June 15, 1998
Dear Shareholder:
We are pleased to present the 1998 semi-annual report for three
of our newest funds - International Small Cap Fund, Global Equity and
Retirement Income Fund.
To expand international investing choices within the Delaware
Investments family of mutual funds, we began operating International
Small Cap Fund on December 19, 1997. Our timing was fortuitous. The Fund
provided an attractive total return as many international markets
rallied during the Fund's initial fiscal period. International Small Cap
Fund's largest country weightings were the United Kingdom (20.4%) and
Japan (15.5%) as of May 31.
Global Equity Fund, to be known as Global Opportunities Fund
effective July 21, 1998, taps the combined skills of Delaware's domestic
and international investment teams. Absolute returns have been strong
over the period as the Fund benefited from the surge in European and
American stock markets since November, as shown on the next page. The
Fund invests primarily in a combination of U.S. stocks and stocks in
established overseas markets using a consistent global discipline. As of
May 31, 1998, foreign stocks represented 61% of your Fund's net assets,
an increase of one percentage point from six months earlier.
In the U.S., Retirement Income Fund has faced a sluggish
period since autumn. We held a substantial position (17% of net assets)
in stocks of domestic real estate investment trusts (REITs) as of May
31. While this provided substantial income, the Fund's positioning did
not allow us to achieve as much capital appreciation from U.S. equities
as we would have liked.
REIT investors have expressed concern about pending federal
legislation that may affect the industry. Weakness in REIT share prices
during the first half of fiscal 1998 was partially offset by
the Fund's focus on industrial, financial and other common stocks.
Retirement Income Fund invests in a mix of domestic stocks, higher risk,
high-yield corporate bonds and convertible securities.
As of May 31, 1998, Retirement Income Fund's SEC yield was
4.88% for Institutional Class shares and 4.65% for A Class shares. This
was more than three times the average 1.42% yield of stocks in the S&P
500 Index. We believe the Fund may be an appropriate investment for
long-term, risk-conscious equity investors.
On behalf of Delaware Investments, we thank you for being charter
shareholders.
Sincerely,
Wayne A. Stork Robert L. Arnold, domestic equities
Chairman Global Equity Fund
Jeffrey J. Nick Elizabeth A. Desmond, overseas equities
President and Chief Global Equity Fund
Executive Officer
Babak Zenouzi, equities Paul A. Matlack, fixed-income
Retirement Income Fund Retirement Income Fund
Timothy W. Sanderson
International Small Cap Fund
PERFORMANCE SUMMARY
INTERNATIONAL SMALL CAP FUND
Cumulative Returns
Through May 31, 1998
LIFETIME
Class A (Est. 12/19/97)
Excluding Sales Charge +14.94%
Including Sales Charge +9.53%
Institutional Class +14.94%
GLOBAL EQUITY FUND
Cumulative Returns
Through May 31, 1998
LIFETIME SIX MONTHS
Class A (Est. 7/22/97)
Excluding Sales Charge +9.35% +12.81%
Including Sales Charge +4.20% +7.46%
Institutional Class +9.23% +12.81%
RETIREMENT INCOME FUND
Average Annual/Cumulative
Returns Through May 31, 1998
LIFETIME ONE YEAR SIX MONTHS
Class A (Est. 12/2/96)
Excluding Sales Charge +30.01% +27.41% +7.05%
Including Sales Charge +25.88% +21.36% +1.99%
Institutional Class +29.94% +27.31% +7.06%
The maximum sales charge for A Class shares is 4.75%. Shares may be
purchased at net asset value under certain circumstances. Class A shares
have a 12b-1 fee that has been waived since inception. Voluntary expense
caps have been in effect. Returns would have been lower without the
caps.
INTERNATIONAL STOCKS INVOLVE GREATER RISKS THAN INVESTING IN U.S.
STOCKS. RETURN AND SHARE VALUE WILL FLUCTUATE SO THAT SHARES WHEN
REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. ALL RESULTS
INCLUDE REINVESTMENT OF DISTRIBUTIONS. PAST PERFORMANCE IS NOT A
GUARANTEE OF FUTURE RESULTS.
THIS SEMI-ANNUAL REPORT IS FOR THE INFORMATION OF INTERNATIONAL SMALL
CAP FUND, GLOBAL EQUITY FUND AND RETIREMENT INCOME FUND SHAREHOLDERS,
BUT IT MAY BE USED WITH PROSPECTIVE INVESTORS WHEN ACCOMPANIED BY
CURRENT PROSPECTUSES FOR EACH FUND, WHICH SET FORTH DETAILS ABOUT
CHARGES, EXPENSES, INVESTMENT OBJECTIVES AND OPERATING POLICIES OF EACH
FUND. YOU SHOULD READ ANY PROSPECTUS CAREFULLY BEFORE YOU INVEST.
SUMMARY INVESTMENT RESULTS ARE DOCUMENTED IN EACH FUND'S CURRENT
STATEMENT OF ADDITIONAL INFORMATION.
<TABLE>
<CAPTION>
DELAWARE GROUP EQUITY FUNDS V, INC. -
RETIREMENT INCOME FUND
STATEMENT OF NET ASSETS
MAY 31, 1998
(UNAUDITED)
NUMBER MARKET
OF SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCK - 35.77%
AUTOMOBILES AND AUTOMOTIVE PARTS - 6.60%
Chrysler 2,000 $ 111,250
General Motors 1,200 86,325
---------- ----------
197,575
----------
BANKING, FINANCE AND INSURANCE - 6.32%
Indymac Mortgage Holdings 4,000 94,750
Mellon Bank 1,400 94,413
----------
189,163
----------
FOOD, BEVERAGE AND TOBACCO - 1.50%
Philip Morris 1,200 44,850
----------
44,850
----------
REAL ESTATE - 17.41%
Corporate Office Properties 5,500 56,375
Crescent Real Estate 1,500 37,125
Excel Realty Trust 1,800 49,050
Glenborough Realty Trust 3,000 84,375
Grove Property Trust 8,000 82,500
Reckson Associates Realty 2,200 52,525
Smith(Charles E.)Residential Realty 2,500 80,938
Starwood Lodging Trust 1,650 77,859
----------
520,747
----------
MISCELLANEOUS - 3.94%
Dollar General (Strypes) 1,100 42,625
Pitney Bowes 1,600 75,200
----------
117,825
----------
TOTAL COMMON STOCK (COST $898,706) 1,070,160
----------
CONVERTIBLE PREFERRED STOCKS - 20.40%
Banking, Finance and Insurance - 2.75%
SunAmerica 3.188% 1,750 82,250
----------
82,250
----------
CABLE, MEDIA AND PUBLISHING - 2.06%
MetroMedia International Group 7.25% 1,100 61,600
----------
61,600
----------
CONSUMER PRODUCTS - 2.27%
Cendant 7.50% 1,800 67,950
----------
67,950
----------
HEALTHCARE AND PHARMACEUTICALS - 1.76%
Herbalife DECS III 8.75% 2,300 52,613
----------
52,613
----------
TELECOMUNICATIONS - 3.39%
*Winstar Communications 7.00% 2,000 101,500
----------
101,500
----------
TRANSPORTATION - 1.84%
Union Pacific Capital Trust 6.25% 1,100 55,000
----------
55,000
----------
UTILITIES - 4.70%
*Calenergy Capital Trust 6.50% 1,200 57,150
Houston Industries 7.00% 1,200 83,550
----------
140,700
----------
MISCELLANEOUS - 1.63%
*Ingersoll-Rand 6.75% 2,000 48,750
----------
48,750
----------
TOTAL CONVERTIBLE PREFERRED STOCKS (COST $529,086) 610,363
----------
PRINCIPAL
AMOUNT
----------
CORPORATE BONDS - 25.25%
Aerospace and Defense - 0.86%
Roller Bearing 9.625% 6/15/07 $ 25,000 25,656
----------
25,656
----------
AUTOMOBILE AND AUTOMOTIVE PARTS - 1.81%
Motors and Gears 10.75% 11/15/06 50,000 54,000
----------
54,000
----------
BUILDING AND MATERIALS - 3.55%
American Builders and Contractors sr
sub nts 10.625% 05/15/07 25,000 25,938
Atrium sr sub nts 10.50% 11/15/06 50,000 53,250
Clark Materials Handling 10.75% 11/15/06 25,000 27,000
----------
106,188
----------
COMPUTER AND TECHNOLOGY - 0.50%
Decisionone Holdings 11.50% 08/01/08 25,000 14,875
----------
14,875
----------
CONSUMER PRODUCTS - 4.46%
Consumers International sr nts 10.25% 04/01/05 25,000 27,438
Precise Technology 11.125% 06/15/07 25,000 26,000
Riddell Sports 10.50% 07/15/07 25,000 26,375
William Carter 10.375% 12/01/06 50,000 53,688
----------
133,501
----------
ELECTRONICS AND ELECTRICAL EQUIPMENT - 1.58%
Fairchild Semiconductor 10.125% 3/15/07 20,000 20,750
HCC Industries sr sub nts 10.75% 5/15/07 25,000 26,500
----------
47,250
----------
ENERGY - 0.85%
Panaco 10.625% 10/1/04 25,000 25,250
----------
25,250
----------
ENVIRONMENTAL SERVICES - 1.75%
Hydrochem Industrial Services 10.375% 08/01/07 50,000 52,500
----------
52,500
----------
LEISURE, LODGING AND ENTERTAINMENT - 3.74%
AFC Enterprises 10.25% 05/15/07 10,000 10,625
Hollywood Theaters 10.625% 08/01/07 25,000 27,031
Town Sports International 9.75% 10/15/04 25,000 25,125
Trump-Atlantic City 11.25% 05/01/06 50,000 49,125
----------
111,906
----------
PACKAGING AND CONTAINERS - 0.85%
Huntsman Packaging 9.125% 10/01/07 25,000 25,531
----------
25,531
----------
RETAIL - 2.67%
Fleming sr sub nts 10.625% 12/15/01 50,000 53,500
Leslie's Poolmart 10.375% 07/15/04 25,000 26,500
----------
80,000
----------
TRANSPORTATION AND SHIPPING - 1.77%
Chemical Leaman 10.375% 06/15/05 50,000 53,000
----------
53,000
----------
MISCELLANEOUS - 0.86%
Burke Industries 10.00% 08/15/07 25,000 25,625
----------
25,625
----------
TOTAL CORPORATE BONDS (COST $779,130) 755,282
----------
CONVERTIBLE BONDS - 17.94%
Automobiles and Automotive Parts - 2.25%
Magna International 4.875% 02/15/05 60,000 67,275
----------
67,275
----------
BANKING, FINANCE AND INSURANCE - 2.25%
Bell Atlantic Financial Services 5.75% 04/01/03 65,000 67,438
----------
67,438
----------
CABLE, MEDIA AND PUBLISHING - 1.71%
World Color Press 6.00% 10/01/07 50,000 51,313
----------
51,313
----------
COMPUTER AND TECHNOLOGY - 2.35%
Platinum Technology 6.25% 12/15/02 65,000 70,200
----------
70,200
----------
ENERGY - 1.78%
Parker Drilling 5.50% 08/01/04 58,000 53,360
----------
53,360
----------
MISCELLANEOUS - 7.60%
Corestaff 2.94% 08/15/04 65,000 57,850
Smartalk Teleservices 5.75% 09/15/04 55,000 51,700
Tel-Save Holdings 4.50% 09/15/02 50,000 47,000
Thermo Fibertek 4.50% 07/15/04 65,000 70,688
----------
227,238
----------
TOTAL CONVERTIBLE BONDS (COST $523,578) 536,824
----------
REPURCHASE AGREEMENTS - 0.97%
With Chase Manhattan 5.53% 06/01/98
(dated 05/29/98, collateralized by $10,000
U.S. Treasury Notes 6.625% due 04/30/02
market value $10,552) 10,300 10,300
With J.P. Morgan Securities 5.55% 06/01/98
(dated 05/29/98, collateralized by $9,000
U.S. Treasury Notes 6.00% due 06/30/99
market value $9,852) 9,700 9,700
With PaineWebber 5.55% 06/01/98
(dated 05/29/98, collateralized by $4,000
U.S. Treasury Notes 5.75% due 11/15/00
market value $4,494 and $4,000
U.S. Treasury Notes 7.50% due 11/15/01
market value $4,704) 9,000 9,000
----------
TOTAL REPURCHASE AGREEMENTS (COST $29,000) 29,000
----------
TOTAL MARKET VALUE OF SECURITIES - 100.33%
(COST $2,759,500) $3,001,629
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (0.33%) (9,745)
----------
NET ASSETS APPLICABLE TO 281,842 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% $2,991,884
==========
NET ASSET VALUE - RETIREMENT INCOME FUND A CLASS
($22,933 / 2,158 SHARES) $10.63
==========
NET ASSET VALUE - RETIREMENT INCOME FUND INSTITUTIONAL CLASS
($2,968,951 / 279,684 SHARES) $10.62
==========
COMPONENTS OF NET ASSETS AT MAY 31, 1998:
Common stock, $.01 par value, 200,000,000 shares
authorized to the Fund with 100,000,000 shares
allocated to Retirement Income Fund A Class,
25,000,000 shares allocated to Retirement Income
Fund B Class, 25,000,000 shares allocated to Retirement
Income Fund C Class and 50,000,000 shares allocated
to Retirement Income Fund Institutional Class $2,462,477
Undistributed net investment income 73,547
Accumulated net realized gain on investments 213,731
Net unrealized appreciation of investments 242,129
----------
Total net assets $2,991,884
==========
------------------------------------------------------------
* Non-income producing security.
nts - notes sub - subordinate sr - senior
MARKET
VALUE
----------
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
RETIREMENT INCOME FUND A CLASS:
Net asset value A Class (A) $ 10.63
Sales charge (4.75% of offering price or 4.99% of the
amount invested per share)(B) 0.53
----------
Offering price $ 11.16
==========
(A) Net asset value per share, as illustrated, is the
estimated amount which would be paid upon
redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for
purchases of $100,000 or more.
</TABLE>
<TABLE>
<CAPTION>
DELAWARE GROUP EQUITY FUNDS V, INC. -
RETIREMENT INCOME FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1998
(Unaudited)
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 55,344
Dividends 42,331 $97,675
---------- ----------
EXPENSES:
Management fees 9,492
Reports and statements to shareholders 3,326
Custodian fees 2,632
Professional fees 1,183
Registration fees 1,050
Directors' fees 934
Accounting and administrative fees 742
Dividend disbursing and transfer agent fees and expenses 618
Taxes (other than taxes on income) 175
Other 532
20,684
Less expenses absorbed by Delaware Management
Company (9,784) 10,900
----------
NET INVESTMENT INCOME 86,775
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investment transactions 213,893
Net change in unrealized appreciation /
depreciation of investments (105,312)
----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 108,581
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $195,356
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
DELAWARE GROUP EQUITY FUNDS V, INC. -
RETIREMENT INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS 12/2/1996*
ENDED TO
5/31/98 11/30/97
(UNAUDITED)
----------- -----------
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income $ 86,775 $ 131,919
Net realized gain on investment transactions 213,893 284,110
Net unrealized appreciation/depreciation of
investments during the period (105,312) 347,441
----------- -----------
Net increase in net assets resulting from operations 195,356 763,470
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Retirement Income Fund A Class (263) (1)
Retirement Income Fund Institutional Class (134,766) (10,117)
Net realized gain on investment transactions:
Retirement Income Fund A Class (553) --
Retirement Income Fund Institutional Class (283,719) 0
----------- -----------
(419,301) (10,118)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Retirement Income Fund A Class 19,845 8,266
Retirement Income Fund Institutional Class 13,498 2,000,007
Net asset value of shares issued upon reinvestment
of dividends from net investment income and net
realized gain on investment transactions:
Retirement Income Fund A Class 816 1
Retirement Income Fund Institutional Class 418,484 10,117
----------- -----------
452,643 2,018,391
Cost of shares repurchased:
Retirement Income Fund A Class (6,557) --
Retirement Income Fund Institutional Class (2,000) --
(8,557) --
Increase in net assets derived from capital
share transactions 444,086 2,018,391
NET INCREASE IN NET ASSETS 220,142 2,771,743
NET ASSETS:
Beginning of period 2,771,743 --
End of period $2,991,885 $2,771,743
* Date of commencement of trading
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each period were
as follows:
RETIREMENT INCOME FUND A CLASS
------------------------------
12/01/97 12/02/96(3)
TO TO
05/31/98(2) 11/30/97
(UNAUDITED)
<S> <C> <C>
Net asset value, beginning of period $ 11.700 $ 8.500
Income from investment operations:
Net investment income (1) 0.315 0.558
Net realized and unrealized gain on
investment transactions 0.850 2.685
Total from investment operations 0.700 3.243
Less dividends:
Dividends from net investment income (0.570) (0.043)
Distributions from net realized gain
on security transactions (1.200) none
---------- ----------
Total dividends (1.770) (0.043)
Net asset value, end of period $ 10.630 $ 11.700
Total return (4) 7.05% 38.31%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 23 $ 9
Ratio of expenses to average net assets 0.75% 0.75%
Ratio of expenses to average net assets
prior to expense
limitation 1.42% 2.18%
Ratio of net investment income to average
net assets 6.30% 5.48%
Ratio of net investment income to average
net assets prior
to expense limitation 5.63% 4.05%
Portfolio turnover 108% 196%
RETIREMENT INCOME FUND
INSTITUTIONAL CLASS
---------------------
12/01/97 12/02/96(3)
TO TO
05/31/98(2) 11/30/97
(UNAUDITED)
Net asset value, beginning of period $ 11.690 $ 8.500
Income from investment operations:
Net investment income (1) 0.315 0.558
Net realized and unrealized gain on
investment transactions 0.385 2.675
Total from investment operations 0.700 3.233
Less dividends:
Dividends from net investment income (0.570) (0.043)
Distributions from net realized gain
on security transactions (1.200) none
Total dividends (1.770) (0.043)
Net asset value, end of period $ 10.620 $ 11.690
Total return (4) 7.06% 38.19%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 2,969 $ 2,763
Ratio of expenses to average net assets 0.75% 0.75%
Ratio of expenses to average net assets
prior to expense
limitation 1.42% 1.88%
Ratio of net investment income to average
net assets 5.95% 5.48%
Ratio of net investment income to average
net assets prior
to expense limitation 5.29% 4.35%
Portfolio turnover 108% 196%
(1) Per share information was based on the average shares outstanding method.
(2) Ratios have been annualized and total return have not been annualized.
(3) Date of commencement of trading; ratios have been annualized and total
returns have not been annualized.
(4) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares.
See accompanying notes
</TABLE>
DELAWARE GROUP EQUITY FUND V, INC - RETIREMENT INCOME FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998
(UNAUDITED)
Delaware Group Equity Funds V, Inc. is registered as a diversified
open-end investment company under the Investment Company Act of 1940, as
amended. The Delaware Group Equity Funds V currently offers two Series,
Small Cap Value Fund and Retirement Income Fund. These financial
statements and related notes pertain to Retirement Income Fund (the
"Fund"). The Fund is organized as a Maryland Corporation and offers four
classes of shares. The Retirement Income Fund A Class carries a
front-end sales charge of 4.75%. The Retirement Income Fund B Class
carries a back-end deferred sales charge. The Retirement Income Fund C
Class carries a level load deferred sales charge and Retirement Income
Fund Institutional Class has no sales charge. As of May 31, 1998 only
the Retirement Income Fund A Class and the Retirement Income Fund
Institutional Class have commenced operations.
The objective of the Fund is to seek to provide investors with high
current income and an investment that has the potential for capital
appreciation.
1. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with generally
accepted accounting principles and are consistently followed by the Fund.
SECURITY VALUATION - Securities listed on an exchange are valued at the
last quoted sales price as of the close of the NYSE on the valuation
date. Securities not traded or securities not listed on an exchange are
valued at the mean of the last quoted bid and asked prices. Long-term
debt securities are valued by an independent pricing service and such
prices are believed to reflect the fair value of such securities. Money
market instruments having less than 60 days to maturity are valued at
amortized cost which approximates market value. Other securities and
assets for which market quotations are not readily available are valued
at fair value as determined in good faith by or under the direction of
the Fund's Board of Directors.
FEDERAL INCOME TAXES - The Fund intends to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes has been made in the
financial statements. Income and capital gain distributions are determined
in accordance with federal income tax regulations which may differ from
generally accepted accounting principles.
CLASS ACCOUNTING - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various
classes of the Fund on the basis of daily net assets of each class.
Distribution expenses relating to a specific class are charged directly
to that class.
REPURCHASE AGREEMENTS - The Fund may invest in a pooled cash account
along with other members of the Delaware Investments Family of Funds. The
aggregate daily balance of the pooled cash account is invested in
repurchase agreements secured by obligations of the U.S. government.
The respective collateral is held by the Fund's custodian bank until the
maturity of the respective repurchase agreements. Each repurchase
agreement is at least 100% collateralized. However, in the event of
default or bankruptcy by the counterparty to the agreement, realization
of the collateral may be subject to legal proceedings.
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.
Certain Fund expenses are paid through "soft dollar" arrangements with
brokers. The amount of these expenses is less than 0.01% of the Fund's
average daily net assets.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
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, 0.625% on the next
$500 million and 0.60% on the average daily net assets in excess of $1
billion. At May 31, 1998 the Fund had a liability for other expenses
payable to DMC of $5,283.
DMC has elected to waive that portion if any of the management fee and
reimburse the Fund to the extent that annual operating expenses exclusive
of taxes, interest, distribution fees, brokerage commissions and
extraordinary expenses, exceed 0.75% of average daily net assets of the
Fund through November 30, 1998. Total expenses absorbed by DMC for the
six months ended May 31, 1998 were $9,784.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate
of DMC, to provide dividend disbursing, transfer agent and accounting
services. For the six months ended May 31, 1998, the Fund expensed $618
for dividend disbursing and transfer agent services and $607 for
accounting services. At May 31, 1998, the Fund had a liability for such
fees and other expenses payable to DSC of $6,011.
Pursuant to the Distribution Agreement, the Fund pays Delaware
Distributors, L.P. (DDLP), the Distributor and an affiliate of DMC, an
annual fee not to exceed 0.30% of the average daily net assets of the A
Class and 1.00% of the average daily net assets of the B and C Class.
DDLP has elected voluntarily to waive its rights to receive 12B-1 Plan
fees (including service fees) from the commencement of operations of A
Class shares of the Fund through November 30, 1998. At May 31, 1998, the
Fund had a liability to DDLP of $3,624.
Certain officers of DMC, DSC and DDLP are officers, directors and/or
employees of the Fund. These officers, directors and employees are paid
no compensation by the Fund.
3. INVESTMENTS
During the six months ended May 31, 1998, the Fund made purchases of
$1,702,064 and sales of $1,554,607 of investment securities other than
U.S. government securities and temporary cash investments.
At May 31, 1998, the aggregate cost of securities for federal income tax
purposes was $2,759,500.
At May 31, 1998, net unrealized appreciation for federal income tax
purposes aggregated $242,129 of which $283,423 related to unrealized
appreciation of securities and $41,294 related to unrealized depreciation
of securities.
At May 31, 1998 the fund had a payable of $15,099 for securities
purchased.
4. CAPITAL STOCK
Transactions in capital stock shares were as follows:
Six Months 12/02/96 *
Ended To
5/31/98 11/30/97
---------- ----------
Shares sold:
Retirement Income Fund A Class 1,933 742
Retirement Income Fund
Institutional Class 1,251 235,295
Shares issued upon reinvestment
of dividends from
net investment income:
Retirement Income Fund A Class 82 --
Retirement Income Fund
Institutional Class 42,186 1,137
---------- ----------
45,452 1,137
---------- ----------
Shares repurchased:
Retirement Income Fund A Class (599) --
Retirement Income Fund
Institutional Class (185) --
---------- ----------
(784) --
---------- ----------
Net Increase 44,668 237,174
========== ==========
* Date of commencement of trading
5. LINE OF CREDIT
The Fund has a committed line of credit for $100,000. No amount was
outstanding at May 31, 1998, or at anytime during the fiscal year.
6. MARKET AND CREDIT RISK
The Fund may invest up to 15 % of its total assets in illiquid securities
which may include securities with contractual restrictions on resale,
securities exempt from registration under Rule 144A of the Securities
Act of 1933, as amended, and other securities which may not be readily
marketable. The relative illiquidity of some of these securities may
adversely affect the Fund's ability to dispose of such securities in a
timely manner and at a fair price when it is necessary to liquidate
such securities.
<TABLE>
<CAPTION>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
GLOBAL EQUITY SERIES
STATEMENT OF NET ASSETS
MAY 31, 1998
(UNAUDITED)
MARKET
NUMBER VALUE
OF SHARES (U.S. $)
---------- ----------
<S> <C> <C>
COMMON STOCK - 98.84%
Australia - 7.73%
Amcor Limited 11,410 $ 52,598
CSR Limited 19,460 56,855
Foster's Brewing Group 31,440 67,962
National Australia Bank 3,920 54,075
Orica 3,300 22,099
----------
253,589
----------
BELGIUM - 2.66%
Electrabel 350 87,428
----------
87,428
----------
FRANCE - 6.54%
Alcatel Alsthom 200 42,720
Compagnie de Saint Gobain 250 49,228
Elf Aquitaine 502 69,614
Societe Generale 268 52,996
----------
214,558
----------
GERMANY - 8.63%
Bayer AG 1,460 69,586
Bayerische Vereinsbank AG 900 75,357
Rheinisch Westfaelisches Elek 1,180 62,717
Siemens AG 1,150 75,357
----------
283,017
----------
HONG KONG - 1.55%
Hong Kong Electric 9,500 27,890
Wharf (Holdings) Limited 18,000 22,995
----------
50,885
----------
JAPAN - 3.00%
Canon 1,000 23,758
Eisai 1,000 13,233
Koito Manufacturing 5,000 24,118
West Japan Railway 10 37,437
----------
98,546
----------
MALAYSIA - 0.73%
Sime Darby Berhad 30,000 23,874
----------
23,874
----------
NETHERLANDS - 1.34%
Royal Dutch Petroleum 770 43,848
----------
43,848
----------
NEW ZEALAND - 2.88%
Carter Holt Harvey Limited 20,160 23,807
Telecom Corporation of New Zealand Class A 3,070 8,055
Telecom Corporation of New Zealand 13,620 62,589
----------
94,451
----------
SPAIN - 2.89%
Iberdrola 2,420 39,889
Telefonica de Espana 1,232 54,992
----------
94,881
----------
UNITED KINGDOM - 22.94%
Associated British Food 4,500 41,371
Bass 4,705 87,132
Blue Circle Industry 10,251 65,142
Boots 6,000 91,723
Cable & Wireless 7,880 89,286
GKN 7,140 105,947
Glaxo Wellcome 3,660 99,720
PowerGen 7,000 88,223
Taylor Woodrow 22,500 84,063
----------
752,607
----------
UNITED STATES - 37.95%
American Home Products 1,400 67,638
Aon 800 51,250
Bank of Boston 700 73,762
Bankers Trust 500 61,750
Bausch & Lomb 1,000 49,813
Baxter International 900 51,469
Browning Ferris 1,500 53,344
ConAgra 1,400 40,950
Crestar Financial 1,000 57,437
Federal National Mortgage 900 53,888
General Motors 900 64,744
GTE 1,000 58,312
Hercules 1,000 44,063
Jardine Matheson Holdings 6,800 20,672
May Department Stores 1,000 64,312
McGraw-Hill 800 62,550
Mellon Bank 1,000 67,438
Philip Morris 1,400 52,325
Pitney Bowes 1,400 65,800
Tenneco 1,200 49,950
Ultramar Diamond Shamrock 1,400 44,712
Union Pacific 900 43,538
USX-Marathon Group 1,300 45,500
----------
1,245,217
----------
TOTAL COMMON STOCK (COST $3,123,042) 3,242,901
==========
MARKET
PRINICIPAL VALUE
AMOUNT (U.S. $)
---------- ----------
REPURCHASE AGREEMENTS - 0.58%
With Chase Manhattan 5.53% 6/1/98
(dated 5/29/98, collateralized by $7,000 U.S.
Treasury Notes 6.625% due 4/30/02, market
value $6,913) $ 7,000 $ 7,000
With J.P. Morgan Securities 5.55% 6/1/98
(dated 5/29/98, collateralized by $6,000 U.S.
Treasury Notes 6.00% due 6/30/99, market
value $6,455) 6,000 6,000
With PaineWebber 5.55% 6/1/98
(dated 5/29/98, collateralized by $3,000 U.S.
Treasury Notes 5.75% due 11/15/00, market value
$2,944 and $3,000 U.S. Treasury Notes 7.50%
due 11/15/01, market value $3,082) 6,000 6,000
----------
TOTAL REPURCHASE AGREEMENTS (COST $19,000) 19,000
----------
TOTAL MARKET VALUE OF ALL SECURITIES - 99.42%
(COST $3,142,042) $3,261,901
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.58% 19,109
----------
NET ASSETS APPLICABLE TO 358,315 SHARES
($.01 PAR VALUE ) OUTSTANDING - 100.00% $3,281,010
==========
NET ASSET VALUE - GLOBAL EQUITY SERIES A CLASS
($5,369 / 586 SHARES) $ 9.16
==========
NET ASSET VALUE - GLOBAL EQUITY SERIES INSTITUTIONAL CLASS
($3,275,641 / 357,729 SHARES) $ 9.16
==========
COMPONENTS OF NET ASSETS AT MAY 31, 1998:
Common stock, $.01 par value, 200,000,000 shares
authorized to the Series with 100,000,000 shares
allocated to Global Equity Series A Class,
25,000,000 shares allocated to Global Equity Series
B Class, 25,000,000 shares allocated to Global Equity
Series C Class and 50,000,000 shares allocated to
Global Equity Series Institutional Class $3,043,857
Undistributed net investment income * 27,839
Accumulated net realized gain on investments 90,487
Net unrealized unrealized appreciation of investments and foreign
currencies 118,827
----------
Total net assets $3,281,010
==========
* Undistributed net investment income includes net realized gains
(losses) on foreign currencies. Net realized gains on foreign
currencies are distributed as net investment income in
accordance with provisions of the Internal Revenue Code.
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
GLOBAL EQUITY SERIES A CLASS:
Net asset value A Class (A) $9.16
Sales charge ( 4.75% of offering price or 5.02% of the amount
invested per share) (B) 0.46
----------
Offering price $9.62
==========
(A) Net asset value per share, as illustrated, is the estimated
amount which would be paid upon redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for the purchases
of $100,000 or more.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
INTERNATIONAL SMALL CAP SERIES
STATEMENT OF NET ASSETS
MAY 31, 1998
(UNAUDITED) MARKET
NUMBER VALUE
OF SHARES (U.S. $)
---------- ----------
<S> <C> <C>
COMMON STOCK - 93.55%
Argentina - 0.80%
Transportadora de Gas del sur, -Class B 13,000 $ 27,572
----------
27,572
----------
AUSTRALIA - 5.63%
David Jones 29,500 35,835
GIO Australia Holdings 18,000 50,459
National Foods 28,000 53,374
Orica 4,600 30,805
Village Roadshow 15,000 23,828
----------
194,301
----------
BELGIUM - 2.07%
ARBED 270 31,889
Bekaert 50 39,403
----------
71,292
----------
CHILE - 0.79%
Banco BHIF-ADR 1,800 27,225
----------
27,225
----------
EGYPT - 0.80%
Paints and Chemical-GDR 3,000 27,750
----------
27,750
----------
FRANCE - 7.69%
Clarins 890 84,804
Club Mediterranee 690 67,589
Remy Cointreau 1,810 40,655
Societe Francaise d'Investissements et deestion 880 72,103
----------
265,151
----------
GERMANY - 7.04%
AGIV fuer Industrie und Verkehrswesen 3,000 84,010
Escada 350 57,827
KSB-Vorzug 150 46,164
Moebel Walther 1,290 54,909
----------
242,910
----------
GREECE - 1.50%
Attica Enterprises 3,120 51,656
----------
51,656
----------
HONG KONG - 4.18%
Guangdong Kelon Electric Holding 56,000 53,476
South China Morning Post Holdings 64,000 36,339
Varitronix International 26,000 54,521
----------
144,336
----------
INDIA - 0.88%
Tata Engineering & Locom-GDR 5,800 30,305
----------
30,305
----------
INDONESIA - 1.00%
PT Ramayana Lestari Sentosa 66,000 9,784
PT Semen Gresik 46,000 24,630
----------
34,414
----------
JAPAN - 15.54%
Arcland Sakamoto 5,000 32,757
Asahi Printing & Packaging 4,000 24,132
Chudenko 2,000 41,181
Copal Electronics 7,000 45,407
Daitec 2,000 31,677
Getz Bros. 7,000 21,973
Kayaba Industry 21,000 48,078
Koito Manufacturing 12,000 57,883
Nichido Fire & Marine 9,000 46,587
Seikagaku 6,000 30,886
Tokyo Denpa 4,000 31,677
Ube-Nitto Kasei 14,000 43,341
York-Benimaru 4,000 80,346
----------
535,925
----------
MALAYSIA - 1.62%
Kumpulan Guthrie 54,000 36,934
Leader Universal Holdings 93,000 18,865
----------
55,799
----------
NETHERLANDS - 3.09%
Koninklijke Bols Wessanen NV 1,970 32,500
Koninklijke Van Ommeren 1,760 73,987
----------
106,487
----------
NEW ZEALAND - 2.15%
Fisher & Paykel Industries 9,700 27,730
Fletcher Challenge Building 14,000 22,966
The Warehouse Group 11,000 23,511
----------
74,207
----------
PERU - .81%
Creditcorp Limited 1,760 27,940
----------
27,940
----------
PHILIPPINES - 1.29%
Aboitiz Equity Ventures 992,000 44,653
----------
44,653
----------
SINGAPORE - 2.03%
DBS Land 28,000 31,399
Rothmans Industries 8,300 38,616
----------
70,015
----------
SOUTH AFRICA - 1.90%
Anglo American Coal 1,250 65,481
----------
65,481
----------
SPAIN - 9.43%
Aumar-Autopistas del Mare 3,300 67,340
Corporacion Mapfre 2,280 87,941
Dragados & Construcciones 2,100 65,352
Empresa Nacional de Celulosa 2,000 42,461
Zardoya Otis 1,750 62,306
----------
325,400
----------
TAIWAN - 1.22%
Yageo-GDR 4,000 42,000
----------
42,000
----------
THAILAND - 1.69%
Hana Microelectronics 13,000 45,061
K.R. Precision 6,800 13,300
----------
58,361
----------
UNITED KINGDOM - 20.40%
Arriva 5,180 37,565
Avon Rubber 2,800 32,023
Booker 5,600 27,044
Charter 4,900 60,757
Dairy Crest Group 7,000 38,658
Delta 14,000 75,375
Glynwed International 18,000 92,800
Greenalls Group 8,200 66,223
Ibstock 34,400 31,429
Keller Group 9,300 37,857
Matthew Clark 10,350 33,603
Mirror Group 18,200 73,788
Taylor Woodrow 25,900 96,766
----------
703,888
----------
TOTAL COMMON STOCK (COST $2,804,255) 3,227,068
----------
PRINCIPAL
AMOUNT
----------
REPURCHASE AGREEMENTS - 6.38%
With Chase Manhattan 5.53% 06/01/98
(dated 05/29/98, collateralized by $77,000
U.S. Treasury Notes 6.625% due 04/30/02
market value $80,046) $ 78,000 79,000
With J.P. Morgan Securities 5.55% 06/01/98
(dated 05/29/98, collateralized by $73,000
U.S. Treasury Notes 6.00% due 06/30/99
market value $74,742) 73,000 73,000
With PaineWebber 5.55% 06/01/98
(dated 05/29/98, collateralized by $34,000
U.S. Treasury Notes 5.75% due 11/15/00
market value $34,093 and $34,000
U.S. Treasury Notes 7.50% due 11/15/01
market value $35,685) 69,000 68,000
----------
TOTAL REPURCHASE AGREEMENTS (COST $220,000) 220,000
----------
TOTAL MARKET VALUE OF SECURITIES - 99.93%
(COST $3,024,255) $3,447,068
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.07% 2,511
----------
NET ASSETS APPLICABLE TO 353,048 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% $3,449,579
==========
NET ASSET VALUE - INTERNATIONAL SMALL CAP SERIES A CLASS
($1,036 / 106 SHARES) $ 9.77
==========
NET ASSET VALUE - INTERNATIONAL SMALL CAP SERIES INSTITUTIONAL CLASS
($3,448,543 / 352,942 SHARE) $ 9.77
==========
See accompanying notes
<CAPTION>
MARKET
VALUE
(U.S. $)
----------
<S> <C>
COMPONENTS OF NET ASSETS AT MAY 31, 1998:
Common stock, $.01 par value, 150,000,000 shares authorized
to the Fund with 50,000,000 shares allocated to
International Small Cap Series A Class, 50,000,000 shares allocated to
International Small Cap Series Institutional Class $3,000,817
Undistributed net investment income* 25,522
Accumulated net realized gain on investments 994
Net unrealized appreciation of investments 422,246
----------
Total net assets $3,449,579
==========
- --------------------------------------------------------------------------
* Undistributed net investment income includes net realized gains
(losses) on foreign currencies. Net realized gains on foreign
currencies are distributed as net investment income in
accordance with provisions of the Internal Revenue Code.
ADR - American Depository Receipt
GDR - Global Depository Receipt
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
INTERNATIONAL SMALL CAP SERIES A CLASS:
Net asset value A Class (A) $ 9.77
Sales charge (4.75% of offering price or 5.02% of the amount invested
per share)(B) 0.49
----------
Offering price $ 10.26
==========
(A) Net asset value per share, as illustrated, is the estimated
amount which would be paid upon redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases of
$100,000 or more.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
STATEMENT OF OPERATIONS
12/19/97*
SIX MONTHS TO
ENDED 5/31/98
5/31/98 (UNAUDITED)
(UNAUDITED) INTERNATIONAL
GLOBAL EQUIT SMALL CAP
SERIES SERIES
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 48,261 $ 41,122
Interest 2,784 11,261
Foreign tax withheld (2,746) (4,263)
48,299 48,120
EXPENSES:
Management fees 12,572 17,360
Professional fees 1,312 1,570
Custodian fees 1,894 5,610
Registration fees 1,150 1,918
Accounting and administration 830 667
Dividend disbursing and transfer agent fees
and expenses 739 193
Reports and statements to shareholders 590 1,800
Directors' fees 348 219
Taxes (other than taxes on income) 104 146
Other 0 1,336
19,539 30,819
Less expenses absorbed by Delaware International
Advisers Ltd. (6,977) (12,831)
12,562 17,988
NET INVESTMENT INCOME 35,737 30,132
NET REALIZED AND UNREALIZED GAIN(LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investment transactions 98,932 994
Foreign currencies (894) (4,610)
Net realized gain (loss) 98,038 (3,616)
Net change in unrealized appreciation /
depreciation of investments and foreign currencies 239,199 422,246
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES 337,237 418,630
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $372,974 $448,762
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED 7/22/97*
5/31/98 TO
(UNAUDITED) 11/30/97
GLOBAL EQUITY GLOBAL EQUITY
SERIES SERIES
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 35,737 $ 19,984
Net realized gain on investments
and foreign currencies 98,038 3,448
Net change in unrealized appreciation / depreciation of
investments and foreign currencies during the period 239,199 (120,372)
Net increase (decrease) in net assets
resulting from operations 372,974 (96,940)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class (57) --
Institutional Class (38,824) --
(38,881) --
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class 650 6,308
Institutional Class -- 3,000,009
Net asset value of shares issued upon reinvestment
of dividends from net investment income and net
realized gain on investment transactions:
A Class 57 --
Institutional Class 38,824 --
39,531 --
Cost of shares repurchased:
A Class (1,991) --
Institutional Class -- --
(1,991) --
Increase in net assets derived from capital
share transactions 37,540 3,006,317
NET INCREASE IN NET ASSETS 371,633 2,909,377
NET ASSETS:
Beginning of period 2,909,377 --
End of period $3,281,010 $2,909,377
12/19/1997*
TO
5/31/98
(UNAUDITED)
INTERNATIONAL
SMALL CAP
SERIES
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 30,132
Net realized gain on investments
and foreign currencies (3,616)
Net change in unrealized appreciation / depreciation of
investments and foreign currencies during the period 422,246
Net increase (decrease) in net assets
resulting from operations 448,762
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class --
Institutional Class --
--
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class 5,661
Institutional Class 3,000,009
Net asset value of shares issued upon reinvestment
of dividends from net investment income and net
realized gain on investment transactions:
A Class --
Institutional Class --
3,005,670
Cost of shares repurchased:
A Class (4,853)
Institutional Class --
(4,853)
Increase in net assets derived from capital
share transactions 3,000,817
NET INCREASE IN NET ASSETS 3,449,579
NET ASSETS:
Beginning of period --
End of period $3,449,579
* Date of commencement of operations
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
Financial Highlights
Selected data for each share of the Series outstanding throughout each period were
as follows:
GLOBAL EQUITY SERIES
--------------------
A CLASS
--------------------
SIX MONTHS(1)
ENDED 7/22/97(2)
5/31/98 TO
(UNAUDITED) 11/30/97
<S> <C> <C>
Net asset value, beginning of period $8.230 $8.500
Income from investment operations:
Net investment income (3) 0.100 0.056
Net realized and unrealized gain on investments
and foreign currencies 0.940 (0.326)
Total from invetment operations 1.040 (0.270)
Less dividends and distributions:
Dividends from net investment income (0.110) --
Distributions from net realized gain on investment
transactions -- --
Total dividends and distributions (0.110) --
Net asset value, end of period $9.160 $8.230
Total return (4) 12.81% (3.18%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) $5 $6
Ratio of expenses to average net assets 0.80% 0.80%
Ratio of expenses to average net assets prior to expense
limitation 1.25% 2.16%
Ratio of net investment income to average net assets 2.28% 1.86%
Ratio of net investment income to average net assets prior
to expense limitation 1.83% 0.50%
Portfolio turnover 61% 25%
GLOBAL EQUITY SERIES
--------------------
INSTITUTIONAL CLASS
--------------------
SIX MONTHS(1)
ENDED 7/22/97(2)
5/31/98 TO
(UNAUDITED) 11/30/97
Net asset value, beginning of period $8.230 $8.500
Income from investment operations:
Net investment income (3) 0.100 0.056
Net realized and unrealized gain on investments
and foreign currencies 0.940 (0.326)
Total from invetment operations 1.040 (0.270)
Less dividends and distributions:
Dividends from net investment income (0.110) --
Distributions from net realized gain on investment
transactions -- --
Total dividends and distributions (0.110) --
Net asset value, end of period $9.160 $8.230
Total return (4) 12.81% (3.18%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) $3,276 $2,903
Ratio of expenses to average net assets 0.80% 0.80%
Ratio of expenses to average net assets prior to expense
limitation 1.25% 1.86%
Ratio of net investment income to average net assets 2.28% 1.86%
Ratio of net investment income to average net assets prior
to expense limitation 1.83% 0.80%
Portfolio turnover 61% 25%
(1) Ratios have been annualized and total returns have not
been annualized.
(2) Date of commencement of trading; ratios have been
annualized and total returns have not been annualized.
(3) Per share information was based on the average shares
outstanding method.
(4) Does not include maximum sales charge of 4.75% nor the
1% limited contingent deferred sales charge that would
apply in the event of certain redemptions within 12
months of purchase of A Class.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (Continued)
Selected data for each share of the Series outstanding throughout each period
were as follows:
INTERNATIONAL SMALL CAP SERIES
------------------------------
A CLASS INSTITUTIONAL CLASS
12/19/1997 (2) 12/19/1997 (2)
TO TO
5/31/98 5/31/98
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net asset value, beginning of period $8.500 $8.500
Income from investment operations:
Net investment income(1) 0.088 0.088
Net realized and unrealized gain on investments
and foreign currencies 1.820 1.182
Total from investment operations 1.270 1.270
Net asset value, end of period $9.770 $9.770
Total return(3) 14.94% 14.94%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $1 $3,449
Ratio of expenses to average net assets 1.25% 1.25%
Ratio of expenses to average net assets
prior to expense limitation 2.13% 2.13%
Ratio of net investment income to average
net assets 2.06% 2.06%
Ratio of net investment income to average
net assets prior to expense limitation 1.18% 1.18%
Portfolio turnover 0% 0%
- ------------------------------------------------
(1) Per share information was based on the average shares outstanding method.
(2) Date of commencement of trading; ratios have been annualized and total
returns have not been annualized.
(3) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class.
</TABLE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998
(UNAUDITED)
Delaware Group Global & International Funds, Inc. (the "Fund") is
registered as a Maryland corporation and offers six series: the
International Equity Series, the Global Bond Series, the Global Assets
Series, the Emerging Markets Series, the Global Equity Series and the
International Small Cap Series. These financial statements and the
related notes pertain to: the Global Equity Series and the International
Small Cap Series (the "Series"). The Global Equity Series and the
International Small Cap Series are registered as a diversified open-end
investment company under the Investment Company Act of 1940, as amended.
Each Series offers four classes of shares. The A Class carries a
front-end sales charge of 4.75%, the B Class carries a back-end
deferred sales charge, the C Class carries a level load sales charge
and the Institutional Class has no sales charge. As of May 31, 1998
only the A Class and the Institutional Class have commenced operations
for both Series'.
The investment objective of each Series is as follows:
GLOBAL EQUITY SERIES: To seek long-term growth without undue risk to
principal by investing in U.S. and foreign equities that provide the
potential for capital appreciation and income.
INTERNATIONAL SMALL CAP SERIES: To seek long-term capital appreciation by
investing primarily in equity securities of small non-U.S. companies.
This may include companies located or operating in established or
emerging countries.
1 SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with generally
accepted accounting principles and are consistently followed by each
Series.
SECURITY VALUATION - Securities listed on an exchange are valued at the
last quoted sales price as of the close of the NYSE on the valuation
date. Securities not traded or securities not listed on an exchange are
valued at the mean of the last quoted bid and asked prices. Securities
listed on a foreign exchange are valued at the last quoted sales price
before the Series is valued. Long-term debt securities are valued by an
independent pricing service and such prices are believed to reflect the
fair value of such securities. 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 Series' Board
of Directors.
FEDERAL INCOME TAXES - Each Series intends to continue to qualify as a
regulated investment company and make the requisite distributions to
shareholders. Accordingly, no provision for federal income taxes has
been made in the financial statements. Income and capital gain
distributions are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting
principles.
CLASS ACCOUNTING - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various
classes of the Series on the basis of daily net assets of each class.
Distribution expenses relating to a specific class are charged directly
to that class.
REPURCHASE AGREEMENTS - Each Series may invest in a pooled cash account
along with other members of the Delaware Investment Family of Funds. The
aggregate daily balance of the pooled cash account is invested in
repurchase agreements secured by obligations of the U.S. government. The
respective collateral is held by the custodian bank until the maturity
of the respective repurchase agreements. Each repurchase agreement is at
least 100% collateralized. However, in the event of default or
bankruptcy by the counterparty to the agreement, realization of the
collateral may be subject to legal proceedings.
FOREIGN CURRENCY TRANSACTIONS - Transactions denominated in foreign
currencies are recorded at the current prevailing exchange rates. The
value of all assets and liabilities denominated in foreign currencies
are translated into U.S. dollars at the exchange rate of such currencies
against the U.S. dollar as of 3:00 PM EST. Transaction gains or losses
resulting from changes in exchange rates during the reporting period or
upon settlement of the foreign currency transaction are reported in
operations for the current period. It is not practical to isolate that
portion of both realized and unrealized gains and losses on investments
in equity securities that result from fluctuations in foreign currency
exchange rates in the statement of operations. The Series does isolate
that portion of gains and losses on investments of debt securities which
are due to changes in the foreign currency exchange rate from that which
are due to changes in the market prices of debt securities. The Series
reports certain foreign currency related transactions as components of
realized gains for financial reporting purposes, whereas such
components are treated as ordinary income (loss) for federal income tax
purposes.
OTHER - Expenses common to all Funds within the Delaware Investment
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. Foreign
dividends are also recorded on the ex-dividend date or as soon after
the ex-dividend date that each Series is aware of such dividends, net of
all non-rebatable tax withholdings. Original issue discounts are
accreted to interest income over the lives of the respective securities.
Withholding taxes on foreign dividends have been provided for in
accordance with the Series' understanding of the applicable country's
tax rules and rates. Each Series declares and pays dividends from
capital gains and net investment income annually.
Certain Fund expenses are paid through "soft dollar" arrangements with
brokers. The amount of these expenses is less than 0.01% of the Series'
average daily net assets.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
2 INVESTMENT MANAGEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
In accordance with the terms of the Investment Management Agreement, each
Series pays Delaware International Advisers Ltd. ("DIAL"), the investment
manager, an annual fee which is based on the daily net assets of each
Series without consideration of amounts paid to unaffiliated directors.
The management fee rates are as follows:
Global International
Equity Small Cap
Series Series
----------- -----------
Management fee as a
percentage of average
daily net assets (per annum) 0.80% 1.25%
DIAL has elected to waive its fees and reimburse each Series to the
extent that annual operating expenses exclusive of taxes, interest,
brokerage commissions and extraordinary expenses, 0.80% for each class of
the Global Equity Series through December 31, 1998 and 1.25% for each
class of the International Small Cap Series through November 30, 1998, of
the average daily net assets for each Series. Total expenses absorbed by
and DIAL for the six months ended May 31, 1998 are as follows:
Global International
Equity Small Cap
Series Series
----------- -----------
Total expenses absorbed
by DIAL $6,977 $12,831
Each Series has engaged Delaware Service Company, Inc. (DSC), an
affiliate of DMC, to provide dividend disbursing, transfer agent and
accounting services for the Series. For the six months ended May 31, 1998,
the amounts expensed for each Series were as follows:
Global International
Equity Small Cap
Series Series
----------- -----------
Dividend disbursing,
transfer agent fees and
other expenses $739 $193
Accounting fees 644 548
On May 31, 1998, the Series' had payables to affiliates as follows:
Global International
Equity Small Cap
Series Series
----------- -----------
Investment Management fee
payable to DIAL $2,720 $4,529
Dividend disbursing, transfer
agent fees, accounting fees and
other expenses payable to DSC 2,669 983
Other expenses payable to
DMC and affiliates 6,467 1,529
Pursuant to the Distribution Agreement, each Series pays Delaware
Distributors, L.P. (DDLP), the Distributor and an affiliate of DMC, an
annual fee not to exceed 0.30% of the average daily net assets of the A
Class and 1.00% of the average daily net assets of the B and C Class.
DDLP has agreed to waive distribution expenses for all classes through
November 30, 1998.
Certain officers of DMC, DSC and DDLP are officers, directors and/or
employees of the Fund. These officers, directors and employees are paid
no compensation by the Fund.
3 INVESTMENTS
During the six months ended May 31, 1998, each Series made purchases and
sales of investment securities other than U.S. government securities and
temporary cash investments as follows:
Global International
Equity Small Cap
Series Series
----------- -----------
Purchases $1,028,387 $2,804,895
Sales 924,791 --
At May 31, 1998, the aggregate cost of securities and unrealized
appreciation (depreciation) for federal income tax purposes for each
Series were as follows:
Global International
Equity Small Cap
Series Series
----------- -----------
Cost of Investments $3,142,042 $3,204,255
=========== ===========
Aggregate unrealized appreciation $167,908 $561,621
Aggregate unrealized depreciation (48,049) (138,808)
----------- -----------
Net unrealized appreciation $119,859 $422,813
=========== ===========
4 CAPITAL STOCK
Transactions in capital stock shares were as follows:
Global International
Equity Small Cap
Series Series
----------- ----------
Six Months 7/22/97 * 12/19/97 *
Ended To To
5/31/98 11/30/97 5/31/98
---------- ---------- ----------
Shares sold:
A Class 74 740 598
Institutional Class -- 352,943 352,942
Shares issued upon
reinvestment of
dividends from net
net investment
income and net
realized gain on
investment
transactions:
A Class 7 -- --
Institutional Class 4,786 -- --
---------- ---------- ----------
4,867 353,683 353,540
---------- ---------- ----------
Shares repurchased:
A Class (235) -- (492)
Institutional Class -- -- --
---------- ---------- ----------
(235) -- (492)
---------- ---------- ----------
Net Increase 4,632 353,683 353,048
========== ========== ==========
5 LINES OF CREDIT
The Global Equity Series has a committed line of credit for $100,000. No
amount was outstanding at May 31, 1998, or at any time during the fiscal
year
6 FOREIGN EXCHANGE CONTRACTS
A Series will generally enter into forward foreign currency contracts as
a way of managing foreign exchange rate risk. A Series may enter into
these contracts to fix the U.S. dollar value of a security that it has
agreed to buy or sell for the period between the date the trade was
entered into and the date the security is delivered and paid for. A
Series may also use these contracts to hedge the U.S. dollar value of
securities it already owns denominated in foreign currencies.
Forward foreign currency contracts are valued at the mean between the bid
and asked prices of the contracts and are marked-to-market daily.
Interpolated values are derived when the settlement date of the contract
is an interim date for which quotations are not available. The change in
market value is recorded as an unrealized gain or loss. When the contract
is closed, a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time
it was closed is recorded.
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of the securities, but it does
establish a rate of exchange that can be achieved in the future. Although
forward foreign currency contracts limit the risk of loss due to a
decline in the value of the hedged currency, they also limit any
potential gain that might result should the value of the currency
increase. In addition, a Series could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their
contracts.
7 MARKET AND CREDIT RISK
Some countries in which the Series may invest require governmental
approval for the repatriation of investment income, capital or the
proceeds of sales of securities by foreign investors. In addition, if
there is a deterioration in a country's balance of payments or for other
reasons, a country may impose temporary restrictions on foreign capital
remittances abroad.
The securities exchanges of certain foreign markets are substantially
smaller, less liquid and more volatile than the major securities markets
in the United States. Consequently, acquisition and disposition of
securities by the Series may be inhibited. In addition, a significant
proportion of the aggregate market value of equity securities listed on
the major securities exchanges in emerging markets are held by a smaller
number of investors. This may limit the number of shares available for
acquisition or disposition by the Series.
The Series may invest in high-yield fixed income securities which carry
ratings of BB or lower by S&P and/or Ba or lower by Moody's. Investments
in these higher yielding securities may be accompanied by a greater
degree of credit risk than higher rated securities. Additionally, lower
rated securities may be more susceptible to adverse economic and
competitive industry conditions than investment grade securities.
Each Series may invest up to 15% of its total assets in illiquid
securities which may include securities with contractual restrictions
on resale, securities exempt from registration under Rule 144A of the
Securities Act of 1933, as amended, and other securities which may not
be readily marketable. The relative illiquidity of some of these
securities may adversely affect the Series' ability to dispose of such
securities in a timely manner and at a fair price when it is necessary
to liquidate such securities.
