VOYAGEUR
Semi-annualReport
YOUR TAX SENSITIVE INVESTMENT MANAGER
DELAWARE-VOYAGEUR, U.S. GOVERNMENT SECURITIES FUND
(FORMERLY VOYAGEUR U.S. GOVERNMENT SECURITIES FUND)
Dated April 30, 1997
<PAGE>
LETTER FROM THE PRESIDENT
Dear Shareholder:
As the stock market continued to climb to new highs, it again took center stage
this reporting period. While we cannot predict when the stock market will
experience a correction, we believe it cannot continue to go up indefinitely
without some type of correction. Investors who diversify their portfolio with
assets divided between stocks and bonds can reduce the impact of stock market
downturns on their overall portfolio. A fixed income mutual fund, such as the
Delaware-Voyageur U.S. Government Securities Fund, can play a key role in a
well-planned investment strategy.
The Delaware-Voyageur U.S. Government Securities Fund is invested entirely in
U.S. Treasury securities and GNMAs, securities that are backed by the full faith
and credit of the United States government. In addition to being considered
among the safest investments, these government securities guarantee the timely
payment of interest and principal*. Fixed income securities by definition pay
dividends at a fixed rate and specified time, so they can be a good source of
regular income.
In the pages that follow, Jane M. Wyatt, the Fund's manager, will discuss some
points of interest related to your Fund and the country's economy. She will also
share her economic outlook.
The Delaware-Voyageur U.S. Government Securities Fund has been a proven
performer with a strong and solid history. We appreciate your continued
patronage of the Delaware-Voyageur U.S. Government Securities Fund. We look
forward to working with you and your financial adviser in offering products and
services designed to bring you closer to achieving your investment goals.
Sincerely,
Wayne A. Stork
Chairman, President and Chief Executive Officer
*Although the Fund invests in securities that are guaranteed by the U.S.
Government, shares of the Fund are not guaranteed. Moreover, the price of such
securities is not guaranteed but rather will fluctuate and respond to changes
in interest rates, and therefore the Fund's net asset value will also
fluctuate.
<PAGE>
DELAWARE-VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
[Photo]
JANE M. WYATT IS THE SENIOR PORTFOLIO MANAGER FOR THE DELAWARE-VOYAGEUR U.S.
GOVERNMENT SECURITIES FUND AS WELL AS VOYAGEUR'S CHIEF INVESTMENT OFFICER. JANE
HAS 20 YEARS OF EXPERIENCE IN THE INVESTMENT INDUSTRY.
*PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE.
For the six months ended
April 30, 1997, the Delaware-Voyageur U.S. Government Securities Fund's total
return at NAV for class A shares was 1 percent. During this same six-month
period, The Lehman Brothers Government Index returned 1.32 percent.*
MAINTAINING A LONG-TERM STRATEGY
The primary reason why we modestly underperformed the Lehman Brothers Government
Index was due to our longer duration. This longer duration meant the Fund was
more sensitive to interest rate movements -- such as the Federal Reserve rate
hike in March 1997 -- than its benchmark, the Lehman Brothers Government Index.
We maintained our overweighting in mortgage-backed securities and, in fact,
increased it to 63 percent of the fund. This increase in the Fund's
mortgage-backed holdings has improved the income potential of the portfolio as
well as given it a more defensive character going forward.
Despite our slight underperformance over the past few months, we will continue
to maintain the Fund's longer duration. We believe that holding the Fund's
duration to the intermediate part of the yield curve will allow us to offer our
shareholders the best risk-adjusted returns over the long term.
U.S. ECONOMY
Currently in the United States is experiencing one of the longest economic
business cycles in the past 100 years. We have enjoyed strong economic growth
and unemployment rates have been extremely low. These are conditions that have
historically have led to inflation, but to date it has not occurred. We believe
the primary reason for this is that today, the United States is part of a more
competitive global economy. Our domestic producers don't have the ability to
raise prices as freely as they did when the U.S. domestic companies markets and
earnings were more closely tied to the domestic economy. Today our producers
compete with companies in Europe, Asia and Latin America. Until the global
"surplus" is reduced it will be difficult for U.S. companies to regain their
pricing power.
OUTLOOK
Since our last report, the Federal Reserve has raised the federal funds rate
once in March. Although there is no sure "bet" that they will raise rates again
in the near future, most market players and indicators are currently speculating
more increases are on the way.
We believe the worse case scenario would be for the Federal Reserve to raise
rates approximately a half a percent more by the end of 1997. However, we
believe this type of an increase shouldn't have a material adverse impact on
intermediateand longer-term fixed income securities since most of this increase
has already been priced into those securities.
Given our belief that the Federal Reserve Board will maintain a vigilant
anti-inflation policy, we think today's fixed income market continues to
represent good value. We will continue to actively manage the Fund by monitoring
current market activities and expectations. This is done in order to find
opportunities where we can add value for the shareholders of the
Delaware-Voyageur U.S. Government Securities Fund.
<PAGE>
U.S. GOVERNMENT SECURITIES FUND
S E M I - A N N U A L R E P O R T
Dated April 30, 1997
<PAGE>
LETTER FROM THE PRESIDENT
Dear Shareholder:
As the stock market continued to climb to new highs, it again took center stage
this reporting period. While we cannot predict when the stock market will
experience a correction, we believe it cannot continue to go up indefinitely
without some type of correction. Investors who diversify their portfolio with
assets divided between stocks and bonds can reduce the impact of stock market
downturns on their overall portfolio. A fixed income mutual fund, such as the
Delaware- Voyageur U.S. Government Securities Fund, can play a key role in a
well-planned investment strategy.
The Delaware-Voyageur U.S. Government Securities Fund is invested entirely in
U.S. Treasury securities and GNMAs, securities that are backed by the full faith
and credit of the United States government. In addition to being considered
among the safest investments, these government securities guarantee the timely
payment of interest and principal*. Fixed income securities by definition pay
dividends at a fixed rate and specified time, so they can be a good source of
regular income.
In the pages that follow, Jane M. Wyatt, the Fund's manager, will discuss some
points of interest related to your Fund and the country's economy. She will also
share her economic outlook.
The Delaware-Voyageur U.S. Government Securities Fund has been a proven
performer with a strong and solid history. We appreciate your continued
patronage of the Delaware-Voyageur U.S. Government Securities Fund. We look
forward to working with you and your financial adviser in offering products and
services designed to bring you closer to achieving your investment goals.
Sincerely,
Wayne A. Stork
Chairman, President and Chief Executive Officer
* Although the Fund invests in securities that are guaranteed by the U.S.
Government, shares of the Fund are not guaranteed. Moreover, the price of
such securities is not guaranteed but rather will fluctuate and respond to
changes in interest rates, and therefore the Fund's net asset value will
also fluctuate.
<PAGE>
<TABLE>
<CAPTION>
DELAWARE-VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) APRIL 30, 1997
- -------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at market value (note 1)
(identified cost: $113,192,881) .................................. $ 112,926,279
Cash in bank on demand deposit ...................................... 1,787,591
Accrued interest receivable ......................................... 1,410,326
Receivable for Fund shares sold ..................................... 448
-------------
Total assets ..................................................... 116,124,644
-------------
LIABILITIES
Dividends payable to shareholders ................................... 105,496
Payable for Fund shares redeemed .................................... 73,135
Other accrued expenses .............................................. 42,444
-------------
Total liabilities ................................................ 221,075
-------------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK .................. $ 115,903,569
=============
Represented by:
Capital stock - authorized 10,000,000,000 shares of $.01 par value $ 114,023
Additional paid-in capital ....................................... 122,251,198
Undistributed net investment income .............................. 87,650
Accumulated net realized loss from investments ................... (6,282,700)
Unrealized depreciation of investments ........................... (266,602)
-------------
TOTAL NET ASSETS ............................................... $ 115,903,569
=============
Net assets applicable to outstanding Class A Shares ................. $ 62,533,040
=============
Net assets applicable to outstanding Class B Shares ................. $ 2,225,270
=============
Net assets applicable to outstanding Class C Shares ................. $ 222,844
=============
Net assets applicable to outstanding Institutional Class Shares ..... $ 50,922,415
=============
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A Shares (6,152,652 shares outstanding) (note 5) ........... $ 10.16
=============
Class B Shares (218,717 shares outstanding) (note 5) ............. $ 10.17
=============
Class C Shares (21,943 shares outstanding) (note 5) .............. $ 10.16
=============
Institutional Class Shares (5,008,974 shares outstanding) (note 5) $ 10.17
=============
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
DELAWARE-VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED APRIL 30, 1997
- -------------------------------------------------------------------------------------
<S> <C>
Investment income:
Interest ........................................................... $ 4,048,903
-----------
Expenses (note 3):
Investment advisory and management fee ............................. 295,281
Dividend disbursing, administrative and accounting services fees ... 83,591
Distribution fees (Class A) ........................................ 80,449
Distribution fees (Class B) ........................................ 11,585
Distribution fees (Class C) ........................................ 1,153
Distribution fees (Institutional Class) ............................ 64,007
Printing, postage and supplies ..................................... 17,350
Audit fees ......................................................... 16,046
Legal fees ......................................................... 1,613
Custodian fees ..................................................... 12,634
Directors' fees .................................................... 2,930
Registration fees .................................................. 28,352
Other .............................................................. 9,731
-----------
Total expenses ................................................... 624,722
Less: Expenses waived or absorbed .................................. (43,350)
-----------
Total net expenses ............................................... 581,372
-----------
Investment income - net .......................................... 3,467,531
-----------
Realized and unrealized gain (loss) on investments (note 2):
Realized gain on security transactions ............................. 259,838
Net change in unrealized appreciation or depreciation of investments (2,522,173)
-----------
Net loss on investments .......................................... (2,262,335)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................. $ 1,205,196
===========
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
DELAWARE-VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SIX MONTHS FOUR MONTHS
ENDED ENDED YEAR
APRIL 30, 1997 OCTOBER 31, ENDED
(UNAUDITED) 1996 (NOTE 1) JUNE 30, 1996
------------- ------------- -------------
Operations:
Investment income - net .................................................... $ 3,467,531 $ 2,259,383 $ 7,374,676
Net realized gain on investments ........................................... 259,838 936,151 2,285,055
Net change in unrealized appreciation or depreciation of investments ....... (2,522,173) 1,370,635 (4,503,029)
------------- ------------- -------------
Net increase in net assets resulting from operations ..................... 1,205,196 4,566,169 5,156,702
------------- ------------- -------------
Distributions to shareholders from:
Investment income - net:
Class A .................................................................. (1,967,921) (1,364,201) (4,281,883)
Class B .................................................................. (61,913) (34,848) (48,064)
Class C .................................................................. (6,176) (4,027) (13,726)
Institutional Class ...................................................... (1,561,300) (858,567) (2,789,781)
------------- ------------- -------------
Total distributions .................................................... (3,597,310) (2,261,643) (7,133,454)
------------- ------------- -------------
Share transactions: (note 5)
Proceeds from sale of shares:
Class A (note 3) ......................................................... 5,590,671 861,117 7,330,164
Class B .................................................................. 389,773 404,912 1,769,115
Class C .................................................................. 5,505 4,598 91,380
Institutional Class ...................................................... 7,982,337 10,243,939 15,417,147
Net asset value of shares issued in reinvestment of
net investment income distributions:
Class A ................................................................ 1,368,590 942,767 2,859,623
Class B ................................................................ 25,551 11,998 16,287
Class C ................................................................ 3,015 1,898 5,275
Institutional Class .................................................... 1,221,631 595,190 1,796,765
Payments for redemption of shares:
Class A .................................................................. (8,650,233) (6,075,050) (16,187,295)
Class B (note 3) ......................................................... (277,857) (100,618) (105,794)
Class C (note 3) ......................................................... (15,600) (600) (85,799)
Institutional Class ...................................................... (7,303,909) (3,372,008) (29,486,507)
------------- ------------- -------------
Increase (decrease) in net assets from share transactions .................. 339,474 3,518,143 (16,579,639)
------------- ------------- -------------
Total increase (decrease) in net assets .................................. 2,052,640 5,822,669 (18,556,391)
Net assets at beginning of year ............................................... 117,956,209 112,133,540 130,689,931
------------- ------------- -------------
Net assets at end of year (including undistributed net
investment income of $87,650, $217,429 and $219,689,
respectively) ............................................................ $ 115,903,569 $ 117,956,209 $ 112,133,540
============= ============= =============
See accompanying notes to financial statements.
</TABLE>
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DELAWARE-VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- -------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Delaware-Voyageur U. S. Government Securities Fund (formerly Voyageur U.S.
Government Securities Fund) (the Fund) is a portfolio within Voyageur Funds,
Inc. which is registered under the Investment Company Act of 1940 (as amended)
as a diversified, open-end management investment company. The Fund seeks high
current income from investments issued, guaranteed or otherwise backed by the
full faith and credit of the U.S. Government. The Fund offers Class A, Class B,
Class C and Institutional Class Shares. Class A Shares are sold with a front-end
sales charge. Class B Shares are sold subject to a contingent deferred sales
charge and such shares automatically convert to Class A after eight years. Class
C Shares are sold subject to a contingent deferred sales charge and have no
conversion feature. Institutional Class Shares are sold without a front-end
sales charge and are not subject to a contingent deferred sales charge. All
classes of shares have identical voting, dividend, liquidation and other rights
and the same terms and conditions, except that the level of distribution fees
charged differs between classes. Income, expenses (other than expenses incurred
under each class' Distribution Agreement) and realized and unrealized gains or
losses on investments are allocated to each class of shares based upon its
relative net assets.
The significant accounting policies followed by the Fund are summarized as
follows:
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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of net increase (decrease) in net assets resulting from
operations during the reporting period. Actual results could differ from those
estimates.
INVESTMENTS IN SECURITIES
The values of fixed income securities are determined using pricing services
or prices quoted by independent brokers. When market quotations are not readily
available, or in certain other circumstances, securities are valued at fair
value according to methods selected in good faith by the Board of Directors.
Short-term securities are valued at amortized cost which approximates market
value.
Security transactions are accounted for on the trade date. Securities gains
and losses are calculated on the identified-cost basis. Interest income,
including level- yield amortization of premium and discount, is accrued daily.
FEDERAL INCOME TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute income to
shareholders in amounts that will avoid or minimize federal income or excise
taxes for the Fund. Net investment income and net realized gains (losses) for
the Fund may differ for financial statement and tax purposes primarily because
of losses deferred for tax purposes due to "wash sale" transactions. The
character of distributions made during the year from net investment income or
net realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions, the
fiscal year in which amounts are distributed may differ from the year that the
income or realized gains (losses) were recorded by the Fund.
For federal income tax purposes, at October 31, 1996, the Fund had a capital
loss carryover of $6,455,498 that will expire in the years 2002 through 2003 if
not offset by subsequent capital gains. It is unlikely that the Board of
Directors will authorize a distribution of any net realized capital gains until
the available capital loss carryover has been offset or expires.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends declared daily from net investment income are payable monthly in
cash or may be reinvested in additional shares of the Fund at net asset value.
Net realized short-term capital gains, when available, may be distributed
throughout the year. Net realized long-term capital gains, when available, are
distributed annually.
<PAGE>
DELAWARE-VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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REPURCHASE AGREEMENTS
Securities pledged as collateral for repurchase agreements are held by the
Fund's custodian bank until maturity of the repurchase agreement. Procedures for
all agreements ensure that the daily market value of the collateral is in excess
of the repurchase agreement in the event of default.
(2) INVESTMENT SECURITIES TRANSACTIONS
Purchase cost and proceeds of sales of investment securities, other than
short-term securities, aggregated $108,811,194 and $110,502,883, respectively,
for the six months ended April 30, 1997.
(3) EXPENSES
The Fund has an investment advisory agreement with Voyageur Fund Managers,
Inc. (Voyageur), under which Voyageur manages the Fund's assets and furnishes
related office facilities, equipment, research and personnel. The Fund pays a
monthly fee to Voyageur equal to an annual rate of .50% of the Fund's average
daily net assets.
The Fund also has Distribution Agreements under Rule 12b-1 of the Investment
Company Act of 1940 with Delaware Distributors, L.P. (Fund Distributors). The
Fund is obligated to pay Fund Distributors a monthly distribution fee at an
annual rate of .25% of the average daily net assets of the Class A and
Institutional Class Shares and 1.00% of the average daily net assets of the
Class B and Class C Shares. Fund Distributors may waive all or part of its
distribution fee at its sole discretion.
The Fund will also pay a fee to Delaware Service Company for acting as the
Fund's dividend disbursing, administrative and accounting services agent. The
fee is paid monthly and is equal to the sum of $1.33 per shareholder account
permonth, a fixed monthly fee ranging from $1,000 to $1,500 based on the level
of the Fund's average daily net assets and an annualized percentage of average
daily net assets at reducing rates from .11% to .02%. The Fund is also
responsible for reimbursing Voyageur's out-of-pocket expenses in connection with
the performance of dividend disbursing, administrative and accounting services.
In addition to the fees above, the Fund is responsible for paying most other
operating expenses including directors' fees, registration fees, printing of
shareholder reports, legal and auditing services, and other miscellaneous
expenses. Under the investment advisory agreement, Voyageur is obligated to pay
all expenses and fees (excluding distribution fees, interest, taxes and
brokerage commission) which exceed 1.00% of the Fund's average daily net assets,
on an annual basis. During the six months ended April 30, 1997, Voyageur
voluntarily absorbed $43,350.
Sales charges paid by Class A shareholders were $19,755 during the six months
ended April 30, 1997. Of this amount, Fund Distributors received $2,841.
Contingent deferred sales charges paid by Class B and Class C shareholders were
$3,245 and $6, respectively.
(4) FUND REORGANIZATION
On January 15, 1997 Voyageur's parent, Dougherty Financial Group, Inc.
("DFG"), executed an agreement and plan of merger with Lincoln National
Corporation ("LNC") pursuant to which LNC would acquire DFG, including the
mutual fund investment advisory business of DFG conducted by Voyageur. The
"assignment" of the advisory agreement relating to the merger has been approved
by the Fund's Board of Directors and shareholders. LNC acquired DFG on April 30,
1997. Upon completion of the acquisition, Delaware Distributors, L.P. became the
distributor for the Fund, and Delaware Service Company, Inc. became the Fund's
transfer, dividend disbursing and shareholder servicing agent. On May 30, 1997,
Delaware Management Company, Inc. assumed the investment advisory agreement for
the Fund.
<PAGE>
DELAWARE-VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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(5) SHARE TRANSACTIONS
Transactions in shares for the periods ended April 30, 1997, October 31, 1996
and June 30, 1996 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------- ---------------------------------------
SIX MONTHS FOUR MONTHS YEAR SIX MONTHS FOUR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, 1997 OCTOBER 31, JUNE 30, APRIL 30, 1997 OCTOBER 31, JUNE 30,
(UNAUDITED) 1996 1996 (UNAUDITED) 1996 1996
------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ................. 543,758 84,718 701,265 37,334 39,770 170,138
Shares issued for
reinvested distributions . 133,433 92,642 275,527 2,489 1,177 1,571
Shares redeemed ............. (843,750) (595,352) (1,556,383) (27,232) (9,851) (10,038)
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in shares
outstanding .............. (166,559) (417,992) ( 579,591) 12,591 31,096 161,671
========== ========== ========== ========== ========== ==========
INSTITUTIONAL
CLASS C CLASS
------------------------------------- ---------------------------------------
SIX MONTHS FOUR MONTHS YEAR SIX MONTHS FOUR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, 1997 OCTOBER 31, JUNE 30, APRIL 30, 1997 OCTOBER 31, JUNE 30,
(UNAUDITED) 1996 1996 (UNAUDITED) 1996 1996
--------------------------------------------------------------------------------
Shares sold ................. 527 449 8,796 773,988 997,379 1,475,063
Shares issued for
reinvested distributions . 294 187 506 119,053 58,441 173,176
Shares redeemed ............. (1,509) (59) (8,540) (710,755) (330,989) (2,794,116)
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in shares
outstanding .............. (688) 577 762 182,286 724,831 (1,145,877)
========== ========== ========== ========== ========== ==========
- -----------------------------
* Commencement of operations.
</TABLE>
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DELAWARE-VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- -------------------------------------------------------------------------------
(6) FINANCIAL HIGHLIGHTS
Per share data (rounded to the nearest cent) for a share of capital stock
outstanding and selected information for each period are as follows:
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------------
SIX MONTHS FOUR MONTHS
ENDED ENDED YEAR ENDED JUNE 30,
APRIL 30, 1997 OCTOBER 31, -----------------------------------------------------
(UNAUDITED) 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period............ $10.37 $10.16 $10.37 $9.76 $10.99 $10.46 $ 9.99
-------- -------- -------- -------- -------- -------- --------
Operations:
Net investment income.......... .30 .21 .63 .62 .55 .61 .67
Net realized and unrealized
gain (loss) on investments.. (.20) .21 (.23) .63 (.94) .83 .76
-------- -------- -------- -------- -------- -------- --------
Total from operations..... .10 .42 .40 1.25 (.39) 1.44 1.43
-------- -------- -------- -------- -------- -------- --------
Distributions to shareholders:
From net investment income...... (.31) (.21) (.61) (.62) (.55) (.61) (.67)
From net realized gains........ -- -- -- (.02) (.29) (.30) (.29)
-------- -------- -------- -------- -------- -------- --------
Total distributions.......... (.31) (.21) (.61) (.64) (.84) (.91) (.96)
-------- -------- -------- -------- -------- -------- --------
Net asset value:
End of period................... $10.16 $10.37 $10.16 $10.37 $ 9.76 $10.99 $10.46
======== ======== ======== ======== ======== ======== ========
Total investment return (d)......... 1.00% 4.18% 3.88% 13.45% (3.95)% 14.25% 14.68%
Net assets at end of
period (000's omitted).......... $62,533 $65,516 $68,442 $75,886 $84,660 $112,604 $53,332
Ratios:
Ratio of expenses to
average daily net assets (f). .97%(e) .98%(e) .97% .95% .96% 1.10% 1.00%
Ratio of net investment income
to average daily net assets.. 5.88%(e) 6.03%(e) 6.07% 6.38% 5.10% 5.61% 6.60%
Assuming no voluntary waivers
and reimbursements:
Expenses (b)................. 1.04%(e) .98%(e) .97% .95% .96% 1.14% 1.25%
Net investment income........ 5.81%(e) 6.03%(e) 6.07% 6.38% 5.10% 5.57% 6.35%
Portfolio turnover rate (excluding
short-term securities)....... 91.44% 66.29% 145.35% 144.39% 124.38% 175.02% 198.54%
See accompanying notes to Financial Highlights.
</TABLE>
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<TABLE>
<CAPTION>
DELAWARE-VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- -------------------------------------------------------------------------------------------------------------------
(6) FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
------------------------------------------------------------------------
SIX MONTHS FOUR MONTHS YEAR YEAR PERIOD FROM
ENDED ENDED ENDED ENDED JUNE 7,
APRIL 30, 1997 OCTOBER 31 JUNE 30, JUNE 30, 1994(c) TO
(UNAUDITED) 1996 1996 1995 JUNE 30, 1994
---------------------------------------------------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period................... $10.38 $10.17 $10.38 $9.75 $10.05
-------- --------- -------- ------- --------
Operations:
Net investment income................. .26 .18 .57 .56 .01
Net realized and unrealized
gain (loss) on investments.......... (.20) .21 (.23) .65 (.28)
-------- --------- -------- ------- --------
Total from operations............. .06 .39 .34 1.21 (.27)
-------- --------- -------- ------- --------
Distributions to shareholders:
From net investment income............ (.27) (.18) (.55) (.56) (.01)
From net realized gains............... -- -- -- (.02) (.02)
-------- --------- -------- ------- --------
Total distributions................. (.27) (.18) (.55) (.58) (.03)
-------- --------- -------- ------- --------
Net asset value:
End of period......................... $10.17 $10.38 $10.17 $10.38 $9.75
======== ========= ======== ======= ========
Total investment return (d).............. .62% 3.91% 3.32% 12.90% (2.68)%
Net assets at end of
period (000's omitted)................ $2,225 $2,139 $1,780 $139 $24
Ratios:
Ratio of expenses to
average daily net assets (f)........ 1.72%(e) 1.73%(e) 1.46% 1.54% .30%(a)
Ratio of net investment income
to average daily net assets......... 5.13%(e) 5.24%(e) 5.55% 5.56% .11%(a)
Assuming no voluntary waivers
and reimbursements:
Expenses (b)...................... 1.79%(e) 1.73%(e) 1.63% 1.69% .30%(a)
Net investment income............. 5.06%(e) 5.24%(e) 5.38% 5.41% .11%(a)
Portfolio turnover rate (excluding
short-term securities).............. 91.44% 66.29% 145.35% 144.39% 124.38%
See accompanying notes to Financial Highlights.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DELAWARE-VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------
(6) FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS C
--------------------------------------------------------------
SIX MONTHS FOUR MONTHS YEAR PERIOD FROM
ENDED ENDED ENDED JANUARY 10,
APRIL 30, 1997 OCTOBER 31, JUNE 30, 1995(c) TO
(UNAUDITED) 1996 1996 JUNE 30, 1995
------------- ------------------------------- -------------
<S> <C> <C> <C> <C>
Net asset value:
Beginning of period......................... $10.36 $10.15 $10.36 $9.48
--------- --------- -------- -------
Operations:
Net investment income....................... .26 .18 .55 .27
Net realized and unrealized
gain (loss) on investments................ (.19) .21 (.23) .88
--------- --------- -------- -------
Total from operations................... .07 .39 .32 1.15
--------- --------- -------- -------
Distributions to shareholders:
From net investment income.................. (.27) (.18) (.53) (.27)
From net realized gains..................... -- -- -- --
--------- --------- -------- -------
Total distributions....................... (.27) (.18) (.53) (.27)
--------- --------- -------- -------
Net asset value:
End of period............................... $10.16 $10.36 $10.15 $10.36
========= ========= ======== =======
Total investment return (d).................... .72% 3.92% 3.11% 12.73%
Net assets at end of
period (000's omitted)...................... $223 $234 $224 $221
Ratios:
Ratio of expenses to
average daily net assets (f).............. 1.72%(e) 1.73%(e) 1.70% 1.62%(e)
Ratio of net investment income
to average daily net assets............... 5.12%(e) 5.26%(e) 5.33% 5.10%(e)
Assuming no voluntary waivers
and reimbursements:
Expenses (b)............................ 1.79%(e) 1.73%(e) 1.70% 1.65%(e)
Net investment income................... 5.05%(e) 5.26%(e) 5.33% 5.07%(e)
Portfolio turnover rate (excluding
short-term securities).................... 91.44% 66.29% 145.35% 144.39%
See accompanying notes to Financial Highlights.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DELAWARE-VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- -------------------------------------------------------------------------------------------------------------------
(6) FINANCIAL HIGHLIGHTS (CONTINUED)
INSTITUTIONAL CLASS
-------------------------------------------------------------------------
SIX MONTHS FOUR MONTHS YEAR YEAR PERIOD FROM
ENDED ENDED ENDED ENDED JUNE 7,
APRIL 30, 1997 OCTOBER 31 JUNE 30, JUNE 30, 1994(c) TO
(UNAUDITED) 1996 1996 1995 JUNE 30, 1994
----------- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period................... $10.37 $10.16 $10.37 $9.75 $10.05
--------- --------- --------- -------- --------
Operations:
Net investment income................. .30 .21 .63 .62 .01
Net realized and unrealized
gain (loss) on investments.......... (.19) .21 (.23) .64 (.28)
--------- --------- --------- -------- --------
Total from operations............. .11 .42 .40 1.26 (.27)
--------- --------- --------- -------- --------
Distributions to shareholders:
From net investment income............ (.31) (.21) (.61) (.62) (.01)
From net realized gains............... -- -- -- (.02) (.02)
--------- --------- --------- -------- --------
Total distributions................. (.31) (.21) (.61) (.64) (.03)
--------- --------- --------- -------- --------
Net asset value:
End of period......................... $10.17 $10.37 $10.16 $10.37 $9.75
====== ====== ====== ====== =====
Total investment return (d).............. 1.10% 4.17% 3.88% 13.57% (2.64)%
Net assets at end of
period (000's omitted)................ $50,922 $50,066 $41,688 $54,445 $49,898
Ratios:
Ratio of expenses to
average daily net assets (f)........ .97%(e) .99%(e) .97% .94% .25%(a)
Ratio of net investment income
to average daily net assets......... 5.88%(e) 6.00%(e) 6.07% 6.39% .16%(a)
Assuming no voluntary waivers and
reimbursements:
Expenses (b)...................... 1.04%(e) .99%(e) .97% .94% .25%(a)
Net investment income............. 5.81%(e) 6.00%(e) 6.07% 6.39% .16%(a)
Portfolio turnover rate (excluding
short-term securities).............. 91.44% 66.29% 145.35% 144.39% 124.38%
See accompanying notes to Financial Highlights.
</TABLE>
<PAGE>
DELAWARE-VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- -------------------------------------------------------------------------------
(6) FINANCIAL HIGHLIGHTS (CONTINUED)
NOTES TO FINANCIAL HIGHLIGHTS
(a) Ratios presented for the period from June 7, 1994 to June 30, 1994 are not
annualized as they are not indicative of anticipated annual results.
(b) Voyageur and Fund Distributors voluntarily waived or reimbursed a portion
of expenses during several periods presented. The annual contractual
expense limit for the Fund (excluding distribution fees) is 1% of average
daily net assets. The maximum distribution fee is .25% of the Fund's
average daily net assets for Class A and Institutional Class Shares and
1.00% of the Fund's average daily net assets for Class B and Class C
Shares.
(c) Commencement of operations.
(d) 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 a sales charge.
(e) Annualized.
(f) Beginning in the year ended June 30, 1996, the expense ratio reflects the
effect of gross expense attributable to earnings credits on uninvested cash
balances received by the Fund. Prior period expense ratios have not been
adjusted.
See accompanying notes to Financial Highlights.
<PAGE>
<TABLE>
<CAPTION>
DELAWARE-VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
INVESTMENTS IN SECURITIES (UNAUDITED) APRIL 30, 1997
- -------------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE(a)
- ------------------------------------------------------------------------------------------------------------------
(Percentage of each investment category relates to total net assets)
BONDS (97.4%):
U.S. GOVERNMENT AGENCY OBLIGATIONS (62.3%):
- ------------------------------------------------------------------------------------------------------------------
Government National Mortgage Association
Mortgage-Backed Pass-Thru Certificates
<S> <C> <C> <C> <C>
10.00% due 12/20/02 $ 62,048 $ 65,383
10.00% due 03/15/16 55,904 61,669
8.00% due 01/15/17 43,850 45,069
7.50% due 03/15/27 16,101,733 15,967,783
7.00% due 09/15/25 1,873,056 1,816,864
7.00% due 01/15/26 15,458,278 14,980,882
7.00% due 02/15/26 4,766,728 4,619,245
7.00% due 03/15/26 2,015,141 1,952,792
7.00% due 04/15/26 3,088,417 2,991,904
7.00% due 07/15/26 2,967,355 2,874,625
6.50% due 03/15/26 18,074,276 16,989,820
6.50% due 04/15/26 1,689,204 1,587,852
6.50% due 05/15/26 8,777,861 8,251,189
--------------
72,205,077
--------------
U.S. TREASURY ISSUES (35.1%)
- ------------------------------------------------------------------------------------------------------------------
U.S. Treasury Notes
10.00% due 05/15/10 15,000,000 17,904,150
8.88% due 05/15/00 1,000,000 1,067,310
8.00% due 05/15/99 500,000 517,345
6.75% due 04/30/00 2,050,000 2,066,482
5.75% due 12/31/98 1,000,000 993,650
5.75% due 08/15/03 2,100,000 2,005,689
5.63% due 11/30/00 900,000 875,412
5.50% due 11/15/98 2,750,000 2,723,600
3.38% due 01/15/07 10,228,350 10,058,764
See accompanying notes to investments in securities.
<PAGE>
DELAWARE-VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
INVESTMENTS IN SECURITIES (UNAUDITED) (CONTINUED) APRIL 30, 1997
- ------------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE(a)
- ------------------------------------------------------------------------------------------------------------------
U.S. Treasury Strips
6.83% due 02/15/12(c) $7,000,000 $ 2,508,800
--------------
40,721,202
--------------
TOTAL INVESTMENTS IN SECURITIES (cost: $113,192,881) (b) $ 112,926,279
==============
</TABLE>
NOTES TO INVESTMENTS IN SECURITIES
(a) Securities are valued by procedures described in note 1 to the financial
statements.
(b) The cost of securities for federal income tax purposes was $113,279,921 and
the aggregate gross unrealized appreciation and depreciation based on this
cost was:
Gross unrealized appreciation...... $ 734,638
Gross unrealized depreciation...... (1,088,280)
-----------
Net unrealized depreciation...... $ (353,642)
============
(c) Zero coupon security. Interest rate disclosed is the effective yield as
of the date of acquisition.
<PAGE>
THE DELAWARE-VOYAGEUR FUNDS
SHAREHOLDER MEETING RESULTS
- --------------------------------------------------------------------------------
A meeting of the fund's shareholders was held on April 11, 1997. The meeting
results including the number of votes cast for, against or withheld, the number
of abstentions, and the number of broker non- votes with the respect to such
matter, are set forth below.
<TABLE>
<CAPTION>
1. The funds' common and preferred shareholders (preferred shareholders only for Messrs.
Longstreth and Madison) elected the following directors:
Shares Shares Withholding
Voted "For" Authority to Vote
------------ ------------------
<S> <C> <C>
Walter P. Babich................................. 7,564,580 51,670
Anthony D. Knerr................................. 7,564,580 51,670
Ann R. Leven..................................... 7,564,580 51,670
W. Thacher Longstreth............................ 7,564,580 51,670
Thomas F. Madison................................ 7,564,580 51,670
Jeffrey J. Nick.................................. 7,564,580 51,670
Charles E. Peck.................................. 7,564,580 51,670
Wayne A. Stork................................... 7,564,580 51,670
2. The funds' shareholders voted to approve a new Investment Advisory Agreement. The
following votes were cast regarding this matter:
Voted "For" Voted "Against" Abstentions Broker Non Votes
----------- --------------- ----------- ----------------
7,078,351 71,391 184,934 281,574
3. The funds' shareholders voted to approve a Sub-Advisory Agreement. The following votes were
cast regarding this matter:
Voted "For" Voted "Against" Abstentions Broker Non Votes
----------- --------------- ----------- ----------------
7,027,299 73,030 234,347 281,574
</TABLE>
<PAGE>
Delaware Group
- ---------------
of Funds
- --------
FOR GROWTH OF CAPITAL
Trend Fund
Enterprise Fund
DelCap Fund
Value Fund
U.S. Growth Fund
FOR TOTAL RETURN
Devon Fund
Decatur Total Return Fund
Decatur Income Fund
Delaware Fund
FOR GLOBAL DIVERSIFICATION
Emerging Markets Fund
New Pacific Fund
World Growth Fund
International Equity Fund
Global Assets Fund
Global Bond Fund
FOR CURRENT INCOME
Delchester Fund
Corporate Income Fund
Federal Bond Fund
U.S. Government Fund
Limited-Term Government Fund
FOR TAX-FREE CURRENT INCOME
Tax-Free Pennsylvania Fund
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
MONEY MARKET FUNDS
Delaware Cash Reserve
U.S. Government Money Fund
Tax-Free Money Fund
CLOSED-END EQUITY/INCOME*
Dividend and Income Fund
Global Dividend and Income Fund
This report must be preceeded or accompanied by a current U.S. Government Fund
prospectus and the Delaware Group Fund Performance Update for the most recently
completed calendar quarter. For a prospectus of any other Delaware Group fund,
contact your financial advisor or Delaware Group.
* Delaware Group Dividend and Income Fund and Delaware Group Global
Dividend and Income Fund purchases can be made through any registered
broker. Be sure to consult your financial adviser when making
investment decisions. Mutual funds can be a valuable part of your
financial plan; however, shares of the Fund are not FDIC or NCUSIF
insured, are not guaranteed by any bank or any credit union, are not
obligations of or deposits of any bank or any credit union, and involve
investment risk, including the possible loss of principal. Shares of
the Fund are not bank or credit union deposits.
INVESTMENT MANAGER
Delaware Management Company, Inc.
Philadelphia, Pennsylvania
INTERNATIONAL AFFILIATE
Delaware International Advisers Ltd.
London, England
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia, Pennsylvania
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
Philadelphia, Pennsylvania
1818 MARKET STREET
Philadelphia, PA 19103-3682
Nationwide (800) 523-4640
SECURITIES DEALERS ONLY
Nationwide (800) 362-7500
FINANCIAL INSTITUTIONS REPRESENTATIVES ONLY
Nationwide (800) 659-2265
(C) Delaware Distributors, L.P.
VOY-USGSA 6/97
