<PAGE>
DELAWARE-Voyageur
U.S. Government Securities Fund
service and guidance
professional management
1997
Annual
Report
goals
DELAWARE
GROUP
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<PAGE>
A Commitment
To Our
Investors
Delaware Group's investment tradition dates back to 1929. We have a long and
distinguished history of helping individuals and institutions - including some
of America's largest pension funds - reach their financial goals.
Headquartered in Philadelphia, a block from the nation's oldest stock
exchange, Delaware Group's first mutual fund was established in 1938. Delaware
International Advisers Ltd., our international affiliate, was established in
1990 and is headquartered in London.
Delaware Group offers a full range of mutual funds. We also manage
variable annuity investments, unit investment trusts and closed-end funds, and
offer retirement plan services for individuals and businesses.
Delaware manages $40 billion in mutual fund assets and institutional
advisory accounts for more than half-a-million investors. We're part of a
global financial service and investment management business owned by Lincoln
National Corporation, whose subsidiaries manage more than $120 billion in
assets.
A TRADITION OF SOUND INVESTING
for current income
U.S. Government Securities Fund's Objective
To seek a high level of current income consistent with prudent investment risk
by investing in the following securities:
*U.S. Treasury bills, notes, bonds and other obligations issued or
unconditionally guaranteed by the U.S. government, or otherwise backed by
the full faith and credit of U.S. government obligations and repurchase
agreements.
*Mortgage participation certificates guaranteed by the Government National
Mortgage Association (GNMA).
commitment
<PAGE>
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November 3, 1997
Dear Shareholder:
While a spectacular U.S. stock market garnered the lion's share of attention
in 1997, the bond market also performed well.
A strong U.S. economy, coupled with low inflation, enabled
Delaware-Voyageur U.S. Government Securities Fund to provide an +8.37% total
return (for Class A shares at net asset value with distributions reinvested)
for the 12 months ended October 31, 1997. This was higher than the Fund's five
year average annualized total return of +7.08% as shown on page 9.
Your Fund's subadviser - Voyageur Asset Management, LLC - takes a
value-oriented approach to fixed-income investing. In managing the Fund, the
goal is to maximize income while preserving principal by investing only in
those securities backed by the full faith and credit of the United States. Of
course, shares of the Fund are not guaranteed, like U.S. Treasury securities.
DURING FISCAL 1997, YOUR FUND EMPHASIZED GNMA BONDS, WHICH PROVIDED HIGHER
INCOME AND EXPERIENCED LESS PRICE FLUCTUATION THAN U.S. TREASURIES.
During fiscal 1997, your Fund emphasized GNMA (Government National
Mortgage Association) Bonds which provided higher income and experienced less
price fluctuation than U.S. Treasuries. We believe the relative price
stability of mortgage securities in calendar 1997 has been due to the fact
that the Federal Reserve Board needed to raise its short-term interest rate
target by only a modest 25 basis points (0.25%) to prevent inflation from
accelerating.
By late spring; however, there were indications that the U.S. economy
was slowing from its torrid 5.6% first quarter growth rate. Declining retail
sales in the second quarter helped reduce inflation fears. This good news,
coupled with Congress' success in reducing the federal budget deficit to the
lowest level since the early 1970s, lifted bond prices.
1997 annual report 1
<PAGE>
CUMULATIVE TOTAL RETURN
- -------------------------------------------------------------------------------
November 1, 1996
to October 31, 1997
- -------------------------------------------------------------------------------
Delaware-Voyageur U.S. Government Securities Fund A Class +8.37%
- -------------------------------------------------------------------------------
Lipper General U.S. Government Fund Average (179 funds) +7.99%
Lehman Brothers Government Bond Index +8.66%
U.S. Consumer Price Index (Inflation) +2.20%
- -------------------------------------------------------------------------------
Performance shown above is based on net asset value and assumes reinvestment
of all distributions. For Fund performance and expense information for all
classes, see page 9. The Lehman Brothers Government Bond Index is an unmanaged
composite of several types of U.S. government securities and assumes no fees
or expenses. Past performance does not guarantee future results.
Overall, we believe economic growth is likely to remain moderate while
interest rate volatility will be relatively muted. We do not believe interest
rates will fall sharply enough to substantially increase the risk of mortgage
refinancing.
Since your Fund's inception two weeks after the U.S. stock market
crash 10 years ago, equity market returns have substantially outpaced bond
market returns, especially during the past three years. Of course, such
stellar performance is not guaranteed, and many investors may want to consider
a balanced mix of stocks and bonds now that equity market volatility has
returned to historical norms.
We suggest you and your financial adviser review your investment goals
and the amount of your portfolio allocated to bonds. Given that our national
leaders appear to have made fiscal responsibility a priority, a fund
emphasizing U.S. government securities may make sense for an income-oriented
investor seeking to reduce his or her risk profile.
Sincerely,
/s/ Wayne A. Stork
Wayne A. Stork
Chairman
/s/ Jeffrey J. Nick
Jeffrey J. Nick
President and Chief Executive Officer
research & discipline
2 1997 annual report
<PAGE>
Introducing Your Fund's Portfolio Manager
On October 6, 1997, Mark L. Simenstad, became senior portfolio manager of
Delaware-Voyageur U.S. Government Securities Fund, replacing Jane M. Wyatt.
Mr. Simenstad is head of Voyageur Asset Management, LLC's taxable fixed-income
group. Mr. Simenstad has 14 years of professional investment experience. Prior
to joining Voyageur, he was a vice president/portfolio manager at Investment
Advisers, Inc. and an assistant vice president/portfolio manager at the
Lutheran Brotherhood, a fraternal organization that offers insurance products
and mutual funds.
photo of Mark L. Simenstad
New President and CEO
On October 13, 1997, Jeffrey J. Nick was named President and Chief Executive
Officer of the Delaware Group of Funds. Mr. Nick has been CEO of Lincoln
National Investment Companies since October 1996. He joined Lincoln National,
Delaware's indirect parent, in April 1990, and from 1992 to 1996 he managed
Lincoln's operations in the United Kingdom. Mr. Nick holds an MBA from the
University of Chicago and a bachelor of arts degree from Princeton University.
1997 annual report 3
<PAGE>
Performance Review
Delaware-Voyageur's U.S.
Government Securities Fund seeks to provide an attractive stream of current
income consistent with prudent investment risk. We invest solely in Treasuries
and government-backed mortgage securities and have historically favored
securities with five- to 10-year maturities.
The Fund's duration of 4.9 years in October 1996 was increased to 5.8
by the end of fiscal 1997 to maximize income potential. Duration measures a
bond's sensitivity to interest rate changes. It approximates the percentage of
change in a bond or bond fund's price given a 1% change in interest rates. In
general, the higher a bond fund's duration, the greater the opportunity for
price appreciation when interest rates fall and the greater the price risk
when rates rise.
With the economy expanding at a 5.6% annual rate during the first
quarter of 1997, the Federal Reserve raised interest rates modestly on March
25th in order to keep inflation under control. Early in calendar 1997, we
expected this move and purchased government issued securities called Treasury
Inflation Indexed Securities (TIPs).
First introduced on January 29, 1997, TIPs are inflation-protected
securities whose rates of return are proportional to the rise and fall of the
U.S. Consumer Price Index (CPI), the government's barometer of inflation.
Since January, U.S. inflation has been milder than either we or many
economists anticipated. Despite a low unemployment rate, consumer spending
has remained at a moderate
strategy
PORTFOLIO HIGHLIGHTS AND ASSET ALLOCATION CHART
- -------------------------------------------------------------------------------
October 31, 1997
Treasuries 45%
GNMA 55%
October 31,
1997
- -------------------------------------------------------------------------------
Average Effective Duration 5.8 years
Average Effective Maturity 9.1 years
Average Quality AAA
Thirty-Day Current SEC Yield* 5.32%
Number of Bonds 39
GNMA 55%
Treasuries 45%
*For Class A shares measured according to the Securities and Exchange
Commission guidelines. For Class B, Class C and the Institutional Class
shares, the 30-day SEC current yields as of October 31, 1997, were 4.85%,
4.85% and 5.59% respectively.
4 1997 annual report
<PAGE>
pace. A stronger U.S. dollar has also helped reduce the price of imported
goods and services. With inflation fears receding, TIPs underperformed other
Treasury securities during the summer of 1997, having a modestly negative
affect on your Fund's results. In October, in response to declining inflation
and expected lower interest rates, we replaced the Fund's TIPs with STRIPs.
STRIPs (Separate Trading of Registered Interest and Principal of
Securities) are U.S. Treasury securities in which the coupon is separated from
the principal, leaving two separate securities. STRIPs have historically
performed best when interest rates decline, and we believe we have positioned
the Fund to benefit from what we believe will be a combination of a slowdown
in economic growth as well as a high level of investor confidence in
Washington's ability to manage our nation's finances.
As of October 31, 1997, approximately 46% of your Fund's net assets
were invested in U.S. Treasury securities. Some 5% of net assets were invested
in STRIPs with a seven-year average maturity.
Another action we've taken has been to slightly reduce the Fund's
position in mortgages, partly because we believe interest rates may continue
to decline in the months ahead. While we value GNMAs (Government National
Mortgage Association bonds) for their yields, which are higher than Treasuries
with like maturities, lower interest rates typically lead to
WE HAVE POSITIONED THE FUND TO BENEFIT FROM WHAT WE BELIEVE WILL BE A
COMBINATION OF A SLOWDOWN IN ECONOMIC GROWTH AS WELL AS A HIGH LEVEL OF
INVESTOR CONFIDENCE IN WASHINGTON'S ABILITY TO MANAGE OUR NATION'S FINANCES.
HOW INTEREST RATES AFFECT MORTGAGE PREPAYMENT RISK
- -------------------------------------------------------------------------------
If 10-Year U.S. Treasury notes yield.... 6.75% 6.15% 5.95% 5.60% 5.25%
Mortgage rates are likely to be......... 7.95% 7.45% 7.25% 6.95% 6.65%
- -------------------------------------------------------------------------------
Percentage of homeowners who may
find mortgage refinancing attractive.. 16% 34% 41% 60% 70%
Mortgage rates shown above are an estimate of Federal Home Loan Mortgage Corp.
average commitment rates for conventional 30-year fixed-rate first mortgages
for a single-family home. Refinancing estimates are as of October 1997. As of
October 31, 1997, a 10-year U.S. Treasury note yielded 5.87%.
Source: Bear Stearns.
If bond yields fall substantially, refinancing of mortgages becomes attractive
for many homeowners. The chart above shows the percentage of the mortgage
securities market at risk of refinancing given various yield levels.
1997 annual report 5
<PAGE>
GLOSSARY
TIPs
Treasury Inflation Indexed Securities. TIPs, introduced for the first time on
January 29, 1997, are inflation-protected securities whose rates of return are
proportional to the rise and fall of the Consumer Price Index (CPI).
GNMA
Government National Mortgage Association. GNMAs are mortgage-backed bonds
which consist of pools of individual mortgages issued by either the Veterans
Administration (VA) or Federal Housing Administration (FHA).
STRIPs
Separate Trading of Registered Interest and Principal of Securities. STRIPs
are Treasury securities in which the coupon is separated from the principal,
leaving two separate securities, which may be held by different investors.
increased levels of mortgage refinancing. We wanted to modestly reduce the
Fund's risk profile while still capitalizing on GNMA's attractive income
potential.
During fiscal 1997, the Fund's average effective maturity was kept in
the intermediate range because we believe this segment of the market has a
relatively attractive risk/reward ratio. While a longer average maturity could
lead to a higher income payout assuming bonds have equal credit quality, it
also means greater price volatility related to interest rate fluctuations.
The Fund seeks to avoid investing in GNMA securities with a coupon
higher than 8%. This reflects our view that a higher coupon, while increasing
the Fund's yield, is more likely to erode principal over time. The Fund's
average coupon was 7.26% at year's end, and the average bond in the portfolio
had a market value that was at a slight discount to face value. Generally, we
believe that during a period of falling interest rates, discounted GNMAs are
likely to perform better than GNMAs bought at face value or a premium.
IT IS IMPORTANT TO BE MINDFUL OF RISK AND BOND PRICES RELATIVE TO FUNDAMENTAL
MEASURES OF VALUE.
6 1997 annual report
<PAGE>
Outlook
We believe two developments during the fall of 1997 may spur increased demand
for U.S. government securities from overseas investors: currency and economic
problems along the Pacific Rim and gold's loss of luster as an investment. In
our opinion, more Asian and European investors will view Treasury bonds as a
relatively more stable and attractive alternative to their own country's
public and corporate debt. Meanwhile, gold - a global "safe haven" for
centuries - has fallen into disfavor as several countries, including Australia
and Switzerland, have announced substantial sales of their reserves. Lower
gold prices are often correlated with lower interest rates.
Since the summer, Treasury prices have benefited from Congressional
efforts to reduce the federal budget deficit. In our opinion, reduced
government borrowing during the past few years has been beneficial for the
U.S. economy and government securities prices because:
1) it has made more capital available for more efficient private
sector growth; and,
2) it has reduced the supply of new U.S. government debt.
If inflation remains low and demand for a declining supply of Treasury
securities from both U.S. and overseas remains strong, interest rates have the
potential to decline in the months ahead. However, we believe long-term rates
will not fall significantly below 6% because the U.S. economy remains
relatively strong.
Analyzing short-term interest rate fluctuations will always be a facet
of bond investing. Still, we believe it is equally important to be mindful of
risk and bond prices relative to fundamental measures of value, and our
investment choices in the year ahead will be guided by that philosophy.
Mark L. Simenstad
Senior Portfolio Manager
November 3, 1997
IN OUR OPINION, MORE ASIAN AND EUROPEAN INVESTORS WILL VIEW TREASURY BONDS AS
A RELATIVELY MORE STABLE AND ATTRACTIVE ALTERNATIVE TO THEIR OWN COUNTRY'S
PUBLIC AND CORPORATE DEBT.
outlook
1997 annual report 7
<PAGE>
Two Features of
U.S. Government Securities Fund
HIGH INCOME POTENTIAL
DISTRIBUTIONS FROM A $100,000 INVESTMENT
Inception through October 31, 1997
Total Income = $112,361
Total Capital Gains = $5,903
Income Capital Gains
Oct. '88 $ 8,816 $0
Oct. '89 $ 9,468 $0
Oct. '90 $ 9,891 $2,398
Oct. '91 $12,137 $0
Oct. '92 $12,138 $1,213
Oct. '93 $12,926 $1,130
Oct. '94 $12,105 $1,034
Oct. '95 $11,501 $ 128
Oct. '96 $11,890 $0
Oct. '97 $11,488 $0
Chart assumes a $100,000 investment on November 2, 1987, in Class A shares,
and includes the effect of a 3.75% front-end sales charge and reinvestment of
distributions. Performance for other classes will differ due to different
charges and expenses. See page 9 for performance and expense information for
all classes. Past performance does not guarantee future results.
Consistently Above-Average Results
RANKING WITHIN LIPPER'S GENERAL U.S. GOVERNMENT FUND AVERAGE
- -------------------------------------------------------------------------------
October 31, 1997
One Year Three Years Five Years Lifetime
- -------------------------------------------------------------------------------
Ranking 50th 15th 17th 6th
Number of Funds 179 134 78 51
Rankings based on return at net asset value with distributions reinvested and
without sales charges for the periods shown above ended October 31, 1997.
Past performance does not guarantee future results. Fee waivers were in
effect for the time periods shown. Returns would have been lower without the
waivers. Source: Lipper Analytical Services.
8 1997 annual report
<PAGE>
U.S. GOVERNMENT SECURITIES FUND'S LIFETIME RESULTS
GROWTH OF A $10,000 INVESTMENT
- -------------------------------------------------------------------------------
November 3, 1987 to October 31, 1997
U.S. Government Securities Fund A Class
Lehman Brothers Government Bond Index
Lipper General U.S. Government Fund Average (48 funds)
<TABLE>
<CAPTION>
Lipper General U.S. Lehman Brothers Government
U.S. Government Securities Fund A Class Government Fund Average (48 funds) Bond Index
<S> <C> <C> <C> <C>
Nov. '87 $ 9,524 $10,000 $10,000
Oct. '88 $10,428 $10,980 $10,972
Oct. '89 $11,390 $12,074 $12,293
Oct. '90 $12,310 $12,697 $13,022
Oct. '91 $14,366 $14,540 $14,927
Oct. '92 $15,899 $15,819 $16,467
Oct. '93 $18,091 $17,711 $18,627
Oct. '94 $16,759 $16,699 $17,793
Oct. '95 $19,673 $19,197 $20,530
Oct. '96 $20,612 $19,974 $21,579
Oct. '97 $22,238 $21,586 $23,445
</TABLE>
Chart assumes a $10,000 investment made on November 2, 1987, and includes the
effect of a 4.75% sales charge and reinvestment of distributions. Performance
for other classes will differ due to different charges and expenses. Past
performance does not guarantee future results.
U.S. Government Securities Fund Performance
Average Annual Return Through October 31, 1997
- -------------------------------------------------------------------------------
Lifetime Five Years One Year
- -------------------------------------------------------------------------------
Class A (Est. 11/2/87)
Excluding Sales Charge +8.93% +7.08% +8.37%
Including Sales Charge +8.40% +6.03% +3.22%
- -------------------------------------------------------------------------------
Class B (Est. 6/7/94)
Excluding Sales Charge +7.28% +7.59%
Including Sales Charge +6.53% +3.59%
- -------------------------------------------------------------------------------
Class C (Est. 1/10/95)
Excluding Sales Charge +9.82% +7.59%
Including Sales Charge +9.82% +6.59%
All returns reflect reinvestment of distributions and the impact of any sales
charges as described below. Return and share value will fluctuate with rising
and falling interest rates so that shares, when redeemed, may be worth more or
less than their original cost. Past performance is not a guarantee of future
results. B and C Class results excluding sales charge assume contingent sales
charges either did not apply or the investment was not redeemed.
Class A shares have a 4.75% maximum sales charge and a 12b-1 fee of 0.25%.
Class B shares do not carry a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are subject to a deferred sales
charge of up to 4% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed
within 12 months, a 1% contingent deferred sales charge applies.
Fee waivers were in effect for the time period shown. Performance would have
been lower without the waivers. See pages 12 and 13 for more information.
The average annual total returns for the lifetime and one-year periods ended
October 31, 1997, for U.S. Government Securities Fund's Institutional Class
(Est. 6/7/94), which is available without sales or asset-based distribution
charges only to certain eligible institutional accounts, were 7.97% and 8.39%.
1997 annual report 9
<PAGE>
Financial Statements
Delaware - Voyageur
U.S. Government Securities Fund
Statement Of Net Assets
October 31, 1997
---------------------------------------------------------------------------
Principal Market
Amount Value
--------- ------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION OBLIGATIONS - 55.50%
GNMA 6.50% 2/15/24 to 12/01/27...... $40,328,195 $39,897,807
GNMA 7.00% 9/15/25 to 3/15/26....... 9,329,396 9,414,167
GNMA 8.00% 1/15/17 ................. 31,413 33,062
GNMA 10.00% 3/15/16 ................ 55,371 61,012
GNMA II 7.00% 10/20/27.............. 6,138,000 6,147,591
GNMA II 10.00% 12/20/02 ............ 54,521 57,571
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Total Government National Mortgage
Association Obligations
(cost $54,512,361)................ 55,611,210
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U.S. TREASURY OBLIGATIONS - 45.98%
U.S. Treasury Bonds 6.25% 8/15/23 .. 4,400,000 4,410,692
U.S. Treasury Bonds 7.875% 2/15/21.. 5,000,000 5,989,050
U.S. Treasury Notes 5.625% 11/30/00. 900,000 896,823
U.S. Treasury Notes 6.00% 7/31/02... 5,200,000 5,246,280
U.S. Treasury Notes 6.125% 7/31/00.. 10,700,000 10,812,884
U.S. Treasury Notes 6.375% 5/15/00.. 1,900,000 1,930,248
U.S. Treasury Notes 6.50% 8/31/01... 5,500,000 5,637,444
U.S. Treasury Notes 6.50% 8/15/05... 5,000,000 5,184,500
U.S. Treasury Notes 8.00% 8/15/99... 100,000 103,937
U.S. Treasury Notes 8.875% 5/15/00.. 500,000 537,425
* U.S. Treasury Strip 5.23% 11/15/04.. 8,000,000 5,318,317
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Total U.S. Treasury Obligations
(cost $45,532,548)................ 46,067,600
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TOTAL MARKET VALUE OF SECURITIES OWNED - 101.48%
(cost $100,044,909)............................... 101,678,810
LIABILITIES NET OF RECEIVABLES
AND OTHER ASSETS - (1.48%)........................ (1,482,345)
-------------
NET ASSETS APPLICABLE TO 9,451,390 SHARES
($0.01 PAR VALUE) OUTSTANDING..................... $100,196,465
=============
NET ASSET VALUE - U.S. GOVERNMENT
SECURITIES FUND A CLASS
($52,212,844 / 4,926,222 shares).................. $10.60
=======
NET ASSET VALUE - U.S. GOVERNMENT
SECURITIES FUND B CLASS
($2,256,609 / 212,656 shares)..................... $10.61
=======
NET ASSET VALUE - U.S. GOVERNMENT
SECURITIES FUND C CLASS
($137,918 / 13,022 shares)........................ $10.59
=======
NET ASSET VALUE - U.S. GOVERNMENT
SECURITIES FUND INSTITUTIONAL CLASS
($45,589,094 / 4,299,490 shares).................. $10.60
=======
<PAGE>
Market
Value
------
COMPONENTS OF NET ASSETS AT OCTOBER 31, 1997:
Common stock, $0.01 par value, 10,000,000,000 shares
authorized to the Fund with 1,000,000,000 shares
allocated to U.S. Government Securities Fund A Class,
1,000,000,000 shares allocated to U.S. Government
Securities Fund B Class, 1,000,000,000 shares
allocated to U.S. Government Securities Fund C Class
and 1,000,000,000 shares allocated to U.S.
Government Securities Fund Institutional Class.. $102,007,592
Undistributed net investment income .............. 82,004
Accumulated net realized loss on investments ..... (3,527,032)
Net unrealized appreciation on investments ....... 1,633,901
-------------
Total net assets.................................. $100,196,465
=============
NET ASSET VALUE AND OFFERING PRICE FOR U.S.
GOVERNMENT SECURITIES FUND A CLASS
Net asset value per share(A)...................... $10.60
Sales charge (4.75% of offering price or 5.00%
of amount invested per share)(B)................ 0.53
-------------
Offering price.................................... $11.13
=============
------------------
* Zero coupon security. Interest rate disclosed is the effective yield as
of the date of acquisition.
(A) Net asset value per share illustrated is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See Purchasing Shares in the current Prospectus for purchases of
$100,000 or more for U.S. Government Fund Class A.
See accompanying notes
Delaware - Voyageur
U.S. Government Securities Fund
Statement Of Assets And Liabilities
October 31, 1997
ASSETS:
Investments in securities at market
(cost $100,044,909)................................ $101,678,810
Cash................................................. 275,597
Interest receivable.................................. 918,127
Subscriptions receivable............................. 211,419
Receivable for securities sold....................... 21,138,355
-------------
Total assets......................................... 124,222,308
-------------
LIABILITIES:
Liquidations payable................................. 2,713,024
Payable for securities purchased..................... 21,008,752
Other accounts payable and accrued expenses.......... 304,067
-------------
Total liabilities.................................... 24,025,843
-------------
Total Net Assets..................................... $100,196,465
=============
See accompanying notes
10 1997 annual report
<PAGE>
Delaware - Voyageur
U.S. Government Securities Fund
Statement Of Operations
Year Ended October 31, 1997
INVESTMENT INCOME:
Interest................................ $7,662,729
EXPENSES:
Management fees......................... $568,682
Distribution expense.................... 304,689
Dividend disbursing and transfer agent
fees and expenses..................... 116,261
Registration fees....................... 50,928
Professional fees....................... 28,999
Accounting fees and salaries............ 27,925
Reports and statements to shareholders.. 26,569
Custodian fees.......................... 23,837
Directors' fees......................... 5,247
Taxes (other than taxes on income)...... 1,200
Other................................... 18,534
-------------
1,172,871
Less expenses absorbed by advisor....... (92,192) 1,080,679
-------------
NET INVESTMENT INCOME................... 6,582,050
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS :
Net realized gain from investment
transactions ......................... 3,015,506
Net change in unrealized appreciation
on investments during the period ..... (621,669)
-------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS........................ 2,393,837
-------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $8,975,887
=============
See accompanying notes
<PAGE>
Delaware - Voyageur
U.S. Government Securities Fund
Statement Of Changes In Net Assets
<TABLE>
<CAPTION>
Year Four Months Year
Ended Ended Ended
10/31/97 10/31/96* 6/30/96
----------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income .............. $6,582,050 $2,259,383 $7,374,676
Net realized gain from investment
transactions...................... 3,015,506 936,151 2,285,055
Net change in unrealized appreciation
on investments during the period.. (621,669) 1,370,635 (4,503,029)
-------------- -------------- --------------
Net increase in net assets
resulting from operations ........ 8,975,887 4,566,169 5,156,702
-------------- -------------- --------------
DISTRIBUTION TO SHAREHOLDERS
FROM:
Net investment income:
A Class........................... (3,691,516) (1,364,201) (4,281,883)
B Class........................... (117,294) (34,848) (48,064)
C Class........................... (10,330) (4,027) (13,726)
Institutional Class............... (2,898,335) (858,567) (2,789,781)
-------------- -------------- --------------
(6,717,475) (2,261,643) (7,133,454)
-------------- -------------- --------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class........................... 7,487,475 861,117 7,330,164
B Class........................... 593,541 404,912 1,769,115
C Class........................... 5,505 4,598 91,380
Institutional Class .............. 13,306,849 10,243,939 15,417,147
Net asset value of shares issued upon
reinvestment of dividends from
net investment income:
A Class........................... 2,596,190 942,767 2,859,623
B Class........................... 57,169 11,998 16,287
C Class........................... 4,390 1,898 5,275
Institutional Class .............. 2,237,082 595,190 1,796,765
-------------- -------------- --------------
26,288,201 13,066,419 29,285,756
-------------- -------------- --------------
Cost of shares repurchased:
A Class........................... (24,625,528) (6,075,050) (16,187,295)
B Class........................... (574,860) (100,618) (105,794)
C Class........................... (109,450) (600) (85,799)
Institutional Class .............. (20,996,519) (3,372,008) (29,486,507)
-------------- -------------- --------------
(46,306,357) (9,548,276) (45,865,395)
-------------- -------------- --------------
Increase (decrease) in net assets
derived from capital share
transactions...................... (20,018,156) 3,518,143 (16,579,639)
-------------- -------------- --------------
NET INCREASE (DECREASE) IN
NET ASSETS........................ (17,759,744) 5,822,669 (18,556,391)
NET ASSETS:
Beginning of period................. 117,956,209 112,133,540 130,689,931
-------------- -------------- --------------
End of period....................... $100,196,465 $117,956,209 $112,133,540
============== ============== ==============
</TABLE>
--------------------
*Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31.
See accompanying notes
1997 annual report 11
<PAGE>
Delaware - Voyageur
U.S. Government Securities Fund
Financial Highlights
- -------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each
period were as follows:
<TABLE>
<CAPTION>
U.S. Government Securities
Fund A Class
---------------------------------------------------
Year Four Months Year Year Year
Ended Ended Ended Ended Ended
10/31/97(5) 10/31/96(4) 6/30/96 6/30/95 6/30/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................................... $10.37 $10.16 $10.37 $9.76 $10.99
Income from investment operations:
Net investment income ................................................ 0.59 0.21 0.63 0.62 0.55
Net realized and unrealized gain (loss) from security transactions ... 0.24 0.21 (0.23) 0.63 (0.94)
------- ------- ------- ------- -------
Total from investment operations ..................................... 0.83 0.42 0.40 1.25 (0.39)
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income.................................. (0.60) (0.21) (0.61) (0.62) (0.55)
Distributions from net realized gain on investment transactions ...... _ _ _ (0.02) (0.29)
------- ------- ------- ------- -------
Total dividends and distributions..................................... (0.60) (0.21) (0.61) (0.64) (0.84)
------- ------- ------- ------- -------
Net asset value, end of period.......................................... $10.60 $10.37 $10.16 $10.37 $ 9.76
======= ======= ======= ======= =======
Total return1........................................................... 8.37% 4.18% 3.88% 13.45% (3.95%)
Ratios and supplemental data:
Net assets, end of period (000 omitted)............................... $52,213 $65,516 $68,442 $75,886 $84,660
Ratio of expenses to average net assets .............................. 0.93% 0.98%(2,3) 0.97%(3) 0.95% 0.96%
Ratio of expenses to average net assets prior to expense limitation... 1.01% 0.98%(2) 0.97% 0.95% 0.96%
Ratio of net investment income to average net assets ................. 5.76% 6.03%(2) 6.07% 6.38% 5.10%
Ratio of net investment income to average net assets prior to expense
limitation ......................................................... 5.68% 6.03%(2) 6.07% 6.38% 5.10%
Portfolio turnover ................................................... 202.47% 66.29% 145.35% 144.39% 124.38%
</TABLE>
- --------------------
(1) 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. Total
return for the period ended October 31, 1996, has not been annualized.
(2) Annualized.
(3) 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.
(4) Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31.
(5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
12 1997 annual report
<PAGE>
Financial Highlights (Continued)
- -------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
U.S. Government Securities Fund U.S. Government Securities Fund
B Class C Class
-------------------------------------------------- -----------------------------------------
Year Four Months Year Year Period From Year Four Months Year Period From
Ended Ended Ended Ended 6/7/94(2) To Ended Ended Ended 1/10/95(2) To
10/31/97(7) 10/31/96(6) 6/30/96 6/30/95 6/30/94 10/31/97(7) 10/31/96(6) 6/30/96 6/30/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $10.38 $10.17 $10.38 $9.75 $10.05 $10.36 $10.15 $10.36 $9.48
Income from investment operations:
Net investment income ............... 0.52 0.18 0.57 0.56 0.01 0.52 0.18 0.55 0.27
Net realized and unrealized gain (loss)
from security transactions......... 0.24 0.21 (0.23) 0.65 (0.28) 0.24 0.21 (0.23) 0.88
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations .... 0.76 0.39 0.34 1.21 (0.27) 0.76 0.39 0.32 1.15
------ ------ ------ ------ ------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net investment income (0.53) (0.18) (0.55) (0.56) (0.01) (0.53) (0.18) (0.53) (0.27)
Distributions from net realized gain
on investment transactions ...... _ _ _ (0.02) (0.02) _ _ _ _
------ ------ ------ ------ ------ ------ ------ ------ ------
Total dividends and distributions.. (0.53) (0.18) (0.55) (0.58) (0.03) (0.53) (0.18) (0.53) (0.27)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period..... $10.61 $10.38 $10.17 $10.38 $ 9.75 $10.59 $10.36 $10.15 $10.36
====== ====== ====== ====== ====== ====== ====== ====== ======
Total return (3)................... 7.59% 3.91% 3.32% 12.90% (2.68%) 7.60% 3.92% 3.11% 12.73%
Ratios and supplemental data:
Net assets, end of period
(000 omitted)................. $2,257 $2,139 $1,780 $139 $24 $138 $234 $224 $221
Ratio of expenses to average
net assets.................... 1.67% 1.73%(4,5) 1.46%(5) 1.54% 0.30%(1) 1.68% 1.73%(4,5) 1.70%(5) 1.62%(4)
Ratio of expenses to average
net assets prior to expense
limitation ................... 1.75% 1.73%(4) 1.63% 1.69% 0.30%(1) 1.76% 1.73%(4) 1.70% 1.65%(4)
Ratio of net investment income
to average net assets......... 5.02% 5.24%(4) 5.55% 5.56% 0.11%(1) 5.02% 5.26%(4) 5.33% 5.10%(4)
Ratio of net investment
income to average net assets
prior to expense limitation .. 4.94% 5.24%(4) 5.38% 5.41% 0.11%(1) 4.94% 5.26%(4) 5.33% 5.07%(4)
Portfolio turnover.............202.47% 66.29% 145.35% 144.39% 124.38% 202.47% 66.29% 145.35% 144.39%
</TABLE>
- --------------------
(1) 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.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge. Total
return for periods less than 12 months have not been annualized.
(4) Annualized.
(5) 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.
(6) Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31.
(7) Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
13 1997 annual report
<PAGE>
Financial Highlights (Continued)
- -------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
U.S. Government Securities Fund
Institutional Class
-------------------------------------------------------------
Year Four Months Year Year Period From
Ended Ended Ended Ended 6/7/94(2) to
10/31/97(7) 10/31/96(6) 6/30/96 6/30/95 6/30/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............................. $10.37 $10.16 $10.37 $9.75 $10.05
Income from investment operations:
Net investment income ...................................... 0.60 0.21 0.63 0.62 0.01
Net realized and unrealized gain (loss) from security
transactions ............................................. 0.24 0.21 (0.23) 0.64 (0.28)
------ ------ ------ ----- ------
Total from investment operations............................ 0.84 0.42 0.40 1.26 (0.27)
------ ------ ------ ----- ------
Less dividends and distributions:
Dividends from net investment income........................ (0.61) (0.21) (0.61) (0.62) (0.01)
Distributions from net realized gain on investment
transactions ............................................. -- -- -- (0.02) (0.02)
------ ------ ------ ----- ------
Total dividends and distributions........................... (0.61) (0.21) (0.61) (0.64) (0.03)
------ ------ ------ ----- ------
Net asset value, end of period ................................... $10.60 $10.37 $10.16 $10.37 $9.75
====== ====== ====== ====== ======
Total return(3)................................................... 8.39% 4.17% 3.88% 13.57% (2.64%)
Ratios and supplemental data:
Net assets, end of period (000 omitted)..................... $45,589 $50,066 $41,688 $54,445 $49,898
Ratio of expenses to average net assets(5).................. 0.93% 0.99%(4,5) 0.97%(5) 0.94% 0.25%(1)
Ratio of expenses to average net assets prior to expense
limitation................................................ 1.01% 0.99%(4) 0.97% 0.94% 0.25%(1)
Ratio of net investment income to average net assets........ 5.76% 6.00%(4) 6.07% 6.39% 0.16%(1)
Ratio of net investment income to average net assets
prior to expense limitation................................ 5.68% 6.00%(4) 6.07% 6.39% 0.16%(1)
Portfolio turnover ......................................... 202.47% 66.29% 145.35% 144.39% 124.38%
</TABLE>
- -----------------------
(1) 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.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge. Total
return for the periods ended October 31, 1996, and June 30, 1994, have
not been annualized.
(4) Annualized.
(5) 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.
(6) Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31.
(7) Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
14 1997 annual report
<PAGE>
Delaware - Voyageur
U.S. Government Securities Fund
Notes To Financial Statements
October 31, 1997
-----------------------------------------------------------------------------
Delaware - Voyageur U.S. Government Securities Fund (the "Fund"), formerly
Voyageur U.S. Government Securities Fund, is registered as a diversified
open-end investment company under the Investment Company Act of 1940, as
amended. The Fund is organized as a Maryland Corporation and currently
offers four classes of shares. The U.S. Government Securities Fund A Class
carries a front-end sales charge of 4.75%. The U.S. Government Securities
Fund B Class carries a back-end deferred sales charge, U.S. Government
Securities Fund C Class carries a level load deferred sales charge and U.S.
Government Institutional Class has no sales charge. The Fund seeks high
current income from investments issued, guaranteed or otherwise backed by
the full faith and credit of the U.S. government.
1. Fund Reorganization
On April 30, 1997, Lincoln National Corporation ("LNC") acquired Voyageur
Fund Manager Inc.'s ("Voyageur") parent, Dougherty Financial Group, Inc.
("DFG") pursuant to an agreement and plan of merger dated January 15, 1997,
in which LNC would acquire DFG including the mutual fund investment advisory
business of DFG conducted by Voyageur. Upon completion of the acquisition,
Delaware Management Company, Inc. ("DMC") became the investment advisor to
the Fund, Delaware Distributors, L.P. ("DDLP") became the distributor for
the Fund, Delaware Service Company, Inc. ("DSC") became the transfer,
dividend-disbursing, shareholder servicing agent and accounting service
agent for the Fund.
2. 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 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 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 Group 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.
<PAGE>
Other - Expenses common to all Funds within the Delaware Group of Funds are
allocated amongst the funds on the basis of average net assets. Security
transactions are recorded on the date the securities are purchased or sold
(trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. Original issue discounts are accreted to
interest income over the lives of the respective securities. The Fund
declares dividends daily from net investment income and pays such dividends
monthly.
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.
3. Investment Management and Other Transactions with Affiliates
Commencing May 1, 1997, in accordance with the terms of the Investment
Management Agreement, the Fund pays DMC, the Investment Manager of the
Fund,an annual fee, which is calculated daily at the rate of 0.50% on the
average daily net assets of the Fund less the fees paid to the unaffiliated
directors. At October 31, 1997, the Fund had a liability for Investment
Management fees and other expenses payable to DMC of $26,844.
DMC has elected to waive that portion of the management fee and reimburse
the Fund to the extent that annual operating expenses exclusive of taxes,
interest, brokerage commissions and extraordinary expenses, exceed 1.00% of
the Fund's average daily net assets attributable to Class A and
Institutional Class shares and 1.75% of the Fund's average daily net assets
attributable to Class B and Class C shares. In addition, DMC may voluntarily
absorb other Fund expenses. Total expenses absorbed by DMC for the six-month
period ended October 31, 1997, were $48,842.
Prior to May 1, 1997, the Funds had an investment advisory and management
agreement with Voyageur. Voyageur received a fee for its investment advisory
and management services based on the average daily net assets of the Fund at
an annual rate of 0.50%. During the period November 1, 1996, to April 30,
1997, Voyageur waived $43,350 of its fees.
Commencing May 1, 1997, the Fund has engaged DSC, an affiliate of DMC, to
serve as dividend disbursing, transfer agent, and accounting services agent
for the Fund. During the period May 1, 1997, to October 31, 1997, the Fund
expensed $32,670 for dividend disbursing and transfer agent services and
$20,733 for accounting services. At October 31, 1997, the Fund had a
liability for such fees and other expenses payable to DSC for $11,213. Prior
to May 1, 1997, the Fund paid a fee to Voyageur for acting as the Fund's
dividend disbursing, administrative, and accounting services agent. During
the period November 1, 1996, through April 30, 1997, the Fund expensed
$83,591 for these services. The Fund was also responsible for reimbursing
Voyageur's out-of-pocket expense in connection with the performance of
dividend disbursing, administrative, and accounting services.
Commencing May 1, 1997, and pursuant to the Distribution Agreement, the Fund
pays DDLP, the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.25% of the average daily net assets attributable to Class A and
Institutional Class shares and 1.00%.
1997 annual report 15
<PAGE>
Notes to Financial Statements (Continued)
-----------------------------------------------------------------------------
3. Investment Management and Other Transactions with Affiliates (Continued
of the average daily net assets attributable to Class B and Class C shares.
For the six- month period ended October 31, 1997, DDLP earned $2,186 for
commissions on sales of the Fund A Class shares.
Prior to May 1, 1997, each class of shares had a Distribution Agreement with
Voyageur Fund Distributors, Inc. ("VFD"). Under the plan the Fund paid VFD a
fee at an annual rate of 0.25% 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.
Certain officers of DMC, DSC and DDLP are officers, directors and/or
employees of the Fund. These officers, directors and employees are not
compensated by the Fund.
4. Capital Stock
Transactions in capital stock shares were as follows:
Year Four Months Year
Ended Ended Ended
10/31/97 10/31/96* 6/30/96
------------ ------------- --------
Shares sold:
A Class.................. 726,443 84,718 701,265
B Class.................. 56,888 39,770 170,138
C Class.................. 527 449 8,796
Institutional Class ..... 1,286,857 997,379 1,475,063
Shares issued upon reinvestment
of dividends from net
investment income and net
realized gains from
security transactions:
A Class.................. 251,626 92,642 275,527
B Class.................. 5,528 1,177 1,571
C Class.................. 427 187 506
Institutional Class...... 216,860 58,441 173,176
---------- --------- ---------
2,545,156 1,274,763 2,806,042
---------- --------- ---------
------------------------
* Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31.
Shares repurchased:
A Class.................. (2,371,057) (595,352) (1,556,383)
B Class.................. (55,886) (9,851) (10,038)
C Class.................. (10,563) (59) (8,540)
Institutional Class...... (2,030,915) (330,989) (2,794,116)
---------- --------- ---------
(4,468,421) (936,251) (4,369,077)
---------- --------- ---------
Net Increase (Decrease)... (1,923,265) 338,512 (1,563,035)
========== ========= =========
5. Investments
During the year ended October 31, 1997, the Fund made purchases of
$231,752,575 and sales of $249,376,180 of long-term U.S. government
securities.
At October 31, 1997, the aggregate cost of securities for federal income tax
purposes was $100,131,949.
At October 31, 1997, net unrealized appreciation for federal income tax
purposes aggregated $1,546,861 of which $1,580,490 related to unrealized
appreciation of securities and $33,629 related to unrealized depreciation of
securities.
For federal income tax purposes, the Fund had a capital loss carryforward at
October 31, 1997, of $3,439,992 which may be carried forward and applied
against future capital gains. The capital loss carryforward expires in the
years 2002 through 2003.
6. Concentration of Credit Risk
The Fund may invest in securities whose value is derived from an underlying
pool of mortgages or consumer loans. Prepayment of these loans may shorten
the stated maturity of the respective obligation and may result in a loss of
premium, if any has been paid.
<PAGE>
-----------------------------------------------------------------------------
Delaware - Voyageur
U.S. Government Securities Fund
Report of Independent Auditors
-----------------------------------------------------------------------------
To the Shareholders and Board of Directors
Delaware - Voyageur
U.S. Government Securities Fund
We have audited the accompanying statement of net assets and statement of
assets and liabilities of Delaware - Voyageur U.S. Government Securities
Fund as of October 31, 1997, and the related statement of operations,
statement of changes in net assets, and financial highlights for the year
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit. The statement of changes in net assets for the periods ended June 30,
1996, through October 31, 1996, and the financial highlights for the periods
ended June 30, 1994, through October 31, 1996, were audited by other
auditors whose report dated December 6, 1996, expressed an unqualified
opinion on those statements and financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements and financial highlights. Our procedures
included confirmation of securities owned as of October 31, 1997, by corresp
ondence with the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the 1997 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Delaware - Voyageur U.S. Government Securities Fund at October
31, 1997, the results of its operations, the changes in its net assets, and
its financial highlights for the year then ended, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
December 4, 1997
16 1997 annual report
<PAGE>
This annual report is for the information of U.S. Government Securities Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current Prospectus for U.S. Government Securities Fund, which
sets forth details about charges, expenses, investment objectives and
operating policies of the Fund. You should read the prospectus carefully
before you invest. Summary investment results are documented in the Fund's
current Statement of Additional Information. The figures in this report
represent past results which are not a guarantee of future results. The return
and principal value of an investment in the Fund will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost.
Board of Directors
Wayne A. Stork
Chairman
Delaware Group of Funds
Philadelphia, PA
Jeffrey J. Nick
President and Chief Executive Officer
Delaware Group of Funds
Philadelphia, PA
Walter P. Babich
Board Chairman, Citadel Constructors, Inc.
King of Prussia, PA
Anthony D. Knerr
Consultant, Anthony Knerr & Associates
New York, NY
Ann R. Leven
Treasurer, National Gallery of Art
Washington, DC
W. Thacher Longstreth
City Councilman
Philadelphia, PA
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
Charles E. Peck
Secretary/Treasurer, Enterprise Homes, Inc.
Fredericksburg, VA
Affiliated Officers
David K. Downes
Executive Vice President, Chief Financial Officer
and Chief Operating Officer
Delaware Group of Funds
Philadelphia, PA
George M. Chamberlain, Jr.
Senior Vice President, Secretary
and General Counsel
Delaware Group of Funds
Philadelphia, PA
Bruce D. Barton
President and Chief Executive Officer
Delaware Distributors, L.P.
Philadelphia, PA
directors & officers
<PAGE>
- -------------------------------------------------------------------------------
Investment Manager
Delaware Management Company, Inc.
Philadelphia, Pennsylvania
International Affiliate
Delaware International Advisers Ltd.
London, England
Subadviser
Voyageur Asset Management, L.L.C.
Minneapolis, MN
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
<PAGE>
This report must be preceded or accompanied by a current U.S. Government
Securities 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 adviser or Delaware Group.
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions Representatives Only
1.800.659.2265
Be sure to consult your financial adviser when making investments. Mutual
funds can be a valuable part of your financial plan; however, shares of the
Fund are not FDIC or NCUSIF insured, are not guaranteed by any bank or any
credit union, and involve investment risk, including the possible loss of the
principal amount invested. Shares of the Fund are not bank or credit union
deposits.
Copy Rights Delaware Distributors, L.P.
DELAWARE
GROUP
- ---------
Philadelphia o London
Printed in the USA on
recycled paper
