<PAGE>
PHOTO OF
COLONIAL OBJECTS
June 30, 1995
Dear Shareholder:
During the six months ended May 31, 1995, the stock market favored large
market capitalization companies, which dominate the Standard & Poor's 500
Stock Index, over companies with small market capitalizations, such as those
comprising the Russell 2000 Index. The disparate performance of the two
groups is shown in the chart below.
In our view, two primary factors contributed to this disparity.
First, the recent decline of the U.S. dollar relative to foreign currencies
lowered the cost of exported American products, which translated into
earnings profits for U.S. companies. Because large companies generally have
greater exposure to foreign economies than their small-cap counterparts,
large-cap stocks tend to benefit more from a depreciating dollar. Such was
the case during your Fund's fiscal first half.
- -------------------------------------------------------------------------------
TOTAL RETURN
SIX MONTHS ENDED
MAY 31, 1995
Value Fund A Class +6.74%
Standard & Poor's 500 Stock Index +19.20%
Russell 2000 Index +11.68%
Lipper Capital Appreciation Fund Average +11.96%
Value Fund and Lipper Capital Appreciation Fund Averages (which includes 157
funds) performance is based on net asset value without including the impact
of sales charge. Performance information for all classes of the Fund can be
found on page 4.
- -------------------------------------------------------------------------------
Large companies provided earnings growth more typical of smaller
companies. This, combined with a declining interest rate environment which
augurs well for company expansion, inspired institutional investors to direct
more money to large-cap growth stocks, on average, than to any other sector
of the equity market, contributing to the underperformance of smaller stocks.
Value Fund, in seeking capital growth, invests primarily in SMALL-
and MID-CAP stocks -- with a focus on those with below-average valuations.
Because of this focus on value, the Fund's holdings of short-term cash
reserves captured only part of the market's latest strong rally. The table
above also shows the six-month total return (capital change plus income) for
Value Fund A Class. The Russell 2000 Index, an unmanaged index comprised of
stocks similar in market capitalization to those in Value Fund, is the Fund's
primary benchmark. We also show the performance of the Lipper Capital
Appreciation Average, a broad-based composite of 157 growth funds with an
investment objective of long-term growth.
This report contains an update from the senior portfolio manager of
the Fund, who explains the Fund's positioning over the past six months and
its impact on performance. We are optimistic about the outlook for
small-cap stocks and Value Fund given the economic and political climate we
see ahead. As always, we thank you for your continued confidence.
/s/ WAYNE A STORK /s/ BRIAN F. WRUBLE
- ---------------------------- ------------------------------------
Wayne A. Stork Brian F. Wruble
Chairman, Board of Directors President and Chief Executive Officer
Delaware Group Value Fund Delaware Group Value Fund
<PAGE>
PHOTO OF
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Portfolio Manager's Review
Despite the fact that the small stock arena has been a difficult place to invest
over the last year and a half, we believe that a more positive undercurrent is
developing. Over the past six months, we increasingly found that U.S. small
stocks were fairly inexpensive relative to their larger size brethren.
Accordingly, as we have found favorable buying opportunities, we have reduced
the Fund's cash position, which has impeded our performance, from approximately
35% to 24% of net assets. We expect to continue reducing our cash position
throughout the second half of fiscal 1995.
In addition, because we were not invested heavily in technology stocks,
the best performing industry group of the past six months, the Fund's
performance was dramatically limited. Technology stocks did not fit our target
profile during this period primarily because of high valuations (i.e., high
price-to-earnings, price-to-cash and price-to-book ratios). In other words, they
were too expensive for us.
HOUSING STOCKS OFFER ATTRACTIVE VALUATIONS
During the fourth calendar quarter of 1994, we took advantage of the
sharp rise in interest rates by investing more significantly in housing and
housing-related (e.g., buildings, housing and materials) issues. These
stocks, which tend to be credit sensitive, were underpriced on a historical
basis because of higher interest rates. National Gypsum, a manufacturer of
building products, became the Fund's largest equity holding.
In November 1994, National Gypsum was the recipient of a takeover bid
from Delcor Incorporated, a company that now employs National Gypsum's former
chairman. National Gypsum rejected the offer. Following a bidding war,
National Gypsum accepted a counter offer from Delcor in May 1995 that was 24%
above the original offer. This acquisition and its resulting impact on
National Gypsum's stock price -- up 47% for the six months ended May 31 --
benefited the Fund.
While, on balance, our housing stocks did not provide such
dramatically positive results during the first half, we remain optimistic
about our holdings in this industry with lower mortgage rates now apparent.
ENERGY STOCKS REPRESENT OPPORTUNITY
We continued to add to the Fund's holdings in energy companies over
the past six months, focusing on the exploration and production, natural gas
distribution and energy services industries. We have maintained our interest
within this sector because we believe it provides the Fund defensive as well
as offensive positions given energy supply and demand imbalances in the U.S.
Offensively, the Fund stands to benefit from a situation when the
supply of oil and gas is depreciating and demand is heading higher because
this generally causes energy prices to rise. On the other hand, when the
market declines and prices of energy stocks have declined even more, relative
to other industry sectors, as is currently the case, these stocks perform
well defensively because they are already cost efficient.
<PAGE>
PHOTO OF
COLONIAL OBJECTS
OUR OUTLOOK FOR SMALL-CAP VALUE STOCKS
As we noted in the opening letter, the fall of the U.S. dollar had a
more pronounced impact on the performance of large-cap stocks than small-cap
stocks over the past several years. Historically, such an effect is not
uncommon during a period of dollar weakness. The chart below shows the
valuation levels of the trade-weighted U.S. dollar since 1967 and the
corresponding relative performance of small-cap stocks. Small stocks have
tended to outperform (when the solid black line is rising) during a period of
dollar strength, and underperform (when the solid black line is falling)
during periods when the dollar is declining.
- ------------------------------------------------------------------------------
SMALL-CAP STOCK PERFORMANCE VERSUS THE TRADE-WEIGHTED U.S. DOLLAR
- ------------------------------------------------------------------------------
Performance
of Small Stocks
Relative to Trade-Weighted
Large Stocks U.S. Dollar
Jan-67 1.09 1
Jun-67 1.22 1
Dec-67 1.35 1.02
Jun-68 1.53 1.02
Dec-68 1.7 1.02
Jun-69 1.46 1.02
Dec-69 1.36 1.02
Jun-70 1.15 1.01
Dec-70 1.2 1.01
Jun-71 1.29 0.99
Dec-71 1.24 0.94
Jun-72 1.22 0.9
Dec-72 1.08 0.92
Jun-73 0.84 0.8
Dec-73 0.84 0.85
Jun-74 0.91 0.83
Dec-74 0.87 0.82
Jun-75 1.09 0.79
Dec-75 1.06 0.86
Jun-76 1.23 0.89
Dec-76 1.31 0.88
Jun-77 1.52 0.87
Dec-77 1.66 0.82
Jun-78 1.97 0.79
Dec-78 1.84 0.74
Jun-79 2.13 0.75
Dec-79 2.25 0.72
Jun-80 2.14 0.71
Dec-80 2.26 0.76 _
Jun-81 2.69 0.89 | Small Stocks
Dec-81 2.56 0.88 | outperform,
Jun-82 2.55 0.96 | Dollar Strong
Dec-82 2.78 0.99 |
Jun-83 3.21 1.04 |
Dec-83 2.97 1.11 |
Jun-84 2.8 1.12 |
Dec-84 2.6 1.24 |
Jun-85 2.62 1.23 _|
Dec-85 2.6 1.05 _
Jun-86 2.62 0.95 | Small Stocks
Dec-86 2.36 0.89 | underperform,
Jun-87 2.28 0.82 | Dollar Weakens
Dec-87 2.07 0.74 |
Jun-88 2.32 0.77 |
Dec-88 2.19 0.77 |
Jun-89 2.15 0.86 |
Dec-89 1.92 0.79 |
Jun-90 1.87 0.77 |
Dec-90 1.57 0.7 _|
Jun-91 1.79 0.79
Dec-91 1.78 0.71
Jun-92 1.82 0.72
Dec-92 2 0.75
Jun-93 2.05 0.77
Dec-93 2.2 0.8
Jun-94 2.14 0.76
Dec-94 2.14 0.75
Feb-95 2.07 0.73
Source: Prudential Securities Inc.; CRSP;
Department of Commerce: Business Cycle Indicator
- -------------------------------------------------------------------------------
HISTORICALLY, SMALL-CAP STOCKS HAVE OUTPERFORMED LARGE-CAP STOCKS WHEN THE
DOLLAR IS RISING AND UNDERPERFORMED WHEN THE DOLLAR IS FALLING. THE MOST
RECENT CYCLE OF OUTPERFORMANCE FOR SMALL-CAP STOCKS ENDED IN EARLY 1994.
<PAGE>
We believe that the recent cycle of strong performance for large-cap
stocks may be slowing due to an anticipated peak in earnings momentum for
that sector, relative to small-cap stocks. We see this as a growing
opportunity for small-cap stocks, particulary given developments that we
believe should strengthen the dollar and the potential for an increase in the
earnings momentum of small stocks relative to their larger counterparts.
* THE U.S. IS ON THE VERGE OF AN INDUSTRIAL RENAISSANCE. Our country is
increasingly becoming the production locale of choice among industrialized
countries due to lower relative labor costs that result from currency
adjustments, superior technological expertise and lower relative
valuations. We believe this will fuel our nation's trade output,
especially in the technology, capital goods, entertainment, financial and
health care businesses, which should drive the dollar upward -- a positive
for small-cap stocks.
* BUDGET DISCUSSIONS ON CAPITOL HILL. The U.S. Government is considering
streamlining, if not eliminating, various agencies such as the Departments
of Commerce and Energy, the FCC and NASA, to name a few. We believe we are
witnessing a replay of the private sector downsizing of the 1980s and
1990s at the public level. Assuming that downsizing would reduce the
budget deficit, we believe that this would not only be positive for the
dollar, but that interest rates should then decline which would allow for
further expansion of stock multiples.
<PAGE>
PHOTO OF
COLONIAL OBJECTS
Furthermore, with the tax reform proposals in Washington, D.C., it
appears that a movement is underway that could shift current biases from
consumption and/or debt toward savings and investment. We believe this would
also favor small stocks.
Until the dollar strengthens, as we believe it will, large company
stocks may continue to outperform small company stocks. Though far from
ideal, this period of lull creates opportunities for the Fund to invest its
cash balance at lower relative valuations, creating opportunities for
potential gain during any subsequent pickup in economic activity or in the
event that institutional investors turn away from large-cap stocks to invest
in small value companies. We believe that as the valuations of large-cap
stocks rise, investors will seek out cheaper, small companies just as we are
doing now. Such future demand, if that materializes, could have a positive
impact on your Fund's performance.
/s/ E. A. TRUMPBOUR
- ------------------------
Edward Trumpbour
Vice President
Senior Portfolio Manager
- --------------------------------------------------------------------------------
Value Fund Performance through May 31, 1995
CLASS A CLASS B
Average Annual Total Returns(1) Aggregate Total Returns(2)
(Introduced September 6, 1994)
Lifetime +12.57% Lifetime +1.28%
Excluding Sales Charge
5 Years +11.62% - 2.68%
Including Sales Charge
1 Year - 3.81%
RETURN AND SHARE VALUE FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THE ORIGINAL INVESTMENT. PAST PERFORMANCE IS NOT A
GUARANTEE OF FUTURE RESULTS.
(1) CLASS A returns reflect the impact of the 5.75% maximum sales charge and
the 12b-1 fee, and the reinvestment of all distributions.
(2) CLASS B returns "including sales charge" reflect the reinvestment of all
distributions, the impact of the maximum 4% contingent deferred sales charge
and a 1% annual distribution and service fee, for the period from
introduction of Class B on September 6, 1994, through May 31, 1995. Class B
six-month aggregate total returns for the period ended May 31, 1995, were
+6.43% (excluding sales charge) and +2.43% (including sales charge). Returns
"excluding sales charge" assume that the investment was not redeemed.
Performance for this short time period may not be representative of longer term
performance of this Class.
The average annual total returns for Value Fund's Institutional Class, which
is available without sales or asset-based distribution charges only to
certain eligible institutional accounts, were +13.52%, +13.14% and +2.38%,
respectively, for the lifetime, five- and one-year periods ended May 31,
1995. The aggregate total return for the Institutional Class for the six
months ended May 31, 1995 was +6.92%. Institutional Class returns were
+13.69, +13.56 and +7.63 for the 10-, five- and one-year periods ended June
30, 1995. The Institutional Class was initially made available on November 9,
1992. Performance for the Institutional Class for periods prior to this date
are based on Class A performance, adjusted to eliminate the impact of the
sales charge, but not the Class A asset-based distribution charge.
Performance through June 30, 1995
CLASS A CLASS B
Average Annual Total Returns(1) Aggregate Total Returns(2)
Lifetime 5 Years 1 Year Lifetime Lifetime
+12.75% +12.05% +1.16% +3.50% - 0.50%
Excluding Sales Charge Including Sales Charge
<PAGE>
Financial Statements
DELAWARE GROUP VALUE FUND, INC.
STATEMENT OF NET ASSETS
May 31, 1995
(Unaudited)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK - 75.25%
AEROSPACE & DEFENSE - 0.91%
Thiokol .......................................... 53,700 $ 1,684,838
------------
1,684,838
------------
AUTOMOTIVES AND AUTOMOTIVE PARTS - 3.19%
ARCTCO ........................................... 74,975 1,035,592
*Custom Chrome .................................... 88,400 1,768,000
*Durakon Industries ............................... 61,700 1,010,338
Excel Industries ................................. 16,100 221,375
Polaris Industries ............................... 14,600 675,250
Smith (A.O.) ..................................... 44,800 1,052,800
Spartan Motors ................................... 16,500 150,563
------------
5,913,918
------------
BANKING, FINANCE & INSURANCE - 14.01%
Allmerica Property & Casualty .................... 58,600 1,208,625
*Americredit ...................................... 237,700 2,109,588
Banco Wiese ADR .................................. 43,207 361,859
Bankers Life Holdings ............................ 37,800 737,100
+Bayerische Vereinsbank AG ........................ 2,868 833,202
*California Federal Bank Class A .................. 94,500 1,216,688
CB Bankshares .................................... 15,000 450,000
CCP Insurance .................................... 37,300 839,250
+Deutsche Pfandbrief & Hypothekenbank AG .......... 1,700 827,742
Fidelity National Financial ...................... 7,500 97,500
First American (Tennessee) ....................... 29,000 1,005,938
First Security ................................... 75,400 1,936,838
Firstmerit ....................................... 52,500 1,246,875
Fourth Financial ................................. 16,500 532,125
Hibernia Class A ................................. 70,000 586,250
*Home State Holdings .............................. 28,200 282,000
Integra Financial ................................ 10,700 509,588
Mid Ocean LTD .................................... 56,300 1,590,475
Money Store ...................................... 61,900 1,911,163
Morgan Keegan .................................... 32,200 571,550
ONBANCorp ........................................ 39,000 1,045,688
PartnerRe Holdings LTD ........................... 48,300 1,104,863
PMI Group ........................................ 38,500 1,573,688
SouthTrust ....................................... 18,000 387,000
Union Planters ................................... 19,300 511,450
Washington Mutual Savings Bank-Seattle ........... 58,000 1,312,250
West One Bancorp ................................. 34,400 1,156,700
------------
25,945,995
------------
<PAGE>
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK (CONTINUED)
BUILDINGS, HOUSING & MATERIALS - 7.89%
Centex ......................................... 52,300 $ 1,503,625
*Centex Construction Products ................... 55,000 701,250
*Champion Enterprises ........................... 97,400 1,631,450
Continental Homes Holdings ..................... 100,100 1,526,525
*Elcor .......................................... 26,800 519,250
*Griffon ........................................ 161,100 1,369,350
Kaufman & Broad Home ........................... 100,600 1,420,975
*National Gypsum ................................ 75,200 3,910,400
Patrick Industries ............................. 84,800 869,200
Ryland Group ................................... 53,700 852,488
Schult Homes ................................... 27,400 308,250
------------
14,612,763
------------
CHEMICALS - 1.77%
*American Pacific ............................... 32,200 165,025
Ferro .......................................... 37,600 1,034,000
Lubrizol ....................................... 30,100 1,049,738
*Scott's ........................................ 46,700 1,021,563
------------
3,270,326
------------
ENERGY & ENERGY SERVICES - 10.24%
*American Oilfield Divers ....................... 187,900 1,150,888
Apache ......................................... 35,400 1,026,600
Cabot Oil & Gas Class A ........................ 105,300 1,658,475
*Chesapeake Energy .............................. 23,200 629,300
Cross Timbers Oil .............................. 38,300 603,225
Devon Energy ................................... 48,000 1,032,000
*Digicon ........................................ 118,100 590,500
*Global Marine .................................. 322,200 1,731,825
*Hornbeck Offshore Services ..................... 45,100 704,688
*Nabors Industries .............................. 55,000 474,375
*Noble Drilling ................................. 90,375 672,164
Nowsco Well Service ............................ 64,400 692,300
Production Operators ........................... 21,500 655,750
Quaker State ................................... 21,500 292,938
*SEACOR Holdings ................................ 59,100 1,366,688
*Tom Brown ...................................... 101,400 1,470,300
USX-Delhi Group ................................ 107,400 1,329,075
Valero Energy .................................. 74,000 1,572,500
Western Gas Resources .......................... 67,100 1,308,450
------------
18,962,041
------------
FOOD, BEVERAGE & TOBACCO - 0.82%
*Bush Boake Allen ............................... 53,200 1,509,550
------------
1,509,550
------------
<PAGE>
STATEMENT OF NET ASSETS (CONTINUED)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK (CONTINUED)
HEALTHCARE & PHARMACEUTICALS - 1.19%
+Draegerwerk Ag Vorz Akt ........................ 4,000 $ 761,500
*Sybron International ........................... 37,200
------------
2,212,300
------------
INDUSTRIAL MACHINERY - 7.28%
+Bobst AG ....................................... 1,000 1,447,537
Cascade ........................................ 3,000 725,625
*Central Sprinkler .............................. 16,900 382,363
IDEX ........................................... 59,000 2,006,000
*INDRESCO ....................................... 128,900 1,756,263
JLG Industries ................................. 24,000 615,000
Joslyn ......................................... 11,500 294,688
*Lindsay Manufacturing .......................... 13,000 411,125
Manitowoc ...................................... 34,900 920,488
Regal-Beloit ................................... 52,800 811,800
+Schmalbach Lubeca AG ........................... 3,400 673,744
+Sig Schweizerische Industrie ................... 1,000 2,244,111
+*Tampella AB ................................... 175,000 448,376
TriMas ......................................... 32,200 732,550
------------
13,469,670
------------
MEDIA, LEISURE & ENTERTAINMENT - 5.12%
*Baldwin Piano & Organ .......................... 53,700 691,388
*CSS Industries ................................. 36,500 584,000
*Devon Group .................................... 55,800 1,485,675
*Hollywood Park ................................. 68,300 939,125
Huffy .......................................... 46,200 652,575
Reynolds & Reynolds Class A .................... 96,600 2,777,250
*Ryan's Family Steak Houses ..................... 32,200 223,388
*Scholastic ..................................... 19,400 1,067,000
*Valassis Communications ........................ 64,400 1,054,550
------------
9,474,951
------------
METALS & MINING - 3.07%
*AK Steel Holding ............................... 35,400 964,650
*Easco .......................................... 33,600 491,400
*Geneva Steel Class A ........................... 192,100 1,945,013
*Lone Star Technologies ......................... 53,700 426,244
+*Pechiney International SA ..................... 35,000 890,702
*Steel of West Virginia ......................... 85,900 966,375
------------
5,684,384
------------
PAPER & FOREST PRODUCTS - 3.73%
Boise Cascade .................................. 47,000 1,551,000
Chesapeake ..................................... 47,300 1,348,050
Longview Fibre ................................. 67,100 1,073,600
+MO OCH Domsjoe AB-B Free ....................... 15,000 791,818
Willamette Industries .......................... 43,000 2,150,000
------------
6,914,468
------------
<PAGE>
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK (CONTINUED)
REAL ESTATE - 3.52%
Camden Property Trust ........................ 62,100 $ 1,420,538
Commercial Net Lease Realty .................. 50,000 643,750
Factory Stores of America .................... 53,700 1,040,438
Horizon Outlet Centers ....................... 49,400 1,123,850
Kranzco Realty Trust ......................... 23,600 413,000
ROC Communities .............................. 85,900 1,879,063
------------
6,520,639
------------
RETAIL & APPAREL - 2.49%
*Burlington Coat Factory ...................... 31,900 342,925
*Chic by H.I.S ................................ 47,900 514,925
Fingerhut .................................... 47,300 650,375
*Hi-Lo Automotive ............................. 43,000 381,625
*Land's End ................................... 63,400 974,775
*Musicland Stores ............................. 100,900 983,775
*Rocky Shoes & Boots .......................... 35,200 297,000
Spiegel Class A .............................. 32,200 358,225
Venture Stores ............................... 10,000 100,000
------------
4,603,625
------------
TECHNOLOGY - 6.03%
+AGIV AG ...................................... 3,000 959,660
*ALC Communications ........................... 53,700 2,335,950
*Cable Design Technologies .................... 19,600 379,750
*Cherry Class A ............................... 52,100 794,525
*Cherry Class B ............................... 48,500 685,063
*IEC Electronics .............................. 63,000 441,000
*MagneTek ..................................... 75,200 1,137,400
Methode Electronics Class A .................. 93,400 1,844,650
*Moog ......................................... 80,500 976,063
*NumereX ...................................... 43,200 621,000
*Rexel ........................................ 118,100 989,088
------------
11,164,149
------------
TEXTILES & FURNITURE - 1.34%
+Kunert Preferred AG .......................... 1,700 209,342
*Mohawk Industries ............................ 61,400 940,188
*O'Sullivan Industries Holding ................ 26,800 211,050
*Syratech ..................................... 64,400 1,118,950
------------
2,479,530
------------
TRANSPORTATION & RELATED - 2.37%
AirTran ...................................... 82,700 723,625
*Consolidated Freightways ..................... 48,300 1,147,125
Intertrans ................................... 43,800 848,625
*Johnstown America Industries ................. 37,200 423,150
<PAGE>
STATEMENT OF NET ASSETS (CONTINUED)
NUMBER MARKET
OF SHARES VALUE
COMMON STOCK (CONTINUED)
TRANSPORTATION & RELATED (CONTINUED)
*Mesa Airlines ................................ 32,200 $ 209,300
*Offshore Logistics ........................... 33,100 471,675
Varlen ....................................... 21,500 564,375
------------
4,387,875
------------
MISCELLANEOUS - 0.28%
+Boskalis Westminster ......................... 41,052 526,474
------------
526,474
------------
TOTAL COMMON STOCK
(COST $125,431,041) ......................... 139,337,496
------------
PREFERRED STOCK - 0.69%
RETAIL - 0.69%
+Spar Handels AG-Non Vtg Pfd .................. 5,500 1,280,609
------------
TOTAL PREFERRED STOCK (COST $1,079,783) ...... 1,280,609
------------
STOCK RIGHTS - 0.02%
+*Deutsche Pfandbrief & Hypothenkenbank
AG Rights ................................... 1,700 35,492
------------
TOTAL STOCK RIGHTS (COST $28,633) ............ 35,492
------------
PRINCIPAL
AMOUNT
SHORT-TERM INVESTMENTS - 16.05%
Federal Home Loan Bank
Discount Notes 6/15/95 ...................... $ 15,000,000 14,965,700
Federal Home Loan Bank
Discount Notes 8/15/95 ...................... 5,000,000 4,938,750
Federal National Mortgage Association
Discount Notes 6/7/95 ....................... 4,000,000 3,996,093
Federal National Mortgage Association
Discount Notes 12/5/95 ...................... 6,000,000 5,822,350
------------
TOTAL SHORT TERM INVESTMENTS
(COST $29,722,893) .......................... 29,722,893
------------
REPURCHASE AGREEMENTS - 8.08%
With Chase Manhattan Bank 6.125% 6/1/95
(dated 5/31/95, collateralized by
$5,064,000 U.S. Treasury Notes 6.00%
due 6/30/96, market value $5,195,038) ....... 5,057,000 5,057,000
With Deutsche Bank 6.10% 6/1/95
(dated 5/31/95, collateralized by
4,903,000 U.S. Treasury Notes 6.125%
due 7/31/96, market value $5,009,593) ....... 4,911,000 4,911,000
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
REPURCHASE AGREEMENTS (CONTINUED)
With PaineWebber 6.125% 6/1/95
(dated 5/31/95, collateralized by
$1,021,000 U.S. Treasury Notes
3.875% due 8/31/95, market value
$1,025,128 and $3,897,000 U.S.
Treasury Notes 8.50% due 4/15/97,
market value $4,115,978) ..................... $ 4,988,000 $ 4,988,000
------------
TOTAL REPURCHASE AGREEMENTS
(COST $14,956,000) ........................... 14,956,000
------------
TOTAL MARKET VALUE OF SECURITIES
OWNED - 100.09% (COST $171,218,350) .......... 185,332,490
LIABILITIES NET OF RECEIVABLES
AND OTHER ASSETS - (0.09%) ................... (171,024)
------------
NET ASSETS APPLICABLE TO 9,173,690 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% ....... $185,161,466
===========
NET ASSET VALUE - VALUE FUND A CLASS
($174,360,042 / 8,638,905 SHARES) ............ $20.18
======
NET ASSET VALUE - VALUE FUND B CLASS
($3,436,883 / 170,940 SHARES) ................ $20.11
======
NET ASSET VALUE - VALUE FUND
INSTITUTIONAL CLASS ($7,364,541 / 363,845) .... $20.24
======
- ------------------
*Non-income producing security for the six months ended May 31, 1995
+Foreign issued security.
COMPONENTS OF NET ASSETS AT MAY 31, 1995:
Common stock, $.01 par value, 500,000,000 shares
authorized to the Fund with 150,000,000 shares
allocated to Value Fund A Class, 150,000,000 to
Value Fund B Class, and 50,000,000 to Value Fund
Institutional Class .................................... $166,987,757
Accumulated undistributed income:
Net investment income ................................... 1,229,263
Net realized gain on investments
and foreign currencies ................................. 2,829,557
Net unrealized appreciation of investments
and foreign currencies ................................. 14,114,889
------------
Total net assets ........................................ $185,161,466
============
See accompanying notes
<PAGE>
DELAWARE GROUP VALUE FUND, INC.
STATEMENT OF OPERATIONS
Six Months Ended May 31, 1995
(Unaudited)
INVESTMENT INCOME:
Interest ...................................... $ 1,781,287
Dividends (net of foreign taxes) .............. 1,048,841 $2,830,128
------------
EXPENSES:
Management fees ($682,709)
and directors' fees ($7,809).................. 690,518
Distribution expenses ......................... 274,591
Dividend disbursing and transfer
agent fees and expenses ...................... 260,626
Registration fees ............................. 29,103
Reports and statements to shareholders ........ 24,383
Salaries ...................................... 22,389
Custodian fees ................................ 15,370
Professional fees ............................. 13,517
Taxes, other than taxes on income ............. 12,000
Other ......................................... 24,564 1,367,061
--------- ----------
NET INVESTMENT INCOME ......................... 1,463,067
----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS AND
FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investment transactions ...................... 2,811,789
Foreign currency ............................. (12,551)
---------
Net realized gain ............................ 2,799,238
Net unrealized appreciation of investments
and foreign currency during the period ....... 7,788,440
------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS .......................... 10,587,678
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .................... $ 12,050,745
============
See accompanying notes
<PAGE>
DELAWARE GROUP VALUE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR
5/31/95 ENDED
(UNAUDITED) 11/30/94
OPERATIONS:
Net investment income ........................ $ 1,463,067 $ 1,400,728
Net realized gain from security
transactions and foreign currencies ......... 2,799,238 2,439,590
Net unrealized appreciation (depreciation)
of investments during the period ............ 7,788,440 (9,879,689)
------------- -------------
Net increase (decrease) in net assets
resulting from operations ................... 12,050,745 (6,039,371)
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Value Fund A Class .......................... (1,473,990) (268,712)
Value Fund B Class .......................... (13,004) --
Value Fund Institutional Class .............. (74,067) (21,832)
Net realized gain from security transactions:
Value Fund A Class .......................... (2,306,543) (1,305,068)
Value Fund B Class .......................... (21,673) --
Value Fund Institutional Class .............. (86,125) (46,393)
------------- -------------
(3,975,402) (1,642,005)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Value Fund A Class .......................... 40,720,178 126,050,942
Value Fund B Class .......................... 2,276,825 1,551,271
Value Fund Institutional Class .............. 1,379,744 3,152,293
Net asset value of shares issued upon
reinvestment of dividends from net
investment income and net realized
gain from security transactions:
Value Fund A Class .......................... 3,572,098 1,449,342
Value Fund B Class .......................... 32,716 --
Value Fund Institutional Class .............. 160,192 68,225
------------- -------------
48,141,753 132,272,073
------------- -------------
Cost of shares repurchased:
Value Fund A Class .......................... (57,030,925) (92,020,403)
Value Fund B Class .......................... (500,886) (40,173)
Value Fund Institutional Class .............. (862,152) (2,051,443)
------------- -------------
(58,393,963) (94,112,019)
------------- -------------
Increase (decrease) in net assets
derived from capital share transactions ..... (10,252,210) 38,160,054
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS ........ (2,176,867) 30,478,678
------------- -------------
NET ASSETS:
Beginning of period .......................... 187,338,333 156,859,655
------------- -------------
End of period (including undistributed
net investment income of $1,229,263 and
$1,327,257, respectively) ................... $ 185,161,466 $ 187,338,333
============= =============
See accompanying notes
<PAGE>
DELAWARE GROUP VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
May 31, 1995
(Unaudited)
Delaware Group Value Fund, Inc. (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 three classes of
shares.
1. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund for financial
statement preparation:
SECURITY VALUATION -- Securities listed on an exchange are valued at the last
quoted sales price as of 4:00 pm on the valuation date. Securities not traded
are valued at the last quoted bid price. Securities not listed on an exchange
are valued at the mean of the last quoted bid and asked prices. Securities
listed on a foreign exchange are valued at the last quoted sale price before the
time when the Fund is valued. Long-term debt securities are valued by an
independent pricing service when such prices are believed to reflect the fair
value of such securities. Money market instruments having less than 60 days to
maturity are valued at amortized cost.
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.
REPURCHASE AGREEMENTS -- The Fund may invest in a pooled cash account along
with other members of the Delaware Group 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 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.
CLASS ACCOUNTING -- Investment income, common expenses and gain (loss) are
allocated to the various classes of the Fund on the basis of daily net
assets. Distribution expenses relating to a specific class are charged
directly to that class.
FOREIGN CURRENCIES -- The value of all assets and liabilities denominated in
foreign currencies are translated into U.S. dollars at the exchange rate of
such currencies against the U.S. dollar as of 3:00 pm EST.
OTHER -- Expenses common to all Funds within the Delaware Group 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 an 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 rate of 0.75% of the
average daily net assets of the Fund less fees paid to the independent
directors. At May 31, 1995, the Fund had a liability for Investment
Management fees and other expenses payable to DMC for $41,528.
<PAGE>
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. (DDLP), the Distributor and affiliate of DMC, an annual fee of 0.30% of
the average daily net assets of A Class and 1.00% of the average daily net
assets of B Class. No distribution expenses are paid by the Institutional
Class. At May 31, 1995, the Fund had a liability for distributions fees and
other expenses payable to DDLP for $10,705. For the six months ended May 31,
1995, the Fund paid DDLP $47,732 for commissions earned on sales of Value
Fund A Class shares.
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. The Fund has engaged Delaware Service Company, Inc.
(DSC), an affiliate of DMC, to serve as dividend disbursing and transfer agent
for the Fund. For the six months ended May 31, 1995, the Fund expensed $260,626
for these services. At May 31, 1995, the Fund had a liability for such fees and
other expenses payable to DSC for $308.
On April 3, 1995, Delaware Management Holdings, Inc., the indirect parent of
DMC, DDLP and DSC, through a merger transaction (the "Merger") became a
wholly-owned subsidiary of Lincoln National Corporation. Other than the
resulting change in ownership, the Merger will not materially change the
manner in which DMC, DDLP and DSC have heretofore conducted their
relationship with the Fund.
An annual meeting of shareholders was held on March 29, 1995. The matters
submitted to a vote of shareholders were the election of directors, the
approval of a new investment management agreement and the ratification of the
selection of Ernst & Young LLP as independent auditors of the Fund. The new
investment management agreement was submitted for shareholder approval in
connection with the Merger noted above because the Investment Company Act of
1940 requires shareholders to vote on a new investment management agreement
whenever there is a change in control of an investment manager.
The names of each director elected at the meeting along with the final vote
tabulation with respect to each nominee and each matter were as follows:
NUMBER OF VOTES
----------------------------------------
FOR AGAINST/WITHHELD ABSTENTIONS
--------- ---------------- -----------
Election of Directors:
Wayne A. Stork ..................... 5,059,959 206,595 --
Walter P. Babich ................... 5,059,935 206,619 --
Anthony D. Knerr ................... 5,059,959 206,595 --
Ann R. Leven ....................... 5,058,657 207,896 --
W.Thacher Longstreth ............... 5,059,597 206,957 --
Charles E. Peck .................... 5,059,935 206,619 --
Approval of the New Investment
Management Agreement ............... 4,814,264 110,146 342,143
Selection of Ernst & Young LLP as
Independent Auditors ............... 4,972,664 49,722 244,167
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS -- During the six months ended May 31, 1995, the Fund made
purchases of $24,868,809 and sales of $17,241,882 of investment securities
other than U.S. Government securities and temporary cash investments.
At May 31, 1995, unrealized appreciation for federal income tax purposes
aggregated $14,108,538 of which $24,401,129 related to unrealized
appreciation of securities and $10,292,591 related to unrealized depreciation
of securities.
The realized gain for federal income tax purposes was $2,811,789 for the six
months ended May 31, 1995.
4. CAPITAL STOCK
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
5/31/95 11/30/94
<S> <C> <C>
Shares sold:
Value Fund A Class ........................................................................ 2,121,441 6,203,942
Value Fund B Class ........................................................................ 119,517 77,412
Value Fund Institutional Class ............................................................ 70,809 155,126
Shares issued upon reinvestment of dividends from net investment income and
net realized gain from security transactions:
Value Fund A Class ........................................................................ 190,919 70,565
Value Fund B Class ........................................................................ 1,750 --
Value Fund Institutional Class ............................................................ 8,548 3,317
----------- -----------
2,512,984 6,510,362
----------- -----------
Shares repurchased:
Value Fund A Class ........................................................................ (2,962,976) (4,527,081)
Value Fund B Class ........................................................................ (25,706) (2,033)
Value Fund Institutional Class ............................................................ (44,576) (101,287)
----------- -----------
(3,033,258) (4,630,401)
----------- -----------
Net increase (decrease) .................................................................... (520,274) 1,879,961
=========== ===========
</TABLE>
5. SECURITIES LENDING -- The market value of securities on loan to
broker/dealers at May 31, 1995, was $21,645,610 for which the Fund received
cash collateral of $22,468,700.
6. LINES OF CREDIT -- The Fund has a committed line of credit for $2,500,000.
No amount was outstanding at May 31, 1995, or at any time during the last
fiscal period.
<PAGE>
7. FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
VALUE FUND A CLASS
----------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
5/31/95(1) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............... $19.320 $20.070 $17.750 $15.320 $11.050 $14.030
Income from investment operations:
Net investment income (loss) ...................... 0.159 0.142 0.033 0.060 (0.006) 0.149
Net realized and unrealized gain (loss) from
security transactions ............................ 1.111 (0.687) 3.147 3.360 4.681 (2.269)
------- ------- ------- ------- ------- -------
Total from investment operations ................... 1.270 (0.545) 3.180 3.420 4.675 (2.120)
Less distributions:
Dividends from net investment income .............. (0.160) (0.035) (0.040) none (0.155) (0.140)
Distributions from net realized gain on
security transactions ............................ (0.250) (0.170) (0.820) (0.990) (0.250) (0.720)
------- ------- ------- ------- ------- -------
Total distributions ............................... (0.410) (0.205) (0.860) (0.990) (0.405) (0.860)
------- ------- ------- ------- ------- -------
Net asset value, end of period ..................... $20.180 $19.320 $20.070 $17.750 $15.320 $11.050
======= ======= ======= ======= ======= =======
Total return(2) .................................... 6.74% (2.78%) 18.59% 22.99% 43.61% (16.14%)
Ratios/supplemental data:
Net assets, end of period (000 omitted) ........... $174,360 $179,498 $151,384 $38,792 $12,041 $7,746
Ratio of expenses to average net assets ........... 1.49% 1.46% 1.64% 1.93% 2.26% 1.79%
Ratio of net investment income (loss) to net assets 1.58% 0.75% 0.25% 0.39% (0.07%) 1.12%
Portfolio turnover ................................ 28% 14% 32% 68% 99% 69%
</TABLE>
- ----------------------
1 Ratios have been annualized and total return has not been annualized.
2 Does not include maximum sales charge of 5.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
VALUE FUND B CLASS VALUE FUND INSTITUTIONAL CLASS
------------------------ -----------------------------------------------------
SIX MONTHS(1) 9/6/94(2) SIX MONTHS(1) YEAR YEAR 11/9/92(2)
ENDED TO ENDED ENDED ENDED TO
5/31/95 11/30/94 5/31/95 11/30/94 11/30/93 11/30/92
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $19.300 $20.280 $19.400 $20.140 $17.750 $17.090
Income from investment operations:
Net investment income ......................... 0.139 0.011 0.170 0.195 0.092 0.004
Net realized and unrealized gain (loss) from
security transactions ........................ 1.071 (0.991) 1.135 (0.685) 3.158 0.656
------- ------- ------- ------- ------- -------
Total from investment operations ............... 1.210 (0.980) 1.305 (0.490) 3.250 0.660
Less distributions:
Dividends from net investment income .......... (0.150) none (0.215) (0.080) (0.040) none
Distributions from net realized gain on
security transactions ........................ (0.250) none (0.250) (0.170) (0.820) none
------- ------- ------- ------- ------- -------
Total distributions ........................... (0.400) none (0.465) (0.250) (0.860) none
Net asset value, end of period ................. $20.110 $19.300 $20.240 $19.400 $20.140 $17.750
======= ======= ======= ======= ======= =======
Total return(3) ................................ 6.43% (4.83%) 6.92% (2.51%) 19.00% 3.86%
Ratios/supplemental data:
Net assets, end of period (000 omitted) ....... $3,437 $1,455 $7,364 $6,385 $5,476 $1,558
Ratio of expenses to average net assets ....... 2.19% 2.16% 1.19% 1.16% 1.34% 1.63%
Ratio of net investment income to net assets .. 0.88% 0.05% 1.88% 1.05% 0.55% 0.69%
Portfolio turnover ............................ 28% 14% 28% 14% 32% 68%
</TABLE>
- ----------
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 Does not include contingent deferred sales charge which varies from 1% - 4%
depending upon the holding period for Value Fund B Class.
- --------------------------------------------------------------------------------
This semi-annual report is for the information of Value Fund shareholders,
but it may be used with prospective investors when preceded or accompanied by
a current PROSPECTUS, which gives details about charges, expenses, investment
objectives and operating policies of the Fund. Summary investment results are
documented in the current STATEMENT OF ADDITIONAL INFORMATION. If used with
prospective investors after September 30, 1995, this report must also be
accompanied by a Value Fund Performance Update for the most recently
completed calendar quarter. The figures in this report represent past
results, and 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.
<PAGE>
- -------------------------------------------------------------------------------
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, tax-free funds, money market funds,
closed-end equity/income funds and global funds give investors the ability
to create a portfolio that fits their personal financial goals. For more
information, including a prospectus of any Delaware Group fund, contact
your financial adviser or call Delaware Group at 800-523-4640 or
215-988-1333 in Philadelphia. Read the prospectus carefully before
investing.
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, ARE NOT OBLIGATIONS OF 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.
INVESTMENT MANAGER SHAREHOLDER SERVICING,
Delaware Management Company, Inc. DIVIDEND DISBURSING
AND TRANSFER AGENT
INTERNATIONAL AFFILIATE Delaware Service Company, Inc.
Delaware International Advisers Ltd.
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
- -------------------------------------------------------------------------------
SA-021 [5/95] PP7/95 Printed in the U.S.A.
|-------------------|
| BULK RATE |
| U.S. POSTAGE |
| PAID |
| Permit No.145 |
| Conshohocken, PA |
|-------------------|
<PAGE>
DELAWARE GROUP
A TRADITION OF SOUND INVESTING SINCE 1929
PHOTO OF
COLONIAL OBJECTS
|
1995 |
|
SEMI- |
|
ANNUAL |
|
REPORT | DELAWARE
| GROUP
| =============
| Value Fund
|
