<PAGE>
[GRAPHIC OMITTED]
Global/International Funds
- --------------------------
Global Opportunities Series (star) International Small Cap Series
Latin America Fund (star) New Europe Fund
1999 Semi-Annual Report
June 18, 1999
Dear Shareholder:
We are pleased to present the 1999 semi-annual report for the newest additions
to Delaware Investments' fleet of global and international mutual funds--Global
Opportunities Series, International Small Cap Series, Latin America Fund and New
Europe Fund.
Economic Overview
Over the last six months, international investors found cause for optimism as
financial turbulence around the world showed signs of calming. As in the United
States, lower global interest rates helped turn the tide.
In December, the central banks of 11 euro-zone nations cut rates to a
uniform 3.0%. Many other nations abroad, including the United Kingdom, New
Zealand and countries in the Pacific Rim followed suit. Lower borrowing costs
helped ease a credit crunch in world markets, allowed businesses to expand and
operate more profitably and reduced concerns about global economic stability.
The International Monetary Fund also played a role in the global
turnaround by providing billions of dollars to struggling economies in Brazil,
Russia and many nations in Asia. IMF intervention helped limit severe economic
problems in those nations and provided an incentive to implement reforms that
are expected to help prevent those problems from recurring.
Emerging markets bounced back strongly from their disappointing 1998
performance. Brazil, in particular, demonstrated steady improvement after
devaluing its currency in January, suggesting to us that the country may be
through the worst of its problems. After months of weakness, the economies in
eastern Asia also appear to be strengthening. Many corporations in the area have
restructured and are operating more efficiently.
The strongest performing major markets for the six-month period ending
May 31, 1999 were the U.S. (+13.0%) and Japan (+14.5%). Two other significant
performers were
<PAGE>
two smaller Asian markets, Hong Kong (which delivered +17.9%) and Singapore,
which outshone all markets with a stellar return of +36.8% as of May 31 (Source:
Bloomberg).
Some of the European markets were decidedly lackluster. The poor
performance can be attributed to weakness in the euro. It stumbled significantly
since its debut at the beginning of 1999, dropping from 1.19 on January 1 to
1.04 on May 31 (Source: Bloomberg). Slower-than-expected growth throughout
Europe and an economic recession in Germany triggered this 13% depreciation.
Amid a somewhat brightening global economic landscape, "value"
investments, which appear to be selling for less than their true worth, took a
back seat to more expensive "growth" investments, mirroring what we've seen in
the U.S. This is one reason why our global and international Funds, which have a
strong value orientation, underperformed their benchmarks and peers.
Investors' bias toward growth companies appeared to shift in 1999,
supported by the remarkable performance of cyclical stocks, investments whose
performance is closely tied to economic ups and downs. In April, long overlooked
cyclical stocks, which are often a staple of value funds, returned more than 21%
as measured by the Morgan Stanley Cyclical Index. We believe our global and
international Funds are positioned to benefit if interest in undervalued
investments remains strong.
Investment Strategy
Global Opportunities Series invests in a broad range of stocks from around the
world. The Fund reported a total return of +2.89% (Class A shares at net asset
value with distributions reinvested) for the six months ended May 31, 1999. The
Fund's performance, however, lagged the Morgan Stanley Capital International
(MSCI) World Index, an unmanaged index, which rose +8.7% during the period.
Smaller positions in Japan and the U.S. worked against our Fund, explaining our
underperformance for the period. Looking forward, Global Opportunities Series is
likely to seek out opportunities in the United Kingdom, Australia and New
Zealand, markets which we consider undervalued compared to the U.S. and Japan.
International Small Cap Series also delivered a positive return,
providing a total return of +9.81% (Class A shares at net asset value with
distributions reinvested) since November 30, 1998. We believe this bodes well
for the long-term capital appreciation potential and success of International
Small Cap Series. The Fund invests primarily in equity securities of smaller
foreign companies, which may include companies located or operating in emerging
or established countries. The market capitalization of the companies that
International Small Cap Series intends to invest in will generally be $1.5
billion or less at the time of purchase.
Latin America Fund, in particular, benefited from economic growth
spurred by lower global interest rates and from Latin America's recovery. The
Fund provided a significant cumulative return of +16.00% (Class A shares at net
asset value with distributions reinvested) since the Fund's inception on
December 29, 1998. Despite delivering a double digit return, Latin America
underperformed the MSCI Latin America Index, an unmanaged index, by 7.5% during
the period (+16.0% versus +23.5%). This underperformance was primarily due to an
overweight exposure to the Brazilian and
<PAGE>
Mexican markets and a significant cash position during the Fund's start-up
period. We are looking for stronger performance relative to that of our
benchmark index, in the second half of the year.
The timing of New Europe Fund's inception on December 29, 1998 was not
as fortuitous as we had hoped. We employed our value-oriented stock selection
strategy just prior to the spring rebound in stock prices in Eastern Europe. The
Fund provided a total return of -3.77% (Class A shares at net asset value with
distributions reinvested) for the six months ended May 31, 1999. We expect your
Fund's performance to improve with further economic recovery in Eastern Europe
in the second half of fiscal 1999. Please see your Fund's latest performance
information for all share classes on the following page.
In Conclusion
Patience and a long-term perspective are important considerations for all
investors, especially those who invest in international markets. Delaware
Investments' experienced, disciplined and consistent approach to international
investing provides valuable portfolio diversification and attractive investment
opportunities.
We thank you for the confidence you have shown in our new global and
international offerings.
Sincerely,
/s/ Wayne A. Stork
- ---------------------
Wayne A. Stork
Chairman
Delaware Investments Family of Funds
/s/ David K. Downes
- ---------------------
David K. Downes
President and Chief Executive Officer
Delaware Investments Family of Funds
This semi-annual report is for the information of Global Opportunities Series,
International Small Cap Series, Latin America Fund and New Europe Fund
shareholders. The current prospectus for each Fund sets forth details about
charges, expenses, investment objectives and operating policies of each Fund.
You should read the prospectus carefully before you invest or send money.
Summary investment results are documented in each Fund's current Statement of
Additional Information.
<PAGE>
Performance Summary
Global/International Funds
Global Opportunities Series (star) International Small Cap Series
Latin America Fund (star) New Europe Fund
Cumulative/Average Annual Total Returns Through May 31, 1999
Lifetime One Year Six Months
Global Opportunities Series
Class A (Est. 7/22/97)
Excluding Sales Charge +6.09% +2.22% +2.89%
Including Sales Charge +2.76% -3.67% -3.08%
Institutional Class +6.09% +2.22% +3.00%
MSCI World +12.70% +13.54% +8.92%
(Morgan Stanley Cyclical Index)
International Small Cap Series
Class A (Est. 12/19/97)
Excluding Sales Charge +10.96% +1.16% +9.81%
Including Sales Charge +6.51% -4.70% +3.49%
Institutional Class +10.96% +1.16% +9.81%
Morgan Stanley EAFE Index +14.07% +4.62% +4.11%
(Morgan Stanley Europe Australia Far East)
Latin America Fund
Class A (Est. 12/29/98)
Excluding Sales Charge +16.00%
Including Sales Charge +9.31%
Institutional Class +16.00%
New Europe Fund
Class A (Est. 12/29/98)
Excluding Sales Charge -3.77%
Including Sales Charge -9.31%
Institutional Class -3.53%
All performance shown above is at net asset value and assumes reinvestment of
distributions. Past performance does not guarantee future results. No sales
charge or 12b-1 fees were imposed on A Class shares for the periods shown and no
B or C class shares were offered. A fee waiver was in effect during this period.
Performance would have been lower without the fee waiver. Return and share-value
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.-
GLOBAL OPPORTUNITIES SERIES
STATEMENT OF NET ASSETS
MAY 31, 1999
(UNAUDITED)
Market
Number Value
of Shares (U.S.$)
--------- -------
COMMON STOCK - 98.06%
Australia - 7.19%
Amcor Limited 10,110 $ 53,751
* CSR Limited 19,460 52,239
Foster's Brewing Group 20,440 57,870
* National Australia Bank 3,320 53,738
* Orica 4,400 24,312
--------
241,910
--------
Belgium -1.88%
Electrabel 206 63,237
--------
63,237
--------
France - 5.47%
* Alcatel 200 23,734
* Compagnie de Saint Gobain 250 39,166
* Elf Aquitaine 502 72,531
Societe Generale 268 48,597
--------
184,028
--------
Germany - 8.29%
Bayer 1,460 55,624
* Bayerische Hypo-und Vereinsbank 1,760 93,619
* Rheinisch Westfaelisches Elek 1,180 52,449
Siemens AG 1,150 77,093
--------
278,785
--------
Hong Kong - 2.25%
Hong Kong Electric 9,500 29,767
* Wharf (Holdings) Limited 18,000 45,842
--------
75,609
--------
Japan - 3.13%
Canon 1,000 25,067
Eisai Co. Limited 1,000 18,533
Koito Manufacturing 5,000 23,670
Matsushita Elecric Industrial 1,000 17,999
West Japan Railway 5 19,930
--------
105,199
--------
Malaysia - 1.17%
Sime Darby Berhad 30,000 39,316
--------
39,316
--------
Netherlands - 4.87%
Elsevier-CVA 4,700 59,443
ING Groep N.V. 600 32,009
Royal Dutch Petroleum 1,300 72,263
--------
163,715
--------
New Zealand - 2.83%
* Carter Holt Harvey Limited 20,160 23,109
Telecom Corporation of New Zealand 16,690 72,056
--------
95,165
--------
Page 1
<PAGE>
GLOBAL OPPORTUNITIES SERIES
STATEMENT OF NET ASSETS (Continued)
Market
Number Value
of Shares (U.S.$)
--------- -------
COMMON STOCK (Continued)
Spain - 2.85%
Iberdrola S.A. 2,420 $ 34,612
Telefonica de Espana 1,281 61,312
---------
95,924
---------
United Kingdom - 20.73%
Associated British Foods 3,960 28,847
* Bass 4,705 69,828
Blue Circle Industry 10,251 63,801
* Boots 6,000 78,337
Cable & Wireless 7,880 96,512
GKN 7,140 116,883
Glaxo Wellcome 3,660 102,954
PowerGen 7,000 75,479
Taylor Woodrow 22,500 64,480
---------
697,121
---------
United States - 37.40%
A T & T 1,200 66,600
Aon 1,800 77,400
Atlantic Richfield 700 58,581
Bank of America 905 58,542
Baxter International 900 58,106
Federal National Mortgage 900 61,200
Ford Motor 1,100 62,769
GTE 1,000 63,062
Heinz (H.J.) 1,100 53,144
Hewlett-Packard 800 75,450
International Paper 1,040 51,982
Jardine Matheson Holdings Limited 6,800 29,104
Lockheed Martin 1,700 68,744
McGraw-Hill 1,100 57,063
Pharmacia & Upjohn 1,000 55,438
Philip Morris 1,400 53,987
Pitney Bowes 900 57,375
Summit Bancorp 1,500 61,406
Tyco International 700 61,163
U.S. Bancorp 1,600 52,000
USX-Marathon Group 2,500 74,843
--------
1,257,959
---------
Total Common Stock (cost $3,244,359) 3,297,968
---------
Warrants - 0.01%
Hong Kong - 0.01%
* Wharf Holdings Warrants 900 464
---------
Total Warrants (cost $0) 464
---------
Page 2
<PAGE>
GLOBAL OPPORTUNITIES SERIES
STATEMENT OF NET ASSETS (Continued)
<TABLE>
<CAPTION>
Market
Principal Value
Amount (U.S.$)
--------- -------
<S> <C> <C>
Repurchase Agreements - 1.93%
With Chase Manhattan 4.78% 06/01/99
(dated 05/28/99, collateralized by $5,000
U.S. Treasury Notes 6.25% due 2/28/02,
market value $5,414 and $9,000 U.S. Treasury
Notes 7.50% due 05/15/02, market value $8,984
and $8,000 U.S. Treasury Notes 5.50% due
02/28/03, market value $8,073) $ 22,000 $ 22,000
With PaineWebber 4.78% 06/01/99
(dated 05/28/98, collateralized by $8,000
U.S. Treasury Bills 6.375% due 05/15/00,
market value $8,641 and $9,000
U.S. Treasury Notes 6.25% due 01/31/02,
market value $8,845 and $4,000
U.S. Treasury Notes 5.375% due
06/30/02, market value $4,453) 21,500 21,500
With Prudential 4.78% 06/01/99
(dated 05/28/99, collateralized by $21,000
U.S. Treasury Notes 15.75% due 11/15/01,
market value $21,945) 21,500 21,500
-----------
Total Repurchase Agreements (cost $65,000) 65,000
-----------
TOTAL MARKET VALUE OF SECURITIES - 100.00%
(cost $3,309,359) $ 3,363,432
LIABILITIES NET OF RECEIVEABLES AND OTHER ASSETS - 0.00% (88)
-----------
NET ASSETS APPLICABLE TO 374,858 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% $ 3,363,344
===========
NET ASSET VALUE - GLOBAL OPPORTUNITIES SERIES A CLASS
($13,079/1,458 SHARES) $ 8.97
===========
NET ASSET VALUE - GLOBAL OPPORTUNITIES SERIES INSTITUTIONAL CLASS
($3,350,265/373,400 SHARES) $ 8.97
===========
COMPONENTS OF NET ASSETS AT MAY 31, 1999:
Common stock, $0.01 par value, 200,000,000 shares
authorized to the Series with 100,000,000 shares allocated to Global
Opportunities Series A Class, 25,000,000 shares allocated to Global
Opportunities Series B Class, 25,000,000 shares allocated to Global
Opportunities Series C Class and 50,000,000 shares allocated to Global
Opportunities Series Institutional Class $ 3,187,665
Undistributed net investment income ** 29,139
Accumulated net realized gain on investments 90,335
Net unrealized appreciation of investments and foreign currencies 56,205
-----------
Total net assets $ 3,363,344
===========
</TABLE>
Page 3
<PAGE>
GLOBAL OPPORTUNITIES SERIES
STATEMENT OF NET ASSETS (Continued)
---------------------------------------------------------------------------
* Non-income producing security for the period ended May 31, 1999.
** Undistributed net investment income includes net realized gains (losses) on
foreign currencies. Net realized gains (losses) on foreign currencies are
treated as net investment income in accordance with provisions of the
Internal Revenue Code.
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
GLOBAL OPPORTUNITIES SERIES:
<TABLE>
<CAPTION>
<S> <C>
Net asset value A Class (A) $ 8.97
Sales charge (5.75% of offering price or 6.13% of the amount invested per share) (B) 0.55
Offering price ------
$ 9.52
======
</TABLE>
---------------------------------------------------------------------------
(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
$50,000 or more.
See accompanying notes
Page 4
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
INTERNATIONAL SMALL CAP SERIES
STATEMENT OF NET ASSETS
MAY 31, 1999
(UNAUDITED)
Market
Number Value
of Shares (U.S.$)
--------- -------
COMMON STOCK - 89.75%
Argentina - 0.68%
Transportadora de Gas del sur, Class B 13,000 $ 23,288
--------
23,288
--------
Australia - 3.84%
David Jones 29,500 29,251
National Foods 28,000 50,231
Orica 5,800 32,047
Village Roadshow 15,000 22,506
--------
134,035
--------
Belgium - 1.27%
ARBED 270 23,398
Bekaert 50 20,819
--------
44,217
--------
Brazil - 0.78%
Rossi Residential 3,600 3,735
Usinas Sider Minas ADR 8,800 23,585
--------
27,320
--------
Chile - 0.71%
Banco BHIF ADR 1,800 24,750
--------
24,750
--------
China - 1.97%
Guangdong Kelon Electric Holding 56,000 42,965
Shenzhen Expressway 156,000 25,748
--------
68,713
--------
Egypt - 0.57%
Paints and Chemical GDR 3,000 19,725
--------
19,725
--------
France - 6.90%
Clarins 1,068 91,718
* Club Mediterranee 690 61,770
* Remy Cointreau 1,810 30,146
Societe Francaise d'Investissements et
Deestion 880 57,161
--------
240,795
--------
Page 1
<PAGE>
INTERNATIONAL SMALL CAP SERIES
STATEMENT OF NET ASSETS (Continued)
Market
Number Value
of Shares (U.S.$)
--------- -------
COMMON STOCK (Continued)
Germany - 6.66%
AGIV fuer Industrie und Verkehrswesen 3,000 $ 63,394
Boewe Systec 1,530 45,868
CeWe Color Holding 250 55,170
Escada 350 47,363
KSB-Vorzug 150 20,611
--------
232,406
--------
Hong Kong - 3.61%
IDT International 300,000 49,516
South China Morning Post (Holdings) 64,000 31,772
Varitronix International 26,000 44,757
--------
126,045
--------
India - 2.32%
Larsen & Toubro GDR 3,100 38,673
Tata Engineering & Locom GDR 10,200 42,330
--------
81,003
--------
Indonesia - 2.71%
PT Ramayana Lestari Sentosa 6,600 35,763
PT Semen Gresik 35,082 58,757
--------
94,520
--------
Japan - 18.49%
Arcland Sakamoto 5,000 55,476
Asahi Printing & Packaging 4,000 33,203
Chudenko 2,060 36,485
Copal Electronics 7,000 51,777
Daitec 2,000 31,066
Getz Brothers 7,000 31,469
Kayaba Industry 21,000 40,731
Koito Manufacturing 12,000 56,807
Nichido Fire & Marine 9,000 45,564
Seikagaku 6,000 65,585
Tokyo Denpa 4,000 49,312
Ube-Nitto Kasei 14,000 46,600
York-Benimaru 3,000 101,089
--------
645,164
--------
Malaysia - 1.89%
Kumpulan Guthrie 54,000 34,816
* Leader Universal Holdings 93,000 31,081
--------
65,897
--------
Page 2
<PAGE>
INTERNATIONAL SMALL CAP SERIES
STATEMENT OF NET ASSETS (Continued)
Market
Number Value
of Shares (U.S. $)
--------- --------
COMMON STOCK (Continued)
Netherlands - 1.47%
Koninklijke Van Ommeren 1,760 $ 51,298
--------
51,298
--------
New Zealand - 5.04%
* Auckland International Airport 31,000 46,992
Fisher & Paykel Industries 9,700 31,123
Fletcher Challenge Building 14,534 22,577
The Warehouse Group 19,800 75,302
--------
175,994
--------
Peru - 0.55%
Creditcorp LTD 1,760 19,360
--------
19,360
--------
Philippines - 1.67%
* Aboitiz Equity Ventures 992,000 58,399
--------
58,399
--------
Singapore - 9.36%
DBS Land 28,000 49,612
Courts (Singapore) 65,000 37,261
Mandarin Oriental International 75,000 55,500
Overseas Union Bank 23,100 118,376
Rothmans Industries 8,300 65,842
--------
326,591
--------
Spain - 5.28%
Aumar-Autopistas del Mare 2,200 44,740
Corporacion Mapfre 1,430 29,578
Grupo Dragados 1,600 55,212
Zardoya Otis 2,041 54,793
--------
184,323
--------
Taiwan - 0.85%
* Yageo GDR 5,600 29,820
--------
29,820
--------
Thailand - 0.64%
* Hana Microelectronics 13,000 22,396
--------
22,396
--------
Page 3
<PAGE>
INTERNATIONAL SMALL CAP SERIES
STATEMENT OF NET ASSETS (Continued)
Market
Number Value
of Shares (U.S. $)
--------- --------
COMMON STOCK (Continued)
United Kingdom - 12.49%
Arriva 5,180 $ 30,768
Avon Rubber 2,800 22,145
Booker 5,600 7,710
Charter 4,900 30,360
Dairy Crest Group 7,000 34,069
Delta 14,000 32,949
Glynwed International 18,000 56,051
Greenalls Group 7,380 40,054
Keller Group 9,300 40,127
Mirror Group 18,200 67,163
Taylor Woodrow 25,900 74,224
---------
435,620
---------
Total Common Stock (cost $2,837,912) 3,131,679
---------
Principal
Amount
---------
REPURCHASE AGREEMENTS - 9.92%
With Chase Manhattan 4.78% 06/01/99
(dated 05/28/99, collateralized by $28,000
U.S. Treasury Notes 6.25% due 2/28/02,
market value $28,818 and $45,000 U.S. Treasury
Notes 7.50% due 05/15/02, market value $47,824
and $43,000 U.S. Treasury Notes 5.50% due
02/28/03, market value $42,975) $117,200 117,200
With PaineWebber 4.78% 06/01/99
(dated 05/28/98, collateralized by $45,000
U.S. Treasury Bills 6.375% due 05/15/00,
market value $45,997 and $45,000
U.S. Treasury Notes 6.25% due 01/31/02,
market value $47,081 and $23,000
U.S. Treasury Notes 5.375% due
06/30/02, market value $23,704) 114,400 114,400
With Prudential 4.78% 06/01/99
(dated 05/28/99, collateralized by $94,000
U.S. Treasury Notes 15.75% due 11/15/01,
market value $116,813) 114,400 114,400
--------
Total Repurchase Agreements (cost $346,000) 346,000
--------
Page 4
<PAGE>
INTERNATIONAL SMALL CAP SERIES
STATEMENT OF NET ASSETS (Continued)
<TABLE>
<S> <C>
TOTAL MARKET VALUE OF SECURITIES - 99.67%
(cost $3,183,912) 3,477,679
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES- 0.33% 11,367
------------
NET ASSETS APPLICABLE TO 363,348 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% $ 3,489,046
============
NET ASSET VALUE - INTERNATIONAL SMALL CAP SERIES A CLASS
($ 9.60 / 1 SHARE) $ 9.60
============
NET ASSET VALUE - INTERNATIONAL SMALL CAP SERIES INSTITUTIONAL CLASS
($ 3,489,036 / 363,347 SHARES) $ 9.60
============
COMPONENTS OF NET ASSETS AT MAY 31, 1999:
Common stock, $0.01 par value, 150,000,000 shares
authorized to the Series with 50,000,000 shares allocated to
International Small Cap Series A Class, 25,000,000 shares allocated to
International Small Cap Series B Class, 25,000,000 shares allocated to
International Small Cap Series C Class and
50,000,000 shares allocated to International
Small Cap Series Institutional Class $ 3,089,852
Undistributed net investment income** 18,765
Accumulated net realized gain on investments 87,076
Net unrealized appreciation of investments and foreign currencies 293,353
============
Total net assets $ 3,489,046
============
- ----------------------------------------------------------------------------------------------
* Non-income producing security for the period ended May 31, 1999.
** Undistributed net investment income includes net realized gains (losses) on
foreign currencies. Net realized gains (losses) on foreign currencies are treated
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 -
INTERNATIONAL SMALL CAP SERIES
Net asset value A Class (A) $ 9.60
Sales charge (5.75% of offering price or 6.15% of the amount invested
per share)(B) 0.59
=============
Offering price $ 10.19
=============
</TABLE>
- --------------------------------------------------------------------------------
(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 $50,000 or
more.
See accompanying notes
Page 5
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
International
Global Opportunities Small Cap
Series Series
Six Months Ended Six Months Ended
5/31/99 5/31/99
(Unaudited) (Unaudited)
-------------------- ----------------
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 2,352 $ 6,109
Dividends 47,513 48,269
Foreign tax withheld (3,653) (4,533)
--------- ---------
46,212 49,845
--------- ---------
EXPENSES:
Management fees 13,657 20,395
Custodian fees 135 1,604
Registration fees 1,000 150
Professional fees 1,250 775
Accounting and administration 1,193 636
Reports and statements to shareholders 800 1,204
Dividend disbursing and transfer agent fees and expenses 977 758
Directors' fees 579 426
Taxes (other than taxes on income) 800 117
Other 808 721
--------- ---------
21,199 26,786
Less expenses absorbed or waived (7,801) (6,210)
Less expenses paid indirectly (53) (92)
--------- ---------
Total expenses 13,345 20,484
--------- ---------
NET INVESTMENT INCOME 32,867 29,361
--------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investments 90,291 86,933
Foreign currencies 6,009 (9,552)
--------- ---------
Net realized gain 96,300 77,381
Net change in unrealized appreciation /
depreciation of investments and foreign currencies (31,273) 207,517
--------- ---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS AND FOREIGN CURRENCIES 65,027 284,898
--------- ---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 97,894 $ 314,259
========= =========
</TABLE>
See accompanying notes
Page 1
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Global Opportunities Series International Small Cap Series
Six Months Ended Six Months Ended 12/19/97*
5/31/99 Year ended 5/31/99 to
(Unaudited) 11/30/98 (Unaudited) 11/30/98
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 32,867 $ 75,359 $ 29,361 $ 66,625
Net realized gain on investments and foreign currencies 96,300 67,582 77,381 22,475
Net change in unrealized appreciation / depreciation of
investments and foreign currencies (31,273) 207,851 207,517 85,836
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from operations 97,894 350,792 314,259 174,936
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class (300) (57) -- --
Institutional Class (76,912) (38,823) (63,530) --
----------- ----------- ----------- -----------
(77,212) (38,880) (63,530) --
----------- ----------- ----------- -----------
Net realized gain on investments:
A Class (233) -- -- --
Institutional Class (59,741) -- (26,471) --
----------- ----------- ----------- -----------
(59,974) -- (26,471) --
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class 32 7,781 -- 5,661
Institutional Class -- -- -- 3,000,009
Net asset value of shares issued upon reinvestment of dividends from net
investment income and net realized gain on investments:
A Class 533 57 -- --
Institutional Class 136,653 38,823 90,000 --
----------- ----------- ----------- -----------
137,218 44,661 90,000 3,005,670
----------- ----------- ----------- -----------
Cost of shares repurchased:
A Class (15) (2,516) -- (5,818)
Institutional Class -- -- -- --
----------- ----------- ----------- -----------
(15) (2,516) -- (5,818)
----------- ----------- ----------- -----------
Increase in net assets derived from capital
share transactions 137,203 44,145 90,000 2,999,852
----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS 97,911 356,057 314,258 3,174,788
NET ASSETS:
Beginning of period 3,265,434 2,909,377 3,174,788 --
----------- ----------- ----------- -----------
End of period $ 3,363,345 $ 3,265,434 $ 3,489,046 $ 3,174,788
=========== =========== =========== ===========
</TABLE>
- ----------
*Date of commencement of operations.
See accompanying notes
Page 1
<PAGE>
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>
Global Opportunities Series
A Class
---------------------------------------
Six Months
Ended Year 7/22/97 (1)
5/31/99 Ended To
(Unaudited) 11/30/98 11/30/97
----------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $9.100 $ 8.230 $ 8.500
Income (loss) from investment operations:
Net investment income (2) 0.088 0.210 0.056
Net realized and unrealized gain (loss) on investments and foreign currencies 0.164 0.770 (0.326)
------ ------- -------
Total from investment operations 0.252 0.980 (0.270)
------ ------- -------
Less dividends and distributions:
Dividends from net investment income (0.215) (0.110) --
Distributions from net realized gain on investments (0.167) -- --
------ ------- -------
Total dividends (0.382) (0.110) --
------ ------- -------
Net asset value, end of period $8.970 $ 9.100 $ 8.230
====== ======= =======
Total return (3) 2.89% 12.07% (3.18%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 13 $ 13 $ 6
Ratio of expenses to average net assets 0.80% 0.80% 0.80%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.57% 1.55% 2.16%
Ratio of net investment income to average net assets 1.97% 2.40% 1.86%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 1.20% 1.65% 0.50%
Portfolio turnover 37% 50% 25%
</TABLE>
<TABLE>
<CAPTION>
Global Opportunities Series
Institutional Class
---------------------------------------
Six Months
Ended Year 7/22/97 (1)
5/31/99 Ended To
(Unaudited) 11/30/98 11/30/97
----------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.090 $ 8.230 $ 8.500
Income (loss) from investment operations:
Net investment income (2) 0.088 0.210 0.056
Net realized and unrealized gain (loss) on investments and foreign currencies 0.174 0.760 (0.326)
------- ------- -------
Total from investment operations 0.262 0.970 (0.270)
------- ------- -------
Less dividends and distributions:
Dividends from net investment income (0.215) (0.110) --
Distributions from net realized gain on investments (0.167) -- --
------- ------- -------
Total dividends (0.382) (0.110) --
------- ------- -------
Net asset value, end of period $ 8.970 $ 9.090 $ 8.230
======= ======= =======
Total return (3) 3.00% 11.95% (3.18%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 3,350 $ 3,253 $ 2,903
Ratio of expenses to average net assets 0.80% 0.80% 0.80%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.27% 1.25% 1.86%
Ratio of net investment income to average net assets 1.97% 2.40% 1.86%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 1.50% 1.95% 0.80%
Portfolio turnover 37% 50% 25%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
International Small Cap Series (4)
Institutional Class
----------------------------------
Six Months
Ended 12/19/97 (1)
5/31/99 To
(Unaudited) 11/30/98
----------- --------
<S> <C> <C>
Net asset value, beginning of period $ 9.000 $ 8.500
Income (loss) from investment operations:
Net investment income (2) 0.081 0.191
Net realized and unrealized gain (loss) on investments and foreign currencies 0.774 0.309
-------- --------
Total from investment operations 0.855 0.500
-------- --------
Less dividends and distributions:
Dividends from net investment income (0.1800) --
Distributions from net realized gain on investments (0.0750) --
-------- --------
Total dividends (0.2550) --
-------- --------
Net asset value, end of period $ 9.600 $ 9.000
======== ========
Total return (3) 9.81% 5.88%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 3,489 $ 3,175
Ratio of expenses to average net assets 1.25% 1.25%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.63% 2.05%
Ratio of net investment income to average net assets 1.81% 2.25%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 1.43% 1.45%
Portfolio turnover 8% 4%
</TABLE>
- ----------
(1) Date of commencement of operations; ratios have been annualized and total
return has not been annualized.
(2) Per share information was based on the average shares outstanding method.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
(4) As of May 31, 1999, the A Class had one share outstanding, representing the
initial seed purchase. Data for this class is excluded because the data is
not believed to be meaningful.
See accompanying notes
Page 1
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999
(UNAUDITED)
Delaware Group Global & International Funds, Inc. (the "Fund.") is registered as
a Maryland corporation and offers eight series, the International Equity Series,
the Global Equity Series, the Global Bond Series, the Emerging Markets Series,
the Global Opportunities Series, the International Small Cap Series, Latin
America Fund and New Europe Fund. These financial statements and related notes
pertain to the Global Opportunities Series and the International Small Cap
Series (the "Series"). The Global Opportunities Series and the International
Small Cap Series are registered as diversified open-end investment companies
under the Investment Company Act of 1940, as amended. Each Series offers four
classes of shares. The A Class carries a front-end sales charge of 5.75%, 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. As of May 31, 1999
only the A and Institutional Classes have commenced operations.
The investment objective of each Series is as follows:
Global Opportunities Series: To seek long-term growth without undue risk to
principal by investing primarily in U.S. and foreign equity securities with the
potential for capital appreciation and income.
International Small Cap Series: To seek long-term capital appreciation by
investing primarily in equity securities of small non-U.S. companies which may
include companies located or operating in established or emerging 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. 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.
Page 1
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Significant Accounting Policies (Continued)
Federal Income Taxes- The 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.
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- The Series may invest in a pooled cash account along with
other members of the Delaware Investments Family of Funds. The aggregate daily
balance of the pooled cash account is invested in repurchase agreements secured
by obligations of the U.S. government. The respective collateral is held by the
Series' 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
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.
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 2
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Significant Accounting Policies(Continued)
Other- Expenses common to all funds within the Delaware Group of Funds are
allocated amongst the funds on the basis of average net assets. Security
transactions are recorded on the date the securities are purchased or sold
(trade date). Costs used in calculating realized gains and losses on the sale of
investment securities are those of the specific securities sold. Dividend income
is recorded on the ex-dividend date and interest income is recorded on the
accrual basis. Foreign dividends are also recorded on the ex-dividend date or as
soon after the ex-dividend date that the Series is aware of such dividends, net
of all non-rebatable tax withholdings. Withholding taxes on foreign dividends
have been provided for in accordance with the Series' understanding of the
applicable country's tax rules and rates. The Series declares and pays dividends
from net investment income and capital gains annually.
Certain expenses of the Series are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to the best price execution. The
Series may receive earnings credit used to offset custody fees when positive
cash balances are maintained at the custodian. The "soft dollar " reimbursement
and the earnings credit are combined as expenses paid indirectly in the
Statement of Operations. The amount of these expenses and credits for the period
ended May 31, 1999 are as follows:
Global International
Opportunities Small Cap
Series Series
--------------------------------------------
"Soft Dollar"
Expenses.................. $38 $38
Earnings Credits.......... 15 54
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 of
the Series, an annual fee which is based on its net assets. DIAL has entered
into a sub-advisory agreement with Delaware Management Company ("DMC"), an
affiliate, with respect to the management of the Global Opportunities Series'
investments in U.S. securities. DMC receives 50% of the management fee paid to
DIAL for managing the U.S. securities portion of the Global Opportunities
Series. Effective April 1, 1999, the management fee for the Global Opportunities
Series is calculated daily at the rate of 0.85% on the first $500 million of the
average daily net assets of the Series, 0.80% on the next $500 million, 0.75% on
the next $1.5 billion and 0.70% on the average daily net assets in excess of
$2.5 billion. For the International Small Cap Series, the management fee
effective April 1, 1999, is calculated daily at the rate of 1.25% on the first
$500 million of the average daily
Page 3
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Investment Management and Other Transactions with Affiliates (Continued)
net assets of the Series, 1.20% on the next $500 million, 1.15% on the next $1.5
billion and 1.10% on the average daily net assets in excess of $2.5 billion.
Prior to April 1, 1999, the management fee rates were as follows:
Global International
Opportunities Small Cap
Series Series
--------------------------------------------
Management fee as a
percentage of average
daily net assets (per annum) 0.80% 1.25%
DIAL has elected to waive its fees and reimburse each Series to the extent that
annual operating expenses, exclusive of taxes, interest, brokerage commission,
extraordinary expenses and distribution fees, exceed 0.80% for each class of the
Global Opportunities Series and 1.25% for each class of the International Small
Cap Series of the average daily net assets for each Series through November 30,
1999.
The Series has engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing and transfer agent services. Each Series
pays DSC a monthly fee based in the number of shareholder accounts, shareholder
transactions and average net assets, subject to certain minimums.
On May 31, 1999, the Series had payables to affiliates as follows:
Global International
Opportunities Small Cap
Series Series
------------------------------------
Investment Management fee
Payable to DIAL........................ $2,542 $2,817
Other expenses payable to DMC
and affiliates......................... 4,472
Dividend disbursing, transfer
agent fees, accounting fees and
other expenses payable to DSC.......... 329 337
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 and 1.00% of the
average daily net assets of
Page 4
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Investment Management and Other Transactions with Affiliates (Continued)
the B and C Class. DDLP has elected voluntarily to waive such fees through May
31, 1999.
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.
3. Investments
During the period ended May 31, 1999, each Series made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments as follows:
Global International
Opportunities Small Cap
Series Series
--------------------------------------------
Purchases.......................... $659,667 $126,301
Sales.............................. 594,745 441,915
The cost of investments for the federal income tax purposes approximates cost
for book purposes. At May 31, 1999, the aggregate cost of securities and
unrealized appreciation (depreciation) for federal income tax purposes for each
Series were as follows:
Global International
Opportunities Small Cap
Series Series
--------------------------------------------
Cost of investments................ $3,309,359 $3,183,912
=========== ===========
Aggregate unrealized appreciation 353,988 635,587
Aggregate unrealized depreciation (299,915) (341,820)
----------- -----------
Net unrealized appreciation........ $54,073 $293,767
=========== ============
Page 5
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NOTES TO FINANCIAL STATEMENTS (Continued)
4. Capital Stock
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
Global Opportunities International Small
Series Cap Series
------ ----------
Period Ended Year Ended Period Ended 12/19/97* to
5/31/99 11/30/98 5/31/99 11/30/98
-------------------------------------------------------
Shares sold:
<S> <C> <C> <C>
A Class 4 942 - 598
Institutional Class - - - 352,942
Shares issued upon reinvestment of dividends from net investment income and net
realized gain on investments:
A Class............. 61 - -
Institutional Class. 15,670 4,787 10,405 -
------------------ ----------------------
15,735 5,736 10,405 353,540
------------------ ----------------------
Shares repurchased:
A Class............. (1) (295) - (597)
Institutional Class. - - - -
------------------ ----------------------
(1) (295) - (597)
------------------ ----------------------
Net increase............... 15,734 5,441 10,405 352,943
================== ======================
</TABLE>
* Date of commencement of operations.
5. Lines Of Credit
The Global Opportunities Series has a committed line of credit of $100,000. No
amounts were outstanding at May 31, 1999.
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.
Forward foreign currency contracts are valued at the mean between the bid and
asked prices of the contracts and are marked-to-marketed daily. Interpolated
values are derived when the settlement date of the contract is an interim date
for which quotations are not
Page 6
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NOTES TO FINANCIAL STATEMENTS (Continued)
7. Foreign Exchange Contracts (Continued)
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 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.
The following forward currency contracts were outstanding at May 31, 1999:
<TABLE>
<CAPTION>
Global Opportunities Series
Value of
Contracts to In exchange Contract at Settlement Unrealized
Deliver For 5/31/99 Date Appreciation
------- --- ------- ---- ------------
<S> <C> <C> <C> <C>
151,614 British Pounds $245,000 $242,620 7/30/99 $2,380
</TABLE>
7. Market and Credit Risks
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 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 of the 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
Page 7
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NOTES TO FINANCIAL STATEMENTS (Continued)
8. Market and Credit Risks (Continued)
registration under Rule 144A of the Securities Act of 1933, as amended, and
other securities which may not be readily marketable. The relative illiquidity
of some of these securities may adversely affect the Series' ability to dispose
of such securities in a timely manner and at a fair price when it is necessary
to liquidate such securities.
Page 8
<PAGE>
Proxy Results
(Unaudited)
For the six months ended March 31, 1999, The Delaware Group Global &
International Funds, Inc. shareholders voted on the following proposals at the
annual meeting of shareholders on March 17, 1999 or as adjourned. The
description of each proposal and number of shares voted are as follows:
1. To elect the Delaware Group Global & International Funds Inc. Board of
Directors.
Shares Shares Voted
Voted Withheld
For Authority
-------------- -------------
Jeffrey J. Nick 20,453,923 891,165
Walter P. Babich 20,479,397 865,691
John H. Durham 20,501,960 843,128
Anthony D. Knerr 20,499,903 845,185
Ann R. Leven 20,505,991 839,097
Thomas F. Madison 20,505,994 839,094
Charles E. Peck 20,506,620 838,468
Wayne A. Stork 20,506,946 838,142
Jan L. Yeomans 20,507,604 837,484
2. To approve the redesignation of the Fund's Investment objective from
fundamental to non-fundamental.
For Against Abstain
----------------- ----------------- -----------------
358,770 None None
3. To approve standardized fundamental investment restrictions for the Global
Opportunities Fund (proposal involves separate votes on seven sub-proposals
3A-3G).
3A. To adopt a new fundamental investment restriction concerning concentration
of the investments in the same industry.
For Against Abstain
----------------- ----------------- -----------------
358,770 None None
3B. To adopt a new fundamental investment restriction concerning borrowing money
and issuing senior securities.
For Against Abstain
----------------- ----------------- -----------------
358,770 None None
3C. To adopt a new fundamental investment restriction concerning underwriting.
For Against Abstain
----------------- ----------------- -----------------
358,770 None None
3D. To adopt a new fundamental investment restriction concerning investments in
real estate.
For Against Abstain
----------------- ----------------- -----------------
358,770 None None
3E. To adopt a new fundamental investment restriction concerning investments in
commodities.
For Against Abstain
----------------- ----------------- -----------------
358,770 None None
Page 1
<PAGE>
Proxy Results (Continued)
(Unaudited)
3F. To adopt a new fundamental investment restriction concerning lending by the
Fund.
For Against Abstain
----------------- ----------------- -----------------
358,770 None None
3G. To reclassify all current fundamental investment restrictions as
non-fundamental.
For Against Abstain
----------------- ----------------- -----------------
358,770 None None
4. To approve a new investment management agreement with Delaware Management
Company for the Global Opportunities Fund.
For Against Abstain
----------------- ----------------- -----------------
358,770 None None
5. To approve a new sub-advisory agreement for the Global Opportunities Fund.
For Against Abstain
----------------- ----------------- -----------------
358,770 None None
6. To ratify the selection of Ernst & Young LLP, as the independent auditors
for Delaware Group Global & International Funds, Inc.
For Against Abstain
----------------- ----------------- -----------------
19,503,887 116,413 1,724,785
7. To approve the restructuring of the Delaware Group Global & International
Funds, Inc. from a Maryland Corporation into a Delaware Business Trust.
For Against Abstain
----------------- ----------------- -----------------
18,845,607 216,023 607,607
Year 2000 (Unaudited)
Like other investment companies, financial and business organizations and
individuals around the world, the Fund could be adversely affected if computer
systems used by the Investment Manager and other service providers do not
properly process and calculate date-related information and data on and after
January 1, 2000. The Fund is taking steps to obtain satisfactory assurances that
the Investment Manager and other major service providers are taking steps
reasonably designed to address the Year 2000 issue with respect to the computer
systems that such service providers use. At this time, however, there can be no
assurance that these steps will be sufficient to avoid any adverse impact to the
Fund.
Page 2
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
LATIN AMERICA FUND
STATEMENT OF NET ASSETS
MAY 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Number of Market Value
Shares (U.S. $)
--------- ------------
<S> <C> <C>
COMMON STOCK - 88.90%
Argentina- 8.41%
Central Puerto Class B 21,300 $ 46,896
S.A. Importadora y Exportadora de la Patagonia 6,700 45,595
Sociedad Comercial del Plata 74,600 31,356
Transportadora de Gas del sur,Class B 24,700 44,247
YPF Sociedad Anonima ADR 1,800 75,825
-----------
243,919
-----------
Brazil - 38.35%
Aracruz Celulose ADR 6,700 128,975
Centrais Electricas GDR 2,200 82,420
Central Costanera ADR 2,100 52,119
Companhia Energetica de Minas Gerais 5,000 104,898
Companhia Paranaense de Energia Copel ADR 14,300 107,250
Gerdau Metalurgica 2,900,000 69,028
*Rossi Residential 32,600 33,822
Telecomunicacoes Brasileiras 2,300 108,631
Telecomunicacoes de Minas Gerais 2,600,000 74,717
Telecomunicacoes do Parana 400,000 67,808
Unibanco GDR 6,800 153,425
Usinas Siderurgicas de Minas Gerais ADR 48,300 129,449
-----------
1,112,542
-----------
Canada- 2.51%
*Bell Canada International 5,100 72,981
-----------
72,981
-----------
Chile - 9.79%
Administradora de Fondos de Pensiones Provida ADR 5,300 107,987
CIA Telecom Chile 3,500 76,125
Quinenco ADR 9,500 99,750
-----------
283,862
-----------
Luxembourg - 2.03%
Quilmes Industrial ADR 5,200 58,825
-----------
58,825
-----------
Mexico - 23.67%
*Acer Computec Latino America 108,500 33,539
Alfa de C.V. Class A 18,700 66,380
Cemex de C.V. Class B 29,000 130,283
*Grupo Financiero Banorte 57,700 73,723
Grupo Financiero Serfin ADR 72,700 26,127
Grupo Industrial Maseca 61,200 38,719
Grupo Industrial Saltillo 19,000 59,907
*Grupo Minsa C Shares 125,000 43,405
Nacional De Drogas 66,000 46,516
Tubos de Acero de Mexico 7,500 68,779
Vitro ADR 16,700 99,156
-----------
686,534
-----------
Peru - 4.14%
Creditcorp Limited 5,900 64,900
Telefonica del Peru ADR 3,800 55,100
-----------
120,000
-----------
Total Common Stock (cost $2,296,488) 2,578,663
-----------
</TABLE>
Page 1
<PAGE>
LATIN AMERICA FUND
STATEMENT OF NET ASSETS (Continued)
<TABLE>
<CAPTION>
Principal Market Value
Amount (U.S. $)
--------- ------------
<S> <C> <C>
REPURCHASE AGREEMENTS - 11.20%
With Chase Manhattan 4.78% 06/01/99
(dated 05/28/99, collateralized by $26,000
U.S. Treasury Notes 6.25% due 02/28/02,
market value $27,069 and $43,000 U.S. Treasury
Notes 7.50% due 05/15/02, market value $44,921
and $40,000 U.S. Treasury Notes 5.50% due
02/28/03, market value $40,367) $ 110,000 $ 110,000
With PaineWebber 4.78% 06/01/99
(dated 05/28/99, collateralized by $43,000
U.S. Treasury Bills 6.375% due 05/15/00,
market value $43,005 and $43,000 U.S.
Treasury Notes 6.25% due 01/31/02, market
value $44,224 and $22,000 U.S. Treasury
Notes 5.375% due 06/30/03, market value $22,165) 107,000 107,000
With Prudential Securities 4.75% 06/01/99
(dated 05/28/99, collateralized by $89,000
U.S. Treasury Notes 15.75% due 11/15/01,
market value $110,223) 108,000 108,000
-----------
Total Repurchase Agreements (cost $325,000) 325,000
-----------
TOTAL MARKET VALUE OF SECURITIES - 100.10% $ 2,903,663
(cost $2,621,488) -----------
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (0.10%) (2,884)
-----------
NET ASSETS APPLICABLE TO 294,222 SHARES ($0.01 PAR VALUE)
OUTSTANDING - 100.00% $ 2,900,779
===========
NET ASSET VALUE - LATIN AMERICA A CLASS
($1,021 / 103.5 SHARES) $ 9.86
===========
NET ASSET VALUE - LATIN AMERICA INSTITUTIONAL CLASS
($2,899,758 / 294,118.5 SHARES) $ 9.86
===========
COMPONENTS OF NET ASSETS AT MAY 31, 1999:
- ------------------------------------------------------------------
Common Stock $0.01 value 150,000,000 shares authorized
to the Series with 50,000,000 shares allocated to Latin
America Series A Class, 25,000,000 shares allocated to Latin
America Series B Class, 25,000,000 shares allocated to Latin
America Series C Class, 50,000,000 shares allocated to
Latin America Series Institutional Class $ 2,501,088
Undistributed net investment income** 48,147
Accumulated net realized gain on investments 69,629
Net unrealized appreciation on investments and foreign currencies 281,915
-----------
Total net assets $ 2,900,779
- ------------------------------------------------------------------ ===========
</TABLE>
* Non-income producing security for the period ended May 31, 1999.
** Undistributed net investment income includes net realized gains (losses) on
foreign currencies. Net realized gains (losses) on foreign currencies are
treated as net investment income in accordance with provisions of the
Internal Revenue Code.
ADR - American Depository Receipt
DR - Global Depository Receipt
Page 2
<PAGE>
LATIN AMERICA FUND
STATEMENT OF NET ASSETS (Continued)
<TABLE>
<CAPTION>
<S> <C>
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
LATIN AMERICA SERIES
Net asset value A Class (A) $ 9.86
Sales charge (5.75% of offering price or 6.09% of the amount invested per share) (B) 0.60
-----------
Offering price $ 10.46
- ------------------------------------------------------------------------------------------- ===========
</TABLE>
(A) Net asset value per share, as illustrated, is the estimated amount
which would be paid upon the redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases of $50,000
or more.
See accompanying notes
Page 3
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
LATIN AMERICA FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD DECEMBER 29,1998* TO MAY 31,1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 52,138
Interest 10,400
Foreign tax withheld (1,728) $ 60,810
---------
EXPENSES:
Management fees 11,629
Professional fees 6,939
Dividend disbursing and transfer agent fees and expenses 639
Reports and statements to shareholders 600
Accounting and administration 521
Custodian fees 354
Registration fees 217
Directors' fees 183
Taxes (other than taxes on income) 50
Other 75 21,207
---------
Less expenses absorbed or waived (7,361)
Less expenses paid indirectly (129)
----------
Total expenses 13,717
----------
NET INVESTMENT INCOME 47,093
----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain on:
Investment transactions 69,629
Foreign currencies 1,054
----------
Net realized gain 70,683
Net change in unrealized appreciation/depreciation
of investment transactions and foreign currencies 281,915
----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS AND FOREIGN CURRENCIES 352,598
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 399,691
==========
</TABLE>
- -----------------------------------------------
* Date of commencement of operations.
See accompanying notes
Page 1
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
LATIN AMERICA FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
12/29/1998*
to
05/31/1999
(Unaudited)
-------------
<S> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 47,093
Net realized gain on investments and foreign currencies 70,683
Net unrealized appreciation/depreciation of investments
and foreign currencies 281,915
-----------
Net increase in net assets resulting from operations 399,691
-----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class 1,421
Institutional Class 2,500,008
Net asset value of shares issued upon reinvestment of dividends from net
investment income and net realized gain on investment transactions:
A Class -
Institutional Class -
-----------
2,501,429
Cost of shares repurchased:
A Class (341)
Institutional Class -
-----------
(341)
-----------
Increase in net assets derived from capital
share transactions 2,501,088
-----------
NET INCREASE IN NET ASSETS 2,900,779
NET ASSETS:
Beginning of period -
-----------
End of period $ 2,900,779
===========
</TABLE>
- ----------------------------------------------
* Date of commencement of operations.
See accompanying notes
Page 1
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
LATIN AMERICA FUND
FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each period was
as follows:
<TABLE>
<CAPTION>
A Class Institutional Class
----------- -------------------
12/29/98(1) 12/29/98(1)
to to
5/31/99 5/31/99
(Unaudited) (Unaudited)
----------- -------------------
<S> <C> <C>
Net asset value, beginning of period $ 8.500 $ 8.500
Income from investment operations:
Net investment income(3) 0.189 0.189
Net realized and unrealized on investments
and foreign currencies 1.171 1.171
------- -------
Total from investment operations 1.360 1.360
------- -------
Net asset value, end of period $ 9.860 $ 9.860
======= =======
Total return(2) 16.00% 16.00%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $1 $2,900
Ratio of expenses to average net assets 1.25% 1.25%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.92% 1.92%
Ratio of net investment income to average net assets 4.28% 4.28%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.61% 3.61%
Portfolio turnover 6% 6%
</TABLE>
- ----------------------------
(1) Date of initial public offering; ratios have been annualized and total
return has not been annualized.
(2) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of the sales charge.
(3) The average share outstanding method has been applied for per share
information.
See accompanying notes
Page 1
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
LATIN AMERICA FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999 (UNAUDITED)
Delaware Group Global and International Funds, Inc. (the "Company") is
registered as a Maryland corporation and offers eight series: the International
Equity Series, the Global Bond Series, the Global Equity Series (formerly the
Global Assets Series), the Emerging Markets Series, the Global Opportunities
Series, the International Small Cap Series, the Latin America Fund and the New
Europe Fund. These financial statements and the related notes pertain to the
Latin America Fund (the "Fund"). The Latin America Fund is registered as a
diversified open-end investment company under the Investment Company Act of
1940, as amended. The Fund offers four classes of shares. The Latin America Fund
A Class carries a front-end sales charge of 5.75%. The Latin America Fund B
Class carries a back-end deferred sales charge. The Latin America Fund C Class
carries a level load deferred sales charge and the Latin America Fund
Institutional Class has no sales charge. As of May 31, 1999 only the A and
Institutional Classes have commenced operations.
The investment objective of the Fund is to achieve long-term capital
appreciation by investing primarily in equity securities of Latin American
companies.
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 the foreign exchange are
valued at the last quoted sales price before the Fund is valued. Other
securities and assets for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the direction of
the Fund's Board of Directors.
Federal Income Taxes- The Fund intends to qualify as a regulated investment
company and make the requisite distributions to shareholders. Accordingly, no
provision for federal income taxes has been made in the financial statements.
Income and capital gain distributions are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles.
Class Accounting- Investment income, common expenses and realized and unrealized
gain (loss) on investments are allocated to the various classes of the Fund on
the basis of daily net assets of each class. Distribution expenses relating to a
specific class are charged directly to that class.
Page 2
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
LATIN AMERICA FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
Repurchase Agreements- The Fund may invest in a pooled cash account along with
other members of the Delaware Investments Family of Funds. The aggregate daily
balance of the pooled cash account is invested in repurchase agreements secured
by obligations of the U.S. government. The respective collateral is held by the
Fund's custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is at least 100% collateralized. However,
in the event of default or bankruptcy by the counterparty to the agreement,
realization of the collateral may be subject to legal proceedings.
Foreign Currency Transactions- Transactions denominated in foreign currencies
are recorded at the prevailing exchange rates on the valuation date. 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 in the statement of operations that
result from fluctuations in the foreign currency exchange rates. The Fund does
isolate that portion of gains and losses on investments of debt securities which
are due the changes in the foreign currency exchange rate from that which are
due to changes in the market prices of debt securities. The Fund reports certain
foreign currency related transactions as components of realized gains (losses)
for financial reporting purposes, whereas such components are treated as
ordinary income (loss) for federal income tax purposes.
Use of Estimates- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Other- Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the 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 Fund is aware of
such dividends, net of all non-rebatable tax withholdings. Withholding taxes on
foreign dividends have been provided for in accordance with the Fund's
understanding of the applicable country's tax rules and rates. The Fund declares
and pays dividends from net investment income and capital gains, if any,
annually.
Page 3
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
LATIN AMERICA FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
Certain expenses of the Fund are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $25 for the period ended May 31,
1999. In addition, the Fund receives earnings credits from its custodian when
positive cash balances are maintained, which are used to offset custody fees.
These credits were $104 for the period ended May 31, 1999. The expenses paid
under the above arrangements are included in their respective expense captions
on the Statement of Operations with the corresponding expense offset shown as
"expenses paid indirectly."
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware International Advisers Ltd. (DIAL), the Investment Manager of the
Fund, an annual fee which is calculated daily at the rate of 1.25% on the first
$500 million of average daily net assets, 1.20% on the next $500 million, 1.15%
on the next $1,500 million and 1.10% on the average daily net assets in excess
of $2,500 million. At May 31, 1999, the Fund had a liability for Investment
Management fees and other expenses payable to DMC of $15,352.
DIAL has elected to waive that portion, if any, of the management fee and
reimburse the Fund to the extent that annual operating expenses, exclusive of
taxes, interest, distribution fees, brokerage commissions and extraordinary
expenses, exceed 1.25% of the average daily net assets of the Fund through May
31, 1999.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to provide dividend disbursing, transfer agent and accounting and administration
services. The Fund pays DSC a monthly fee based on the number of shareholder
accounts, shareholder transactions and average net assets, subject to certain
minimums. At May 31, 1999, the Fund had a liability for such fees and other
expenses payable to DSC of $2,469.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. (DDLP), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.25% of the average daily assets of the A Class and 1.00% of the average
daily net assets of the B and C Classes. DDLP has elected voluntarily to waive
such fees through June 30, 1999.
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 4
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
LATIN AMERICA FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Investments
During the period ended May 31, 1999, the Fund made purchases of $2,346,540 and
sales of $50,052 of investment securities other than U.S. government securities
and temporary cash investments.
The cost of investments for federal income tax purposes approximates cost for
book purposes. At May 31, 1999 the aggregate cost of securities was $2,621,488.
At May 31, 1999, the net unrealized appreciation was $282,175 of which $454,439
related to unrealized appreciation of securities and $172,264 related to
unrealized depreciation of securities.
4. Capital Stock
Transactions in capital stock shares were as follows:
12/29/98*
to
5/31/99
(Unaudited)
-----------
Shares sold:
A Class 142
Institutional Class 294,119
Shares issued upon reinvestment of
distributions from net investment income
and net realized gain on investments:
A Class -
Institutional Class -
-------
294,261
-------
Shares Repurchased:
A Class (39)
Institutional Class -
-------
(39)
-------
Net increase 294,222
=======
*Date of commencement of operations.
Page 5
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
LATIN AMERICA FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
6. Foreign Exchange Contracts
The Fund will generally enter into forward currency contracts as a way of
managing foreign exchange risk. The Fund 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. The Fund may also use these contracts to hedge the U.S.
dollar value of securities it already owns denominated in foreign currencies.
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, the Fund could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts.
7. Market and Credit Risks
Some countries in which the Fund 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 Fund 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 Fund.
The Fund may invest in up to 15% of its total assets in illiquid securities
which may include securities with contractual restrictions on resale, securities
exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, and other securities which may not be readily marketable. The relative
illiquidity of some of these securities may adversely affect the Fund's ability
to dispose of such securities in a timely manner and at a fair price when it is
necessary to liquidate such securities.
Page 6
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NEW EUROPE FUND
STATEMENT OF NET ASSETS
MAY 31, 1999
(UNAUDITED)
Market
Number Value
of Shares (U.S.$)
---------------- ----------------
COMMON STOCK - 98.77%
Belgium - 1.91%
Electrabel 150 $ 46,046
----------
46,046
----------
Croatia - 2.36%
Pliva d.d. - GDR 144A 3,500 56,875
----------
56,875
----------
Czech Republic - 3.56%
* SPT Telecom - GDR 2,500 41,500
* Ceske Radiokomunikace GDR 144A 1,200 44,400
----------
85,900
----------
France - 12.87%
Alcatel Alsthom 400 47,467
* Compagnie de Saint Gobain 510 79,898
* Elf Aquitaine 840 121,370
Societe Generale 340 61,653
----------
310,388
----------
Germany - 10.64%
Bayer 1,730 65,911
Bayerische Vereinsbank 1,290 68,618
* Rheinisch Westfaelisches Elek 1,280 56,894
Siemens 970 65,026
----------
256,449
----------
Hungary - 6.05%
Demasz Rt - GDR 2,300 33,005
Magyar Tavkozlesi Rt - ADR 144A 2,000 56,000
MOL Magyar Olaj-es Gazipari Rt.- GDR 144A 2,340 56,745
----------
145,750
----------
Italy - 2.57%
* Ente Nazionale Idrocarburi SpA 9,950 62,041
----------
62,041
----------
Netherlands - 7.50%
Elsevier 5,030 63,617
ING Groep 560 29,875
Royal Dutch Petroleum 1,570 87,271
----------
180,763
----------
Poland - 1.36%
* Prokom Software - GDR 144A 2,000 32,700
----------
32,700
----------
Portugal - 1.57%
Portugal Telecom 840 37,949
----------
37,949
----------
<PAGE>
NEW EUROPE FUND
STATEMENT OF NET ASSETS (Continued)
Market
Number Value
of Shares (U.S.$)
---------------- ----------------
COMMON STOCK (Continued)
Spain - 8.39%
Banco Santander Central Hispano 3,654 $ 76,073
* Iberdrola 3,460 49,487
Telefonica de Espana 1,601 76,628
----------
202,188
----------
Sweden - 2.19%
Svenska Cellulosa 2,275 52,839
----------
52,839
----------
Switzerland - 1.68%
Novartis 28 40,564
----------
40,564
----------
United Kingdom - 36.12%
Associated British Food 6,864 50,001
Bass 5,900 87,563
Blue Circle Industries 9,400 58,505
* Boots 4,300 56,141
* British Airways 11,000 78,105
BG 11,500 63,382
Cable & Wireless 6,000 73,486
GKN 5,600 91,673
Glaxo Wellcome 1,800 50,633
Great Universal Stores 4,600 49,011
PowerGen 7,000 75,479
Rio Tinto 6,130 89,947
* Unigate 6,900 46,949
----------
870,875
----------
Total Common Stock (cost $2,511,297) 2,381,327
----------
Principal
Amount
------------
REPURCHASE AGREEMENTS - 1.28%
With Chase Manhattan 4.78% 6/01/99
(dated 5/28/99, collateralized by
$4,000 U.S. Treasury Notes 5.50%
due 2/28/03, market value $3,850 and
$3,000 U.S. Treasury Notes 6.25% due
2/28/02, market value $2,582 and $4,000
U.S. Treasury Notes 7.50% due 5/15/02,
market value $4,285) $10,400 $ 10,400
With PaineWebber 4.78% 6/01/99 (dated
5/28/99, collateralized by $2,000 U.S.
Treasury Notes 5.375% due 6/30/03,
market value $2,124 and $4,000 U.S.
Treasury Notes 6.25% due 1/31/02, market
value $4,218 and $4,000 U.S. Treasury
Notes 6.375% due 5/15/00, market value
$4,121) 10,300 10,300
With Prudential Securities 4.75% 6/01/99
(dated 5/28/99, collateralized by $8,000
U.S. Treasury Notes 15.75% due 11/15/01,
market value $10,465) 10,300 10,300
----------
Total Repurchase Agreements (cost $31,000) 31,000
<PAGE>
NEW EUROPE FUND
STATEMENT OF NET ASSETS (Continued)
TOTAL MARKET VALUE OF SECURITIES -100.05%
(cost $2,542,297) $2,412,327
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (0.05%) (1,319)
----------
NET ASSETS APPLICABLE TO 294,143 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% $2,411,008
==========
NET ASSET VALUE - NEW EUROPE FUND A CLASS
($196 / 24 SHARES) $ 8.18
==========
NET ASSET VALUE - NEW EUROPE FUND INSTITUTIONAL CLASS
($2,410,812 / 294,119 SHARES) $ 8.20
==========
COMPONENTS OF NET ASSETS AT MAY 31, 1999:
Common stock, $0.01 par value, 150,000,000 shares
authorized to the Fund with 50,000,000 shares
allocated to New Europe Fund A Class,
25,000,000 shares allocated to New Europe
Fund B Class, 25,000,000 shares allocated
to New Europe Fund C Class and
50,000,000 shares allocated to New
Europe Fund Institutional Class $2,500,227
Undistributed net investment income** 29,313
Accumulated net realized gain on investments 10,330
Net unrealized depreciation of investments
and foreign currencies (128,862)
==========
Total net assets $2,411,008
==========
- --------------------------------------------------------------------------------
* Non-income producing security for the period ended May 31, 1999.
** Undistributed net investment income includes net realized gains (losses) on
foreign currencies. Net realized gains (losses) on foreign currencies are
treated 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 -
NEW EUROPE FUND
Net asset value A Class (A) $ 8.18
Sales charge (5.75% of offering price or 6.11% of the
amount invested per share) (B) 0.50
----------
Offering price $ 8.68
==========
- --------------------------------------------------------------------------------
(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 $50,000 or
more.
See accompanying notes
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NEW EUROPE FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD DECEMBER 29, 1998* TO MAY 31, 1999 (UNAUDITED)
INVESTMENT INCOME:
Interest $ 3,577
Dividends 31,966
Foreign tax withheld (3,339) $ 32,204
------- ---------
EXPENSES:
Management fees 12,762
Professional fees 1,898
Reports and statements to shareholders 1,249
Registration fees 1,180
Dividend disbursing and transfer agent
fees and expenses 1,050
Taxes (other than taxes on income) 850
Accounting and administration 800
Custodian fees 612
Directors' fees 160
Other 494 21,055
------- ---------
Less expenses absorbed or waived (8,227)
Less expenses paid indirectly (261)
---------
Total expenses 12,567
---------
NET INVESTMENT INCOME 19,637
---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain on:
Investments 10,330
Foreign currencies 9,676
---------
Net realized gain 20,006
Net change in unrealized appreciation/depreciation of
investments and foreign currencies (128,862)
---------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS AND FOREIGN CURRENCIES (108,856)
---------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ (89,219)
=========
- --------------------------------------------------------------------------------
* Date of commenecment of operations.
See accompanying notes
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NEW EUROPE FUND
STATEMENTS OF CHANGES IN NET ASSETS
12/29/1998*
to
5/31/99
(Unaudited)
------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 19,637
Net realized gain on investments and foreign currencies 20,006
Net change in unrealized appreciation/depreciation of
investments and foreign currencies (128,862)
----------
Net decrease in net assets resulting from operations (89,219)
----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class 198
Institutional Class 2,501,684
----------
Net asset value of shares issued upon reinvestment
of distributions from net investment income and net
realized gain on investments:
A Class --
Institutional Class --
----------
2,501,882
----------
Cost of shares repurchased:
A Class --
Institutional Class (1,655)
----------
(1,655)
----------
Increase in net assets derived from capital
share transactions 2,500,227
----------
NET INCREASE IN NET ASSETS 2,411,008
NET ASSETS:
Beginning of period --
----------
End of period $2,411,008
==========
- --------------------------------------------------------------------------------
* Date of commencement of operations.
See accompanying notes
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each period was
as follows:
<TABLE>
<CAPTION>
New Europe Fund New Europe Fund
A Class Institutional Class
---------------- -------------------
12/29/98(3) 12/29/98(3)
to to
5/31/99 5/31/99
(Unaudited) (Unaudited)
---------------- -------------------
<S> <C> <C>
Net asset value, beginning of period $ 8.500 $ 8.500
Income (loss) from investment operations:
Net investment income(1) 0.067 0.067
Net realized and unrealized loss on investments and foreign currencies (0.387) (0.367)
------- -------
Total from investment operations (0.320) (0.300)
------- -------
Net asset value, end of period $ 8.180 $ 8.200
======= =======
Total return(2) (3.77%) (3.53%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 0 $2,411
Ratio of expenses to average net assets 1.25% 1.25%
Ratio of expenses to average net assets prior to expense limitation
and expenses paid indirectly 2.05% 2.05%
Ratio of net investment income to average net assets 1.88% 1.88%
Ratio of net investment income to average net assets prior to
expense limitation and expenses paid indirectly 1.08% 1.08%
Portfolio turnover 5% 5%
</TABLE>
- ---------------------------------------------------------
(1) Per share information was based on the average shares outstanding method.
(2) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of the sales charge.
(3) Date of initial public offering; ratios have been annualized and total
return has not been annualized.
See accompanying notes
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NEW EUROPE FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999 (UNAUDITED)
Delaware Group Global and International Funds, Inc. (the "Company") is
registered as a Maryland corporation and offers eight funds: the International
Equity Series, the Global Bond Series, the Global Equity Series (formerly the
Global Assets Series), the Emerging Markets Series, the Global Opportunities
Series, the International Small Cap Series, the Latin America Fund and the New
Europe Fund. These financial statements and the related notes pertain to the New
Europe Fund (the "Fund"). The New Europe Fund is registered as a diversified
open-end investment company under the Investment Company Act of 1940, as
amended. The Fund offers four classes of shares. The New Europe Fund A Class
carries a front-end sales charge of 5.75%. The New Europe Fund B Class carries a
back-end deferred sales charge. The New Europe Fund C Class carries a level load
deferred sales charge and the New Europe Fund Institutional Class has no sales
charge. As of May 31, 1999 only the A and Institutional Classes have commenced
operations.
The investment objective of the Fund is to achieve long-term capital
appreciation by investing primarily in equity securities of European companies.
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 the foreign exchange are
valued at the last quoted sales price before the Fund is valued. Other
securities and assets for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the direction of
the Fund's Board of Directors.
Federal Income Taxes- The Fund intends to qualify as a regulated investment
company and make the requisite distributions to shareholders. Accordingly, no
provision for federal income taxes has been made in the financial statements.
Income and capital gain distributions are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles.
Class Accounting- Investment income, common expenses and realized and unrealized
gain (loss) on investments are allocated to the various classes of the Fund on
the basis of daily net assets of each class. Distribution expenses relating to a
specific class are charged directly to that class.
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NEW EUROPE FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
Repurchase Agreements- The Fund may invest in a pooled cash account along
with other members of the Delaware Investments Family of Funds. The aggregate
daily balance of the pooled cash account is invested in repurchase agreements
secured by obligations of the U.S. government. The respective collateral is held
by the Fund's custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is at least 100% collateralized. However,
in the event of default or bankruptcy by the counterparty to the agreement,
realization of the collateral may be subject to legal proceedings.
Foreign Currency Transactions- Transactions denominated in foreign currencies
are recorded at the prevailing exchange rates on the valuation date. 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 in the statement of operations that
result from fluctuations in the foreign currency exchange rates. The Fund does
isolate that portion of gains and losses on investments of debt securities which
are due the changes in the foreign currency exchange rate from that which are
due to changes in the market prices of debt securities. The Fund reports certain
foreign currency related transactions as components of realized gains (losses)
for financial reporting purposes, whereas such components are treated as
ordinary income (loss) for federal income tax purposes.
Use of Estimates- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Other- Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the 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 Fund is aware of
such dividends, net of all non-rebatable tax withholdings. Withholding taxes on
foreign dividends have been provided for in accordance with the Funds'
understanding of the applicable country's tax rules and rates. The Fund declares
and pays dividends from net investment income and capital gains, if any,
annually.
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NEW EUROPE FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
Certain expenses of the Fund are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $24 for the period ended May 31,
1999. In addition, the Fund receives earnings credits from its custodian when
positive cash balances are maintained, which are used to offset custody fees.
These credits were $237 for the period ended May 31, 1999. The expenses paid
under the above arrangements are included in their respective expense captions
on the Statement of Operations with the corresponding expense offset shown as
"fees paid indirectly."
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware International Advisers Ltd. (DIAL), the Investment Manager of the
Fund, an annual fee which is calculated daily at the rate of 1.25% on the first
$500 million of average daily net assets, 1.20% on the next $500 million, 1.15%
on the next $1,500 million and 1.10% on the average daily net assets in excess
of $2,500 million. At May 31, 1999, the Fund had a liability for Investment
Management fees and other expenses payable to DMC of $4,535.
DIAL has elected to waive that portion, if any, of the management fee and
reimburse the Fund to the extent that annual operating expenses, exclusive of
taxes, interest, distribution fees, brokerage commissions and extraordinary
expenses, exceed 1.25% of the average daily net assets of the Fund through May
31, 1999.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to provide dividend disbursing, transfer agent and accounting and administration
services. The Fund pays DSC a monthly fee based on the number of shareholder
accounts, shareholder transactions and average net assets, subject to certain
minimums. At May 31, 1999, the Fund had a liability for such fees and other
expenses payable to DSC of $283.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. (DDLP), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.25% of the average daily assets of the A Class and 1.00% of the average
daily net assets of the B and C Classes. DDLP has elected voluntarily to waive
such fees through June 30,1999.
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>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NEW EUROPE FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Investments
During the period ended May 31, 1999, the Fund made purchases of $2,538,557 and
sales of $37,591 of investment securities other than U.S. government securities
and temporary cash investments.
The cost of investments for federal income tax purposes approximates cost for
book purposes. At May 31, 1999 the aggregate cost of securities was $2,542,297.
At May 31, 1999, the net unrealized depreciation was $129,970, of which $118,673
related to unrealized appreciation of securities and $248,643 related to
unrealized depreciation of securities.
4. Capital Stock
Transactions in capital stock shares were as follows:
12/29/98*
to
5/31/99
(Unaudited)
-----------
Shares sold:
A Class 24
Institutional Class 294,319
Shares issued upon reinvestment of
distributions from net investment income
and net realized gain on investments:
A Class --
Institutional Class --
-------
294,343
-------
Shares Repurchased:
A Class --
Institutional Class (200)
-------
(200)
-------
Net increase 294,143
=======
- ------------------------------------
*Date of commencement of operations.
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NEW EUROPE FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
6. Foreign Exchange Contracts
The Fund will generally enter into forward currency contracts as a way of
managing foreign exchange risk. A Fund 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. The Fund may also use these contracts to hedge the U.S.
dollar value of securities it already owns denominated in foreign currencies.
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 Fund could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts.
The following forward foreign currency contracts were outstanding at May 31,
1999.
<TABLE>
<CAPTION>
Value of Unrealized
Contracts To In Exchange Contract At Settlement Appreciation
Deliver For 5/31/99 Date (Depreciation)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
92,825 British Pounds $150,000 $148,543 7/30/99 $1,457
</TABLE>
<PAGE>
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC. -
NEW EUROPE FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
7. Market and Credit Risks
Some countries in which the Fund 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 Fund 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 Fund.
The Fund may invest in up to 10% of its total assets in illiquid securities
which may include securities with contractual restrictions on resale, securities
exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, and other securities which may not be readily marketable. The relative
illiquidity of some of these securities may adversely affect the Fund's ability
to dispose of such securities in a timely manner and at a fair price when it is
necessary to liquidate such securities.