<PAGE>
DELAWARE(SM)
INVESTMENTS
------------ Delaware U.S. Growth Fund
Growth of Capital
[Growth of Capital Artwork]
2000 SEMI-ANNUAL REPORT
<PAGE>
A TRADITION OF SOUND INVESTING SINCE 1929
-----------------------------------------
TABLE OF CONTENTS
------------------
Letter to Shareholders 1
Portfolio Management
Review 3
Performance Summary 6
Financial Statements
Statement of Net Assets 7
Statement of Operations 9
Statements of Changes in
Net Assets 10
Financial Highlights 11
Notes to Financial
Statements 15
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 (23 single-state funds)
o International equity o International fixed-income
o Balanced
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.
<PAGE>
Dear Shareholder
June 12, 2000
Recap of Events - The events of the past six months in the U.S. stock markets
are reminiscent of the old Chinese proverb: `May you live in interesting times.'
For some investors, the recent market volatility may have made life a bit too
interesting. During the fourth quarter of 1999, technology stocks, particularly
Internet-related companies, experienced significant price increases, as
investors recognized the powerful growth in this dynamic area.
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. Perhaps in post-Y2K relief, but more likely because of a constant flow
of money into the markets through retirement plans, the market experienced
continued strong growth early in 2000. This was especially true for technology
stocks. The Nasdaq Composite Index added to its extraordinary 86% growth in 1999
by breaking through the 5,000 level on March 9, 2000, just a few months after
surpassing 4,000 for the first time (Source: Bloomberg).
Meanwhile, it seemed to us that reaction to the latest in a series of interest
rate hikes by the Federal Reserve Board and fear of ongoing interest rate
increases led many investors to shun so-called "old economy" stocks. Rather than
remove their assets from the equity markets, many investors shifted to
high-growth "new economy" technology stocks, which rely less on borrowing money
to finance their growth.
However, as March and April arrived, it was our opinion that more and more
investors and even some leading investment authorities were expressing concerns
about lofty and unsustainable technology stock valuations. This was particularly
true of Internet companies that haven't yet recorded any actual earnings.
Volatility dominated the markets in April, erasing the impressive year-to-date
gains that many technology companies had registered through March.
Total Return
For The Period Ended April 30, 2000 Six Months
--------------------------------------------------------------------------------
Delaware U.S. Growth Fund Class A +30.10%
--------------------------------------------------------------------------------
Lipper Large-Cap Growth Funds Average (543 funds) +20.94%
Standard & Poor's 500 Index +7.18%
--------------------------------------------------------------------------------
All performance shown above is at net asset value without the effect of sales
charges and assumes reinvestment of dividends and capital gains. Performance for
all Fund classes can be found on page 6. The Lipper Large-Cap Growth Funds
Average includes large-cap growth mutual funds tracked by Lipper Analytical
(Source: Lipper Analytical Services, Inc.). The S&P 500 Index is an unmanaged
composite of mostly large-capitalization U.S. companies. You cannot invest
directly in an index. Past performance does not guarantee future results.
"DELAWARE U.S. GROWTH FUND DELIVERED SOLID PERFORMANCE OVER THE LAST SIX MONTHS,
SUBSTANTIALLY OUTPACING ITS BENCHMARK, THE S&P 500 Index."
1
<PAGE>
Delaware U.S. Growth Fund delivered solid performance over the last six months,
despite this unstable environment, substantially outpacing its benchmark, the
S&P 500 Index. This strong return was due primarily to our holdings in
well-established technology stocks.
As of April 30, about 50% of the Fund's assets were invested in technology
related stocks, compared to about 32% for the S&P 500 Index. This positioned
Delaware U.S. Growth Fund to benefit from the impressive technology rally that
took place from November 1999 through March 2000, but it also made the Fund
vulnerable to the downturn that occurred in April.
Market Outlook - We view the market's recent downturn as a normal correction
after a period of very dramatic gains. While we expect to see continued
volatility as the Fed strives to slow U.S. economic growth, we believe the
market will perform reasonably well overall for the remainder of 2000. Business
conditions continue to be robust and the U.S. economy is very strong.
Thank you for your continued confidence in Delaware Investments. We look forward
to reporting to you again next fall.
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
[Growth of Capital Artwork]
2
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
---------------------------
Francis Houghton
Senior Portfolio Manager
June 12, 2000
The Fund's Results
Delaware U.S. Growth Fund performed well for the six months ended
April 30, 2000. The Fund provided a total return of 30.10% (Class A shares at
net asset value with distributions reinvested), surpassing both its benchmark,
the S&P 500 Index which returned 7.18%, and its peer group, as represented by
the Lipper Large-Cap Growth Funds Average, which returned 20.94%.
During the past six months, the broad market was quite strong. Prior to the
start of our fiscal period in November 1999, we had reduced our exposure to the
healthcare sector because we believed that the growth prospects for this sector
over the next 12 to 24 months weren't favorable. We put most of the money from
the sale of these stocks into the technology area, which, in our opinion,
continues to have excellent growth potential.
Market volatility, particularly within the technology sector, accelerated during
the first quarter of 2000. During the month of April, the Nasdaq Composite
experienced four of its largest daily increases as well as four of its largest
daily declines (Source: Bloomberg). Against this backdrop, we have tried to
structure Delaware U.S. Growth Fund's portfolio to capture as much potential
growth as possible while managing risk. We think the technology, wireless
communication and energy companies we own are very well positioned for the world
that's unfolding.
As always, Delaware U.S. Growth Fund will focus on stocks that, in our opinion,
are poised for accelerated earnings growth rates. We particularly focus on
companies that are undergoing a positive fundamental change, such as:
o a new product introduction;
o an improved industry environment; or,
o a corporate restructuring or "turnaround."
On the pages that follow, we discuss Delaware U.S. Growth Fund's positioning in
several key sectors and how these positions affected the Fund's performance.
Relative to the S&P 500 Index, the Fund was overweighted in technology, slightly
overweighted in healthcare and underweighted in utility companies and consumer
non-durables.
"WE HAVE TRIED TO STRUCTURE DELAWARE U.S. GROWTH FUND'S PORTFOLIO TO CAPTURE AS
MUCH POTENTIAL GROWTH AS POSSIBLE WHILE MANAGING RISK."
3
<PAGE>
Portfolio Highlights
Technology Sector
The Internet has been a profound development in our society, and we believe it
will continue to have a strong impact on businesses over the next several years.
However, rather than buy the so-called "dot.com" stocks, many of which are
losing money, we have focused instead on companies that provide the
infrastructure and services that permit the Internet to work.
A lot of non-Web-oriented companies have realized they must take advantage of
the Internet in order to remain competitive. These companies are investing
heavily in hardware, software, communications equipment and infrastructure that
enable them to interact cost-effectively through the Internet. This trend has
benefited several of our holdings, such as Oracle, Sun Microsystems, EMC and
Cisco Systems.
During the past six months, we added to our position in Cisco Systems, which
provides the routers and switchers for the Internet. We also added to our
position in Sun Microsystems, which provides Internet servers and other
equipment. The Fund also holds Oracle, which we added to our portfolio early in
1999. Oracle provides much of the software that makes the Internet work. We
believe these companies are all well positioned to benefit from the Internet's
continued growth.
Energy Sector
We are tapping into the energy sector in several ways. We have invested in two
companies that are participating in the utility industry's deregulation, which
is in its fairly early stages. Enron and Dynegy both have the ability to trade
energy as a commodity. This began several years ago with the deregulation of the
natural gas industry. They're applying the same skill sets to trading units of
electricity. More recently, they've directed their attention to the trading of
bandwidth, which is the carrying capacity of high-speed multi-purpose
telecommunications lines. This technology is in its early stages of development,
but has tremendous growth potential.
In addition, our holdings of Triton Energy, Schlumberger and Transocean Sedco
Forex have all performed admirably because of a favorable environment for energy
companies. The substantial increase in energy prices over the past several
months has been beneficial for the operations of many energy companies. As big
oil companies do better, they are able to spend more money to find new oil and
new energy sources. This trickles into the offshore drilling area, which is
supplied by Transocean and Schlumberger. We expect this trend to continue for
several years.
"THE INTERNET HAS BEEN A PROFOUND DEVELOPMENT IN OUR SOCIETY, AND WE BELIEVE IT
WILL CONTINUE TO HAVE A STRONG IMPACT ON BUSINESSES OVER THE NEXT SEVERAL
YEARS."
[Growth of Capital Artwork]
4
<PAGE>
Portfolio Characteristics
April 30, 2000
--------------------------------------------------------------------------------
Beta* 0.98
--------------------------------------------------------------------------------
Median Market
Capitalization $43.8 billion
--------------------------------------------------------------------------------
Average Price-To-Earnings Ratio** 34.8x
--------------------------------------------------------------------------------
Portfolio Turnover 123%
--------------------------------------------------------------------------------
*Beta is a measure of risk relative to the S&P 500 Index. A number less than
1.0 means less historical price volatility than the Index. A number higher
than 1.0 means more historical volatility.
**P/Es are based on analysts' forward earnings estimates as reported to First
Call.
Healthcare Sector
In healthcare, some of the stocks are down substantially after going through a
period of great uncertainty related to various government issues. With lower
prices in the healthcare sector, we see some opportunities to add good companies
in this area. We've added several pharmaceutical companies that we believe have
strong growth prospects, namely Eli Lilly, Abbott Laboratories and Pharmacia.
We've also maintained some exposure in medical technology companies.
Outlook
Generally, we think business conditions now are very robust. While there may be
some slowing in the coming months, on balance, we expect the U.S. economy to
remain strong throughout the year. Going forward, we believe technology will
continue to be the most dynamic sector of the economy, at least for the
foreseeable future. The Internet and its related activities continue to expand
at a rapid rate. Similarly, communications, portions of the healthcare area, and
some of the energy sector are very dynamic. Within these high-growth areas, we
will continue to focus on companies that have:
o low dividend yields;
o strong balance sheets; and
o high expected earnings growth relative to their industry.
5
<PAGE>
FUND BASICS
-----------
Fund Objective
The Fund seeks maximum capital appreciation by investing in companies of all
sizes which have low dividend yields, strong balance sheets and high expected
growth rates relative to their industry.
Total Fund Assets
$248.77 million
Number of Holdings
54
Fund Start Date
December 3, 1993
Your Fund Manager
Francis Houghton has 39 years of investment experience. He joined Delaware
Investments on March 1, 2000 as a result of the integration of Lynch & Mayer's
investment personnel into Delaware. He has been managing the Fund since 1999.
Prior to joining Lynch & Mayer in 1990, he was Chairman of BMI Capital, a
Portfolio Manager at Neuberger & Berman and a Partner at Oppenheimer & Co., Inc.
He received a BBA from Manhattan College and attended NYU Graduate School of
Business.
NASDAQ Symbols
Class A DUGAX
Class B DEUBX
Class C DEUCX
DELAWARE U.S. GROWTH FUND PERFORMANCE
-------------------------------------
Average Total Returns
Through April 30, 2000 Lifetime Five year One Year
--------------------------------------------------------------------------------
Class A (Est. 12/3/93)
Excluding Sales Charge +21.76% +28.35% +38.79%
Including Sales Charge +20.64% +26.83% +30.78%
--------------------------------------------------------------------------------
Class B (Est. 3/29/94)
Excluding Sales Charge +22.18% +27.43% +37.79%
Including Sales Charge +22.18% +27.28% +32.79%
--------------------------------------------------------------------------------
Class C (Est. 5/23/94)
Excluding Sales Charge +23.73% +27.54% +37.78%
Including Sales Charge +23.73% +27.54% +36.78%
Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share value will fluctuate so that shares, when
redeemed, may be worth more or less than 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 also have 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.
The average annual total returns for the lifetime, five-year and one-year
periods ended April 30, 2000 for Delaware U.S. Growth Fund's Institutional Class
were +21.78%, +28.76% and +39.23%, respectively. The Institutional Class was
made available without sales charges only to certain eligible institutional
accounts on February 3, 1994. Performance prior to that date is based on Class A
performance and was adjusted to eliminate the effect of the sales charge, but
not Class A's asset-based distribution charge.
NASDAQ Symbol Institutional Class: DEUIX
6
<PAGE>
Statement of Net Assets
DELAWARE U.S. GROWTH FUND
-------------------------
Number of Market
April 30, 2000 (Unaudited) Shares Value
--------------------------------------------------------------------------------
Common Stock - 90.99%
Banking, Finance & Insurance - 1.36%
Morgan Stanley Dean Witter .......................... 44,200 $ 3,392,350
------------
3,392,350
------------
Cable, Media & Publishing - 6.37%
*AT&T - Liberty Media Class A ........................ 60,000 2,996,250
*Clear Channel Communications ........................ 35,413 2,549,735
*Echostar Communications Class A ..................... 39,600 2,522,025
Time Warner ......................................... 44,400 3,993,225
*USA Networks ........................................ 164,800 3,790,400
------------
15,851,635
------------
Chemicals - 1.62%
Pharmacia ........................................... 80,444 4,017,171
------------
4,017,171
------------
Computers & Techn ology - 17.15%
*America Online ...................................... 18,700 1,118,494
*Cisco Systems ....................................... 108,400 7,515,168
*Covad Communications Group .......................... 74,700 2,072,925
*EMC ................................................. 42,200 5,863,163
General Motors Class H .............................. 51,700 4,979,355
*Microsoft ........................................... 35,600 2,483,100
*Oracle .............................................. 98,500 7,873,844
*Parametric Technology ............................... 231,300 1,886,540
Pitney Bowes ........................................ 111,000 4,537,125
*Sun Microsystems .................................... 47,100 4,330,256
------------
42,659,970
------------
Electronics & Electrical Equipment - 11.03%
*Altera .............................................. 44,700 4,570,575
Intel ............................................... 61,100 7,748,244
*JDS Uniphase ........................................ 21,800 2,261,750
Motorola ............................................ 23,500 2,797,969
*National Semiconductor .............................. 76,400 4,641,300
Texas Instruments ................................... 33,300 5,423,738
------------
27,443,576
------------
Energy - 12.96%
*BP Amoco, ADR ....................................... 75,000 3,825,000
Dynegy .............................................. 105,300 6,890,569
Enron ............................................... 122,900 8,564,594
Schlumberger ........................................ 52,000 3,981,250
Transocean Sedco Forex .............................. 101,567 4,773,649
Triton Energy ....................................... 115,100 4,193,956
------------
32,229,018
------------
<PAGE>
Number of Market
Shares Value
--------------------------------------------------------------------------------
Common Stock (continued)
Healthcare & Pharmaceuticals - 11.92%
*Abbott Laboratories ................................. 121,300 $ 4,662,469
*Amgen ............................................... 125,600 7,033,600
*Genetech ............................................ 49,000 5,733,000
Guidant ............................................. 81,500 4,676,063
*Inhale Therapeutic Systems .......................... 33,400 2,066,625
Lilly (Eli) ......................................... 71,000 5,489,188
------------
29,660,945
------------
Industrial Machinery - 3.93%
*Applied Materials ................................... 41,000 4,174,313
*Celetica ............................................ 102,800 5,609,025
------------
9,783,338
------------
Retail - 1.02%
*Starbucks ........................................... 84,200 2,545,734
------------
2,545,734
------------
Telecommunications - 21.75%
*Ciena ............................................... 58,500 7,232,063
*Ericsson (LM) Telefonaktiebolaget,
ADR ............................................... 58,900 5,208,969
*Exodus Communications ............................... 74,400 6,579,750
*Intermedia Communications ........................... 114,100 4,649,575
*MCI Worldcom ........................................ 60,750 2,760,328
*McLeod Class A ...................................... 169,800 4,245,000
*Nextel Communications ............................... 37,200 4,071,075
Nokia ............................................... 90,400 5,141,500
Nortel Networks ..................................... 37,000 4,190,250
*Qualcomm ............................................ 19,300 2,092,844
*Sprint .............................................. 79,200 4,356,000
*Voicestream Wireless ................................ 36,000 3,564,000
------------
54,091,354
------------
Utilities - 1.88%
AES ................................................. 52,100 4,685,744
------------
4,685,744
------------
Total Common Stock
(cost $165,613,808) ............................... $226,360,835
============
7
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware U.S. Growth Fund Amount Value
--------------------------------------------------------------------------------
Repurchase Agreements - 8.62%
With Chase Manhattan 5.68% 5/1/00
(dated 4/28/00, collateralized by
$7,387,000 U.S. Treasury Notes
4.75% due 2/15/04, market
value $7,008,838) ................................. $6,837,000 $ 6,837,000
With J.P. Morgan Securities 5.70% 5/1/00
(dated 4/28/00, collateralized by
$5,091,000 U.S. Treasury Notes 5.875%
due 10/31/01, market value $5,182,776
and $2,213,000 U.S. Treasury
Notes 6.25% due 10/31/01, market
value $2,267,315) ................................. 7,300,000 7,300,000
With PaineWebber 5.70% 5/1/00
(dated 4/28/00, collateralized by
$4,710,000 U.S. Treasury Notes 5.50%
due 7/31/01, market value $4,707,294,
$2,308,000 U.S. Treasury Notes 7.25%
due 8/15/01, market value $2,396,339
and 350,000 U.S. Treasury Notes 4.50%
due 1/31/01, market value $349,446) ............... 7,299,000 7,299,000
------------
Total Repurchase Agreements
(cost $21,436,000) ................................ 21,436,000
------------
Total Market Value of Securities - 99.61%
(cost $187,049,808) ............................... 247,796,835
Receivables and Other Assets
Net of Liabilities - 0.39% ........................ 970,345
------------
Net Assets Applicable to 12,995,750
Shares Outstanding - 100.00% ...................... $248,767,180
============
Net Asset Value - Delaware U.S. Growth
Fund A Class
($89,122,210 / 4,623,127 Shares) .................. $19.28
------
Net Asset Value - Delaware U.S. Growth ...............
Fund B Class
($68,075,695 / 3,748,254 Shares) .................. $18.16
------
Net Asset Value - Delaware U.S. Growth
Fund C Class
($14,003,483 / 712,334 Shares) .................... $19.66
------
Net Asset Value - Delaware U.S. Growth
Fund Institutional Class
($77,565,792 / 3,912,035 Shares) .................. $19.83
------
----------------------
* Non-income producing security for the six months ended April 30, 2000
ADR - American Depository Receipt
<PAGE>
--------------------------------------------------------------------------------
Components of Net Assets at April 30, 2000:
Shares of beneficial interest
(unlimited authorization - no par) ........................... $189,025,011
Accumulated net investment loss ................................. (866,823)
Accumulated net realized loss on investments .................... (138,035)
Net unrealized appreciation of investments ...................... 60,747,027
------------
Total Net Assets ................................................ $248,767,180
============
Net Asset Value and Offering Price per share -
Delaware U.S. Growth Fund
Net asset value A Class (A) ..................................... $19.28
Sales charge (5.75% of offering price or 6.12%
of the amount invested per share) (B) ........................ 1.18
------
Offering price .................................................. $20.46
======
----------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See the current prospectus for purchases of $50,000 or more.
See accompanying notes
8
<PAGE>
Statement of Operations
Six Months Ended April 30, 2000 (Unaudited) Delaware U.S. Growth Fund
--------------------------------------------------------------------------------
Investment Income:
Dividends ............................................. $ 256,179
Interest .............................................. 409,735 $ 665,914
---------
Expenses:
Management fees ....................................... 638,296
Distribution expense .................................. 401,635
Dividend disbursing and transfer agent fees
and expenses ....................................... 332,806
Accounting and administration ......................... 62,600
Registration fees ..................................... 56,000
Reports and statements to shareholders ................ 28,000
Custodian fees ........................................ 11,942
Professional fees ..................................... 3,000
Taxes (other than taxes on income) .................... 2,300
Trustees' fees ........................................ 1,200
Other ................................................. 4,978
---------
...................................................... 1,542,757
---------
Less expenses paid indirectly ......................... (10,020) 1,532,737
---------
Net Investment Loss ................................... (866,823)
-----------
Net Realized and Unrealized Gain on Investments:
Net realized gain on investments ...................... 272,295
Net change in unrealized appreciation/depreciation
of investments ..................................... 38,307,074
-----------
Net realized and unrealized gain on investments ....... 38,579,369
-----------
Net Increase in Net Assets Resulting from Operations .. $37,712,546
===========
See accompanying notes
9
<PAGE>
Statements of Changes in Net Assets
Delaware U.S. Growth Fund
--------------------------------------------------------------------------------
Six Months Year
Ended Ended
4/30/2000 10/31/1999
(Unaudited)
Increase (Decrease) in Net Assets from Operations:
Net investment loss ................................ $ (866,823) $ (1,021,542)
Net realized gain on investments ................... 272,295 7,328,259
Net change in unrealized appreciation/depreciation
of investments .................................. 38,307,074 14,391,314
--------------------------
Net increase in net assets resulting from
operations ...................................... 37,712,546 20,698,031
--------------------------
Distributions to Shareholders from:
Net realized gain on investments:
A Class ......................................... (1,578,957) -
B Class ......................................... (1,206,412) -
C Class ......................................... (286,903) -
Institutional Class ............................. (2,011,673) -
--------------------------
(5,083,945) -
--------------------------
Capital Share Transactions:
Proceeds from shares sold:
A Class ......................................... 50,119,555 26,392,044
B Class ......................................... 38,986,024 20,813,118
C Class ......................................... 6,766,875 5,196,397
Institutional Class ............................. 20,006,123 36,039,896
Net asset value of shares issued upon reinvestment of distributions
from net realized gain on investments:
A Class ......................................... 1,532,053 -
B Class ......................................... 1,098,102 -
C Class ......................................... 275,714 -
Institutional Class ............................. 2,011,673 -
--------------------------
120,796,119 88,441,455
--------------------------
Cost of shares repurchased:
A Class ......................................... (9,809,250) (8,790,855)
B Class ......................................... (4,554,262) (3,097,377)
C Class ......................................... (1,513,763) (999,392)
Institutional Class ............................. (11,940,702) (22,902,507)
--------------------------
(27,817,977) (35,790,131)
--------------------------
Increase in net assets derived from capital share
transactions .................................... 92,978,142 52,651,324
--------------------------
Net Increase in Net Assets ......................... 125,606,743 73,349,355
Net Assets:
Beginning of period ................................ 123,160,437 49,811,082
End of period ...................................... $248,767,180 $123,160,437
==========================
See accompanying notes
10
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware U.S. Growth 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 ...................... $15.310 $11.490 $16.650 $13.820 $12.430 $10.210
Income (loss) from investment operations:
Net investment loss .................................... (0.074) (0.161) (0.062) (0.060) (0.090) (0.090)
Net realized and unrealized gain on investments ........ 4.636 3.981 1.272 4.250 1.480 2.310
----------------------------------------------------------------------
Total from investment operations ....................... 4.562 3.820 1.210 4.190 1.390 2.220
----------------------------------------------------------------------
Less distributions:
Distributions from net realized gain on investments .... (0.592) - (6.370) (1.360) - -
----------------------------------------------------------------------
Total distributions .................................... (0.592) - (6.370) (1.360) - -
----------------------------------------------------------------------
Net asset value, end of period ............................ $19.280 $15.310 $11.490 $16.650 $13.820 $12.430
======================================================================
Total return(1) ........................................... 30.10% 33.33% 10.52% 33.18% 11.18% 21.74%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $89,122 $37,771 $14,130 $6,933 $16,118 $13,574
Ratio of expenses to average net assets ................ 1.56%(4) 1.86% 1.49% 1.44% 1.80% 1.85%
Ratio of expenses to average net assets prior to
expense limitation ................................... 1.56%(4) 1.86% 1.49% 1.44% 1.88% 2.18%
Ratio of net investment loss to average net assets ..... (0.82%)(4) (1.12%) (0.52%) (0.38%) (0.77%) (0.88%)
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ........................................... (0.82%)(4) (1.12%) (0.52%) (0.38%) (0.85%) (1.21%)
Portfolio turnover rate ................................ 123%(4) 132% 135% 144% 131% 58%
</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.
(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
11
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware U.S. Growth 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 ...................... $14.500 $10.960 $16.260 $13.610 $12.330 $10.190
Income (loss) from investment operations:
Net investment loss .................................... (0.135) (0.253) (0.140) (0.160) (0.170) (0.140)
Net realized and unrealized gain on investments ........ 4.387 3.793 1.210 4.170 1.450 2.280
----------------------------------------------------------------------
Total from investment operations ....................... 4.252 3.540 1.070 4.010 1.280 2.140
----------------------------------------------------------------------
Less distributions:
Distributions from net realized gain on investments .... (0.592) - (6.370) (1.360) - -
----------------------------------------------------------------------
Total distributions .................................... (0.592) - (6.370) (1.360) - -
----------------------------------------------------------------------
Net asset value, end of period ............................ $18.160 $14.500 $10.960 $16.260 $13.610 $12.330
======================================================================
Total return(1) ........................................... 29.63% 32.39% 9.62% 32.30% 10.38% 21.00%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $68,076 $25,938 $5,418 $1,653 $809 $567
Ratio of expenses to average net assets ................ 2.26%(4) 2.56% 2.19% 2.14% 2.48% 2.50%
Ratio of expenses to average net assets prior to
expense limitation ................................... 2.26%(4) 2.56% 2.19% 2.14% 2.56% 2.83%
Ratio of net investment loss to average net assets ..... (1.52%)(4) (1.82%) (1.22%) (1.08%) (1.45%) (1.57%)
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ........................................... (1.52%)(4) (1.82%) (1.22%) (1.08%) (1.53%) (1.90%)
Portfolio turnover rate ................................ 123%(4) 132% 135% 144% 131% 58%
</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.
(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
12
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware U.S. Growth 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 ...................... $15.650 $11.830 $17.020 $14.180 $12.850 $10.620
Income (loss) from investment operations:
Net investment loss .................................... (0.142) (0.264) (0.148) (0.170) (0.160) (0.100)
Net realized and unrealized gain on investments ........ 4.744 4.084 1.328 4.370 1.490 2.330
----------------------------------------------------------------------
Total from investment operations ....................... 4.602 3.820 1.180 4.200 1.330 2.230
----------------------------------------------------------------------
Less distributions:
Distributions from net realized gain on investments .... (0.592) - (6.370) (1.360) - -
----------------------------------------------------------------------
Total distributions .................................... (0.592) - (6.370) (1.360) - -
----------------------------------------------------------------------
Net asset value, end of period ............................ $19.660 $15.650 $11.830 $17.020 $14.180 $12.850
======================================================================
Total return(1) ........................................... 29.69% 32.38% 10.04% 32.26% 10.35% 21.00%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $14,003 $6,682 $1,657 $252 $55 $27
Ratio of expenses to average net assets ................ 2.26%(4) 2.56% 2.19% 2.14% 2.48% 2.50%
Ratio of expenses to average net assets prior to
expense limitation ................................... 2.26%(4) 2.56% 2.19% 2.14% 2.56% 2.82%
Ratio of net investment loss to average net assets ..... (1.52%)(4 (1.82%) (1.22%) (1.08%) (1.45%) (1.61%)
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ........................................... (1.52%)(4) (1.82%) (1.22%) (1.08%) (1.53%) (1.93%)
Portfolio turnover rate ................................ 123%(4) 132% 135% 144% 131% 58%
</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.
(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
13
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware U.S. Growth 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 ...................... $15.710 $11.750 $16.860 $13.940 $12.500 $10.230
Income (loss) from investment operations:
Net investment loss .................................... (0.045) (0.118) (0.027) (0.010) (0.050) (0.050)
Net realized and unrealized gain on investments ........ 4.757 4.078 1.287 4.290 1.490 2.320
----------------------------------------------------------------------
Total from investment operations ....................... 4.712 3.960 1.260 4.280 1.440 2.270
----------------------------------------------------------------------
Less distributions:
Distributions from net realized gain on investments .... (0.592) - (6.370) (1.360) - -
----------------------------------------------------------------------
Total distributions .................................... (0.592) - (6.370) (1.360) - -
----------------------------------------------------------------------
Net asset value, end of period ............................ $19.830 $15.710 $11.750 $16.860 $13.940 $12.500
======================================================================
Total return(1) ........................................... 30.29% 33.79% 10.80% 33.57% 11.52% 22.19%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $77,566 $52,769 $28,606 $18,455 $10,003 $4,819
Ratio of expenses to average net assets ................ 1.26%(4) 1.56% 1.19% 1.14% 1.48% 1.50%
Ratio of expenses to average net assets prior to
expense limitation ................................... 1.26%(4) 1.56% 1.19% 1.14% 1.56% 1.83%
Ratio of net investment loss to average net assets ..... (0.52%)(4) (0.82%) (0.22%) (0.08%) (0.45%) (0.59%)
Ratio of net investment loss to average net assets
prior to expense limitation and expenses paid
indirectly ........................................... (0.52%)(4) (0.82%) (0.22%) (0.08%) (0.53%) (0.92%)
Portfolio turnover rate ................................ 123%(4) 132% 135% 144% 131% 58%
</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.
(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
14
<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 Overseas Equity Fund and the Delaware New Pacific Fund. These
financial statements and related notes pertain to the Delaware U.S. Growth Fund
(the "Fund"). The Fund offers four classes of shares. The A Class carries a
front-end sales charge of 5.75%. The B Class carries a back-end deferred sales
charge. The C Class carries a level load deferred sales charge and the
Institutional Class has no sales charge.
The objective of the Fund is to seek to maximize capital appreciation.
1. Significant Accounting Policies
The following accounting policies are in accordance with accounting principles
generally accepted in the United States and are consistently followed by the
Fund.
Security Valuation - 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. 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 or under
the direction of the Company's Board of Trustees.
Federal Income Taxes - The Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations, which may differ from accounting
practices generally accepted in the United States.
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
the Fund on the basis of daily net assets of each class. Distribution expenses
relating to a specific class are charged directly to that class.
<PAGE>
Repurchase Agreements - The Fund may invest in a pooled cash account along with
other members of the Delaware Investments Family of Funds. The aggregate daily
balance of the pooled cash account is invested in repurchase agreements secured
by obligations of the U.S. Government. The respective collateral is held by the
Fund's custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is 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.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. The Fund declares and pays dividends from net
investment income and capital gains, if any, annually.
Certain expenses of the Fund are paid through commission arrangements with
brokers. These transactions are done subject to best execution. The amount of
these expenses was approximately $2,278 for the six months ended April 30, 2000.
In addition, the Fund receives earnings credits from its custodian when positive
balances are maintained, which are used to offset custody fees. These credits
were $7,742 for the six months ended April 30, 2000. The expenses paid under the
above arrangements are included in their respective expense captions on the
Statement of Operations with the corresponding expense offset shown as "Expenses
paid indirectly".
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Fund
currently pays Delaware Management Company ("DMC"), the Investment Manager of
the Fund, an annual fee which is calculated at a rate of 0.65% on the first $500
million of average daily net assets, 0.60% on the next $500 million, 0.55% on
the next $1.5 billion, and 0.50% on the average daily net assets in excess of
$2.5 billion. At April 30, 2000, the Fund had a liability for investment
management fees and other expenses payable to DMC for $7,247.
15
<PAGE>
Notes to Financial Statements (continued)
2. Investment Management and Other Transactions with Affiliates (continued)
On March 1, 2000, management of Lynch & Mayer, Inc. and Delaware Investments
integrated Lynch & Mayer's investment personnel into Delaware. Francis Houghton,
formerly of Lynch & Mayer, joined Delaware's growth team and continued to act as
the Fund's portfolio manager with day-to-day investment responsibility for the
Fund. As a result of the integration, Lynch & Mayer no longer served as
sub-adviser to the Fund.
The Fund has engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting services for
the Fund. The Fund pays DSC a monthly fee based on the number of shareholder
accounts, shareholder transactions, and average net assets, subject to certain
minimums. At April 30, 2000, the Fund had a liability for such fees and other
expenses payable to DSC for $88,311.
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 Class. At April 30, 2000, the Fund had a
liability for distribution fees and other expenses payable to DDLP of $32,776.
For the six months ended April 30, 2000, DDLP earned $261,094 for commissions on
sales of the Fund A Class shares.
Certain officers of DMC, DSC and DDLP are officers, trustees and/or employees of
the Fund. These officers, trustees and employees are paid no compensation by the
Fund.
3. Investments
During the six months ended April 30, 2000, the Fund made purchases of
$175,887,102 and sales of $110,620,841 of investment securities other than U.S.
government securities and temporary cash investments.
At April 30, 2000, net unrealized appreciation was $60,747,027 of which
$67,422,280 related to unrealized appreciation of securities and $6,675,253
related to unrealized depreciation of securities. At April 30, 2000, the
aggregate cost of securities was $187,049,808.
<PAGE>
4. Capital Shares
Transactions in capital shares were as follows:
Six Months Year
Ended Ended
4/30/00 10/31/99
(Unaudited)
Shares sold:
A Class ....................................... 2,580,749 1,847,598
B Class ....................................... 2,141,738 1,523,020
C Class ....................................... 343,190 356,169
Institutional Class ........................... 1,038,525 2,506,744
Shares issued upon reinvestment of
distributions from net realized
gain on investments:
A Class ....................................... 87,346 -
B Class ....................................... 66,271 -
C Class ....................................... 15,377 -
Institutional Class ........................... 111,636 -
---------- ----------
6,384,832 6,233,531
---------- ----------
Shares repurchased:
A Class ......................................... (511,995) (610,432)
B Class ......................................... (248,425) (228,770)
C Class ......................................... (73,089) (69,457)
Institutional Class ............................. (597,523) (1,581,540)
---------- ----------
(1,431,032) (2,490,199)
---------- ----------
Net Increase .................................... 4,953,800 3,743,332
========== ==========
5. Lines of Credit
The Fund, 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 the 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.
No amount was outstanding at April 30, 2000, or at any time during the period.
16
<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 o Emerging Markets Fund o National High-Yield
Innovation 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 o Global Equity Fund o Tax-Free USA
Fund* o Global Bond Fund Intermediate Fund
o Small Cap Value Fund o State Tax-Free Funds**
o U.S. Growth Fund Current Income
o Tax-Efficient Equity Fund o Delchester Fund Stability of Principal
o Social Awareness Fund o High-Yield o Cash Reserve
Opportunities Fund o Tax-Free Money Fund
Total Return o Strategic Income Fund
o Blue Chip Fund o Corporate Bond Fund Asset Allocation
o Devon Fund o Extended Duration o Foundation Funds
o Growth and Income Fund Bond Fund Growth Portfolio
o Decatur Equity o American Government Balanced Portfolio
Income Fund Bond Fund Income Portfolio
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.
<PAGE>
DELAWARE(SM) For Shareholders
INVESTMENTS 1.800.523.1918
=====================
Philadelphia o London For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
This semi-annual report is for the information of Delaware U.S. Growth Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current prospectus for Delaware U.S. Growth Fund Prospectus and
the Delaware Investments Performance Update for the most recently completed
calendar quarter. The prospectus sets forth details about charges, expenses,
investment objectives and operating policies of the Fund. You should read the
prospectus carefully before you invest. The figures in this report represent
past results which are not a guarantee of future results. The return and
principal value of an investment in the Fund will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
BOARD OF TRUSTEES Charles E. Peck Investment Manager
Wayne A. Stork Retired Delaware Management Company
Chairman Fredericksburg, VA Philadelphia, PA
Delaware Investments Family of Funds
Philadelphia, PA Janet L. Yeomans International Affiliate
Vice President and Treasurer Delaware International Advisers Ltd.
Walter P. Babich 3M Corporation London, England
Board Chairman St. Paul, MN
Citadel Constructors, Inc. National Distributor
King of Prussia, PA Delaware Distributors, L.P.
AFFILIATED OFFICERS Philadelphia, PA
David K. Downes
President and Chief Executive Officer Charles E. Haldeman, Jr. Shareholder Servicing, Dividend
Delaware Investments Family of Funds President and Chief Executive Officer Disbursing and Transfer Agent
Philadelphia, PA Delaware Management Holdings, Inc. Delaware Service Company, Inc.
Philadelphia, PA Philadelphia, PA
John H. Durham
Private Investor Richard J. Flannery 1818 Market Street
Horsham, PA Executive Vice President Philadelphia, PA 19103-3682
and General Counsel
Anthony D. Knerr Delaware Investments Family of Funds
Consultant, Anthony Knerr & Associates Philadelphia, PA
New York, NY
Bruce D. Barton
Ann R. Leven President and Chief Executive Officer
Former Treasurer, National Gallery of Art Delaware Distributors, L.P.
Washington, DC Philadelphia, PA
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
</TABLE>
Printed in the USA
(3215) (5926)
SA-101 [4/00] PP 6/00
