<PAGE>
FOR GROWTH OF CAPITAL
DELAWARE GROUP
DelCap Fund
1997
professional management
Semi-Annual
service and guidance
Report
goals
[PICTURE OF LANDSCAPE]
DELAWARE
GROUP
- --------
<PAGE>
- --------------------------------------------------------------------------------
A P R I L 1 5 , 1 9 9 7
Dear Shareholder:
The first half of DelCap Fund's 1997 fiscal year was a time of
change and transition for both the financial markets and your Fund's
leadership.
Stocks of large companies outperformed stocks of medium-size and
small companies for most of the period. DelCap was negatively affected by
this trend. However, we used market weakness as an opportunity to make some
changes in the Fund's portfolio, which we believe auger for better long-term
growth potential.
For the six months ended March 31, 1997, DelCap Fund's A Class shares
had a total return of -11.57% (with distributions reinvested at net asset
value). In part, this reflected a stock market whose volatility returned to
historical norms.
Since September, your Fund has increased its position in technology
and energy stocks, two sectors whose growth prospects appear attractive.
We believe these and other changes your Fund's management have made should
put DelCap in a better position for the months ahead.
TO HELP PRESERVE CAPITAL IN A DIFFICULT MARKET,
YOUR FUND REDUCED ITS EXPOSURE TO CYCLICAL CONSUMER BUSINESSES.
In our opinion, the mid-cap sector's performance since the fall
reflected a preoccupation with company size that was short-sighted and not
sustainable. Although a modest increase in interest rates at the end of March
adversely affected many stocks, we believe the current environment may
ultimately increase the attractiveness of medium-size companies that can
maintain consistent earnings growth.
<TABLE>
<CAPTION>
TOTAL RETURN
- --------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED 10 YEARS ENDED+
MARCH 31, 1997 MARCH 31, 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
DelCap Fund A -11.57% +11.04%
- --------------------------------------------------------------------------------------------------------
NASDAQ Industrial Index -8.10% +8.40%
Standard & Poor's 500 Index +11.24% +13.38%
Lipper Mid-Cap Fund Average -6.27% (199 funds) +11.49% (25 funds)
- --------------------------------------------------------------------------------------------------------
+ AVERAGE ANNUAL TOTAL RETURN.
ALL PERFORMANCE QUOTED ABOVE IS BASED ON NET ASSET VALUE WITHOUT EFFECT OF
SALES CHARGES. SEC-MANDATED PERFORMANCE INFORMATION FOR ALL CLASSES OF DELCAP
FUND CAN BE FOUND ON PAGE 8.
</TABLE>
1997 SEMI-ANNUAL REPORT
2
<PAGE>
Screened backword discipline
On March 20, Gerald S. Frey, your Fund's co-manager, assumed leadership
of DelCap's veteran portfolio management team. Two new investment
professionals - Marshall T. Bassett and John A. Heffern - have been added to the
team that assists Mr. Frey.
Let me assure you that DelCap's investment strategy has not changed.
The Fund consistently employs a fundamental approach to investing - emphasizing
long-term earnings growth and careful company-by-company analysis. This strategy
has provided an average annual lifetime return of +20.05% (for A Class shares as
of March 31, 1997 with distributions reinvested at net asset value and without
effect of sales charges).
Since last fall, the fear of higher interest rates has been a thorn
in the side of investors. A low U.S. unemployment rate and six years of
economic expansion have investors speculating about how much the Federal
Reserve Board might increase the cost of borrowing to curtail inflation.
In late March, the Fed raised the federal funds rate - the interest
rate banks charge each other for overnight loans - by 25 basis points (0.25%)
to 5.50%. We share the view of most economists that further increases could
follow in the months ahead.
To help preserve capital in this uncertain environment, your Fund
substantially reduced its exposure to cyclical consumer businesses such as
credit card companies and restaurants. DelCap's managers have also sold
health care stocks that they considered vulnerable to likely changes in
federal government reimbursement policies.
We encourage you to read Mr. Frey's review of the Fund's performance,
what steps he's taken in response to market conditions and his outlook for the
balance of fiscal 1997. We thank you for your continuing confidence in Delaware
Group.
Sincerely,
/s/ Wayne A. Stork
- -----------------------------------------------
Wayne A. Stork
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
1997 SEMI-ANNUAL REPORT
3
<PAGE>
Portfolio Managers' Review
(PICTURE OF DELCAP'S PORTFOLIO MANAGEMENT TEAM HERE)
DELCAP'S PORTFOLIO MANAGEMENT TEAM is led by Gerald S. Frey (seated at far
left). He is assisted by (left to right) William H. Miller, John A. Heffern,
Lori P. Wachs and Judy Finger. Not shown is Marshall T. Bassett.
The first half of fiscal 1997 was not the finest hour for stocks of medium
size companies. Faced with rising domestic interest rates and financial
uncertainty in sectors such as technology, investors flocked to stocks of
large companies which are viewed as relatively immune to the cyclical fortunes
of the U.S. economy.
WE BELIEVE THE MARKET'S FIXATION ON SIZE IS SHORT-SIGHTED, AND IN FACT HAS
CREATED SOME COMPELLING LONG-TERM OPPORTUNITIES FOR PATIENT INVESTORS.
Many of these people chose to buy mutual funds whose holdings parallel the
components of unmanaged indexes of large cap stocks. Relatively fewer people
invested in funds that parallel mid-cap and small cap indexes, or like DelCap,
have active management teams that evaluate medium-size companies one by one.
We believe the market's fixation on size is short-sighted, and in
fact has created some compelling long-term opportunities for patient
investors. As of March 31, 1997, the difference between the relative annual
performance of large company stocks and those of medium-size companies was at
the widest level in five years.
In such an environment, we believe prudent stock selection is
especially important. In our opinion, an active professional management team
can add value to an investment portfolio because the performance of individual
stocks varies greatly within the mid-cap sector.
1997 SEMI-ANNUAL REPORT
4
<PAGE>
INVESTMENT STRATEGY
When we evaluate medium-size companies, we look for a solid two-to-three year
track record of growth in quarterly earnings and market share. Our investment
discipline is to buy stocks selling at prices that do not reflect the company's
earnings growth rate. We believe this indicates capital appreciation potential,
especially if a company shows consistent earnings growth and industry leadership
During the first half of 1997, John A. Heffern and Marshall T. Bassett
joined the DelCap team. Mr. Heffern, a veteran bank stock analyst, focuses on
financial and business services stocks while Mr. Bassett, previously an emerging
growth stock specialist with Morgan Stanley, covers consumer stocks. This
complements the work our other team members were doing in areas such as health
care, leisure and lodging and technology. Each week we meet formally to discuss
our research, which can include meetings with companies' management and plant
visits, talking to customers and reviewing the competition.
<TABLE>
<CAPTION>
PORTFOLIO HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------
MARKET VALUE OF COMPANIES* SEPTEMBER 30, 1996 MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $250 million 1.4% 1.7%
$250 million to $1.5 billion 44.4% 37.2%
Greater than $1.5 billion 54.2% 61.1%
MEDIAN MARKET CAPITALIZATION $1.2 billion $1.63 billion
NUMBER OF STOCKS 103 83
CASH POSITION* 11% 6.8%
AVERAGE STOCK
PRICE-TO-EARNINGS RATIO** 24.9x 23.2x
BETA*** 1.11 1.05
* PERCENT OF NET ASSETS
** BASED ON A CONSENSUS OF ANALYSTS' EARNINGS ESTIMATES.
*** A MEASURE OF VOLATILITY RELATIVE TO THE S&P 500 INDEX FOR THE PAST THREE
YEARS ENDED MARCH 31. A NUMBER LESS THAN 1.0 MEANS A SECURITY HAS
FLUCTUATED IN PRICE LESS THAN THE INDEX. A NUMBER GREATER THAN 1.0 MEANS
THE SECURITY HAS FLUCTUATED IN PRICE MORE THAN THE INDEX.
</TABLE>
1997 SEMI-ANNUAL REPORT
5
<PAGE>
Strategic Positioning
A PRUDENT CONSUMER
DIET: LESS RED MEAT,
NO MORE PLASTIC
Stock performance of the restaurant and credit card industries has suffered
since September. Intense competition, adverse consumer spending patterns and
slowing growth has depressed restaurant profits, and during the first half of
fiscal 1997 we reduced our position in chains such as LONE STAR STEAKHOUSE.
Credit card companies, meanwhile, are facing a growing volume of loan
losses. Despite low unemployment and a healthy U.S. economy, more consumers
are filing for bankruptcy or defaulting on unsecured debt. By liquidating our
holdings of poorly performing credit card issuers such as ADVANTA, we helped
preserve capital. We have been focusing on companies such as CMAC INVESTMENT
which makes loans backed by hard assets such as autos or real estate.
HEALTH CHOICE: LESS GOVERNMENT, MORE MANAGED CARE
Proposals to alter federal Medicare reimbursement to service providers have
negatively affected some health care stocks since last fall. We've reduced
our position in companies whose profits we believed were sensitive to changes
in federal health care policy. We have shifted our investment emphasis to
physician practice management companies such as PHYCOR, operators of assisted
living centers and health care services such as dental care that are not
dependent on government programs.
<TABLE>
<CAPTION>
BROAD SECTOR DIVERSIFICATION
DELCAP FUND VS. WILSHIRE MIDCAP INDEX
- -----------------------------------------------------------------------------------------------------
March 31, 1997 ALLOCATION
SHARE OF FUND'S CHANGE FROM SHARE OF
BROAD SECTOR NET ASSETS SEPTEMBER 30, 1996 INDEX
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consumer Goods
and Consumer Services* 27% -5% 26%
Health Care 16 +1 14
Business Services 17 +1 9
Technology 21 +8 21
Financial 8 No change 7
Basic Industry/Energy 8 +6 19
Transportation/Utilities 3 +2 2
*THESE GROUPS CONSIST OF MANY MANUFACTURING AND SERVICE INDUSTRIES.
</TABLE>
1997 SEMI-ANNUAL REPORT
6
<PAGE>
TECHNOLOGY:
TIME TO REBOOT
Your Fund was underweighted in technology when the current fiscal year began
and during the first half we significantly increased our technology stock
holdings, taking advantage of the overall underperformance of this sector.
IN RECENT MONTHS, WE FOUND MANY OPPORTUNITIES TO ADD HIGH QUALITY COMPANIES
AT WHAT WE BELIEVE WERE DEPRESSED PRICES.
Our technology purchases, as well as other investment decisions,
helped reduce your Fund's 11% cash position as of September 30, 1996, to 6%
of net assets as of March 31.
While we've endured some short-term pain for these efforts,
we believe we can effectively position your Fund to participate in what is
expected to be the most dynamic sector of the economy into the next
millennium.
OUTLOOK
As we mentioned in our 1996 annual report, we're striving for a concentrated
yet diverse portfolio. Over the past 18 months, we've reduced the number of
stocks we own by more than 20%. This allows us to focus more closely on the
trends affecting each of your Fund's holdings. Our top 10 holdings amounted
to 23.8% of net assets as of March 31, 1997, a higher percentage than a year
ago.
For 11 years, DelCap has believed that a fundamental approach to
investing can provide greater rewards than investing styles relying on
short-term investor sentiment - the "momentum" of the market. Our team of
professionals will continue to employ a consistent stock selection strategy
that we are confident can not only endure the short-term effects of market
volatility but ultimately reward patient, long-term investors. We look
forward to reporting to you again in October.
outlook
Gerald S. Frey
SENIOR PORTFOLIO MANAGER
April 15, 1997
1997 SEMI-ANNUAL REPORT
7
<PAGE>
FUND PERFORMANCE
DELCAP FUND'S LIFETIME PERFORMANCE
Growth of a $10,000 Investment
March 27, 1986, to March 31, 1997
DelCap Fund A NASDAQ Industrial Index S&P 500 Index
3/31/86 $10,000 $10,000 $10,000
3/31/87 $23,832 $12,084 $12,622
3/31/88 $23,684 $10,209 $11,569
3/31/89 $26,863 $10,607 $14,375
3/31/90 $33,854 $11,987 $15,888
3/31/91 $39,568 $14,502 $18,681
3/31/92 $44,544 $17,989 $21,296
3/31/93 $45,470 $18,987 $23,262
3/31/94 $51,672 $20,731 $24,501
3/31/95 $54,049 $21,338 $28,768
3/31/96 $69,466 $27,275 $37,448
3/31/97 $67,929 $27,092 $44,041
Capital gains and dividend reinvestment have provided more than half of the
total return of DelCap Fund for the Fund's lifetime.
THE FUND'S PERFORMANCE IS COMPARED TO THAT OF THE S&P 500 AND THE NASDAQ
INDUSTRIAL INDEX. CHART ASSUMES $10,000 INVESTED ON MARCH 27, 1986, AND
INCLUDES THE EFFECT OF A 4.75% FRONT-END SALES CHARGE AND THE REINVESTMENT OF
ALL DISTRIBUTIONS. PERFORMANCE OF OTHER CLASSES OF DELCAP FUND WILL VARY DUE
TO DIFFERING CHARGES AND EXPENSES. PAST PERFORMANCE IS NOT A GUARANTEE OF
FUTURE RESULTS.
<TABLE>
<CAPTION>
DELCAP FUND PERFORMANCE
Average Annual Return Through March 31, 1997
- -------------------------------------------------------------------------------------------------------
Lifetime Ten Years Five Years One Year
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (Est. 3/27/86)
Excluding Sales Charge +20.05% +11.04% +8.81% -2.22%
Including Sales Charge +19.52% +10.50% +7.75% -6.87%
- -------------------------------------------------------------------------------------------------------
Class B (Est. 9/6/94)
Excluding Sales Charge +10.93% - - -2.88%
Including Sales Charge +10.00% - - -6.30%
- -------------------------------------------------------------------------------------------------------
Class C (Est. 11/29/95)
Excluding Sales Charge +4.50% - - -2.86%
Including Sales Charge +4.50% - - -3.71%
</TABLE>
ALL PERFORMANCE INCLUDES REINVESTMENT OF DISTRIBUTIONS AND APPLICABLE SALES
CHARGES AS DESCRIBED BELOW. RETURN AND SHARE VALUE WILL FLUCTUATE SO THAT SHARES
WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. PAST PERFORMANCE
IS NOT A GUARANTEE OF FUTURE RESULTS. PERFORMANCE FOR CLASS B AND C SHARES
"EXCLUDING SALES CHARGE" ASSUMES THE INVESTMENT WAS NOT REDEEMED.
CLASS A SHARES CARRY A 4.75% MAXIMUM FRONT-END SALES CHARGE AND A 12B-1 FEE.
CLASS B SHARES DO NOT CARRY A FRONT-END SALES CHARGE, BUT ARE SUBJECT TO A 1%
ANNUAL DISTRIBUTION AND SERVICE FEE. THEY ARE ALSO SUBJECT TO A DEFERRED SALES
CHARGE IF REDEEMED BEFORE THE END OF THE SIXTH YEAR. CLASS C SHARES HAVE A 1%
ANNUAL DISTRIBUTION AND SERVICE FEE. IF SHARES ARE REDEEMED WITHIN 12 MONTHS, A
1% CONTINGENT DEFERRED SALES CHARGE APPLIES.
THE AVERAGE ANNUAL TOTAL RETURNS FOR THE LIFETIME, TEN-YEAR, FIVE-YEAR, ONE-YEAR
PERIODS AND AGGREGATE RETURN FOR THE SIX MONTH-PERIOD ENDED MARCH 31, 1997, FOR
DELCAP FUND'S INSTITUTIONAL CLASS, WHICH IS AVAILABLE WITHOUT SALES OR
ASSET-BASED DISTRIBUTION CHARGES ONLY TO CERTAIN ELIGIBLE INSTITUTIONAL
ACCOUNTS, WERE +20.19%, +11.19%, +9.09%, -1.92% AND -11.43%. THE INSTITUTIONAL
CLASS WAS INITIALLY MADE AVAILABLE NOVEMBER 9, 1992; PERFORMANCE PRIOR TO THAT
DATE WAS ADJUSTED TO ELIMINATE THE EFFECT OF THE SALES CHARGE, BUT NOT CLASS A'S
ASSET-BASED DISTRIBUTION CHARGE.
1997 SEMI-ANNUAL REPORT
8
<PAGE>
Financial Statements
+DELAWARE GROUP EQUITY FUNDS IV, INC.-
++DELCAP FUND
STATEMENT OF NET ASSETS
MARCH 31, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
----------------------------
COMMON STOCK - 94.41%
BANKING, FINANCE & INSURANCE - 8.65%
AMBAC........................................ 76,300 $ 4,921,350
Aames Financial.............................. 505,500 10,236,375
Blanch(E.W.)Holdings......................... 427,500 9,565,313
CMAC Investment.............................. 430,200 14,357,925
*FIRSTPLUS Financial Group.................... 294,300 8,847,394
MBIA ........................................ 169,700 16,269,988
Money Store (The)............................ 522,300 10,935,656
----------
75,134,001
----------
CABLE, MEDIA & PUBLISHING - 1.64%
Cognizant.................................... 238,900 6,957,963
Reynolds & Reynolds Class A ................. 307,400 7,339,175
----------
14,297,138
----------
COMPUTERS & TECHNOLOGY - 22.16%
Adobe Systems................................ 512,200 20,520,013
*Affiliated Computer Services A .............. 685,800 15,687,675
*BA Merchant Services A....................... 198,200 2,725,250
*BISYS Group.................................. 709,400 22,257,425
*BMC Software................................. 467,100 21,515,794
*Cascade Communications....................... 359,200 9,496,350
*Compuware.................................... 213,400 13,470,875
*DST Systems.................................. 103,900 2,961,150
Dallas Semiconductor......................... 210,200 5,570,300
First Data................................... 523,122 17,720,758
HBO & Co. ................................... 297,474 14,148,607
*HNC Software ................................ 192,000 5,004,000
*Parametric Technology ....................... 800 36,050
*PeopleSoft .................................. 70,400 2,820,400
*Pure Atria .................................. 660,500 11,104,656
*Rational Software............................ 467,000 9,602,688
*Sterling Commerce............................ 294,512 8,540,848
*StorMedia Class A ........................... 814,900 9,320,419
-----------
192,503,258
----------
ELECTRONICS & ELECTRICAL - 4.92%
*Gartner Group Class A........................ 302,800 6,510,200
*LSI Logic.................................... 561,900 19,526,025
*Micron Technology............................ 77,900 3,154,950
*Xilinx....................................... 277,800 13,525,388
----------
42,716,563
----------
- ---------------------
+Formerly known as Delaware Group DelCap Fund, Inc.
++Formerly known as Concept I Series.
Top 10 holdings, representing 23.8% of net assets, are in bold face.
<PAGE>
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
----------------------------
COMMON STOCK (CONTINUED)
ENERGY - 5.79%
*CalEnergy................................ 392,400 $ 13,341,600
*Global Industries Ltd.................... 427,000 9,127,125
*Newpark Resources........................ 223,000 9,756,250
*Noble Drilling........................... 580,200 10,008,450
*Reading & Bates.......................... 356,100 8,056,763
------------
50,290,188
------------
ENVIROMENTAL SERVICES - 4.55%
*Philip Environmental..................... 1,005,200 15,203,650
*USA Waste Services....................... 338,970 12,033,435
*United Waste Systems..................... 329,700 12,301,931
------------
39,539,016
------------
FOOD, BEVERAGE & TOBACCO - 2.32%
Foodmaker................................ 938,350 9,500,794
General Cigar Holdings................... 285,000 6,341,250
Swisher International Group A............ 295,200 4,317,300
------------
20,159,344
------------
HEALTHCARE & PHARMACEUTICALS - 16.18%
*Centocor................................. 251,700 7,692,581
*Dura Pharmaceuticals..................... 426,900 15,234,994
*Health Care and Retirement............... 238,400 6,854,000
*Health Management Associates Class A..... 767,595 18,230,381
*HEALTHSOUTH.............................. 492,600 9,420,975
*Incyte Pharmaceuticals................... 46,000 2,363,250
*Interim Services......................... 250,900 9,753,738
*Interneuron Pharmaceutical............... 200,900 3,503,194
*MedPartners.............................. 809,500 17,201,875
*Orthodontic Centers of America........... 766,200 10,487,363
*Phycor................................... 578,500 15,727,969
*Quorum Health Group...................... 314,200 9,720,563
*Teva Pharmaceutical ADR.................. 59,900 3,316,963
*Vencor................................... 292,900 11,093,588
------------
140,601,434
------------
LEISURE, LODGING & ENTERTAINMENT - 7.39%
Callaway Golf............................ 256,700 7,348,038
HFS...................................... 449,900 26,487,863
*Interstate Hotels........................ 211,900 5,986,175
La Quinta Inns........................... 156,300 3,204,150
*Lone Star Steakhouse/Saloon.............. 280,700 6,403,469
*Mirage Resorts........................... 466,300 9,908,875
*Prime Hospitality ....................... 308,900 4,826,563
------------
64,165,133
------------
1997 SEMI-ANNUAL REPORT
9
<PAGE>
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
----------------------------
COMMON STOCK (CONTINUED)
RETAIL - 9.85%
*Bed Bath & Beyond........................ 159,200 $ 3,850,650
*Circuit City Stores-CarMax Group......... 78,800 1,182,000
*CompUSA.................................. 268,300 4,225,725
*General Nutrition........................ 862,200 17,567,325
*Guitar Center............................ 194,300 3,133,088
*Kohl's................................... 305,500 12,945,563
Pep Boys-Manny, Moe & Jack............... 243,300 7,299,000
*Saks Holdings............................ 236,200 6,790,750
St. John Knits........................... 158,800 6,868,100
*Staples.................................. 783,537 15,817,653
*Value City Department Stores............. 284,000 2,343,000
*Viking Office Products................... 182,900 3,566,550
------------
85,589,404
------------
TELECOMMUNICATIONS - 0.41%
*CIENA.................................... 125,400 3,566,063
------------
3,566,063
------------
TEXTILES, APPAREL & FURNITURE - 3.17%
*Nine West Group.......................... 197,600 8,842,600
*Tommy Hilfiger........................... 357,400 18,674,150
------------
27,516,750
------------
TRANSPORTATION & SHIPPING - 1.28%
Illinois Central......................... 353,550 11,136,825
------------
11,136,825
------------
UTILITIES - 2.45%
AES...................................... 380,897 21,330,232
------------
21,330,232
------------
MISCELLANEOUS - 3.65%
*CUC International........................ 925,505 20,823,863
*Personnel Group of America............... 243,900 4,786,527
*Prime Service............................ 318,800 6,057,200
------------
31,667,590
------------
Total Common Stock (cost $672,774,409).... 820,212,939
------------
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENT - 7.56%
With Chase Manhattan 5.90% 4/01/97
(dated 3/31/97, collateralized by
$23,567,000 U.S. Treasury Notes
5.125% due 2/28/98, market value
$23,473,366)............................. $22,988,000 $22,988,000
With Paine Webber Securities 6.25% 04/01/97
(dated 3/31/97, collateralized by
$17,501,000 U.S. Treasury Notes
6.00% due 08/31/97, market value
$17,595,298 and
$3,980,000 U.S. Treasury Notes
7.75% due 11/30/99, market value
$4,193,227).............................. 21,352,000 21,352,000
<PAGE>
STATEMENT OF NET ASSETS (CONTINUED)
- -------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------------
REPURCHASE AGREEMENTS (CONTINUED)
With Prudential Securities 6.25% 04/01/97
(dated 3/31/97 $22,382,000 U.S.
Treasury Bills due 09/25/97,
market value $21,794,703)................ $21,352,000 $ 21,352,000
Total Repurchase Agreement
(cost $65,692,000)....................... 65,692,000
------------
TOTAL MARKET VALUE OF SECURITIES OWNED - 101.97%
(cost $738,466,409)...................... $885,904,939
------------
LIABILITIES NET OF RECEIVABLES
AND OTHER ASSETS - (1.97%)............... (17,140,846)
------------
NET ASSETS APPLICABLE TO 36,205,756 SHARES
($.01 Par Value) OUTSTANDING - 100.00%... $ 868,764,093
============
NET ASSET VALUE - DELCAP FUND A CLASS:
($730,680,822 / 30,509,129 shares)....... $23.95
======
NET ASSET VALUE - DELCAP FUND B CLASS
($16,171,545 / 688,672 shares)........... $23.48
======
NET ASSET VALUE - DELCAP FUND C CLASS
($2,488,834 / 104,932 shares)............ $23.72
======
NET ASSET VALUE - DELCAP FUND INSTITUTIONAL CLASS
($119,422,892 / 4,903,023 shares)........ $24.36
======
- ---------------------
*Non-income producing security for the six months ended March 31, 1997
COMPONENTS OF NET ASSETS AT MARCH 31, 1997:
Common stock $.01 par value, 500,000,000 shares
authorized to the Fund................... $653,168,209
Accumulated undistributed:
Net investment loss...................... (11,246,486)
Net realized gain on investments......... 79,403,840
Net unrealized appreciation of investments 147,438,530
------------
Total net assets......................... $868,764,093
============
See accompanying notes
1997 SEMI-ANNUAL REPORT
10
<PAGE>
Delaware Group Equity Funds IV, Inc.-
DelCap Fund
Statement of Operations
Six Months Ended March 31, 1997
(Unaudited)
INVESTMENT INCOME:
Interest................................... $1,887,874
Dividends.................................. 879,688 $2,767,562
----------
EXPENSES:
Management fees ($3,886,987)
and directors' fees ($12,671)............. 3,899,658
Distribution expenses...................... 1,383,866
Dividend disbursing and transfer agent fees
and expenses.............................. 998,251
Accounting fees and salaries............... 178,731
Reports and statements to shareholders..... 56,700
Taxes (other than income).................. 40,000
Federal and state registration fees........ 39,600
Professional fees.......................... 31,650
Custodian fees............................. 30,000
Other...................................... 110,821 6,769,277
---------- -------------
NET INVESTMENT LOSS........................ (4,001,715)
-------------
NET REALIZED GAIN AND UNREALIZED
LOSS ON INVESTMENTS:
Net realized gain from security transactions 78,292,553
Net unrealized depreciation of investments
during the period......................... (193,253,619)
-------------
NET REALIZED GAIN AND UNREALIZED
LOSS ON INVESTMENTS....................... (114,961,066)
-------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS................ $(118,962,781)
==============
See accompanying notes
<PAGE>
Delaware Group Equity Funds IV, Inc.-
DelCap Fund
Statement of Changes in Net Assets
SIX MONTHS YEAR
ENDED ENDED
3/31/97 9/30/96
UNAUDITED
- ------------------------------------------------------------------------------
OPERATIONS:
Net investment loss...................... $ (4,001,715) $ (7,244,771)
Net realized gain from
security transactions................... 78,292,553 141,476,838
Net unrealized appreciation
(depreciation) during the period........ (193,253,619) 65,285,809
-------------- --------------
Net increase (decrease) in net assets
resulting from operations............... (118,962,781) 199,517,876
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM NET REALIZED GAIN ON
SECURITY TRANSACTIONS:
DelCap Fund A Class..................... (106,872,179) (106,000,980)
DelCap Fund B Class..................... (1,868,016) (422,917)
DelCap Fund C Class..................... (238,607) (4)
DelCap Fund Institutional Class......... (20,595,496) (15,970,617)
-------------- --------------
(129,574,298) (122,394,518)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
DelCap Fund A Class..................... 258,529,602 317,170,421
DelCap Fund B Class..................... 6,868,235 10,431,359
DelCap Fund C Class..................... 1,426,677 1,855,616
DelCap Fund Institutional Class......... 27,157,969 76,237,748
Net asset value of shares issued upon
reinvestment of dividends from net
realized gain on security transactions:
DelCap Fund A Class..................... 95,973,672 94,027,731
DelCap Fund B Class..................... 1,827,875 418,429
DelCap Fund C Class..................... 228,718 4
DelCap Fund Institutional Class......... 20,595,496 15,971,018
-------------- --------------
412,608,244 516,112,326
-------------- --------------
Cost of shares repurchased:
DelCap Fund A Class..................... (340,277,347) (439,149,860)
DelCap Fund B Class..................... (1,856,568) (1,186,427)
DelCap Fund C Class..................... (559,325) (29,965)
DelCap Fund Institutional Class......... (69,245,526) (56,897,203)
-------------- --------------
(411,938,766) (497,263,455)
-------------- --------------
Increase in net assets derived
from capital share transactions......... 669,478 18,848,871
-------------- --------------
NET INCREASE (DECREASE)
IN NET ASSETS........................... (247,867,601) 95,972,229
-------------- --------------
NET ASSETS:
Beginning of period...................... 1,116,631,694 1,020,659,465
-------------- --------------
End of period............................ $ 868,764,093 $1,116,631,694
============== ==============
See accompanying notes
1997 SEMI-ANNUAL REPORT
11
<PAGE>
Delaware Group Equity Funds IV, Inc.-
DelCap Fund
Financial Highlights
March 31, 1997
- -------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
DelCap Fund A Class
-----------------------------------------------------------------------
Six Months
Ended Year Ended September 30,
3/31/97(1) 1996 1995 1994 1993 1992
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........ $30.740 $28.870 $25.570 $26.080 $20.730 $21.470
Income (loss) from investment operations:
Net investment (loss)...................... (0.110)(2) (0.208)(2) (0.166)(2) (0.218) (0.125) (0.059)
Net realized and unrealized gain (loss) from
security transactions..................... (3.090) 5.618 5.296 0.528 5.475 (0.651)
------- ------- ------- ------- ------- -------
Total from investment operations........... (3.200) 5.410 5.130 0.310 5.350 (0.710)
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income none none none none none (0.030)
Distributions from net realized gain on
security transactions..................... (3.590) (3.540) (1.830) (0.820) none none
------- ------- ------- ------- ------- -------
Total distributions........................ (3.590) (3.540) (1.830) (0.820) none (0.030)
------- ------- ------- ------- ------- -------
Net asset value, end of period.............. $23.950 $30.740 $28.870 $25.570 $26.080 $20.730
======= ======= ======= ======= ======= =======
Total return(3)............................. (11.57%) 21.09% 22.04% 1.17% 25.81% (3.32%)
Ratios/supplemental data:
Net assets, end of period (000 omitted).... $730,681 $923,248 $888,571 $890,787 $1,057,358 $993,125
Ratio of expenses to average net assets.... 1.34% 1.35% 1.37% 1.35% 1.30% 1.39%
Ratio of net investment loss to average
net assets................................ (0.80%) (0.74%) (0.67%) (0.68%) (0.43%) (0.26%)
Portfolio turnover......................... 107% 72% 51% 34% 51% 24%
Average commission rate paid............... $0.0600 $0.0600 N/A N/A N/A N/A
- -------------------
(1) Ratios have been annualized and total retrun has not been annualized.
(2) The average shares outstanding method has been applied for per share
information.
(3) Does not include maximum sales charge that is or was in effect nor the 1%
limited contingent deferred sales charge that would apply in the event of
certain redemptions within 12 months of purchase.
</TABLE>
1997 SEMI-ANNUAL REPORT
12
<PAGE>
Financial Highlights (Continued)
- -------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
DelCap Fund B Class DelCap Fund C Class
----------------------------------------------- -------------------------
Six Months Year Year 9/6/94(2) Six Months 11/29/95(2)
Ended Ended Ended to Ended to
3/31/97(1) 9/30/96 9/30/95 9/30/94 3/31/97(1) 9/30/96
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period....... $30.300 $28.680 $25.560 $25.180 $30.570 $28.880
Income (loss) from investment operations:
Net investment loss....................... (0.201)(3) (0.400)(3) (0.340)(3) (0.008) (0.202)(3) (0.359)(3)
Net realized and unrealized gain from
security transactions.................... (3.029) 5.560 5.290 0.388 (3.058) 5.589
------- ------- ------- ------- ------- -------
Total from investment operations.......... (3.230) 5.160 4.950 0.380 (3.260) 5.230
Less distributions:
Dividends from net investment income..... none none none none none none
Distributions from net realized gain on
security transactions .................. (3.590) (3.540) (1.830) none (3.590) (3.540)
------- ------- ------- ------- ------- -------
Total distributions...................... (3.590) (3.540) (1.830) none (3.590) (3.540)
------- ------- ------- ------- ------- -------
Net asset value, end of period............ $23.480 $30.300 $28.680 $25.560 $23.720 $30.570
======= ======= ======= ======= ======= =======
Total return(4)........................... (11.89%) 20.27% 21.34% 1.51% (11.88%) 20.38%
Ratios/supplemental data:
Net assets, end of period (000 omitted).. $16,172 $13,239 $2,710 $287 $2,489 $1,947
Ratio of expenses to average net assets.. 2.04% 2.05% 2.07% 2.05% 2.04% 2.05%
Ratio of net investment loss to average
net assets.............................. (1.50%) (1.44%) (1.37%) (1.38%) (1.50%) (1.44%)
Portfolio turnover....................... 107% 72% 51% 34% 107% 72%
Average commission rate paid............. $0.0600 $0.0600 N/A N/A $0.0600 $0.0600
- -------------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of initial public offering; ratios have been annualized and total
return has not been annualized.
(3) The average shares outstanding method has been applied for per share
information.
(4) Does not include contingent deferred sales charge which varies from 1%-4%
for DelCap Fund B Class and 1% for DelCap Fund C Class depending upon the
holding period.
</TABLE>
1997 SEMI-ANNUAL REPORT
13
<PAGE>
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
DelCap Institutional Class
----------------------------------------------------------
Six Months Year Year Year 11/9/92(2)
Ended Ended Ended Ended Ended
3/31/97(1) 9/30/96 9/30/95 9/30/94 9/30/93
(Unaudited)(3)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $31.160 $29.130 $25.710 $26.140 $22.000
Income (loss) from investment operations:
Net investment loss............................... (0.069)(3) (0.123)(3) (0.091)(3) (0.080) (0.027)
Net realized and unrealized gain from
security transactions............................ (3.141) 5.693 5.341 0.470 4.167
------- ------- ------- ------- -------
Total from investment operations.................. (3.210) 5.570 5.250 0.390 4.410
Less distributions:
Dividends from net investment income.............. none none none none none
Distributions from net realized gain on
security transactions............................ (3.590) (3.540) (1.830) (0.820) none
------- ------- ------- ------- -------
Total distributions............................... (3.590) (3.540) (1.830) (0.820) none
------- ------- ------- ------- -------
Net asset value, end of period..................... $24.360 $31.160 $29.130 $25.710 $26.140
======= ======= ======= ======= =======
Total return....................................... (11.43%) 21.44% 22.45% 1.48% 21.31%
Ratios/supplemental data:
Net assets, end of period (000 omitted)........... $119,423 $178,197 $129,378 $110,126 $85,588
Ratio of expenses to average net assets........... 1.04% 1.05% 1.07% 1.05% 1.02%
Ratio of net investment loss to average net assets (0.50%) (0.44%) (0.37%) (0.38%) (0.15%)
Portfolio turnover................................ 107% 72% 51% 34% 51%
Average commission rate paid...................... $0.0600 $0.0600 N/A N/A N/A
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of initial public offering; ratios and total return have been
annualized.
(3) The average shares outstanding method has been applied for per share
information.
</TABLE>
1997 SEMI-ANNUAL REPORT
14
<PAGE>
DELAWARE GROUP EQUITY FUNDS IV, INC. - DELCAP FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
Delaware Group Equity Funds IV, Inc.- Delcap Fund, formerly known as Delaware
Group Delcap Fund, Inc. - Concept I Series (the "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 investment objective of the Fund is to seek long-term capital growth by
investing in common stocks and securities convertible into common stocks of
companies that have a demonstrated history of growth and have the potential
to support continued growth.
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. 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 aggregated daily
balance of the pooled cash account is invested in repurchase agreements
secured by obligations of the U.S. government. The respective collateral is
held by the Fund's custodian bank until the maturity of the respective
repurchase agreements. Each repurchase agreement is at least 100%
collateralized. However, in the event of default or bankruptcy by the
counterparty to the agreement, realization of the collateral may be subject
to legal proceedings.
Class Accounting - Investment income, common expenses, and realized and
unrealized 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 an accrual basis. Original issue discounts are accreted to
interest income over the lives of the respective securities.
2. Investment Management and Other Transactions with Affiliates
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 rate of 0.75% of the net
assets of the Fund less fees paid to the independent directors. At March 31,
1997, the Fund had a liability for Investment Management fees and other
expenses payable to DMC for $29,883.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. (DDLP), the Distributor and an affiliate of DMC, an annual fee of 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 C Class. No distribution expenses are paid by the
Institutional Class. For the six months ended March 31, 1997, DDLP earned
$106,495 for commissions on sales of DelCap Fund A Class shares.
<PAGE>
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. For the six months
ended March 31, 1997, the Fund has expensed $998,251 for these services. The
Fund also engaged DSC to provide accounting services for the Fund. For the
six months ended March 31, 1997, the Fund has expensed $152,044 for these
services. Previously fund personnel provided this service and the related
costs were recorded in salaries and other expense categories in the Statement
of Operations. At March 31, 1997, the Fund had a liability for dividend
disbursing, transfer agent, and accounting service fees and other expenses
payable to DSC and DIRSI for $68,270.
Certain officers of DMC are officers, directors, and/or employees of the
Fund. These officers, directors and employees are paid no compensation by
the Fund.
3. Investments
During the six months ended March 31, 1997, the Fund made purchases of
$510,847,935 and sales of $605,684,697 of investment securities other than
U.S. government securities and temporary cash investments.
At March 31, 1997 unrealized appreciation for federal income tax purposes
aggregated $137,447,437 of which $194,859,635 related to unrealized
appreciation of securities and $57,412,198 related to unrealized depreciation
of securities. At March 31, 1997, the aggregate cost of securities for
federal tax purposes was $748,457,502.
4. Capital Stock
Transactions in capital stock shares were as follows:
SIX MONTHS YEAR
ENDED ENDED
3/31/97 9/30/96
----------- ----------
Shares sold:
Delcap Fund A Class................. 9,632,607 11,382,634
Delcap Fund B Class................. 252,724 368,919
Delcap Fund C Class................. 52,626 64,725
Delcap Fund Institutional Class..... 983,100 2,690,557
Shares issued upon reinvestment
of dividends from net realized gain
from security transactions:
Delcap Fund A Class................. 3,610,756 3,634,623
Delcap Fund B Class................. 69,979 16,313
Delcap Fund C Class................. 8,670 -
Delcap Fund Institutional Class..... 762,796 610,514
---------- ----------
15,373,258 18,768,285
---------- ----------
Shares repurchased:
Delcap Fund A Class................. (12,771,241) (15,762,489)
Delcap Fund B Class................. (70,927) (42,795)
Delcap Fund C Class................. (20,045) (1,044)
Delcap Fund Institutional Class..... (2,562,515) (2,022,635)
---------- ----------
(15,424,728) (17,828,963)
---------- ----------
Net increase (decrease)............. (51,470) 939,322
=========== ==========
5. Lines of Credit
The Fund has a committed line of credit for $15 million. No amount was
outstanding at March 31, 1997 or at any time during the last fiscal period.
1997 SEMI-ANNUAL REPORT
15
<PAGE>
THIS SEMI-ANNUAL REPORT IS FOR THE INFORMATION OF DELCAP FUND SHAREHOLDERS,
BUT IT MAY BE USED WITH PROSPECTIVE INVESTORS WHEN PRECEDED OR ACCOMPANIED BY
A CURRENT PROSPECTUS FOR DELCAP FUND, WHICH SETS FORTH DETAILS ABOUT CHARGES,
EXPENSES, INVESTMENT OBJECTIVES AND OPERATING POLICIES OF THE FUND. YOU
SHOULD READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST. SUMMARY INVESTMENT
RESULTS ARE DOCUMENTED IN THE FUND'S CURRENT STATEMENT OF ADDITIONAL
INFORMATION. THE FIGURES IN THIS REPORT REPRESENT PAST RESULTS WHICH ARE NOT
A GUARANTEE OF FUTURE RESULTS. THE RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
INVESTMENT MANAGER
Delaware Management Company, Inc.
Philadelphia
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING AND
TRANSFER AGENT
Delaware Service Company, Inc.
Philadelphia
1818 Market Street
Philadelphia, PA 19103-3682
FOR SHAREHOLDERS
1.800.523.1918
FOR SECURITIES DEALERS
1.800.362.7500
FOR FINANCIAL INSTITUTIONS
REPRESENTATIVES
1.800.659.2265
[PICTURE OF GLOBE]
Be sure to consult your financial adviser when making investments. Mutual
funds can be a valuable part of your financial plan: however, shares of the
Fund are not FDIC or NCUSIF insured, are not guaranteed by any bank or any
credit union, and involve investment risk, including the possible loss of
principal. Shares of the Fund are not bank or credit union deposits.
DELAWARE
GROUP
- --------
Philadelphia o London
Copy Rights Delaware Distributors, L.P.
Printed in the USA on recycled paper
SA-016 [3/97] PP5/97
(X-179)
