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For International Diversification
Global &
International Funds
[Photo of illustration from International Diversification Brochure]
service and guidance
professional management
goals
1998
Semi-Annual Report
International Equity Fund
Global Bond Fund
Global Assets Fund
Emerging Markets Fund
DELAWARE
INVESTMENTS
- -----------
Philadelphia * London
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June 15, 1998
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Dear Shareholder:
Is the world's economy half full or half empty? It's the question
international investors have faced since November.
The news from Asia has been ugly. Political turmoil has led to riots and
economic collapse in Indonesia. In Japan, a crushing debt burden threatens the
financial system. Nationalism has led to nuclear testing in India and
Pakistan. China may devalue its currency.
At the same time, however, growth prospects in Western Europe appear
excellent. Equity markets in countries such as the United Kingdom, Italy and
Spain are thriving as the continent moves to a single currency and reduces
government regulation. Companies are embracing shareholder-friendly governance
structures. Some European stock markets outperformed the unmanaged S&P 500
Index for the six months ended May 31, 1998.
It is a time of monumental change - some painful, some progressive. On
balance, however, we see the world as a far safer, freer and more prosperous
place today than at any point in the 20th Century. A new millennium promises
attractive rewards as more nations adopt open market economies.
Our bright long-term outlook is tempered by sobering short-term setbacks.
AS THE EFFECTS OF THE PACIFIC RIM'S RECESSION HAVE RIPPLED AROUND THE WORLD,
SIX-MONTH RESULTS FOR MOST OF DELAWARE INVESTMENTS' GLOBAL & INTERNATIONAL
FUNDS WERE DISAPPOINTING.
As the effects of the Pacific Rim's recession have rippled around the world,
our results for the first half of fiscal 1998 were disappointing.
<TABLE>
<CAPTION>
<S> <C> <C>
CUMULATIVE/AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------------------------------
Periods Ended May 31, 1998
Six Months Lifetime
- -------------------------------------------------------------------------------------------------------
International Equity A Class (Est. 10/31/91) +13.26% +11.40%
Lipper International Equity Fund Average +17.33% (519 funds) +11.25% (67 funds)
Morgan Stanley Europe Australia Far East (EAFE) Index +16.22% +9.08%
- -------------------------------------------------------------------------------------------------------
Global Bond Fund A Class (Est. 12/27/94) +0.56% +9.92%
Lipper Global Income Fund Average +2.96% (148 funds) +9.85% (95 funds)
Salomon SmithBarney Government Bond Index +2.33% +7.22%
- -------------------------------------------------------------------------------------------------------
Global Assets Fund A Class (Est. 12/27/94)* +9.16% +17.19%
Lipper Global Flexible Portfolio Average +9.61% (74 funds) +15.26% (54 funds)
Morgan Stanley World Index +15.54% +19.43%
- -------------------------------------------------------------------------------------------------------
Emerging Markets Fund A Class (Est. 6/10/96) -7.38% -2.42%
Lipper Emerging Markets Fund Average -6.11% (155 funds) -6.03% (108 funds)
Morgan Stanley Emerging Markets Free Index -7.17% -12.88%
- -------------------------------------------------------------------------------------------------------
</TABLE>
* Effective July 21, 1998, the Fund was renamed Global Equity Fund and its
investment focus was changed. Lipper Analytical Services is expected to change
the Fund's peer group to the Global Equity Fund Category this summer. All
performance is at net asset value and assumes reinvestment of distributions.
For complete performance for all Fund Classes and expense information,
including waivers, see pages 12 to 13. The unmanaged Morgan Stanley World
Index and Salomon SmithBarney World Government Bond Index include U.S. market
performance. All returns stated in U.S. dollars. Past performance does not
guarantee future results.
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Our concentration on stocks and bonds in Europe, the Americas and more
stable Pacific Rim countries such as Australia reduced volatility but did not
allow the Funds to benefit from capital appreciation in some markets. Also,
returns from many overseas investments were reduced by a strong U.S. dollar.
Each of Delaware Investments' four global and international funds has
outperformed its peers for its respective lifetime period, as shown on page 2.
We remain convinced of the long-term effectiveness of Delaware's consistent,
value discipline. Over the coming months, we anticipate that Delaware's
income-oriented and inflation-savvy method of evaluating stocks and bonds will
again prove its mettle.
Delaware's 20 investment professionals in London, together with their
colleagues in Philadelphia, continuously assess the special risks of global
investing, keeping in mind the perspective of U.S. investors. Through
fundamental research of individual securities, country analysis and defensive
hedging, we strive to reduce portfolio risks.
One measure of investor confidence in Delaware International's approach is
that it now manages more than $10 billion in assets. In fact, our
London-managed assets now account for 22% of Delaware's overall business, up
from just 8% three years ago. We wish to thank you for turning to Delaware to
take advantage of all the world has to offer.
Sincerely,
/s/ Wayne A. Stork
- -------------------------------------
Wayne A. Stork
Chairman
/s/ Jeffrey J. Nick
- -------------------------------------
Jeffrey J. Nick
President and Chief Executive Officer
Global Assets Fund Becomes
Global Equity Fund
==============================================================================
On April 16, 1998, the Board of Directors of Global Assets Fund approved a
name change and a change in the Fund's investment focus. Effective July 21,
1998, the Fund will be known as Global Equity Fund. Global Equity Fund will
invest primarily in stocks in established markets around the world, including
the U.S. The Fund's investment objective remains the same - to achieve
long-term total return.
When Global Assets Fund was launched in December 1994, we expanded
Delaware's fund family by providing an easy way to achieve global
diversification with a single investment. However, more investors these days
seem to be building portfolios using more than one mutual fund. We made the
change because we think an all-equity approach will appeal to more
shareholders. The Fund's unmanaged benchmark will remain the Morgan Stanley
World Index, an all-equity index that includes U.S. stocks.
If you aren't sure whether Global Equity Fund's new strategy still suits
your goals, we suggest you consult your financial adviser.
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Portfolio Managers' Review
International Equity Fund International Equity Fund has maintained a strong
position in United Kingdom and Western European stocks since the Fund's
inception nearly seven years ago. During the first half of fiscal 1998, this
focus helped us provide attractive results as the UK's stock market became the
world's second largest, eclipsing that of Japan (the U.S. is the largest).
Thus far in calendar 1998, selected European stock markets have also
outperformed the unmanaged S&P 500 Index, a measure of U.S. large company
stocks. For example, Spain's benchmark IBEX Index rose +41.8% for the six
months ended May 31. Stocks in the U.K. did well in absolute terms, but the
market underperformed most Continental European markets.
DURING THE FIRST HALF OF FISCAL 1998, THIS FOCUS HELPED US PROVIDE ATTRACTIVE
RESULTS AS THE UK'S STOCK MARKET BECAME THE WORLD'S SECOND LARGEST, ECLIPSING
THAT OF JAPAN.
International Equity Fund's weighting in Spanish stocks at mid-year was
more than double that of your Fund's benchmark - the Morgan Stanley Europe
Australia Far East Index (see page 5). Our holdings in Telefonica, the
country's main telecom services provider, and a Spanish bank contributed to
the Fund's +13.26% total return (for Class A shares at net asset value with
distributions reinvested) for the first half of fiscal 1998.
We concentrate on dividend-paying stocks in established markets and
companies that appear to be selling below their intrinsic value. This value
approach begins with an evaluation of the potential effects of a country's
currency fluctuations, inflation, local economy and political issues.
Concerns about local inflation and individual stock values led us to avoid
certain European markets, such as Italy and Portugal, whose returns since
November have been even more spectacular than Spain's. While this detracted
from your Fund's short-term results, strict adherence to our investment
discipline allowed us to maintain a much lower risk profile than many other
foreign stock funds (see below).
Another way we reduce risk is through defensive currency hedging to protect
the dollar value of our investments. As of May 31, we held
<TABLE>
<CAPTION>
YOUR FUND'S ATTRACTIVE RISK PROFILE
- ----------------------------------------------------------------------------------------------------
MORNINGSTAR RISK SCORES (PERIODS ENDED FEBRUARY 28, 1998)*
International Equity Fund Foreign Stock Fund Average
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Three Years 0.63 0.74 (214 funds)
Five Years 0.67 0.77 (134 funds)
</TABLE>
The average risk factor for all equity funds equals 1.00. Numbers greater than
1.00 indicate more relative risk, less than 1.00 indicates lower relative
risk. Past performance does not guarantee future results. To calculate risk,
Morningstar concentrates on those months during which a fund underperformed
the average return of a three-month U.S. Treasury bill. It adds up the amounts
by which a fund fell short of a Treasury bill's return and divides the result
by the total number of months in the rating period.
*Latest available data.
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positions in the British pound, Spanish peseta and Australian dollar. The Fund
will generally use forward currency contracts, which can limit the risk of
loss should the value of the hedged currency decline. We believe reducing
exchange risk is as important as seeking potential capital gains.
Since November, Asian stock markets have remained volatile. Some markets
rebounded this past winter as governments in Thailand and Malaysia took steps
to stabilize their economies and restore investor confidence. Others, notably
Indonesia and Japan, deteriorated further amid political turmoil and recession.
Your Fund's holdings of Pacific Rim equities, especially Japanese stocks,
has historically been modest compared to your Fund's peers. Generally, this
positioning has enhanced the Fund's performance. In fact, a measure of how
weak the Japanese market has been is that the country's stock market currently
represents only 1/5 of the Morgan Stanley EAFE Index, compared to more than
1/3 just three years ago.
We hold a few export-oriented Japanese stocks such as Canon Electronics,
the photocopier maker. Some of these contributed to your Fund's total return
during the first half of fiscal 1998. In general, export-oriented Japanese
companies seem well-positioned to benefit from the decline in the value of the
yen even as the country's financial sector has fallen into disarray.
Outlook
Three primary factors influence international portfolio returns for U.S.
investors - a fund manager's choice of stocks, choice of country and the
relationship of the local currency to the U.S. dollar.
In fiscal 1998, country selection has been more important than ever.
Countries that have embraced free markets and have relatively stable political
systems are doing well. Stocks in markets plagued by corporate and political
corruption,
INTERNATIONAL EQUITY FUND'S COUNTRY ALLOCATION VS.
MORGAN STANLEY EUROPE AUSTRALIA FAR EAST (EAFE) INDEX
- ----------------------------------------------------------
May 31, 1998 International Morgan Stanley
Equity Fund EAFE Index
United Kingdom 28.40% 20.90%
Japan 13.80% 20.90%
Australia/New Zealand 12.40% 2.60%
Germany 10.90% 11.20%
Netherlands/Belgium 9.00% 7.80%
France 8.90% 9.30%
Spain 7.60% 3.40%
Asian Pacific Rim* 3.00% 5.70%
*Hong Kong, Singapore, Malaysia.
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bureaucratic inefficiency or nationalism have lagged the rest of
the world.
Overall, established international markets appear to offer more attractive
potential returns than the U.S. In Europe, greater independence for central
banks and fiscal policies designed to foster monetary union have bolstered
investor confidence and reduced inflation.
As Asian markets slowly begin to recover and as economic growth in
Continental Europe accelerates, we think investors may become concerned about
potential increases in global consumer and producer prices. During the first
half of fiscal 1998, global oil, grain and other commodity prices fell to
unusually low levels around the globe that we believe cannot be sustained over
the long term. In the coming months, we think more industries will face higher
raw material costs.
AS ASIAN MARKETS SLOWLY BEGIN TO RECOVER AND AS ECONOMIC GROWTH IN CONTINENTAL
EUROPE ACCELERATES, WE THINK INVESTORS MAY BECOME CONCERNED ABOUT POTENTIAL
INCREASES IN GLOBAL CONSUMER AND PRODUCER PRICES.
In a world marked by increasing uncertainty and stock market volatility, we
will remain as loyal to our inflation-savvy, income-oriented investment
discipline as a bulldog. Our preference for equities in relatively stable
countries such as the UK, Australia and New Zealand is as strong as ever
because we believe many companies in these markets continue to offer superior
total return potential.
Global Bond Fund
Global Bond Fund's total return was curtailed by the strength of the U.S.
dollar during the first half of fiscal 1998. While the Fund's holdings of U.S.
Treasury securities provided attractive returns between November and May,
preserving capital in Europe and the Pacific Rim was challenging as the U.S.
dollar rose in value against most major currencies, especially the Japanese
yen.
Defensive hedging by purchasing forward currency contracts can reduce
currency risk in an equity fund. However, such a strategy is currently
impractical for a bond fund because the cost of hedging substantially reduces
a fund's income potential.
In managing Global Bond Fund, we rely on income potential as a key measure
of value. Our research focuses on long-term factors such as inflation and on
trends that can be analyzed with reasonable certainty. When we invest in
overseas bonds, your Fund strives to obtain a rate of return that is
meaningfully greater than the U.S. inflation rate.
GLOBAL BOND FUND
PORTFOLIO HIGHLIGHTS
- ------------------------------------------------------------
May 31, 1998
Yield Before Expenses 5.39%
Current 30-Day SEC Yield 4.20%*
Highest Concentration - Western Europe 39.6% of net assets
Average Effective Duration 4.2 years
Average Effective Maturity 6.1 years
Average Quality Aa1
* Measured according to Securities and Exchange Commission guidelines. Current
30-day SEC yield was 3.71%, 3.71% and 4.71% for Class B, Class C and
Institutional Class shares as of May 31, 1998, respectively. Performance
information for all Classes can be found on page 12.
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One way we attempt to reduce currency risk is by holding bonds denominated
in a currency that appears more attractive than the home currency of the
issuer. For example, as of May 31 we held Japanese highway bonds denominated
in Canadian dollars and Republic of Finland bonds denominated in German
deutschemarks.
The Funds portfolio managers also place great importance on quality and
focus on bonds rated A or better by Standard & Poor's. Generally, the Fund's
holdings will have an average maturity in the five to 10-year range, a range
we believe offers attractive income compared to the risk to principal from
fluctuating interest rates.
Outlook
Overall, we prefer dollar-denominated markets - countries such as Canada whose
currency is denominated in dollars, the value of which is pegged to the U.S.
dollar. These countries' bonds generally offer higher yields than U.S.
Treasuries with comparable maturities.
In Europe, progress toward currency union over the past two years has
helped the performance of bonds in countries such as Italy and Spain which
historically have had relatively weak currencies and higher-than-average
inflation. This past winter, we sold our Italian bonds as they rose in value
and yields fell.
About one-quarter of your Fund's portfolio was U.S. bonds and foreign
securities issued in U.S. dollars. Since November, we've added to our holdings
of U.S. inflation-indexed bonds. In our view, these fixed-income securities
were undervalued because of the U.S.' current low inflation environment and
because the Treasury Department has had difficulty marketing this relatively
new type of bond.
During the first half of fiscal 1998, bond market uncertainty remained high
even as yields on 30-year U.S. Treasury bonds fell to record lows in January.
Government economic statistics offered little evidence that the Asian
recession could slow the U.S. economy.
In our view, inflationary pressures in the U.S. are likely to modestly
increase by year's end. However, we believe the Federal Reserve Board will be
under pressure not to raise its interest rate target. Although U.S. consumer
spending is high and the unemployment rate near record lows, we do not expect
the Fed to tighten credit because to do so would risk triggering more currency
volatility around the world.
CHANGE IN SELECTED CURRENCY VALUES VS. THE U.S. DOLLAR
- ------------------------------------------------------
DECEMBER 31, 1997 TO JUNE 30, 1998
South African Rand -17.60%
New Zealand Dollar -10.90%
Japanese Yen -6.10%
Austrailian Dollar -5.00%
Canadian Dollar -2.70%
German Mark -0.50%
British Pound +1.30%
Source: Bloomberg Business News.
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Global Assets Fund
Global Assets Fund provided a competitive +9.16% total return for the first
half of fiscal 1998 (for A Class shares at net asset value with distributions
reinvested).
During the period, we increased the Fund's weighting in foreign and
domestic stocks to capture the robust capital appreciation potential available
from selected European and U.S. equities. Nearly two-thirds of the Fund's net
assets were invested in equities as of May 31, compared to 55.7% at the start
of fiscal 1998.
WE INCREASED THE FUND'S WEIGHTING IN FOREIGN AND DOMESTIC STOCKS TO CAPTURE
THE ROBUST CAPITAL APPRECIATION POTENTIAL AVAILABLE FROM SELECTED EUROPEAN AND
U.S. EQUITIES.
We also reduced the portion of your Fund's net assets allocated to
foreign bonds from 19.5% to 18.4% amid concern about the effects of a rising
U.S. dollar. The percentage of Fund assets allocated to high-yield U.S. bonds
has remained unchanged since autumn. This asset class has helped reduce
portfolio volatility and contributed significantly to your Fund's investment
income.
We always take inflation into account when evaluating both U.S. and foreign
stocks and bonds and used the same income-oriented approach as International
Equity Fund and Global Bond Fund. We compare stocks and bonds within a country
as well as across countries, all using a consistent yardstick.
Following the same strategy as the International Equity Fund (see page 4),
Global Assets had a high concentration of stocks in Europe, particularly in
the United Kingdom. Many of these stocks have done well since November.
Your Fund had a modest 3.7% positioning in equities of Asian Pacific Rim
countries as of May 31. With some exceptions, this region's weak performance,
particularly the Japanese and Hong Kong markets, negatively affected our
results.
A New Strategy
Since its inception at the end of 1994, Global Assets Fund has combined
multiple types of U.S. and foreign securities. While an all-in-one approach to
asset allocation can be sound, our research has shown that many investors and
their advisers currently prefer to pick from a menu of mutual funds that
invest in only one or two asset classes.
Beginning in July, we will shift the portfolio to focus on stocks around
the world, including the U.S., and rename the Fund Global Equity Fund. We plan
to eliminate the bond component. These changes are coming at what we believe
is
GLOBAL ASSETS FUND
ASSET MIX
- ------------------------------
May 31, 1998
High-Yield U.S. Bonds 8.50%
Foreign Bonds 18.40%
U.S. Stocks 38.70%
Foreign Stocks 25.80%
Cash Equivalents 8.60%
Effective July 21, 1998, the Fund will begin to sell the bond component of its
portfolio and will be known as Global Equity Fund. The focus of the portfolio
will be stocks around the world, including the U.S.
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an opportune moment. We see continued weakness in some foreign bond markets in
the months ahead because of the high value of the U.S. dollar. Also, we are
exiting the U.S. high-yield market at a time when this market may be at its
peak strength.
Global Equity Fund's fundamental investment objective remains the same - to
achieve long-term total return. As a result of these modifications, Global
Equity Fund's risk profile may increase and the amount of dividend income
available for distribution is expected to be less. However, we believe the
long-term benefits of a potentially larger shareholder base make these
modifications worthwhile.
Emerging Markets Fund
During the first half of fiscal 1998, political and economic turmoil
throughout Asia have had significant negative effects on developing markets
throughout the world and Emerging Markets Fund's portfolio.
Still, we believe our value-oriented stock selection process is making a
positive difference. Your Fund tends to emphasize stocks with low
price-to-earnings ratios relative to stocks in our benchmark, the Morgan
Stanley Emerging Markets Free Index.
In the midst of volatility, investors gravitate to companies with
operations that have stable and growing cash flows, companies likely to
survive local economic problems. These are the types of businesses we tend to
hold in the Fund's portfolio
For example, in Mexico we own Grupo Minsa, a major food company that makes
flour for tortillas. Our visits to Mexico have shown that more of the
country's population is buying processed flour rather than making traditional
tortilla paste at home. Although Minsa's stock has lost value during fiscal
1998, we believe the company remains well-positioned for long-term,
non-cyclical growth.
Overall, we held positions in 79 stocks in 24 countries as of May 31, with
Brazil being our largest single country position (14.8% of net assets). Such
diversification is prudent, given that the risks of investing in emerging
markets are considerably greater than those of established markets. Of course,
we believe the potential long-term rewards are greater as well.
Your Fund's second largest country weighting as of May 31 was India. It is
difficult to measure the long-term economic fallout from India's nuclear
tests. At a minimum, it reinforces
EMERGING MARKETS FUND'S COUNTRY ALLOCATION VS.
MORGAN STANLEY EMERGING MARKETS FREE INDEX
Morgan Stanley
Emerging Markets Fund Emerging Markets Free Index
Brazil 14.80% 13.60%
India 10.40% 6.70%
Malaysia 8.90% 5.80%
Middle East 9.80% 6.30%
Other Latin America 10.50% 25.20%
Other Pacific Rim 9.50% 22.40%
Eastern Europe 13.10% 6.50%
South Africa 9.80% 13.80%
China/Hong Kong 6.20% 0.80%
Mexico 5.40% 11.70%
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investors' fears about the country's historical lack of political stability.
Also, although India has enormous growth potential, foreign companies' efforts
to reach consumers have often been stymied by bureaucracy and cultural
obstacles.
We believe, however, that many Indian stocks are substantially undervalued.
Our largest position in the country is The India Fund, a closed-end fund that
traded at a 21% discount to its net asset value as of May 31. Although the
fund's share price declined and discount widened following the nuclear tests,
the fund still made a positive contribution to Emerging Markets Fund's total
return for the first half of 1998. Over the long term, we believe common sense
will prevail in the political arena and that any U.S. economic sanctions
against India will have only a limited economic impact.
Outlook
In our research across the Pacific, we have found that some countries such as
Thailand are making slow progress to get back on their feet. Thailand's new
government is reforming and recapitalizing its banking system. The first
country to face a currency crisis last summer, Thailand could also lead the
way to recovery.
We've also visited South Korea and Malaysia. Prospects for economic revival
there are less well defined. Although these governments appear more willing
than Indonesia to address concerns of the International Monetary Fund, a
global lending organization that assists emerging market countries, the
current economic downturn is likely to be deep and protracted.
As of mid-year, stocks in Emerging Markets Fund's portfolio were priced at
an average of 72% of what we paid for them, indicating a substantial amount of
accrued losses, which, if realized, we can use to offset future realized
gains.
Over the long term, we believe the future of selected markets in Europe,
South America and elsewhere remains bright. Although tax-management is not a
strategy of the Fund, we see the short-term setbacks we've encountered since
last summer as providing a potential opportunity for the Fund to realize
substantial capital appreciation in the future without generating significant
tax liabilities for shareholders.
DELAWARE INTERNATIONAL
ADVISERS LTD.
DELAWARE MANAGEMENT COMPANY
June 15, 1998
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Performance Summary
GROWTH OF A $10,000 INVESTMENT
INCEPTION THROUGH MAY 31, 1998
International Equity Fund
A Class (Est. 10/31/91) $19,388
Lipper International Fund
Average (67 Funds) $20,115
Global Assets Fund
A Class (Est. 12/27/94) $16,402
Lipper Flexible Portfolio
Average (95 Funds) $16,008
Global Bond Fund
A Class (Est. 12/27/94) $13,171
Lipper Global Income
Fund Average (54 Funds) $13,643
Emerging Markets Fund
A Class (Est. 6/10/96) $ 9,075
Lipper Emerging Markets
Fund Average (108 Funds) $ 8,789
Chart assumes $10,000 investments on the inception date, reinvestment of
distributions and a front-end 4.75% sales charge for the Delaware Investments
mutual funds shown above. Sales charges vary for funds in the Lipper averages.
Past performance does not guarantee future results. For complete Fund
performance and sales charge information, see pages 12 and 13. Performance of
other Classes of each Fund vary due to different charges and expenses.
==============================================================================
Your Management Team
Each of Delaware Investments' Global & International Funds is managed in
London. Clive A. Gillmore, Robert Akester, Joshua Brooks and Nigel May are
responsible for equities in established and emerging overseas markets. Ian G.
Sims manages foreign bonds. They are assisted by portfolio managers in
Philadelphia who manage U.S. equities and U.S. high-yield bonds. Effective
July 21, 1998, Elizabeth A. Desmond in London will manage foreign stocks and
overall asset allocation for Global Equity Fund. Robert L. Arnold in
Philadelphia will manage U.S. Equities for Global Equity Fund.
==============================================================================
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INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH MAY 31, 1998
Lifetime Five Years One Year
- --------------------------------------------------------------------------
Class A (Est. 10/31/91)
Excluding Sales Charge +11.40% +12.78% +7.52%
Including Sales Charge +10.58% +11.69% +2.43%
- --------------------------------------------------------------------------
Class B (Est. 9/6/94)
Excluding Sales Charge +9.91% +6.74%
Including Sales Charge +9.28% +2.74%
- --------------------------------------------------------------------------
Class C (Est. 11/29/95)
Excluding Sales Charge +15.09% +6.75%
Including Sales Charge +15.09% +5.75%
- --------------------------------------------------------------------------
GLOBAL BOND FUND
- --------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH MAY 31, 1998
Lifetime One Year
- --------------------------------------------------------------------------
Class A (Est. 12/27/94)
Excluding Sales Charge +9.92% +3.92%
Including Sales Charge +8.37% -1.06%
- --------------------------------------------------------------------------
Class B (Est. 12/27/94)
Excluding Sales Charge +9.17% +3.09%
Including Sales Charge +8.46% -0.87%
- --------------------------------------------------------------------------
Class C (Est. 11/29/95)
Excluding Sales Charge +5.30% +3.11%
Including Sales Charge +5.30% +2.12%
- --------------------------------------------------------------------------
Return and share value for each Fund fluctuate so that shares, when redeemed,
may be worth more or less than their original cost. Past performance is not a
guarantee of future results. Returns reflect reinvestment of any distributions
and any applicable sales charges as noted below. Performance excluding sales
charges for B and C Classes assumes contingent sales charges did not apply or
the investment was not redeemed.
Voluntary expense limitations were in effect for each Fund for the periods
shown. Performance would have been lower without the limitations.
Class A shares have a 4.75% front-end maximum sales charge and a 12b-1 fee.
Class B shares do not carry a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are subject to a deferred sales
charge of up to 4% if redeemed before the end of the sixth year.
Class C shares have an annual 1% service and distribution fee and a 1%
contingent deferred sales charge if redeemed within 12 months of purchase.
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GLOBAL ASSETS FUND
- ----------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH MAY 31, 1998
- ----------------------------------------------------------------
Lifetime One Year
Class A (Est. 12/27/94)
Excluding Sales Charge +17.19% +12.71%
Including Sales Charge +15.53% +7.33%
- ----------------------------------------------------------------
Class B (Est. 12/27/94)
Excluding Sales Charge +16.37% +11.86%
Including Sales Charge +15.76% +7.86%
- ----------------------------------------------------------------
Class C (Est. 11/29/95)
Excluding Sales Charge +13.97% +11.91%
Including Sales Charge +13.97% +10.91%
- ----------------------------------------------------------------
EMERGING MARKETS FUND
- ----------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH MAY 31, 1998
- ----------------------------------------------------------------
Lifetime One Year
Class A (Est. 6/10/96)
Excluding Sales Charge -2.42% -21.27%
Including Sales Charge -4.80% -25.02%
- ----------------------------------------------------------------
Class B (Est. 6/10/96)
Excluding Sales Charge -3.05% -21.80%
Including Sales Charge -4.89% -24.74%
- ----------------------------------------------------------------
Class C (Est. 6/10/96)
Excluding Sales Charge -3.05% -21.80%
Including Sales Charge -3.05% -22.54%
- ----------------------------------------------------------------
See page 12 for important additional information. Return and share value for
each Fund fluctuate so that shares, when redeemed, may be worth more or less
than their original cost. Past performance is not a guarantee of future
results.
Institutional Class shares are available without sales or asset-based
distribution charges only to certain eligible institutional accounts. Below
are average annual and cumulative six-month returns through May 31, 1998:
Lifetime Five Years One Year Six Months
International Equity Fund* +11.68% +13.12% +7.87% +13.45%
Global Bond Fund** +10.22% +4.08% +0.65%
Global Assets Fund** +17.54% +13.02% +9.31%
Emerging Markets Fund *** -2.06% -21.08% -7.30%
* Initially offered on November 9, 1992. Performance prior to this date is
based on Class A performance, adjusted to eliminate the sale charges,
but not the asset-based distribution charge. **Initially offered on
December 27, 1994. *** Initially offered June 10, 1996.
<PAGE>
14 for international diversification
Financial Statements
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
INTERNATIONAL EQUITY SERIES
STATEMENT OF NET ASSETS
MAY 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES (U.S. $)
------------------------------------
<S> <C> <C>
COMMON STOCK - 94.03%
Australia - 9.26%
Amcor ....................... 980,000 $ 4,517,633
CSR ......................... 1,862,874 5,442,639
+Foster's Brewing Group ...... 3,161,165 6,833,290
+National Austalia Bank ...... 452,518 6,242,307
Orica ....................... 367,400 2,460,372
-----------
25,496,241
-----------
Belgium - 2.98%
+Electrabel .................. 32,890 8,215,691
-----------
8,215,691
-----------
Germany - 10.89%
Bayer ....................... 142,090 6,772,254
Bayerische Vereinsbank ...... 68,800 5,760,627
Continental ................. 119,500 3,620,806
Rheinisch Westfaelisches Elek 137,000 7,281,602
Siemens ..................... 99,900 6,546,234
-----------
29,981,523
-----------
France - 8.91%
+Alcatel Alsthom ............. 35,531 7,589,433
Campagnie de Saint Gobain ... 29,975 5,902,461
Elf Aquitaine ............... 33,865 4,696,173
Societe Generale ............ 32,118 6,351,244
-----------
24,539,311
-----------
Hong Kong - 2.04%
Hong Kong Electric .......... 932,000 2,736,118
Wharf Holdings .............. 2,258,000 2,884,673
-----------
5,620,791
-----------
Japan - 13.76%
Amano ....................... 194,000 1,741,669
Canon Electronics ........... 343,000 8,149,024
+Eisai ....................... 484,000 6,404,546
+Kinki Coca-Cola Bottling .... 183,000 2,081,640
Koito Manufacturing ......... 679,000 3,275,232
Matsushita Electric ......... 484,000 7,561,407
West Japan Railway .......... 2,320 8,685,380
-----------
37,898,898
-----------
Malaysia - 0.48%
Oriental Holdings ........... 320,000 553,410
Sime Darby .................. 966,000 768,730
-----------
1,322,140
-----------
Netherlands - 6.04%
Elsevier .................... 238,000 3,701,657
Koninklijke Van Ommeren ..... 66,000 2,774,529
Royal Dutch Petroleum ....... 75,280 4,286,858
Unilever NV-CVA ............. 74,120 5,885,550
-----------
16,648,594
-----------
New Zealand - 3.12%
+Carter Holt Harvey .......... 1,117,300 1,319,435
</TABLE>
- -----------------
Top 10 stock holdings, representing 30.3% of net assets, are in boldface.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES (U.S. $)
------------------------------
<S> <C> <C>
COMMON STOCK (Continued)
New Zealand (Continued)
+Telecom Corporation of New Zealand .......... 1,579,920 $ 7,260,380
------------
8,579,815
------------
Singapore - 0.50%
Jardine Matheson Holdings Limited ........... 452,287 1,374,952
------------
1,374,952
------------
Spain - 7.61%
+Banco Central Hispanoamer ................... 250,038 8,185,112
Iberdrola ................................... 215,000 3,543,877
+Telefonica de Espana ........................ 206,727 9,227,543
------------
20,956,532
------------
United Kingdom - 28.44%
BG .......................................... 825,000 4,249,956
Bass ........................................ 411,607 7,621,946
Blue Circle Industries ...................... 953,254 6,057,636
Boots ....................................... 507,500 7,758,231
British Airways ............................. 659,570 6,989,200
Cable & Wireless ............................ 670,000 7,591,614
Centrica .................................... 935,000 1,525,453
GKN ......................................... 565,800 8,395,619
Great Universal Stores ...................... 620,200 8,868,921
Rio Tinto ................................... 439,700 5,473,537
Taylor Woodrow .............................. 1,580,825 5,906,176
Unigate ..................................... 726,000 7,876,719
------------
78,315,008
------------
Total Common Stock (cost $210,550,168) ...... 258,949,496
------------
WARRANTS - 0.00%
Indonesia - 0.00%
*PT Bank Dagang Nasional ..................... 568,750 805
------------
Total Warrants (cost $0) .................... 805
------------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENTS - 7.45%
With Chase Manhattan 5.53% 06/01/98
(dated 05/29/98, collateralized by $7,175,000
U.S. Treasury Notes 6.625% due 04/30/02
market value $7,466,852) ................. $ 7,315,000 7,315,000
With J.P. Morgan Securities 5.55% 06/01/98
(dated 05/29/98, collateralized by $6,773,000
U.S. Treasury Notes 6.00% due 06/30/99
market value $6,972,108) ................. 6,831,000 6,831,000
With PaineWebber 5.55% 06/01/98
(dated 05/29/98, collateralized by $3,161,000
U.S. Treasury Notes 5.75% due 11/15/00
market value $3,180,265 and $3,135,000
U.S. Treasury Notes 7.50% due 11/15/01
market value $3,328,793) ................. 6,376,000 6,376,000
------------
Total Repurchase Agreements
(cost $20,522,000) ....................... 20,522,000
------------
</TABLE>
<PAGE>
for international diversification 15
INTERNATIONAL EQUITY SERIES
STATEMENT OF NET ASSETS (CONTINUED)
- -------------------------------------------------------------------------------
MARKET
VALUE
(U.S. $)
--------
TOTAL MARKET VALUE OF SECURITIES - 101.48%
(COST $231,072,168) ....................................... $279,472,301
LIABILITIES NET OF RECEIVABLES AND OTHER
ASSETS - (1.48%) .......................................... (4,074,687)
------------
NET ASSETS APPLICABLE TO 17,202,283 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% .................... $275,397,614
============
NET ASSET VALUE - INTERNATIONAL EQUITY SERIES A CLASS
($127,536,932 / 7,967,944 SHARES) ......................... $16.01
======
NET ASSET VALUE - INTERNATIONAL EQUITY SERIES B CLASS
($40,146,020 / 2,515,426 SHARES) .......................... $15.96
======
NET ASSET VALUE - INTERNATIONAL EQUITY SERIES C CLASS
($14,664,433 / 919,715 SHARES) ............................ $15.94
======
NET ASSET VALUE - INTERNATIONAL EQUITY SERIES INSTITUTIONAL
CLASS ($93,050,229 / 5,799,198 SHARES) .................... $16.05
======
COMPONENTS OF NET ASSETS AT May 31, 1998:
Common stock, $.01 par value, 500,000,000 shares
authorized to the Fund with 50,000,000 shares
allocated to International Equity Series A Class, 25,000,000
shares allocated to International Equity Series B Class,
25,000,000 shares allocated to International Equity
Series C Class, and 50,000,000 shares allocated to
International Equity Series Institutional Class ........... $229,908,692
Undistributed net investment income** ........................ 1,037,134
Accumulated net realized (loss) on investments................ (3,905,760)
Net unrealized appreciation of investments
and foreign currencies .................................... 48,357,548
------------
Total net assets ............................................. $275,397,614
============
- ------------
* Non-income producing security.
** Undistributed net investment income includes net realized gains (losses) on
foreign currencies. Net realized gains on foreign currencies are distributed
as net investment income in accordance with provisions of the Internal
Revenue Code.
+ Security is partially or fully on loan.
NETASSET VALUE AND OFFERING PRICE PER SHARE
INTERNATIONAL EQUITY SERIES A CLASS:
Net asset value A Class (A) .................................. $16.01
Sales charge (4.75% of offering price or 5.00% of the amount
invested per share)(B) .................................... 0.80
------
Offering price ............................................... $16.81
======
- -------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases of $100,000
or more.
See accompanying notes
<PAGE>
DELAWARE GROUP
GLOBAL & INTERNATIONAL FUNDS, INC. -
GLOBAL BOND SERIES
STATEMENT OF NET ASSETS
MAY 31, 1998 (UNAUDITED)
- -------------------------------------------------------------------------------
MARKET
PRINCIPAL VALUE
AMOUNT* (U.S.$)
--------------------------------
BONDS - 96.82%
AUSTRALIA - 7.67%
Federal National Mortgage Association
5.75% 09/05/00 ......................... A$ 600,000 $ 378,676
New South Wales Treasury
7.00% 02/01/00 ......................... 800,000 515,220
Queensland Treasury
8.00% 08/14/01 ......................... 750,000 508,070
---------
1,401,966
---------
CANADA - 9.06%
Abbey National Treasury Service
7.00% 12/31/99 ......................... C$ 550,000 385,785
KFW International Finance
6.50% 12/28/01 ......................... 120,000 85,149
Kingdom of Norway 8.375% 01/27/03 ......... 120,000 91,688
Ontario Hydro 10.00% 03/19/01 ............. 470,000 361,731
Ontario Hydro 10.875% 03/29/99............. 500,000 358,651
Japan Highway 7.875% 09/27/02 ............. 500,000 372,379
---------
1,655,383
---------
DENMARK - 1.83%
Kingdom of Denmark
7.00% 11/15/07 ......................... Dk 2,000,000 335,294
---------
335,294
---------
GERMANY - 15.29%
Abbey National Treasury
5.625% 09/30/02 ........................ Dem 500,000 291,060
Baden Wurt L-Finance NV
5.25% 09/26/01 ......................... 600,000 344,021
Baden Wurt L-Finance NV
6.625% 08/20/03 ........................ 75,000 45,602
Bundesrepublik Deutschuland
8.375% 05/21/01 ........................ 1,090,000 679,335
Deutsche Pfandbriefe Hypotheken
5.625% 02/07/03 ........................ 400,000 233,503
International Bank Reconstruction
& Development 6.125% 09/27/02........... 600,000 356,413
Republic of Austria 7.25% 05/03/07 ........ 500,000 324,664
Republic of Finland 5.50% 02/09/01 ........ 900,000 519,812
---------
2,794,410
---------
JAPAN - 4.56%
Federal National Mortgage Association
2.00% 12/20/99 .........................Jpy 60,000,000 442,494
International Bank Reconstruction
& Development 4.50% 06/20/00 ........... 25,000,000 194,947
Republic of Italy 3.50% 06/20/01 .......... 25,000,000 195,622
---------
833,063
---------
<PAGE>
16 for international diversification
GLOBAL BOND SERIES
STATEMENT OF NET ASSETS (CONTINUED)
- -------------------------------------------------------------------------------
MARKET
PRINCIPAL VALUE
AMOUNT* (U.S.$)
--------------------------------
BONDS (CONTINUED)
NETHERLANDS -9.93%
Netherland Government 7.50%
01/15/23 ............................... Nlg 1,400,000 $ 894,631
Netherlands Government 9.00%
05/15/00 .............................. 1,700,000 920,346
---------
1,814,977
---------
NEW ZEALAND - 8.31%
Government of New Zealand 6.50%
02/15/00................................ NZ$ 200,000 105,716
Government of New Zealand 8.00%
04/15/04 ............................... 1,500,000 854,586
Government of New Zealand 8.00%
11/15/06 ............................... 600,000 352,831
Government of New Zealand 10.00%
03/15/02 ............................... 350,000 206,248
---------
1,519,381
---------
SOUTH AFRICA - 3.76%
Republic of South Africa 12.50%
01/15/02 ............................... Sa 3,700,000 688,042
---------
688,042
---------
SPAIN - 2.85%
Spanish Government 0.00%
01/31/08 ............................... Sp 50,000,000 353,102
Spanish Government 0.00%
01/31/01 ............................... 25,000,000 167,634
---------
520,736
---------
SWEDEN - 2.82%
Swedish Government 8.00%
08/15/07 ............................... Sk 1,000,000 154,638
Swedish Government 10.25%
05/05/03 ............................... 1,000,000 157,498
Swedish Government 13.00%
06/15/01 ............................... 1,300,000 204,121
---------
516,257
---------
UNITED KINGDOM - 6.87%
Abbey National Treasury 8.00%
04/02/03 ............................... Gbp 40,000 69,176
Depfa Finance 7.125% 11/11/03 ............. 220,000 368,801
Glaxo Wellcome 8.75% 12/01/05 ............. 230,000 426,607
Ontario Province 6.875% 09/15/00 ......... 85,000 138,851
SmithKline Beecham Notes 8.375%
12/29/00 ............................... 150,000 252,984
---------
1,256,419
---------
<PAGE>
- -------------------------------------------------------------------------------
MARKET
PRINCIPAL VALUE
AMOUNT* (U.S.$)
--------------------------------
BONDS (CONTINUED)
UNITED STATES - 23.87%
J. Sainsbury plc 6.25% 03/27/02 ........... $ 100,000 $100,375
Korea Electric Power 6.375% 12/01/03 ...... 200,000 168,875
Matsushita Electric 7.25% 08/01/02 ........ 200,000 208,125
Republic of Finland 7.875% 07/28/04 ....... 200,000 220,625
U.S. Treasury Inflation Index Note
3.625% 07/15/02 ........................ 353,815 349,612
U.S.Treasury Inflation Index Note
3.375% 01/15/07 ........................ 408,748 396,739
U.S. Treasury Inflation Index Note
3.625% 01/15/08 ........................ 300,684 297,770
U.S. Treasury Note 6.25% 02/15/03 ......... 500,000 513,645
U.S. Treasury Note 6.25% 02/15/07.......... 1,000,000 1,040,700
U.S. Treasury Note 6.375% 08/15/27 ........ 500,000 537,220
U.S. Treasury Note 7.50% 11/15/01 ......... 500,000 529,610
----------
4,363,296
----------
TOTAL BONDS (COST OF $18,207,166) ......... 17,699,224
----------
REPURCHASE AGREEMENTS - 0.75%
With Chase Manhattan 5.53% 06/01/98
(dated 05/29/98, collateralized by
$48,000 U.S. Treasury Notes 6.625%
due 04/30/02 market value $49,847) ..... 49,000 49,000
With JP Morgan Securities 5.55% 06/01/98
(dated 05/29/98, collateralized by
$45,000 U.S. Treasury Notes 6.00%
due 06/30/99 market value $46,544)...... 46,000 46,000
With PaineWebber 5.55% 06/01/98
(dated 05/29/98, collateralized by
$21,000 U.S. Treasury Notes 5.75%
due 11/15/00 market value $21,231
and $21,000 U.S. Treasury Notes 7.50%
due 11/15/01 market value $22,222)...... 42,000 42,000
----------
TOTAL REPURCHASE AGREEMENTS (COST $137,000) 137,000
----------
<PAGE>
GLOBAL BOND SERIES
STATEMENT OF NET ASSETS (CONTINUED)
- -------------------------------------------------------------------------------
MARKET
VALUE
(U.S.$)
-------
TOTAL MARKET VALUE OF SECURITIES - 97.57%
(COST $18,344,166) ..................................... $17,836,224
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 2.43% ... 444,489
-----------
NET ASSETS APPLICABLE TO 1,716,290 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% ................. $18,280,713
===========
NET ASSET VALUE - GLOBAL BOND SERIES A CLASS
($4,364,522 / 409,596 SHARES) .......................... $10.66
======
NET ASSET VALUE - GLOBAL BOND SERIES B CLASS
($1,127,027 / 105,827 SHARES)........................... $10.65
======
NET ASSET VALUE - GLOBAL BOND SERIES C CLASS
($654,716 / 61,799 SHARES) ............................. $10.59
======
NET ASSET VALUE - GLOBAL BOND SERIES INSTITUTIONAL CLASS
($12,134,448 / 1,139,068 SHARES) ....................... $10.65
======
COMPONENTS OF NET ASSETS AT MAY 31, 1998:
Common stock, $.01 par value, 500,000,000 shares
authorized to the Fund with 50,000,000 shares
allocated to Global Bond Series A Class,
25,000,000 shares allocated to Global Bond
Series B Class, 25,000,000 shares allocated to
Global Bond Series C Class, and 50,000,000
shares allocated to Global Bond Series
Institutional Class .................................... $18,778,833
Undistributed net investment income** ..................... 121,543
Accumulated net realized loss on investments .............. (106,939)
Net unrealized depreciation of investments and
foreign currencies ...................................... (512,724)
-----------
Total net assets .......................................... $18,280,713
===========
- --------
*Principal amount is stated in the currency in which each bond is denominated.
A$ - Australian Dollars Jpy - Japanese Yen
Gbp - British Pounds NZ$ - New Zealand Dollars
C$ - Canadian Dollars Sa - South African Rand
Dk - Danish Krona Sk - Swedish Kroner
Nlg - Dutch Guilders Sp - Spanish Pesetas
Dem - German Deutsche Marks $ - U. S. Dollars
**Undistributed net investment income includes net realized gains (losses) on
foreign currencies. Net realized gains on foreign currencies are distributed
as net investment income in accordance with provisions of the Internal Revenue
Code.
NET ASSET VALUE AND OFFERING PRICE
PER SHARE - GLOBAL BOND SERIES A CLASS:
Net asset value A Class (A) ............................... $10.66
Sales charge (4.75% of offering price or 4.97%
of the amount invested per share)(B) .................... 0.53
------
Offering price ............................................ $11.19
======
- --------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases of $100,000
or more.
See accompanying notes
<PAGE>
for international diversification 17
DELAWARE GROUP
GLOBAL & INTERNATIONAL FUNDS, INC. -
GLOBAL ASSETS SERIES
STATEMENT OF NET ASSETS
MAY 31, 1998 (UNAUDITED)
- -------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES (U.S.$)
--------------------------------
COMMON STOCK - 64.51%
AUSTRALIA - 3.03%
Amcor Limited ............................. 13,900 $ 64,077
CSR Limited ................................ 28,650 83,705
Foster's Brewing Group .................... 52,239 112,922
National Australia Bank .................... 10,588 146,057
Southcorp Holdings ......................... 32,472 116,173
Orica ...................................... 7,043 47,165
--------
570,099
--------
BELGIUM - 0.76%
Electrabel ................................ 570 142,382
--------
142,382
--------
FRANCE - 2.90%
Compagnie de Saint Gobain .................. 1,120 220,542
Elf Aquitaine .............................. 1,232 170,846
Societe Generale ........................... 779 154,045
--------
545,433
--------
GERMANY - 2.85%
Bayer ...................................... 2,100 100,090
Bayerische Vereinsbank .................... 1,600 133,968
Continental ................................ 3,800 115,139
Rheinisch Westfaelisches Elektric ......... 1,850 98,328
Siemens .................................... 1,350 88,463
--------
535,988
--------
HONG KONG - 0.53%
Hong Kong Electric ......................... 11,000 32,293
Wharf Holdings ............................. 52,000 66,432
--------
98,725
--------
JAPAN - 3.00%
Canon Electronics ......................... 5,000 118,790
Chiyoda Fire and Marine .................... 12,000 43,801
Eisai....................................... 5,000 66,163
Hitachi .................................... 10,000 65,731
Koito Manufacturing ........................ 10,000 48,236
Matsushita Electric ........................ 7,000 109,359
West Japan Railway ........................ 20 74,874
Yokohama Reito ............................. 5,000 35,997
--------
562,951
--------
MALAYSIA - 0.04%
Sime Darby ................................ 8,300 6,605
--------
6,605
--------
NETHERLANDS - 1.73%
Elsevier ................................... 5,150 80,099
Koninklijke Van Ommeren .................... 2,515 105,726
Royal Dutch Petroleum ..................... 2,440 138,947
--------
324,772
--------
New Zealand - 0.83%
Carter Holt Harvey Limited ................. 32,800 38,734
Telecom Corporation of New Zealand.......... 21,600 99,261
Telecom Corporation of New Zealand IR ...... 7,126 18,696
--------
156,691
--------
<PAGE>
18 for international diversification
GLOBAL ASSETS FUND
STATEMENT OF NET ASSETS (CONTINUED)
- -------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES (U.S.$)
--------------------------------
COMMON STOCK (CONTINUED)
SPAIN - 1.87%
Banco Central Hispanoamericano ............. 3,604 $117,963
Iberdrola .................................. 6,000 98,899
Telefonica de Espana ....................... 3,027 135,114
---------
351,976
---------
UNITED KINGDOM - 8.26%
BG ......................................... 7,059 36,363
Bass ....................................... 5,893 109,121
Blue Circle Industries ..................... 13,256 84,238
Boots ...................................... 11,200 171,216
British Airways ............................ 6,253 66,258
Cable & Wireless ........................... 16,400 185,825
*Centrica ................................... 8,000 13,052
GKN ........................................ 17,600 261,157
Glaxo Wellcome ............................. 7,320 199,441
PowerGen ................................... 13,700 172,666
Rio Tinto .................................. 8,650 107,678
Taylor Woodrow ............................. 38,600 144,215
---------
1,551,230
---------
UNITED STATES - 38.71%
Aflac ...................................... 3,200 204,600
Alltel ..................................... 2,200 86,763
American Home Products ..................... 6,400 309,200
American International Group ............... 950 117,622
Chubb ...................................... 1,100 87,519
CIA Telecom Chile .......................... 2,100 46,594
CMS Energy ................................. 1,800 78,413
ConAgra .................................... 5,400 157,950
Danaher .................................... 2,200 159,088
Developers Diversified Realty .............. 700 27,431
Ecolab ..................................... 8,900 274,788
Equifax .................................... 5,500 200,063
Ericsson (LM) Tel `B' ADS .................. 2,600 72,556
Exxon ...................................... 1,200 84,600
Federal Home Loan .......................... 3,400 154,700
Federal National Mortgage .................. 1,200 71,850
Federal Signal ............................. 2,900 64,888
Foster Wheeler ............................. 1,900 48,213
Freeport Mc Copp ........................... 360 76,950
Fuller (HB) ................................ 1,700 106,675
GenCorp .................................... 2,300 68,569
General Electric ........................... 500 41,688
Grace (W.R.) ............................... 1,000 18,563
Hannaford Brothers ......................... 1,500 66,281
Hershey Foods .............................. 1,000 69,250
Hewlett-Packard ............................ 2,600 161,525
Hillenbrand Industries ..................... 2,600 160,550
HON Industries ............................. 5,400 172,969
Intel ...................................... 1,900 135,672
Intimate Brands ............................ 8,500 243,844
Jardine Matheson Holdings Limited .......... 13,027 39,602
Johnson & Johnson .......................... 3,300 227,906
Kerr-McGee ................................. 900 56,925
<PAGE>
- -------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES (U.S.$)
--------------------------------
COMMON STOCK (CONTINUED)
UNITED STATES (CONTINUED)
Lowe's Companies ............................ 1,300 $102,944
Masco ....................................... 4,900 275,625
May Department Stores ....................... 1,300 83,606
Miller ...................................... 2,200 60,913
Nationwide Financial Services-A ............. 2,900 125,969
Nationwide Health Properties ................ 2,300 55,200
Pentair ..................................... 2,300 100,913
Philip Morris ............................... 5,000 186,875
PMI Group ................................... 2,500 187,969
Provident ................................... 2,600 95,875
Ralston-Purina Group ........................ 900 100,181
Rite Aid .................................... 9,500 340,214
SAFECO ...................................... 2,000 93,375
SBC Communications .......................... 2,400 93,300
Sealed Air .................................. 536 28,676
Sealed Air - A .............................. 475 26,452
ServiceMaster ............................... 2,000 66,125
Service International ....................... 2,800 114,450
Sherwin-Williams ............................ 4,600 152,950
Stewart Enterprises ......................... 3,000 81,094
Sun Communities ............................. 1,500 50,906
Symbol Technologies ......................... 5,450 191,772
Teleflex .................................... 1,800 72,788
Total S A - ADR ............................. 2,500 155,781
Tyco International .......................... 1,400 77,525
Universal Foods ............................. 4,600 109,538
Unum ........................................ 1,800 100,013
Valspar ..................................... 3,600 145,350
Wallace Computer Services ................... 3,900 104,325
-----------
7,274,511
-----------
TOTAL COMMON STOCK (COST $9,638,964) 12,121,363
-----------
WARRANTS - 0.01%
INDONESIA - 0.01%
* PT Bank Dagang Nasional Warrants
02/14/00 ................................. 75,000 106
-----------
TOTAL WARRANTS (COST $0) 106
-----------
PRINCIPAL
AMOUNT**
BONDS - 26.91%
AUSTRALIA - 1.41%
Queensland Treasury Global 8.00% 08/14/01 ... A$ 200,000 135,485
NSWTC Regd - Government Agency
7.00% 2/1/00 ............................. 200,000 128,805
-----------
264,290
-----------
CANADA - 1.82%
Canada Government 4.25% 12/01/21 ............ C$ 90,000 65,175
Canada Government Series
VSO5 4.25% 12/1/26 ....................... 60,000 43,730
GMAC Canada 6.75% 12/14/01 .................. 100,000 70,743
Government of Canada 9.00% 12/01/04.......... 150,000 124,039
Kingdom of Norway 8.38% 01/27/03 ............ 50,000 38,203
-----------
341,890
-----------
<PAGE>
for international diversification 19
GLOBAL ASSETS FUND
STATEMENT OF NET ASSETS (CONTINUED)
- -------------------------------------------------------------------------------
MARKET
PRINCIPAL VALUE
AMOUNT** (U.S.$)
--------------------------------
BONDS (CONTINUED)
GERMANY - 4.6%
Baden Wurt L-Finance NV 6.63% 08/20/03 .........Dem 150,000 $91,203
Bayerische Vereinsbank 6.50% 06/06/05 .......... 200,000 122,632
Bundesrepblik Deutscheland 5.75% 08/22/00 ...... 350,000 202,747
Bundesrepblik Deutschland 6.50% 07/15/03 ....... 150,000 91,395
Bundesrepblik Deutscheland 8.38% 05/21/01 ...... 240,000 149,578
DSL Finance NV 6.00% 02/21/06 .................. 350,000 208,643
---------
866,198
---------
JAPAN - 2.40%
Federal National Mortgage Association
2.00% 12/20/99 ..............................Jpy40,000,000 294,996
International Bank Reconstruction & Development
4.50% 06/20/00 ............................... 10,000,000 77,979
Republic of Italy 3.50% 06/20/01 ............... 10,000,000 78,249
---------
451,224
---------
NETHERLANDS - 2.17%
Netherlands Government 7.50% 01/15/23 ..........Nlg 300,000 191,707
Netherlands Government 9.00% 05/15/00 .......... 400,000 216,552
---------
408,259
---------
NEW ZEALAND - 1.74%
Government of New Zealand
6.50% 02/15/00 ...............................NZ 100,000 52,858
Government of New Zealand
8.00% 04/15/04 ............................... 190,000 108,248
Government of New Zealand 8.00% 11/15/06 ....... 280,000 164,655
---------
325,760
---------
SOUTH AFRICA - 0.69%
Republic of South Africa 12.5% 1/15/02 .........Sa 700,000 130,170
---------
130,170
---------
SWEDEN - 2.03%
Sweden (Kingdom of) 5.50% 04/12/02 .............Sk 1,000,000 131,087
Swedish Government 8.00% 08/15/07 .............. 1,000,000 154,638
Swedish Government 9.00% 04/20/09 .............. 200,000 33,605
Swedish Government 13.00% 06/15/01 ............. 400,000 62,806
---------
382,136
---------
UNITED KINGDOM - 1.49%
Abbey Nat'l Treasury 8.00% 04/02/03 ............Gbp 50,000 86,470
Depfa Finance 7.13% 11/11/03 ................... 60,000 100,582
Glaxo Wellcome 8.75% 12/01/05 .................. 50,000 92,741
---------
279,793
---------
UNITED STATES - 8.55%
AFC Enterprises 10.25% 05/15/07 ................$ 25,000 26,562
Albritton Communications 9.75% 11/30/07 ........ 25,000 26,187
American Builders and Contractors
10.63% 05/15/07 .............................. 25,000 25,937
American Safety Razor 9.88% 08/01/05 ........... 25,000 27,250
American Standard 10.88% 05/15/99 .............. 25,000 26,187
American Standard sr nts 7.375% 2/1/08 ......... 50,000 49,375
Atrium 10.50% 11/15/06 ......................... 25,000 26,625
Calpine 10.50% 05/15/06 ........................ 25,000 27,437
Cinemark 9.63% 08/01/08 ........................ 25,000 25,875
Clark Materials Handling 10.75% 11/15/06 ....... 25,000 27,000
Cole National Group 9.88% 12/31/06 ............. 25,000 26,937
Commonwealth Aluminum 10.75% 10/01/06 .......... 25,000 26,937
Consumers International 10.25% 04/01/05 ........ 50,000 54,875
<PAGE>
- -------------------------------------------------------------------------------
MARKET
PRINCIPAL VALUE
AMOUNT** (U.S.$)
--------------------------------
BONDS (CONTINUED)
UNITED STATES (CONTINUED)
Costilla Energy Notes 10.25% 10/01/06 .......... $25,000 $25,250
Decisionone Holdings 11.50% 08/01/08 ........... 25,000 14,875
Delta Beverage Group 9.75% 12/15/03 ............ 25,000 26,125
DiGiorgio 10.00% 06/15/07 ...................... 100,000 101,000
Dyncorp 9.50% 03/01/07 ......................... 25,000 25,780
First Nationwide Holdings 9.13% 01/15/03 ....... 25,000 26,437
Fleming 10.63% 12/15/01 ........................ 50,000 53,500
Four M 12.00% 06/01/06 ......................... 25,000 26,750
Graphic Controls 12.00% 09/15/05 ............... 25,000 28,063
HCC Industries 10.75% 05/15/07 ................. 25,000 26,500
Healthsouth Rehabilitation 9.50% 04/01/01 ...... 25,000 26,375
Hollinger International Publishing
9.25% 03/15/07 ............................... 25,000 26,250
Hollywood Theaters 10.63% 08/01/07 ............. 25,000 27,031
Huntsman 9.50% 07/01/07 ........................ 25,000 25,688
Hydrochem Industrial Services
10.38% 08/01/07 .............................. 25,000 26,250
Insilco 10.25% 08/15/07 ........................ 50,000 52,563
Loomis Fargo 10.00% 01/15/04 ................... 50,000 50,500
Motors and Gears 10.75% 11/15/06 ............... 50,000 54,000
Muzak LP/Muzak Capital 10.00% 10/01/03 ......... 25,000 26,063
Nortek 9.25% 03/15/07 .......................... 25,000 25,875
Petro Stopping Centers 10.50% 02/01/07 ......... 25,000 27,000
Portola Packaging 10.75% 10/01/05 .............. 25,000 26,250
Precise Technology 11.13% 06/15/07 ............. 50,000 52,000
Prestolite Electric 144A 9.625% 2/1/8 .......... 75,000 76,688
Pride Petroleum Services 9.38% 05/01/07 ........ 25,000 26,750
Reliant Building 10.88% 05/01/04 ............... 50,000 51,500
Rogers Cable Systems 9.63% 08/01/02 ............ 25,000 26,750
Rogers Communications 8.88% 07/15/07 ........... 25,000 25,250
Trump-Atlantic City 11.25% 05/01/06 ............ 50,000 49,125
United Refining 10.75% 06/15/07 ................ 100,000 99,500
Westinghouse Air Brakes 9.38% 06/15/05 ......... 25,000 26,375
William Carter 10.38% 12/01/06 ................. 25,000 26,844
----------
1,606,091
----------
TOTAL BONDS (COST $5,123,045) .................. 5,055,811
----------
REPURCHASE AGREEMENTS - 8.93%
With Chase Manhattan Bank 5.625% 06/01/98
(dated 05/29/98, collateralized by $587,000
U.S. Treasury Notes 6.625% due 04/30/02,
market value $610,898) ....................... 598,000 598,000
With J.P. Morgan Securities 5.55% 06/01/98
(dated 05/29/98, collateralized by $554,000
U.S. Treasury Notes 6.00% due 06/30/99,
market value $570,420) ....................... 559,000 559,000
With PaineWebber 5.50% due 06/01/98
(dated 05/29/98, collateralized by $259,000
U.S. Treasury Notes 5.75% due 11/15/00,
market value $260,192 and $256,000
U.S. Treasury Notes 7.50% due 11/15/01,
market value $272,344) ....................... 522,000 522,000
----------
TOTAL REPURCHASE AGREEMENTS
(COST $1,679,000) .............................. 1,679,000
----------
<PAGE>
20 for international diversification
GLOBAL ASSETS FUND
STATEMENT OF NET ASSETS (CONTINUED)
- -------------------------------------------------------------------------------
MARKET
VALUE
(U.S.$)
-----------
TOTAL MARKET VALUE OF SECURITIES - 100.35%
(COST $16,441,009) .......................................... $18,856,280
LIABILITIES NET OF RECEIVABLES
AND OTHER ASSETS - (0.35)% .................................. (66,353)
-----------
NET ASSETS APPLICABLE TO 1,363,245 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% ...................... $18,789,927
===========
NET ASSET VALUE - GLOBAL ASSETS SERIES
A CLASS ($7,285,026 / 528,281 SHARES) ....................... $13.79
======
NET ASSET VALUE - GLOBAL ASSETS SERIES
B CLASS ($5,284,491 / 383,186 SHARES) ....................... $13.79
======
NET ASSET VALUE - GLOBAL ASSETS SERIES
C CLASS ($3,566,448 / 259,571 SHARES) ....................... $13.74
======
NET ASSET VALUE - GLOBAL ASSETS SERIES
INSTITUTIONAL CLASS ($2,653,962 / 192,207 SHARES) ........... $13.81
======
COMPONENTS OF NET ASSETS AT MAY 31, 1998:
Common stock $.01 par value 500,000,000 shares authorized
to the Fund with 50,000,000 shares allocated to
the Global Assets Series A Class, 25,000,000
shares allocated to the Global Assets Series B
Class, 25,000,000 shares allocated to the
Global Assets Series C Class, and 50,000,000
allocated to the Global Assets Series
Institutional Class ........................................ $16,236,472
Undistributed net investment income***......................... 26,543
Accumulated net realized gain on investments .................. 113,519
Net unrealized appreciation of investments and
foreign currencies.......................................... 2,413,396
-----------
Total net assets............................................... $18,789,927
===========
- ------------
*Non-Income producing security.
**Principal amount is stated in the currency in which each bond is denominated.
A$ - Australian Dollars Jpy - Japanese Yen
Gbp - British Pounds NZ$ - New Zealand Dollar
C$ - Canadian Dollars Sk - Swedish Kroner
Nlg - Dutch Gilders Sa - South African Rand
Dem - German Deutsche Mark $ - U.S. Dollars
***Undistributed net investment income includes net realized gains (losses) on
foreign currencies. Net realized gains on foreign currencies are distributed
as net investment income in accordance with provisions of the Internal
Revenue Code.
ADR - American Depository Receipt
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
GLOBAL ASSETS SERIES A CLASS:
Net asset value A Class (A) ................................ $13.79
Sales charge (4.75% of offering price or 5.00%
of the amount invested per share)(B) ..................... 0.69
------
Offering price ............................................. $14.48
======
(A) Net asset value per share, as illustrated, is the estimated amount
which would be paid upon redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases of
$100,000 or more.
See accompanying notes
<PAGE>
DELAWARE GROUP
GLOBAL & INTERNATIONAL FUNDS, INC. -
EMERGING MARKETS SERIES
STATEMENT OF NET ASSETS
MAY 31, 1998 (UNAUDITED)
- -------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES (U.S.$)
--------------------------------
COMMON STOCK - 98.19%
ARGENTINA - 4.31%
Central Puerto-Class B ...................... 80,000 $ 220,096
Transportadora de Gas del sur,-Class B ...... 70,600 149,737
YPF Sociedad Anonima-ADR .................... 9,800 304,413
----------
674,246
----------
BRAZIL - 14.77%
Aracruz Celulose-ADR ........................ 11,250 151,875
Brasmotor ................................... 1,606,000 164,747
Centrais Electricas de Santa Catarina-GDR ... 1,000 89,551
Companhia Energetica de Minas Gerais-ADR .... 9,240 306,296
Companhia Paranaense de Energia-Copel ADR ... 7,878 78,288
Elevadores Atlas ............................ 18,000 258,194
Gerdau Metalurgica .......................... 10,110,000 404,295
Gerdau Metalurgica .......................... 277,018 7,824
Lojas Renner ................................ 4,100,000 140,789
Rossi Residential ........................... 24,800 171,415
Telecommunicacoes Brasileiras-ADR ........... 4,350 463,819
Usinas Siderurgicas de Minas Gerais-ADR ..... 13,370 73,580
----------
2,310,673
----------
CHILE - 4.28%
Administradora de Fondos
de Pensiones Provida ADR .................. 15,100 253,869
Banco BHIF-ADR .............................. 13,000 196,625
Empresa Nacional Electricidad-ADR ........... 14,050 218,653
----------
669,147
----------
CZECHOSLOVAKIA - 1.69%
Komercni Banka I.F .......................... 5,300 91,390
Restitucni Investment Fund .................. 6,400 172,507
----------
263,897
----------
EGYPT - 1.89%
Paints and Chemicals GDR .................... 32,000 296,000
----------
296,000
----------
ESTONIA - 0.70%
Eesti Uhispank-GDR .......................... 11,344 109,186
----------
109,186
----------
GERMANY - 0.27%
*EGIS Rt ..................................... 1,150 42,187
----------
42,187
----------
GREECE - 2.96%
Attica Enterprises .......................... 15,090 249,834
Helenic Bottling Company .................... 6,380 213,350
----------
463,184
----------
HONG KONG - 6.21%
First Tractor ............................... 610,000 245,990
Guangdong Kelon Electric Holding ............ 229,000 218,678
Guangshen Railway ........................... 1,150,000 158,789
Shenzhen Expressway ......................... 1,674,000 347,791
----------
971,248
==========
- --------------
Top 10 stock holdings, representing 20.0% of net assets, are in boldface.
<PAGE>
for international diversification 21
EMERGING MARKETS FUND
STATEMENT OF NET ASSETS (CONTINUED)
- -------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES (U.S.$)
--------------------------------
COMMON STOCK (CONTINUED)
INDIA - 10.36%
Gujarat Ambuja Cement-GDR ...................... 14,600 $96,725
India Fund, (The) .............................. 50,560 385,520
Larsen & Toubro-GDR ............................ 16,200 206,145
Mahanagar Telephone Nigam limited-GDR .......... 27,000 354,376
Tata Engineering & Locomotive Limited GDR ...... 48,300 252,368
*Videsh Sanchar Nigam Limited ................... 27,500 326,563
---------
1,621,697
---------
INDONESIA - 0.24%
PT Bank Dagang Nasional ........................ 716,750 6,343
PT Semen Gresik ................................ 52,000 27,842
PT United Tractors ............................. 77,000 4,089
---------
38,274
---------
ISRAEL - 4.77%
Bank Hapoalim .................................. 120,000 368,569
Israel Chemicals Limited ....................... 298,581 378,095
---------
746,664
---------
MALAYSIA - 8.87%
Leader Universal Holdings ...................... 615,000 124,751
Petronas Dagangan .............................. 337,000 350,562
Public Finance ................................. 105,000 31,675
Resorts World .................................. 224,000 346,609
Rothmans of Pall Mall .......................... 41,300 311,475
Sime Darby ..................................... 280,000 222,820
---------
1,387,892
---------
MEXICO - 5.40%
ALFA, de C.V.-Class A .......................... 55,015 255,594
Cemex, de C.V.-Class B ......................... 36,000 175,003
*Grupo Minsa-Class C ............................ 117,000 66,289
*Grupo Minsa-ADR ................................ 13,000 74,750
Vitro-ADR ...................................... 31,900 273,144
---------
844,780
---------
PERU - 1.88%
Banco de Credito del Peru ...................... 113,380 106,832
Creditcorp Limited ............................. 11,825 187,722
---------
294,554
---------
POLAND - 2.27%
Elektrim Spolka Akcyjna ........................ 27,000 354,999
---------
354,999
---------
ROMANIA - 1.95%
Banco Turco Romana-GDR ......................... 16,500 305,250
---------
305,250
---------
RUSSIA - 2.49%
Gazprom ADR .................................... 4,200 58,380
*Gazprom-ADR Reg.s .............................. 5,000 69,687
Lukoil Holding-ADR ............................. 3,100 127,627
Mosenergo-ADR .................................. 19,800 133,508
---------
389,202
---------
<PAGE>
- -------------------------------------------------------------------------------
MARKET
NUMBER VALUE
OF SHARES (U.S.$)
--------------------------------
COMMON STOCK (CONTINUED)
SLOVENIA - 0.77%
Blagovno Trgovinski Center GDR ................. 9,615 $ 64,901
SKB Banka-GDR .................................. 4,000 55,000
----------
119,901
----------
SOUTH AFRICA - 9.79%
Amalgamated Banks of South Africa .............. 22,800 179,023
AngloAmerican Corporation of
South Africa Limited ........................... 7,500 359,151
Edgars Stores .................................. 6,504 102,137
Ingwe Coal ..................................... 46,400 163,722
Iscor .......................................... 1,059,300 308,055
Sappi Limited .................................. 39,600 213,432
Sasol Limited .................................. 25,800 205,079
----------
1,530,599
----------
SOUTH KOREA - 1.46%
Pohang Iron & Steel Limited .................... 5,660 227,639
----------
227,639
----------
TAIWAN - 2.90%
Asia Cement-GDR ................................ 24,000 233,400
*Yageo-GDR ...................................... 21,000 220,500
----------
453,900
----------
THAILAND - 4.94%
Hana Microelectronics Public Co. Limited ....... 94,200 326,516
K.R. Precision ................................. 71,700 140,240
*Ruang Khao 2 Fund .............................. 1,003,100 126,660
Thai Reinsurance Public Co. Limited ............ 86,000 178,856
----------
772,272
----------
TURKEY - 3.00%
*Efes Sinai Yatirim Holdings-ADR ................ 9,869 213,417
*Netas-Northern Eleckrik Telekomunikayson. ...... 870,000 255,884
----------
469,301
----------
TOTAL COMMON STOCK (COST $19,647,106) .......... 15,356,692
----------
WARRANTS - 0.00%
HONG KONG - 0.00%
*Guangdong Investment 7/99 ...................... 14,800 241
----------
241
----------
INDONESIA - 0.00%
*PT Bank Dagang Nasional 2/14/00 ................ 68,250 97
----------
97
----------
TOTAL WARRANTS (COST $0) ...................... 338
----------
<PAGE>
22 for international diversification
EMERGING MARKETS FUND
STATEMENT OF NET ASSETS (CONTINUED)
- -------------------------------------------------------------------------------
MARKET
PRINCIPAL VALUE
AMOUNT (U.S.$)
--------------------------------
REPURCHASE AGREEMENTS - 3.97%
With Chase Manhattan 5.53% 06/01/98 (dated
05/29/98, collateralized by $217,000 U.S.
Treasury Notes 6.625% due 04/30/02
market value $225,949)....................... $221,000 $ 221,000
With J.P. Morgan Securities 5.55% 06/01/98 (dated
05/29/98, collateralized by $205,000 U.S.
Treasury Notes 6.00% due 06/30/99 market value
$210,977).................................... 207,000 207,000
With PaineWebber 5.55% 06/01/98 (dated 05/29/98,
collateralized by $96,000 U.S. Treasury Notes
5.75% due 11/15/00 market value $96,235 and
$95,000 U.S. Treasury Notes 7.50% due 11/15/01
market value $100,730)....................... 193,000 193,000
----------
TOTAL REPURCHASE AGREEMENTS (COST $621,000)..... 621,000
----------
TOTAL MARKET VALUE OF SECURITIES - 102.16%
(COST $20,268,106) .......................................... $15,978,030
LIABILITIES NET OF RECEIVABLES
AND OTHER ASSETS - (2.16%) .................................. (337,416)
-----------
NET ASSETS APPLICABLE TO 1,772,170 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% ...................... $15,640,614
===========
NET ASSET VALUE - EMERGING MARKETS SERIES A CLASS
($8,783,100 / 992,163 SHARES) ............................... $8.85
=====
NET ASSET VALUE - EMERGING MARKETS SERIES B CLASS
($3,461,050 / 395,236 SHARES) ............................... $8.76
=====
NET ASSET VALUE - EMERGING MARKETS SERIES C CLASS
($1,233,241 / 140,833 SHARES) ............................... $8.76
=====
NET ASSET VALUE - EMERGING MARKETS SERIES
INSTITUTIONAL CLASS ($2,163,223 / 243,938 SHARES) ........... $8.87
=====
<PAGE>
- -------------------------------------------------------------------------------
MARKET
VALUE
(U.S.$)
----------
COMPONENTS OF NET ASSETS AT MAY 31, 1998:
Common stock, $.01 par value, 500,000,000 shares
authorized to the Fund with 50,000,000 shares
allocated to Emerging Markets Series A Class,
25,000,000 shares allocated to Emerging Markets
Series B Class, 25,000,000 shares allocated to
Emerging Markets Series C Class, and 50,000,000
shares allocated to Emerging Markets Series
Institutional Class.................................... $19,907,650
Undistributed net investment income**..................... 36,983
Accumulated net realized gain on investments ............. 20,335
Net unrealized depreciation of investments and
foreign currencies..................................... (4,324,354)
-----------
Total net assets ......................................... $15,640,614
===========
- -------------
*Non-income producing security.
**Undistributed net investment income includes net realized gains (losses) on
foreign currencies. Net realized gains on foreign currencies are distributed
as net investment income in accordance with provisions of the Internal
Revenue Code.
ADR - American Depository Receipt
GDR - Global Depository Receipt
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
EMERGING MARKETS SERIES A CLASS:
Net asset value A Class (A)............................... $8.85
Sales charge (4.75% of offering price or 4.97% of
the amount invested per share)(B) ...................... 0.44
-----
Offering price ........................................... $9.29
=====
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases of $100,000
or more.
See accompanying notes
<PAGE>
for international diversification 23
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Global Global Emerging
Equity Series Bond Series Assets Series Markets Series
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest........................................... $ 456,157 $609,282 $ 236,233 $ 23,150
Dividends ......................................... 3,727,069 - 120,396 234,325
Foreign tax withheld .............................. (331,345) - (5,386) (15,238)
---------- -------- ---------- ----------
3,851,881 609,282 351,243 242,237
---------- -------- ---------- ----------
EXPENSES:
Management fees ................................... 933,098 67,549 66,008 103,961
Custodian fees .................................... 31,580 4,860 3,222 23,204
Dividend disbursing and transfer agent fees
and expenses..................................... 527,703 16,995 45,796 63,066
Distribution expense .............................. 425,261 16,246 51,379 37,692
Registration fees ................................. 17,676 14,500 5,000 39,237
Reports and statements to shareholders ............ 8,600 1,591 4,774 3,791
Accounting and administration fees ................ 60,561 4,428 4,367 5,797
Professional fees ................................. 21,400 500 3,764 17,460
Directors' fees ................................... 2,181 469 462 448
Taxes (other than taxes on income) ................ 3,000 209 707 810
Amortization of organization expenses ............. 0 1,907 1,845 14,946
Other ............................................. 9,187 4,865 8,896 3,274
2,040,247 134,119 196,220 313,686
----------- -------- ---------- ----------
Less expenses absorbed by Delaware
International Advisers Ltd. ..................... 0 (32,676) (61,992) (136,852)
----------- -------- ---------- ----------
2,040,247 101,443 134,228 176,834
----------- -------- ---------- ----------
NET INVESTMENT INCOME 1,811,634 507,839 217,015 65,403
----------- -------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investment transactions ........................ (3,897,240) (98,222) 131,570 155,232
Foreign currencies ............................. (316,580) 28,411 (9,277) (273)
----------- -------- ---------- ----------
Net realized gain (loss) ..................... (4,213,820) (69,811) 122,293 154,959
Net change in unrealized appreciation/
depreciation of investments and foreign
currencies ................................... 33,570,227 (334,710) 1,132,568 (1,528,003)
----------- -------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES .......... 29,356,407 (404,521) 1,254,861 (1,373,044)
----------- -------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ................................ $31,168,041 $103,318 $1,471,876 ($1,307,641)
=========== ======== ========== ==========
</TABLE>
See accompanying notes
<PAGE>
24 for international diversification
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Equity Series Global Bond Series Global Assets Series Emerging Markets Series
------------------------------------------------------------------------------------------------
Six Months Year Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended Ended Ended
5/31/98 11/30/97 5/31/98 11/30/97 5/31/98 11/30/97 5/31/98 11/30/97
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income ............... $1,811,634 $2,692,917 $507,839 $881,753 $217,015 $ 510,179 $ 65,403 $ 62,601
Net realized gain on investments
and foreign currencies ........... (4,213,820) 6,169,700 (69,811) 119,653 122,293 1,350,450 154,959 757,185
Net increase (decrease) in unrealized
appreciation (depreciation) on
investments and foreign currencies
during the period ................ 33,570,227 (7,483,373) (334,710) (648,055) 1,132,568 (605,292) (1,528,003) (2,722,301)
----------- ---------- -------- ---------- ---------- --------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations ........ 31,168,041 1,379,244 103,318 353,351 1,471,876 1,255,337 (1,307,641) (1,902,515)
----------- ---------- -------- ---------- ---------- --------- ---------- ----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
A Class .......................... (2,715,058) (2,797,661) (67,663) (305,700) (98,276) (336,743) (18,319) (2,696)
B Class .......................... (567,801) (314,247) (13,350) (63,377) (43,837) (127,562) - -
C Class .......................... (200,379) (67,804) (8,343) (31,300) (29,753) (52,779) - -
Institutional Class .............. (2,032,475) (1,209,385) (221,325) (651,174) (39,983) (87,203) (9,828) (9,242)
Net realized gain on investment
transactions:
A Class .......................... (1,182,260) (123,938) (12,745) (12,933) (610,032) (45,735) (554,164) (20,222)
B Class .......................... (345,134) (15,415) (3,044) (2,428) (397,951) (17,933) (209,526) (2,270)
C Class .......................... (121,799) (2,682) (1,965) (424) (272,115) (4,527) (80,276) (1,540)
Institutional Class .............. (754,255) (46,296) (31,461) (23,842) (198,609) (8,230) (108,106) (27,727)
----------- ---------- -------- ---------- ---------- --------- ---------- ----------
(7,919,161) (4,577,428) (359,896)(1,091,178) (1,690,556) (680,712) (980,219) (63,697)
----------- ---------- -------- ---------- ---------- --------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class .......................... 87,221,509 95,608,942 570,364 2,749,127 1,274,096 3,460,095 2,285,351 16,953,861
B Class .......................... 31,437,389 50,802,495 178,824 716,211 725,630 2,221,214 766,094 5,637,884
C Class .......................... 47,262,368 19,377,282 5,818 601,901 426,668 1,859,189 288,887 1,675,859
Institutional Class .............. 25,759,842 54,385,504 2,079,207 5,493,756 425,450 213,172 974,801 2,304,964
</TABLE>
<PAGE>
for international diversification 25
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Equity Series Global Bond Series Global Assets Series Emerging Markets Series
-----------------------------------------------------------------------------------------------------
Six Months Year Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended Ended Ended
5/31/98 11/30/97 5/31/98 11/30/97 5/31/98 11/30/97 5/31/98 11/30/97
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value of shares issued
upon reinvestment of dividends
from net investment income and
net realized gain on security
transactions:
A Class ...................... 3,739,140 2,781,683 59,356 261,143 681,101 375,195 525,809 22,478
B Class ...................... 845,163 301,251 13,200 48,687 415,633 140,100 197,823 2,081
C Class ...................... 284,875 67,923 9,901 30,822 276,623 53,622 76,653 1,540
Institutional Class .......... 2,773,440 1,248,194 252,215 674,758 238,591 95,433 112,829 36,969
------------ ------------ ----------- ----------- ----------- ----------- ----------- -----------
199,323,726 224,573,274 3,168,885 10,576,405 4,463,792 8,418,020 5,228,247 26,635,636
------------ ------------ ----------- ----------- ----------- ----------- ----------- -----------
Cost of shares repurchased:
A Class ...................... (87,170,208) (75,048,166) (774,415) (1,684,418) (1,506,677) (8,950,771) (2,427,519) (8,593,077)
B Class ...................... (27,464,351) (29,347,424) (131,217) (341,785) (256,513) (2,858,059) (478,994) (1,724,911)
C Class ...................... (46,178,340) (9,214,761) (54,881) (30,665) (192,769) (124,369) (459,564) (128,601)
Institutional Class .......... (13,688,812) (16,596,084) (1,300,507) (1,151,567) (287,428) (334,720) (517,783) (4,355,115)
------------ ------------ ----------- ----------- ----------- ----------- ----------- -----------
(174,501,711) (130,206,435) (2,261,020) (3,208,435) (2,243,387)(12,267,919) (3,883,860)(14,801,704)
------------ ------------ ----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets
derived from capital share
transactions ................. 24,822,015 94,366,839 907,865 7,367,970 2,220,405 (3,849,899) 1,344,387 11,833,932
------------ ------------ ----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS ........................ 48,070,895 91,168,655 651,287 6,630,143 2,001,725 (3,275,274) (943,473) 9,867,720
NET ASSETS:
Beginning of period ............. 227,326,719 136,158,064 17,629,426 10,999,283 16,788,202 20,063,476 16,584,087 6,716,367
------------ ------------ ----------- ----------- ----------- ----------- ----------- -----------
End of period ...................$275,397,614 $227,326,719 $18,280,713 $17,629,426 $18,789,927 $16,788,202 $15,640,614 $16,584,087
============ ============ =========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes
<PAGE>
26 for international diversification
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
International Equity Series A Class
--------------------------------------------------------------------
Six Months Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
5/31/98(2) 11/30/97 11/30/96 11/30/95 11/30/94 11/30/93
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $14.650 $14.640 $12.190 $11.920 $11.250 $9.590
Income from investment operations:
Net investment income(1) ........................... 0.114 0.220 0.490 0.297 0.140 0.499
Net realized and unrealized gain on investments
and foreign currencies ............................. 1.756 0.245 2.385 0.628 0.895 1.636
------- ------- ------- ------- ------- -------
Total from invetment operations .................... 1.870 0.465 2.875 0.925 1.035 2.135
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ............... (0.355) (0.435) (0.280) (0.185) (0.225) (0.475)
Distributions from net realized gain on
investment transactions ........................... (0.155) (0.020) (0.145) (0.470) (0.140) none
------- ------- ------- ------- ------- -------
Total dividends and distributions .................. (0.510) (0.455) (0.425) (0.655) (0.365) (0.475)
------- ------- ------- ------- ------- -------
Net asset value, end of period ........................ $16.010 $14.650 $14.640 $12.190 $11.920 $11.250
======= ======= ======= ======= ======= =======
Total return(3) ....................................... 13.26% 3.27% 24.22% 8.17% 9.23% 23.08%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............ $127,537 $112,425 $89,177 $62,251 $53,736 $31,673
Ratio of expenses to average net assets ............ 1.60% 1.70% 1.85% 2.07% 1.56% 1.25%
Ratio of expenses to average net assets prior to
expense limitation ................................ 1.60% 1.71% 1.95% 2.07% 1.82% 2.16%
Ratio of net investment income to average net
assets ........................................... 1.24% 1.46% 3.70% 2.57% 1.22% 3.91%
Ratio of net investment income to average net assets
prior to expense limitation ...................... 1.24% 1.45% 3.60% 2.57% 0.96% 3.00%
Portfolio turnover ................................. 6% 8% 9% 21% 27% 24%
</TABLE>
- -----------------------
(1) Per share information for the six months ended May 31, 1998 and the years
ended November 30, 1996, and 1997, was based on the average shares
outstanding method.
(2) Ratios have been annualized and total return has not been annualized.
(3) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase.
<PAGE>
for international diversification 27
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY SERIES B CLASS
--------------------------------------------------------
SIX MONTHS 9/6/94(3)
ENDED YEAR ENDED TO
5/31/98(2) 11/30/97 11/30/96 11/30/95 11/30/94
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $14.560 $14.560 $12.130 $11.900 $12.860
Income from investment operations:
Net investment income(1) .............................. 0.061 0.114 0.398 0.278 0.036
Net realized and unrealized gain
(loss) on investments and
foreign currencies ................................... 1.749 0.246 2.377 0.567 (0.966)
------- ------- ------- ------- -------
Total from investment operations ...................... 1.810 0.360 2.775 0.845 (0.930)
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net
investment income .................................... (0.255) (0.340) (0.200) (0.145) (0.030)
Distributions from net realized gain on
investment transactions .............................. (0.155) (0.020) (0.145) (0.470) none
------- ------- ------- ------- -------
Total dividends and distributions ..................... (0.410) (0.360) (0.345) (0.615) (0.030)
------- ------- ------- ------- -------
Net asset value, end of period ........................... $15.960 $14.560 $14.560 $12.130 $11.900
======= ======= ======= ======= =======
Total return(5) .......................................... 12.83% 2.54% 23.38% 7.46% (7.24%)
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ........................................ $40,146 $31,914 $10,878 $3,471 $624
Ratio of expenses to average
net assets ........................................... 2.30% 2.40% 2.55% 2.77% 2.26%
Ratio of expenses to average net
assets prior to expense limitation ................... 2.30% 2.41% 2.65% 2.77% 2.52%
Ratio of net investment income to
average net assets ................................... 0.54% 0.76% 3.00% 1.87% 0.52%
Ratio of net investment income to
average net assets prior
to expense limitation ................................ 0.54% 0.75% 2.90% 1.87% 0.26%
Portfolio turnover .................................... 6% 8% 9% 21% 27%
<PAGE>
INTERNATIONAL EQUITY SERIES C CLASS
--------------------------------------------
SIX MONTHS 11/29/95(4)
ENDED YEAR ENDED TO
5/31/98(2) 1/30/97 11/30/96 11/30/95
(UNAUDITED)
Net asset value, beginning of period ..................... $14.540 $14.540 $12.190 $12.240
Income from investment operations:
Net investment income(1) .............................. 0.061 0.114 0.400 none
Net realized and unrealized gain
(loss) on investments and
foreign currencies ................................... 1.749 0.246 2.375 (0.050)
------- ------- ------- -------
Total from investment operations ...................... 1.810 0.360 2.775 (0.050)
------- ------- ------- -------
Less dividends and distributions:
Dividends from net
investment income .................................... (0.255) (0.340) (0.280) none
Distributions from net realized gain on
investment transactions .............................. (0.155) (0.020) (0.145) none
------- ------- ------- -------
Total dividends and distributions ..................... (0.410) (0.360) (0.425) none
------- ------- ------- -------
Net asset value, end of period ........................... $15.940 $14.540 $14.540 $12.190
======= ======= ======= =======
Total return(5) .......................................... 12.85% 2.54% 23.39% (6)
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ........................................ $14,664 $11,811 $1,909 $5
Ratio of expenses to average
net assets ........................................... 2.30% 2.40% 2.55% (6)
Ratio of expenses to average net
assets prior to expense limitation ................... 2.30% 2.41% 2.65% (6)
Ratio of net investment income to
average net assets ................................... 0.54% 0.76% 3.00% (6)
Ratio of net investment income to
average net assets prior
to expense limitation ................................ 0.54% 0.75% 2.90% (6)
Portfolio turnover .................................... 6% 8% 9% (6)
</TABLE>
- -------------------
(1) Per share information for the six months ended May 31, 1998 and the years
ended November 30, 1996, and 1997, was based on the average shares
outstanding method.
(2) Ratios have been annualized and total return has not been annualized.
(3) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(4) Date of commencement of trading.
(5) Does not include contingent deferred sales charge which varies from 1 - 4%
depending upon the holding period for B Class shares and 1% for C Class
shares.
(6) The ratios of expenses and net investment income to average net assets,
portfolio turnover and total return have been omitted as management
believes that such ratios and total return for this relatively short
period are not meaningful.
<PAGE>
28 for international diversification
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY SERIES INSTITUTIONAL CLASS
-------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
5/31/98(2) 11/30/97 11/30/96 11/30/95 11/30/94 11/30/93
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $14.720 $14.710 $12.240 $11.970 $11.290 $9.590
Income from investment operations:
Net investment income(1) .............................. 0.137 0.267 0.530 0.323 0.166 0.594
Net realized and unrealized gain on investments
and foreign currencies ............................... 1.763 0.238 2.405 0.637 0.899 1.581
------- ------- ------- ------- ------- ------
Total from investment operations ...................... 1.900 0.505 2.935 0.960 1.065 2.175
------- ------- ------- ------- ------- ------
Less dividends and distributions:
Dividends from net investment income .................. (0.415) (0.475) (0.320) (0.220) (0.245) (0.475)
Distributions from net realized gain on
investment transactions .............................. (0.155) (0.020) (0.145) (0.470) (0.140) none
------- ------- ------- ------- ------- ------
Total dividends and distributions ..................... (0.570) (0.495) (0.465) (0.690) (0.385) (0.475)
------- ------- ------- ------- ------- ------
Net asset value, end of period ........................... $16.050 $14.720 $14.710 $12.240 $11.970 $11.290
======= ======= ======= ======= ======= =======
Total return ............................................. 13.45% 3.55% 24.68% 8.46% 9.47% 23.52%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $93,050 $71,177 $34,194 $11,660 $7,613 $3,959
Ratio of expenses to average net assets ............... 1.30% 1.40% 1.55% 1.77% 1.26% 0.95%
Ratio of expenses to average net assets prior
to expense limitation ................................ 1.30% 1.41% 1.65% 1.77% 1.52% 1.86%
Ratio of net investment income to average net assets .. 1.54% 1.76% 4.00% 2.87% 1.52% 4.21%
Ratio of net investment income to average net assets
prior to expense limitation ......................... 1.54% 1.75% 3.90% 2.87% 1.26% 3.30%
Portfolio turnover .................................... 6% 8% 9% 21% 27% 24%
</TABLE>
- -------------------
(1) Per share information for the six months ended May 31, 1998 and the years
ended November 30, 1996, and 1997, was based on the average shares
outstanding method.
(2) Ratios have been annualized and total return has not been annualized.
<PAGE>
for international diversification 29
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
GLOBAL BOND A CLASS
----------------------------------------------
SIX MONTHS 12/27/94(3)
ENDED YEAR ENDED TO
5/31/98(2) 11/30/97 11/30/96 11/30/95
(UNAUDITED)
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $10.790 $11.480 $11.230 $10.000
Income from investment operations:
Net investment income(1) .............................. 0.293 0.625 0.755 0.659
Net realized and unrealized gain (loss)
on investments and foreign currencies ................ (0.233) (0.505) 0.730 1.171
------- ------- ------- -------
Total from investment operations ...................... 0.060 0.120 1.485 1.830
------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .................. (0.160) (0.770) (0.875) (0.600)
Distributions from net realized gain
on investment transactions ........................... (0.030) (0.040) (0.360) none
------- ------- ------- -------
Total dividends and distributions ..................... (0.190) (0.810) (1.235) (0.600)
------- ------- ------- -------
Net asset value, end of period ........................... $10.660 $10.790 $11.480 $11.230
======= ======= ======= =======
Total return(4) .......................................... 0.56% 1.24% 14.35% 18.79%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $4,365 $4,567 $3,467 $889
Ratio of expenses to average net assets ............... 1.25% 1.25% 1.25% 1.25%
Ratio of expenses to average net assets
prior to expense limitation .......................... 1.61% 2.04% 5.00% 12.34%
Ratio of net investment income to
average net assets ................................... 5.48% 5.76% 6.82% 7.70%
Ratio of net investment income to average
net assets prior to expense limitation ............... 5.12% 4.97% 3.07% (3.39%)
Portfolio turnover .................................... 70% 76% 42% 98%
GLOBAL BOND B CLASS
--------------------------------------------
SIX MONTHS 12/27/94(3)
ENDED YEAR ENDED TO
5/31/98(2) 11/30/97 11/30/96 11/30/95
(UNAUDITED)
Net asset value, beginning of period ..................... $10.790 $11.490 $11.230 $10.000
Income from investment operations:
Net investment income(1) .............................. 0.256 0.550 0.679 0.565
Net realized and unrealized gain (loss)
on investments and foreign currencies ................ (0.236) (0.511) 0.735 1.205
------- ------- ------- -------
Total from investment operations ...................... 0.020 0.039 1.414 1.770
------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .................. (0.130) (0.699) (0.794) (0.540)
Distributions from net realized gain
on investment transactions ........................... (0.030) (0.040) (0.360) none
------- ------- ------- -------
Total dividends and distributions ..................... (0.160) (0.739) (1.154) (0.540)
------- ------- ------- -------
Net asset value, end of period ........................... $10.650 $10.790 $11.490 $11.230
======= ======= ======= =======
Total return(4) .......................................... 0.18% 0.48% 13.51% 18.23%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $1,127 $1,081 $707 $115
Ratio of expenses to average net assets ............... 1.95% 1.95% 1.95% 1.95%
Ratio of expenses to average net assets
prior to expense limitation .......................... 2.31% 2.74% 5.70% 13.04%
Ratio of net investment income to
average net assets ................................... 4.78% 5.06% 6.12% 7.00%
Ratio of net investment income to average
net assets prior to expense limitation ............... 4.42% 4.27% 2.37% (4.09%)
Portfolio turnover .................................... 70% 76% 42% 98%
</TABLE>
<PAGE>
- -------------------
(1) Per share information for the six months ended May 31, 1998 and the years
ended November 30, 1996, and 1997, was based on the average shares
outstanding method.
(2) Ratios have been annualized and total return has not been annualized.
(3) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(4) Does not include maximum sales charge of 4.75% nor the 1% limited
contingent deferred sales charge that would apply in the event of certain
redemptions within 12 months of purchase for Class A shares and does not
include contingent deferred sales charge which varies from 1 - 4% for
Class B shares depending upon the holding period.
<PAGE>
30 for international diversification
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
GLOBAL BOND C CLASS
----------------------------------------------
SIX MONTHS 11/29/95(3)
ENDED YEAR ENDED TO
5/31/98(2) 11/30/97 11/30/96 11/30/95
(UNAUDITED)
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $10.740 $11.440 $11.240 $11.330
Income from investment operations:
Net investment income(1) .............................. 0.256 0.551 0.680 none
Net realized and unrealized gain (loss)
on investments and foreign currencies ................ (0.246) (0.512) 0.719 (0.036)
------- ------- ------- -------
Total from investment operations ...................... 0.010 0.039 1.399 (0.036)
------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .................. (0.130) (0.699) (0.839) (0.054)
Distributions from net realized gain on
investment transactions .............................. (0.030) (0.040) (0.360) none
------- ------- ------- -------
Total dividends and distributions ..................... (0.160) (0.739) (1.199) (0.054)
------- ------- ------- -------
Net asset value, end of period ........................... $10.590 $10.740 $11.440 $11.240
======= ======= ======= =======
Total return(5) .......................................... 0.09% 0.49% 13.51% (6)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $655 $703 $118 $5
Ratio of expenses to average net assets ............... 1.95% 1.95% 1.95% (6)
Ratio of expenses to average net assets
prior to expense limitation .......................... 2.31% 2.74% 5.70% (6)
Ratio of net investment income to
average net assets ................................... 4.78% 5.06% 6.12% (6)
Ratio of net investment income to average
net assets prior to expense limitation ............... 4.42% 4.27% 2.37% (6)
Portfolio turnover .................................... 70% 76% 42% (6)
GLOBAL BOND INSTITUTIONAL CLASS
--------------------------------------------
SIX MONTHS 12/27/94(4)
ENDED YEAR ENDED TO
5/31/98(2) 11/30/97 11/30/96 11/30/95
(UNAUDITED)
Net asset value, beginning of period ..................... $10.810 $11.520 $11.270 $10.000
Income from investment operations:
Net investment income(1) .............................. 0.309 0.658 0.788 0.782
Net realized and unrealized gain (loss)
on investments and foreign currencies ................. (0.239) (0.515) 0.732 1.088
------- ------- ------- -------
Total from investment operations ...................... 0.070 0.143 1.520 1.870
------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .................. (0.200) (0.813) (0.910) (0.600)
Distributions from net realized gain on
investment transactions .............................. (0.030) (0.040) (0.360) none
------- ------- ------- -------
Total dividends and distributions ..................... (0.230) (0.853) (1.270) (0.600)
------- ------- ------- -------
Net asset value, end of period ........................... $10.650 $10.810 $11.520 $11.270
======= ======= ======= =======
Total return(5) .......................................... 0.65% 1.45% 14.68% 19.21%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $12,134 $11,278 $6,707 $897
Ratio of expenses to average net assets ............... 0.95% 0.95% 0.95% 0.95%
Ratio of expenses to average net assets
prior to expense limitation ........................... 1.31% 1.74% 4.70% 12.04%
Ratio of net investment income to
average net assets .................................... 5.78% 6.06% 7.12% 8.00%
Ratio of net investment income to average
net assets prior to expense limitation ................ 5.42% 5.27% 3.37% (3.09%)
Portfolio turnover .................................... 70% 76% 42% 98%
</TABLE>
<PAGE>
- -------------------
(1) Per share information for the six months ended May 31, 1998 and the years
ended November 30, 1996, and 1997, was based on the average shares
outstanding method.
(2) Ratios have been annualized and total return has not been annualized.
(3) Date of commencement of trading.
(4) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(5) Does not include the contingent deferred sales charge of 1% for the C
Class shares.
(6) The ratios of expenses and net investment income to average net assets,
portfolio turnover and total return have been omitted as management
believes that such ratios and total return for this relatively short
period are not meaningful.
<PAGE>
for international diversification 31
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
GLOBAL ASSETS SERIES A CLASS
-----------------------------------------------
SIX MONTHS 12/27/94(3)
ENDED YEAR ENDED TO
5/31/98(2) 11/30/97 11/30/96 11/30/95
(UNAUDITED)
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $14.050 $13.310 $11.900 $10.000
Income from investment operations:
Net investment income(1) .............................. 0.285 0.437 0.493 0.301
Net realized and unrealized gain (loss) on
investments and foreign currencies .................... 0.880 0.843 1.572 1.839
------- ------- ------- -------
Total from investment operations ...................... 1.165 1.280 2.065 2.140
------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .................. (0.195) (0.490) (0.385) (0.240)
Distributions from net realized gain on investment
transactions .......................................... (1.230) (0.050) (0.270) none
------- ------- ------- -------
Total dividends and distributions ..................... (1.425) (0.540) (0.655) (0.240)
------- ------- ------- -------
Net asset value, end of period ........................... $13.790 $14.050 $13.310 $11.900
======= ======= ======= =======
Total return(4) .......................................... 9.16% 9.91% 18.17% 21.48%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $7,285 $6,939 $11,878 $3,122
Ratio of expenses to average net assets ............... 1.24% 1.25% 1.25% 1.25%
Ratio of expenses to average net assets prior
to expense limitation ................................. 1.94% 2.16% 2.72% 7.55%
Ratio of net investment income to average
net assets ............................................ 2.75% 3.24% 4.13% 4.75%
Ratio of net investment income to average net
assets prior to expense limitation .................... 2.05% 2.33% 2.66% (1.55%)
Portfolio turnover .................................... 28% 74% 34% 57%
GLOBAL ASSETS SERIES B CLASS
---------------------------------------------
SIX MONTHS 12/27/94(3)
ENDED YEAR ENDED TO
5/31/98(2) 11/30/97 11/30/96 11/30/95
(UNAUDITED)
Net asset value, beginning of period ..................... $14.040 $13.300 $11.880 $10.000
Income from investment operations:
Net investment income(1) .............................. 0.215 0.342 0.379 0.212
Net realized and unrealized gain (loss) on
investments and foreign currencies .................... 0.895 0.848 1.606 1.848
------- ------- ------- -------
Total from investment operations ...................... 1.110 1.190 1.985 2.060
------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .................. (0.130) (0.400) (0.295) (0.180)
Distributions from net realized gain on investment
transactions .......................................... (1.230) (0.050) (0.270) none
------- ------- ------- -------
Total dividends and distributions ..................... (1.360) (0.450) (0.565) (0.180)
------- ------- ------- -------
Net asset value, end of period ........................... $13.790 $14.040 $13.300 $11.880
======= ======= ======= =======
Total return(4) .......................................... 8.72% 9.18% 17.32% 20.73%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $5,285 $4,445 $4,796 $613
Ratio of expenses to average net assets ............... 1.94% 1.95% 1.95% 1.95%
Ratio of expenses to average net assets prior
to expense limitation ................................. 2.64% 2.86% 3.42% 8.25%
Ratio of net investment income to average
net assets ............................................ 2.05% 2.54% 3.43% 4.05%
Ratio of net investment income to average net
assets prior to expense limitation .................... 1.35% 1.63% 1.96% (2.25%)
Portfolio turnover .................................... 28% 74% 34% 57%
</TABLE>
<PAGE>
- -------------------
(1) Per share information for the six months ended May 31, 1998 and the year
ended November 30, 1997, was based on the average shares outstanding
method.
(2) Ratios have been annualized and total return has not been annualized.
(3) Date of commencement of trading; ratios and total return have been
annualized.
(4) Does not include maximum sales charge of 4.75% nor the 1% limited
contingent deferred sales charge that would apply in the event of certain
redemptions within 12 months of purchase of A Class shares. Does not
include contingent deferred sales charge which varies from 1-4% depending
upon the holding period for Class B shares depending upon the holding
period.
<PAGE>
32 for international diversification
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
GLOBAL ASSETS SERIES C CLASS
-----------------------------------------------
SIX MONTHS 11/29/94(3)
ENDED YEAR ENDED TO
5/31/98(2) 11/30/97 11/30/96 11/30/95
(UNAUDITED)
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $13.990 $13.250 $11.890 $11.940
Income from investment operations:
Net investment income(1) .............................. 0.242 0.341 0.446 none
Net realized and unrealized gain (loss) on
investments and foreign currencies ................... 0.868 0.849 1.534 (0.050)
------- ------- ------- -------
Total from investment operations ...................... 1.110 1.190 1.980 (0.050)
------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .................. (0.130) (0.400) (0.350) none
Distributions from net realized gain on
investment transactions .............................. (1.230) (0.050) (0.270) none
------- ------- ------- -------
Total dividends and distributions ..................... (1.360) (0.450) (0.620) none
------- ------- ------- -------
Net asset value, end of period ........................... $13.740 $13.990 $13.250 $11.890
======= ======= ======= =======
Total return(5) .......................................... 8.75% 9.21% 17.33% (6)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $3,566 $3,094 $1,185 $5
Ratio of expenses to average net assets ............... 1.94% 1.95% 1.95% (6)
Ratio of expenses to average net assets prior
to expense limitation ................................ 2.64% 2.86% 3.42% (6)
Ratio of net investment income to average
net assets ........................................... 2.05% 2.54% 3.43% (6)
Ratio of net investment income to average
net assets prior to expense limitation ............... 1.35% 1.63% 1.96% (6)
Portfolio turnover .................................... 28% 74% 34% (6)
GLOBAL ASSETS INSTITUTIONAL CLASS
---------------------------------------------
SIX MONTHS 12/27/94(4)
ENDED YEAR ENDED TO
5/31/98(2) 11/30/97 11/30/96 11/30/96
(UNAUDITED)
Net asset value, beginning of period ..................... $14.100 $13.340 $11.930 $10.000
Income from investment operations:
Net investment income(1) .............................. 0.333 0.478 0.567 0.473
Net realized and unrealized gain (loss) on
investments and foreign currencies ................... 0.852 0.857 1.533 1.697
------- ------- ------- -------
Total from investment operations ...................... 1.185 1.335 2.100 2.170
------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .................. (0.245) (0.525) (0.420) (0.240)
Distributions from net realized gain on
investment transactions .............................. (1.230) (0.050) (0.270) none
------- ------- ------- -------
Total dividends and distributions ..................... (1.475) (0.575) (0.690) (0.240)
------- ------- ------- -------
Net asset value, end of period ........................... $13.810 $14.100 $13.340 $11.930
======= ======= ======= =======
Total return(5) .......................................... 9.31% 10.34% 18.38% 21.88%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $2,654 $2,310 $2,203 $2,191
Ratio of expenses to average net assets ............... 0.94% 0.95% 0.95% 0.95%
Ratio of expenses to average net assets prior
to expense limitation ................................ 1.64% 1.86% 2.42% 7.25%
Ratio of net investment income to average
net assets ........................................... 3.05% 3.54% 4.43% 5.05%
Ratio of net investment income to average
net assets prior to expense limitation ............... 2.35% 2.63% 2.96% (1.25%)
Portfolio turnover .................................... 28% 74% 34% 57%
</TABLE>
<PAGE>
- -------------------
(1) Per share information for the six months ended May 31, 1998 and the year
ended November 30, 1997, was based on the average shares outstanding
method.
(2) Ratios have been annualized and total return has not been annualized.
(3) Date of commencement of trading.
(4) Date of commencement of trading; ratios and total return have been
annualized.
(5) Does not include the contingent deferred sales charge of 1% for the C
Class shares.
(6) The ratios of expenses and net investment income to average net assets,
portfolio turnover and total return have been omitted as management
believes that such ratios and total return for this relatively short
period are not meaningful.
<PAGE>
for international diversification 33
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
EMERGING MARKETS SERIES A CLASS EMERGING MARKETS SERIES B CLASS
-------------------------------- -------------------------------
SIX MONTHS YEAR 6/10/96(3) SIX MONTHS YEAR 6/10/96(3)
ENDED ENDED TO ENDED ENDED TO
5/31/98(2) 11/30/97 11/30/96 5/31/98(2) 11/30/97 11/30/96
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $10.200 $9.970 $10.000 $10.110 $9.940 $10.000
Income from investment operations:
Net investment income (loss)(1) ....................... 0.048 0.062 0.018 0.013 (0.020) (0.051)
Net realized and unrealized gain (loss) on
investments and foreign currencies ................... (0.773) 0.253 (0.048) (0.758) 0.265 (0.009)
------- ------ ------- ------- ------ -------
Total from investment operations ...................... (0.725) 0.315 (0.030) (0.745) 0.245 (0.060)
------- ------ ------- ------- ------ -------
Less dividends and distributions:
Dividends from net investment income .................. (0.020) (0.010) none none none none
Distributions from net realized gain on
investment transactions .............................. (0.605) (0.075) none (0.605) (0.075) none
------- ------ ------- ------- ------ -------
Total dividends and distributions ..................... (0.625) (0.085) none (0.605) (0.075) none
------- ------ ------- ------- ------ -------
Net asset value, end of period ........................... $8.850 $10.200 $9.970 $8.760 $10.110 $9.940
====== ======= ====== ====== ======= ======
Total return(4) .......................................... (7.38%) 3.19% (0.30%) (7.65%) 2.48% (0.60%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $8,783 $9,665 $2,518 $3,461 $3,484 $282
Ratio of expenses to average net assets ............... 1.96% 2.00% 2.00% 2.70% 2.70% 2.70%
Ratio of expenses to average net
assets prior to expense limitation ................... 3.63% 3.02% 4.10% 4.37% 3.72% 4.80%
Ratio of net investment income to average
net assets ........................................... 0.99% 0.52% 0.17% 0.25% (0.18%) (0.53%)
Ratio of net investment income to average
net assets priod to expense limitation ............... (0.68%) (0.50%) (1.93%) (1.42%) (1.20%) (2.63%)
Portfolio turnover .................................... 12% 65% 36% 12% 65% 36%
</TABLE>
- -------------------
(1) Per share information for the six months ended May 31, 1998 and the years
ended November 30, 1996, and 1997, was based on the average shares
outstanding method.
(2) Ratios have been annualized and total return has not been annualized.
(3) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(4) Does not include maximum sales charge of 4.75% for A Class nor the limited
contingent deferred sales charge which varies from 1 - 4% for Class B
shares depending upon the holding period.
<PAGE>
34 for international diversification
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
EMERGING MARKETS SERIES C CLASS EMERGING MARKETS INSTITUTIONAL CLASS
-------------------------------- -----------------------------------
SIX MONTHS YEAR 6/10/96(3) SIX MONTHS YEAR 6/10/96(3)
ENDED ENDED TO ENDED ENDED TO
5/31/98(2) 11/30/97 11/30/96 5/31/98(2) 11/30/97 11/30/96
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $10.110 $9.940 $10.000 $10.250 $9.990 $10.000
Income from investment operations:
Net investment income (loss)(1) ....................... 0.013 (0.019) (0.051) 0.060 0.098 0.047
Net realized and unrealized gain (loss) on
investments and foreign currencies .................... (0.758) 0.264 (0.009) (0.780) 0.262 (0.057)
------- ------ ------- ------- ------ ------
Total from investment operations ...................... (0.745) 0.245 (0.060) (0.720) 0.360 (0.010)
------- ------ ------- ------- ------ ------
Less dividends and distributions:
Dividends from net investment income .................. none none none (0.055) (0.025) none
Distributions from net realized gain on
investment transactions ............................... (0.605) (0.075) none (0.605) (0.075) none
------- ------ ------- ------- ------ ------
Total dividends and distributions ..................... (0.605) (0.075) none (0.660) (0.100) none
------- ------ ------- ------- ------ ------
Net asset value, end of period ........................... $8.760 $10.110 $9.940 $8.870 $10.250 $9.990
======= ======= ======= ======= ======= ======
Total return(4) .......................................... (7.65%) 2.48% (0.60%) (7.30%) 3.64% (0.10%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $1,233 $1,519 $199 $2,163 $1,916 $3,717
Ratio of expenses to average net assets ............... 2.70% 2.70% 2.70% 1.70% 1.70% 1.70%
Ratio of expenses to average net assets prior
to expense limitation ................................. 4.37% 3.72% 4.80% 3.37% 2.72% 3.80%
Ratio of net investment income to average
net assets ............................................ 0.25% (0.18%) (0.53%) 1.25% 0.82% 0.47%
Ratio of net investment income to average
net assets prior to expense limitation ................ (1.42%) (1.20%) (2.63%) (0.42%) (0.20%) (1.63%)
Portfolio turnover .................................... 12% 65% 36% 12% 65% 36%
</TABLE>
- -------------------
(1) Per share information for the six months ended May 31, 1998 and the years
ended November 30, 1996, and 1997, was based on the average shares
outstanding method.
(2) Ratios have been annualized and total return has not been annualized.
(3) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(4) Does not include the contingent deferred sales charge of 1% for Class C
shares.
<PAGE>
for international diversification 35
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998 (UNAUDITED)
Delaware Group Global & International Funds, Inc. (the "Fund") is registered as
a Maryland corporation and offers six series: the International Equity Series,
the Global Bond Series, the Global Assets Series, the Emerging Markets Series,
the Global Equity Series and the International Small Cap Series. These financial
statements and the related notes pertain to: the International Equity Series,
the Global Bond Series, the Global Assets Series and the Emerging Markets Series
(the "Series"). The International Equity Series is registered as a diversified
open-end investment company and The Global Bond Series, The Global Assets Series
and The Emerging Markets Series are registered as non-diversified open-ended
investment companies under the Investment Company Act of 1940. Each Series
offers four classes of shares. The A Class carries a front-end sales charge of
4.75%, the B Class carries a back-end deferred sales charge, the C Class carries
a level load sales charge and the Institutional Class has no sales charge.
The investment objective of each Series is as follows:
INTERNATIONAL EQUITY SERIES: To seek long-term growth without undue risk to
principal by investing primarily in international equity securities with the
potential for capital appreciation and income.
GLOBAL BOND SERIES: To seek current income consistent with the preservation of
principal by investing primarily in international bonds that may also provide
the potential for capital appreciation.
GLOBAL ASSETS SERIES: To seek long-term total return by investing in
securities, including U.S. and foreign stocks and bonds, which, in the
Manager's or Sub-Adviser's opinion, will provide higher current income than a
portfolio comprised exclusively of equity securities along with the potential
for capital growth.
EMERGING MARKETS SERIES: To seek long-term capital appreciation by investing
primarily in equity securities of issuers located or operating in emerging
market countries.
1. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund.
SECURITY VALUATION - Securities listed on an exchange are valued at the last
quoted sales price as of the close of the NYSE on the valuation date.
Securities not traded or securities not listed on an exchange are valued at
the mean of the last quoted bid and asked prices. Securities listed on a
foreign exchange are valued at the last quoted sales price before the Series
is valued. Long-term debt securities are valued by an independent pricing
service and such prices are believed to reflect the fair value of such
securities. 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 - Each series intends to continue to qualify as a
regulated investment company and make the requisite distributions to
shareholders. Accordingly, no provision for federal income taxes has been made
in the financial statements. Income and capital gain distributions are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles.
<PAGE>
CLASS ACCOUNTING - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
the Series on the basis of daily net assets of each class. Distribution
expenses relating to a specific class are charged directly to that class.
REPURCHASE AGREEMENTS - Each Series may invest in a pooled cash account along
with other members of the Delaware Investment Family of Funds. The aggregate
daily balance of the pooled cash account is invested in repurchase agreements
secured by obligations of the U.S. government. The respective collateral is
held by the custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is at least 100% collateralized.
However, in the event of default or bankruptcy by the counterparty to the
agreement, realization of the collateral may be subject to legal proceedings.
FOREIGN CURRENCY TRANSACTIONS - Transactions denominated in foreign currencies
are recorded at the current prevailing exchange rates. The value of all assets
and liabilities denominated in foreign currencies are translated into U.S.
dollars at the exchange rate of such currencies against the U.S. dollar as of
3:00 PM EST. Transaction gains or losses resulting from changes in exchange
rates during the reporting period or upon settlement of the foreign currency
transaction are reported in operations for the current period. It is not
practical to isolate that portion of both realized and unrealized gains and
losses on investments in equity securities that result from fluctuations in
foreign currency exchange rates in the statement of operations. The Series
does isolate that portion of gains and losses on investments of debt
securities which are due to changes in the foreign currency exchange rate from
that which are due to changes in the market prices of debt securities. The
Series reports certain foreign currency related transactions as components of
realized gains for financial reporting purposes, whereas such components are
treated as ordinary income (loss) for federal income tax purposes.
OTHER - Expenses common to all Funds within the Delaware Investment Family of
Funds are allocated amongst the Funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. Foreign dividends are also recorded on the
ex-dividend date or as soon after the ex-dividend date that the Series are
aware of such dividends, net of all non-rebatable tax withholdings. Original
issue discounts are accreted to interest income over the lives of the
respective securities. Withholding taxes on foreign dividends have been
provided for in accordance with the Series' understanding of the applicable
country's tax rules and rates. Each Series declares and pays dividends from
capital gains annually and from net investment income as follows: the
International Equity Series, the Global Assets Series and the Global Bond
Series quarterly; the Emerging Markets Series, annually.
Certain Fund expenses are paid through "soft dollar" arrangements with
brokers. The amount of these expenses is less than 0.01% of the Series'
average daily net assets.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
<PAGE>
36 for international diversification
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. INVESTMENT MANAGEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
In accordance with the terms of the Investment Management Agreement, each Series
pays Delaware International Advisers Ltd. ("DIAL"), the investment manager, an
annual fee which is based on its net assets less the fees paid to the
unaffiliated directors of the International Equity Series, the Global Assets
Series and the Global Bond Series. The management fee for the Emerging Markets
Series is without consideration of amounts paid to unaffiliated directors. DIAL
has entered into a sub-advisory agreement with Delaware Management Company
(DMC), an affiliate, with respect to the management of the Global Assets Series'
investment in U.S. securities. DMC will receive from DIAL 25% of the investment
management fees and other expenses for the Global Assets Series. The management
fee rates are as follows:
<TABLE>
<CAPTION>
International Global Global Emerging
Equity Bond Assets Markets
Series Series Series Series
------------- ------ ------ --------
<S> <C> <C> <C> <C>
Management fee as a percentage of average
daily net assets (per annum)................ 0.75% 0.75% 0.75% 1.25%
</TABLE>
DIAL has elected to waive its fees and reimburse each Series to the extent
that annual operating expenses exclusive of taxes, interest, brokerage
commissions, extraordinary expenses and distribution expenses exceed, 1.55%
for each class of the International Equity Series, 0.95% for each class of the
Global Bond and the Global Assets Series and 1.70% for each class of the
Emerging Markets Series, of the average daily net assets for each Series
through November 30, 1998. Total expenses absorbed by DIAL for the six months
ended May 31, 1998 are as follows:
<TABLE>
<CAPTION>
International Global Global Emerging
Equity Bond Assets Markets
Series Series Series Series
------------- ------- ------- --------
<S> <C> <C> <C>
Total expenses absorbed by DIAL -- $32,676 $61,992 $136,852
</TABLE>
The Series have engaged Delaware Service Company, Inc. (DSC), an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting services
for the Series. For the six months ended May 31, 1998, the amounts expensed
for each Series were as follows:
<TABLE>
<CAPTION>
International Global Global Emerging
Equity Bond Assets Markets
Series Series Series Series
------------- ------ ------ --------
<S> <C> <C> <C> <C>
Dividend disbursing, transfer agent fees and other expenses....... $527,703 $16,995 $45,796 $63,066
Accounting fees................................................... 49,200 3,581 3,498 5,026
</TABLE>
<PAGE>
On May 31, 1998, the Fund had payables to affiliates as follows:
<TABLE>
<CAPTION>
International Global Global Emerging
Equity Bond Assets Markets
Series Series Series Series
------------- ------ ------ --------
<S> <C> <C> <C> <C>
Investment Management fee payable to DIAL........................ $649,383 $24,267 $34,649 $ -
Dividend disbursing, transfer agent fees, accounting fees and
other expenses payable to DSC................................. 32,382 2,812 55,026 139,525
Other expenses payable to DMC and affiliates..................... 61,470 814 138,146 274,703
</TABLE>
Pursuant to the Distribution Agreement, each Series pays Delaware
Distributors, L.P. (DDLP), the Distributor and an affiliate of DMC, an annual
fee not to exceed 0.30% of the average daily net assets of the A Class for the
International Equity Series, the Global Bond Series and the Global Assets
Series and 0.25% for the Emerging Markets Series. The B and C Classes have an
annual fee of 1.00% of the average daily net assets for all of the funds.
For the six months ended May 31, 1998, DDLP earned commissions on sales of the
Fund A Class shares for each Series as follows:
<TABLE>
<CAPTION>
International Global Global Emerging
Equity Bond Assets Markets
Series Series Series Series
------------- ------ ------ --------
<S> <C> <C> <C> <C>
$34,212 $1,870 $3,350 $5,065
</TABLE>
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>
for international diversification 37
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS
During the six months ended May 31, 1998, the Fund made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments for each Series as follows:
<TABLE>
<CAPTION>
International Global Global Emerging
Equity Bond Assets Markets
Series Series Series Series
------------- ------ ------ --------
<S> <C> <C> <C> <C>
Purchases.................... $23,199,901 $7,610,633 $3,544,431 $3,325,371
Sales........................ 6,754,076 5,983,849 2,243,314 1,838,842
</TABLE>
At May 31, 1998, the aggregate cost of securities and unrealized appreciation
(depreciation) for federal income tax purposes for each Series were as
follows:
<TABLE>
<CAPTION>
International Global Global Emerging
Equity Bond Assets Markets
Series Series Series Series
------------- ------ ------ --------
<S> <C> <C> <C> <C>
Cost of Investments.......................... $231,072,168 $18,344,166 $16,441,009 $20,268,106
============ =========== =========== ===========
Aggregate unrealized appreciation............ $ 66,180,534 $ 333,388 $ 3,040,335 $ 1,079,037
Aggregate unrealized depreciation............ (17,780,401) (841,330) (625,064) (5,581,575)
Net unrealized appreciation.................. $ 48,400,133 ($507,942) $ 2,415,271 ($4,502,538)
</TABLE>
4. CAPITAL STOCK
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
International Equity Series Global Bond Series Global Assets Series Emerging Market Series
--------------------------- ------------------ -------------------- ----------------------
Six Months Year Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended Ended Ended
5/31/98 11/30/97 5/31/98 11/30/97 5/31/98 11/30/97 5/31/98 11/30/97
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold:
A Class 5,628,524 6,322,583 53,946 251,836 93,761 256,603 238,816 1,427,852
B Class 2,099,324 3,317,692 16,677 65,290 52,832 163,601 80,426 469,643
C Class 3,109,527 1,288,076 543 55,133 31,106 136,936 30,073 140,946
Institutional Class 1,669,871 3,519,724 193,832 504,713 30,643 15,591 98,316 193,572
Shares issued upon reinvestment
of dividends from net
investment income and net
realized gain on investment
transactions:
A Class 266,419 193,856 5,550 24,085 53,363 28,560 56,782 2,273
B Class 60,542 20,835 1,234 4,494 32,578 10,606 21,526 211
C Class 20,436 4,643 931 2,867 21,794 3,999 8,341 156
Institutional Class 196,764 86,399 23,618 62,112 18,668 7,188 12,171 3,734
---------- ---------- -------- -------- -------- -------- --------- ---------
13,051,407 14,753,808 296,331 970,530 334,745 623,084 546,451 2,238,387
---------- ---------- -------- -------- -------- -------- --------- ---------
Shares repurchased:
A Class (5,602,280) (4,933,746) (73,243) (154,612) (112,618) (684,103) (250,706) (735,499)
B Class (1,836,579) (1,893,676) (12,249) (31,190) (18,901) (218,266) (51,194) (153,713)
C Class (3,022,478) (611,809) (5,145) (2,843) (14,463) (9,239) (47,749) (10,999)
Institutional Class (902,617) (1,096,146) (121,606) (106,037) (20,900) (24,094) (53,625) (382,197)
---------- ---------- -------- -------- -------- -------- --------- ---------
(11,363,954) (8,535,377) (212,243) (294,682) (166,882) (935,702) (403,274) (1,282,358)
---------- ---------- -------- -------- -------- -------- --------- ---------
Net Increase (Decrease) 1,687,453 6,218,431 84,088 675,848 167,863 (312,618) 143,177 956,029
========== ========== ======== ======== ======== ======== ========= =========
</TABLE>
5. LINES OF CREDIT
The Fund has a committed line of credit for $10.8 million for the
International Equity Series, $900,000 for the Global Bond Series, $1 million
for the Global Assets Series and $900,000 for the Emerging Markets Series. No
amount was outstanding at May 31, 1998, or at any time during the fiscal year.
6. FOREIGN EXCHANGE CONTRACTS
A Series will generally enter into forward foreign currency contracts as a way
of managing foreign exchange rate risk. A Series may enter into these
contracts to fix the U.S. dollar value of a security that it has agreed to buy
or sell for the period between the date the trade was entered into and the
date the security is delivered and paid for. A Series may also use these
contracts to hedge the U.S. dollar value of securities it already owns
denominated in foreign currencies.
<PAGE>
38 for international diversification
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Forward foreign currency contracts are valued at the mean between the bid and
asked prices of the contracts and are marked-to-market daily. Interpolated
values are derived when the settlement date of the contract is an interim date
for which quotations are not available. The change in market value is recorded
as an unrealized gain or loss. When the contract is closed, a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed is recorded.
The use of forward foreign currency contracts does not eliminate fluctuations
in the underlying prices of the securities, but it does establish a rate of
exchange that can be achieved in the future. Although forward foreign currency
contracts limit the risk of loss due to a decline in the value of the hedged
currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, a Series could be exposed to
risks if the counterparties to the contracts are unable to meet the terms of
their contracts.
7. MARKET AND CREDIT RISK
Some countries in which the Series may invest require governmental approval
for the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
temporary restrictions on foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially smaller,
less liquid and more volatile than the major securities markets in the United
States. Consequently, acquisition and disposition of securities by the Series
may be inhibited. In addition, a significant proportion of the aggregate
market value of equity securities listed on the major securities exchanges in
emerging markets are held by a smaller number of investors. This may limit the
number of shares available for acquisition or disposition by the Series.
The Series may invest in high-yield fixed income securities which carry
ratings of BB or lower by S&P and/or Ba or lower by Moody's. Investments in
these higher yielding securities may be accompanied by a greater degree of
credit risk than higher rated securities. Additionally, lower rated securities
may be more susceptible to adverse economic and competitive industry
conditions than investment grade securities.
With the exception of Emerging Markets Series each Series 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 Emerging Markets Series may invest up
to 15% in such securities. The relative illiquidity of some of these
securities may adversely affect the Series' ability to dispose of such
securities in a timely manner and at a fair price when it is necessary to
liquidate such securities.
8. SECURITIES LENDING
Securities on loan are required at all times to be secured by collateral at
least equal to 102% of the market value of securities issued in the U.S. and
105% of the market value of securities issued outside of the United States.
However, in the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral may be subject to
legal proceedings. In the event that the borrower is insufficient to cover the
value of loaned securities, and provided such collateral insufficiency is not
the result of investment losses, the lending agent has agreed to pay the
amount of the shortfall to the Series or, at the option of the lending agent,
replace the loaned securities.
Market Cash
Value Collateral
----- ----------
International Equity Series $43,935,456 $46,550,575
<PAGE>
DELAWARE INVESTMENTS FAMILY OF FUNDS
FOR GROWTH OF CAPITAL
Aggressive Growth Fund
Trend Fund
DelCap Fund
Small Cap Value Fund
U.S. Growth Fund
Growth Stock Fund
Tax-Efficient Equity Fund
FOR TOTAL RETURN
Social Awareness Fund
Blue Chip Fund
Devon Fund
Decatur Total Return Fund
Decatur Income Fund
REIT Fund
Delaware Fund
FOR INTERNATIONAL DIVERSIFICATION
Emerging Markets Fund
New Pacific Fund
Overseas Equity Fund
International Equity Fund
Global Equity Fund
Global Bond Fund
FOR CURRENT INCOME
Delchester Fund
High-Yield Opportunities Fund
Strategic Income Fund
U.S. Government Fund
Delaware-Voyageur
U.S. Government Securities Fund
Limited-Term Government Fund
FOR TAX-EXEMPT INCOME
National High Yield Municipal Bond Fund
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
State Tax-Free Funds*
MONEY MARKET FUNDS
Delaware Cash Reserve
Tax-Free Money Fund
ASSET ALLOCATION FUNDS
Growth Portfolio
Balanced Portfolio
Income Portfolio
* Available for the following states: Arizona, California, Colorado, Florida,
Idaho, Iowa, Kansas, Minnesota, Missouri, North Dakota, New Jersey, New
Mexico, New York, Ohio, Oregon, Pennsylvania, Utah, Washington, Wisconsin.
Insured and intermediate bond funds are available in selected states.
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.
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<PAGE>
This Semi-annual report is for the information of Global & International Funds
shareholders, but it may be used with prospective investors when preceded or
accompanied by current Prospectuses for the Global & International Funds,
which set forth details about charges, expenses, investment objectives and
operating policies of each Fund. You should read the prospectus carefully
before you invest. Summary investment results are documented in each Fund's
current Statement of Additional Information. The figures in this report
represent past results which are not a guarantee of future results. The return
and principal value of an investment in each Fund will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost.
INVESTMENT MANAGER
Delaware International Advisers Ltd.
London, England
U.S. AFFILIATE
Delaware Management Company
Philadelphia
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
Philadelphia
1818 Market Street
Philadelphia, PA 19103-3682
FOR SHAREHOLDERS
1.800.523.1918
FOR SECURITIES DEALERS
1.800.362.7500
FOR FINANCIAL INSTITUTIONS
REPRESENTATIVES ONLY
1.800.659.2265
www.delawarefunds.com
International investing has special risks that include less stable economies
and governments, currency fluctuations and different accounting standards.
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. Shares of the Fund are not bank or credit union deposits.
(C) Delaware Distributors, L.P.
Printed in the USA on recycled paper
SA-034 [5/98] PP7/98
Delaware
Investments(TM)
- ---------------------
Philadelphia - London
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