<PAGE>
DELAWARE(SM)
INVESTMENTS
-----------
Delaware REIT Fund
Total Return
2000 SEMI-ANNUAL REPORT
(Total Return Artwork)
<PAGE>
A TRADITION OF SOUND INVESTING SINCE 1929
TABLE OF CONTENTS
Letter to Shareholders 1
Portfolio Management
Review 2
Performance Summary 4
Financial Statements
Statement of Net Assets 5
Statement of Operations 7
Statements of Changes in
Net Assets 8
Financial Highlights 9
Notes to Financial
Statements 12
A Commitment To Our Investors
Experienced
[ ] Our seasoned investment professionals average more than 15 years'
experience.
[ ] We opened our first mutual fund in 1938. For over 70 years, we have
managed money in a variety of investment styles that have weathered a full
range of economic and market environments.
Disciplined
[ ] We follow strict investment policies and clear buy/sell guidelines.
[ ] We strive to balance risk and reward in order to provide sound investment
alternatives within any given asset class.
Consistent
[ ] We believe consistent processes are the best way to seek consistent
investment performance.
[ ] Our commitment to style consistency has earned us the confidence of
discriminating institutional and individual investors to manage over $46
billion in assets as of March 31, 2000.
Comprehensive
[ ] We offer more than 70 mutual funds in these asset classes.
o Large-cap equity o High-yield bonds
o Mid-cap equity o Investment grade bonds
o Small-cap equity o Municipal bonds (23 single-state funds)
o International equity o International fixed-income
o Balanced
[ ] Our funds are available through financial advisers who can offer you
individualized attention and valuable investment advice.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the
principal amount invested. (C)Delaware Distributors, L.P.
<PAGE>
"COMMERCIAL REAL ESTATE MARKETS ARE FUNDAMENTALLY SOUND AND WE ARE ENCOURAGED
ABOUT THE LONG-TERM OUTLOOK FOR REITS."
Dear Shareholder
June 12, 2000
Recap of Events - Like a mighty freight train, the U.S. economy continued its
record expansion during the last six months, sparking concerns about inflation
and spurring the Federal Reserve Board to continue its more restrictive monetary
policy. The Fed followed up its interest rate hikes of June and August, 1999
with four additional rate hikes from November, 1999 through May, 2000. Despite
the Fed's tightening efforts, inflation fears intensified in April after
government reports showed a surge in consumer prices. In response, both the Dow
Jones Industrial Average and the Nasdaq Composite Index suffered record one-day
point drops on April 17.
The plunge capped a rough week during which the Dow fell 805.71 points, or 7.3%,
and the Nasdaq dropped 1,125.16 points, or 25.3%. Also during April, markets
suffered near record volatility as fickle investors alternately pursued and
abandoned "old economy" blue chip stocks in favor of "new economy" stocks such
as high-tech, biotech and dot.com companies.
Against this backdrop, investors began to turn to investments that appeared less
volatile and we saw renewed interest in REITs as an asset class. This also
helped boost REIT prices as investors recognized the attractive values and
potential for returns.
Delaware REIT Fund was well positioned to benefit from this environment and your
Fund rebounded strongly from its 1999 one-year performance with a total return
of 12.74% (Class A shares at net asset value with reinvestment of dividends and
capital gains) for the six months ended April 30, 2000. We believe this gain was
attributable to individual REIT selection as well as strength in specific
sectors.
Market Outlook - The current economic environment of rising interest rates,
combined with market volatility, may cause economic growth to slow later this
year. However, this is not expected to lead to a recession and may actually help
control the supply side for REITs. Commercial real estate markets are
fundamentally sound and we are encouraged about the long-term outlook for REITs.
We believe REITs will continue to provide strong earnings growth and attractive
returns.
Thank you for your continued confidence in Delaware REIT Fund and Delaware
Investments.
Sincerely,
/s/ Wayne A. Stork /s/ David K. Downes
Wayne A. Stork David K. Downes
Chairman, President and Chief Executive Officer,
Delaware Investments Family of Funds Delaware Investments Family of Funds
Total Return
For Period Ended April 30, 2000 Six Months
--------------------------------------------------------------------------------
Delaware REIT Fund Class A +12.74%
--------------------------------------------------------------------------------
Lipper REIT Funds Average (150 funds) + 9.69%
NAREIT Equity REIT Index +10.69%
Standard & Poor's 500 Index + 7.18%
--------------------------------------------------------------------------------
All performance shown above is at net asset value without the effect of sales
charges and assumes reinvestment of dividends and capital gains. Performance
information for all Fund classes can be found on page 4. The Lipper category
represents the average returns of REIT mutual funds with similar investment
objectives tracked by Lipper Analytical (Source: Lipper Analytical Services,
Inc.). The NAREIT Equity REIT Index is an unmanaged index of real estate
investment trusts that invest in many types of U.S. property. The S&P 500 Index
is an unmanaged composite of mostly large-capitalization U.S. Companies. You
cannot invest directly in an index. Past performance does not guarantee future
results.
1
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
Damon J. Andres
Portfolio Manager
Thomas J. Trotman
Portfolio Manager
June 12, 2000
The Fund's Results
Delaware REIT Fund posted a 12.74% total return for the six months ended
April 30, 2000 (Class A shares at net asset value with reinvestment of dividends
and capital gains). Your Fund outperformed both its benchmark - the NAREIT
Equity REIT Index, which returned 10.69% - and its peer group, the Lipper Real
Estate Funds Average, which posted a return of 9.69% for the period.
In considering individual companies for the portfolio, we use a disciplined
investment approach to identify what we consider to be quality REITs that
demonstrate growth in both their cash flow and dividends. In general, these are
companies that:
o Retain a substantial portion of the properties' cash flow;
o Effectively use capital to expand;
o Have a strong ability to raise rents; and,
o Can create a franchise value for the REIT.
We rely on a balanced mix of sector weighting, and the portfolio includes
several different sectors in the real estate industry. Your Fund's strong
performance is a result of our strict adherence to the overall investment
process.
Portfolio Highlights
For much of the past six months, REIT prices have declined even though the
underlying property values have remained solid. As a result, investors have
tended to ignore REITs in favor of large-cap stocks with higher growth
potential. However, April's stock market volatility marked a transition as
investors seemed to recognize REITs as a low volatility asset class with
attractive values and the potential for steady returns. This provided a catalyst
that began to send REIT prices up again.
Multifamily and Office REITs, our largest sectors, did particularly well for the
portfolio. Occupancy rates and rental growth for both sectors continue to be
vigorous in regional markets, driven by limited supply and high demand in key
areas such as the West Coast and the mid-Atlantic. Retail strip centers and
hotels were also strong performers during the period. Although we are still
concerned about overbuilding in the hotel sector, the current higher interest
rate environment has helped curb supply.
(Total Return Artwork)
2
<PAGE>
We were slightly overweighted in the Industrial sector compared to our
benchmark, the NAREIT Equity REIT Index. This sector modestly underperformed
during the period and our higher concentration hurt the Fund's performance. We
still believe the fundamentals in the Industrial sector are sound and expect its
performance to improve later this year if economic growth slows. Manufactured
Housing REITs were another weak performer, hurt by concerns about building
oversupply. We feel these concerns are exaggerated and will continue to maintain
our holdings in this sector.
Outlook
As we look ahead, we are cautiously optimistic that REITs may continue to draw
investors seeking a well-priced alternative to the stock market's volatility. We
expect economic growth will most likely slow if the Federal Reserve continues
its incremental rate increases, but we don't expect the rate increases to
trigger a recession or to harm REITs. In fact, a rising interest rate
environment may actually benefit REITs by further curbing the supply of new REIT
issues. Right now, we feel real estate fundamentals remain sound and supply and
demand are in balance. REIT yields relative to both Treasuries and utility
investments are attractive. Unlike Treasuries, REIT Securities are not backed by
the full faith and credit of the U.S. government as to payment of principal and
interest. Based on these factors, we believe we will see good earnings growth
over the next 12 to 24 months.
3
<PAGE>
Delaware REIT Fund
FUND BASICS
Fund Objective
The Fund seeks maximum long-term total return with capital appreciation as a
secondary objective.
Total Fund Assets
$ 74.58 million
Number of Holdings
29
Fund Start Date
December 6, 1995
Your Fund Managers
Damon J. Andres earned a bachelor's degree in Business Administration with an
emphasis in Finance and Accounting from the University of Richmond. Prior to
joining Delaware Investments in 1994, Mr. Andres was a Consulting Associate with
Cambridge Associates, Inc. in Arlington, Virginia.
Thomas J. Trotman earned a bachelor's degree in Accounting from Muhlenberg
College and an MBA from Widener University. Prior to joining Delaware
Investments in 1995, he was Vice President and Director of Investment Research
at Independence Capital Management. Before that, he held credit-related
positions at Marine Midland Bank, U.S. Steel Corporation, and Amerada Hess. He
is a Chartered Financial Analyst.
NASDAQ Symbols
Class A DPREX
Class B DPRBX
Class C DPRCX
(Total Return Artwork)
FUND PERFORMANCE
Average Annual Total Returns
Through April 30, 2000 Lifetime Three Years One Year
--------------------------------------------------------------------------------
Class A (Est. 12/6/95)
Excluding Sales Charge +14.35% +6.46% +2.83%
Including Sales Charge +12.82% +4.39% -3.09%
--------------------------------------------------------------------------------
Class B (Est. 11/11/97)
Excluding Sales Charge -1.57% +2.00%
Including Sales Charge -2.52% -2.90%
--------------------------------------------------------------------------------
Class C (Est. 11/11/97)
Excluding Sales Charge -1.57% +2.00%
Including Sales Charge -1.57% +1.02%
--------------------------------------------------------------------------------
Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share values will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
results, excluding sales charges assume either that contingent deferred sales
charges did not apply or the investment was not redeemed. Past performance is
not a guarantee of future results.
Class A shares have a 5.75% maximum up-front 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 contingent
deferred sales charge of up to 5% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
Fee limitations were in effect for the periods shown. Returns would have been
lower without the limitations.
The average annual total returns for the lifetime, three-year, and one-year
periods ended April 30, 2000 for the REIT Institutional Class and The Real
Estate Investment Trust Portfolio Class shares were 14.53%, 6.71%, and 3.13%,
respectively. The Real Estate Investment Trust Portfolio Class and Institutional
Class were originally available on November 4, 1997 and November 11, 1997,
respectively. Performance prior to these dates reflects the performance of the
original class (established December 6, 1995) which operated under a
substantially similar expense structure.
NASDAQ Symbol Institutional Class: DPRSX
4
<PAGE>
Statement of Net Assets
DELAWARE REIT FUND
------------------
Number of Market
April 30, 2000 (Unaudited) Shares Value
--------------------------------------------------------------------------------
Common Stock - 96.42%
Hotel/Restaurant REITs - 2.24%
MeriStar Hospitality .......................... 84,500 $ 1,668,875
-----------
1,668,875
-----------
Industrial REITs - 8.52%
AMB Property .................................. 98,300 2,168,744
Cabot Industrial Trust ........................ 84,200 1,620,850
Prologis Trust ................................ 130,400 2,567,250
-----------
6,356,844
-----------
Mall REITs - 7.29%
Macerich ...................................... 98,600 2,286,288
Simon Property Group .......................... 124,100 3,149,038
-----------
5,435,326
-----------
Manufactured Housing REITs - 7.02%
Chateau Communities ........................... 97,848 2,544,048
Sun Communities ............................... 81,200 2,689,750
-----------
5,233,798
-----------
Multifamily REITs - 19.04%
Apartment Investment & Management ............. 75,500 3,001,125
Avalon Bay Communities ........................ 88,694 3,470,153
Equity Residential Properties Trust ........... 59,300 2,698,150
Essex Property Trust .......................... 66,400 2,564,700
Grove Property Trust .......................... 179,100 2,462,625
-----------
14,196,753
-----------
Net Lease REITs - 2.78%
Franchise Finance ............................. 87,300 2,073,375
-----------
2,073,375
-----------
Office REITs - 21.10%
Alexandria R.E.Equities ....................... 83,500 2,672,000
CarrAmerica Realty ............................ 76,900 1,826,375
Equity Office Properties Trust ................ 114,602 3,115,742
Prentiss Properties Trust ..................... 121,900 2,895,125
SL Green Realty ............................... 109,300 2,807,644
Spieker Properties ............................ 54,600 2,419,463
-----------
15,736,349
-----------
Office/Industrial REITs - 10.69%
Duke-Weeks Realty ............................. 153,300 3,324,694
Liberty Property Trust ........................ 78,800 1,851,300
Reckson Associates Realty ..................... 139,200 2,792,700
-----------
7,968,694
-----------
Real Estate Operating Companies - 8.49%
*Catellus Development .......................... 140,800 1,830,400
Starwood Hotels & Resorts World ............... 96,250 2,737,109
Trizec Hahn ................................... 108,700 1,766,375
-----------
6,333,884
-----------
<PAGE>
Number of Market
Shares Value
--------------------------------------------------------------------------------
Common Stock (continued)
Retail Strip Center REITs - 6.29%
Kimco Realty ................................. 56,900 $ 2,265,331
Pan Pacific Retail Properties ................ 127,600 2,424,400
-----------
4,689,731
-----------
Self-Storage REITs - 2.96%
Public Storage ............................... 98,700 2,208,413
-----------
2,208,413
-----------
Total Common Stock
(cost $69,068,697) ....................... 71,902,042
-----------
Principal
Amount
Repurchase Agreements - 5.70%
With Chase Manhattan 5.68% 5/1/00
(dated 4/28/00, collateralized by
$1,465,000 U.S. Treasury Notes
4.75% due 2/15/04, market
value $1,390,258) ............................. $1,356,000 1,356,000
With JP Morgan 5.70% 5/1/00 (dated
4/28/00, collateralized by $1,010,000
U.S. Treasury Notes 5.875% due
10/31/01, market value $1,028,045
and $439,000 U.S. Treasury Notes
6.25% due 10/31/01, market
value $499,740) ............................... 1,448,000 1,448,000
With PaineWebber 5.70% 5/1/00 (dated
4/28/00, collateralized by $70,000 U.S. .......
Treasury Notes 4.50% due 1/31/01,
market value $69,315 and $934,000
U.S. Treasury Notes 5.50% due
7/31/01, market value $933,729 and
$458,000 U.S. Treasury Notes 7.25%
due 8/15/01, market value $475,333) ........... 1,448,000 1,448,000
-----------
Total Repurchase Agreements
(cost $4,252,000) ............................. 4,252,000
-----------
5
<PAGE>
Statement of Net Assets (continued)
Market
Delaware REIT Fund Value
--------------------------------------------------------------------------------
Total Market Value of Securities Owned - 102.12%
(cost $73,320,697) ..................................... $76,154,042
Liabilities Net of Receivables and
Other Assets - (2.12%) ................................. (1,577,610)
-----------
Net Assets Applicable to 6,025,835
Shares Outstanding - 100.00% ........................... $74,576,432
===========
Net Asset Value - Delaware REIT
Fund A Class
($29,973,136 / 2,422,173 Shares) ....................... $12.37
------
Net Asset Value - Delaware REIT
Fund B Class
($12,400,814 / 1,002,148 Shares) ....................... $12.37
------
Net Asset Value - Delaware REIT
Fund C Class
($6,333,441 / 511,781 Shares) .......................... $12.38
------
Net Asset Value - Delaware REIT
Fund Institutional Class
($1,751,523 / 141,477 Shares) .......................... $12.38
------
Net Asset Value - Delaware REIT
Fund Real Estate Investment
Trust Portfolio Class
($24,117,518 / 1,948,256 Shares) ....................... $12.38
------
--------------------------------------------------------------------------------
Components of Net Assets at April 30, 2000:
Shares of beneficial interest (unlimited
authorization - no par) ................................ $74,384,475
Undistributed net investment income ....................... (225,203)
Accumulated net realized
loss on investments .................................... (2,416,185)
Net unrealized appreciation
of investments ......................................... 2,833,345
-----------
Total Net Assets .......................................... $74,576,432
===========
---------
REIT - Real Estate Investment Trust
*Non-income producing security for the period ending April 30, 2000
Net Asset Value and Offering Price Per Share -
Delaware REIT Fund
Net Asset Value A Class (A) ............................... $12.37
Sales charge (5.75% of the offering
price or 6.06% of the amount
invested per share) (B) ................................ 0.75
------
Offering Price ............................................ $13.12
======
---------
(A) Net Asset Value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $50,000 or more.
See accompanying notes
6
<PAGE>
Statement of Operations
Six Months Ended April 30, 2000 (Unaudited) Delaware REIT Fund
--------------------------------------------------------------------------------
Investment Income:
Dividends ........................................... $1,603,677
Interest ............................................ 64,483 $1,668,160
----------
Expenses:
Management fees ..................................... 251,011
Distribution expense ................................ 117,184
Dividend disbursing and transfer agent fees
and expenses ...................................... 48,909
Registration fees ................................... 43,657
Reports and statements to shareholders .............. 29,341
Accounting and administration ....................... 13,743
Custodian fees ...................................... 6,811
Professional fees ................................... 4,310
Taxes (other than taxes on income) .................. 3,460
Trustees' fees ...................................... 211
Other ............................................... 2,660 521,297
---------- -----------
Less expenses absorbed or waived .................... (92,716)
Less expenses paid indirectly ....................... (1,625)
-----------
Total expenses ...................................... 426,956
-----------
Net Investment Income ............................... 1,241,204
-----------
Net realized and unrealized gain (loss)
on investments:
Net realized loss on investments .................... (1,976,294)
Net change in unrealized appreciation/depreciation
of investments .................................... 8,956,409
-----------
Net realized and unrealized gain on investments ..... 6,980,115
-----------
Net increase in net assets resulting from operations. $8,221,319
==========
See accompanying notes
7
<PAGE>
Statements of Changes in Net Assets
Delaware REIT Fund
--------------------------------------------------------------------------------
Six Months Year
Ended Ended
4/30/00 10/31/99
(Unaudited)
Increase (decrease) in net assets from operations:
Net investment income ............................... $ 1,241,204 $ 3,347,693
Net realized gain (loss) on investments ............. (1,976,294) 91,109
Net change in unrealized appreciation/depreciation
of investments .................................... 8,956,409 (4,090,337)
-------------------------
Net increase (decrease) in net assets resulting
from operations ................................... 8,221,319 (651,535)
-------------------------
Distributions to shareholders from:
Net investment income:
A Class .......................................... (719,477) (953,499)
B Class .......................................... (315,332) (666,418)
C Class .......................................... (119,752) (145,314)
Institutional Class .............................. (40,049) (86,881)
The Real Estate Investment Trust Portfolio
Class .......................................... (666,302) (2,002,180)
Net realized gain on investments:
A Class .......................................... -- (689,750)
B Class .......................................... -- (674,750)
C Class .......................................... -- (135,690)
Institutional Class .............................. -- (69,929)
The Real Estate Investment Trust Portfolio
Class .......................................... -- (2,051,762)
-------------------------
(1,860,912) (7,476,173)
-------------------------
Capital Share Transactions:
Proceeds from shares sold:
A Class .......................................... 11,242,774 17,964,602
B Class .......................................... 1,394,945 5,088,095
C Class .......................................... 2,752,676 2,538,627
Institutional Class .............................. 1,215,188 814,239
The Real Estate Investment Trust Portfolio
Class .......................................... 987 --
Net asset value of shares issued upon
reinvestment of distributions from net
investment income and net realized gain
on investments:
A Class .......................................... 650,205 1,494,177
B Class .......................................... 260,855 1,188,069
C Class .......................................... 98,593 209,959
Institutional Class .............................. 40,049 156,808
The Real Estate Investment Trust Portfolio
Class .......................................... 448,838 3,166,874
-------------------------
18,105,110 32,621,450
-------------------------
Cost of shares repurchased:
A Class .......................................... (8,409,603) (6,148,789)
B Class .......................................... (3,912,644) (3,614,467)
C Class .......................................... (715,809) (1,073,668)
Institutional Class .............................. (951,458) (971,824)
The Real Estate Investment Trust Portfolio
Class .......................................... -- (19,472,821)
-------------------------
(13,989,514) (31,281,569)
-------------------------
Increase in net assets derived from capital
share transactions ................................ 4,115,596 1,339,881
-------------------------
Net increase (decrease) in net assets ............... 10,476,003 (6,787,827)
Net Assets:
Beginning of period ................................. 64,100,429 70,888,256
-------------------------
End of period ....................................... $74,576,432 $64,100,429
=========================
See accompanying notes
8
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware REIT Fund A Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months 12/6/95(1)
Ended Year Ended to
4/30/00(2) 10/31/99 10/31/98(5) 10/31/97 9/30/96
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................................ $11.300 $12.980 $16.260 $12.490 $10.000
Income (loss) from investment operations:
Net investment income(3) ......................................... 0.205 0.549 1.118 0.616 0.652
Net realized and unrealized gain (loss) on investments ........... 1.195 (0.844) (2.713) 4.664 1.938
---------------------------------------------------------
Total from investment operations ................................. 1.400 (0.295) (1.595) 5.280 2.590
---------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............................. (0.330) (0.710) (0.865) (0.720) (0.100)
Distributions from net realized gain on investments .............. - (0.675) (0.820) (0.790) -
---------------------------------------------------------
Total dividends and distributions ................................ (0.330) (1.385) (1.685) (1.510) (0.100)
---------------------------------------------------------
Net asset value, end of period ...................................... $12.370 $11.300 $12.980 $16.260 $12.490
=========================================================
Total return(4) ..................................................... 12.74% (2.69%) (10.98%) 46.50% 26.12%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .......................... $29,853 $23,975 $13,340 $60,089 $26,468
Ratio of expenses to average net assets .......................... 1.20% 1.20% 1.11% 0.82% 0.89%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ........................ 1.48% 1.43% 1.27% 0.99% 1.02%
Ratio of net investment income to average net assets ............. 3.89% 4.81% 4.31% 4.25% 6.70%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly ............. 3.61% 4.58% 4.15% 4.08% 6.57%
Portfolio turnover ............................................... 14% 48% 51% 58% 109%
</TABLE>
(1) Date of commencement of operations; Ratios have been annualized and total
return has not been annualized.
(2) Ratios have been annualized and total return has not been annualized.
(3) Per share information for the year ended October 31, 1999 and the period
ended April 30, 2000 was based on the average shares outstanding method.
(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.
(5) Effective November 4, 1997, the original class of The Real Estate Investment
Trust Portfolio was redesignated the REIT Fund A Class and became subject to
a 0.25% 12B-1 distribution fee. Before that date, that class was not subject
to such a fee; the financial highlights presented above have not been
restated to reflect a 0.25% fee for the period prior to the portfolio
redesignation. In conjunction with the redesignation of the original class,
four additional classes of shares (REIT Fund B Class, REIT Fund C Class,
REIT Fund Institutional Class and The Real Estate Investment Trust Portfolio
Class) were created. REIT Fund A Class shares representing $54.9 million and
$1.8 million were exchanged by shareholders for Real Estate Investment Trust
Portfolio Class and REIT Fund Institutional Class shares, respectively.
See accompanying notes
9
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware REIT Fund B Class Delaware REIT Fund C Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months Year 11/11/97(1) Six Months Year 11/11/97(1)
Ended Ended to Ended Ended to
4/30/00(2) 10/31/99 10/31/98 4/30/00(2) 10/31/99 10/31/98
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $11.300 $12.990 $16.230 $11.300 $12.990 $16.230
Income (loss) from investment operations:
Net investment income(3) ............................... 0.113 0.516 0.914 0.114 0.511 0.914
Net realized and unrealized gain (loss)
on investments ....................................... 1.240 (0.904) (2.559) 1.251 (0.899) (2.559)
---------------------------------------------------------------------
Total from investment operations ....................... 1.353 (0.388) (1.645) 1.365 (0.388) (1.645)
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................... (0.285) (0.627) (0.775) (0.285) (0.627) (0.775)
Distributions from net realized gain on investments .... -- (0.675) (0.820) -- (0.675) (0.820)
---------------------------------------------------------------------
Total dividends and distributions ...................... (0.285) (1.302) (1.595) (0.285) (1.302) (1.595)
---------------------------------------------------------------------
Net asset value, end of period ............................ $12.370 $11.300 $12.990 $12.380 $11.300 $12.990
=====================================================================
Total return(4) ........................................... 12.29% (3.43%) (11.31%) 12.29% (3.43%) (11.31%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $12,400 $13,575 $12,802 $6,333 $3,657 $2,435
Ratio of expenses to average net assets ................ 1.95% 1.95% 1.86% 1.95% 1.95% 1.86%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ...... 2.23% 2.18% 2.02% 2.23% 2.18% 2.02%
Ratio of net investment income to average net assets ... 3.14% 4.06% 3.56% 3.14% 4.06% 3.56%
Ratio of net investment income to average net assets
prior to expense limitation and expenses
paid indirectly ...................................... 2.86% 3.83% 3.40% 2.86% 3.83% 3.40%
Portfolio turnover ..................................... 14% 48% 51% 14% 48% 51%
</TABLE>
(1) Date of commencement of operations; Ratios have been annualized and total
return has not been annualized.
(2) Ratios have been annualized and total return has not been annualized.
(3) Per share information for the year ended October 31, 1999 and the period
ended April 30, 2000 was based on the average shares outstanding method.
(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
10
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Delaware REIT Fund
Selected data for each share of the Fund outstanding Delaware REIT Fund The Real Estate
throughout each period were as follows: Institutional Class Investment Trust Portfolio Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months Year 11/11/97(1) Six Months Year 11/11/97(1)
Ended Ended to Ended Ended to
4/30/00(2) 10/31/99 10/31/98 4/30/00(2) 10/31/99 10/31/98
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $11.310 $12.990 $16.230 $11.310 $12.990 $16.340
Income (loss) from investment operations:
Net investment income(3) ............................... 0.236 0.743 1.134 0.236 0.742 1.134
Net realized and unrealized (loss) on investments ...... 1.182 (1.005) (2.659) 1.181 (1.004) (2.769)
---------------------------------------------------------------------
Total from investment operations ....................... 1.418 (0.262) (1.525) 1.417 (0.262) (1.635)
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................... (0.348) (0.743) (0.895) (0.347) (0.743) (0.895)
Distributions from net realized gain on investments .... -- (0.675) (0.820) -- (0.675) (0.820)
---------------------------------------------------------------------
Total dividends and distributions ...................... (0.348) (1.418) (1.715) (0.347) (1.418) (1.715)
---------------------------------------------------------------------
Net asset value, end of period ............................ $12.380 $11.310 $12.990 $12.380 $11.310 $12.990
=====================================================================
Total return(4) ........................................... 12.90% (2.42%) (10.56%) 12.90% (2.42%) (11.17%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $17,523 $1,313 $1,504 $24,116 $21,580 $40,807
Ratio of expenses to average net assets ................ 0.95% 0.95% 0.86% 0.95% 0.95% 0.86%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ...... 1.23% 1.18% 1.02% 1.23% 1.18% 1.02%
Ratio of net investment income to average net assets ... 4.14% 5.06% 4.56% 4.14% 5.06% 4.56%
Ratio of net investment income to average net assets
prior to expense limitation and expenses
paid indirectly ...................................... 3.86% 4.83% 4.40% 3.86% 4.83% 4.40%
Portfolio turnover ..................................... 14% 48% 51% 14% 48% 51%
</TABLE>
(1) Date of commencement of operations; ratios have been annualized and total
return has not been annualized.
(2) Ratios have been annualized and total return has not been annualized.
(3) Per share information for the year ended October 31, 1999 and the period
ended April 30, 2000 was based on the average shares outstanding method.
(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
11
<PAGE>
Notes to Financial Statements
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
The Real Estate Investment Trust Portfolio (the"Delaware REIT Fund"or the
"Fund") is a series of Delaware Pooled Trust which is registered as a
diversified open-end investment company under the Investment Company Act of
1940, as amended. The Fund is organized as a Delaware Business Trust and
currently offers five classes of shares. Delaware REIT Fund A Class carries a
front-end sales charge of 5.75%, Delaware REIT Fund B Class carries a back-end
deferred sales charge, Delaware REIT Fund C Class carries a level load deferred
sales charge, and Delaware REIT Fund Institutional and The Real Estate
Investment Trust Portfolio Classes carry no sales charge. This report contains
information relating only to Delaware REIT Fund. All other Delaware Pooled Trust
portfolios are included in a separate report.
The Fund seeks to achieve a maximum long-term total return, with capital
appreciation as a secondary objective. It seeks to achieve its objectives by
investing in securities of companies primarily engaged in the real estate
industry.
1. Significant Accounting Policies
The following accounting policies are in accordance with accounting principles
generally accepted in the United States and are consistently followed by the
Fund.
Security Valuation - 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. Money market instruments having less than 60
days to maturity are valued at amortized cost, which approximates market value.
Other securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Fund's Board of Trustees.
Federal Income Taxes - The Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations which may differ from accounting
principles generally accepted in the United States.
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
the Fund on the basis of daily net assets of each class. Distribution expenses
relating to a specific class are charged directly to that class.
<PAGE>
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 102% 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
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated 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. The Fund declares and pays dividends from net
investment income on a quarterly basis. Net capital gains, if any, will be
distributed annually.
Certain expenses of the Fund are paid through commission arrangements with
brokers. These transactions are done subject to best execution. The amount of
these expenses was approximately $754 for the period ended April 30, 2000. In
addition, the Fund receives earnings credits from its custodian when positive
cash balances are maintained, which are used to offset custody fees. The
expenses paid under the above arrangements are included in their respective
expense captions on the Statement of Operations with the corresponding expense
offset shown as "Expenses paid indirectly".
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company ("DMC"), the Investment Manager of the Fund, an
annual fee, which is calculated daily at the rate of 0.75% on the first $500
million of average daily net assets of the Fund, 0.70% on the next $500 million,
0.65% on the next $1,500 million and 0.60% on the net assets over $2,500
million. At April 30, 2000, the Fund had a liability for Investment Management
fees and other expenses payable to DMC of $35,223.
12
<PAGE>
Notes to Financial Highlights (continued)
--------------------------------------------------------------------------------
2. Investment Management and Other Transactions with Affiliates (continued)
Lincoln Investment Management, Inc., an affiliate of DMC, receives 30% of the
advisory fee paid to DMC for acting as sub-advisor to the Fund.
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 fees, and extraordinary expenses, exceed
0.95% of the Fund's average daily net assets through February 28, 2001.
The Fund has engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent, and accounting and
administrative services. The Fund pays DSC a monthly fee based on the number of
shareholder accounts, shareholder transactions and average net assets, subject
to certain minimums. At April 30, 2000, the Fund had a liability for such fees
and other expenses payable to DSC of $10,782.
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 A Class shares and
1.00% of the average daily net assets attributable to B Class and C Class
shares. At April 30, 2000, the Fund had a liability for distribution fees and
other expenses payable to DDLP and other affiliates of $25,081.
For the period ended April 30, 2000, DDLP earned $4,839 for commissions on sales
of the Fund A Class shares.
Certain officers of DMC, DSC and DDLP are officers, trustees and/or employees of
the Fund. These officers, trustees and employees are not compensated by the
Fund.
3. Investments
During the period ended April 30, 2000, the Fund made purchases of $13,460,000
and sales of $9,084,079 of investments other than U.S. government securities and
temporary cash investments.
At April 30, 2000, the aggregate net unrealized appreciation for federal income
tax purposes was $2,833,345 of which $4,470,587 related to unrealized
appreciation of securities and $1,637,242 related to unrealized depreciation of
securities. At April 30, 2000, the aggregate cost of securities for federal
income tax purposes was $69,068,697.
For federal income tax purposes, the Fund had a capital loss carry forward of
$343,655 at April 30, 2000, expiring in 2007, which may be carried forward and
applied against future gains.
<PAGE>
4. Capital Shares
Transactions in capital stock shares were as follows:
Six Months Year
Ended Ended
4/30/00 10/31/99
(Unaudited)
Shares sold:
A Class ............................................ 987,080 1,471,049
B Class ............................................ 123,050 414,465
C Class ............................................ 242,445 207,473
Institutional Class ................................ 104,780 65,124
The Real Estate Investment
Trust Portfolio Class ............................ -- --
Shares issued upon reinvestment of
distributions from net investment income
and net realized gain on investments:
A Class .......................................... 58,367 124,187
B Class .......................................... 23,444 98,229
C Class .......................................... 8,834 17,467
Institutional Class .............................. 3,584 13,031
The Real Estate Investment
Trust Portfolio Class .......................... 40,257 263,387
---------- ----------
1,591,841 2,674,412
---------- ----------
Shares repurchased:
A Class .......................... ................. (744,318) (501,722)
B Class ............................................ (345,605) (297,118)
C Class ............................................ (63,074) (88,808)
Institutional Class ................................ (83,020) (77,809)
The Real Estate Investment
Trust Portfolio Class ............................ -- (1,496,409)
---------- ----------
(1,236,017) (2,461,866)
---------- ----------
Net increase ......................................... 355,824 212,546
========== ==========
5. Lines of Credit
The Funds, along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participate in a $683,500,000 revolving line of
credit facility to be used for temporary or emergency purposes as an additional
source of liquidity to fund redemptions of investor shares. The Participants are
charged an annual commitment fee, which is allocated across the Participants on
the basis of each Fund's allocation of the entire facility. The Participants may
borrow up to a maximum of one third of their net assets under the agreement. The
Funds had no amounts outstanding at April 30, 2000 or at any time during the
period.
6. Credit and Market Risk
The Fund may invest up to 10% of its total assets in illiquid securities which
may include securities with contractual restrictions on resale, securities
exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, and other securities which may not be readily marketable. The relative
illiquidity of some of these securities may adversely affect the Fund's ability
to dispose of such securities in a timely manner and at a fair price when it is
necessary to liquidate such securities.
13
<PAGE>
DELAWARE(SM) For Shareholders
INVESTMENTS 1.800.523.1918
---------------------
Philadelphia o London For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
This semi-annual report is for the information of Delaware REIT Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current Prospectus for Delaware REIT Fund and the Delaware
Investments Performance Update for the most recently completed calendar quarter.
The prospectus sets forth details about charges, expenses, investment objectives
and operating policies of the Fund. You should read the prospectus carefully
before you invest. The figures in this report represent past results which are
not a guarantee of future results. The return and principal value of an
investment in the Fund will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BOARD OF TRUSTEES Charles E. Peck Investment Manager
Retired Delaware Management Company
Wayne A. Stork Fredericksburg, VA Philadelphia, PA
Chairman
Delaware Investments Family of Funds Janet L. Yeomans International Affiliate
Philadelphia, PA Vice President and Treasurer Delaware International Advisers Ltd.
3M Corporation London, England
Walter P. Babich St. Paul, MN
Board Chairman National Distributor
Citadel Constructors, Inc. AFFILIATED OFFICERS Delaware Distributors, L.P.
King of Prussia, PA Philadelphia, PA
Charles E. Haldeman, Jr.
David K. Downes President and Chief Executive Officer Shareholder Servicing, Dividend
President and Chief Executive Officer Delaware Management Holdings, Inc. Disbursing and Transfer Agent
Delaware Investments Family of Funds Philadelphia, PA Delaware Service Company, Inc.
Philadelphia, PA Philadelphia, PA
Richard J. Flannery
John H. Durham Executive Vice President 1818 Market Street
Private Investor and General Counsel Philadelphia, PA 19103-3682
Horsham, PA Delaware Investments
Philadelphia, PA
Anthony D. Knerr
Consultant, Anthony Knerr & Associates Bruce D. Barton
New York, NY President and Chief Executive Officer
Delaware Distributors, L.P.
Ann R. Leven Philadelphia, PA
Former Treasurer, National Gallery of Art
Washington, DC
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
</TABLE>
(3243) Printed in the USA
SA-187 [4/00] PP 6/00 (J5940)
