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For International Diversification
Global &
International Funds
(photo of illustration from
For International Equity Brochure)
service and guidance
professional management
goals
1999
Semi-Annual
Report
International Equity Fund
Global Bond Fund
Global Equity Fund
Emerging Markets Fund
DELAWARE(SM)
INVESTMENTS
- ---------------------
Philadelphia o London
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2 June 10, 1999
Dear Shareholder:
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 including Brazil,
Russia and many nations in Asia. IMF intervention helped limit the severity of
economic problems in those nations and provided an incentive to implement
reforms that are
Delaware Investments' experienced, disciplined and consistent approach to
international Investing provides valuable portfolio diversification and
attractive investment opportunities.
<TABLE>
<CAPTION>
Cumulative/Average Annual Total Returns
- ----------------------------------------------------------------------------------------------------------
Periods Ended May 31, 1999
Six Months Lifetime
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
International Equity Fund A Class (Est. 10/31/91) +3.20% +9.69%
Lipper International Equity Fund Average +4.98% (511 funds) +9.54% (62 funds)
Morgan Stanley Europe Australia Far East (EAFE) Index +4.15% +8.49%
- ----------------------------------------------------------------------------------------------------------
Global Bond Fund A Class (Est. 12/27/94) -0.71% +8.59%
Lipper Global Income Fund Average -1.74% (146 funds) +7.23% (88 funds)
Salomon Smith Barney World Government Bond Index -3.62% +6.99%
- ----------------------------------------------------------------------------------------------------------
Global Equity Fund A Class (Est. 12/27/94)* +3.49% +13.87%
Lipper Global Equity Fund Average +9.99% (217 funds) +14.66% (108 funds)
Morgan Stanley World Index +8.92% +18.10%
- ----------------------------------------------------------------------------------------------------------
Emerging Markets Fund A Class (Est. 6/10/96) +10.48% -8.14%
Lipper Emerging Markets Fund Average +19.01% (155 funds) -6.65% (105 funds)
Morgan Stanley Emerging Markets Free Index +21.39% -7.58%
</TABLE>
All performance is at net asset value and assumes reinvestment of
distributions. For complete performance for all Fund classes and expense
information, including waivers, see pages 13 and 14. The unmanaged Morgan
Stanley World Index and Salomon Smith Barney World Government Bond Index include
U.S. market performance. The Morgan Stanley Europe Australia Far East Index and
the Morgan Stanley Emerging Markets Free Index are also unmanaged. All returns
stated in U.S. dollars. Past performance does not guarantee future results.
* On July 21, 1998, Global Assets Fund was renamed Global Equity Fund and its
investment focus changed. The Fund's Lipper Analytical Services peer group was
changed to the Global Equity Fund category.
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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. Over the last several months, Brazil's
foreign reserves, a barometer of international confidence in the country, rose
steadily to nearly $42 billion (Source: New York Times). Falling interest rates
in Brazil boosted investor confidence and contributed to substantial stock
market gains in March, April and May.
After months of weakness, the economies in eastern Asia appear to be
strengthening. Many corporations in the area have restructured and are operating
more efficiently. Governments have adopted pro-business policy changes that are
stimulating economic growth in the region. We expect these changes to benefit
the long-term performance of investments in Asian markets.
Amid this 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. Until
recently, investors seemed willing to pay higher prices for growth stocks of
companies with more reliable earnings. This is a key reason our global and
international funds, which have a strong value approach, underperformed their
benchmarks and their peers.
The investor bias toward growth companies shifted in 1999, supported by the
remarkable performance of cyclical stocks, long-overlooked investments which are
often a staple of value funds. We believe Delaware's global and international
funds are positioned to benefit if interest in undervalued investments remains
strong.
Patience and a long-term perspective are important attributes 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.
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
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Portfolio Manager Reviews
International Equity Fund
By Clive A. Gillmore and Nigel G. May
Directors and Senior Portfolio Managers,
Delaware International Advisers Ltd.
Investment Strategy
International Equity Fund invests primarily in developed countries,
concentrating on Western Europe and select Pacific Rim nations that meet the
Fund's value discipline. We define value stocks as those that appear to be
selling for less than their true worth, and have strong prospects for future
growth.
We consider International Equity Fund to be a core international fund, and
therefore attempt to manage our risk profile. As the chart below shows,
International Equity Fund has historically enjoyed a lower risk profile than
many other international funds. When selecting countries, our disciplined value
style includes an analysis of the political and economic environment, the
strength and value of the currencies, and the anticipated inflation rate.
Within Europe, we were cautious about the prospects for the euro and focused
on countries that did not participate in the European Monetary Union
convergence. The United Kingdom, at 29% of net assets, remained the Fund's
largest country allocation.
We also invested heavily in companies from Australia and New Zealand, which
benefited from growing investor interest in commodity-based stocks. Our
investments in Australia and New Zealand provided substantial gains for the
Fund.
In December of 1998, investors still seemed concerned about unstable global
conditions. During the month, International Equity Fund's value approach
International Equity Fund's focus on less expensive stocks led us to invest more
heavily in commodity-based stocks than the EAFE index, benefiting the Fund's
performance in April and May.
Your Fund's Attractive Risk Profile
- --------------------------------------------------------------------------------
Morningstar Risk Scores (Periods Ended May 31, 1999)*
Three Years (366 funds) Five Years (190 funds)
- --------------------------------------------------------------------------------
International Equity Fund A Class 0.62 0.66
Foreign Stock Fund Average 0.73 0.75
* The average risk factor for all equity funds equals 1.00. Numbers greater than
1.00 indicate more relative risk, less than 1.00 indicates lower relative
risk. Past performance does not guarantee future results. To calculate risk,
Morningstar concentrates on those months during which a fund underperformed
the average return of a three-month U.S. Treasury bill's return and divides
the result by the total number of months in the rating period. The fund's
average monthly loss is then compared with the average monthly loss for the
fund's investment class. The resulting risk rating expresses how risky the
fund is relative to the average fund in the investment class. For example,
since the average risk rating for the fund's investment class is 1.00, a
Morningstar risk rating of 1.35 reveals that the fund has been 35% riskier
than the average fund in the same category for the period considered.
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was overshadowed by investments that exhibited more substantial earnings growth.
This contributed to the Fund's +3.20% return for the six months ended May 31,
1999, (Class A shares at net asset value with distributions reinvested),
slightly less than the unmanaged Morgan Stanley Europe Australia Far East (EAFE)
Index and our peers.
During the first half of 1999, however, investors started paying closer
attention to less-expensive stocks. As countries like Brazil and Japan showed
signs of turning the corner, the dominance of growth investments began to wane,
benefiting many of the markets we were invested in.
Since its inception, your Fund has historically kept its investments in
Japanese stocks smaller than the EAFE Index. This was based on our belief that
many Japanese stocks were overpriced. Over the last six months,
faster-than-expected economic growth signaled an improving outlook for the
Japanese economy and helped generate stronger investment returns. This made it
difficult for International Equity Fund to keep pace with the EAFE Index and
other international funds that had more substantial Japanese allocations.
Nevertheless, we still view the Japanese market as overvalued and expect the
economic recovery in the country to be slow and difficult.
The outstanding performance of commodity-based stocks was a bright spot for
the Fund. Growing investor confidence in the recovery of many worldwide
economies boosted the performance of commodities issues, including oil, utility
and paper companies. International Equity Fund's focus on less expensive stocks
led us to invest more heavily in commodity-based stocks than the EAFE Index,
benefiting the Fund's performance in April and May.
Rising demand from recovering world markets and the intervention of OPEC, an
intergovernmental organization working to bring stability to the petroleum
market, contributed to higher oil prices. This helped support higher prices for
the Fund's holdings of ELF Acquitaine, a French company that produces, refines
and distributes oil.
Stronger global demand for commodities also benefited the Fund's holdings of
CSR., a diversified company producing a wide range of products including
building materials and aluminum.
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Outlook
In the coming months, International Equity Fund's country allocations should
remain relatively stable. The U.K., in our opinion, currently offers attractive
value and will probably remain the Fund's
largest position.
We may, however, continue to protect our U.K. position, by hedging
approximately 8% of our holdings in sterling, based on our belief that the
currency is somewhat overvalued. While the expense of currency contracts limits
the Fund's short-term total returns, such contracts can help reduce our exposure
to fluctuating currency values.
During the first quarter of 1999, Japan's economy, the world's second
largest, grew 1.9%, reversing a trend of five consecutive quarters of
contraction (Source: Bloomberg Business News). Despite this encouraging news, we
expect to hold our Japanese position relatively steady at approximately 13% of
the Fund's total net assets, substantially less than the EAFE Index. In our
view, the road to economic recovery in Japan will be bumpy. In the coming
months, we will continue to monitor the progress of economic recovery in Japan,
while searching for select companies that offer reasonably priced stocks.
In our opinion, International Equity Fund's value portfolio remains
positioned to minimize investment risk and capitalize on opportunities in
overlooked markets.
We were encouraged by the long awaited return-to-form of less expensive
investments in recent months. Should global economies continue to demonstrate
stronger growth, investors may remain focused on a broader base of companies,
including reasonably priced value stocks.
International Equity Fund's Country Allocation vs.
Morgan Stanley Europe Australia Far East Index
- --------------------------------------------------------------------------------
International Morgan Stanley
Equity Fund EAFE Index
- --------------------------------------------------------------------------------
United Kingdom 28.6% 22.5%
Australia/New Zealand 13.8% 3.1%
Japan 13.4% 23.0%
Germany 9.6% 9.5%
France 8.7% 9.3%
Netherlands/Belgium 8.2% 7.5%
Spain 6.5% 3.1%
Hong Kong 3.0% 2.4%
Singapore/Malaysia 1.6% 1.0%
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Global Bond Fund
By Ian G. Sims, Christopher A. Moth and Joanna Bates
Senior Portfolio Managers,
Delaware International Advisers Ltd.
Strategic Positioning
Global markets calmed considerably since the fall and winter of 1998. A healthy
U.S. economy helped support global economic recovery, especially in emerging
markets regions such as Asia and Latin America. Demand for the security of fixed
income investments appeared to wane as investor confidence increased.
Global Bond Fund provided a total return of -0.71% for the six months ended
May 31, 1999 (Class A shares with dividends reinvested). Although your Fund's
return was negative for this period, we did a better job of preserving capital
than the Fund's unmanaged benchmark, the Salomon Smith Barney World Government
Bond Index and the average return of a peer group of funds with similar
investment objectives, tracked by Lipper Analytical Services, Inc.
On July 2, 1999, Joanna Bates joined the Global Bond Fund portfolio
management team. Ms. Bates is a graduate of London University and has been with
Delaware since 1997. Previously she was an Associate Director, Fixed Interest at
Hill Samuel Investment Management. Christopher A. Moth has been a portfolio
manager for Global Bond Fund since January of 1997. Mr. Moth graduated from the
City University of London and previously worked at the Guardian Royal Exchange,
where he was responsible for technical analysis, quantitative models and
projections.
Global Bond Fund's portfolio managers place great importance on quality and
focus primarily on bonds rated A or better by Standard & Poor's. At the mid
point of your Fund's fiscal year, the portfolio's average bond quality was AA+,
based on S&P ratings.
An improving global outlook and a robust U.S. economy reduced demand for
U.S. government debt over the last six months, lowering prices and pushing
yields higher. Long-term U.S. Treasury yields increased to just over 5.8% as of
May 31, 1999 from last October's low of 4.7% (Source: Bloomberg Business News).
Because we rely on income potential as the key measure of value, Global Bond
Fund significantly increased its allocation in U.S. Treasuries to 17.7%, as of
May 31, 1999, an increase of more than 9% since the beginning of the fiscal
year. The U.S. is now Global Bond Fund's largest country allocation.
Complementing our U.S. holdings were sizable investments in Australia,
Canada and New Zealand. Prior to November, we viewed currencies in these
countries as extremely undervalued relative to the U.S. dollar. Global Bond Fund
benefited over the past six months as currencies in Australia, Canada and New
Zealand strengthened. We have, however, begun to reduce our exposure in these
countries in favor of the better values we believe to be now available in
Europe.
In Europe, progress toward currency union over the past two years originally
helped bond performance in countries with historically weak currencies and
higher-than-average inflation like Italy and Spain. Since the euro was
introduced in January, however, the value of the new currency depreciated over
12% as of
Global Bond Fund's portfolio managers place great importance on quality and
focus primarily on bonds rated A or better by Standard & Poor's.
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May 31, 1999 (Source: Bloomberg Business News).
We believe slower-than-expected growth throughout Europe and an economic
recession in Germany contributed to the declining value of the euro. The
weakness of the euro increased bond yields in European Monetary Union member
nations, creating better value and opening up attractive investment
opportunities for Global Bond Fund.
Investing in foreign bonds involves certain risks, including fluctuating
currency values. Since American investors measure their results in U.S. dollars,
international currency changes can add or subtract from U.S. returns. We attempt
to reduce currency risk by holding bonds denominated in currencies that appear
undervalued. For example, as of May 31, 1999 we held bonds denominated in the
South African rand, which we viewed as inexpensive and having the potential to
significantly rise in value.
We also attempt to minimize risk by selectively hedging our currency
exposure with contracts that allow us to convert foreign currencies into U.S.
dollars at a predetermined rate. Global Bond Fund's focus on undervalued
currencies made hedging unnecessary over the last six months.
In general, we look for bonds with an average effective maturity in the
five- to ten-year range, a range we believe offers an attractive level of income
relative to the higher risk of fluctuating interest rates with longer term
bonds. Your Fund's average effective maturity as of May 31, 1999 was 6.88 years,
well within our target.
Outlook
We believe inflationary pressures in the United States have started to increase.
In our opinion, U.S. bond yields are currently low and don't reflect the
possibility that interest rates may rise. The potential for stronger global
economic growth could also contribute to higher inflation during the next six
months.
We expect to continue to limit the Fund's exposure to inflation risk by
maintaining a relatively short average effective duration. As of May 31, 1999,
Global Bond Fund's average effective duration was 4.81 years, shorter than that
of the Salomon Smith Barney World Government Bond Index. We plan to continue
defensively positioning Global Bond Fund's duration in the coming months to help
preserve capital if yields rise and prices fall.
In our opinion, U.S. bond yields, while still somewhat low, are
substantially more attractive than in recent years. We also see opportunities in
Europe to purchase undervalued bonds due to slower economic growth and currency
weakness.
Foreign bond markets now represent more than half of the fixed-income
opportunities worldwide, up from less than one third in 1989 (Source: Bloomberg
Business News). We remain confident that a portfolio consisting of both U.S. and
foreign bonds helps reduce investment risk and increases your opportunities for
high current income and capital appreciation. We thank you for your continued
commitment to Global Bond Fund and Delaware Investments.
GLOBAL BOND FUND
Portfolio Highlights
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May 31, 1999
- --------------------------------------------------------------------------------
Current 30-Day SEC Yield 3.51%*
Highest Concentration - United States 18.65% of assets
Average Effective Duration 4.81 years
Average Effective Maturity 6.88 years
Average Quality AA+
* For Class A shares, measured according to Securities and Exchange Commission
guidelines, SEC 30-day yield was 2.98%, 3.00% and 3.99% for Class B, Class C
and Institutional Class shares. Performance information for all classes can be
found on pages 13 and 14.
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Global Equity Fund
By Elizabeth A. Desmond
Director and Senior Portfolio Manager,
Delaware International Advisers Ltd.
And Robert L. Arnold
Senior Portfolio Manager
Delaware Management Company
Sharing the same value investment strategy as Delaware Investments'
International Equity Fund, Global Equity Fund scans the world for markets,
currencies and companies that are reasonably valued given their prospects for
future growth. Complementing Global Equity Fund's international holdings, is a
substantial portfolio of U.S. stocks that also meet value criteria.
Global Equity Fund provided a positive return of +3.49% in the six months
ended May 31, 1999 (Class A shares with distributions reinvested at net asset
value). Two of the strongest major markets since last December have been the
United States and Japan. We were not as heavily invested in these markets as our
benchmark, the Morgan Stanley World Index, or many other global funds because we
viewed them as overpriced. Therefore, this strategy worked against the portfolio
over the last six months and helps explain why the Fund did not keep pace with
the returns of the Morgan Stanley World Index and our peers.
Some of the European markets were decidedly lackluster. Stock prices in
Germany fell 7.0% over the last six months and France rose just over 2% (Source:
Bloomberg Business News). We attribute this, in part, to the weakness of the new
European currency, the euro. After a smooth start-up on January 4, the euro has
steadily slipped against the U.S. dollar, reflecting the sharp contrast between
the pace of economic growth in the U.S. and in Europe.
Due to the uncertain long-term outlook for the euro, we focused most of the
Fund's assets on countries that did not adopt the new currency. Our largest
country allocation remained the U.K. We also maintained sizable allocations in
stocks from Australia and New Zealand where the anticipation of stronger demand
for commodities helped drive attractive returns on commodity-based stocks.
The Asian markets performed well over the past six months, particularly
Japan, Hong Kong and Singapore, where signs that governments are implementing
much needed reforms boosted investor confidence.
As of May 31, 1999, approximately 37% of Global Equity Fund was invested in
U.S. equities, compared to more than 51% for the Morgan Stanley World Index, the
Fund's benchmark. Until April, very large growth-oriented companies and
technology companies with high price-to-
Hewlett Packard, a technology company, was one of our better-performing U.S.
stocks over the last six months. A strong new product line and plans to
restructure the organization contributed to Hewlett Packard's impressive
performance
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earnings ratios dominated U.S. equity market returns. P/E ratios are a commonly
used measurement of a stock's value. Global Equity Fund's focus on stocks which
we believe are selling for less than their true worth limited our ability to
invest in many of the best performing U.S. stocks.
Hewlett Packard, a technology company, was one of our better-performing U.S.
holdings over the last six months. A strong new product line and plans to
restructure the organization contributed to Hewlett Packard's impressive
performance. Investors were especially interested in a new network server that
is expected to deliver twice the power of competing products for half the cost.
Outlook
Looking forward, we will probably remain underweighted in Japan relative to the
Morgan Stanley World Index. In our opinion, the majority of Japanese stock
offerings are too expensive to meet Global Equity Fund's value discipline. Our
U.S. equity allocation will also probably remain below that of the Index. We
believe other parts of the world currently offer better value and superior
opportunities for capital appreciation.
We plan to continue to invest a large portion of the Fund's assets in the
U.K., Australia and New Zealand, which in our opinion, have healthy prospects
for future growth. We are, however, currently hedging the British sterling,
which we view as overvalued relative to the U.S. dollar.
We feel U.S. inflation should remain relatively benign, however, it could
tick up modestly due to higher commodity prices and labor costs. In our opinion,
a higher rate of inflation might prompt the U.S. Federal Reserve to raise
short-term interest rates. Higher interest rates are a potential concern for the
Fund, because increased borrowing costs could slow down the rate of global
economic recovery and reduce the attractiveness of less-expensive value stocks.
We believe a stronger Asian region could further the process of recovery in
many other parts of the world and help counterbalance the impact of potentially
higher U.S. interest rates. A continued global recovery should create higher
demand for commodities, which in our opinion will benefit Global Equity Fund's
long-term value focus.
GLOBAL EQUITY FUND'S
Asset Mix
- ------------------------------------------
May 31, 1999
Europe 53.7%
Pacific 7.6%
U.S. Stocks 37.2%
Cash and Other Assets 1.5%
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Emerging Markets Fund
By Clive A. Gillmore, Robert Akester And Joshua Brooks
Senior Portfolio Managers
Delaware International Advisers Ltd.
Investment Strategy
After weathering one of the most difficult years ever in 1998, emerging markets
investors saw substantial improvement during the opening months of 1999. For the
six months ended May 31, 1999, emerging markets investments, as measured by the
Morgan Stanley Emerging Markets Free Index, gained over 20%, signaling that
after more than 18 months of turmoil, world markets appeared to be on the
upswing.
Delaware Investments' Emerging Markets Fund returned +10.48% (Class A shares
at net asset value with distributions reinvested) for the same six month period.
Although the Fund performed well in absolute terms, it fell short of both the
Morgan Stanley Emerging Markets Free ("EMF") Index, the Fund's benchmark, and a
peer group of funds with similar investment objectives.
Consistent with our other global and international funds, Emerging Markets
Fund follows a steadfast value discipline and has a lower price-to-earnings
ratio than the Morgan Stanley EMF Index. We believe value stocks in emerging
markets offer attractive long-term opportunities; however, over the last six
months, our focus on such companies contributed to the Fund's underperformance.
For the last several years, uncertain global economic conditions reduced the
appeal of value investments, which were overshadowed by large growth-oriented
companies. This trend began to reverse in April and May as the worst of the
global recession appeared to be over and worldwide economies showed signs of
heating up. Commodity issues and energy stocks, in particular, benefited from
investors' expectations for stronger economic growth in many parts of the world.
When selecting stocks, we not only look at companies, we also consider the
country of origin. Due to the higher degree of risk associated with
international investing, we maintained a portfolio of 71 different companies
from 24 emerging markets countries, as of May 31, 1999. We believe investing in
a broad range of companies and countries helps to reduce long-term investment
risk.
We continued to invest the largest percentage of Emerging Markets Fund's
assets in Brazil. Brazil, after surviving severe financial problems in the third
and fourth quarters of 1998, progressed toward recovery in 1999. In December
1998 and January of 1999, our substantial allocation to Brazil had a negative
impact on the Fund's performance. While many of the companies operating in
Brazil were modernizing, restructuring and becoming more efficient, investors
were concerned about the Brazilian government's reluctance to implement economic
reforms.
After weathering one of the most difficult years ever in 1998, emerging markets
investors saw substantial improvement during the opening months of 1999.
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Brazil's market, however, made remarkable progress after the devaluation of
the nation's currency, the real, on January 21, 1999. Because Brazil does not
export heavily, the currency devaluation had little impact on trade. However, it
did slow the outflow of international capital, led to lower interest rates and
improved investor confidence. After months of uneasiness about Brazil's
currency, investors were encouraged to see Brazil pull through the devaluation
in reasonably good shape. Consequently, since the end of January, stock prices
in Brazil have risen more than 56%.
Although South Korea's stock market performed well over the past six months,
we chose to invest less heavily there than our benchmark, the Morgan Stanley
Emerging Markets Free Index. As of May 31, we allocated 2.1% of Emerging Markets
Fund's assets in South Korean stocks, compared with the Index's 12.5%.
In some ways, we view developments in the South Korean market as the reverse
of what we have seen in Brazil. For example, in Brazil, governmental reforms
have been implemented slowly and with much opposition. Nevertheless, many
Brazilian businesses restructured on their own, in order to operate more
profitably. In contrast, the South Korean government has promoted strong
measures to turn their economy around. However, we believe many companies in
South Korea are still borrowing excessively and expanding into unprofitable
markets.
Outlook
After a difficult year, it appears that many emerging markets economies have
started to turn the corner. As emerging nations continue to work with the
International Monetary Fund to implement much-needed economic reforms, we expect
the measures to provide long-term benefits to investors.
We believe Thailand and China are two countries in the Pacific Rim that
currently offer the most attractive opportunities for long-term capital
appreciation. We also plan to continue allocating a substantial portion of the
Fund's assets to Brazil, where many companies still appear very inexpensive to
us.
While it is still too soon to close the book on problems in emerging
markets, the prospects of a severe global recession seem greatly reduced. For
investors with a long-term outlook and a tolerance for the special risks
associated with investing in emerging markets, we see greater-than-usual
opportunities to discover companies and countries that are temporarily out of
favor, but have the potential to rise in value to their true worth.
As emerging nations
continue to work
with the
International
Montetary Fund to
implement much-
needed economic
reforms, we expect
the measures to
provide long-term
benefits to emerging
market investors.
Emerging Markets Fund:
Focusing On Latin America
- --------------------------------------------------------------------------------
Country/Region Allocation May 31, 1999
U.S. Cash Equivalents 8.9%
Latin America* 33.1%
Eastern Europe and Russia 8.3%
South Africa 12.6%
Middle East** 8.2%
India 4.4%
Taiwan 1.2%
China (Hong Kong) 5.9%
Thailand 5.8%
Malaysia 9.4%
Other Pacific Rim*** 2.2%
*Argentina, Brazil, Chile, Mexico, Peru.
**Israel, Turkey, Egypt.
***Indonesia, South Korea.
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Performance Summary
International Equity Fund
- --------------------------------------------------------------------------------
Average Annual Total Returns Through May 31, 1999
Lifetime Five Years One Year
- --------------------------------------------------------------------------------
Class A (Est. 10/31/91)
Excluding Sales Charge +9.69% +8.77% -0.91%
Including Sales Charge +8.83% +7.49% -6.63%
- --------------------------------------------------------------------------------
Class B (Est. 9/6/94)
Excluding Sales Charge +7.38% -1.54%
Including Sales Charge +7.06% -6.42%
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Class C (Est. 11/29/95)
Excluding Sales Charge +10.08% -1.54%
Including Sales Charge +10.08% -2.52%
Global Bond Fund
- --------------------------------------------------------------------------------
Average Annual Total Returns Through May 31, 1999
Lifetime One Year
- --------------------------------------------------------------------------------
Class A (Est. 12/27/94)
Excluding Sales Charge +8.59% +4.14%
Including Sales Charge +7.40% -0.79%
- --------------------------------------------------------------------------------
Class B (Est. 12/27/94)
Excluding Sales Charge +7.84% +3.41%
Including Sales Charge +7.49% -0.54%
- --------------------------------------------------------------------------------
Class C (Est. 11/29/95)
Excluding Sales Charge +4.79% +3.53%
Including Sales Charge +4.79% +2.54%
Returns reflect reinvestment of distributions and, where designated "Including
Sales Charge" any applicable sales charges as noted below. Return and share
value will fluctuate so that shares when redeemed may be worth more or less than
the original share price. Past performance does not guarantee future results.
Performance excluding sales charges for B and C Classes assumes contingent
deferred sales charges did not apply or the investment was not redeemed.
Class A shares have a front-end maximum sales charge of 5.75% (4.75% for Global
Bond Fund) and a 12b-1 fee.
Class B shares do not carry a front-end sales charge, but are subject to a 1%
annual distribution and service fee, and a contingent deferred sales charge of
up to 5% (4.00% for Global Bond Fund) if redeemed before the end of the sixth
year.
Class C shares have a 1% annual distribution service fee. If shares are redeemed
within 12 months, a 1% contingent deferred sales charge applies.
Institutional Class shares for each Fund, which are available without sales or
asset-based distribution charges only to certain eligible institutional
accounts, provided the following returns for the listed periods ended May 31,
1999.
Lifetime Five Years One Year
International Equity Fund (10/31/92) +9.98% +9.10% -0.60%
Global Bond Fund (12/27/94) +8.91% +4.54%
Global Equity Fund (12/27/94) +14.21% +3.49%
Emerging Markets Fund (6/10/96) -7.84% -18.28%
Lifetime performance commenced 10/31/91. For the period 10/31/92 through
11/9/92, performance is based on Class A performance, adjusted to eliminate the
sales charges, but not the asset-based distribution charge.
<PAGE>
for
international
diversification
14
Global Equity Fund*
- --------------------------------------------------------------------------------
Average Annual Total Returns Through May 31, 1999
Lifetime One Year
- --------------------------------------------------------------------------------
Class A (Est. 12/27/94)
Excluding Sales Charge +13.87% +3.18%
Including Sales Charge +12.35% -2.75%
- --------------------------------------------------------------------------------
Class B (Est. 12/27/94)
Excluding Sales Charge +13.07% +2.47%
Including Sales Charge +12.77% -2.36%
- --------------------------------------------------------------------------------
Class C (Est. 11/29/95)
Excluding Sales Charge +10.57% +2.48%
Including Sales Charge +10.57% +1.51%
See the footnotes on page 13 for important additional information and
Institutional Class performance. Return and share value for each Fund fluctuate
so that shares, when redeemed, may be worth more or less than their original
cost. Past performance is not a guarantee of future results.
* Effective July 21, 1998, the Fund was renamed Global Equity Fund and its
investment objective changed.
Emerging Markets Fund
- --------------------------------------------------------------------------------
Average Annual Total Returns Through May 31, 1999
Lifetime One Year
- --------------------------------------------------------------------------------
Class A (Est. 6/10/96)
Excluding Sales Charge -8.14% -18.48%
Including Sales Charge -9.96% -23.17%
- --------------------------------------------------------------------------------
Class B (Est. 6/10/96)
Excluding Sales Charge -8.75% -19.04%
Including Sales Charge -9.61% -23.08%
- --------------------------------------------------------------------------------
Class C (Est. 6/10/96)
Excluding Sales Charge -8.79% -19.16%
Including Sales Charge -8.79% -19.96%
See the footnotes on page 13 for important additional information and
Institutional Class performance. Return and share value for each Fund fluctuate
so that shares, when redeemed, may be worth more or less than their original
cost. Past performance is not a guarantee of future results.
<PAGE>
for international diversifications 15
Financial Statements
Delaware Group Global & International Funds, Inc. -
International Equity Series
Statement of Net Assets
May 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Market
Number Value
of Shares (U.S. $)
-----------------------------
Common Stock - 93.35%
Australia - 10.84%
Amcor ..................................... 1,380,000 $ 7,336,980
CSR ....................................... 2,482,874 6,665,077
Foster's Brewing Group .................... 3,801,165 10,761,855
+National Australia Bank ................... 552,518 8,943,116
Orica ..................................... 734,300 4,057,305
-----------
37,764,333
-----------
Belgium - 1.65%
+Electrabel ................................ 18,679 5,734,008
-----------
5,734,008
-----------
France - 8.74%
Alcatel Alsthom ........................... 58,531 6,945,774
+Compagnie de Saint Gobain ................. 45,975 7,202,580
Elf Aquitaine ............................. 49,865 7,204,688
Societe Generale .......................... 50,118 9,088,072
-----------
30,441,114
-----------
Germany - 9.59%
Bayer ..................................... 182,090 6,937,405
+Bayerische Vereinsbank .................... 98,800 5,255,423
Continental ............................... 119,500 2,744,121
+RWE ....................................... 204,000 9,067,507
Siemens ................................... 139,900 9,378,501
-----------
33,382,957
-----------
Hong Kong - 2.98%
Hong Kong Electric ........................ 1,482,000 4,643,701
Wharf Holdings ............................ 2,258,000 5,750,437
-----------
10,394,138
-----------
Japan - 13.40%
Canon ..................................... 418,000 10,477,919
Eisai ..................................... 334,000 6,190,018
Hitachi ................................... 620,000 4,529,939
+Kinki Coca-Cola Bottling .................. 183,000 3,233,616
Koito Manufacturing ....................... 679,000 3,214,335
Matsushita Elecric ........................ 554,000 9,971,323
West Japan Railway ........................ 2,270 9,048,290
-----------
46,665,440
-----------
Malaysia - 0.58%
Oriental Holdings Berhad .................. 320,000 732,632
Sime Darby Berhad ......................... 966,000 1,265,968
-----------
1,998,600
-----------
<PAGE>
- --------------------------------------------------------------------------------
Market
Number Value
of Shares (U.S. $)
-----------------------------
Common Stock (Continued)
Netherlands - 6.52%
Elsevier .................................. 573,000 $ 7,247,042
Koninklijke Van Ommeren ................... 66,000 1,923,676
Royal Dutch Petroleum ..................... 140,280 7,797,706
+Unilever .................................. 86,714 5,754,409
-----------
22,722,833
-----------
New Zealand - 2.95%
+Carter Holt Harvey ........................ 1,117,300 1,280,751
+Telecom Corporation of New Zealand ........ 2,079,920 8,979,720
-----------
10,260,471
-----------
Singapore - 0.99%
Jardine Matheson Holdings Limited ......... 802,287 3,433,788
-----------
3,433,788
-----------
Spain - 6.53%
+Banco Santander Central Hispano ........... 450,066 9,369,924
Iberdrola ................................. 215,000 3,075,070
+*Telefonica de Espana ...................... 215,078 10,294,253
-----------
22,739,247
-----------
United Kingdom - 28.58%
Bass ...................................... 676,607 10,041,707
BG ........................................ 1,245,000 6,861,746
Blue Circle Industries .................... 1,453,254 9,044,889
Boots ..................................... 607,500 7,931,614
British Airways ........................... 1,474,570 10,470,088
Cable & Wireless .......................... 820,000 10,043,073
Centrica .................................. 841,500 1,694,156
GKN ....................................... 675,800 11,062,998
Great Universal Stores .................... 740,200 7,886,576
Rio Tinto ................................. 614,700 9,019,595
Taylor Woodrow ............................ 2,780,825 7,969,260
Unigate ................................... 1,103,000 7,505,088
-----------
99,530,790
-----------
Total Common Stock
(cost $286,279,073) ..................... 325,067,719
-----------
Warrants - 0.02%
Hong Kong - 0.02%
*Wharf Holdings ............................ 112,900 58,232
-----------
Total Warrants (cost $0) .................. 58,232
-----------
<PAGE>
16 for international diversification
International Equity Series
Statement of Net Assets (Continued)
- --------------------------------------------------------------------------------
Total Market Value of Securities - 93.37%
(cost $286,279,073) ...................................... $325,125,951
Receivables and Other Assets
Net of Liabilities - 6.63% ............................... 23,080,630
------------
Net Assets Applicable to 22,275,925 shares
($0.01 par value) Outstanding - 100.00% .................. $348,206,581
============
Net Asset Value - International Equity Series A Class
($112,223,138 / 7,184,924 shares) ........................ $15.62
======
Net Asset Value - International Equity Series B Class
($36,530,246 / 2,345,536 shares) ......................... $15.57
======
Net Asset Value - International Equity Series C Class
($13,804,366 / 887,341 shares) ........................... $15.56
======
Net Asset Value - International Equity Series Institutional
Class ($185,648,831 / 11,858,124 shares) ................. $15.66
======
Components of Net Assets at May 31, 1999:
Common stock, $0.01 par value, 500,000,000 shares authorized
to the Fund with 50,000,000 shares allocated to International
Equity Series A Class, 25,000,000 shares allocated to
International Equity Series B Class, 25,000,000 shares
allocated to International Equity Series C Class, and
50,000,000 shares allocated to International Equity Series
Institutional Class ...................................... $304,582,479
Undistributed net investment income** .................... 1,505,366
Accumulated net realized gain on investments ................ 3,028,993
Net unrealized appreciation of investments and foreign
currencies ............................................... 39,089,743
------------
Total net assets ............................................ $348,206,581
============
- -------------------------------
*Non-income producing security.
**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.
+Security is partially or fully on loan.
Net Asset Value and Offering Price Per Share -
International Equity Series
Net asset value A Class (A) ................................. $15.62
Sales charge (5.75% of offering price or 6.08% of
the amount invested per share) (B) ....................... 0.95
------
Offering price .............................................. $16.57
======
- -------------------------------
(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>
Delaware Group
Global & International Funds, Inc. -
Statement of Assets and Liabilities
May 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
International
Equity Series
-------------
Assets:
Investments at market ....................................... $325,125,951
Cash and foreign currencies ................................. 12,065,509
Dividends and interest receivable ........................... 2,231,644
Receivable for securities sold .............................. 4,013,450
Other assets ................................................ 7,307,213
------------
Total assets ................................................ 350,743,767
------------
Liabilities:
Other accounts payable and accrued expenses ................. 2,537,186
------------
Total liabilities ........................................... 2,537,186
------------
Total net assets ............................................ 348,206,581
============
Investments at cost ......................................... 286,279,073
------------
See accompanying notes
<PAGE>
for international diversification 17
Delaware Group Global & International Funds, Inc. -
Global Bond Series
Statement of Net Assets
May 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Market
Principal Value
Amount* (U.S. $)
-------------------------
Bonds - 96.34%
Australia - 10.91%
Australian Government 6.75% 11/15/06 ............. A$ 400,000 $ 274,170
Federal National Mortgage Association
5.75% 09/05/00 ................................ 600,000 394,072
New South Wales Treasury
6.50% 05/01/06 ................................ 400,000 266,759
7.00% 02/01/00 ................................ 1,000,000 661,542
Queensland Treasury
8.00% 08/14/01 ................................ 750,000 514,761
---------
2,111,304
---------
Canada - 17.68%
Abbey National Treasury Service
7.00% 12/31/99 ................................ C$ 1,050,000 719,654
Government of Canada
5.25% 09/01/03 ................................ 300,000 203,032
7.50% 03/01/01 ................................ 500,000 352,224
10.25% 03/15/14 ............................... 800,000 801,894
Japan Highway 7.875% 09/27/02 .................... 500,000 359,868
KFW International Finance 6.50% 12/28/01 ......... 120,000 83,027
Kingdom of Norway 8.375% 01/27/03 ................ 120,000 88,252
Ontario Hydro
5.60% 06/02/08 ................................ 700,000 471,533
10.00% 03/19/01 ............................... 470,000 343,535
---------
3,423,019
---------
Germany - 18.08%
Baden Wurt L-Finance
6.625% 08/20/03 ............................... Eu 675,000 402,509
Bundesrepublik Deutschland
6.00% 07/04/07 ................................ 301,129 356,216
6.25% 01/04/24 ................................ 328,952 398,169
Deutsche Pfandbrief Hypotheken
5.625% 02/07/03 ............................... 600,000 673,411
Halifax 5.625% 07/23/07 .......................... 1,550,000 897,304
Republic of Austria 7.25% 05/03/07 ............... 1,200,000 772,350
---------
3,499,959
---------
Netherlands - 4.97%
Netherlands Government
8.25% 09/15/07 ................................ Eu 158,402 212,459
9.00% 05/15/00 ................................ 680,670 749,852
---------
962,311
---------
New Zealand - 9.71%
Government of New Zealand
7.00% 07/15/09 ................................NZ$ 200,000 112,874
8.00% 04/15/04 ................................ 1,200,000 699,852
8.00% 11/15/06 ................................ 900,000 534,902
10.00% 03/15/02 ............................... 550,000 328,841
Ontario Province 6.25% 12/03/08 .................. 400,000 204,083
---------
1,880,552
---------
<PAGE>
- --------------------------------------------------------------------------------
Market
Principal Value
Amount* (U.S. $)
-------------------------
Bonds (continued)
South Africa - 4.33%
Republic of South Africa
12.50% 01/15/02 ............................... Sa 3,700,000 $ 560,760
13.00% 08/31/10 ............................... 2,000,000 277,849
----------
838,609
----------
Sweden - 12.01%
Swedish Export Credit 6.50% 06/05/01 ............. Sk 3,500,000 428,527
Swedish Government
8.00% 08/15/07 ................................ 3,500,000 510,299
9.00% 04/20/09 ................................ 6,800,000 1,062,830
10.25% 05/05/03 ............................... 1,000,000 143,143
13.00% 06/15/01 ............................... 1,300,000 179,988
----------
2,324,787
----------
United States - 18.65%
Korea Electric Power 6.375% 12/01/03 ............. $ 200,000 189,590
U.S.Treasury Inflation Index Notes
3.375% 01/15/07 ............................... 415,312 402,334
3.625% 07/15/02 ............................... 359,496 359,383
3.625% 01/15/08 ............................... 608,847 597,621
U.S. Treasury Notes
6.25% 02/15/07 ................................ 1,500,000 1,540,376
6.375% 08/15/27 ............................... 500,000 521,802
----------
3,611,106
----------
Total Bonds (cost $19,576,618) 18,651,647
----------
Repurchase Agreements - 0.97%
With Chase Manhattan 4.78% 06/01/99
(dated 05/28/99, collateralized by $15,000
U.S. Treasury Notes 6.25% due 02/28/02,
market value $15,658 and $25,000 U.S.
Treasury Notes 7.50% due 05/15/02, market
value $25,985 and $23,000 U.S. Treasury Notes
5.50% due 2/28/2003,
market value $23,350) ......................... 64,000 64,000
With PaineWebber 4.78% 06/01/99
(dated 05/28/99, collateralized by $24,000
U.S. Treasury Notes 6.375% due 05/15/00,
market value $24,992 and $25,000 U.S.
Treasury Notes 6.25% due 01/31/02, market
value $25,582 and $12,000 U.S. Treasury
Notes 5.375% due 06/30/03,
market value $12,880) ......................... 62,000 62,000
With Prudential Securities 4.75% 06/01/99
(dated 05/28/99, collateralized by $51,000
U.S. Treasury Notes 15.75% due 11/15/01,
market value $63,471) ......................... 62,000 62,000
----------
Total Repurchase Agreements
(cost $188,000) ............................... 188,000
----------
<PAGE>
18 for international diversification
Global Bond Series
Statement of Net Assets (Continued)
- --------------------------------------------------------------------------------
Total Market Value of Securities - 97.31%
(cost $19,764,618) ............................................ $18,839,647
Receivables and Other Assets
Net of Liabilities - 2.69% .................................... 520,054
-----------
Net Assets Applicable to 1,839,293 shares
($0.01 par value) Outstanding - 100.00% ....................... $19,359,701
===========
Net Asset Value - Global Bond Series A Class
($4,154,249 / 394,523 shares) ................................. $10.53
======
Net Asset Value - Global Bond Series B Class
($1,829,776 / 173,862 shares) ................................. $10.52
======
Net Asset Value - Global Bond Series C Class
($831,310 / 79,411 shares) .................................... $10.47
======
Net Asset Value - Global Bond Series Institutional Class
($12,544,366 / 1,191,497 shares) .............................. $10.53
======
Components of Net Assets at May 31, 1999:
Common stock, $0.01 par value, 500,000,000 shares
authorized to the Fund with 50,000,000 shares
allocated to Global Bond Series A Class, 25,000,000
shares allocated to Global Bond Series B Class, 25,000,000
shares allocated to Global Bond Series C Class, and
50,000,000 shares allocated to Global Bond Series
Institutional Class ............................................ $20,107,957
Undistributed net investment income** ............................ 105,127
Accumulated net realized gain on investments ..................... 79,993
Net unrealized depreciation of investments and foreign currencies. (933,376)
-----------
Total net assets ................................................. $19,359,701
===========
- ----------
*Principal amount is stated in the currency in which each bond is denominated.
A$ - Australian Dollars
C$ - Canadian Dollars
Eu - Euro
NZ$ - New Zealand Dollars
Sa - South African Rand
Sk - Swedish Kroner
$ - U.S. Dollars
**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 Bond Series
Net asset value A Class (A) ....................................... $10.53
Sales charge (4.75% of offering price or 5.03% of
the amount invested per share)(B) .............................. 0.53
------
Offering price .................................................... $11.06
======
- ----------
(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 $100,000
or more.
See accompanying notes
<PAGE>
Delaware Group
Global & International Funds, Inc. -
Global Equity Series
Statement of Net Assets
May 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Number of Market Value
Shares (U.S. $)
--------------------------
Common Stock - 98.38%
Australia - 7.19%
Amcor .............................................. 45,600 $ 242,439
CSR ................................................ 116,250 312,064
Foster's Brewing Group ............................. 92,839 262,846
National Australia Bank ............................ 17,488 283,063
Orica .............................................. 22,800 125,979
----------
1,226,391
----------
Belgium - 1.86%
Electrabel ......................................... 1,035 317,720
----------
317,720
----------
France - 5.60%
Compagnie de Saint Gobain .......................... 1,720 269,460
Elf Aquitaine ...................................... 2,632 380,282
Societe Generale ................................... 1,679 304,459
----------
954,201
----------
Germany - 7.87%
Bayer .............................................. 9,700 369,558
Bayerische Vereinsbank ............................. 7,070 376,071
RWE ................................................ 5,050 224,465
Siemens ............................................ 5,550 372,056
----------
1,342,150
----------
Hong Kong - 1.87%
Hong Kong Electric ................................. 44,000 137,870
Wharf Holdings ..................................... 71,000 180,815
----------
318,685
----------
Japan - 3.43%
Canon .............................................. 5,000 125,334
Eisai .............................................. 8,000 148,264
Koito Manufacturing ................................ 10,000 47,339
Matsushita Electric ................................ 8,000 143,990
West Japan Railway ................................. 30 119,581
----------
584,508
----------
Malaysia - 1.12%
Sime Darby Berhad .................................. 145,300 190,419
----------
190,419
----------
Netherlands - 5.10%
Elsevier ........................................... 23,650 299,114
Koninklijke Van Ommeren ............................ 2,515 73,304
Royal Dutch Petroleum .............................. 8,940 496,945
----------
869,363
----------
New Zealand - 3.12%
Carter Holt Harvey ................................. 114,300 131,021
Telecom Corporation of New Zealand ................. 92,726 400,330
----------
531,351
----------
Singapore - 1.14%
Jardine Matheson Holdings Limited .................. 45,427 194,428
----------
194,428
----------
Spain - 2.52%
Iberdrola .......................................... 9,100 130,154
Telefonica de Espana ............................... 6,269 300,052
----------
430,206
----------
<PAGE>
for international diversification 19
Global Equity Series
Statement of Net Assets (Continued)
- --------------------------------------------------------------------------------
Market
Number Value
of Shares (U.S. $)
----------------------------
Common Stock (Continued)
United Kingdom - 20.44%
Associated British Food ............. 25,960 $ 189,107
Bass ................................ 22,392 332,326
Blue Circle Industries .............. 53,056 330,215
Boots ............................... 32,700 426,936
British Airways ..................... 27,152 192,791
Cable & Wireless .................... 29,400 360,081
GKN ................................. 23,700 387,974
Glaxo Wellcome ...................... 10,820 304,362
PowerGen ............................ 25,900 279,273
Rio Tinto ........................... 28,050 411,582
Taylor Woodrow ...................... 94,700 271,390
-----------
3,486,037
-----------
United States - 37.12%
AT&T ................................ 6,300 349,650
Aon ................................. 9,300 399,900
Atlantic Richfield .................. 3,700 309,644
BankAmerica ......................... 5,318 344,008
Baxter International ................ 5,000 322,813
Federal National Mortgage ........... 5,000 340,000
Ford Motor .......................... 5,000 285,313
GTE ................................. 5,400 340,538
Heinz (H.J.) ........................ 6,000 289,875
Hewlett-Packard ..................... 3,900 367,819
International Paper ................. 5,495 274,762
Lockheed Martin ..................... 8,600 347,763
McGraw-Hill ......................... 5,500 285,313
Pharmacia & Upjohn .................. 5,000 277,188
Philip Morris ....................... 5,700 219,806
Pitney Bowes ........................ 4,400 280,500
Summit Bancorp ...................... 7,600 311,125
Tyco International .................. 3,600 314,550
U.S. Bancorp ........................ 8,500 276,250
USX-Marathon Group .................. 13,100 392,180
-----------
6,328,997
-----------
Total Common Stock (cost $15,589,599) 16,774,456
-----------
Preferred Stock - 0.17%
United States - 0.17%
Sealed Air .......................... 475 28,619
------
Total Preferred Stock (cost $21,116). 28,619
------
Warrants - 0.00%
Indonesia - 0.00%
*Wharf Holdings ...................... 2,600 1,341
------
Total Warrants (cost $0) ............ 1,341
------
<PAGE>
Total Market Value of Securities - 98.55%
(cost $15,610,715) ........................................... $16,804,416
Receivables and Other Assets
Net of Liabilities - 1.45% ................................... 246,812
-----------
Net Assets Applicable to 1,280,625 shares
($0.01 par value) Outstanding - 100.00% ...................... $17,051,228
===========
Net Asset Value - Global Equity Series A Class
($7,806,551 / 585,618 shares) ................................ $13.33
======
Net Asset Value - Global Equity Series B Class
($5,115,600 / 384,303 shares) ................................ $13.31
======
Net Asset Value - Global Equity Series C Class
($2,872,790 / 216,678 shares) ................................ $13.26
======
Net Asset Value - Global Equity Series Institutional Class
($1,256,287 / 94,026 shares) ................................. $13.36
======
Components of Net Assets at May 31, 1999:
Common stock $0.01 par value 500,000,000 shares authorized
to the Fund with 50,000,000 shares allocated to the Global
Equity Series A Class, 25,000,000 shares allocated to the
Global Equity Series B Class, 25,000,000 shares allocated
to the Global Equity Series C Class, and 50,000,000
allocated to the Global Equity Series Institutional Class .... $15,403,248
Undistributed net investment income** ........................... 34,152
Accumulated net realized gain on investments .................... 407,303
Net unrealized appreciation on investments and
foreign currencies ........................................... 1,206,525
-----------
Total net assets ................................................ $17,051,228
===========
- ----------
*Non-income producing security.
**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 Equity Series
Net asset value A Class (A) ..................................... $13.33
Sales charge (5.75% of offering price or 6.08% of the amount
invested per share) (B) ...................................... 0.81
------
Offering price .................................................. $14.14
======
- ----------
(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>
20 for international diversification
Delaware Group Global & International Funds, Inc. -
Emerging Markets Series
Statement of Net Assets
May 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Market Market
Number Value
of Shares (U.S. $)
---------------------------
Common Stock - 90.37%
Argentina - 3.92%
Central Puerto Class B .................. 80,000 $ 176,134
Transportadora de Gas del Sur, Class B .. 70,600 126,470
YPF Sociedad Anonima ADR ................ 4,500 189,563
----------
492,167
----------
Brazil - 18.20%
Aracruz Celulose ADR .................... 11,250 216,563
Brasmotor Preferred ..................... 1,606,000 124,937
Cemig ADR ............................... 9,239 193,831
Centrais Electricas de Santa Catarina ... 309,000 116,604
Centrais Electricas de Santa Catarina GDR 1,000 37,464
Companhia Energetica de Minas Gerais .... 3,300,000 69,736
Companhia Paranaense de Energia-Copel ADR 26,000 195,000
Elevadores Atlas ........................ 18,000 258,113
Gerdau Metalurgica ...................... 11,710,000 278,729
Gerdau Metalurgica ...................... 277,018 5,146
Renner Participacoes .................... 4,100,000 3,570
Rossi Residential GDR ................... 24,800 25,730
Telecomunicacoes de Minas Gerias ........ 9,300,000 267,257
Telecomunicacoes do Parana .............. 1,000,000 169,521
Uniao de Bancos Brasileiros ............. 12,900,000 219,431
Usinas Siderurgicas de Minas Gerais ..... 24,600 66,409
Usinas Siderurgicas de Minas Gerais ADR . 13,370 35,833
----------
2,283,874
----------
Chile - 3.17%
Administradora de Fondos de Pensiones
Provida ADR .......................... 12,000 244,500
Banco BHIF ADR
Empresa Nacional Electricidad ADR ....... 14,050 153,672
----------
398,172
----------
China - 5.87%
First Tractor ........................... 610,000 110,907
Guangdong Kelon Electric Holding ........ 229,000 175,696
Guangshen Railway ....................... 1,490,000 172,917
*Hengan International Group .............. 346,000 122,693
Shenzhen Expressway ..................... 934,400 154,224
----------
736,437
----------
Croatia - 1.08%
*Zagrebacka Banka GDR .................... 13,740 135,683
----------
135,683
----------
Egypt - 1.27%
Paints and Chemicals GDR ................ 24,200 159,115
----------
159,115
----------
Estonia - 2.00%
*Eesti Telekom GDR ....................... 3,932 88,077
*Eesti Uhispank GDR ...................... 30,044 162,989
----------
251,066
----------
Hungary - 1.51%
Gedeon Richter GDR ...................... 5,100 188,955
----------
188,955
----------
<PAGE>
- --------------------------------------------------------------------------------
Market Market
Number Value
of Shares (U.S. $)
----------------------
Common Stock (Continued)
India - 4.41%
*India Fund (The) .................................. 26,560 $ 230,740
Larsen & Toubro GDR ............................... 16,200 202,095
Mahanagar Telephone Nigam Limited GDR ............. 13,220 120,633
----------
553,468
----------
Indonesia - 0.10%
*PT United Tractors ................................ 77,000 12,801
----------
12,801
----------
Israel - 2.23%
Bank Hapoalim ..................................... 110,500 280,345
----------
280,345
----------
Malaysia - 9.36%
*Leader Universal Holdings ......................... 615,000 205,539
Petronas Dagangan ................................. 337,000 345,868
Public Finance .................................... 105,000 96,711
Resorts World Berhad .............................. 82,000 159,684
Sime Darby Berhad ................................. 280,000 366,947
----------
1,174,749
----------
Mexico - 5.19%
ALFA, Class A ..................................... 55,015 195,288
Cemex, Class B .................................... 36,000 161,731
*Grupo Minsa ADR ................................... 13,000 40,625
*Grupo Minsa Class C ............................... 117,000 40,628
Vitro ADR ......................................... 35,800 212,563
----------
650,835
----------
Peru - 2.62%
Banco de Credito del Peru ......................... 124,718 78,763
Creditcorp Limited ................................ 11,825 130,075
Telefonica del Peru ADR ........................... 8,300 120,350
----------
329,188
----------
Romania - 0.72%
Banca Turco Romana GDR ............................ 16,500 90,338
----------
90,338
----------
Russia - 2.10%
Gazprom ADR ....................................... 5,000 51,750
Gazprom ADR Reg S ................................. 4,200 43,470
Lukoil Holding ADR ................................ 3,100 115,320
Mosenergo ADR ..................................... 19,800 53,262
----------
263,802
----------
Slovenia - 0.92%
Blagovno Trgovinski Center GDR .................... 9,615 62,257
SKB Banka GDR ..................................... 4,000 53,600
----------
115,857
----------
South Africa - 12.59%
Amalgamated Banks of South Africa ................. 49,000 224,206
Anglo American Corporation of South Africa Limited 8,600 388,826
Edgars Stores ..................................... 10,620 79,856
Iscor ............................................. 1,093,000 262,299
*Sanlam Limited .................................... 97,000 93,113
<PAGE>
for international diversification 21
Emerging Markets Series
Statement of Net Assets (Continued)
- --------------------------------------------------------------------------------
Number Market
of Shares Value
------------------------
Common Stock (Continued)
South Africa (Continued)
Sappi Limited ....................................... 39,600 $240,749
Sasol Limited ....................................... 51,200 290,793
----------
1,579,842
----------
South Korea - 2.10%
Pohang Iron & Steel Limited ......................... 2,860 263,246
---------
263,246
----------
Taiwan - 1.25%
Yageo GDR ........................................... 29,400 156,555
----------
156,555
----------
Thailand - 5.04%
*Bangkok Bank Public Co. Limited ..................... 93,800 290,363
*Hana Microelectronics Public Co. Limited ............ 78,000 134,374
Thai Reinsurance Public Co. Limited ................. 86,000 208,345
----------
633,082
----------
Turkey - 4.72%
*Efes Sinai Yatirim 144A ADR ......................... 89,808 118,995
*Efes Sinai Yatirim Holdings ......................... 8,261,890 105,686
Koc Holding ......................................... 2,908,200 225,356
Netas-Northern Eleckrik Telekomunikayson ............ 4,524,000 141,895
----------
591,932
----------
Total Common Stock (cost $16,682,150) ............... 11,341,509
----------
Rights - 0.74%
Thailand - 0.74%
*Thai Reinsurance Public Co. Limited ................. 43,000 92,598
----------
Total Rights (cost $0) .............................. 92,598
----------
Warrants - 0.00%
Hong Kong - 0.00%
*Guangdong Investment 7/99 ........................... 14,800 19
----------
Total Warrants (cost $0) ............................ 19
----------
Principal
Amount
---------
Repurchase Agreements - 8.89%
With Chase Manhattan 4.78% 06/01/99
(dated 05/28/99, collateralized by $90,000
U.S. Treasury Notes 6.25% due 02/28/02,
market value $92,867 and $146,000
U.S. Treasury Notes 7.50% due 05/15/02,
market value $154,114 and $138,000
U.S. Treasury Notes 5.50% due 02/28/2003,
market value $138,488) ............................ $377,000 377,000
With PaineWebber 4.78% 06/01/99
(dated 05/28/99, collateralized by $146,000
U.S. Treasury Notes 6.375% due 05/15/00,
market value $148,226 and $146,000 U.S.
Treasury Notes 6.25% due 01/31/02, market
value $151,721 and $76,000 U.S. Treasury
Notes 5.375% due 06/30/03,
market value $76,387) ............................. 369,000 369,000
<PAGE>
Principal Market
Amount Value
--------------------------
Repurchase Agreements (Continued)
With Prudential Securities 4.75% 06/01/99
(dated 05/28/99, collateralized by $304,000
U.S. Treasury Notes 15.75% due 11/15/01,
market value $376,434) ............................ $369,000 $369,000
Total Repurchase Agreements
(cost $1,115,000) .................................. 1,115,000
============
Total Market Value of Securities - 100.00%
(cost $17,797,150) ............................................ $12,549,126
Receivables and Other Assets Net of Liabilities- 0.00% 591
------------
Net Assets Applicable to 1,763,320 Shares
($0.01 par value) outstanding - 100.00% ....................... $12,549,717
===========
Net Asset Value - Emerging Markets Series A Class
($6,349,732 / 890,302 shares) ................................. $7.13
=====
Net Asset Value - Emerging Markets Series B Class
($2,778,926 / 392,493 shares) ................................. $7.08
=====
Net Asset Value - Emerging Markets Series C Class
($1,093,302 / 154,570 shares) ................................. $7.07
=====
Net Asset Value - Emerging Markets Series Institutional
Class ($2,327,757 / 325,955 shares) ........................... $7.14
=====
Components of Net Assets at May 31, 1999:
Common stock, $0.01 par value, 500,000,000 shares
authorized to the Fund with 50,000,000 shares
allocated to Emerging Markets Series A Class, 25,000,000
shares allocated to Emerging Markets Series B Class, 25,000,000
shares allocated to Emerging Markets Series C Class, and
50,000,000 shares allocated to Emerging Markets Series
Institutional Class ........................................... $19,920,801
Undistributed net investment income** ........................... 42,016
Accumulated net realized loss on investments .................... (2,167,129)
Net unrealized depreciation of investments
and foreign currencies ....................................... (5,245,971)
-----------
Total net assets ................................................ $12,549,717
===========
- ------------
* Non-income producing security.
** 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 -
Emerging Markets:
Net asset value A Class (A) ..................................... $7.13
Sales charge (5.75% of offering price or 6.03% of
the amount invested per share) (B) ........................... 0.43
-----
Offering price .................................................. $7.56
=====
- ------------
(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>
22 for international diversification
Delaware Group Global & International Funds, Inc.
Statements of Operations
Six Months Ended May 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
International Global Global Emerging
Equity Series Bond Series Equity Series Markets Series
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ............................................... $261,076 $ 638,221 $13,345 $18,997
Dividends .............................................. 5,140,585 - 255,939 207,245
Foreign tax withheld ................................... (571,753) - (19,425) (17,241)
--------- --------- --------- ---------
4,829,908 638,221 249,859 209,001
--------- --------- --------- ---------
EXPENSES:
Management fees ........................................ 1,378,578 73,519 67,574 64,547
Dividend disbursing and transfer agent fees and expenses 889,236 16,366 57,705 51,714
Distribution expense ................................... 462,064 19,138 53,064 22,992
Custodian fees ......................................... 103,623 13,469 200 11,763
Accounting and administration .......................... 69,294 3,756 4,744 2,011
Reports and statements to shareholders ................. 67,550 2,625 5,815 5,800
Registration fees ...................................... 48,000 14,700 11,185 9,669
Professional fees ...................................... 50,237 300 3,600 3,657
Taxes (other than taxes on income) ..................... 13,450 80 180 -
Directors' fees ........................................ 3,319 436 421 503
Amortization of organization expenses .................. - 1,918 1,756 1,825
Other .................................................. 42,694 5,002 2,981 7,193
--------- --------- --------- ---------
3,128,045 151,309 209,225 181,674
Less expenses absorbed or waived ....................... - (25,543) (23,315) (70,545)
Less expenses paid indirectly .......................... (35,115) (8,495) (199) (882)
--------- --------- --------- ---------
Total expenses ......................................... 3,092,930 117,271 185,711 110,247
--------- --------- --------- ---------
Net Investment Income .................................. 1,736,978 520,950 64,148 98,754
--------- --------- --------- ---------
Net Realized and Unrealized Gain (Loss)
On Investments and Foreign Currencies:
Net realized gain (loss) on:
Investments ....................................... 5,866,847 74,536 567,277 (666,449)
Foreign currencies ................................ 868,839 9,523 66,515 (21,728)
--------- --------- --------- ---------
Net realized gain (loss) .......................... 6,735,686 84,059 633,792 (688,177)
Net change in unrealized appreciation /
depreciation of investments and foreign currencies. 5,433,324 (750,416) (133,125) 1,745,594
--------- --------- --------- ---------
Net Realized and Unrealized Gain (Loss)
On Investments and Foreign Currencies ............... 12,169,010 (666,357) 500,667 1,057,417
---------- --------- --------- ---------
Net Increase (Decrease) In Net Assets Resulting
From Operations ..................................... $13,905,988 ($145,407) $564,815 $1,156,171
=========== ========== ======== ==========
</TABLE>
See accompanying notes
<PAGE>
for international diversification 23
Delaware Group Global & International Funds, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
International Equity Series Global Bond Series Global Equity Series Emerging Markets Series
---------------------------------------------------------------------------------------------------
Six months Year Six months Year Six months Year Six months Year
Ended Ended Ended Ended Ended Ended Ended Ended
5/31/99 11/30/98 5/31/99 11/30/98 5/31/99 11/30/98 5/31/99 11/30/98
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) In Net Assets
From Operations:
Net investment income ..............$1,736,978 $5,019,760 $520,950 $1,053,317 $64,148 $337,208 $98,754 $189,466
Net realized gain (loss) on
investmentsand foreign currencies . 6,735,686 (3,196,161) 84,059 (13,355) 633,792 959,229 (688,177) (1,484,603)
Net change in unrealized
appreciation /depreciation of
investments andforeign currencies . 5,433,324 18,869,098 (750,416) (4,946) (133,125) 58,825 1,745,594 (4,195,214)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net
assets resulting from operations ..13,905,988 20,692,697 (145,407) 1,035,016 564,815 1,355,262 1,156,171 (5,490,351)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Distribution to Shareholders from:
Net investment income:
A Class ...........................(1,622,081) (3,037,638) (91,882) (166,398) (22,754) (171,922) (58,679) (18,319)
B Class ........................... (333,763) (567,801) (32,093) (34,237) (7,664) (78,621) (3,872) -
C Class ........................... (146,074) (200,379) (11,298) (20,219) (4,739) (53,181) (1,386) -
Institutional Class ...............(2,414,542) (2,491,733) (270,268) (528,593) (4,664) (70,840) (15,279) (9,828)
Net realized gain on investments:
A Class ........................... - (1,182,260) (44,575) (12,745) (366,425) (610,032) - (554,164)
B Class ........................... - (345,134) (17,576) (3,044) (270,108) (397,951) - (207,819)
C Class ........................... - (121,799) (5,593) (1,965) (168,225) (272,115) - (80,276)
Institutional Class ............... - (754,255) (124,376) (31,461) (131,263) (198,609) - (108,106)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(4,516,460) (8,700,999) (597,661) (798,662) (975,842) (1,853,271) (79,216) (978,512)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Capital share transactions:
Proceeds from shares sold:
A Class ..........................272,493,432 248,532,751 605,092 1,209,209 1,527,754 2,361,979 1,307,907 3,500,308
B Class ...........................31,939,064 60,750,047 847,789 369,004 464,660 1,381,650 763,663 1,064,411
C Class ...........................85,163,264 111,824,042 409,329 46,266 207,259 734,792 267,157 469,587
Institutional Class ...............53,042,479 134,073,252 2,075,222 4,205,056 190,724 534,315 1,410,909 1,246,820
Net asset value of shares issued upon
reinvestment of distributions from net
investment income and net realized gain
on investments:
A Class ........................... 1,512,503 3,884,411 100,549 125,332 383,186 751,633 54,231 525,839
B Class ........................... 309,017 845,306 44,949 30,879 256,234 443,501 3,519 197,988
C Class ........................... 86,965 284,894 16,204 21,384 162,343 291,513 1,323 76,653
Institutional Class ............... 2,409,269 2,947,818 378,905 558,582 66,527 269,449 15,280 112,829
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
446,955,993 563,142,521 4,478,039 6,565,712 3,258,687 6,768,832 3,823,989 7,194,435
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Cost of shares repurchased:
A Class .........................(288,774,611) (249,450,329) (1,071,151) (1,276,054) (1,304,683) (2,518,715)(1,091,347) (4,545,984)
B Class ......................... (34,352,129) (57,621,538) (174,974) (306,186) (880,448) (744,541) (766,923) (779,647)
C Class ......................... (86,405,505) (111,127,873) (106,777) (239,025) (821,399) (628,811) (161,784) (670,501)
Institutional Class ............. (37,889,426) (44,978,467) (2,369,874) (3,262,721) (1,533,624) (423,236) (444,266) (1,200,434)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(447,421,671) (463,178,207) (3,722,776) (5,083,986) (4,540,154) (4,315,303)(2,464,320) (7,196,566)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets
derived from capital share
transactions..................... (465,678) 99,964,314 755,263 1,481,726 (1,281,467) 2,453,529 1,359,669 (2,131)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
net assets: ..................... 8,923,850 111,956,012 12,195 1,718,080 (1,692,494) 1,955,520 2,436,624 (6,470,994)
Net assets:
Beginning of year .................339,282,731 227,326,719 19,347,506 17,629,426 18,743,722 16,788,202 10,113,093 16,584,087
----------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
End of year ......................$348,206,581 $339,282,731 $19,359,701 $19,347,506 $17,051,228 $18,743,722$12,549,717 $10,113,093
=========== =========== ========== ========== ========== ========== ========== ==========
</TABLE>
See accompanying notes
<PAGE>
24 for international diversification
Delaware Group Global & International Funds, Inc.
Financial Highlights
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
International Equity Series A Class
--------------------------------------------------------------------------
Six Months Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
5/31/99(1) 11/30/98 11/30/97 11/30/96 11/30/95 11/30/94
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $15.330 $14.650 $14.640 $12.190 $11.920 $11.250
Income from investment operations:
Net investment income(2) ............................. 0.073 0.273 0.220 0.490 0.297 0.140
Net realized and unrealized gain on investments
and foreign currencies ............................... 0.412 0.957 0.245 2.385 0.628 0.895
------- ------- ------- ------- ------- -------
Total from investment operations ..................... 0.485 1.230 0.465 2.875 0.925 1.035
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ................. (0.195) (0.395) (0.435) (0.280) (0.185) (0.225)
Distributions from net realized gain on investments .. none (0.155) (0.020) (0.145) (0.470) (0.140)
------- ------- ------- ------- ------- -------
Total dividends and distributions .................... (0.195) (0.550) (0.455) (0.425) (0.655) (0.365)
------- ------- ------- ------- ------- -------
Net asset value, end of period .......................... $15.620 $15.330 $14.650 $14.640 $12.190 $11.920
======= ======= ======= ======= ======= =======
Total return(3) ......................................... 3.20% 8.75% 3.27% 24.22% 8.17% 9.23%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .............. $112,223 $122,609 $112,425 $89,177 $62,251 $53,736
Ratio of expenses to average net assets .............. 1.79% 1.70% 1.70% 1.85% 2.07% 1.56%
Ratio of expenses to average net assets prior
to expense limitation and expenses paid indirectly(4) 1.79% 1.70% 1.71% 1.95% 2.07% 1.82%
Ratio of net investment income to average net assets . 0.93% 1.80% 1.46% 3.70% 2.57% 1.22%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly(4) 0.93% 1.80% 1.45% 3.60% 2.57% 0.96%
Portfolio turnover ................................... 2% 5% 8% 9% 21% 27%
</TABLE>
- ------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Per share information for the six months ended May 31, 1999 and the
years ended November 30, 1996, 1997, and 1998 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) DIAL agreed to waive expenses for the years 1994 through 1998.
See accompanying notes
<PAGE>
for international diversification 25
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
International Equity Series B Class
-------------------------------------------------------------------------
Six Months Ended Year Year Year Year
5/31/99(1) Ended Ended Ended Ended 9/6/94(2) to
(Unaudited) 11/30/98 11/30/97 11/30/96 11/30/95 11/30/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $15.280 $14.560 $14.560 $12.130 $11.900 $12.860
Income (loss) from investment operations:
Net investment income(3) ................................ 0.018 0.168 0.114 0.398 0.278 0.036
Net realized and unrealized gain (loss) on investments
and foreign currencies ................................. 0.402 0.962 0.246 2.377 0.567 (0.966)
------- ------- ------- ------- ------- -------
Total from investment operations ........................ 0.420 1.130 0.360 2.775 0.845 (0.930)
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .................... (0.130) (0.255) (0.340) (0.200) (0.145) (0.030)
Distributions from net realized gain on investments ..... none (0.155) (0.020) (0.145) (0.470) none
------- ------- ------- ------- ------- -------
Total dividends and distributions ....................... (0.130) (0.410) (0.360) (0.345) (0.615) (0.030)
------- ------- ------- ------- ------- -------
Net asset value, end of period ............................. $15.570 $15.280 $14.560 $14.560 $12.130 $11.900
======= ======= ======= ======= ======= =======
Total return(4) ............................................ 2.84% 8.03% 2.54% 23.38% 7.46% (7.24%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $36,530 $37,775 $31,914 $10,878 $3,471 $624
Ratio of expenses to average net assets ................. 2.49% 2.40% 2.40% 2.55% 2.77% 2.26%
Ratio of expenses to average net assets prior
to expense limitation and expenses paid indirectly(5)... 2.49% 2.40% 2.41% 2.65% 2.77% 2.52%
Ratio of net investment income to average net assets .... 0.23% 1.10% 0.76% 3.00% 1.87% 0.52%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly(5) 0.23% 1.10% 0.75% 2.90% 1.87% 0.26%
Portfolio turnover 2% 5% 8% 9% 21% 27%
</TABLE>
- ----------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(3) Per share information for the six months ended May 31, 1999 and the years
ended November 30, 1996, 1997, and 1998 was based on the average shares
outstanding method.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
(5) DIAL agreed to waive expenses for the years 1994 through 1998.
See accompanying notes
<PAGE>
26 for international diversification
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
International Equity Series C Class
----------------------------------------------------------------
Six Months Year Year Year
5/31/99(1) Ended Ended Ended 11/29/95(2) to
Ended 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......................... $15.260 $14.540 $14.540 $12.190 $12.240
Income (loss) from investment operations:
Net investment income(3) ................................... 0.019 0.167 0.114 0.400 none
Net realized and unrealized gain (loss) on investments
and foreign currencies .................................... 0.411 0.963 0.246 2.375 (0.050)
------- ------- ------- ------- -------
Total from investment operations ........................... 0.430 1.130 0.360 2.775 (0.050)
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ....................... (0.130) (0.255) (0.340) (0.280) none
Distributions from net realized gain on investments ........ none (0.155) (0.020) (0.145) none
------- ------- ------- ------- -------
Total dividends and distributions .......................... (0.130) (0.410) (0.360) (0.425) none
------- ------- ------- ------- -------
Net asset value, end of period ................................ $15.560 $15.260 $14.540 $14.540 $12.190
======= ======= ======= ======= =======
Total return(4) ............................................... 2.84% 8.04% 2.54% 23.39% (5)
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................... $13,805 $14,076 $11,811 $1,909 $5
Ratio of expenses to average net assets .................... 2.49% 2.40% 2.40% 2.55% (5)
Ratio of expenses to average net assets prior
to expense limitation and expenses paid indirectly(6) .. .. 2.49% 2.40% 2.41% 2.65% (5)
Ratio of net investment income to average net assets ....... 0.23% 1.10% 0.76% 3.00% (5)
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly(6) 0.23% 1.10% 0.75% 2.90% (5)
Portfolio turnover ......................................... 2% 5% 8% 9% (5)
</TABLE>
- ----------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of commencement of trading.
(3) Per share information for the six months ended May 31, 1999 and the years
ended November 30, 1996, 1997, and 1998 was based on the average shares
outstanding method.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
(5) The ratios of expenses and net investment income to average net assets,
portfolio turnover and total return have been omitted as management believes
that such ratios and total return for this relatively short period are not
meaningful.
(6) DIAL agreed to waive expenses for the years 1994 through 1998.
See accompanying notes
<PAGE>
for international diversification 27
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
International Equity Series Institutional Class
------------------------------------------------------------------------
Six Months Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
5/31/99(1) 11/30/98 11/30/97 11/30/96 11/30/95 11/30/94
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $15.370 $14.720 $14.710 $12.240 $11.970 $11.290
Income from investment operations:
Net investment income(2) ................................ 0.096 0.318 0.267 0.530 0.323 0.166
Net realized and unrealized gain on investments
and foreign currencies ................................. 0.416 0.962 0.238 2.405 0.637 0.899
------- ------- ------- ------- ------- -------
Total from investment operations ........................ 0.512 1.280 0.505 2.935 0.960 1.065
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .................... (0.222) (0.475) (0.475) (0.320) (0.220) (0.245)
Distributions from net realized gain on investments ..... none (0.155) (0.020) (0.145) (0.470) (0.140)
------- ------- ------- ------- ------- -------
Total dividends and distributions ....................... (0.222) (0.630) (0.495) (0.465) (0.690) (0.385)
------- ------- ------- ------- ------- -------
Net asset value, end of period ............................. $15.660 $15.370 $14.720 $14.710 $12.240 $11.970
======= ======= ======= ======= ======= =======
Total return ............................................... 3.37% 9.10% 3.55% 24.68% 8.46% 9.47%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $185,649 $164,823 $71,177 $34,194 $11,660 $7,613
Ratio of expenses to average net assets ................. 1.49% 1.40% 1.40% 1.55% 1.77% 1.26%
Ratio of expenses to average net assets prior
to expense limitation and expenses paid indirectly(3)... 1.49% 1.40% 1.41% 1.65% 1.77% 1.52%
Ratio of net investment income to average net assets .... 1.23% 2.10% 1.76% 4.00% 2.87% 1.52%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly(3) 1.23% 2.10% 1.75% 3.90% 2.87% 1.26%
Portfolio turnover ...................................... 2% 5% 8% 9% 21% 27%
</TABLE>
- ----------
(1) Ratios have been annualized and total return has not been annualized.
(2) Per share information for the six months ended May 31, 1999 and the years
ended November 30, 1996, 1997, and 1998 was based on the average shares
outstanding method.
(3) DIAL agreed to waive expenses for the years 1994 through 1998.
See accompanying notes
<PAGE>
28 for international diversification
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Global Bond Series A Class
-----------------------------------------------------------------
Six Months Year Year Year
Ended Ended Ended Ended 12/27/94(2) to
5/31/99(1) 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .............................. $10.940 $10.790 $11.480 $11.230 $10.000
Income (loss) from investment operations:
Net investment income(3) ....................................... 0.280 0.595 0.625 0.755 0.659
Net realized and unrealized gain (loss) on investments
and foreign currencies ....................................... (0.365) (0.015) (0.505) 0.730 1.171
------- ------- ------- ------- -------
Total from investment operations ............................... (0.085) 0.580 0.120 1.485 1.830
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ........................... (0.220) (0.400) (0.770) (0.875) (0.600)
Distributions from net realized gain on investments ............ (0.105) (0.030) (0.040) (0.360) none
------- ------- ------- ------- -------
Total dividends and distributions .............................. (0.325) (0.430) (0.810) (1.235) (0.600)
------- ------- ------- ------- -------
Net asset value, end of period .................................... $10.530 $10.940 $10.790 $11.480 $11.230
======= ======= ======= ======= =======
Total return(4) ................................................... (0.71%) 5.47% 1.24% 14.35% 18.79%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ........................ $4,154 $4,684 $4,567 $3,467 $889
Ratio of expenses to average net assets ........................ 1.30% 1.25% 1.25% 1.25% 1.25%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ...................... 1.56% 1.59% 2.04% 5.00% 12.34%
Ratio of net investment income to average net assets ........... 5.20% 5.58% 5.76% 6.82% 7.70%
Ratio of net investment income (loss) to average net assets prior
to expense limitation and expenses paid indirectly ........... 4.94% 5.24% 4.97% 3.07% (3.39%)
Portfolio turnover ............................................. 90% 93% 76% 42% 98%
</TABLE>
- ----------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(3) Per share information for the six months ended May 31, 1999 and the years
ended November 30, 1996, 1997, and 1998 was based on the average shares
outstanding method.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
See accompanying notes
<PAGE>
for international diversification 29
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Global Bond Series B Class
-------------------------------------------------------------
Six Months Year Year Year 12/27/94(2)
Ended Ended Ended Ended to
5/31/99(1) 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................................ $10.930 $10.790 $11.490 $11.230 $10.000
Income (loss) from investment operations:
Net investment income(3) ......................................... 0.242 0.520 0.550 0.679 0.565
Net realized and unrealized gain (loss) on investments
and foreign currencies ......................................... (0.362) (0.020) (0.511) 0.735 1.205
------- ------- ------- ------- -------
Total from investment operations ................................. (0.120) 0.500 0.039 1.414 1.770
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ............................. (0.185) (0.330) (0.699) (0.794) (0.540)
Distributions from net realized gain on investments .............. (0.105) (0.030) (0.040) (0.360) none
------- ------- ------- ------- -------
Total dividends and distributions ................................ (0.290) (0.360) (0.739) (1.154) (0.540)
------- ------- ------- ------- -------
Net asset value, end of period ...................................... $10.520 $10.930 $10.790 $11.490 $11.230
======= ======= ======= ======= =======
Total return(4) ..................................................... (0.95%) 4.59% 0.48% 13.51% 18.23%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .......................... $1,830 $1,188 $1,081 $707 $115
Ratio of expenses to average net assets .......................... 2.00% 1.95% 1.95% 1.95% 1.95%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ........................ 2.26% 2.29% 2.74% 5.70% 13.04%
Ratio of net investment income to average net assets ............. 4.50% 4.88% 5.06% 6.12% 7.00%
Ratio of net investment income (loss) to average net assets prior
to expense limitation and expenses paid indirectly ............. 4.24% 4.54% 4.27% 2.37% (4.09%)
Portfolio turnover ............................................... 90% 93% 76% 42% 98%
</TABLE>
- ----------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(3) Per share information for the six months ended May 31, 1999 and the years
ended November 30, 1996, 1997, and 1998 was based on the average shares
outstanding method.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
See accompanying notes
<PAGE>
30 for international diversification
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Global Bond Series C Class
-------------------------------------------------------------------
Six Months Year Year Year
Ended Ended Ended Ended 11/29/95(2) to
5/31/99(1) 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .............................$ 10.880 $ 10.740 $11.440 $11.240 $11.330
Income (loss) from investment operations:
Net investment income(3) ....................................... 0.243 0.521 0.551 0.680 none
Net realized and unrealized gain (loss) on investments
and foreign currencies ....................................... (0.363) (0.021) (0.512) 0.719 (0.036)
------- ------- ------- ------- -------
Total from investment operations ............................... (0.120) 0.500 0.039 1.399 (0.036)
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ........................... (0.185) (0.330) (0.699) (0.839) (0.054)
Distributions from net realized gain on investments ............ (0.105) (0.030) (0.040) (0.360) none
------- ------- ------- ------- -------
Total dividends and distributions .............................. (0.290) (0.360) (0.739) (1.199) (0.054)
------- ------- ------- ------- -------
Net asset value, end of period .................................... $10.470 $10.880 $10.740 $11.440 $11.240
======= ======= ======= ======= =======
Total return(4) ................................................... (1.04%) 4.71% 0.49% 13.51% (5)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ........................ $831 $539 $703 $118 $5
Ratio of expenses to average net assets ........................ 2.00% 1.95% 1.95% 1.95% (5)
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ...................... 2.26% 2.29% 2.74% 5.70% (5)
Ratio of net investment income to average net assets ........... 4.50% 4.88% 5.06% 6.12% (5)
Ratio of net investment income (loss) to average net assets prior
to expense limitation and expenses paid indirectly ........... 4.24% 4.54% 4.27% 2.37% (5)
Portfolio turnover ............................................. 90% 93% 76% 42% (5)
</TABLE>
- ----------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of commencement of trading.
(3) Per share information for the six months ended May 31, 1999 and the years
ended November 30, 1996, 1997, and 1998 was based on the average shares
outstanding method.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
(5) The ratios of expenses and net investment income to average net assets,
portfolio turnover and total return have been omitted as management believes
that such ratios and total return for this relatively short period are not
meaningful.
See accompanying notes
<PAGE>
for international diversification 31
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Global Bond Series Institutional Class
-----------------------------------------------------------------
Six Months Year Year Year
Ended Ended Ended Ended 12/27/94(2) to
5/31/99(1) 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............................... $10.930 $10.810 $11.520 $11.270 $10.000
Income (loss) from investment operations:
Net investment income(3) ........................................ 0.296 0.627 0.658 0.788 0.782
Net realized and unrealized gain (loss) on investments
and foreign currencies ........................................ (0.361) (0.017) (0.515) 0.732 1.088
------- ------- ------- ------- -------
Total from investment operations ................................ (0.065) 0.610 0.143 1.520 1.870
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ............................ (0.230) (0.460) (0.813) (0.910) (0.600)
Distributions from net realized gain on investments ............. (0.105) (0.030) (0.040) (0.360) none
------- ------- ------- ------- -------
Total dividends and distributions ............................... (0.335) (0.490) (0.853) (1.270) (0.600)
------- ------- ------- ------- -------
Net asset value, end of period ..................................... $10.530 $10.930 $10.810 $11.520 $11.270
======= ======= ======= ======= =======
Total return(4) .................................................... (0.62%) 5.88% 1.45% 14.68% 19.21%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ......................... $12,545 $12,937 $11,278 $6,707 $897
Ratio of expenses to average net assets ......................... 1.00% 0.95% 0.95% 0.95% 0.95%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ....................... 1.26% 1.29% 1.74% 4.70% 12.04%
Ratio of net investment income to average net assets ............ 5.50% 5.88% 6.06% 7.12% 8.00%
Ratio of net investment income (loss) to average net assets prior
to expense limitation and expenses paid indirectly ............ 5.24% 5.54% 5.27% 3.37% (3.09%)
Portfolio turnover .............................................. 90% 93% 76% 42% 98%
</TABLE>
- ----------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(3) Per share information for the six months ended May 31, 1999 and the years
ended November 30, 1996, 1997, and 1998 was based on the average shares
outstanding method.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
See accompanying notes
<PAGE>
32 for international diversification
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Global Equity Series A Class
---------------------------------------------------------------
Six Months Year Year Year
Ended Ended Ended Ended 12/27/94(2) to
5/31/99(1) 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $13.600 $14.050 $13.310 $11.900 $10.000
Income from investment operations:
Net investment income(3) ............................... 0.069 0.289 0.437 0.493 0.301
Net realized and unrealized gain on investments
and foreign currencies ............................... 0.381 0.826 0.843 1.572 1.839
------- ------- ------- ------- -------
Total from investment operations ....................... 0.450 1.115 1.280 2.065 2.140
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ................... (0.040) (0.335) (0.490) (0.385) (0.240)
Distributions from net realized gain on investments .... (0.680) (1.230) (0.050) (0.270) none
------- ------- ------- ------- -------
Total dividends and distributions ...................... (0.720) (1.565) (0.540) (0.655) (0.240)
------- ------- ------- ------- -------
Net asset value, end of period ............................ $13.330 $13.600 $14.050 $13.310 $11.900
======= ======= ======= ======= =======
Total return(4) ........................................... 3.49% 8.83% 9.91% 18.17% 21.48%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $7,806 $7,329 $6,939 $11,878 $3,122
Ratio of expenses to average net assets ................ 1.85% 1.55% 1.25% 1.25% 1.25%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ...... 2.12% 1.99% 2.16% 2.72% 7.55%
Ratio of net investment income to average net assets ... 1.05% 2.17% 3.24% 4.13% 4.75%
Ratio of net investment income (loss) to average net
assets prior to expense limitation and expenses
paid indirectly ...................................... 0.78% 1.73% 2.33% 2.66% (1.55%)
Portfolio turnover ..................................... 36% 90% 74% 34% 57%
</TABLE>
- ------------------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of commencement of trading; ratios and total return have been
annualized.
(3) Per share information for the six months ended May 31, 1999 and the years
ended November 30, 1997 and 1998 was based on the average shares outstanding
method.
(4) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
See accompanying notes
<PAGE>
for international diversification 33
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Global Equity Series B Class
---------------------------------------------------------------
Six Months Year Year Year
Ended Ended Ended Ended 12/27/94(2) to
5/31/99(1) 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $13.600 $14.040 $13.300 $11.880 $10.000
Income from investment operations:
Net investment income(3) ............................... 0.023 0.197 0.342 0.379 0.212
Net realized and unrealized gain on investments
and foreign currencies ............................... 0.387 0.813 0.848 1.606 1.848
------- ------- ------- ------- -------
Total from investment operations ....................... 0.410 1.010 1.190 1.985 2.060
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ................... (0.020) (0.220) (0.400) (0.295) (0.180)
Distributions from net realized gain on investments .... (0.680) (1.230) (0.050) (0.270) none
------- ------- ------- ------- -------
Total dividends and distributions (0.700) (1.450) (0.450) (0.565) (0.180)
------- ------- ------- ------- -------
Net asset value, end of period ............................ $13.310 $13.600 $14.040 $13.300 $11.880
======= ======= ======= ======= =======
Total return(4) ........................................... 3.18% 7.97% 9.18% 17.32% 20.73%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $5,116 $5,397 $4,445 $4,796 $613
Ratio of expenses to average net assets ................ 2.55% 2.25% 1.95% 1.95% 1.95%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly .............. 2.82% 2.69% 2.86% 3.42% 8.25%
Ratio of net investment income to average net assets ... 0.35% 1.47% 2.54% 3.43% 4.05%
Ratio of net investment income (loss) to average net
assets prior to expense limitation and expenses paid
indirectly ........................................... 0.08% 1.03% 1.63% 1.96% (2.25%)
Portfolio turnover ..................................... 36% 90% 74% 34% 57%
</TABLE>
- -----------------------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of commencement of trading; ratios and total return have been
annualized.
(3) Per share information for the six months ended May 31, 1999 and the years
ended November 30, 1997 and 1998 was based on the average shares outstanding
method.
(4) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
See accompanying notes
<PAGE>
34 for international diversification
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Global Equity Series C Class
---------------------------------------------------------------
Six Months Year Year Year
Ended Ended Ended Ended 11/29/95(2) to
5/31/99(1) 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $13.550 $13.990 $13.250 $11.890 $11.940
Income (loss) from investment operations:
Net investment income(3) ............................... 0.023 0.197 0.341 0.446 none
Net realized and unrealized gain (loss) on investments
and foreign currencies ............................... 0.387 0.813 0.849 1.534 (0.050)
------- ------- ------- ------- -------
Total from investment operations ....................... 0.410 1.010 1.190 1.980 (0.050)
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ................... (0.020) (0.220) (0.400) (0.350) none
Distributions from net realized gain on investments .... (0.680) (1.230) (0.050) (0.270) none
------- ------- ------- ------- -------
Total dividends and distributions ...................... (0.700) (1.450) (0.450) (0.620) none
------- ------- ------- ------- -------
Net asset value, end of period ............................ $13.260 $13.550 $13.990 $13.250 $11.890
======= ======= ======= ======= =======
Total return(4) ........................................... 3.19% 8.00% 9.21% 17.33% (5)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $2,873 $3,391 $3,094 $1,185 $5
Ratio of expenses to average net assets ................ 2.55% 2.25% 1.95% 1.95% (5)
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly .............. 2.82% 2.69% 2.86% 3.42% (5)
Ratio of net investment income to average net assets ... 0.35% 1.47% 2.54% 3.43% (5)
Ratio of net investment income (loss) to average net
assets prior to expense limitation and expenses paid
indirectly ........................................... 0.08% 1.03% 1.63% 1.96% (5)
Portfolio turnover ..................................... 36% 90% 74% 34% (5)
</TABLE>
- ----------------------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of commencement of trading.
(3) Per share information for the six months ended May 31, 1999 and the years
ended November 30, 1997 and 1998 was based on the average shares outstanding
method.
(4) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(5) The ratios of expenses and net investment income to average net assets,
portfolio turnover and total return have been omitted as management believes
that such ratios and total return for this relatively short period are not
meaningful.
See accompanying notes
<PAGE>
for international diversification 35
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Global Equity Series Institutional Class
---------------------------------------------------------------
Six Months Year Year Year
Ended Ended Ended Ended 12/27/94(2) to
5/31/99(1) 11/30/98 11/30/97 11/30/96 11/30/95
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $13.610 $14.100 $13.340 $11.930 $10.000
Income (loss) from investment operations:
Net investment income(3) ............................... 0.089 0.329 0.478 0.567 0.473
Net realized and unrealized gain (loss) on investments
and foreign currencies ............................... 0.391 0.816 0.857 1.533 1.697
------- ------- ------- ------- -------
Total from investment operations ....................... 0.480 1.145 1.335 2.100 2.170
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ................... (0.050) (0.405) (0.525) (0.420) (0.240)
Distributions from net realized gain on investments .... (0.680) (1.230) (0.050) (0.270) none
------- ------- ------- ------- -------
Total dividends and distributions ...................... (0.730) (1.635) (0.575) (0.690) (0.240)
------- ------- ------- ------- -------
Net asset value, end of period ............................ $13.360 $13.610 $14.100 $13.340 $11.930
======= ======= ======= ======= =======
Total return(4) ........................................... 3.72% 9.07% 10.34% 18.38% 21.88%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $1,256 $2,627 $2,310 $2,203 $2,191
Ratio of expenses to average net assets ................ 1.55% 1.25% 0.95% 0.95% 0.95%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly .............. 1.82% 1.69% 1.86% 2.42% 7.25%
Ratio of net investment income to average net assets ... 1.35% 2.47% 3.54% 4.43% 5.05%
Ratio of net investment income (loss) to average net
assets prior to expense limitation and expenses paid
indirectly ........................................... 1.08% 2.03% 2.63% 2.96% (1.25%)
Portfolio turnover ..................................... 36% 90% 74% 34% 57%
</TABLE>
- --------------------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(3) Per share information for the six months ended May 31, 1999 and the years
ended November 30, 1997 and 1998 was based on the average shares outstanding
method.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
See accompanying notes
<PAGE>
36 for international diversification
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Emerging Markets Series A Class
-----------------------------------------------
Six Months Year Year
Ended Ended Ended 6/10/96(2) to
5/31/99(1) 11/30/98 11/30/97 11/30/96
(Unaudited)
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $6.530 $10.200 $ 9.970 $10.000
Income (loss) from investment operations:
Net investment income (loss)(3) ....................... 0.066 0.129 0.062 0.018
Net realized and unrealized gain (loss)
on investments and foreign currencies ............... 0.604 (3.174) 0.253 (0.048)
------ ------- ------- -------
Total from investment operations ...................... 0.670 (3.045) 0.315 (0.030)
------ ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .................. (0.070) (0.020) (0.010) none
Distributions from net realized gain
on investments ...................................... none (0.605) (0.075) none
------ ------- ------- -------
Total dividends and distributions ..................... (0.070) (0.625) (0.085) none
------ ------- ------- -------
Net asset value, end of period ........................... $7.130 $ 6.530 $10.200 $ 9.970
====== ======= ======= =======
Total return(4) .......................................... 10.48% (31.66%) 3.19% (0.30%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $6,350 $ 5,584 $ 9,665 $ 2,518
Ratio of expenses to average net assets ............... 1.95% 1.96% 2.00% 2.00%
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly ............................ 3.31% 3.91% 3.02% 4.10%
Ratio of net investment income (loss)
to average net assets ............................... 2.11% 1.58% 0.52% 0.17%
Ratio of net investment income (loss)
to average net assets prior to expense
limitation and expenses paid indirectly ............. 0.75% (0.37%) (0.50%) (1.93%)
Portfolio turnover .................................... 14% 47% 65% 36%
</TABLE>
<PAGE>
[RESTUB]
<TABLE>
<CAPTION>
Emerging Markets Series B Class
------------------------------------------------
Six Months Year Year
Ended Ended Ended 6/10/96(2) to
5/31/99(1) 11/30/98 11/30/97 11/30/96
(Unaudited)
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $6.440 $10.110 $ 9.940 $10.000
Income (loss) from investment operations:
Net investment income (loss)(3) ....................... 0.043 0.070 (0.020) (0.051)
Net realized and unrealized gain (loss)
on investments and foreign currencies ............... 0.607 (3.135) 0.265 (0.009)
------ ------- ------- -------
Total from investment operations ...................... 0.650 (3.065) 0.245 (0.060)
------ ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .................. (0.010) none none none
Distributions from net realized gain
on investments ...................................... none (0.605) (0.075) none
------ ------- ------- -------
Total dividends and distributions ..................... (0.010) (0.605) (0.075) none
------ ------- ------- -------
Net asset value, end of period ........................... $7.080 $ 6.440 $10.110 $ 9.940
====== ======= ======= =======
Total return(4) .......................................... 10.13% (32.11%) 2.48% (0.60%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $2,779 $ 2,528 $ 3,484 $ 282
Ratio of expenses to average net assets ............... 2.70% 2.70% 2.70% 2.70%
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly ............................ 4.06% 4.61% 3.72% 4.80%
Ratio of net investment income (loss)
to average net assets ............................... 1.36% 0.84% (0.18%) (0.53%)
Ratio of net investment income (loss)
to average net assets prior to expense
limitation and expenses paid indirectly ............. 0.00% (1.07%) (1.20%) (2.63%)
Portfolio turnover .................................... 14% 47% 65% 36%
</TABLE>
- -----------------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(3) Per share information for the six months ended May 31, 1999 and the years
ended November 30, 1996, 1997 and 1998 was based on the average shares
outstanding method.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
See accompanying notes
<PAGE>
for international diversification 37
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Series outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Emerging Markets Series C Class
-----------------------------------------------
Six Months Year Year
Ended Ended Ended 6/10/96(2) to
5/31/99(1) 11/30/98 11/30/97 11/30/96
(Unaudited)
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $6.430 $10.110 $ 9.940 $10.000
Income (loss) from investment operations:
Net investment income (loss)(3) ....................... 0.043 0.068 (0.019) (0.051)
Net realized and unrealized gain (loss)
on investments and foreign currencies ............... 0.607 (3.143) 0.264 (0.009)
------ ------- ------- -------
Total from investment operations ...................... 0.650 (3.075) 0.245 (0.060)
------ ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .................. (0.010) none none none
Distributions from net realized gain
on investments ...................................... none (0.605) (0.075) none
------ ------- ------- -------
Total dividends and distributions ..................... (0.010) (0.605) (0.075) none
------ ------- ------- -------
Net asset value, end of period ........................... $7.070 $ 6.430 $10.110 $ 9.940
====== ======= ======= =======
Total return(4) .......................................... 10.14% (32.21%) 2.48% (0.60%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $1,093 $ 884 $ 1,519 $ 199
Ratio of expenses to average net assets ............... 2.70% 2.70% 2.70% 2.70%
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly ............................ 4.06% 4.61% 3.72% 4.80%
Ratio of net investment income (loss)
to average net assets ............................... 1.36% 0.84% (0.18%) (0.53%)
Ratio of net investment income (loss)
to average net assets prior to expense
limitation and expenses paid indirectly ............. 0.00% (1.07%) (1.20%) (2.63%)
Portfolio turnover .................................... 14% 47% 65% 36%
</TABLE>
<PAGE>
[RESTUB]
<TABLE>
<CAPTION>
Emerging Markets Series Institutional Class
------------------------------------------------
Six Months Year Year
Ended Ended Ended 6/10/96(2) to
5/31/99(1) 11/30/98 11/30/97 11/30/96
(Unaudited)
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $6.550 $10.250 $ 9.990 $10.000
Income (loss) from investment operations:
Net investment income (loss)(3) ....................... 0.074 0.151 0.098 0.047
Net realized and unrealized gain (loss)
on investments and foreign currencies ............... 0.606 (3.191) 0.262 (0.057)
------ ------- ------- -------
Total from investment operations ...................... 0.680 (3.040) 0.360 (0.010)
------ ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .................. (0.090) (0.055) (0.025) none
Distributions from net realized gain
on investments ...................................... none (0.605) (0.075) none
------ ------- ------- -------
Total dividends and distributions ..................... (0.090) (0.660) (0.100) none
------ ------- ------- -------
Net asset value, end of period ........................... $7.140 $ 6.550 $10.250 $ 9.990
====== ======= ======= =======
Total return(4) .......................................... 10.67% (31.55%) 3.64% (0.10%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $2,328 $ 1,117 $ 1,916 $ 3,717
Ratio of expenses to average net assets ............... 1.70% 1.70% 1.70% 1.70%
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly ............................ 3.06% 3.61% 2.72% 3.80%
Ratio of net investment income (loss)
to average net assets ............................... 2.36% 1.84% 0.82% 0.47%
Ratio of net investment income (loss)
to average net assets prior to expense
limitation and expenses paid indirectly ............. 1.00% (0.07%) (0.20%) (1.63%)
Portfolio turnover .................................... 14% 47% 65% 36%
</TABLE>
- ----------------------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(3) Per share information for the six months ended May 31, 1999 and the years
ended November 30, 1996, 1997 and 1998 was based on the average shares
outstanding method.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
See accompanying notes
<PAGE>
38 for international diversification
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 six series: the International Equity Series,
the Global Bond Series, the Global Equity Series, the Emerging Markets Series,
the Global Opportunities Series and the International Small Cap Series. These
financial statements and the related notes pertain to the International Equity
Series, the Global Bond Series, the Global Equity Series and the Emerging
Markets Series (the "Series"). The International Equity Series is registered as
a diversified open-end investment company, and the Global Bond Series, the
Global Equity Series and the Emerging Markets Series are registered as
non-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% for all Series except the Global Bond
Series, which is 4.75%. The B Class carries a back-end deferred sales charge,
the C Class carries a level load sales charge and the Institutional Class has no
sales charge.
The investment objective of each Series is as follows:
International Equity Series: To seek long-term growth without undue risk to
principal by investing primarily in international equity securities with the
potential for capital appreciation and income.
Global Bond Series: To seek current income consistent with the preservation of
principal by investing primarily in international bonds that may also provide
the potential for capital appreciation.
Global Equity Series: To seek long-term total return by investing in securities,
including U.S. and foreign stocks, with the potential for capital appreciation
and income.
Emerging Markets Series: To seek long-term capital appreciation by investing
primarily in equity securities of issuers located or operating in emerging
market countries.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund.
Security Valuation - Securities listed on an exchange are valued at the last
quoted sales price as of the close of the NYSE on the valuation date. Securities
not traded or securities not listed on an exchange are valued at the mean of the
last quoted bid and asked prices. Securities listed on a foreign exchange are
valued at the last quoted sales price before each Series is valued. Long-term
debt securities are valued by an independent pricing service and such prices are
believed to reflect the fair value of such securities. Money market instruments
having less than 60 days to maturity are valued at amortized cost, which
approximates market value. Other securities and assets for which market
quotations are not readily available are valued at fair value as determined in
good faith by or under the direction of the Fund's Board of Directors.
Federal Income Taxes - Each Series intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations, which may differ from generally
accepted accounting principles.
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
each Series on the basis of daily net assets of each class. Distribution
expenses relating to a specific class are charged directly to that class.
<PAGE>
Repurchase Agreements - Each 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 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 foreign currency exchange rates. The Series do
isolate that portion of gains and losses on investments in debt securities which
are due to changes in the foreign currency exchange rate from that which are due
to changes in the market prices of debt securities. The Series report 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 Series are 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. Original issue
discounts are accreted to interest income over the lives of the respective
securities. Each Series declares and pays dividends from capital gains annually
and from net investment income as follows: the International Equity Series, the
Global Equity Series and the Global Bond Series quarterly and the Emerging
Markets Series annually.
Certain expenses of the Series are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price execution. The Series
may receive earnings credits from its custodian when positive cash balances are
maintained, which are used to offset custody fees. The expenses paid under the
above arrangement are included in their respective expense captions on the
Statement of Operations with the corresponding expense offset shown as "expenses
paid indirectly". The amount of these expenses and credits for the period ended
May 31, 1999 are as follows:
<PAGE>
for international diversification 39
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
International Global Global Emerging
Equity Bond Equity Markets
Series Series Series Series
------------- ------ ------ --------
"Soft Dollar" Expenses.. $4,091 $226 $199 $119
Earnings Credits ....... 31,024 8,269 -- 763
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, each Series
pays Delaware International Advisers Ltd. ("DIAL"), the Investment Manager, an
annual fee 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 Equity Series' investment in U.S. securities.
DMC receives 25% of the management fee paid to DIAL for managing the U.S.
securities portion of the Global Equity Series. The management fee rates changed
effective April 1, 1999, with the exception of the International Equity Series
which was effective April 15, 1999. The new management fee rate for the
International Equity Series and Global Equity Series is 0.85% of the first $500
million of average daily net assets of each Series, 0.80% on the next $500
million, 0.75% on the next $1,500 million and 0.70% on the average daily net
assets over $2,500 million. The new rate for the Global Bond Series is 0.75% of
the first $500 million of average daily net assets, 0.70% on the next $500
million, 0.65% on the next $1,500 million and 0.60% on the average daily net
assets over $2,500 million. The new rate for the Emerging Markets Series is
1.25% of 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 over $2,500 million. The old management fee rate for the
International Equity Series, Global Bond Series, and Global Equity Series was
0.75%, which was calculated daily on the net assets of each Series, less fees
paid to the independent directors. The old management fee rate for the Emerging
Market Series was 1.25% calculated daily on the net assets of the Series.
DIAL has elected to waive its fees and reimburse the Series to the extent that
annual operating expenses, exclusive of taxes, interest, brokerage commissions,
extraordinary expenses and distribution expenses, exceed 1.00% for each class of
the Global Bond Series, 1.55% for each class of the Global Equity Series and
1.70% for each class of the Emerging Markets Series of the average daily net
assets for the Series through November 30, 1999.
The Series have engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting services.
Each Series pays DSC a monthly fee based on the number of shareholder accounts,
shareholder transactions and average net assets, subject to certain minimums.
<PAGE>
On May 31, 1999, the Series had liabilities payable to affiliates as follows:
<TABLE>
<CAPTION>
International Global Global Emerging
Equity Bond Equity Markets
Series Series Series Series
------------- ------ ------ --------
<S> <C> <C> <C> <C>
Investment management fee payable to DIAL ................... $258,467 $8,176 $12,493 --
Dividend disbursing, transfer agent, accounting fees and
other expenses payable to DSC ............................ 144,254 7,196 14,919 $11,883
Other expenses payable to DMC and affiliates ................ -- -- 493 --
</TABLE>
Pursuant to the Distribution Agreement, each Series pays Delaware Distributors,
L.P. ("DDLP"), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.30% of the average daily net assets of the A Class and 1.00% of the
average daily net assets of the B and C Class. For the period February 1, 1998
through July 31, 1999, DDLP has elected to waive its fees to ensure that the
annual fee received from the Emerging Markets Series A Class does not exceed
0.25% of the average daily net assets.
For the six months ended May 31, 1999, DDLP earned commissions on sales of the A
Class shares for each Series as follows:
International Global Global Emerging
Equity Bond Equity Markets
Series Series Series Series
------------ ------ ------ --------
$26,968 $3,339 $3,071 $2,118
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 six months 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:
International Global Global Emerging
Equity Bond Equity Markets
Series Series Series Series
------------ ------ ------ --------
Purchases ............. $3,598,750 $8,705,545 $3,066,557 $997,867
Sales ................. 22,304,954 8,395,023 4,794,720 661,651
<PAGE>
40 for international diversification
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
The cost of investments for federal income tax purposes approximates cost for
book purposes. At May 31, 1999, the aggregate cost of securities and unrealized
appreciation (depreciation) for each Series were as follows:
<TABLE>
<CAPTION>
International Global Global Emerging
Equity Bond Equity Markets
Series Series Series Series
------------ ------ ------ --------
<S> <C> <C> <C> <C>
Cost of investments ................................ $286,279,073 $19,764,618 $15,610,715 $17,797,150
============ =========== =========== ===========
Aggregate unrealized appreciation .................. $54,363,005 $80,207 $2,012,400 $595,126
Aggregate unrealized depreciation .................. (15,516,127) (1,005,178) (818,699) (5,843,150)
------------ ----------- ----------- -----------
Net unrealized appreciation (depreciation).......... $38,846,878 $(924,971) $1,193,701 $(5,248,024)
============ =========== =========== ===========
</TABLE>
For federal income tax purposes, the Fund had accumulated capital losses at
November 30, 1998 for each Series as follows:
Year of Expiration
2006
----
International Equity Series............... $2,837,854
Emerging Markets Series .................. 1,188,491
4. Capital Stock
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
International Equity Series Global Bond Series
--------------------------- --------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
5/31/99 11/30/98 5/31/99 11/30/98
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Shares sold:
A Class ....................................... 17,614,635 16,564,864 56,013 113,649
B Class ....................................... 2,093,774 4,073,265 77,344 34,421
C Class ....................................... 5,537,271 7,476,066 38,267 4,332
Institutional Class ........................... 3,392,514 8,697,007 191,461 393,104
Shares issued upon reinvestment of distributions
from net investment income and net realized
gain on investments:
A Class ....................................... 99,460 275,722 9,394 11,830
B Class ....................................... 20,438 60,552 4,195 2,915
C Class ....................................... 5,755 20,437 1,522 2,026
Institutional Class ........................... 157,776 207,907 35,437 52,808
----------- ------------ ---------- ---------
28,921,623 37,375,820 413,633 615,085
----------- ------------ ---------- ---------
Shares repurchased:
A Class ....................................... (18,526,262) (16,518,776) (99,143) (120,563)
B Class ....................................... (2,241,603) (3,853,029) (16,323) (28,855)
C Class ....................................... (5,577,915) (7,386,503) (9,912) (22,294)
Institutional Class ........................... (2,415,348) (3,016,912) (218,967) (305,570)
----------- ------------ ---------- ---------
(28,761,128) (30,775,220) (344,345) (477,282)
----------- ------------ ---------- ---------
Net increase ..................................... 160,495 6,600,600 69,288 137,803
=========== ============ ========== =========
</TABLE>
<PAGE>
for international diversification 41
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global Equity Series Emerging Markets Series
-------------------------- -------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
5/31/99 11/30/98 5/31/99 11/30/98
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Shares sold:
A Class ....................................... 115,169 176,582 199,384 415,378
B Class ....................................... 34,782 101,799 118,600 123,871
C Class ....................................... 15,591 54,271 42,311 58,715
Institutional Class ........................... 14,014 39,144 218,095 138,485
Shares issued upon reinvestment of distributions
from net investment income and net realized
gain on investments:
A Class ....................................... 29,653 58,833 9,176 56,786
B Class ....................................... 19,847 34,726 599 21,543
C Class ....................................... 12,623 22,924 224 8,341
Institutional Class ........................... 5,138 21,063 2,585 12,171
--------- --------- -------- --------
246,817 509,342 590,974 835,290
--------- --------- -------- --------
Shares repurchased:
A Class ....................................... (98,245) (190,149) (173,775) (563,918)
B Class ....................................... (67,070) (56,458) (119,383) (97,215)
C Class ....................................... (61,709) (48,156) (25,408) (79,781)
Institutional Class ........................... (118,045) (31,084) (65,292) (167,165)
--------- --------- -------- --------
(345,069) (325,847) (383,858) (908,079)
--------- --------- -------- --------
Net increase (decrease) .......................... (98,252) 183,495 207,116 (72,789)
========= ========= ======== ========
</TABLE>
5. Lines of Credit
The Fund has a committed line of credit for $10.8 million for the International
Equity Series, $900,000 for the Global Bond Series, $1 million for the Global
Equity Series and $900,000 for the Emerging Markets Series. No amounts were
outstanding at May 31, 1999, or at any time during the fiscal year.
6. Foreign Exchange Contracts
A Series will generally enter into forward foreign currency contracts as a way
of managing foreign exchange rate risk. A Series may enter into these contracts
to fix the U.S. dollar value of a security that it has agreed to buy or sell for
the period between the date the trade was entered into and the date the security
is delivered and paid for. A Series may also use these contracts to hedge the
U.S. dollar value of securities it already owns denominated in foreign
currencies.
Forward foreign currency contracts are valued at the mean between the bid and
asked prices of the contracts and are marked-to-market daily. Interpolated
values are derived when the settlement date of the contract is an interim date
for which quotations are not available. The change in market value is recorded
as an unrealized gain or loss. When the contract is closed, a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed is recorded.
The use of forward foreign currency contracts does not eliminate fluctuations in
the underlying prices of the securities, but it does establish a rate of
exchange that can be achieved in the future. Although forward foreign currency
contracts limit the risk of loss due to a decline in the value of the hedged
currency, they also limit any potential gain that might result should the value
of the currency increase. In addition, a Series could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts.
The following forward foreign currency contracts were outstanding at May 31,
1999:
<TABLE>
<CAPTION>
International Equity Series
- -----------------------------------------------------------------------------------------------------------------
Value of Unrealized
Contracts to In Exchange Contract at Settlement Appreciation
Deliver For 5/31/99 Date (Depreciation)
<S> <C> <C> <C> <C>
18,540,178 British Pounds $29,960,000 $29,669,012 07/30/99 $290,988
1,309,938 British Pounds 2,090,400 2,097,136 06/02/99 (6,736)
1,832,881 British Pounds 2,936,642 2,934,372 06/01/99 2,270
234,514,911 Japanese Yen 1,921,151 1,927,946 06/01/99 (6,795)
Global Equity Series
- -----------------------------------------------------------------------------------------------------------------
Contracts to
Deliver
865,126 British Pounds $1,398,000 $1,384,422 07/30/99 13,578
</TABLE>
<PAGE>
42 for international diversification
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
7. Market and Credit Risk
Some countries in which the Series may invest require governmental approval for
the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
temporary restrictions on foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially smaller,
less liquid and more volatile than the major securities markets in the United
States. Consequently, acquisition and disposition of securities by the Series
may be inhibited. In addition, a significant proportion of the aggregate market
value of equity securities listed on the major securities exchanges in emerging
markets are held by a smaller number of investors. This may limit the number of
shares available for acquisition or disposition by the Series.
The Series may invest in high-yield fixed income securities which carry ratings
of BB or lower by S&P and/or Ba or lower by Moody's. Investments in these higher
yielding securities may be accompanied by a greater degree of credit risk than
higher rated securities. Additionally, lower rated securities may be more
susceptible to adverse economic and competitive industry conditions than
investment grade securities.
With the exception of the Emerging Markets Series each Series may invest up to
10% of its total assets in illiquid securities which may include securities with
contractual restrictions on resale, securities exempt from registration under
Rule 144A of the Securities Act of 1933, as amended, and other securities which
may not be readily marketable. The Emerging Markets Series may invest up to 15%
in such securities. The relative illiquidity of some of these securities may
adversely affect the Series' ability to dispose of such securities in a timely
manner and at a fair price when it is necessary to liquidate such securities.
8. Securities Lending
The International Equity Series may participate, along with other funds in the
Delaware Investments Family of Funds, in a Securities Lending Agreement
("Lending Agreement"). Security loans made pursuant to the Lending Agreement are
required at all times to be secured by U.S. Treasury obligations and/or cash
collateral at least equal to 100% of the market value of securities issued in
the U.S. and 105% of the market value of securities issued outside of the U.S.
Cash collateral received is invested in fixed income securities, with a weighted
average maturity not to exceed 90 days, rated in one of the top two tiers by
Standard & Poor's Ratings Group or Moody's Investors Service, Inc. or repurchase
agreements collateralized by such securities. However, in the event of default
or bankruptcy by the lending agent, realization and/or retention of the
collateral may be subject to legal proceedings. In the event that the borrower
fails to return loaned securities and collateral received is insufficient to
cover the value of loaned securities and provided such collateral is not the
result of investment losses, the lending agent has agreed to pay the amount of
the shortfall to the Series, or at the discretion of the lending agent, replace
the loaned securities. The market value of the securities on loan and the
related collateral received at May 31, 1999 were as follows:
Market Value
of securities Market Value
on loan of collateral
------------- -------------
International Equity Series ............... $41,165,848 $44,008,513
<PAGE>
for international diversification 43
Proxy Results
(Unaudited)
- --------------------------------------------------------------------------------
For the six months ended May 31, 1999, 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 Abstain
------ ------------ -------
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 reclassification of the investment objective from fundamental
to non-fundamental.
For Against Abstain
----- ------- -------
International Equity Series.. 15,443,838 301,931 515,505
Global Bond Series .......... 1,174,210 1,655 13,177
Global Equity Series ........ 692,527 26,540 42,218
Emerging Markets Series ..... 655,489 39,709 50,726
3. To approve standardized fundamental investment restrictions (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
----- ------- -------
International Equity Series.. 15,583,559 189,223 488,492
Global Bond Series .......... 1,173,031 3,427 12,582
Global Equity Series ........ 698,426 22,355 40,504
Emerging Markets Series ..... 662,179 28,932 54,814
3B. To adopt a new fundamental investment restriction concerning borrowing money
and issuing senior securities.
For Against Abstain
----- ------- -------
International Equity Series.. 15,541,922 218,434 500,918
Global Bond Series .......... 1,172,426 3,597 13,018
Global Equity Series ........ 692,250 22,544 46,491
Emerging Markets Series ..... 655,103 34,563 56,258
3C. To adopt a new fundamental investment restriction concerning underwriting.
For Against Abstain
----- ------- -------
International Equity Series.. 15,564,197 185,955 511,122
Global Bond Series .......... 1,175,609 1,615 11,816
Global Equity Series ........ 698,289 18,324 44,672
Emerging Markets Series ..... 662,198 26,485 57,241
<PAGE>
3D. To adopt a new fundamental investment restriction concerning investments in
real estate.
For Against Abstain
----- ------- -------
International Equity Series.. 15,561,813 212,763 486,698
Global Bond Series .......... 1,173,706 3,205 12,130
Global Equity Series ........ 701,201 15,803 44,281
Emerging Markets Series ..... 660,816 30,283 54,825
3E. To adopt a new fundamental investment restriction concerning investments in
commodities.
For Against Abstain
----- ------- -------
International Equity Series.. 15,532,850 236,595 491,828
Global Bond Series .......... 1,172,901 3,205 12,935
Global Equity Series ........ 699,790 18,426 43,070
Emerging Markets Series ..... 654,443 31,967 59,514
3F. To adopt a new fundamental investment restriction concerning lending by the
Fund.
For Against Abstain
----- ------- -------
International Equity Series.. 15,540,964 226,660 493,650
Global Bond Series .......... 1,173,533 1,815 13,693
Global Equity Series ........ 699,703 17,466 44,116
Emerging Markets Series ..... 651,716 38,799 55,409
3G. To reclassify all current fundamental investment restrictions as
non-fundamental.
For Against Abstain
----- ------- -------
International Equity Series.. 15,456,017 275,581 529,676
Global Bond Series .......... 1,174,246 2,098 12,697
Global Equity Series ........ 689,253 25,525 46,508
Emerging Markets Series ..... 651,104 42,691 52,129
4. To approve a new investment management agreement with Delaware Management
Company.
For Against Abstain
----- ------- -------
International Equity Series.. 11,632,431 4,117,862 510,981
Global Bond Series .......... 1,173,297 2,701 13,043
Global Equity Series ........ 692,305 23,771 45,208
Emerging Markets Series ..... 844,122 38,725 49,736
5. To approve a new Sub-Advisory Agreement.
For Against Abstain
----- ------- -------
Global Equity Series ........ 821,548 16,320 47,370
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 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
<PAGE>
This Semi-annual report is for the information of Global & International Funds
shareholders, but it may be used with prospective investors when preceded or
accompanied by the current prospectus for the Global & International Funds and
the Delaware Investments Performance Update for the most recently completed
calendar quarter. The prospectus sets forth details about charges, expenses,
investment objectives and operating policies of 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. The
figures in this report represent past results which are not a guarantee of
future results. The return and principal value of an investment in each Fund
will fluctuate so that shares, when redeemed, may be worth more or less than
their original cost.
- --------------------------------------------------------------------------------
(photo of globes)
Investment Manager
Delaware International Advisers Ltd.
London, England
U.S. Affiliate
Delaware Management Company
Philadelphia
National Distributor
Delaware Distributors, L.P.
Philadelphia
Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
Philadelphia
1818 Market Street
Philadelphia, PA 19103-3682
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
International investing has special risks that include less stable economies and
governments, currency fluctuations and different accounting standards.
Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan; however, shares of the Funds are
not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union,
and involve investment risk, including the possible loss of the principal.
Shares of the Funds are not bank or credit union deposits.
(C) Delaware Distributors, L.P.
DELAWARE(SM)
INVESTMENTS
- ---------------------
Philadelphia o London
Printed in the USA
on recycled paper
(1925)
SA-034 [5/99] PP7/99
