72% 34.29% 14.50% 14.37%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $5,314 $5,558 $4,457 $1,903 $1,182 $454
Ratio of expenses to average net assets ................ 2.63% 2.31% 2.43% 2.50% 2.47% 2.41%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ...... 2.63% 2.31% 2.46% 2.57% 2.47% 2.50%
Ratio of net investment income (loss) to average
net assets ........................................... (0.87%) (0.21%) (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 ............................. (0.87%) (0.21%) (0.53%) (0.74%) (0.01%) (0.71%)
Portfolio turnover ..................................... 10% 43% 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
11
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Growth Stock Fund C Class
------------------------------------------------------------------------------------------------------------------------------------
Period From
Six Months Year Ended 10/21/95(1)
Ended 10/31/00 4/30/00 4/30/99 4/30/98(2) 4/30/97 to 4/30/96
(Unaudited)(4)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $25.630 $31.600 $31.190 $24.930 $23.430 $22.610
Income from investment operations:
Net investment income (loss) ........................... (0.105) (0.070) (0.149) (0.192) 0.070 0.110
Net realized and unrealized gain (loss) on investments.. 0.435 (1.453) 2.704 8.442 3.220 2.000
---------------------------------------------------------------------
Total from investment operations ....................... 0.330 (1.523) 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 .... (1.960) (4.447) (2.145) (1.990) (1.760) (1.040)
---------------------------------------------------------------------
Total dividends and distributions ...................... (1.960) (4.447) (2.145) (1.990) (1.790) (1.290)
---------------------------------------------------------------------
Net asset value, end of period ........................... $24.000 $25.630 $31.600 $31.190 $24.930 $23.430
=====================================================================
Total return(3) .......................................... 1.49% (5.45%) 8.72% 34.25% 14.42% 9.72%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $1,876 $1,942 $1,631 $1,112 $712 $104
Ratio of expenses to average net assets ................ 2.63% 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 ...... 2.63% 2.31% 2.46% 2.57% 2.47% 2.43%
Ratio of net investment income (loss) to average
net assets ........................................... (0.87%) (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 ............................. (0.87%) (0.21%) (0.53%) (0.74%) 0.14% (0.73%)
Portfolio turnover ..................................... 10% 43% 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
12
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Growth Stock Fund Institutional Class
-------------------------------------------------------------------------------------------------------------
Period From
Six Months Year Ended 8/29/97(1) to
Ended 10/31/00 4/30/00 4/30/99 4/30/98(2)
(Unaudited)(4)
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $26.700 $32.840 $32.030 $27.520
Income from investment operations:
Net investment income (loss) ........................... 0.016 0.229 0.153 0.047
Net realized and unrealized gain (loss) on
investments .......................................... 0.464 (1.547) 2.802 5.803
--------------------------------------------
Total from investment operations ....................... 0.480 (1.318) 2.955 5.850
--------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................... -- (0.375) -- (0.040)
Distributions from net realized gain on investments .... (1.960) (4.447) (2.145) (1.300)
--------------------------------------------
Total dividends and distributions ...................... (1.960) (4.822) (2.145) (1.340)
--------------------------------------------
Net asset value, end of period ........................... $25.220 $26.700 $32.840 $32.030
============================================
Total return(3) .......................................... 2.02% (4.59%) 9.79% 21.41%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $2,490 $1,467 $1,860 $799
Ratio of expenses to average net assets ................ 1.63% 1.31% 1.43% 1.50%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ...... 1.63% 1.31% 1.46% 1.57%
Ratio of net investment income to average net assets ... 0.13% 0.79% 0.50% 0.33%
Ratio of net investment income to average net
assets prior to expense limitation and expenses
paid indirectly ...................................... 0.13% 0.79% 0.47% 0.26%
Portfolio turnover ..................................... 10% 43% 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
13
<PAGE>
Notes to Financial Statements
October 31, 2000 (Unaudited)
--------------------------------------------------------------------------------
Voyageur Mutual Funds III (the "Trust") is organized as a Delaware Business
Trust and offers three series: Delaware Select 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 is registered as a diversified open-end investment company under the
Investment Company Act of 1940, as amended. The Fund offers four classes of
shares. The A Class carries a maximum front-end sales charge of 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 among
individual 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.
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated among the funds on the basis of average net assets. Security
transactions are recorded on the date the securities are purchased or sold
<PAGE>
(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 $505 for the period ended October 31, 2000. The
expenses paid under the above arrangements are included in the 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 $1.5 billion and 0.50% on the average daily net assets in
excess $2.5 billion. At October 31, 2000 the Fund had a liability for Investment
Management fees and other expenses payable to DMC of $10,326.
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.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to provide dividend disbursing, transfer agent, accounting and administration
services. The Fund pays DSC a monthly fee based on the number of shareholder
accounts, shareholder transactions and average net assets, subject to certain
minimums. At October 31, 2000, the Fund had a liability for such fees and other
expense payable to DSC of $19,777.
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 Class. At October 31, 2000, the Fund had
a liability for distribution fees and other expenses payable to DDLP of $3,408.
For the period ended October31, 2000, DDLP earned $3,408 for commissions on
sales of the Fund A Class shares.
Certain officers of DMC, DSC and DDLP are officers, trustees and/or employees of
the Fund. These officers, trustees and employees are paid no compensation by the
Fund.
14
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
3. Investments
For the period ended October 31, 2000, the Fund made purchases of $4,234,575 and
sales of $4,735,248 of investment securities other than U.S. government
securities and temporary cash investments.
At October 31, 2000 the cost of investments for federal income tax purposes
approximates the cost for book purposes. At October 31, 2000 the cost of
investments was $36,712,303. At October 31, 2000, the net unrealized
appreciation aggregated $6,602,103 of which $10,292,316 related to unrealized
appreciation of securities and $3,690,213 related to unrealized depreciation of
securities.
4. Capital Shares
Transactions in capital shares were as follows:
Six Months
Ended Year Ended
10/31/00 4/30/00
(Unaudited)
Shares sold:
A Class ............................................ 68,958 204,573
B Class ............................................ 24,542 113,526
C Class ............................................ 12,846 34,884
Institutional Class ................................ 62,830 38,501
Shares issued upon reinvestment
of distributions:
A Class ............................................ 100,631 217,621
B Class ............................................ 17,143 25,717
C Class ............................................ 5,235 8,936
Institutional Class ................................ 4,005 9,905
------- -------
296,190 653,663
------- -------
Shares repurchased:
A Class ............................................ (161,798) (465,761)
B Class ............................................ (37,133) (63,238)
C Class ............................................ (15,697) (19,678)
Institutional Class ................................ (23,048) (50,093)
------- -------
(237,676) (598,770)
------- -------
Net increase ......................................... 58,514 54,893
======= =======
5. Line of Credit
The Fund along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participate in a $375,400,000 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. The
Fund had no amount outstanding as of October 31, 2000, or at any time during the
period.
15
<PAGE>
This page intentionally left blank.
<PAGE>
DELAWARE INVESTMENTS FAMILY OF FUNDS
------------------------------------
More information on any fund offered by Delaware Investments can be found in
each fund's current prospectus. Prospectuses for all funds offered by Delaware
Investments are available from your financial adviser. Please read the
prospectus carefully before you invest or send money.
<TABLE>
<CAPTION>
<S> <C> <C>
Growth of Capital International and Global Tax-Exempt Income
o Technology and Innovation o Emerging Markets Fund o National High-Yield
Fund o New Pacific Fund Municipal Bond Fund
o Select Growth Fund o Overseas Equity Fund o Tax-Free USA Fund
o Trend Fund o International Equity Fund o Tax-Free Insured Fund
o Growth Opportunities Fund* o Global Equity Fund o Tax-Free USA
o Small Cap Value Fund o Global Bond Fund Intermediate Fund
o U.S. Growth Fund o State Tax-Free Funds**
o Tax-Efficient Equity Fund Current Income
o Social Awareness Fund o High-Yield Stability of Principal
Opportunities Fund o Cash Reserve
Total Return o Delchester Fund o Tax-Free Money Fund
o Blue Chip Fund o Extended Duration
o Devon Fund Bond Fund Asset Allocation
o Growth and Income Fund o Strategic Income Fund o Foundation Funds
o Decatur Equity o Corporate Bond Fund Growth Portfolio
Income Fund o American Government Balanced Portfolio
o REIT Fund Bond Fund Income Portfolio
o Balanced Fund o U.S. Government
Securities Fund
o Limited-Term
Government Fund
</TABLE>
*Formerly known as DelCap Fund.
**Available for the following states: Arizona, California, Colorado, Florida,
Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, New Jersey,
New Mexico, New York, Oregon, Pennsylvania and Wisconsin. Insured and
intermediate bond funds are available in selected states.
<PAGE>
DELAWARE(SM)
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 semi-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.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
BOARD OF TRUSTEES Charles E. Peck Investment Manager
Retired Delaware Management Company
Wayne A. Stork Fredericksburg, VA Philadelphia, PA
Chairman
Delaware Investments Family of Funds Janet L. Yeomans International Affiliate
Philadelphia, PA Vice President and Treasurer Delaware International Advisers Ltd.
3M Corporation London, England
Walter P. Babich St. Paul, MN
Board Chairman Subadviser
Citadel Constructors, Inc. AFFILIATED OFFICERS Voyageur Asset Management, LLC
King of Prussia, PA Minneapolis, MN
Charles E. Haldeman, Jr.
David K. Downes President and Chief Executive Officer National Distributor
President and Chief Executive Officer Delaware Management Holdings, Inc. Delaware Distributors, L.P.
Delaware Investments Family of Funds Philadelphia, PA Philadelphia, PA
Philadelphia, PA
Richard J. Flannery Shareholder Servicing, Dividend
John H. Durham Executive Vice President Disbursing and Transfer Agent
Private Investor and General Counsel Delaware Service Company, Inc.
Horsham, PA Delaware Investments Family of Funds Philadelphia, PA
Philadelphia, PA
Anthony D. Knerr 2005 Market Street
Consultant, Anthony Knerr & Associates Bruce D. Barton Philadelphia, PA 19103-3682
New York, NY President and Chief Executive Officer
Delaware Distributors, L.P.
Ann R. Leven Philadelphia, PA
Former Treasurer, National Gallery of Art
Washington, DC
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
</TABLE>
(4086) Printed in the USA
SA-409 [10/00] BP 12/00 (J6553)
