<PAGE>
DELAWARE(SM)
INVESTMENTS
------------ Delaware New Pacific Fund
Delaware Overseas Equity Fund
International Diversification
[International Diversification Artwork]
2000 Semi-annual report
<PAGE>
TABLE OF CONTENTS
------------------
Letter to Shareholders 1
Delaware New Pacific Fund
Portfolio
Management Review 3
Performance Summary 5
Delaware Overseas Equity Fund
Portfolio
Management Review 6
Performance Summary 8
Financial Statements
Statements of
Net Assets 9
Statement of Assets
and Liabilities 14
Statements of
Operations 15
Statements of Changes
in Net Assets 16
Financial Highlights 17
Notes to Financial
Statements 25
A TRADITION OF SOUND INVESTING SINCE 1929
-----------------------------------------
A Commitment To Our Investors
Experienced
o Our seasoned investment professionals average more than 15 years' experience.
o We opened our first mutual fund in 1938. For over 70 years, we have managed
money in a variety of investment styles that have weathered a full range of
economic and market environments.
Disciplined
o We follow strict investment policies and clear buy/sell guidelines.
o We strive to balance risk and reward in order to provide sound investment
alternatives within any given asset class.
Consistent
o We believe consistent processes are the best way to seek consistent investment
performance.
o Our commitment to style consistency has earned us the confidence of
discriminating institutional and individual investors to manage over $46
billion in assets as of March 31, 2000.
Comprehensive
o We offer more than 70 mutual funds in these asset classes.
o Large-cap equity o High-yield bonds
o Mid-cap equity o Investment grade bonds
o Small-cap equity o Municipal bonds
o International equity (23 single-state funds)
o Balanced o International fixed-income
o Our funds are available through financial advisers who can offer you
individualized attention and valuable investment advice.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the
principal amount invested.
(C)Delaware Distributors, L.P.
<PAGE>
Dear Shareholder
June 12, 2000
Recap of Events - Over the past six months, we have seen a continuation of the
improvements in overseas and emerging markets as economies around the world
continued their recovery from the difficulties of 1998. As in the U.S.,
international market performance was strongly momentum-driven, with stocks in
the technology and telecommunications sectors providing the bulk of the
performance for much of the period.
Amid this technology exuberance, the big Y2K story was that the new millennium
arrived with a yawn, rather than a headache or global catastrophe, as some had
feared. Post-Y2K relief helped fuel continued strong growth of world markets
early in 2000. This was especially true for technology stocks during the first
several months of the period.
Markets worldwide suffered during March and April, 2000, as fickle investors
alternately pursued and abandoned "old economy" blue chip stocks in favor of
"new economy" stocks such as high-tech and dot.com companies. However, a
technology sell off that started during the last week of March has led to a
broadening of the market as investors began to pay attention to valuation
levels.
Delaware New Pacific Fund, which invests primarily in countries located in Asia,
performed well during the fourth quarter in 1999, as many Asian markets saw
strong gains. However, many markets in the region stumbled during the first
quarter of 2000, despite continued improvements in the overall economic outlook
for Asia. For the six-month period ended April 30, 2000, your Fund provided a
+5.59% return (Class A shares at net asset value with all distributions
reinvested). Your Fund outperformed its benchmark, the Morgan Stanley Pacific
Index, which posted a return of +3.65% for the same period.
Total Return
For Period Ended April 30, 2000 Six Months
--------------------------------------------------------------------------------
Delaware New Pacific Fund Class A +5.59%
Morgan Stanley Pacific Index +3.65%
Lipper Pacific Region Funds Average (62 funds) +11.92%
--------------------------------------------------------------------------------
Delaware Overseas Equity Fund Class A +6.50%
MSCI EAFE Index +6.84%
Lipper International Funds Average (711 funds) +14.14%
--------------------------------------------------------------------------------
All performance shown above is at net asset value without the effect of sales
charges and assumes reinvestment of dividends and capital gains. Performance
information for all Fund classes can be found on pages 5 and 8. The Morgan
Stanley Pacific Index is an unmanaged measure of international stocks in
established Pacific markets. The Lipper Pacific Region Funds Average represents
a peer group of Pacific region mutual funds tracked by Lipper Analytical
(Source: Lipper Analytical Services, Inc.). The MSCI EAFE Index is an unmanaged
measure of international stocks in established markets. The Lipper International
Fund Average represents a peer group of international mutual funds tracked by
Lipper Analytical (Source: Lipper Analytical Services, Inc.). You cannot invest
directly in an index. Past performance does not guarantee future results.
1
<PAGE>
Delaware Overseas Equity Fund, which invests in both developed and emerging
markets, provided a +6.50% return (Class A shares at net asset value with all
distributions reinvested) for the six month period ended April 30, 2000, almost
matching its benchmark, the MSCI EAFE Index, which returned +6.84% for the same
period.
For some investors with holdings in international and emerging markets, it has
probably been difficult to maintain a long-term perspective over the past few
years. Although there are inherent short-term risks associated with
international investing, such as currency and political risks, and, in the case
of Delaware New Pacific Fund, regional concentration risks, there can also be
great financial opportunities over longer time periods. Investing in
international and emerging markets adds a strong diversification component to
your portfolio.
On the pages that follow, your Fund's portfolio management team discusses
Delaware New Pacific Fund's and Delaware Overseas Equity Fund's recent
performance and outlook for the future.
Outlook - While we are currently seeing a good deal of volatility in markets
worldwide, we believe Delaware New Pacific Fund and Delaware Overseas Equity
Fund are well positioned to benefit from a continued broadening of the market
and investors' renewed appreciation of earnings and valuations as the keys to
stock appreciation.
We thank you for your continued confidence and commitment to Delaware
Investments.
Sincerely,
/s/ Wayne A. Stork /s/ David K. Downes
------------------------------- ---------------------------------
Wayne A. Stork David K. Downes
Chairman, President and Chief Executive Officer,
Delaware Investments Delaware Investments
Family of Funds Family of Funds
[International Diversification Artwork]
2
<PAGE>
Calum Graham
Portfolio Manager & Director
AIB Govett Asset
Management Limited
June 12, 2000
PORTFOLIO MANAGEMENT REVIEW
---------------------------
Delaware New Pacific Fund
The Fund's Results
Delaware New Pacific Fund, which invests primarily in countries located in Asia,
provided a +5.59% return for the six month period ended April 30, 2000 (Class A
shares at net asset value with all distributions reinvested).
The Fund's performance was negatively impacted by two factors. As of April 30,
2000, we had approximately 49.4% of the portfolio allocated to Japan, a sizeable
weighting but a smaller percentage than our benchmark, the Morgan Stanley
Pacific Index. Our underweight position was primarily a function of our belief
that there were more attractive growth rates elsewhere in the region. Our
holdings in the technology sector were less than our benchmark and our peers, as
we believe many of the companies that were responsible for the recent rally had
become overvalued. Both the Japanese market and the technology sector performed
well during our fiscal period.
Highlights
Following strong gains in the fourth quarter of 1999, many Asian markets
stumbled in 2000. In the early part of 2000, the correction in the region's
markets occurred despite continued improvements in the overall economic outlook
for Asia. In spite of generally weak currencies and rising oil prices, economic
data released early in 2000 indicated that recent growth in the Gross Domestic
Product (GDP) across the region had exceeded market expectations with few signs
of increasing inflationary pressures.
The one exception to this generally positive economic backdrop was the Japanese
economy, where GDP contracted on a year-over-year basis for two consecutive
quarters. While this has introduced a previously unanticipated risk into many of
Asia's stock markets, other underlying leading indicators continue to point to a
relatively positive forecast for the Japanese economy in 2000 (Source:
Bloomberg).
As in most other parts of the world, many Asian markets experienced an increased
divergence between "old economy" and "new economy" stocks in the first four
months of 2000. This was most noticeable in Japan, South Korea, Hong Kong and
India, where internet fever drove strong performance in the technology, media
and telecom sectors, while sectors such as steel, petrochemicals and banks
generally underperformed.
3
<PAGE>
The potential for volatility has prompted us to take a more cautious view of
technology. We believe there continue to be compelling long-term opportunities
in the technology area and your Fund has significant holdings among Asian
corporations, which we currently view as particularly strong. We continue to
believe selectivity is critical. Our holdings of Samsung Electronics in Korea,
Hutchison Whampoa and China Telecom in Hong Kong have all benefited from the
tech rally over the past several months.
The Fund is currently positioned as follows:
o We have increased our exposure in Japan to around 49%. During our fiscal
period, we switched some of our holdings out of highly valued internet-related
stocks and into stocks that we believe can benefit from the ongoing demand for
electronic and telecom-related products. We believe these stocks, namely
Sharp, DDI and Kyocera, have more attractive valuations than highly valued
internet-related stocks.
o We have started reducing our exposure to the South Korean market because we
think that their economy is currently the most vulnerable to rising inflation
in the year ahead. This reduction, however, has been gradual because we
believe there is the potential for upward earnings revisions in this market
over the next few months.
o The Fund continues to have no protective currency hedges in place as we
believe that the Japanese Yen will continue to trade in a relatively tight
range against the U.S. dollar. We believe that many other Asian currencies
currently appear to be undervalued given the ongoing improvement in current
account balances.
Outlook
The prospect for improving world growth in the year ahead is encouraging for
both developed and emerging markets. In many cases emerging markets depend on
exports of manufactured goods or commodities to the developed world. Even in
countries where commodity companies are a relatively small part of the country's
index, the level of demand for oil, minerals or food may have a powerful
influence on the health of the economy as a whole. While it might be too
optimistic to expect another year as strong as 1999, there are still many signs
indicating a potentially strong year in 2000.
[International Diversification Artwork]
4
<PAGE>
FUND BASICS
-----------
Fund Objective
The Fund seeks to maximize long-term capital appreciation. It does so primarily
by investing in companies which are domiciled in, or have their principal
business activities in, the Pacific Basin.
Total Fund Assets
$ 10.26 million
Number of Holdings
67
Fund Start Date
December 3, 1993
Your Fund Manager
Calum Graham earned an M.A. in Spanish from the University of St. Andrews. He
joined AIB Govett Asset Management Limited in 1996 as the Director of Emerging
Markets. He was previously head of the Latin America desk. Prior to joining AIB
Govett, he worked for Cazenove & Co. where he helped set up the firm's equity
research and sales operation in Latin America.
NASDAQ Symbols
Class A DENPX
Class B DENBX
Class C DENCX
DELAWARE NEW PACIFIC
--------------------
FUND PERFORMANCE
----------------
Average Total Returns
Through April 30, 2000 Lifetime Five Years One Year
--------------------------------------------------------------------------------
Class A (Est. 12/3/93)
Excluding Sales Charge -3.22% -1.58% +29.72%
Including Sales Charge -4.11% -2.74% +22.27%
--------------------------------------------------------------------------------
Class B (Est. 3/29/94)
Excluding Sales Charge -3.35% -2.22% +28.83%
Including Sales Charge -3.35% -2.60% +23.83%
--------------------------------------------------------------------------------
Class C (Est. 5/10/94)
Excluding Sales Charge -3.85% -2.26% +29.01%
Including Sales Charge -3.85% -2.26% +28.01%
--------------------------------------------------------------------------------
Returns reflect reinvestment of distributions and any applicable front-end sales
charge as noted below. Returns and share values will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Class B and C
results, excluding sales charges, assume either that contingent deferred sales
charges did not apply or the investment was not redeemed. Past performance is
not a guarantee of future results.
Class A shares have a 5.75% maximum front-end sales charge and a 12b-1 fee.
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a contingent
deferred sales charge of up to 5% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
An expense limitation was in effect for all classes of Delaware New Pacific Fund
during the period. Performance would have been lower if the expense limitation
was not in effect.
The average annual returns for the lifetime, five-year and one-year periods
ended April 30, 2000 for Delaware New Pacific Fund's Institutional Class were
-4.52%, -1.08%, and +30.59%, respectively. The Institutional Class (Est.
February 3, 1994) is available without sales or asset-based distribution charges
only to certain eligible institutional accounts.
NASDAQ Symbol Institutional Class: DENIX
5
<PAGE>
Clive Gilmore
Senior Portfolio
Manager & Director
Delaware International
Advisers Ltd.
Robert Akester
Senior Portfolio Manager
Delaware International
Advisers Ltd.
June 12, 2000
[International Diversification Artwork]
PORTFOLIO MANAGEMENT REVIEW
----------------------------
Delaware Overseas Equity Fund
The Fund's Results
During our fiscal period, Delaware Overseas Equity Fund's performance fell short
of both the Morgan Stanley Capital International Europe Australia and Far East
Index, the Fund's benchmark, and a peer group of funds with similar investment
objectives. The Fund follows a steadfast value discipline and has a lower
price-to-earnings ratio than the Morgan Stanley Index. In spite of the
brightening global economic landscape, for most of our fiscal period, "value"
investments, stocks or bonds that appear to be selling for less than their true
worth, took a back seat to more expensive "growth" investments, mirroring what
we've seen in the U.S. This is a key reason your Fund underperformed.
Portfolio Highlights
Delaware Overseas Equity Fund focuses on both developed and emerging nations. We
are permitted to invest up to 40% of the Fund's assets in emerging market
economies. Due to the compelling valuations and what we believe to be above
average growth potential in these areas, we have slightly increased our holdings
in emerging markets over the past six months. Despite rising more than 55% in
the last year, emerging markets were rising from such a low base that we still
think they are generally very cheap relative to developed markets (Source:
Bloomberg).
European markets, which are typically sensitive to rising U.S. interest rates,
experienced some volatility during the period. Euro zone countries are beginning
to see some inflation, as a result of weakness in the currency and higher oil
prices. As in the U.S., the European Central Bank has raised interest rates over
the past six months and we expect it to impose additional increases in the
coming months. The U.S. dollar remained strong against the euro and we
anticipate that it will stay this way until the U.S. economy shows clear signs
of slowdown.
European markets remained attractive, however, as we saw an increase in economic
activity and a continuation of merger and acquisition activity. The Fund
benefited from our exposure to the French and German markets, and particularly
from stocks such as Alcatel and Siemens. In Spain, a number of strong companies
are benefiting from the government's deregulation and liberalization of the
economy.
6
<PAGE>
We continue to see good value in the U.K. market, where we have an overweight
position. However, the market underperformed during the past six months amid
concerns over interest rates and the effect of electronic commerce on
traditional retailers and manufacturers.
We are invested selectively in Eastern Europe, including small holdings in
Estonia and Hungary. These countries are adopting measures to strengthen their
economies in order to qualify for membership in the European Economic Union. In
Russia, outlook improved as rising oil prices helped the economy and the country
successfully navigated parliamentary and presidential elections.
In the Pacific, Hong Kong and Singapore had the strongest returns during the
period. Markets were buoyed by improving forecasts for global GDP and industrial
production, which should help to support export growth and also commodity
prices.
The recovery of the Japanese economy appears to be gaining momentum. We continue
to maintain an underweight position in the Japanese market as we believe it is
over-valued given the poor level of profitability that has been achieved by
Japanese companies. The Fund benefited however, from its exposure to companies
such as Hitachi and Canon, which had strong earnings growth over the past six
months.
The Australian and New Zealand markets improved their performance during our
fiscal period as the strong economic fundamentals in these markets began to be
reflected in the share prices. We continue to believe these markets offer
attractive value and should benefit from the improvements in commodity prices in
the months ahead.
Against this background Delaware Overseas Equity Fund has:
o Maintained an underweighted position to the overvalued Japanese market,
o An overweighted exposure to the attractively valued UK and Australian markets,
o An underweighted position overall in Continental Europe, with selected markets
overweighted.
Outlook
We will probably continue the Fund's portfolio allocation for the near future.
Should the worldwide economic recovery continue, we believe our Fund is
positioned well to benefit. We expect to continue to maintain our focus on
undervalued companies which we believe have strong growth potential for the
future.
7
<PAGE>
Fund Basics
-----------
Fund Objective
The Fund seeks to maximize total return. It does so primarily through
investments in an internationally diversified portfolio of equity securities.
Total Fund Assets
$9.91 million
Number of Holdings
112
Fund Start Date
December 3, 1993
Your Fund Managers
Clive Gillmore is a graduate of the University of Warwick. Mr. Gillmore joined
Delaware in 1990 after serving in the investment management field for eight
years. He previously was Senior Portfolio Manager at Hill Samuel Investment
Advisers Ltd.
Robert Akester is a graduate of University College, London. Mr. Akester joined
Delaware in 1996 and has more than 25 years of investment experience.
NASDAQ Symbols
Class A DEWGX
Class B DEWBX
Class C DEWCX
[International Diversification Artwork]
<PAGE>
DELAWARE OVERSEAS EQUITY
------------------------
FUND PERFORMANCE
----------------
Average Total Returns
Through April 30, 2000 Lifetime Five Years One Year
--------------------------------------------------------------------------------
Class A (Est. 12/3/93)
Excluding Sales Charge +5.59% +5.75% +5.42%
Including Sales Charge +4.62% +4.51% +0.61%
--------------------------------------------------------------------------------
Class B (Est. 3/29/94)
Excluding Sales Charge +4.24% +4.99% +4.55%
Including Sales Charge +4.24% +4.76% -0.45%
--------------------------------------------------------------------------------
Class C (Est. 5/10/94)
Excluding Sales Charge +4.34% +4.96% +4.53%
Including Sales Charge +4.34% +4.96% +3.53%
--------------------------------------------------------------------------------
Returns reflect reinvestment of distributions and any applicable front-end sales
charges as noted below. Returns and share values will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Class B and C
results, excluding sales charges, assume either that contingent deferred sales
charges did not apply or the investment was not redeemed. Past performance is
not a guarantee of future results.
Class A shares have a 5.75% maximum front-end sales charge and a 12b-1fee.
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a contingent
deferred sales charge of up to 5% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
An expense limitation was in effect for all classes of Delaware Overseas Equity
Fund during the period. Performance would have been lower if the expense
limitation was not in effect.
The average annual returns for the lifetime, five-year and one-year periods
ended April 30, 2000 for the Delaware Overseas Equity Fund Institutional Class
were +4.99%, +5.75%, and +5.44%, respectively. The Institutional Class (est.
February 3, 1994) is available without sales or asset-based distribution charges
only to certain eligible institutional accounts.
NASDAQ Symbol Institutional Class: DEWIX
8
<PAGE>
Statements of Net Assets
Delaware New Pacific Fund
-------------------------
Number of Market
April 30, 2000 (Unaudited) Shares Value
--------------------------------------------------------------------------------
Common Stock - 93.76%
Australia - 4.27%
Australia & New Zealand
Banking Group ........................................ 9,000 $ 62,220
Broken Hill Proprietary ............................... 10,000 107,671
CSR ................................................... 19,000 41,603
National Australia Bank ............................... 3,000 41,095
News Corporation ...................................... 7,000 88,882
Telstra ............................................... 22,500 96,431
----------
437,902
----------
China - 0.50%
*Petrochina ............................................ 332,000 51,574
----------
51,574
----------
Hong Kong - 9.31%
Cheung Kong Holdings .................................. 12,000 143,275
*China Telecom ......................................... 13,000 93,880
HSBC Holdings ......................................... 16,800 187,644
Hutchison Whampoa ..................................... 9,000 131,143
*New World Infrastructure .............................. 105,000 111,886
Sun Hung Kai Properties ............................... 20,000 158,553
Yue Yuen Industrial Holdings .......................... 59,000 128,768
----------
955,149
----------
India - 5.08%
Himachal Futuristic ................................... 3,300 63,861
Hindalco Industries, GDR .............................. 6,140 104,380
*ICICI, GDR ............................................ 3,370 80,880
I.T.C., GDR ........................................... 3,900 66,300
Mahanagar Telephone Nigam, GDR ........................ 6,900 89,700
Videsh Sanchar Nigam, GDR ............................. 6,110 115,479
----------
520,600
----------
Japan - 49.42%
Daiwa Bank (The) ...................................... 52,000 140,632
DDI ................................................... 17 195,239
Denso ................................................. 6,000 146,985
Fujitsu ............................................... 13,000 368,436
Funai Electric ........................................ 500 277,855
Hikari Tsushin ........................................ 200 28,897
Ito-Yokado ............................................ 2,000 146,152
Kao ................................................... 4,000 121,886
Kyocera ............................................... 1,700 284,514
Matsumotokiyoshi ...................................... 700 55,108
Mitsubishi ............................................ 37,000 322,126
Mitsui Fudosan ........................................ 36,000 366,102
Nippon Express ........................................ 28,000 176,864
Nippon Telegraph & Telephone .......................... 26 322,682
NTT DoCoMo ............................................ 6 200,611
Omron ................................................. 11,000 299,528
Orix .................................................. 2,720 388,463
Ryohin Keikaku ........................................ 500 92,850
Sakura Bank (The) ..................................... 40,000 280,819
Sekisui House ......................................... 8,000 73,354
<PAGE>
Number of Market
Shares Value
--------------------------------------------------------------------------------
Common Stock (continued)
Japan (continued)
Sharp ................................................. 7,000 $ 135,176
Shin-Etsu Chemical .................................... 2,000 105,770
*Softbank .............................................. 400 98,916
Sony .................................................. 400 45,976
*Sony - New ............................................ 400 46,309
Takeda Chemical Industries ............................ 3,000 197,555
Trend Micro ........................................... 1,000 150,042
----------
5,068,847
----------
Malaysia - 2.53%
Resorts World Berhad .................................. 80,000 258,944
----------
258,944
----------
Philippines - 0.87%
*ABS-CBN Broadcasting .................................. 75,000 89,015
----------
89,015
----------
Singapore - 7.27%
Sembcorp Industries ................................... 26 27
Singapore Press Holdings .............................. 20,000 391,399
*SSI, GDR .............................................. 8,285 75,601
United Overseas Bank .................................. 40,000 278,901
----------
745,928
----------
South Korea - 5.63%
Dacom ................................................. 230 33,368
Haansoft .............................................. 2,460 43,447
*Korea Telecom, ADR .................................... 1,870 64,515
*Korea Telecom Freetel ................................. 770 44,267
L.G. Chemical ......................................... 2,778 63,833
*Locus ................................................. 460 55,958
Samsung Electronics ................................... 1,005 271,682
----------
577,070
----------
Taiwan - 7.51%
Asustek Computer ...................................... 12,726 141,007
Far Eastern Textile ................................... 47,000 72,201
Formosa Plastic ....................................... 69,000 143,210
*Siliconware Precision Industries ...................... 72,000 163,556
United Microelectronics ............................... 74,000 250,335
----------
770,309
----------
Thailand - 1.37%
Advanced Information Service .......................... 7,000 82,018
Thai Farmers Bank ..................................... 56,000 58,847
----------
140,865
----------
Total Common Stock
(cost $9,061,043) .................................. $9,616,203
----------
9
<PAGE>
Statements of Net Assets (continued)
Market
Delaware New Pacific Fund Value
--------------------------------------------------------------------------------
Total Market Value of Securities - 93.76%
(cost $9,061,043) ........................................ $ 9,616,203
Receivables and Other Assets
Net of Liabilities - 6.24% ............................... 639,916
-----------
Net Assets Applicable to 1,354,803 Shares
Outstanding - 100.00% .................................... $10,256,119
===========
Net Asset Value - Delaware New Pacific Fund
A Class ($5,387,291 / 714,102 Shares) .................... $7.54
-----
Net Asset Value - Delaware New Pacific Fund
B Class ($3,008,203 / 394,662 Shares) .................... $7.62
-----
Net Asset Value - Delaware New Pacific Fund
C Class ($1,147,290 / 154,056 Shares) .................... $7.45
-----
Net Asset Value - Delaware New Pacific Fund
Institutional Class ($713,335 / 91,983 Shares) ........... $7.76
-----
Components of Net Assets at April 30, 2000:
Shares of Beneficial Interest
(unlimited authorization - no par) ....................... $10,150,325
** Accumulated net investment loss ............................. (435,616)
Accumulated net realized gain
on investments ........................................... 4,128
Net unrealized appreciation of
investments and foreign currencies ....................... 537,282
-----------
Total Net Assets ............................................ $10,256,119
===========
----------------------
* Non-income producing security for the period ended April 30, 2000.
** 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--
Delaware New Pacific Fund
Net asset value A Class (A) ................................. $7.54
Sales charge (5.75% of offering price
or 6.10% of the amount invested
per share) (B) ........................................... 0.46
-----
Offering price .............................................. $8.00
=====
----------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See How to Buy Shares in the current Prospectus for purchases of $50,000 or
more.
See accompanying notes
10
<PAGE>
Statements of Net Assets (continued)
Delaware Overseas Equity Fund
-----------------------------
Number of Market
April 30, 2000 (Unaudited) Shares Value
--------------------------------------------------------------------------------
Common Stock - 90.19%
Argentina - 0.68%
Central Puerto SA, Class B ............................. 21,142 $ 34,274
Transportadora De Gas Series B ......................... 20,300 33,112
--------
67,386
--------
Australia - 6.46%
Amcor .................................................. 39,100 115,751
CSR .................................................... 27,000 59,120
Foster's Brewing Group ................................. 70,000 176,817
National Australia Bank ................................ 15,200 208,214
Orica .................................................. 14,400 56,923
*Paperlinx .............................................. 13,033 23,477
--------
640,302
--------
Belgium - 0.68%
Electrabel SA .......................................... 278 67,208
--------
67,208
--------
Brazil - 5.51%
Aracruz Celulose SA, ADR ............................... 3,300 61,669
*Centrais Electric Series B, GDR ........................ 400 13,744
Companhia Energetica de Minas
Gerais, ADR ......................................... 2,517 38,499
Companhia Paranaense de Energia-
Copel, ADR .......................................... 11,586 85,447
Gerdau, ADR ............................................ 3,977 98,679
Petroleo Brasileiro .................................... 4,090 96,898
Rossi Residential, GDR ................................. 16,600 28,059
Telecomunicacoes Brasileiras ........................... 500,000 14
Unibanco, GDR .......................................... 3,600 89,775
Usinas Siderurgicas de Minas
Gerais SA ........................................... 8,000 33,295
--------
546,079
--------
Chile - 0.81%
Administradora de Fondos de Pensiones
Provida SA, ADR ..................................... 3,400 70,125
Empresa Nacional Electricidad SA, ADR .................. 931 10,707
--------
80,832
--------
China - 1.56%
First Tractor .......................................... 42,000 4,206
Guangdong Kelon Electric Holding ....................... 85,000 52,926
Guangshen Railway ...................................... 404,000 48,755
Shenzhen Expressway .................................... 436,000 48,698
--------
154,585
--------
Croatia - 0.25%
Zagrebacka Banka, GDR .................................. 1,775 25,471
--------
25,471
--------
Egypt - 0.25%
*Paints & Chemical, GDR ................................. 6,000 25,350
--------
25,350
--------
Estonia - 0.43%
EESTI Telekom, GDR ..................................... 1,211 27,853
*EESTI Uhispank, GDR .................................... 2,890 15,100
--------
42,953
--------
<PAGE>
Number of Market
Shares Value
--------------------------------------------------------------------------------
Common Stock (continued)
France - 6.33%
Alcatel ................................................ 500 $115,923
Compagnie de Saint Gobain .............................. 1,132 154,485
Societe Generale ....................................... 800 165,693
Total Fina ............................................. 1,260 191,199
--------
627,300
--------
Germany - 6.69%
Bayer .................................................. 4,600 186,741
Bayerische Hypo-und Vereinsbank ........................ 2,740 170,399
Continental ............................................ 3,100 56,793
Rheinisch Westfaelisches Elektric ...................... 3,860 125,290
Siemens ................................................ 850 123,651
--------
662,874
--------
Greece - 0.62%
Hellenic Telecommunications, ADR ....................... 5,225 61,067
--------
61,067
--------
Hong Kong - 3.72%
*Beijing Capital International Airport .................. 188,000 31,618
Hengan International ................................... 234,000 52,573
Hong Kong Electric ..................................... 32,000 99,831
Jardine Matheson ....................................... 15,200 60,800
Wharf Holdings ......................................... 60,000 124,403
--------
369,225
--------
Hungary - 0.60%
*Gedeon Richter, GDR .................................... 1,088 59,731
--------
59,731
--------
India - 2.73%
Gas Authority of India, GDR ............................ 9,519 60,684
*ICICI, ADR ............................................. 3,394 86,123
Larsen & Toubro, GDR ................................... 700 9,590
Mahanagar Telephone Nigam, GDR ......................... 4,800 62,400
Videsh Sanchar Nigam, GDR .............................. 1,370 25,893
Videsh Sanchar Nigam 144A, GDR ......................... 1,372 25,931
--------
270,621
--------
Israel - 1.24%
Bank Hapoalim .......................................... 22,081 67,822
ECI Telecommunications ................................. 1,979 55,041
--------
122,863
--------
Japan - 9.77%
Canon .................................................. 5,000 228,767
Eisai .................................................. 5,000 145,874
Hitachi ................................................ 15,000 179,216
Matsushita Electric Industrial ......................... 7,000 185,422
Nichido Fire & Marine .................................. 14,000 63,536
West Japan Railway ..................................... 48 165,379
--------
968,194
--------
Malaysia - 1.85%
Petronas Dagangan Berhad ............................... 56,000 60,715
Resorts World Berhad ................................... 18,000 58,262
Sime Darby Berhad ...................................... 55,000 64,552
--------
183,529
--------
11
<PAGE>
Statements of Net Assets (continued)
Number of Market
Delaware Overseas Equity Fund Shares Value
--------------------------------------------------------------------------------
Common Stock (continued)
Mexico - 1.85%
Alfa SA de CV, Class A ................................. 25,700 $ 81,234
Cemex SA - CPO ......................................... 20,444 89,057
Vitro SA, ADR .......................................... 3,500 13,344
----------
183,635
----------
Netherlands - 5.09%
Elsevier - CVA ......................................... 11,600 112,850
ING Groep .............................................. 3,100 169,168
Royal Dutch Petroleum .................................. 3,100 178,694
Vopak .................................................. 1,742 43,476
----------
504,188
----------
New Zealand - 1.42%
Carter Holt Harvey ..................................... 28,000 23,663
Telecom Corporation of New Zealand ..................... 27,800 117,471
----------
141,134
----------
Peru - 0.70%
Creditcorp, ADR ........................................ 2,420 25,561
Telefonica del Peru SA, ADR ............................ 2,900 43,863
----------
69,424
----------
Russia - 0.65%
*Gazprom, ADR ........................................... 1,000 6,675
Lukoil Holding, ADR .................................... 960 57,869
----------
64,544
----------
South Africa - 4.28%
Amalgamated Banks of South Africa ...................... 7,273 25,743
Iscor .................................................. 32,534 71,973
Kersaf Investments ..................................... 11,175 39,637
Network Healthcare ..................................... 265,617 35,256
Sanlam ................................................. 74,300 88,211
Sappi .................................................. 11,000 77,059
Sasol .................................................. 14,700 86,286
----------
424,165
----------
South Korea - 0.83%
Pohang Iron & Steel, ADR ............................... 3,900 81,900
----------
81,900
----------
Spain - 3.89%
Banco Santander Central Hispano ........................ 10,100 105,328
Iberdrola SA ........................................... 8,300 106,479
*Telefonica ............................................. 7,799 173,584
----------
385,391
----------
<PAGE>
Number of Market
Shares Value
--------------------------------------------------------------------------------
Common Stock (continued)
Taiwan - 1.71%
China Steel, GDR ....................................... 6,603 $ 93,680
Yageo, 144A GDR ........................................ 5,000 37,500
Yageo, GDR ............................................. 5,108 38,310
----------
169,490
----------
Thailand - 1.48%
Bangkok Bank ........................................... 11,800 19,995
Electricity Generating Public Company .................. 79,000 95,987
*Hana Microelectronics .................................. 4,100 30,805
----------
146,787
----------
Turkey - 0.29%
*Efes Sinai Yatirim ..................................... 467,740 8,054
*Efes Sinai Yatirim, ADR ................................ 649 21,157
----------
29,211
----------
United Kingdom - 17.82%
Bass ................................................... 14,457 169,154
BG Group ............................................... 29,051 175,496
Blue Circle Industry ................................... 15,000 100,598
Boots .................................................. 20,300 155,581
British Airways ........................................ 23,200 121,276
Cable & Wireless ....................................... 11,100 184,055
GKN .................................................... 10,900 150,700
Glaxo Wellcome ......................................... 5,100 157,696
Great Universal Stores ................................. 27,400 165,522
Halifax ................................................ 9,700 90,992
Powergen ............................................... 27,700 174,020
Rio Tinto .............................................. 5,300 82,312
Taylor Woodrow ......................................... 16,000 39,235
----------
1,766,637
----------
Total Common Stock
(cost $9,175,316) .................................... 8,942,076
----------
Investment Companies - 1.36%
*India Fund, (The) ...................................... 9,400 134,538
----------
Total Investment Companies
(cost $128,743) ...................................... 134,538
----------
Preferred Stock - 0.60%
Telecomunicacoes Brasileiras,
ADR Preferred Block ................................. 500 59,094
----------
Total Preferred Stock
(cost $33,559) ....................................... 59,094
----------
12
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware Overseas Equity Fund Amount Value
--------------------------------------------------------------------------------
Repurchase Agreements - 5.35%
With Chase Manhattan 5.68% 5/1/00
(dated 4/28/00, collateralized by
$182,000 U.S. Treasury Notes 4.75%
due 2/15/04, market value $173,619) ............... $169,000 $ 169,000
With J.P. Morgan Securities 5.70%
5/1/00 (dated 4/28/00, collateralized
by $126,000 U.S. Treasury Notes
5.875% due 10/31/01, market value
$128,384 and $55,000 U.S. Treasury
Notes 6.25% due 10/31/01,
market value $56,165) ............................. 181,000 181,000
With PaineWebber 5.70% 5/1/00
(dated 4/28/00, collateralized by $9,000
U.S. Treasury Notes 4.50% due 1/31/01,
market value $8,656, $116,000 U.S.
Treasury Notes 5.50% due 7/31/01,
market value $116,606 and $57,000
U.S. Treasury Notes 7.25% due
8/15/04, market value $59,361) .................... 181,000 181,000
----------
Total Repurchase Agreements
(cost $531,000) 531,000
----------
Total Market Value of Securities - 97.50%
(cost $9,868,618) ................................. $9,666,708
Receivables and Other Assets
Net of Liabilities - 2.50% ......................... 247,501
----------
Net Assets Applicable to 1,290,177 Shares
Outstanding - 100.00% .............................. $9,914,209
==========
Net Asset Value - Delaware Overseas
Equity Fund A Class
($6,076,614 / 747,704 shares) ..................... $8.13
-----
Net Asset Value - Delaware Overseas
Equity Fund B Class
($3,341,713 / 474,715 shares) ..................... $7.04
-----
Net Asset Value - Delaware Overseas
Equity Fund C Class
($358,766 / 50,787 shares) ........................ $7.06
-----
Net Asset Value - Delaware Overseas
Equity Fund Institutional Class
($137,116 / 16,971 shares) ........................ $8.08
-----
<PAGE>
--------------------------------------------------------------------------------
Components of Net Assets at April 30, 2000:
Shares of Beneficial Interest
(unlimited authorization - no par) ........................ $10,002,005
**Accumulated undistributed net investment loss ................ (4,625)
Accumulated net realized gain on investments ................. 118,988
Net unrealized depreciation of investments and
foreign currencies ........................................ (202,159)
-----------
Total Net Assets ............................................. $ 9,914,209
===========
----------------------
*Non-income producing security for the period ended April 30, 2000.
**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 -
Delaware Overseas Equity Fund
Net asset value A Class (A) .................................. $8.13
Sales charge (5.75% of offering price or 6.15%
of the amount invested per share) (B) ..................... 0.50
-----
Offering price ............................................... $8.63
=====
----------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $50,000 or more.
See accompanying notes
13
<PAGE>
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
April 30, 2000 (Unaudited) Delaware New Pacific Fund
---------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments at market (cost $9,061,043) ..................... $ 9,616,203
Foreign currency ............................................ 644,812
Dividends and interest receivable ........................... 46,282
Subscriptions receivable .................................... 155,524
Receivable for securities sold .............................. 411,427
Other assets ................................................ 6,074
-----------
Total Assets ................................................ 10,880,322
-----------
Liabilities:
Liquidations payable ........................................ 9,411
Payable for securities purchased ............................ 200,739
Other accounts payable and accrued expenses ................. 414,053
-----------
Total Liabilities ........................................... 624,203
-----------
Total Net Assets ............................................ $10,256,119
===========
</TABLE>
See accompanying notes
14
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Delaware Delaware
New Pacific Overseas
Six Months Ended April 30, 2000 (Unaudited) Fund Equity Fund
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Dividends ................................................................................... $ 93,631 $ 64,939
Interest .................................................................................... 17,510 28,219
Foreign tax withheld ........................................................................ (12,046) (5,048)
---------- --------
99,095 88,110
---------- --------
Expenses:
Management fees ............................................................................. 88,155 24,062
Distribution expense ........................................................................ 55,855 14,816
Registration fees ........................................................................... 33,649 38,711
Dividend disbursing and transfer agent fees and expenses .................................... 33,475 20,550
Reports and statements to shareholders ...................................................... 5,800 8,825
Custodian fees and expenses ................................................................. 4,716 1,532
Taxes (other than taxes on income) .......................................................... 540 -
Trustees' fees .............................................................................. 600 1,550
Accounting and administration ............................................................... 4,800 675
Professional fees ........................................................................... 100 3,520
Other ....................................................................................... 1,489 30
---------- --------
229,179 114,271
Less expenses absorbed or waived by Delaware Management Company ............................. (4,779) (52,914)
Less expenses paid indirectly ............................................................... (555) (96)
---------- --------
Total expenses .............................................................................. 223,845 61,261
---------- --------
Net Investment Income (Loss) ................................................................ (124,750) 26,849
---------- --------
Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currencies:
Net realized gain (loss) on:
Investments ................................................................................. 5,248,628 118,869
Foreign currencies .......................................................................... 17,534 (6,106)
---------- --------
Net realized gain ........................................................................... 5,266,162 112,763
Net change in unrealized appreciation/depreciation of investments and foreign currencies .... (3,621,867) (110,127)
---------- --------
Net Realized and Unrealized Gain on Investments and Foreign Currencies ...................... 1,644,295 2,636
---------- --------
Net Increase in Net Assets Resulting From Operations ........................................ $1,519,545 $ 29,485
========== ========
</TABLE>
See accompanying notes
15
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Delaware Delaware Overseas
New Pacific Fund Equity Fund
---------------------------------------------------------------------------------------------------------------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
4/30/00 10/31/99 4/30/00 10/31/99
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations:
Net investment income (loss) ...................................... $ (124,750) $ (114,759) $ 26,849 $ 25,166
Net realized gain (loss) on investments and foreign currencies .... 5,266,162 1,848,536 112,763 56,291
Net change in unrealized appreciation/depreciation of investments
and foreign currencies ......................................... (3,621,867) 4,330,161 (110,127) 376,432
------------------------------------------------------------
Net increase in net assets resulting from operations .............. 1,519,545 6,063,938 29,485 457,889
------------------------------------------------------------
Distributions To Shareholders From:
Net investment income:
A Class ........................................................ (218,207) - (32,767) (158,267)
B Class ........................................................ (72,839) - (8,959) (93,220)
C Class ........................................................ (14,136) - (1,591) (21,225)
Institutional Class ............................................ (23,218) - (1,217) (4,757)
Net realized gain on investments:
A Class ........................................................ - - (36,044) (311,979)
B Class ........................................................ - - (17,917) (199,549)
C Class ........................................................ - - (3,182) (45,435)
Institutional Class ............................................ - - (1,116) (9,052)
------------------------------------------------------------
(328,400) - (102,793) (843,484)
------------------------------------------------------------
Capital Share Transactions:
Proceeds from shares sold:
A Class ........................................................ 6,773,898 7,036,523 4,600,016 583,522
B Class ........................................................ 1,879,637 2,617,747 2,684,224 155,355
C Class ........................................................ 245,136 1,070,210 194,067 157,634
Institutional Class ............................................ 8,918,098 5,731,523 127,179 481,026
Net asset value of shares issued upon reinvestment of distributions
from net investment income:
A Class ........................................................ 214,161 - 65,213 464,682
B Class ........................................................ 72,083 - 26,272 284,170
C Class ........................................................ 12,669 - 4,677 46,619
Institutional Class ............................................ 23,218 - 2,333 13,809
------------------------------------------------------------
18,138,900 16,456,003 7,703,981 2,186,817
------------------------------------------------------------
Cost of shares repurchased:
A Class ........................................................ (14,428,880) (4,807,802) (829,696) (610,554)
B Class ........................................................ (4,889,881) (815,140) (352,914) (429,624)
C Class ........................................................ (245,806) (303,950) (52,547) (136,429)
Institutional Class ............................................ (9,573,656) (5,000,686) (62,496) (480,947)
------------------------------------------------------------
(29,138,223) (10,927,578) (1,297,653) (1,657,554)
------------------------------------------------------------
Increase (decrease) in net assets derived from
capital share transactions ..................................... (10,999,323) 5,528,425 6,406,328 529,263
------------------------------------------------------------
Net Increase (Decrease) In Net Assets ............................. (9,808,178) 11,592,363 6,333,020 143,668
Net Assets:
Beginning of period ............................................... 20,064,297 8,471,934 3,581,189 3,437,521
------------------------------------------------------------
End of period ..................................................... $10,256,119 $20,064,297 $9,914,209 $3,581,189
============================================================
</TABLE>
See accompanying notes
16
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware New Pacific Fund A Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
4/30/00(2) 10/31/99(2) 10/31/98(2) 10/31/97(2) 10/31/96(3) 10/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $7.260 $4.590 $7.320 $9.420 $8.710 $10.440
Income (loss) from investment operations:
Net investment income (loss) ......................... (0.039) (0.039) 0.008 (0.010) (0.050) (0.050)
Net realized and unrealized gain (loss)
on investments and foreign currencies .............. 0.454 2.709 (2.683) (1.940) 0.769 (1.390)
---------------------------------------------------------------------
Total from investment operations ..................... 0.415 2.670 (2.675) (1.950) 0.719 (1.440)
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................. (0.135) - (0.055) (0.150) (0.009) -
Distributions from net realized gain
on investments ..................................... - - - - - (0.290)
---------------------------------------------------------------------
Total dividends and distributions .................... (0.135) - (0.055) (0.150) (0.009) (0.290)
---------------------------------------------------------------------
Net asset value, end of period .......................... $7.540 $7.260 $4.590 $7.320 $9.420 $ 8.710
=====================================================================
Total return(1) ......................................... 5.59% 58.52% (36.85%) (21.15%) 8.26% (13.99%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) .............. $5,387 $12,113 $5,887 $7,144 $11,752 $10,353
Ratio of expenses to average net assets .............. 1.93%(4) 1.96% 1.90% 1.80% 1.82% 1.85%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly .... 1.97%(4) 2.57% 3.23% 1.86% 2.77% 3.73%
Ratio of net investment income (loss) to average
net assets ......................................... (1.50%)(4) (0.65%) 0.15% (0.08%) (0.41) (0.60%)
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ......................................... (1.55%)(4) (1.26%) (1.18%) (0.14%) (1.36) (2.48%)
Portfolio turnover rate .............................. 153%(4) 93% 188% 178% 163% 163%
</TABLE>
----------
(1) 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. An expense
limitation was in effect during the period. Performance would have been
lower if the expense limitation was not in effect.
(2) The average shares outstanding method has been applied for per share
information.
(3) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
(4) Annualized.
See accompanying notes
17
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware New Pacific Fund B Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
4/30/00(2) 10/31/99(2) 10/31/98(2) 10/31/97(2) 10/31/96(3) 10/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $7.320 $4.660 $7.470 $9.680 $9.010 $10.860
Income (loss) from investment operations:
Net investment loss .................................. (0.067) (0.081) (0.031) (0.080) (0.050) (0.100)
Net realized and unrealized gain (loss)
on investments and foreign currencies .............. 0.457 2.741 (2.724) (1.980) 0.730 (1.460)
---------------------------------------------------------------------
Total from investment operations ..................... 0.390 2.660 (2.755) (2.060) 0.680 (1.560)
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................. (0.090) - (0.055) (0.150) (0.010) -
Distributions from net realized gain on
investments ........................................ - - - - - (0.290)
---------------------------------------------------------------------
Total dividends and distributions .................... (0.090) - (0.055) (0.150) (0.010) (0.290)
---------------------------------------------------------------------
Net asset value, end of period .......................... $7.620 $7.320 $4.660 $7.470 $9.680 $ 9.010
=====================================================================
Total return(1) ......................................... 5.24% 57.08% (37.05%) (21.72%) 7.54% (14.56%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) .............. $3,008 $5,654 $2,236 $2,534 $562 $573
Ratio of expenses to average net assets .............. 2.63%(4) 2.66% 2.60% 2.50% 2.50% 2.50%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly .... 2.67%(4) 3.27% 3.93% 2.56% 3.45% 4.38%
Ratio of net investment loss to average net assets ... (2.20%)(4) (1.35%) (0.55%) (0.77%) (1.09%) (1.20%)
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ......................................... (2.25%)(4) (1.96%) (1.88%) (0.83%) (2.04%) (3.08%)
Portfolio turnover rate .............................. 153%(4) 93% 188% 178% 163% 163%
</TABLE>
----------
(1) 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. An expense
limitation was in effect during the period. Performance would have been
lower if the expense limitation was not in effect.
(2) The average shares outstanding method has been applied for per share
information.
(3) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
(4) Annualized.
See accompanying notes
18
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware New Pacific Fund C Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
4/30/00(2) 10/31/99(2) 10/31/98(2) 10/31/97(2) 10/31/96(3) 10/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $7.150 $4.550 $7.320 $9.490 $8.830 $10.660
Income (loss) from investment operations:
Net investment loss .................................. (0.066) (0.082) (0.029) (0.080) (0.050) (0.080)
Net realized and unrealized gain (loss)
on investments and foreign currencies .............. 0.456 2.682 (2.686) (1.940) 0.718 (1.460)
---------------------------------------------------------------------
Total from investment operations ..................... 0.390 2.600 (2.715) (2.020) 0.668 (1.540)
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................. (0.090) - (0.055) (0.150) (0.008) -
Distributions from net realized gain
on investments ..................................... 0.000 - - - - (0.290)
---------------------------------------------------------------------
Total dividends and distributions .................... (0.090) - (0.055) (0.150) (0.008) (0.290)
---------------------------------------------------------------------
Net asset value, end of period .......................... $7.450 $7.150 $4.550 $7.320 $9.490 $ 8.830
=====================================================================
Total return(1) ......................................... 5.37% 57.14% (37.18%) (21.85%) 7.58% (14.57%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) .............. $1,147 $1,093 $130 $129 $44 $17
Ratio of expenses to average net assets .............. 2.63%(4) 2.66% 2.60% 2.50% 2.50% 2.50%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly .... 2.67%(4) 3.27% 3.93% 2.56% 3.45% 4.38%
Ratio of net investment loss to average net assets ... (2.20%)(4) (1.35%) (0.55%) (0.77%) (1.09%) (1.02%)
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ......................................... (2.25%)(4) (1.96%) (1.88%) (0.83%) (2.04%) (2.90%)
Portfolio turnover rate .............................. 153%(4) 93% 188% 178% 163% 163%
</TABLE>
----------
(1) 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. An expense
limitation was in effect during the period. Performance would have been
lower if the expense limitation was not in effect.
(2) The average shares outstanding method has been applied for per share
information.
(3) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
(4) Annualized.
See accompanying notes
19
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware New Pacific Fund Institutional Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
4/30/00(2) 10/31/99(2) 10/31/98(2) 10/31/97(2) 10/31/96(3) 10/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $7.460 $4.690 $7.440 $9.530 $8.770 $10.480
Income (loss) from investment operations:
Net investment income (loss) ......................... (0.027) (0.020) 0.024 0.020 (0.050) (0.010)
Net realized and unrealized gain (loss)
on investments and foreign currencies .............. 0.477 2.790 (2.719) (1.960) 0.820 (1.410)
---------------------------------------------------------------------
Total from investment operations ..................... 0.450 2.770 (2.695) (1.940) 0.770 (1.420)
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................. (0.150) - (0.055) (0.150) (0.010) -
Distributions from net realized gain
on investments ..................................... - - - - - (0.290)
---------------------------------------------------------------------
Total dividends and distributions .................... (0.150) - (0.055) (0.150) (0.010) (0.290)
---------------------------------------------------------------------
Net asset value, end of period .......................... $7.760 $7.460 $4.690 $7.440 $9.530 $ 8.770
=====================================================================
Total return(1) ......................................... 5.90% 59.06% (36.39%) (20.79%) 8.77% (13.65%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) .............. $713 $1,204 $219 $250 $119 $62
Ratio of expenses to average net assets .............. 1.63%(4) 1.66% 1.60% 1.50% 1.50% 1.50%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly .... 1.67%(4) 2.27% 2.93% 1.56% 2.45% 3.38%
Ratio of net investment income (loss) to average
net assets ......................................... (1.20%)4 (0.35%) 0.45% 0.22% (.09%) (0.16%)
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ......................................... (1.25%)(4) (0.96%) (0.88%) 0.16% (1.04%) (2.04%)
Portfolio turnover rate .............................. 153%(4) 93% 188% 178% 163% 163%
</TABLE>
----------
(1) 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. An expense
limitation was in effect during the period. Performance would have been
lower if the expense limitation was not in effect.
(2) The average shares outstanding method has been applied for per share
information.
(3) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
(4) Annualized.
See accompanying notes
20
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Overseas Equity Fund A Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
4/30/00(2) 10/31/99(2) 10/31/98(2) 10/31/97(2,4) 10/31/96(3) 10/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $7.830 $8.950 $12.520 $12.390 $11.400 $11.000
Income (loss) from investment operations:
Net investment income (loss) ......................... 0.046 0.075 0.091 (0.060) (0.060) 0.010
Net realized and unrealized gain (loss)
on investments and foreign currencies .............. 0.464 0.870 (1.501) 0.960 1.073 0.400
---------------------------------------------------------------------
Total from investment operations ..................... 0.510 0.945 (1.410) 0.900 1.013 0.410
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................. (0.100) (0.695) (0.520) (0.440) (0.023) (0.010)
Distributions from net realized gain
on investments ..................................... (0.110) (1.370) (1.640) (0.330) - -
---------------------------------------------------------------------
Total dividends and distributions .................... (0.210) (2.065) (2.160) (0.770) (0.023) (0.010)
---------------------------------------------------------------------
Net asset value, end of period .......................... $8.130 $7.830 $ 8.950 $12.520 $12.390 $11.400
=====================================================================
Total return(1) ......................................... 6.50% 13.86% (12.95%) 7.74% 8.90% 3.81%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .............. $6,077 $2,285 $2,034 $10,868 $14,886 $13,018
Ratio of expenses to average net assets .............. 2.00%(5) 1.85% 1.83% 1.80% 1.82% 1.85%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly .... 3.91%(5) 5.31% 3.75% N/A 2.60% 2.96%
Ratio of net investment income (loss) to average
net assets ......................................... 1.20%(5) 0.95% 0.93% (0.45%) (0.51%) 0.00%
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ......................................... (0.71%)(5) (2.51%) (0.99%) N/A (1.29%) (1.11%)
Portfolio turnover rate .............................. 14%(5) 7% 87% 18% 21% 9%
</TABLE>
----------
(1) 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. An expense
limitation was in effect during the period. Performance would have been
lower if the expense limitation was not in effect.
(2) The average shares outstanding method has been applied for per share
information.
(3) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
(4) Commencing September 15, 1997, Delaware International Advisers Limited
entered into a sub-adviser agreement to manage the Fund.
(5) Annualized.
See accompanying notes
21
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Overseas Equity Fund B Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
4/30/00(2) 10/31/99(2) 10/31/98(2) 10/31/97(2,4) 10/31/96(3) 10/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $6.790 $8.030 $11.540 $11.560 $10.710 $10.400
Income (loss) from investment operations:
Net investment income (loss) ......................... 0.023 0.017 0.033 (0.140) (0.060) (0.020)
Net realized and unrealized gain (loss)
on investments and foreign currencies .............. 0.392 0.753 (1.383) 0.890 0.930 0.350
---------------------------------------------------------------------
Total from investment operations ..................... 0.415 0.770 (1.350) 0.750 0.870 0.330
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................. (0.055) (0.640) (0.520) (0.440) (0.020) (0.020)
Distributions from net realized gain
on investments ..................................... (0.110) (1.370) (1.640) (0.330) - -
---------------------------------------------------------------------
Total dividends and distributions .................... (0.165) (2.010) (2.160) (0.770) (0.020) (0.020)
---------------------------------------------------------------------
Net asset value, end of period .......................... $7.040 $6.790 $ 8.030 $11.540 $11.560 $10.710
=====================================================================
Total return(1) ......................................... 6.09% 12.98% (13.66%) 6.95% 8.16% 3.19%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .............. $3,342 $1,018 $1,166 $1,450 $1,208 $1,183
Ratio of expenses to average net assets .............. 2.70%(5) 2.55% 2.53% 2.50% 2.50% 2.50%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly .... 4.61%(5) 6.01% 4.45% N/A 3.28% 3.61%
Ratio of net investment income (loss) to average
net assets ......................................... 0.50%(5) 0.25% 0.23% (1.16%) (1.19%) (0.57%)
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ......................................... (1.41%)(5) (3.21%) (1.69%) N/A (1.97%) (1.68%)
Portfolio turnover rate .............................. 14%(5) 7% 87% 18% 21% 9%
</TABLE>
----------
(1) 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. An expense
limitation was in effect during the period. Performance would have been
lower if the expense limitation was not in effect.
(2) The average shares outstanding method has been applied for per share
information.
(3) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
(4) Commencing September 15, 1997, Delaware International Advisers Limited
entered into a sub-adviser agreement to manage the Fund.
(5) Annualized.
See accompanying notes
22
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Overseas Equity Fund C Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
4/30/00(2) 10/31/99(2) 10/31/98(2) 10/31/97(2,4) 10/31/96(3) 10/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $6.810 $8.040 $11.550 $11.580 $10.730 $10.430
Income (loss) from investment operations:
Net investment income (loss) ......................... 0.023 0.017 0.033 (0.140) (0.060) (0.060)
Net realized and unrealized gain (loss)
on investments and foreign currencies .............. 0.392 0.763 (1.383) 0.880 0.930 0.390
---------------------------------------------------------------------
Total from investment operations ..................... 0.415 0.780 (1.350) 0.740 0.870 0.330
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................. (0.055) (0.640) (0.520) (0.440) (0.020) (0.030)
Distributions from net realized gain
on investments ..................................... (0.110) (1.370) (1.640) (0.330) - -
---------------------------------------------------------------------
Total dividends and distributions .................... (0.165) (2.010) (2.160) (0.770) (0.020) (0.030)
---------------------------------------------------------------------
Net asset value, end of period .......................... $7.060 $6.810 $ 8.040 $11.550 $11.580 $10.730
=====================================================================
Total return(1) ......................................... 6.07% 13.08% (13.67%) 6.85% 8.15% 3.16%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .............. $359 $209 $179 $159 $112 $43
Ratio of expenses to average net assets .............. 2.70%(5) 2.55% 2.53% 2.50% 2.50% 2.50%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly .... 4.61%(5) 6.01% 4.45% N/A 3.28% 3.61%
Ratio of net investment income (loss) to average
net assets ......................................... 0.50%(5) 0.25% 0.23% (1.16%) (1.19%) (0.62%)
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ......................................... (1.41%)(5) (3.21%) (1.69%) N/A (1.97%) (1.73%)
Portfolio turnover rate .............................. 14%(5) 7% 87% 18% 21% 9%
</TABLE>
----------
(1) 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. An expense
limitation was in effect during the period. Performance would have been
lower if the expense limitation was not in effect.
(2) The average shares outstanding method has been applied for per share
information.
(3) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
(4) Commencing September 15, 1997, Delaware International Advisers Limited
entered into a sub-adviser agreement to manage the Fund.
(5) Annualized.
See accompanying notes
23
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Overseas Equity Fund Institutional Class
------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
4/30/00(2) 10/31/99(2) 10/31/98(2) 10/31/97(2,4) 10/31/96(3) 10/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $7.810 $8.930 $12.480 $12.320 $11.440 $11.020
Income (loss) from investment operations:
Net investment income (loss) ......................... 0.059 0.098 0.123 (0.020) (0.060) 0.040
Net realized and unrealized gain (loss)
on investments and foreign currencies .............. 0.441 0.872 (1.513) 0.950 0.963 0.410
---------------------------------------------------------------------
Total from investment operations ..................... 0.500 0.970 (1.390) 0.930 0.903 0.450
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................. (0.120) (0.720) (0.520) (0.440) (0.023) (0.030)
Distributions from net realized gain
on investments ..................................... (0.110) (1.370) (1.640) (0.330) - -
---------------------------------------------------------------------
Total dividends and distributions .................... (0.230) (2.090) (2.160) (0.770) (0.023) (0.030)
---------------------------------------------------------------------
Net asset value, end of period .......................... $8.080 $7.810 $ 8.930 $12.480 $12.320 $11.440
=====================================================================
Total return(1) ......................................... 6.38% 14.30% (12.82%) 8.04% 7.91% 4.22%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .............. $137 $69 $59 $60 $284 $161
Ratio of expenses to average net assets .............. 1.70%(5) 1.55% 1.53% 1.50% 1.50% 1.50%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly .... 3.61%(5) 5.01% 3.45% N/A 2.28% 2.61%
Ratio of net investment income (loss) to average
net assets ......................................... 1.50%(5) 1.25% 1.23% (0.15%) (0.19%) 0.40%
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ......................................... (0.41%)(5) (2.21%) (0.69%) N/A (0.97%) (0.71%)
Portfolio turnover rate .............................. 14%(5) 7% 87% 18% 21% 9%
</TABLE>
----------
(1) 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. An expense
limitation was in effect during the period. Performance would have been
lower if the expense limitation was not in effect.
(2) The average shares outstanding method has been applied for per share
information.
(3) Commencing May 3, 1996, Delaware Management Company replaced Lincoln
National Corporation as the Fund's investment manager.
(4) Commencing September 15, 1997, Delaware International Advisers Limited
entered into a sub-adviser agreement to manage the Fund.
(5) Annualized.
See accompanying notes
24
<PAGE>
Notes to Financial Statements
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
Delaware Group Adviser Funds (the "Company") is registered as a diversified
open-end investment company under the Investment Company Act of 1940, as
amended. The Company is organized as a Delaware Business Trust. The Company
currently issues three separate series of shares: the Delaware U.S. Growth Fund,
the Delaware New Pacific Fund and the Delaware Overseas Equity Fund. These
financial statements and related notes pertain to the Delaware New Pacific Fund
("New Pacific Fund") and the Delaware Overseas Equity Fund ("Overseas Equity
Fund") (individually a "Fund" and collectively the "Funds"). Each Fund offers
four classes of shares. The A Class carries a maximum front-end sales charge of
5.75%. The B Class carries a back-end contingent deferred sales charge. The C
Class (known as a level load class) carries a back-end contingent deferred sales
charge for one year and the Institutional Class has no sales charge.
The New Pacific Fund seeks to maximize long term capital appreciation. It does
so by investing in Pacific Basin countries.
The Overseas Equity Fund seeks to maximize total return. It does so by investing
in an internationally diversified mix of stocks.
1. Significant Accounting Policies
The following accounting policies are in accordance with accounting principles
generally accepted in the United States and are consistently followed by the
Funds.
Security Valuation - All equity securities are valued at the last quoted sales
price as of the close of the New York Stock Exchange (NYSE) on the valuation
date. If on a particular day an equity security does not trade, then the mean
between the bid and asked prices will be used. Securities listed on a foreign
exchange are valued at the last quoted sales price before the Fund is valued.
Money market instruments having less than 60 days to maturity are valued at
amortized cost, which approximates market value. Other securities and assets for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Funds' Board of
Trustees.
Federal Income Taxes - Each Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations, which may differ from accounting
principles generally accepted in the United States.
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
each Fund on the basis of daily net assets of each class. Distribution expenses
relating to a specific class are charged directly to that class.
<PAGE>
--------------------------------------------------------------------------------
Repurchase Agreements - Each Fund may invest in a pooled cash account along with
other members of the Delaware Investments Family of Funds. The aggregate daily
balance of the pooled cash account is invested in repurchase agreements secured
by obligations of the U.S. Government. The respective collateral is held by the
Funds' custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is at least 102% collateralized. However,
in the event of default or bankruptcy by the counterparty to the agreement,
realization of the collateral may be subject to legal proceedings.
Foreign Currency Transactions - Transactions denominated in foreign currencies
are recorded at the current prevailing exchange rates on the valuation date. The
value of all assets and liabilities denominated in foreign currencies is
translated into U.S. dollars at the exchange rate of such currencies against the
U.S. dollar daily. 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 Funds report
certain foreign currency related transactions as components of realized gains
for financial reporting purposes, whereas such components are treated as
ordinary income (loss) for federal income tax purposes.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Other - Expenses common to all Funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. Foreign dividends are also recorded on the
ex-dividend date or as soon after the ex-dividend date that the Funds are aware
of such dividends, net of all non-rebatable tax withholdings. Original issue
discounts are accreted to interest income over the lives of the respective
securities. Withholding taxes on foreign dividends have been provided for in
accordance with the Funds' understanding of the applicable country's tax rules
and rates. Each Fund declares and pays dividends from net investment income and
net capital gains, if any, annually.
25
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
1. Significant Accounting Policies (continued)
Certain expenses of the Funds are paid through commission arrangements with
brokers. These transactions are done subject to best execution. The amount of
these expenses was approximately $239 for the New Pacific Fund and $64 for the
Overseas Equity Fund for the six months ended April 30, 2000. In addition, the
Funds receive earnings credits from their custodian when positive balances are
maintained, which are used to offset custody fees. These credits were $316 for
the New Pacific Fund and $32 for the Overseas Equity Fund for the six months
ended April 30, 2000. The expenses paid under the above arrangements are
included in their respective expense captions on the Statements of Operations
with the corresponding expense offset shown as "Expenses paid indirectly".
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Funds
currently pay Delaware Management Company ("DMC"), the Investment Manager of
each Fund, an annual fee based upon the following annual rates:
New Pacific Overseas
Fund Equity Fund
----------- -----------
On the first $500 million ........................ 0.85% 0.85%
On the next $500 million ......................... 0.80% 0.80%
On the next $1.5 billion ......................... 0.75% 0.75%
In excess of $2.5 billion ........................ 0.70% 0.70%
DMC has entered into sub-advisory agreements with AIB Govett, Inc. with respect
to the management of the New Pacific Fund and with Delaware International
Advisers Limited, an affiliate of DMC, with respect to the management of the
Overseas Equity Fund. The sub-advisers receive sub-advisory fees from the
Investment Manager for their services calculated in accordance with the schedule
set forth below. The Funds do not pay any fees directly to the sub-advisers:
New Pacific Overseas
Fund Equity Fund
----------- -----------
Sub-advisory fee as a percentage
of average daily net assets
(per annum) ................................... 0.50% 0.80%
DMC has elected to waive that portion, if any, of the management fee and
reimburse the Funds to the extent that annual operating expenses, exclusive of
taxes, interest, brokerage commissions and extraordinary expenses, exceed 2.00%
for each class of the New Pacific Fund and 1.70% for each class of the Overseas
Equity Fund, of the average daily net assets of each Fund through October 31,
2000.
<PAGE>
--------------------------------------------------------------------------------
At April 30, 2000, the Funds had a liability for investment management fees and
other expenses payable to DMC as follows:
New Pacific Overseas
Fund Equity Fund
----------- -----------
$98 $206
The Funds have engaged Delaware Service Company, Inc. (DSC), an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting services.
Each Fund pays DSC a monthly fee based on the number of shareholder accounts,
shareholder transactions and average net assets, subject to certain minimums.
On April 30, 2000, the Funds had liabilities for such fees and other expenses
payable to DSC as follows:
New Pacific Overseas
Fund Equity Fund
----------- -----------
$8,822 $5,842
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. ("DDLP"), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.30% of the average daily net assets of the A Class and 1.00% of the
average daily net assets of the B and C Classes. At April 30, 2000, the Funds
had liabilities for such fees and other expenses payable to DDLP as follows:
New Pacific Overseas
Fund Equity Fund
----------- -----------
$8,898 $8,954
For the six months ended April 30, 2000, DDLP earned commissions on sales of the
Fund A Class shares as follows:
New Pacific Overseas
Fund Equity Fund
----------- -----------
$25,742 $13,180
Certain officers of DMC, DSC and DDLP are officers, trustees and/or employees of
the Funds. These officers, trustees and employees are paid no compensation by
the Funds.
3. Investments
During the six months ended April 30, 2000, each Fund made purchases and sales
of investment securities other than U.S. government securities and temporary
cash investments as follows:
Purchases Sales
----------- -----------
New Pacific Fund $14,174,478 $24,149,073
Overseas Equity Fund $6,190,606 $331,290
26
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
3. Investments (continued)
At April 30, 2000, the aggregate cost of securities and unrealized appreciation
(depreciation) for federal income tax purposes are as follows:
New Pacific Overseas
Fund Equity Fund
----------- -----------
Cost of Investments ............................... $9,061,043 $9,868,618
Aggregated unrealized appreciation ................ 1,259,639 613,683
Aggregated unrealized depreciation ................ (704,479) (815,593)
---------- ----------
Net unrealized appreciation
(depreciation) ................................. $ 555,160 $ (201,910)
========== ==========
For federal income tax purposes, the New Pacific Fund had a capital loss
carryforward at October 31, 1999 of $5,247,362 which may be carried forward and
applied against future capital gains. The capital loss carryforward expires in
2006.
4. Capital Shares
Transactions in capital shares were as follows:
New Pacific Fund
---------------------
Six Months Year
Ended Ended
4/30/00 1999
Shares sold:
A Class ......................................... 845,909 1,124,218
B Class ......................................... 230,586 424,919
C Class ......................................... 30,575 175,563
Institutional Class ............................. 1,070,035 876,299
Shares issued upon reinvestment of
distributions from net investment
income and net realized gains
on investments:
A Class ......................................... 26,538 -
B Class ......................................... 8,812 -
C Class ......................................... 1,585 -
Institutional Class ............................. 2,800 -
--------- ---------
2,216,840 2,600,999
--------- ---------
Shares repurchased:
A Class ......................................... (1,826,730) (739,315)
B Class ......................................... (616,870) (132,812)
C Class ......................................... (30,969) (51,268)
Institutional Class ............................. (1,142,231) (761,571)
--------- ---------
(3,616,800) (1,684,966)
--------- ---------
Net Increase (Decrease) ........................... (1,399,960) 916,033
========= =========
<PAGE>
--------------------------------------------------------------------------------
Overseas Equity Fund
--------------------
Six Months Year
Ended Ended
4/30/00 1999
Shares sold:
A Class .......................................... 547,797 75,438
B Class .......................................... 370,054 22,753
C Class .......................................... 26,634 20,523
Institutional Class .............................. 15,569 60,595
Shares issued upon reinvestment of
distributions from net investment
income and net realized gains
on investments:
A Class .......................................... 7,972 67,837
B Class .......................................... 3,695 47,520
C Class .......................................... 655 7,770
Institutional Class .............................. 287 2,028
------- -------
972,663 304,464
------- -------
Shares repurchased:
A Class ......................................... (100,044) (78,698)
B Class ......................................... (48,869) (65,654)
C Class ......................................... (7,199) (19,816)
Institutional Class ............................. (7,713) (60,389)
------- -------
(163,825) (224,557)
------- -------
Net Increase ...................................... 808,838 79,907
======= =======
5. Foreign Exchange Contracts
The New Pacific and Overseas Equity Funds will generally enter into forward
foreign currency contracts as a way of managing foreign exchange rate risk. A
fund may enter into these contracts to fix the U.S. dollar value of a security
that it has agreed to buy or sell for the period between the date the trade was
entered into and the date the security is delivered and paid for. A fund may
also use these contracts to hedge the U.S. dollar value of securities it already
owns denominated in foreign currencies.
Forward foreign currency contracts are valued at the mean between the bid and
asked prices of the contracts and are marked-to-market daily. Interpolated
values are derived when the settlement date of the contract is an interim date
for which quotations are not available. The change in market value is recorded
by the Funds as an unrealized gain or loss. When the contract is closed, the
Funds records 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.
27
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
5. Foreign Exchange Contracts (continued)
The use of forward foreign currency contracts does not eliminate fluctuations in
the underlying prices of the Funds' securities, but it does establish a rate of
exchange that can be achieved in the future. Although forward foreign currency
contracts limit the risk of loss due to a decline in the value of the hedged
currency, they also limit any potential gain that might result should the value
of the currency increase. In addition, the Funds could be exposed to risks if
the counterparties to the contracts are unable to meet the terms of their
contracts.
The Funds had no forward foreign currency contract outstanding at April 30,
2000.
6. Credit and Market Risk
Some countries in which the New Pacific and Overseas Equity Funds 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 New
Pacific Fund and the Overseas Equity Fund may be inhibited. In addition, a
significant proportion of the aggregate market value of equity securities listed
on the major securities exchanges in emerging markets are held by a smaller
number of investors. This may limit the number of shares available for
acquisition or disposition by the Funds.
7. Lines of Credit
The Funds, along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participate in a $683,500,000 revolving line of
credit facility to be used for temporary or emergency purposes as an additional
source of liquidity to fund redemptions of investor shares. The Participants are
charged an annual commitment fee, which is allocated across the Participants on
the basis of each Fund's allocation of the entire facility. The Participants may
borrow up to a maximum of one third of their net assets under the agreement. The
Funds had no amounts outstanding at April 30, 2000, or at any time during the
fiscal year.
28
<PAGE>
DELAWARE INVESTMENTS FAMILY OF FUNDS
------------------------------------
Complete information on any fund offered by Delaware Investments can be found in
each fund's current prospectus. Prospectuses for all funds offered by Delaware
Investments are available from your financial adviser. Please read the
prospectus carefully before you invest or send money.
<TABLE>
<CAPTION>
<S> <C> <C>
Growth of Capital International and Global Tax-Exempt Income
o Technology and Innovation o Emerging Markets Fund o National High-Yield
Fund o New Pacific Fund Municipal Bond Fund
o Select Growth Fund o Overseas Equity Fund o Tax-Free USA Fund
o Trend Fund o International Equity Fund o Tax-Free Insured Fund
o Growth Opportunities Fund* o Global Equity Fund o Tax-Free USA
o Small Cap Value Fund o Global Bond Fund Intermediate Fund
o U.S. Growth Fund o State Tax-Free Funds**
o Tax-Efficient Equity Fund Current Income
o Social Awareness Fund o Delchester Fund Stability of Principal
o High-Yield o Cash Reserve
Opportunities Fund o Tax-Free Money Fund
Total Return o Strategic Income Fund Asset Allocation
o Blue Chip Fund o Corporate Bond Fund o Foundation Funds
o Devon Fund o Extended Duration Growth Portfolio
o Growth and Income Fund Bond Fund Balanced Portfolio
o Decatur Equity o American Government Income Portfolio
Income Fund Bond Fund
o REIT Fund o U.S. Government
o Balanced Fund Securities Fund
o Limited-Term
Government Fund
</TABLE>
* Formerly known as DelCap Fund.
** Available for the following states: Arizona, California, Colorado, Florida,
Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, New Jersey,
New Mexico, New York, Oregon, Pennsylvania and Wisconsin. Insured and
intermediate bond funds are available in selected states.
(C)Delaware Distributors, L.P.
<PAGE>
DELAWARE(SM)
INVESTMENTS
---------------------
Philadelphia o London
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
This semi-annual report is for the information of Delaware New Pacific Fund and
Delaware Overseas Equity Fund shareholders, but it may be used with prospective
investors when preceded or accompanied by a current prospectus for Delaware New
Pacific Fund and Delaware Overseas Equity Fund and the Delaware Investments
Performance Update for the most recently completed calendar quarter. The
prospectus sets forth details about charges, expenses, investment objectives and
operating policies of each Fund. You should read the prospectus carefully before
you invest. The figures in this report represent past results which are not a
guarantee of future results. The return and principal value of an investment in
each Fund will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost.
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
BOARD OF TRUSTEES
Wayne A. Stork Charles E. Peck Investment Manager
Chairman Retired Delaware Management Company
Delaware Investments Family of Funds Fredericksburg, VA Philadelphia, Pennsylvania
Philadelphia, PA
Jan L. Yeomans International Affiliate
Walter P. Babich Vice President and Treasurer Delaware International Advisers Ltd.
Board Chairman 3M Corporation London, England
Citadel Constructors, Inc. St. Paul, Minnesota
King of Prussia, PA Sub Adviser
AIB Govett Asset Management Ltd.
David K. Downes AFFILIATED OFFICERS London, England
President and Chief Executive Officer
Delaware Investments Family of Funds Charles E. Haldeman, Jr. National Distributor
Philadelphia, PA President and Chief Executive Officer Delaware Distributors, L.P.
Delaware Management Holdings, Inc. Philadelphia, Pennsylvania
John H. Durham Philadelphia, PA
Private Investor Shareholder Servicing, Dividend
Horsham, PA Richard J. Flannery Disbursing and Transfer Agent
Executive Vice President and Delaware Service Company, Inc.
Anthony D. Knerr General Counsel Philadelphia, Pennsylvania
Consultant, Anthony Knerr & Associates Delaware Investments Family of Funds
New York, NY Philadelphia, PA 1818 Market Street
Philadelphia, PA 19103-3682
Ann R. Leven Bruce D. Barton
Former Treasurer, National Gallery of Art President and Chief Executive Officer
Washington, DC Delaware Distributors, L.P.
Philadelphia, PA
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
</TABLE>
(3224) Printed in the USA
SA-109 [4/00]PP 6/00 (J5935)
