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<PAGE>
Delaware Group Equity Funds IV, Inc -
Capital Appreciation Fund
Statement of Net Assets
March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C> <C>
COMMON STOCK- 94.81%
Aerospace & Defense- 3.46%
AAR . . . . . . . . . . 1,400 $42,000
AMP . . . . . . . . . . 300 10,313
General Dynamics . . . . . . . . . . 200 13,475
---------------------
65,788
---------------------
Automobiles & Auto Parts- 1.86%
Ford Motor . . . . . . . . . . 600 18,825
General Motors . . . . . . . . . . 300 16,613
---------------------
35,438
---------------------
Banking, Finance & Insurance- 11.44%
Aames Financial . . . . . . . . . . 900 18,225
Aon . . . . . . . . . . 400 24,500
CIGNA . . . . . . . . . . 150 21,919
Chase Manhattan . . . . . . . . . . 300 28,088
Crestar Financial . . . . . . . . . . 600 20,775
First Union . . . . . . . . . . 200 16,225
* Medallion Financial . . . . . . . . . . 300 5,400
Mellon Bank . . . . . . . . . . 400 29,100
Summit Bancorp . . . . . . . . . . 500 21,875
The Money Store . . . . . . . . . . 1,500 31,406
---------------------
217,513
---------------------
Cable, Media & Publishing- 1.08%
McGraw-Hill . . . . . . . . . . 400 20,450
---------------------
20,450
---------------------
Chemicals- 2.90%
* Rhone-Poulenc-ADR . . . . . . . . . . 700 23,275
DuPont(E.I.)DeNemours . . . . . . . . . . 300 31,800
---------------------
55,075
---------------------
Computers & Technology- 15.65%
Adobe Systems . . . . . . . . . . 700 28,044
* BISYS Group . . . . . . . . . . 900 28,238
* BMC Software . . . . . . . . . . 700 32,244
* Cadence Design Systems . . . . . . . . . . 1,000 34,375
* Compuware . . . . . . . . . . 100 6,313
* Cypress Semiconductor . . . . . . . . . . 1,800 22,500
* EMC . . . . . . . . . . 800 28,400
* Fore Systems . . . . . . . . . . 900 13,444
* INSO . . . . . . . . . . 600 22,575
* Komag . . . . . . . . . . 900 27,394
Minnesota Mining & Manufacturing . . . . . . . . . . 200 16,900
* Peerless Systems . . . . . . . . . . 1,000 11,875
* Pure Atria . . . . . . . . . . 1,500 25,218
---------------------
297,520
---------------------
Electronics & Electrical- 4.61%
* Kulicke & Soffa Industries . . . . . . . . . . 200 4,238
* LSI Logic . . . . . . . . . . 700 24,325
* Sipex . . . . . . . . . . 700 20,606
Thomas & Betts . . . . . . . . . . 500 21,375
Xerox . . . . . . . . . . 300 17,062
---------------------
87,606
---------------------
Energy- 8.29%
Mobil . . . . . . . . . . 200 26,125
* Noble Drilling . . . . . . . . . . 1,200 20,700
* Patterson Energy . . . . . . . . . . 900 25,143
* Precision Drilling . . . . . . . . . . 800 33,800
USX-Marathon Group . . . . . . . . . . 900 25,087
Williams . . . . . . . . . . 600 26,700
---------------------
157,555
---------------------
<PAGE>
Environmental Services- 6.86%
* Philip Environmental . . . . . . . . . . 1,500 22,687
* Republic Industries . . . . . . . . . . 1,000 34,812
* USA Waste Services . . . . . . . . . . 1,000 35,500
* United Waste Systems . . . . . . . . . . 1,000 37,312
---------------------
130,311
---------------------
Food, Beverage & Tobacco- 2.39%
Heinz (H.J.) . . . . . . . . . . 500 19,750
Philip Morris . . . . . . . . . . 225 25,678
---------------------
45,428
---------------------
Healthcare & Pharmaceuticals- 17.54%
* BOC Group plc . . . . . . . . . . 600 18,900
Baxter International . . . . . . . . . . 500 21,563
Bristol-Myers Squibb . . . . . . . . . . 400 23,600
* Capstone Pharmacy . . . . . . . . . . 2,600 28,925
* DepoTech . . . . . . . . . . 200 3,050
* Dura Pharmaceuticals . . . . . . . . . . 900 32,119
* HealthSouth . . . . . . . . . . 1,600 30,600
* Health Management Associates Class A . . . . . . . . . . 1,300 30,875
Jones Medical Industries . . . . . . . . . . 400 9,525
* MedPartners . . . . . . . . . . 1,400 29,750
Pharmacia & Upjohn . . . . . . . . . . 700 25,637
* Phycor . . . . . . . . . . 1,000 27,187
SmithKline Beecham . . . . . . . . . . 300 21,000
* Vencor . . . . . . . . . . 700 26,512
* Vertex Pharmaceuticals . . . . . . . . . . 100 4,062
---------------------
333,305
---------------------
Industrial Machinery- 0.75%
*PRI Automation . . . . . . . . . . 300 14,213
---------------------
14,213
---------------------
Leisure, Lodging & Entertainment- 6.25%
Callaway Golf . . . . . . . . . . 800 22,900
* Equity Marketing . . . . . . . . . . 500 8,438
* Extended Stay America . . . . . . . . . . 1,800 27,225
* HFS . . . . . . . . . . 600 35,325
* Sun International Hotels . . . . . . . . . . 700 24,500
* Teardrop Golf . . . . . . . . . . 100 422
---------------------
118,810
---------------------
Retail- 2.14%
* Aviation Sales . . . . . . . . . . 400 10,050
* General Nutrition . . . . . . . . . . 1,500 30,563
---------------------
40,613
---------------------
Telecommunications- 3.51%
Frontier . . . . . . . . . . 800 14,300
* PageMart Wireless . . . . . . . . . . 900 5,344
* Telco Systems . . . . . . . . . . 1,700 19,550
* Teleport Communications Group . . . . . . . . . . 1,200 27,525
---------------------
66,719
---------------------
Transportation & Shipping- 1.79%
Norfolk Southern . . . . . . . . . . 200 17,050
Union Pacific . . . . . . . . . . 300 17,025
---------------------
34,075
---------------------
<PAGE>
Miscellaneous- 4.29%
* KLA Instruments . . . . . . . . . . 200 7,312
* National Education . . . . . . . . . . 1,700 21,462
* Personnel Group of America . . . . . . . . . . 1,200 23,550
Pitney Bowes . . . . . . . . . . 500 29,375
---------------------
81,699
---------------------
Total Common Stock (Cost $1,911,592) 1,802,118
---------------------
REPURCHASE AGREEMENT- 5.37%
With Chase Manhattan 5.90% 04/01/97
(dated 3/31/97, collateralized by
$37,000 U.S Treasury Notes
5.125% due 02/28/98, market value
$36,447) 36,000 36,000
With Paine Webber Securities 6.25% 04/01/97
(dated 3/31/97, collateralized by
$27,000 U.S Treasury Notes
6.00% due 08/31/97, market value
$27,320 and $6,000 U.S. Treasury Notes
7.75% due 11/30/99, market value
$6,511) 33,000 33,000
With Prudential Securities 6.25% 04/01/97
(dated 3/31/97, collateralized by
$35,000 U.S Treasury Bills
102 due 09/25/97, market value
$33,841) 33,000 33,000
---------------------
Total Repurchase Agreement 102,000
---------------------
TOTAL MARKET VALUE OF SECURITIES OWNED- 100.18% 1,904,118
(cost $2,013,592) ---------------------
LIABILITIES NET OF RECEIVABLES (0.18%) (3,408)
AND OTHER ASSETS- ---------------------
NET ASSETS APPLICABLE TO 236,230 SHARES 100.00%
($.01 Par Value) OUTSTANDING- $1,900,710
=====================
NET ASSET VALUE - CAPITAL APPRECIATION FUND A CLASS
($5,712 / 710 shares) $8.05
=====================
NET ASSET VALUE - CAPITAL APPRECIATION FUND
INSTITUTIONAL CLASS
($1,894,998 / 235,520 shares) $8.05
=====================
----------------------------------------------------
*Non-income producing security for the period
ended March 31, 1997
COMPONENTS OF NET ASSETS AT MARCH 31, 1997
Common stock $.01 par value 200,000,000 shares
authorized to the Fund with 100,000,000 shares allocated to Capital
Appreciation Fund A Class, 25,000,000 shares allocated to Capital
Appreciation Fund B Class, 25,000,000 shares allocated to
Capital Appreciation Fund C Class and 50,000,000 shares allocated to
Capital Appreciation Fund Institutional Class $2,007,967
Accumulated undistributed income:
Net investment gain 1,969
Net realized gain on investments 248
Net unrealized appreciation of investments (109,474)
---------------------
Total Net Assets $1,900,710
=====================
</TABLE>
See accompanying notes
<PAGE>
Delaware Group Equity Funds IV, Inc. -
Capital Appreciation Fund
Statement of Operations
For the Period Ended March 31, 1997
(Unaudited)
INVESTMENT INCOME:
Dividends 5,838
Interest $ 2,926 $ 8,764
-------
EXPENSES:
Management fees ($4,916)
and directors' fees ($488) 5,404
Reports and statements to shareholders 720
Registration fees 596
Professional fees 457
Custodian fees 399
Dividend disbursing and transfer
agent fees and expenses 398
Accounting fees and salaries 220
Taxes, other than taxes on income 200
Other 327
-----
8,721
Expenses absorbed by Delaware Management
Company, Inc. 3,809 4,912
----- -----
NET INVESTMENT INCOME 3,852
-----
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain from security transactions 248
Net unrealized depreciation
of investments
during the period (109,474)
--------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (109,226)
--------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ (105,374)
==========
See accompanying notes
<PAGE>
Delaware Group Equity Funds IV, Inc. -
Capital Appreciation Fund
Statement of Changes in Net Assets
(Unaudited)
12/2/96*
to
3/31/97
--------
OPERATIONS:
Net investment income $ 3,852
Net realized gain from security
transactions 248
Net unrealized depreciation
of investments during the period (109,474)
--------
Net decrease in net assets resulting
from operations (105,374)
--------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income:
Capital Appreciation Fund A Class (1)
Capital Appreciation Fund B Class --
Capital Appreciation Fund C Class --
Capital Appreciation Fund Institutional Class (1,882)
Net realized gain from security transactions:
Capital Appreciation Fund A Class --
Capital Appreciation Fund B Class --
Capital Appreciation Fund C Class --
Capital Appreciation Fund Institutional Class --
--------
(1,883)
--------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Capital Appreciation Fund A Class 6,075
Capital Appreciation Fund B Class --
Capital Appreciation Fund C Class --
Capital Appreciation Fund Institutional Class 2,000,009
Net asset value of shares issued upon
reinvestment of dividends from net
investment income and net realized
gain from security transactions:
Capital Appreciation Fund A Class 1
Capital Appreciation Fund B Class --
Capital Appreciation Fund C Class --
Capital Appreciation Fund Institutional Class 1,882
---------
2,007,967
---------
Cost of shares repurchased:
Capital Appreciation Fund A Class --
Capital Appreciation Fund B Class --
Capital Appreciation Fund C Class --
Capital Appreciation Fund Institutional Class --
---------
--
---------
Increase in net assets derived
from capital share transactions 2,007,967
---------
NET INCREASE IN NET ASSETS 1,900,710
NET ASSETS:
Beginning of period --
---------
End of period (including undistributed
net investment income of $1,969) $ 1,900,710
===========
- -------------------
*Date of initial public offering
See accompanying notes
<PAGE>
Delaware Group Equity Funds IV, Inc. -
Capital Appreciation Fund
Financial Highlights
(Unaudited)
<TABLE>
<CAPTION>
Capital Capital
Appreciation Fund Appreciation Fund
A Class Institutional Class
----------------- -------------------
12/2/96(1) 12/2/96(1)
to to
3/31/97 3/31/97
----------------- -------------------
<S> <C> <C>
Net asset value, beginning of period $8.5000 $8.5000
Income from investment operations:
Net investment income 0.0163 0.0163
Net realized and unrealized gain
from security transactions (0.4583) (0.4583)
------- -------
Total from investment operations (0.4420) (0.4420)
-------- -------
Less distributions:
Dividends from net investment income (0.0080) (0.0080)
Distributions from net realized gain
on security transactions - -
------- -------
Total distributions (0.0080) (0.0080)
-------- --------
Net asset value, end of period $8.0500 $8.0500
======= =======
Total return (2) (5.20%) (5.20%)
Ratios/supplemental data:
Net assets, end of period (000 omitted) $6 $1,895
Ratio of expenses to average net assets 0.75% 0.75%
Ratio of expenses to average net assets
prior to expense limitation 1.33% 1.33%
Ratio of net investment income to
average net assets 0.59% 0.59%
Ratio of net investment income to average
net assets prior to expense limitation 0.01% 0.01%
Portfolio turnover 73% 73%
Average commission rate paid $0.0600 $0.0600
</TABLE>
(1)Date of initial public offering; ratios have been annualized and total return
has not been annualized.
(2)Does not include current maximum sales charge of 4.75% nor the 1% limited
contingent deferred sales charge that would apply in the event of certain
redemptions within 12 months of purchase.
<PAGE>
Delaware Group Equity Funds IV, Inc. -
Capital Appreciation Fund
Notes to Financial Statements
March 31, 1997
(Unaudited)
Delaware Group Equity Funds IV, Inc. - Capital Appreciation Fund is registered
as a diversified open-end investment company under the Investment Company Act of
1940. The Fund is organized as a Maryland corporation and offers four classes of
shares.
The objective of the Fund is to seek to provide investors with an investment
that has the potential for capital appreciation.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund:
Security Valuation-Securities listed on an exchange are valued at the last
quoted sales price as of 4:00 pm EST on the valuation date. Securities not
traded or securities not listed on an exchange are valued at the mean of the
last quoted bid and asked prices. Long-term debt securities are valued by an
independent pricing service when such prices are believed by the Board of
Directors to reflect the fair value of such securities. Money market instruments
having less than 60 days to maturity are valued at amortized cost which
approximates market value.
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 is required in the financial
statements. Income and capital gain distributions are determined in accordance
with federal income tax regulations which may differ from generally accepted
accounting principles.
Repurchase Agreements-The Fund may invest in a pooled cash account along with
other members of the Delaware Group 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 100% collateralized. However, in the event of default or
bankruptcy by the counterparty to the agreement, realization of the collateral
may be subject to legal proceedings.
Class Accounting-Investment income, common expenses, and unrealized and realized
gains (losses) 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.
Use of Estimates- The preparation of financial statements in conformity with
generally accepted accounting principals 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 Group of Funds are
allocated amongst the funds on the basis of average net assets. Security
transactions are recorded on the date the securities are purchased or sold
(trade date). Costs used in calculating realized gains and losses on the sale of
investment securities are those of the specific securities sold. Dividend income
is recorded on the ex-dividend date and interest income is recorded on the
accrual basis. Original issue discounts are accreted to interest income over the
lives of the respective securities.
2. Investment Management and Distribution Agreements
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company, Inc. (DMC), the Investment Manager of the
Fund, an annual fee which is calculated daily at the annual rate of 0.75% of the
average daily net assets of the Fund.
DMC has elected voluntarily to waive its fee and reimburse the Fund to the
extent that annual operating expenses, exclusive of taxes, interest, brokerage
commission, extraordinary expenses and 12b-1 expenses exceed 0.75% of average
net assets for each class through May 31, 1997. Total expenses absorbed by DMC
for the period ended March 31, 1997 were $3,809.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. (DDLP), the Distributor and 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 Class and the C Class. No distribution expenses are
paid by the Institutional Class. DDLP has elected voluntarily to waive 12B-1
plan fees through May 31, 1997.
<PAGE>
Notes to Financial Statements (Continued)
The Fund has engaged Delaware Service Company, Inc. (DSC) and Delaware
Investment & Retirement Services, Inc. (DIRSI), affiliates of DMC, to serve as
dividend disbursing and transfer agents for the Fund. The Fund also engaged DSC
to provide accounting services for the Fund. For the period ended March 31,
1997, the Fund expensed for dividend disbursing, transfer agent services and
accounting services $618.
Certain officers of the Investment Manager are officers, directors, and/or
employees of the Fund. These officers, directors and employees are paid no
compensation by the Fund.
3. Investments
During the period ended March 31, 1997, the Fund made purchases of $2,377,130
and sales of $465,786 of investment securities other than U.S. government
securities and temporary cash investments.
At March 31, 1997, the federal income tax cost basis of the Fund's investment
were $2,013,592 and, accordingly, net unrealized depreciation for federal income
tax purposes aggregated $109,474 of which $54,664 related to unrealized
appreciation of securities and $164,138 related to unrealized depreciation of
securities.
4. Capital Stock
Transactions in capital stock shares of the fund were as follows:
12/2/96*
to
3/31/97
----------
Shares sold:
Capital Appreciation Fund A Class 710
Capital Appreciation Fund B Class -
Capital Appreciation Fund C Class -
Capital Appreciation Fund Institutional Class 235,295
Shares issued upon reinvestment of dividends from
net investment income and distributions of net
realized gain from security transactions:
Capital Appreciation Fund A Class -
Capital Appreciation Fund B Class -
Capital Appreciation Fund C Class -
Capital Appreciation Fund Institutional Class 225
---------
236,230
---------
Share repurchased:
Capital Appreciation Fund A Class -
Capital Appreciation Fund B Class -
Capital Appreciation Fund C Class -
Capital Appreciation Fund Institutional Class -
---------
-
---------
Net Increase 236,230
=========
- ---------------------
*Date of initial public offering.
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