<PAGE>
FOR CURRENT INCOME
Delaware U.S. Government Securities Fund
(various photos demonstrating service, guidance, professional management
and goals)
service and guidance
professional management
goals
1999
Annual Report
DELAWARE(SM)
INVESTMENTS
- ---------------------
Philadelphia o London
<PAGE>
A TRADITION OF SOUND INVESTING
commitment
A Commitment
To Our Investors
(photo of computer keyboard)
(photo of illustration for current income brochure)
Delaware Investments has a tradition of money management that 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, the Delaware organization established its first mutual fund in 1938.
Delaware International Advisers Ltd., our international affiliate, was
established in 1990 and is headquartered in London.
Delaware Investments offers a full range of mutual funds. We also manage
investments for variable annuities and closed-end funds as well as offer a wide
range of retirement plan services for individuals and businesses.
Delaware Investments manages approximately $45 billion in mutual fund assets
and institutional advisory accounts for more than half-a-million investors.
Complete information on any fund offered by Delaware Investments can be found in
each fund's current prospectus. Prospectuses for all funds offered by Delaware
Investments are available from your financial adviser. Please read the
prospectus carefully before you invest or send money.
Delaware U.S. Government
Securities Fund Objective
Seeks to provide shareholders with a high level of current income consistent
with prudent investment risk.
Table of Contents
Letter to Shareholders Page 1
Portfolio Manager's Review Page 3
Performance Page 6
Statement of Net Assets Page 7
Financial Highlights Page 9
current
income
tradition
<PAGE>
November 17, 1999
for current
income
1
Dear Shareholder:
The past year has been a challenging one for fixed-income investors.
Just before our fiscal year began, debt problems in Russia and Brazil, along
with ongoing concerns about recessions in Asia, created strong worldwide demand
for U.S. Treasury bonds. Demand for Treasuries, during times of extreme market
turbulence is often referred to as "a flight to quality."
The Federal Reserve Board's ensuing interest rate cuts in the fall of 1998
set the stage for a significant stock market recovery that started in the fourth
quarter of 1998 and continued with little interruption through most of our
fiscal period. Consequently, investors generally remained focused on the equity
markets.
During the spring and summer, fixed-income securities took second billing to
equities. The performance of Treasury bonds and most fixed-income securities
suffered, as strength in the domestic economy reduced demand for "safe haven"
investments.
The most significant news for fixed-income investors in the last six months
has been the Federal Reserve Board's reversal of its previous low interest rate
policy. The success of the stock market in the spring and summer heightened
inflationary concerns and the Federal Reserve responded by raising interest
rates by 0.25% on June 30th, August 24th and November 16th. As of this writing,
the Federal funds target rate on overnight loans between banks stands at 5.50%.
These three increases took back the last of three quarter-point reductions made
in the fall of 1998 in response to the global financial crisis and returned the
rate to its level of 14 months ago. Looking forward, we believe bonds will
remain in the shadow of stocks as long as economic growth and the roaring bull
market continue.
Delaware U.S. Government Securities Fund provided a disappointing total
return
ALTHOUGH EQUITY MARKETS HAVE TAKEN CENTER STAGE AMONG MANY INVESTORS,
FIXED-INCOME INVESTMENTS STILL PLAY AN IMPORTANT ROLE IN MOST WELL BALANCED
PORTFOLIOS.
ANNUAL RETURN
- --------------------------------------------------------------------------------
One Year Ended
October 31, 1999
- --------------------------------------------------------------------------------
Delaware U.S. Government Securities Fund A Class -1.53%
Lehman Brothers Government Bond Index -6.16%
Lipper General U.S. Government Fund Average (178 funds) -3.19%
U.S. Consumer Price Index +2.87%
- --------------------------------------------------------------------------------
All performance shown above is based on net asset value and assumes reinvestment
of all distributions. Past performance does not guarantee future results.
Performance of other Fund classes varies due to different charges and expenses.
Complete performance information can be found on page 6. The Lipper General U.S.
Government Fund Average represents the average return of U.S. government bond
funds tracked by Lipper, Inc. The Lehman Brothers Government Bond Index is an
unmanaged composite of several types of U.S. government securities and assumes
no fees or expenses. The Consumer Price Index is the U.S. government's measure
of inflation. You cannot invest directly in an index.
<PAGE>
for current
income
2
of -1.53% (for Class A shares with distributions reinvested at net asset value)
for the one year ended October 31, 1999. Although we were certainly affected by
the shifting investment environment, your Fund protected principal better than
the unmanaged Lehman Brothers Government Bond Index, which had a negative total
return of -6.16%.
Unfortunately, both your Fund and the Lehman Index underperformed the U.S.
Consumer Price Index for the fiscal year. The U.S. Consumer Price Index is the
measure of change in consumer prices as determined by a monthly survey of the
U.S. Bureau of Labor Statistics and generally reflects the domestic rate of
inflation. Over longer time periods, your Fund has outperformed the U.S.
Consumer Price Index. For the ten-year period ending October 31, 1999, your Fund
provided an average annual return of 7.73% (for Class A shares with
distributions reinvested at net asset value), while the U.S. Consumer Price
Index increased just 2.97% annually for the same period (Source: Wiesenberger
Investment View). We hope you will consider your investment in Delaware U.S.
Government Securities Fund in the context of your long-term investment goals and
needs.
Over the last fiscal year, as it did the prior fiscal year, your Fund's
management team employed two investment strategies:
o We consciously focused on income potential rather than maximizing price
appreciation.
o We allocated a significant percentage of our portfolio to GNMAs,
mortgage-backed securities issued by the Government National Mortgage
Association. In general, these securities provided higher income and declined
less in value than U.S. Treasuries with comparable maturities during our
fiscal period (Source: Bloomberg).
In the report that follows, Mr. Randal W. Harrison, your Fund's portfolio
manager, outlines Delaware U.S. Government Securities Fund's approach and shares
his outlook for the coming months.
Although equity markets have taken center stage among many investors,
fixed-income investments still play an important role in most well balanced
portfolios. We thank you for your commitment to Delaware Investments.
Sincerely,
/s/ Wayne A. Stork
- ------------------------------------
Wayne A. Stork
Chairman,
Delaware Investments Family of Funds
/s/ David K. Downes
- -------------------------------------
David K. Downes
President and Chief Executive Officer,
Delaware Investments Family of Funds
discipline
<PAGE>
for current
income
3
Portfolio Manager's Review
RANDAL W. HARRISON, CFA
Senior Portfolio Manager
Voyageur Asset Management
November 17, 1999
GNMAS DOMINATE FUND
HOLDINGS FOR FISCAL YEAR
Throughout fiscal 1999, yields on U.S. Treasury bonds have risen in response to
both domestic and international factors. Domestically, continued confidence from
consumers and businesses has supported robust spending in both the consumer and
capital goods sectors, sending investors to the stock market. Meanwhile, foreign
economies are improving, which adds to domestic inflation fears. These two
scenarios pushed prices of long-term U.S. Treasury bonds lower, as demand for
fixed-income securities weakened. This, in turn, sent yields on Treasuries
higher over the last twelve months.
The Federal Reserve responded this past summer and fall by taking back the
three interest-rate cuts it provided in 1998 in an effort to soothe inflation
concerns.
In order to maximize Delaware U.S. Government Securities Fund's income
stream in a lower and then a rising interest rate environment this past year, we
continued to invest a significant percentage of your Fund's total assets in
Government National Mortgage Association bonds (GNMAs).
These securities, which are issued by private firms, such as mortgage bankers
and savings institutions, represent pools of residential mortgages insured or
guaranteed by the Federal Housing Administration, the Farmers Housing
Administration or the Veterans Administration. Principal and interest payments
of GNMAs, like U.S. Treasury bonds, are backed by the full faith and credit of
the U.S. government, which means they are considered to be of the highest credit
quality available.
GNMAs provided significant price and yield performance during 1999. The
superior returns of GNMA bonds relative to
WE BELIEVE WE HAVE POSITIONED DELAWARE U.S. GOVERNMENT SECURITIES FUND'S
PORTFOLIO TO PROVIDE ATTRACTIVE INCOME POTENTIAL AND RELATIVE STABILITY OF
PRINCIPAL.
overview
About Your Fund's Manager
On August 16, 1999, Randal W. Harrison took over management of Delaware U.S.
Government Securities Fund. Mr. Harrison holds a B.S. from Miami University
(Ohio), an MBA from the University of Iowa and is a Chartered Financial Analyst.
He currently manages $1.2 billion in assets for Delaware Investments, where he
has worked since 1993. Prior to joining Voyageur Asset Management, Mr. Harrison
was a securities analyst and trader for AEGON USA Insurance Group.
<PAGE>
for current
income
4
(photo of computer keyboard)
Treasuries helped to cushion your Fund's return in what has been an unfriendly
environment for bond investors. Throughout most of 1999, your Fund has had
significant holdings of GNMAs, often exceeding 65.0% of total assets. As of
October 31, 1999, GNMAs represented 64.0% of your Fund.
We expect to maintain a substantial exposure to GNMAs because they currently
offer an attractive yield advantage. We also believe that over the long term the
price appreciation of GNMA securities will be greater than that of Treasuries.
However, we would be surprised to see the price appreciation on GNMAs
significantly outpace Treasuries in the near term, given GNMAs recent strong
performance during fiscal 1999.
Complementing the GNMA holdings in your Fund's portfolio were U.S. Treasury
bonds, which represented 33.6% of your Fund as of October 31, 1999. Treasuries
are direct government obligations, actual debt issues of the U.S. government.
Like GNMAs, they are considered to be of the highest credit quality available.
Yields on Treasury notes have risen by roughly one-and-a-half percent
throughout 1999 (Source: Bloomberg). The domestic and international backdrop and
Federal Reserve Board activity have all contributed to falling prices and rising
yields. Despite the difficulties this past year, Treasury securities are a
valuable component of our strategy, providing a measure of security to the
portfolio and also allowing us to diversify your Fund's total assets while
maintaining a high level of quality.
STRIPS securities (Separate Trading of Registered Interest or Principal of
Securities) represented 1.6% of your Fund's total net assets as of October 31,
1999. STRIPs are U.S. Treasuries in which the coupon or interest payment is
separated from the repayment of principal, leaving two separate securities.
STRIPs generally perform better than traditional Treasury bonds in a declining
interest rate environment because they lock in a particular yield, which would
become more valuable if interest rates on the other securities fell. They also,
however, decline in value faster when interest rates rise. By October 31, STRIPs
represented a very small portion of your Fund's portfolio, primarily because we
believed the rising interest rate environment made them less
diversity
DELAWARE U.S. GOVERNMENT SECURITIES FUND
FOR MONTHLY INCOME AND INFLATION PROTECTION POTENTIAL
o Dividends paid monthly
o Uses a complement of mortgage-backed securities and U.S. Treasury bonds
o Seeks high current income consistent with safety of principal
<PAGE>
for current
(photo of couple talking to financial advisor) income
5
suitable for our investment strategy.
Over much of the last year, your Fund's effective duration has been
positioned between five and six years. Duration is a common measure of a bond or
bond fund's sensitivity to interest rates. The longer the duration, the more a
bond's price will change for a given increase or decrease in interest rates.
Duration stood at 5.2 years as of October 31, 1999, towards the lower end of the
Fund's duration range, a position we consider fairly defensive. We would
probably consider lengthening the Fund's duration again if interest rates appear
more stable in the months ahead.
OUTLOOK
We believe we have positioned Delaware U.S. Government Securities Fund's
portfolio to provide attractive income potential and relative stability of
principal for the first half of fiscal 2000.
In the months ahead, we intend to evaluate the interest rate situation
carefully and watch for changes in consumer and producer prices to gauge their
potential effects on fixed income markets. Based upon our evaluations, we will
position the portfolio to take advantage of opportunities as presented. We thank
you for your continued confidence in Delaware Investments.
OUTLOOK
PORTFOLIO HIGHLIGHTS AND ASSET ALLOCATION
- --------------------------------------------------------------------------------
As of October 31, 1999
GNMA 64.0%
U.S. Treasury Obligations 33.6%
Cash & Other 0.8%
STRIPs 1.6%
October 31, 1999 October 31, 1998
- --------------------------------------------------------------------------------
Average Credit Quality AAA AAA
Average Effective Duration 5.2 years 5.4 years
Number of Bonds 13 18
- --------------------------------------------------------------------------------
Before Expense
SEC 30-Day Yield* Limitation
A Class 5.35% 5.30%
B Class 4.87% 4.82%
C Class 4.99% 4.94%
Institutional Class 5.73% 5.68%
* Calculated according to Securities and Exchange Commission guidelines. An
expense limitation for the Fund was in effect for the period shown.
Performance would have been lower without the limitation.
<PAGE>
for current
income
6
Performance Summary
DELAWARE U.S. GOVERNMENT SECURITIES FUND
LONG-TERM PERFORMANCE
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
NOVEMBER 1, 1989 TO OCTOBER 31, 1999
Delaware US Government Lehman Brothers
Securities Fund A Class Government Bond Index
Nov. '89 $ 9,525 $10,000
Oct. '90 10,296 10,071
Oct. '91 12,015 11,917
Oct. '92 13,297 13,302
Oct. '93 15,131 16,504
Oct. '94 14,017 14,565
Oct. '95 16,454 18,499
Oct. '96 17,239 19,152
Oct. '97 18,681 21,582
Oct. '98 20,327 25,063
Oct. '99 $20,013 $23,520
Chart assumes a $10,000 investment made on November 1, 1989, and includes the
effect of a 4.75% sales charge and reinvestment of distributions. The Lehman
Brothers Government Bond Index is an unmanaged composite of several types of
U.S. government securities and assumes no fees or expenses. You cannot invest
directly in an index. Performance for other classes will differ due to different
charges and expenses. Past performance does not guarantee future results.
DELAWARE U.S. GOVERNMENT SECURITIES FUND PERFORMANCE
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH OCTOBER 31, 1999
Lifetime Ten Years Five Years One Year
- --------------------------------------------------------------------------------
Class A (Est. 11/2/87)
Excluding Sales Charge +8.00% +7.73% +7.40% -1.53%
Including Sales Charge +7.57% +7.21% +6.35% -6.24%
- --------------------------------------------------------------------------------
Class B (Est. 6/7/94)
Excluding Sales Charge +5.59% +6.69% -2.18%
Including Sales Charge +5.44% +6.37% -5.91%
- --------------------------------------------------------------------------------
Class C (Est. 1/10/95)
Excluding Sales Charge +6.83% -2.19%
Including Sales Charge +6.83% -3.12%
All performance includes reinvestment of distributions and applicable sales
charges as described below. Return and share value will fluctuate so that
shares, when redeemed, may be worth more or less than the original cost. Past
performance is not a guarantee of future results. Performance for Class B and C
shares excluding sales charge assumes either contingent sales charges did not
apply or the investment was not redeemed. Returns reflect a voluntary expense
limitation in effect at the time. Returns would have been lower without the
limitation.
Class A shares have a 4.75% maximum sales charge and a 12b-1 fee.
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a 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 shares are
redeemed within 12 months, a 1% contingent deferred sales charge applies.
The average annual total returns for the lifetime, five- and one-year
periods through 10/31/99 for Delaware U.S. Government Securities Fund
Institutional Class were +6.32%, +7.42%, and -1.40%. Institutional Class
shares are available without sales or asset-based distribution charges only to
certain eligible institutional accounts.
<PAGE>
for current income 7
Financial Statements
VOYAGEUR FUNDS, INC.
DELAWARE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF NET ASSETS
OCTOBER 31, 1999
________________________________________________________________________________
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION OBLIGATIONS - 64.00%
GNMA 6.00% 11/20/28 ................................ $ 1,958,320 $ 1,807,163
GNMA 6.50% 7/15/14 to 4/15/29 ...................... 21,317,718 20,427,837
GNMA 7.50% 3/15/27 to 4/15/29 ...................... 10,145,830 10,189,956
GNMA 8.00% 1/15/17 ................................. 3,673 3,797
GNMA 10.00% 3/15/16 ................................ 26,944 29,487
GNMA II 10.00% 12/20/02 ............................ 18,104 18,913
-----------
Total Government National Mortgage
Association Obligations (cost $33,616,602) ...... 32,477,153
-----------
U.S. TREASURY OBLIGATIONS - 35.20%
U.S. Treasury Bond 5.25% 2/15/29 ................... 1,000,000 866,284
U.S. Treasury Bond 8.13% 8/15/21 ................... 1,000,000 1,186,488
U.S. Treasury Note 4.25% 11/15/03 .................. 3,000,000 2,818,208
U.S. Treasury Note 4.75% 11/15/08 .................. 2,200,000 1,990,228
U.S. Treasury Note 5.63% 5/15/01 ................... 1,500,000 1,497,453
U.S. Treasury Note 7.00% 7/15/06 ................... 8,325,000 8,694,013
*U.S.Treasury Strip-Principal 6.34% 11/15/04 ........ 1,100,000 808,327
-----------
Total U.S. Treasury Obligations
(cost $18,878,183) .............................. 17,861,001
-----------
TOTAL MARKET VALUE OF SECURITIES - 99.20%
(COST $52,494,785) ........................................... $50,338,154
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.80% ......... 407,700
-----------
NET ASSETS APPLICABLE TO 4,973,682 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% ...................... $50,745,854
===========
NET ASSET VALUE - DELAWARE U.S. GOVERNMENT SECURITIES
FUND A CLASS ($38,519,724 / 3,776,306 SHARES) ................ $10.20
======
NET ASSET VALUE - DELAWARE U.S. GOVERNMENT SECURITIES
FUND B CLASS ($6,549,644 / 641,037 SHARES) ................... $10.22
======
NET ASSET VALUE - DELAWARE U.S. GOVERNMENT SECURITIES
FUND C CLASS ($1,391,512 / 136,480 SHARES) ................... $10.20
======
NET ASSET VALUE - DELAWARE U.S. GOVERNMENT SECURITIES
FUND INSTITUTIONAL CLASS ($4,284,974 / 419,859 SHARES) ....... $10.21
======
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
COMPONENTS OF NET ASSETS AT OCTOBER 31, 1999:
Common stock, $0.01 par value, 10,000,000,000 shares
authorized to the Fund with 1,000,000,000 shares
allocated to the Delaware U.S. Government Securities
Fund A Class, 1,000,000,000 shares allocated to the
Delaware U.S. Government Securities Fund B Class,
1,000,000,000 shares allocated to the Delaware U.S.
Government Securities Fund C Class, and 1,000,000,000
shares allocated to the Delaware U.S. Government
Securities Fund Institutional Class ...................... $56,038,690
Undistributed net investment income ......................... 13,454
Accumulated net realized loss on investments ................ (3,149,659)
Net unrealized depreciation of investments .................. (2,156,631)
-----------
Total net assets ............................................ $50,745,854
===========
- ----------------------
* Zero coupon security. The interest rate disclosed is the effective yield at
October 31, 1999.
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
DELAWARE U.S. GOVERNMENT SECURITIES FUND
Net asset value A class (A) ................................. $10.20
Sales charge (4.75% of offering price or 5.00% of
the amount invested per share) (B) ....................... 0.51
------
Offering price .............................................. $10.71
======
- ----------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
See accompanying notes
<PAGE>
8 for current income
VOYAGEUR FUNDS, INC.
DELAWARE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1999
________________________________________________________________________________
INVESTMENT INCOME:
Interest ......................................... $5,028,710
----------
EXPENSES:
Management fees .................................. $413,761
Distribution expense ............................. 243,961
Dividend disbursing and transfer agent fees
and expenses .................................. 103,204
Accounting and administration .................... 32,518
Registration fees ................................ 44,800
Reports and statements to shareholders ........... 31,593
Professional fees ................................ 18,155
Custodian fees ................................... 8,600
Directors' fees .................................. 5,807
Taxes (other than taxes on income) ............... 2,100
Other ............................................ 13,758
-------- ----------
918,257
Less expenses waived or absorbed ................. (10,688)
Less expenses paid indirectly .................... (1,946)
----------
Total operating expenses ......................... 905,623
Interest expense ................................. 828
----------
Total expenses ................................... 906,451
----------
NET INVESTMENT INCOME ............................ 4,122,259
----------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS :
Net realized loss on investments ................. (3,031,615)
Net change in unrealized appreciation/depreciation
of investments ................................ (2,802,444)
----------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS ................................ (5,834,059)
----------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ............................... $(1,711,800)
===========
See accompanying notes
<PAGE>
VOYAGEUR FUNDS, INC.
DELAWARE U.S. GOVERNMENT SECURITIES FUND
STATEMENTS OF CHANGES IN NET ASSETS
________________________________________________________________________________
YEAR ENDED YEAR ENDED
10/31/99 10/31/98
---------- ----------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income .............................. $ 4,122,259 $ 4,702,358
Net realized gain (loss) on investments ............ (3,031,615) 3,881,172
Net change in unrealized appreciation/depreciation
of investments .................................. (2,802,444) (988,088)
----------- ----------
Net increase (decrease) in net assets
resulting from operations ....................... (1,711,800) 7,595,442
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class ......................................... (1,997,496) (2,595,734)
B Class ......................................... (235,557) (131,800)
C Class ......................................... (38,943) (8,993)
Institutional Class ............................. (1,836,809) (2,047,835)
Net realized gain on investments:
A Class ......................................... (242,646) --
B Class ......................................... (26,084) --
C Class ......................................... (2,085) --
Institutional Class ............................. (201,369) --
----------- ----------
(4,580,989) (4,784,362)
----------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class ......................................... 8,038,131 4,805,092
B Class ......................................... 4,291,874 2,925,008
C Class ......................................... 1,597,648 359,733
Institutional Class ............................. 10,762,439 12,134,993
Net asset value of shares issued upon reinvestment
of distributions from net investment income and
net realized gain on investments:
A Class ......................................... 1,533,537 1,792,342
B Class ......................................... 209,476 90,607
C Class ......................................... 33,177 3,449
Institutional Class ............................. 1,845,529 1,756,212
----------- ----------
28,311,811 23,867,436
----------- ----------
Cost of shares repurchased:
A Class ......................................... (13,003,403) (15,496,863)
B Class ......................................... (2,143,849) (796,621)
C Class ......................................... (560,273) (125,998)
Institutional Class ............................. (42,448,667) (23,572,475)
----------- ----------
(58,156,192) (39,991,957)
----------- ----------
Decrease in net assets derived from capital
share transactions .............................. (29,844,381) (16,124,521)
----------- ----------
NET DECREASE IN NET ASSETS ......................... (36,137,170) (13,313,441)
NET ASSETS:
Beginning of year .................................. 86,883,024 100,196,465
----------- ----------
End of year ........................................ $50,745,854 $ 86,883,024
=========== ===========
See accompanying notes
<PAGE>
for current income 9
VOYAGEUR FUNDS, INC.
DELAWARE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
________________________________________________________________________________
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
DELAWARE U.S. GOVERNMENT SECURITIES FUND CLASS A
---------------------------------------------------------------------------
YEAR YEAR YEAR FOUR MONTHS YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/99 10/31/98 10/31/97(1) 10/31/96(2) 6/30/96 6/30/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $10.940 $10.600 $10.370 $10.160 $10.370 $9.760
Income (loss) from investment operations:
Net investment income .................................. 0.516 0.555 0.590 0.210 0.630 0.620
Net realized and unrealized gain (loss) on investments . (0.681) 0.351 0.240 0.210 (0.230) 0.630
------- ------- ------- ------- ------- -------
Total from investment operations ....................... (0.165) 0.906 0.830 0.420 0.400 1.250
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ................... (0.515) (0.566) (0.600) (0.210) (0.610) (0.620)
Distributions from net realized gain on investments .... (0.060) -- -- -- -- (0.020)
------- ------- ------- ------- ------- -------
Total dividends and distributions ...................... (0.575) (0.566) (0.600) (0.210) (0.610) (0.640)
------- ------- ------- ------- ------- -------
Net asset value, end of period ............................ $10.200 $10.940 $10.600 $10.370 $10.160 $10.370
======= ======= ======= ======= ======= =======
Total return(3)............................................ (1.53%) 8.79% 8.37% 4.18% 3.88% 13.45%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $38,520 $44,819 $52,213 $65,516 $68,442 $75,886
Ratio of expenses to average net assets ................ 1.03% 1.00% 0.93% 0.98% 0.97% 0.95%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ............. 1.05% 1.06% 1.01% 0.98% 0.97% 0.95%
Ratio of net investment income to average net assets ... 4.91% 5.21% 5.76% 6.03% 6.07% 6.38%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid
indirectly .......................................... 4.89% 5.15% 5.68% 6.03% 6.07% 6.38%
Portfolio turnover ..................................... 182% 280% 202% 66% 145% 144%
</TABLE>
- ----------------------
(1) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(2) Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31. Ratios have been annualized and total return has not
been annualized.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
See accompanying notes
<PAGE>
10 for current income
FINANCIAL HIGHLIGHTS (CONTINUED)
________________________________________________________________________________
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
DELAWARE U.S. GOVERNMENT SECURITIES FUND CLASS B
---------------------------------------------------------------------------
YEAR YEAR YEAR FOUR MONTHS YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/99 10/31/98 10/31/97(1) 10/31/96(2) 6/30/96 6/30/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $10.950 $10.610 $10.380 $10.170 $10.380 $9.750
Income (loss) from investment operations:
Net investment income .................................. 0.438 0.477 0.520 0.180 0.570 0.560
Net realized and unrealized gain (loss) on investments . (0.673) 0.348 0.240 0.210 (0.230) 0.650
------- ------- ------- ------- ------- -------
Total from investment operations ....................... (0.235) 0.825 0.760 0.390 0.340 1.210
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ................... (0.435) (0.485) (0.530) (0.180) (0.550) (0.560)
Distributions from net realized gain on investments .... (0.060) -- -- -- -- (0.020)
------- ------- ------- ------- ------- -------
Total dividends and distributions ...................... (0.495) (0.485) (0.530) (0.180) (0.550) (0.580)
------- ------- ------- ------- ------- -------
Net asset value, end of period ............................ $10.220 $10.950 $10.610 $10.380 $10.170 $10.380
======= ======= ======= ======= ======= =======
Total return(3) ........................................... (2.18%) 7.97% 7.59% 3.91% 3.32% 12.90%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $6,550 $4,582 $2,257 $2,139 $1,780 $139
Ratio of expenses to average net assets ................ 1.78% 1.75% 1.67% 1.73% 1.46% 1.54%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ..... 1.80% 1.81% 1.75% 1.73% 1.63% 1.69%
Ratio of net investment income to average net assets ... 4.16% 4.46% 5.02% 5.24% 5.55% 5.56%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid
indirectly .......................................... 4.14% 4.40% 4.94% 5.24% 5.38% 5.41%
Portfolio turnover ..................................... 182% 280% 202% 66% 145% 144%
</TABLE>
- ----------------------
(1) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(2) Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31. Ratios have been annualized and total return has not
been annualized.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
See accompanying notes
<PAGE>
for current income 11
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
DELAWARE U.S. GOVERNMENT SECURITIES FUND CLASS C
---------------------------------------------------------------------------
YEAR YEAR YEAR FOUR MONTHS YEAR PERIOD FROM
ENDED ENDED ENDED ENDED ENDED 1/10/95(3) TO
10/31/99 10/31/98 10/31/97(1) 10/31/96(2) 6/30/96 6/30/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $10.930 $10.590 $10.360 $10.150 $10.360 $9.480
Income (loss) from investment operations:
Net investment income .................................. 0.438 0.477 0.520 0.180 0.550 0.270
Net realized and unrealized gain (loss) on investments . (0.676) 0.348 0.240 0.210 (0.230) 0.880
------- ------- ------- ------- ------- -------
Total from investment operations ....................... (0.238) 0.825 0.760 0.390 0.320 1.150
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ................... (0.432) (0.485) (0.530) (0.180) (0.530) (0.270)
Distributions from net realized gain on investments .... (0.060) -- -- -- -- --
------- ------- ------- ------- ------- -------
Total dividends and distributions ...................... (0.492) (0.485) (0.530) (0.180) (0.530) (0.270)
------- ------- ------- ------- ------- -------
Net asset value, end of period ............................ $10.200 $10.930 $10.590 $10.360 $10.150 $10.360
======= ======= ======= ======= ======= =======
Total return(4)............................................ (2.19%) 7.98% 7.60% 3.92% 3.11% 12.73%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $1,392 $385 $138 $234 $224 $221
Ratio of expenses to average net assets ................ 1.78% 1.75% 1.68% 1.73% 1.70% 1.62%(3)
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ..... 1.80% 1.81% 1.76% 1.73% 1.70% 1.65%(3)
Ratio of net investment income to average net assets ... 4.16% 4.46% 5.02% 5.26% 5.33% 5.10%(3)
Ratio of net investment income to average net assets
prior to expense limitation and expenses
paid indirectly ..................................... 4.14% 4.40% 4.94% 5.26% 5.33% 5.07%(3)
Portfolio turnover ..................................... 182% 280% 202% 66% 145% 144%
</TABLE>
- ----------------------
(1) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(2) Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31. Ratios have been annualized and total return has not
been annualized.
(3) Commencement of operations. Ratios have been annualized.
(4) 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.
See accompanying notes
<PAGE>
12 for current income
FINANCIAL HIGHLIGHTS (CONTINUED)
________________________________________________________________________________
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
DELAWARE U.S. GOVERNMENT SECURITIES FUND INSTITUTIONAL CLASS
---------------------------------------------------------------------------
YEAR YEAR YEAR FOUR MONTHS YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/99 10/31/98 10/31/97(1) 10/31/96(2) 6/30/96 6/30/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $10.940 $10.600 $10.370 $10.160 $10.370 $9.750
Income (loss) from investment operations:
Net investment income .................................. 0.521 0.555 0.600 0.210 0.630 0.620
Net realized and unrealized gain (loss) on investments.. (0.672) 0.351 0.240 0.210 (0.230) 0.640
------- ------- ------- ------- ------- -------
Total from investment operations........................ (0.151) 0.906 0.840 0.420 0.400 1.260
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ................... (0.519) (0.566) (0.610) (0.210) (0.610) (0.620)
Distributions from net realized gain on investments .... (0.060) -- -- -- -- (0.020)
------- ------- ------- ------- ------- -------
Total dividends and distributions ...................... (0.579) (0.566) (0.610) (0.210) (0.610) (0.640)
------- ------- ------- ------- ------- -------
Net asset value, end of period ............................ $10.210 $10.940 $10.600 $10.370 $10.160 $10.370
======= ======= ======= ======= ======= =======
Total return(3) ........................................... (1.40%) 8.79% 8.39% 4.17% 3.88% 13.57%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $4,285 $37,097 $45,589 $50,066 $41,688 $54,445
Ratio of expenses to average net assets ................ 0.99% 1.00% 0.93% 0.99% 0.97% 0.94%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ..... 1.01% 1.06% 1.01% 0.99% 0.97% 0.94%
Ratio of net investment income to average net assets ... 4.95% 5.21% 5.76% 6.00% 6.07% 6.39%
Ratio of net investment income to average net assets
prior to expense limitation and expenses
paid indirectly ..................................... 4.93% 5.15% 5.68% 6.00% 6.07% 6.39%
Portfolio turnover ..................................... 182% 280% 202% 66% 145% 144%
</TABLE>
- ----------------------
(1) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(2) Effective October 31, 1996, the Fund changed its fiscal year end from
June 30 to October 31. Ratios have been annualized and total return has not
been annualized.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
See accompanying notes
<PAGE>
for current income 13
DELAWARE U.S. GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
Voyageur Funds, Inc. - (the "Company") is registered as an investment company
under the Investment Company Act of 1940, as amended. The Company is organized
as a Delaware Business Trust. Delaware U.S. Government Securities Fund (the
"Fund"), a series of Voyageur Funds, Inc., is a diversified investment company.
The Fund currently offers four classes of shares. The Delaware U.S. Government
Securities Fund A Class carries a front-end sales charge of 4.75%. The Delaware
U.S. Government Securities Fund B Class carries a back-end deferred sales
charge, the Delaware U.S. Government Securities Fund C Class carries a level
load deferred sales charge and the Delaware U.S. Government Securities Fund
Institutional Class has no sales charge.
The Fund's objective is to seek a high level of current income consistent with
prudent investment risk from investments issued, guaranteed or otherwise backed
by the full faith and credit of the U.S. Government.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund.
Security Valuation - 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 Investments Family of Funds. The aggregate daily
balance of the pooled cash account is invested in repurchase agreements secured
by obligations of the U.S. government. The respective collateral is held by the
Fund's custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is at least 100% collateralized. However,
in the event of default or bankruptcy by the counterparty to the agreement,
realization of the collateral may be subject to legal proceedings.
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.
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the
<PAGE>
specific securities sold. 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. Net capital gains, if any, are
distributed annually.
Certain expenses of the Fund are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was $1,946 for the year ended October 31, 1999. The
expenses paid under the above agreement are included in other expenses on the
Statement of Operations with a corresponding expense offset shown as "Expenses
paid indirectly."
2. Investment Management and Other Transactions with Affiliates
Effective April 15, 1999 and in accordance with the terms of the Investment
Management Agreement, the Fund pays Delaware Management Company, Inc., ("DMC"),
the Investment Manager of the Fund, an annual fee which is calculated daily at
the rate of 0.55% on the first $500 million of average daily net assets of the
Fund, 0.50% on the next $500 million, 0.45% on the next $1,500 million, and
0.425% on the average daily net assets over $2,500 million, less fees paid to
the unaffiliated directors. However, DMC has agreed to limit its management fee
to 0.50% of average net assets through April 30, 2001. Prior to April 15, 1999,
the Fund paid DMC an annual fee which was calculated at the rate of 0.50% on the
average daily net assets of the Fund. At October 31, 1999, the Fund had a
liability for Investment Management fees and other expenses payable to DMC of
$18,435.
Effective January 1, 1999, DMC has entered into a sub-advisory agreement with
Voyageur Asset Management LLC with respect to the management of the Fund. The
sub-advisor receives a sub-advisory fee from DMC for its services equal to one
half of the actual fee paid to DMC under the terms of the Investment Management
Agreement. The Fund does not pay any fees to the sub-advisor.
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, distribution expenses and extraordinary expenses exceed
0.85% of the Fund's average daily net assets through December 31, 1999. Prior to
January 1, 1999, the expense limitation was 0.75% of the Fund's average daily
net assets.
The Fund has engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent, and accounting and
administration services. The Fund pays DSC a monthly fee based on number of
shareholder accounts, shareholder transactions and average net assets, subject
to certain minimums. At October 31, 1999, the Fund had a liability for such fees
and other expenses payable to DSC of $13,865.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. ("DDLP"), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.25% of the average daily net assets attributable to Class A and
Institutional Class shares and 1.00% of the average daily net assets
attributable to Class B and Class C shares. The Distributor has agreed to waive
these fees for the Institutional Class shares acquired by shareholders on or
after March 1, 1998. On October 31, 1999, the Fund had a payable to DDLP of
$31,643.
For the year ended October 31, 1999, DDLP earned $16,522 for commissions on
sales of the Fund A Class shares.
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Fund. These officers, directors and employees are paid no compensation by
the Fund.
<PAGE>
14 for current income
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
3. Investments
During the year ended October 31, 1999, the Fund had purchases of $147,363,102
and sales of $173,272,198 of long-term U.S. government securities.
At October 31, 1999, the aggregate cost of securities for federal income tax
purposes was $52,858,009.
At October 31, 1999, net unrealized depreciation for federal income tax purposes
aggregated ($2,519,855) of which $3,465 related to unrealized appreciation of
securities and ($2,523,320) related to unrealized depreciation of securities.
4. Capital Stock
Transactions in capital stock shares were as follows:
YEAR ENDED YEAR ENDED
10/31/99 10/31/98
------------ ------------
Shares sold:
Class A .......................................... 768,054 445,970
Class B .......................................... 407,097 270,788
Class C .......................................... 152,135 33,380
Institutional Class .............................. 1,016,118 1,131,934
Shares issued upon reinvestment of dividends
from net investment income and net realized
gains on investments:
Class A ......................................... 145,433 167,314
Class B ......................................... 19,894 8,424
Class C ......................................... 3,187 319
Institutional Class ............................. 174,713 163,759
----------- -----------
2,686,631 2,221,888
----------- -----------
Shares repurchased:
Class A ......................................... (1,235,065) (1,441,622)
Class B ......................................... (204,181) (73,641)
Class C ......................................... (54,037) (11,526)
Institutional Class ............................. (4,160,715) (2,205,440)
----------- -----------
(5,653,998) (3,732,229)
----------- -----------
Net Decrease ....................................... (2,967,367) (1,510,341)
=========== ===========
<PAGE>
5. Market and 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.
6. Tax Information (Unaudited)
The information set forth below is for the Fund's fiscal year as required by
federal laws. Shareholders, however, must report distributions on a calendar
year basis for income tax purposes, which may include distributions for portions
of two fiscal years of a fund. Accordingly, the information needed by
shareholders for income tax purposes will be sent to them in early 2000. Please
consult your tax advisor for proper treatment of this information.
For the fiscal year ended October 31, 1999, the Fund designates as ordinary
income and long-term capital gains distributions paid during the year as
follows:
LONG-TERM CAPITAL ORDINARY INCOME TOTAL
GAINS DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
------------------- ----------------- ------------------
10% 90% 100%
<PAGE>
for current income 15
DELAWARE U.S. GOVERNMENT SECURITIES FUND
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
VOYAGEUR FUNDS, INC. - DELAWARE U.S. GOVERNMENT SECURITIES FUND
We have audited the accompanying statement of net assets of Delaware U.S.
Government Securities Fund (the "Fund") as of October 31, 1999, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the three years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
highlights for the periods ended June 30, 1995 through October 31, 1996 were
audited by other auditors whose report dated December 6, 1996 expressed an
unqualified opinion on those financial highlights.
We conducted our audits 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, 1999, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware U.S. Government Securities Fund at October 31, 1999, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and its financial highlights for each of
the three years in the period then ended, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
December 3, 1999
<PAGE>
D E L A W A R E I N V E S T M E N T S F A M I L Y OF F U N D S
FOR GROWTH OF CAPITAL
Delaware Select Growth Fund
Delaware Trend Fund
Delaware DelCap Fund
Delaware Small Cap Value Fund
Delaware U.S. Growth Fund
Delaware Growth Stock Fund
Delaware Tax-Efficient Equity Fund
Delaware Social Awareness Fund
FOR TOTAL RETURN
Delaware Blue Chip Fund
Delaware Devon Fund
Delaware Growth and Income Fund
Delaware Decatur Equity Income Fund
Delaware REIT Fund
Delaware Balanced Fund
FOR INTERNATIONAL DIVERSIFICATION
Delaware Emerging Markets Fund
Delaware New Pacific Fund
Delaware Overseas Equity Fund
Delaware International Equity Fund
Delaware Global Equity Fund
Delaware Global Bond Fund
<PAGE>
FOR CURRENT INCOME
Delaware Delchester Fund
Delaware High-Yield Opportunities Fund
Delaware Strategic Income Fund
Delaware Corporate Bond Fund
Delaware Extended Duration Bond Fund
Delaware American Government Bond Fund
Delaware U.S. Government Securities Fund
Delaware Limited-Term Government Fund
FOR TAX-EXEMPT INCOME
Delaware National High-Yield Municipal Bond Fund
Delaware Tax-Free USA Fund
Delaware Tax-Free Insured Fund
Delaware Tax-Free USA Intermediate Fund
Delaware State Tax-Free Funds*
MONEY MARKET FUNDS
Delaware Cash Reserve
Delaware Tax-Free Money Fund
ASSET ALLOCATION FUNDS
Delaware Foundation Funds
Growth Portfolio
Balanced Portfolio
Income Portfolio
* Available for the following states: Arizona, California, Colorado, Florida,
Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, New Jersey,
New Mexico, New York, Ohio, Oregon, Pennsylvania and Wisconsin. Insured and
intermediate bond funds are available in selected states.
funds
Complete information on any fund offered by Delaware Investments can be found in
each fund's current prospectus. Prospectuses for all funds offered by Delaware
Investments are available from your financial adviser. Please read the
prospectus carefully before you invest or send money.
(photo of computer keyboard)
<PAGE>
THIS ANNUAL REPORT IS FOR THE INFORMATION OF DELAWARE U.S. GOVERNMENT SECURITIES
FUND shareholders, but it may be used with prospective investors when preceded
or accompanied by a current Prospectus for Delaware U.S. Government Securities
Fund and the Delaware Investments Performance Update for the most recently
completed calendar quarter. The Prospectus sets forth details about charges,
expenses, investment objectives and operating policies of the Fund. You should
read the prospectus carefully before you invest or send money. 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 Investments Family of Funds
Philadelphia, PA
WALTER P. BABICH
Board Chairman, Citadel Constructors, Inc.
King of Prussia, PA
DAVID K. DOWNES
President and Chief Executive Officer
Delaware Investments Family of Funds
Philadelphia, PA
ANTHONY D. KNERR
Consultant, Anthony Knerr & Associates
New York, NY
ANN R. LEVEN
Former Treasurer, National Gallery of Art
Washington, DC
THOMAS F. MADISON
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
CHARLES E. PECK
Retired
Fredericksburg, VA
JAN L. YEOMANS
Vice President and Treasurer
3M Corporation
St. Paul, Minnesota
<PAGE>
AFFILIATED OFFICERS
RICHARD J. FLANNERY
Executive Vice President and General Counsel
Delaware Investments Family of Funds
Philadelphia, PA
BRUCE D. BARTON
President and Chief Executive Officer
Delaware Distributors, L.P.
Philadelphia, PA
ERIC E. MILLER
Senior Vice President, Secretary
and Deputy General Counsel
Delaware Investments Family of Funds
Philadelphia, PA
(photo of globes)
directors
& officers
- --------------------------------------------------------------------------------
INVESTMENT MANAGER
Delaware Management Company
Philadelphia, Pennsylvania
INTERNATIONAL AFFILIATE
Delaware International Advisers Ltd.
London, England
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia, Pennsylvania
SUB-ADVISER
VOYAGEUR ASSET MANAGEMENT LLC
Minneapolis, Minnesota
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
Philadelphia, Pennsylvania
1818 Market Street
Philadelphia, PA 19103-3682
<PAGE>
When used with prospective investors, this report must be preceded or
accompanied by a current Delaware U.S. Government Securities Fund Prospectus and
the Delaware Investments Performance Update for the most recently completed
calendar quarter. For a prospectus of any other mutual fund from Delaware
Investments, contact your financial adviser or Delaware Investments.
(photo of globes)
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
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.
(C) Delaware Distributors, L.P.
DELAWARE(SM)
INVESTMENTS
- -----------------------
Philadelphia o London
Printed in the USA
on recycled paper
(2366) (J5326)
AR-404[10/99]PPL12/99
