<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
File No. 33-11419
File No. 811-4997
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
------
Post-Effective Amendment No. 17 /X/
------
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 17
------
DELAWARE GROUP EQUITY FUNDS V, INC.
(formerly Delaware Group Value Fund, Inc.)
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
1818 Market Street, Philadelphia, Pennsylvania 19103
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (215) 255-2923
--------------
George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Approximate Date of Public Offering: January 29, 1997
----------------
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
-----
X on January 29, 1997 pursuant to paragraph (b)
-----
60 days after filing pursuant to paragraph (a)(1)
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on (date) pursuant to paragraph (a)(1)
-----
75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2) of Rule 485
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Registrant has registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Section 24(f)
of the Investment Company Act of 1940. Registrant's 24f-2 Notice
for its most recent fiscal year will be filed on or about January 29, 1997.
<PAGE>
--- C O N T E N T S ---
This Post-Effective Amendment No. 17 to Registration File No. 33-11419
includes the following:
1. Facing Page
2. Contents Page
3. Cross-Reference Sheet
4. Part A - Prospectuses
5. Part B - Statement of Additional Information
6. Part C - Other Information
7. Signatures
<PAGE>
CROSS-REFERENCE SHEET*
PART A
<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ----------- ------------
Value Fund
A Class/ Institutional
B Class/ Class
C Class
<S> <C> <C> <C>
1 Cover Page.............................................................. Cover Cover
Page Page
2 Synopsis................................................................ Synopsis; Synopsis;
Summary of Summary of
Expenses Expenses
3 Condensed Financial Information......................................... Financial Financial
Highlights Highlights
4 General Description of Registrant ...................................... Investment Investment
Objective and Objective
Policy; Shares; and Policy;
Other Investment Shares;Other
Policies and Risk Investment
Considerations Policies and
Risk
Considerations
5 Management of the Fund ................................................. Management of Management
the Fund of the Fund
6 Capital Stock and Other Securities ..................................... The Delaware Dividends
Difference; and
Dividends and Distributions;
Distributions; Taxes; Taxes;
Shares Shares
7 Purchase of Securities Being Offered.................................... Cover Page; Cover Page;
Classes of Shares; Classes of
How to Buy Shares; Shares; How
Calculation of to Buy
Offering Price Shares;
and Net Asset Calculation
Value Per Share; of Net Asset
Management of Value Per
the Fund Share;
Management
of the Fund
</TABLE>
<PAGE>
CROSS-REFERENCE SHEET*
PART A
(Continued)
<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ----------- ------------
Value Fund
A Class/ Institutional
B Class/ Class
C Class
<S> <C> <C> <C>
8 Redemption or Repurchase................................................ Classes of Shares; Classes of
How to Buy Shares; Shares; How
Redemption and to Buy
Exchange Shares;
Redemption
and
Exchange
9 Legal Proceedings....................................................... None None
</TABLE>
<PAGE>
CROSS-REFERENCE SHEET*
PART A
(Continued)
<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ------------ ------------
Retirement Income Fund
A Class/ Institutional
B Class/ Class
C Class
<S> <C> <C> <C>
1 Cover Page.............................................................. Cover Page Cover Page
2 Synopsis................................................................ Synopsis; Synopsis;
Summary of Summary of
Expenses Expenses
3 Condensed Financial Information......................................... Financial Financial
Highlights Highlights
4 General Description of Registrant ...................................... Investment Investment
Objective and Objective
Policy; Shares; and Policy;
Other Investment Shares;
Policies and Other
Risk Considerations Investment
Policies and
Risk
Considerations
5 Management of the Fund ................................................. Management of Management
the Fund of the Fund
6 Capital Stock and Other Securities ..................................... The Delaware Dividends
Difference; and
Dividends and Distributions;
Distributions; Taxes;
Taxes; Shares Shares
</TABLE>
<PAGE>
CROSS-REFERENCE SHEET*
PART A
(Continued)
<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ------------ ------------
Retirement Income Fund
A Class/ Institutional
B Class/ Class
C Class
<S> <C> <C> <C>
7 Purchase of Securities Being Offered.................................... Cover Page; Cover Page;
How to Buy Shares; How to Buy
Calculation of Shares;
Offering Price Calculation
and Net Asset of Net Asset
Value Per Share; Value Per
Management of Share;
the Fund Management
of the Fund
8 Redemption or Repurchase................................................ How to Buy Shares; How to Buy
Redemption and Shares;
Exchange Redemption
and
Exchange
9 Legal Proceedings....................................................... None None
</TABLE>
* This filing relates to Registrant's Value Fund A Class, Value Fund B
Class, Value Fund C Class and Value Fund Institutional Class of Value
Fund, and Retirement Income Fund A Class, Retirement Income Fund B Class,
Retirement Income Fund C Class and Retirement Income Fund Institutional
Class of Retirement Income Fund. Shares of each Series are described in
separate prospectuses, however, they share a common Statement of
Additional Information and Part C.
<PAGE>
CROSS REFERENCE SHEET
PART B
<TABLE>
<CAPTION>
Location in Statement
Item No. Description of Additional Information
- -------- ----------- -------------------------
<S> <C> <C>
10 Cover Page.............................................................. Cover Page
11 Table of Contents....................................................... Table of Contents
12 General Information and History......................................... General Information
13 Investment Objectives and Policies...................................... Investment Policies and
Portfolio Techniques
14 Management of the Registrant............................................ Officers and Directors
15 Control Persons and Principal Holders of
Securities............................................................ Officers and Directors
16 Investment Advisory and Other Services.................................. Plans Under Rule 12b-1
for the Fund Classes (under
Purchasing Shares);
Investment Management
Agreements; Officers
and Directors; General
Information; Financial
Statements
17 Brokerage Allocation.................................................... Trading Practices and
Brokerage
18 Capital Stock and Other Securities...................................... Capitalization and
Noncumulative Voting
(under General Information)
19 Purchase, Redemption and Pricing of Securities
Being Offered......................................................... Purchasing Shares; Determining
Offering Price and Net Asset
Value; Redemption and
Repurchase; Exchange Privilege
20 Tax Status.............................................................. Accounting and Tax
Issues; Distributions
and Taxes
21 Underwriters ........................................................... Purchasing Shares
22 Calculation of Performance Data......................................... Performance Information
23 Financial Statements.................................................... Financial Statements
</TABLE>
<PAGE>
CROSS REFERENCE SHEET
PART C
Location in
Item No. Description Part C
- -------- ----------- -----------
24 Financial Statements and Exhibits...................... Item 24
25 Persons Controlled by or under Common
Control with Registrant.............................. Item 25
26 Number of Holders of Securities........................ Item 26
27 Indemnification........................................ Item 27
28 Business and Other Connections of Investment Adviser... Item 28
29 Principal Underwriters................................. Item 29
30 Location of Accounts and Records....................... Item 30
31 Management Services.................................... Item 31
32 Undertakings........................................... Item 32
<PAGE>
(DGVF-ABC)
VALUE FUND PROSPECTUS
JANUARY 29, 1997
A CLASS SHARES
B CLASS SHARES
C CLASS SHARES
------------------------------------------------------------------------------
1818 Market Street, Philadelphia, PA 19103
For Prospectus and Performance: Nationwide 800-523-4640
Information on Existing Accounts: (SHAREHOLDERS ONLY)
Nationwide 800-523-1918
Dealer Services: (BROKER/DEALERS ONLY)
Nationwide 800-362-7500
Representatives of Financial Institutions: Nationwide 800-659-2259
This Prospectus describes the shares of the Value Fund series (the
"Fund") of Delaware Group Equity Funds V, Inc. ("Equity Funds V, Inc.")
(formerly Delaware Group Value Fund, Inc.), a professionally-managed mutual fund
of the series type. The Fund intends to achieve its objective of capital
appreciation by investing primarily in common stocks whose market values appear
low relative to their underlying value or future potential.
The Fund offers Value Fund A Class ("Class A Shares"), Value Fund B
Class ("Class B Shares") and Value Fund C Class ("Class C Shares")
(individually, a "Class" and collectively, the "Classes").
This Prospectus relates only to the Classes listed above and sets forth
information that you should read and consider before you invest. Please retain
it for future reference. The Fund's Statement of Additional Information ("Part
B" of Equity Funds V, Inc.'s registration statement), dated January 29, 1997, as
it may be amended from time to time, contains additional information about the
Fund and has been filed with the Securities and Exchange Commission. Part B is
incorporated by reference into this Prospectus and is available, without charge,
by writing to Delaware Distributors, L.P. at the above address or by calling the
above numbers. The Fund's financial statements appear in its Annual Report,
which will accompany any response to requests for Part B.
The Fund also offers Value Fund Institutional Class, which is available
for purchase only by certain investors. A prospectus for Value Fund
Institutional Class can be obtained by writing to Delaware Distributors, L.P. at
the above address or by calling the above number.
-1-
<PAGE>
(DGVF-ABC)
TABLE OF CONTENTS
<TABLE>
<S> <C>
Cover Page Classes of Shares
Synopsis How to Buy Shares
Summary of Expenses Redemption and Exchange
Financial Highlights Dividends and Distributions
Investment Objective and Policy Taxes
Suitability Calculation of Offering Price and
Investment Strategy Net Asset Value Per Share
Risk Factors Management of the Fund
The Delaware Difference Other Investment Policies and Risk Considerations
Plans and Services Appendix A--Investment Illustrations
Retirement Planning Appendix B--Classes Offered
Appendix C--Ratings
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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.
-2-
<PAGE>
(DGVF-ABC)
SYNOPSIS
Investment Objective
The investment objective of the Fund is to seek capital appreciation by
investing primarily in common stocks whose market values appear low relative to
their underlying value or future potential. For further details, see Investment
Objective and Policy and Other Investment Policies and Risk Considerations.
Risk Factors and Special Considerations
The Fund may enter into options for hedging purposes to counterbalance
portfolio volatility. While the Fund does not engage in options for speculative
purposes, there are risks that result from use of these instruments by the Fund,
and the investor should review the descriptions of these risks in this
Prospectus. See Investment Strategy under Investment Objective and Policy and
Other Investment Policies and Risk Considerations.
Investment Manager, Distributor and Service Agent
Delaware Management Company, Inc. (the "Manager") furnishes investment
management services to the Fund, subject to the supervision and direction of
Equity Funds V, Inc.'s Board of Directors. The Manager also provides investment
management services to certain of the other funds in the Delaware Group.
Delaware Distributors, L.P. (the "Distributor") is the national distributor for
the Fund and for all of the other mutual funds in the Delaware Group. Delaware
Service Company, Inc. (the "Transfer Agent") is the shareholder servicing,
dividend disbursing, accounting services and transfer agent for the Fund and for
all of the other mutual funds in the Delaware Group. See Summary of Expenses and
Management of the Fund for further information regarding the Manager and the
fees payable under the Fund's Investment Management Agreement.
Sales Charges
The price of Class A Shares includes a maximum front-end sales charge
of 4.75% of the offering price, which, based on the net asset value per share of
the Class A Shares as of the end of Equity Fund V, Inc.'s most recent fiscal
year, is equivalent to 5.01% of the amount invested. The sales charge is reduced
on certain transactions of at least $100,000 but under $1,000,000. For purchases
of $1,000,000 or more, the front-end sales charge is eliminated. Class A Shares
are subject to annual 12b-1 Plan expenses for the life of the investment.
The price of Class B Shares is equal to the net asset value per share.
Class B Shares are subject to a contingent deferred sales charge ("CDSC") of:
(i) 4% if shares are redeemed within two years of purchase; (ii) 3% if shares
are redeemed during the third or fourth year following purchase; (iii) 2% if
shares are redeemed during the fifth year following purchase; and (iv) 1% if
shares are redeemed during the sixth year following purchase. Class B Shares are
subject to annual 12b-1 Plan expenses for approximately eight years after
purchase. See Automatic Conversion of Class B Shares under Classes of Shares.
The price of Class C Shares is equal to the net asset value per share.
Class C Shares are subject to a CDSC of 1% if shares are redeemed within 12
months of purchase. Class C Shares are subject to annual 12b-1 Plan expenses for
the life of the investment.
See Classes of Shares and Distribution (12b-1) and Service under
Management of the Fund.
-3-
<PAGE>
(DGVF-ABC)
Purchase Amounts
Generally, the minimum initial investment in any Class is $1,000.
Subsequent investments must generally be at least $100.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that is less than $1,000,000. An investor may exceed these maximum purchase
limitations for Class B Shares and Class C Shares by making cumulative purchases
over a period of time. An investor should keep in mind, however, that reduced
front-end sales charges apply to investments of $100,000 or more in Class A
Shares, and that Class A Shares are subject to lower annual 12b-1 Plan expenses
than Class B and Class C Shares and generally are not subject to a CDSC. The
minimum and maximum purchase amounts for retirement plans may vary. See How to
Buy Shares.
Redemption and Exchange
Class A Shares of the Fund may be redeemed or exchanged at the net
asset value calculated after receipt of the redemption or exchange request.
Neither the Fund nor the Distributor assesses a charge for redemptions or
exchanges of Class A Shares, except for certain redemptions of shares purchased
at net asset value, which may be subject to a CDSC if a dealer's commission was
paid in connection with such purchases. See Front-End Sales Charge Alternative -
Class A Shares under Classes of Shares.
Class B Shares and Class C Shares may be redeemed or exchanged at the
net asset value calculated after receipt of the redemption or exchange request
subject, in the case of redemptions, to any applicable CDSC. Neither the Fund
nor the Distributor assesses any charges other than the CDSC for redemptions or
exchanges of Class B or Class C Shares. There are certain limitations on an
investor's ability to exchange shares between the various classes of shares that
are offered. See Redemption and Exchange.
Open-End Investment Company
Equity Funds V, Inc., which was organized as a Maryland corporation on
January 16, 1987, is an open-end management investment company. The Fund's
portfolio of assets is diversified as defined by the Investment Company Act of
1940 (the "1940 Act"). See Shares under Management of the Fund.
-4-
<PAGE>
(DGVF-ABC)
SUMMARY OF EXPENSES
A general comparison of the sales arrangements and other expenses
applicable to Class A, Class B and Class C Shares follows:
<TABLE>
<CAPTION>
Class A Class B Class C
Shareholder Transaction Expenses Shares Shares Shares
- ---------------------------------------------- --------- ---------- ---------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)............................. 4.75% None None
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering price) None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or
redemption proceeds, as applicable)............................. None* 4.00%* 1.00%*
Redemption Fees................................................. None** None** None**
</TABLE>
<TABLE>
<CAPTION>
Annual Operating Expenses
(as a percentage of average Class A Class B Class C
daily net assets) Shares Shares Shares
- ---------------------------------------------- --------- ---------- ---------
<S> <C> <C> <C>
Management Fees................................................. 0.75% 0.75% 0.75%
12b-1 Expenses (including service fees) 0.30%+ 1.00%+ 1.00%+
Other Operating Expenses........................................ 0.40% 0.40% 0.40%
----- ----- -----
Total Operating Expenses................................... 1.45% 2.15% 2.15%
===== ===== =====
</TABLE>
*Class A purchases of $1 million or more may be made at net asset
value. However, if in connection with any such purchase a dealer commission is
paid to the financial adviser through whom such purchase is effected, a CDSC of
1% will be imposed on certain redemptions within 12 months of purchase ("Limited
CDSC"). Class B Shares are subject to a CDSC of: (i) 4% if shares are redeemed
within two years of purchase; (ii) 3% if shares are redeemed during the third or
fourth year following purchase; (iii) 2% if shares are redeemed during the fifth
year following purchase; (iv) 1% if shares are redeemed during the sixth year
following purchase; and (v) 0% thereafter. Class C Shares are subject to a CDSC
of 1% if the shares are redeemed within 12 months of purchase. See Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased at Net
Asset Value under Redemption and Exchange and Deferred Sales Charge Alternative
- - Class B Shares and Level Sales Charge Alternative - Class C Shares under
Classes of Shares.
**CoreStates Bank, N.A. currently charges $7.50 per redemption for
redemptions payable by wire.
-5-
<PAGE>
(DGVF-ABC)
+Class A Shares, Class B Shares and Class C Shares are subject to
separate 12b-1 Plans. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charges permitted by rules of the
National Association of Securities Dealers, Inc. (the "NASD"). See Distribution
(12b-1) and Service under Management of the Fund.
For expense information about Value Fund Institutional Class, see the
separate prospectus relating to that class.
The following example illustrates the expenses that an investor would
pay on a $1,000 investment over various time periods, assuming (1) a 5% annual
rate of return, (2) redemption and no redemption at the end of each time period
and (3) for Class B Shares and Class C Shares, payment of a CDSC at the time of
redemption, if applicable.
<TABLE>
<CAPTION>
Assuming Redemption Assuming No Redemption
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Shares $62(1) $91 $123 $213 $62 $91 $123 $213
Class B Shares $62 $97 $135 $231(2) $22 $67 $115 $231(2)
Class C Shares $32 $67 $115 $248 $22 $67 $115 $248
</TABLE>
(1) Generally, no redemption charge is assessed upon redemption of Class A
Shares. Under certain circumstances, however, a Limited CDSC, which has
not been reflected in this calculation, may be imposed on certain
redemptions within 12 months of purchase. See Contingent Deferred Sales
Charge for Certain Redemptions of Class A Shares Purchased at Net Asset
Value under Redemption and Exchange.
(2) At the end of approximately eight years after purchase, Class B Shares
will be automatically converted into Class A Shares. The example above
assumes conversion of Class B Shares at the end of the eighth year.
However, the conversion may occur as late as three months after the
eighth anniversary of purchase, during which time the higher 12b-1 Plan
fees payable by Class B Shares will continue to be assessed.
Information for the ninth and tenth years reflects expenses of the
Class A Shares. See Automatic Conversion of Class B Shares under
Classes of Shares for a description of the automatic conversion
feature.
The purpose of the above tables is to assist the investor in
understanding the various costs and expenses that an investor in any of the
Classes will bear directly or indirectly.
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.
-6-
<PAGE>
(DGVF-ABC)
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
Delaware Group Equity Funds V, Inc. - Value Fund and have been audited by Ernst
& Young LLP, independent auditors. The data should be read in conjunction with
the financial statements, related notes, and the report of Ernst & Young LLP
covering such financial information and highlights, all of which are
incorporated by reference into Part B. Further information about the Fund's
performance is contained in its Annual Report to shareholders. A copy of the
Fund's Annual Report (including the report of Ernst & Young LLP) may be obtained
from Equity Funds V, Inc. upon request at no charge.
- -------------------------------------------------------------------------------
-7-
<PAGE>
(DGVF-ABC)
DGVF-A-CHT
<TABLE>
<CAPTION>
Class A Shares
-----------------------------------------------------------------------------------------------------
Period
6/24/87(1)
Year Ended through
11/30/96 11/30/95 11/30/94 11/30/93 11/30/92 11/30/91 11/30/90 11/30/89 11/30/88 11/30/87
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period ................... $22.760 $19.320 $20.070 $17.750 $15.320 $11.050 $14.030 $10.440 $7.740 $9.530
Income From Investment
Operations
Net Investment Income......... 0.122 0.253 0.142 0.033 0.060 (0.006) 0.149 0.131 0.054 0.058
Net Gains (Losses) on
Securities (both realized
and unrealized)...... ..... 4.028 3.597 (0.687) 3.147 3.360 4.681 (2.269) 3.529 2.691 (1.848)
----- ----- ------- ----- ----- ----- ------- ----- ------ -------
Total From Investment
Operations............... 4.150 3.850 (0.545) 3.180 3.420 4.675 (2.120) 3.660 2.745 (1.790)
----- ----- ------- ----- ----- ----- ------- ----- ------ -------
Less Distributions
Dividends (from net
investment income) ........ (0.240) (0.160) (0.035) (0.040) none (0.155) (0.140) (0.070) (0.045) none
Distributions (from
capital gains).... ........ (0.890) (0.250) (0.170) (0.820) (0.990) (0.250) (0.720) none none none
Returns of Capital............ none none none none none none none none none none
----- ----- ------- ----- ----- ----- ------- ----- ------ -------
Total Distributions......... (1.130) (0.410) (0.205) (0.860) (0.990) (0.405) (0.860) (0.070) (0.045) none
----- ----- ------- ----- ----- ----- ------- ----- ------ -------
Net Asset Value,
End of Period............. $25.780 $22.760 $19.320 $20.070 $17.750 $15.320 $11.050 $14.030 $10.440 $7.740
======= ======= ======= ======= ======= ======= ======= ======= ======= ======
Total Return(2)............. 19.08% 20.39% (2.78%) 18.59% 22.99% 43.61% (16.14%) 35.28%(3) 35.57%(3)(18.78%)(3)
- ------------
- ---------------------
Ratios/Supplemental
Data
Net Assets, End
of Period
(000's omitted) ........... $192,297 $177,011 $179,498 $151,384 $38,792 $12,041 $7,746 $11,055 $6,797 $8,780
Ratio of Expenses
to Average
Daily Net Assets........ 1.45% 1.48% 1.46% 1.64% 1.93% 2.26% 1.79% 1.98%(4) 2.02%(4) 1.50%(4)
Ratio of Net Investment
Income to Average Daily
Net Assets........ ......... 0.51% 1.18% 0.75% 0.25% 0.39% (0.07%) 1.12% 1.14%(5) 0.35%(5) 1.74%(5)
Portfolio Turnover
Rate............... ....... 87% 65% 14% 32% 68% 99% 69% 103% 66% 60%
Average Commission
Rate Paid.......... ....... $0.060 N/A N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>
- ---------
(1) Date of initial public offering; ratios and total return have been
annualized.
(2) Does not reflect maximum front-end sales charge that is or was in effect
nor the 1% Limited CDSC that would apply in the event of certain
redemptions within 12 months of purchase. See Contingent Deferred Sales
Charge for Certain Redemptions of Class A Shares Made At Net Asset Value.
(3) Total return reflects the expense limitation referenced in Notes 4 and 5.
(4) Ratio of expenses to average daily net assets prior to expense limitation
was 2.16% for 1989, 2.23% for 1988 and 2.26% for 1987. (5) Ratio of net
investment income to average daily net assets prior to expense limitation
was 0.97% for 1989, 0.14% for 1988 and 0.99% for 1987.
<PAGE>
(DGVF-ABC)
<TABLE>
<CAPTION>
Class B Shares Class C Shares
------------------------------------- ------------------------------
Period Period
9/6/94(1) Year 11/29/95(2)
Year Ended through Ended through
11/30/96 11/30/95 11/30/94 11/30/96 11/30/95
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................. $22.590 $19.300 $20.280 $22.760 $22.510
Income From Investment Operations
Net Investment Income (Loss)......................... (0.041) 0.141 0.011 (0.043) none
Net Gains (Losses) on Securities
(both realized and unrealized)............ 4.006 3.549 (0.991) 4.003 0.250
----- ----- ------- -------
Total From Investment Operations............... 3.965 3.690 (0.980) 3.960 0.250
----- ----- ------- ----- -----
Less Distributions
Dividends (from net investment income)............... (0.095) (0.150) none (0.280) none
Distributions (from capital gains)................... (0.890) (0.250) none (0.890) none
Returns of Capital................................... none none none none none
Total Distributions............................ (0.985) (0.400) none (1.170) none
------- ------- ---- ------- ----
Net Asset Value, End of Period....................... $25.570 $22.590 $19.300 $25.550 $22.760
======= ======= ======= ======= =======
Total Return......................................... 18.26%(3) 19.55%(3) (4.83%)(3) 18.23%(3) (4)
- ------------
- ----------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted) $12,730 $5,788 $1,455 $3,360 $5
Ratio of Expenses to Average Daily Net Assets....... 2.15% 2.18% 2.16% 2.15%(4)
Ratio of Net Investment Income to
Average Daily Net Assets....................... (0.19%) 0.48% 0.05% (0.19%) (4)
Portfolio Turnover Rate.............................. 87% 65% 14% 87% (4)
Average Commission Rate Paid......................... $0.060 N/A N/A $0.060 N/A
</TABLE>
(1) Date of initial public offering; ratios have been annualized, but total
return has not been annualized.
(2) Date of initial public offering. Total return for this short of a time
period may not be representative of longer term results.
(3) Total return does not include any applicable CDSC, which varies from 1-4%,
depending on the holding period for Class B Shares and 1% for Class C
Shares for 12 months from the date of purchase.
(4) The ratios of expenses and net investment income to average daily net
assets, portfolio turnover and total return have been omitted as management
believes that such ratios, portfolio turnover and total return for this
relatively short period are not meaningful.
<PAGE>
(DGVF-ABC)
INVESTMENT OBJECTIVE AND POLICY
The objective of the Fund is capital appreciation. The Fund's strategy
is to invest primarily in common stocks and issues convertible into common
stocks which, in the opinion of the Manager, have market values that appear low
relative to their underlying value or future earnings and growth potential.
SUITABILITY
The Fund may be suitable for investors interested in long-term capital
appreciation. Providing current income is not an objective of the Fund. Any
income produced is expected to be minimal. Investors should not consider a
purchase of Fund shares as equivalent to a complete investment program. The
Delaware Group includes a family of funds, generally available through
registered investment dealers, which may be used together to create a more
complete investment program.
Ownership of Fund shares reduces the bookkeeping and administrative
inconvenience that would be involved with direct purchases of the Fund's
portfolio securities.
Net asset value may fluctuate at times in response to market conditions
and, as a result, the Fund is not appropriate for a short-term investor.
INVESTMENT STRATEGY
While management believes that the Fund's objective may best be
attained by investing in common stocks, the Fund may also invest in other
securities including, but not limited to, convertible securities, warrants,
preferred stocks, bonds and foreign securities. Fixed-income securities are
expected to receive only minor emphasis.
The Fund will purchase securities which the Manager believes to be
undervalued in relation to asset value or long-term earning power of the
companies. The Manager may also invest in securities of companies where current
or anticipated favorable changes within a company provide an opportunity for
capital appreciation. The Manager's emphasis will be on securities of companies
that may be temporarily out of favor or whose value is not yet recognized by the
market.
The Fund may invest without regard to a minimum grade level where there
are favorable changes in a company's earnings or growth potential or where
general economic conditions and/or the interest rate environment provide an
opportunity for appreciation in these securities. Investment characteristics and
certain risks associated with the types of securities in which the Fund will
generally invest are described in this Prospectus. See Risk Factors for more
specific information and risks associated with foreign and lower rated
securities. The strategies employed are dependent upon the judgment of the
Manager.
While not a fundamental policy, under normal market conditions the Fund
intends to invest 65% of its net assets in securities issued by small- to
mid-cap companies, those having a market capitalization generally of less than
$3 billion. As a general matter, small- to mid-cap companies may have more
limited product lines, markets and financial resources than large-cap companies.
In addition, securities of small- to mid-cap companies, generally, may trade
less frequently (and with a lesser volume), may be more volatile and may be
somewhat less liquid than securities issued by larger capitalization companies.
-8-
<PAGE>
(DGVF-ABC)
The Manager will consider the financial strength of the company, the
nature of its management and any developments affecting the security, the
company or the industry. Securities may be out of favor due to a variety of
factors, such as lack of an institutional following, unfavorable developments
affecting the issuer of the securities, such as poor earning reports, dividend
reductions, or cyclical economic or business conditions. Other securities
considered by the Manager would include those of companies where current or
anticipated favorable changes such as a new product or service, technological
breakthrough, management change, projected takeovers, changes in capitalization
or redefinition of future corporate operations provide an opportunity for
capital appreciation. The Manager will also consider securities where trading
patterns suggest that significant positions are being accumulated by officers of
the company, outside investors or the company itself. The Manager feels it may
uncover situations where those who have a vested interest in the company feel
the securities are undervalued and have appreciation potential.
In investing for capital appreciation, the Fund may hold securities for
any period of time. The degree of portfolio activity will affect brokerage costs
of the Fund and may affect taxes payable by the Fund's shareholders.
See Portfolio Trading Practices under Management of the Fund.
Should the market warrant a temporary, defensive approach, the Fund may
also invest in fixed-income obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities, as well as money market
instruments, and corporate bonds rated A or above by Moody's Investors Service,
Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P"). (Appendix C to this
Prospectus describes these ratings.)
If the Manager believes that market conditions warrant, the Fund may
employ options strategies. The Fund may write covered call options on individual
issues as well as write call options on stock indices. A call option is
"covered" if, during the term of the option, the Fund owns or has the right to
obtain at no added cost the security underlying the call option, owns a call
option on the underlying securities with an exercise price no higher than the
exercise price on the call option written or, subject to any regulatory
restrictions, has segregated an amount of cash or liquid high grade debt
obligations at least equal to the current price of the underlying securities.
The Fund may also purchase put options on individual issues and on stock
indices. The Manager will employ these techniques in an attempt to protect
appreciation attained, to offset capital losses and/or to take advantage of the
liquidity available in the option markets. The ability to hedge effectively
using options on stock indices will depend, in part, on the correlation between
the composition of the index and the Fund's portfolio as well as the price
movement of individual securities. The Fund does not currently intend to write
or purchase options on stock indices.
While there is no limit on the amount of the Fund's assets which may be
invested in covered call options, the Fund will not invest more than 2% of its
net assets in put options. The Fund will only use exchange-traded options.
Although the Fund will constantly strive to attain the objective of
capital appreciation, there can be no assurance that it will be attained. The
objective of the Fund may not be changed without shareholder approval.
RISK FACTORS
Investors should be willing to accept the risks associated with
investments in domestic and international securities (and currency hedging
transactions in connection with international investing). Investing in
international securities may be speculative and subject the Fund to additional
risks. Investing in a company temporarily out of favor may involve the risk that
the anticipated favorable change may not occur and, as a result, that security
may decline in value or not appreciate as expected.
-9-
<PAGE>
(DGVF-ABC)
The Fund may also purchase, at times, lower rated or unrated
securities, including corporate bonds and convertible securities without regard
to a grade minimum, which may be considered speculative and may increase the
portfolio's credit risk. Although the Fund will ordinarily place minor emphasis
on fixed-income securities and will not typically purchase bonds or other
securities rated below B by Moody's or S&P (i.e., high-yield, high-risk
securities, also known as "junk bonds"), it may do so if the Manager believes
that capital appreciation is likely. While the Fund is authorized to invest up
to 25% of its net assets in securities rated below B, it does not presently
intend to invest more than 5% of its net assets in securities of this type.
Investing in such lower rated securities may involve certain risks not typically
associated with higher rated securities. Such securities are considered very
speculative and may possibly be in default or have interest payments in arrears.
See High-Yield, High-Risk Securities in Part B for additional information on the
risks associated with such securities. See Appendix C to this Prospectus for
more rating information.
For additional information about the Fund's investment policies and
certain risks associated with investments in certain types of securities, see
Other Investment Policies and Risk Considerations.
-10-
<PAGE>
(DGVF-ABC)
THE DELAWARE DIFFERENCE
PLANS AND SERVICES
The Delaware Difference is our commitment to provide you with superior
information and quality service on your investments in the Delaware Group of
funds.
SHAREHOLDER PHONE DIRECTORY
Investor Information Center
800-523-4640
Fund Information; Literature; Price; Yield and Performance Figures
Shareholder Service Center
800-523-1918
Information on Existing Regular Investment Accounts and
Retirement Plan Accounts;
Wire Investments; Wire Liquidations; Telephone Liquidations and
Telephone Exchanges
Delaphone
800-362-FUND
(800-362-3863)
Performance Information
You can call the Investor Information Center at any time for current
performance information.
Shareholder Services
During business hours, you can call the Delaware Group's Shareholder
Service Center. Our representatives can answer any questions about your account,
the Fund, various service features and other funds in the Delaware Group.
Delaphone Service
Delaphone is an account inquiry service for investors with
Touch-Tone(R) phone service. It enables you to get information on your account
faster than the mailed statements and confirmations. Delaphone also provides
current performance information on the Fund, as well as other funds in the
Delaware Group. Delaphone is available seven days a week, 24 hours a day.
Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent following
all transactions other than those involving a reinvestment of dividends. You
should examine statements and confirmations immediately and promptly report any
discrepancy by calling the Shareholder Service Center.
Duplicate Confirmations
If your financial adviser or investment dealer is noted on your
investment application, we will send a duplicate confirmation to him or her.
This makes it easier for your adviser to help you manage your investments.
-11-
<PAGE>
(DGVF-ABC)
Tax Information
Each year, Equity Funds V, Inc. will mail to you information on the
tax status of your dividends and distributions.
Dividend Payments
Dividends, capital gains and other distributions are automatically
reinvested in your account, unless you elect to receive them in cash. You may
also elect to have the dividends earned in one fund automatically invested in
another Delaware Group fund with a different investment objective subject to
certain exceptions and limitations.
For more information, see Additional Methods of Adding to Your
Investment - Dividend Reinvestment Plan under How to Buy Shares or call the
Shareholder Service Center.
MoneyLine Direct Deposit Service
If you elect to have your dividends and distributions paid in cash and
such dividends and distributions are in an amount of $25 or more, you may choose
the MoneyLine Direct Deposit Service and have such payments transferred from
your Fund account to your predesignated bank account. See Dividends and
Distributions. In addition, you may elect to have your Systematic Withdrawal
Plan payments transferred from your Fund account to your predesignated bank
account through this service. See Systematic Withdrawal Plans under Redemption
and Exchange. Your funds will normally be credited to your bank account two
business days after the payment date. There are no fees for this service. You
can initiate the MoneyLine Direct Deposit Service by completing an Authorization
Agreement. If your name and address are not identical to the name and address on
your Fund account, you must have your signature guaranteed. The MoneyLine Direct
Deposit Service is not available for certain retirement plans.
Right of Accumulation
With respect to Class A Shares, the Right of Accumulation feature
allows you to combine the value of your current holdings of Class A Shares,
Class B Shares and Class C Shares of the Fund with the dollar amount of new
purchases of Class A Shares of the Fund to qualify for a reduced front-end sales
charge on such purchases of Class A Shares. Under the Combined Purchases
Privilege, you may also include certain shares that you own in other funds in
the Delaware Group. See Classes of Shares.
Letter of Intention
The Letter of Intention feature permits you to obtain a reduced
front-end sales charge on purchases of Class A Shares by aggregating certain of
your purchases of Delaware Group fund shares over a 13-month period. See Classes
of Shares and Part B.
12-Month Reinvestment Privilege
The 12-Month Reinvestment Privilege permits you to reinvest proceeds
from a redemption of Class A Shares, within one year of the date of the
redemption, without paying a front-end sales charge. See Part B.
Exchange Privilege
The Exchange Privilege permits shareholders to exchange all or part of
their shares into shares of other funds in the Delaware Group, subject to
certain exceptions and limitations. For additional information on exchanges, see
Investing by Exchange under How to Buy Shares and Redemption and Exchange.
-12-
<PAGE>
(DGVF-ABC)
Wealth Builder Option
You may elect to invest in the Fund through regular liquidations of
shares in your accounts in other funds in the Delaware Group. Investments under
this feature are exchanges and are therefore subject to the same conditions and
limitations as other exchanges of Fund shares. See Additional Methods of Adding
to Your Investment - Wealth Builder Option and Investing by Exchange under How
to Buy Shares and Redemption and Exchange.
Delaware Group Asset Planner
Delaware Group Asset Planner is an asset allocation service that gives
you, working with a professional financial adviser, the ability to more easily
design and maintain investments in a diversified selection of Delaware Group
mutual funds. The Asset Planner service offers a choice of four predesigned
allocation strategies (each with a different risk/reward profile) made up of
separate investments in predetermined percentages of Delaware Group funds. With
the guidance of a financial adviser, you may also tailor an allocation strategy
that meets your personal needs and goals. See How to Buy Shares.
Financial Information about the Fund
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. Equity Funds V, Inc.'s fiscal year ends
on November 30.
-13-
<PAGE>
(DGVF-ABC)
RETIREMENT PLANNING
An investment in the Fund may be suitable for tax-deferred retirement
plans. Among the retirement plans noted below, Class B Shares are available for
investment only by Individual Retirement Accounts, Simplified Employee Pension
Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred Compensation
Plans.
Retirement plans may be subject to plan establishment fees, annual
maintenance fees and/or other administrative or trustee fees. Fees are based
upon the number of participants in the plan as well as the services selected.
Additional information about fees is included in retirement plan materials. Fees
are quoted upon request.
Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders. Certain
retirement plans may qualify to purchase Value Fund Institutional Class. For
additional information on any of the plans and Delaware's retirement services,
call the Shareholder Service Center or see Part B.
Individual Retirement Account ("IRA")
Individuals, even if they participate in an employer-sponsored
retirement plan, may establish their own retirement program for investments in
each of the Classes. Contributions to an IRA may be tax-deductible and earnings
are tax-deferred. Under the Tax Reform Act of 1986, the tax deductibility of IRA
contributions is restricted, and in some cases eliminated, for individuals who
participate in certain employer-sponsored retirement plans and whose annual
income exceeds certain limits. Existing IRAs and future contributions up to the
IRA maximums, whether deductible or not, still earn on a tax-deferred basis.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Classes is available for investment by a
SEP/IRA.
Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
New SAR/SEP plans may not be established after December 31, 1996. In
addition, employers must have 25 or fewer eligible employees to maintain an
existing SEP/IRA which permits salary deferral contributions. SAR/SEP plans may
only invest in Class A Shares and Class C Shares.
403(b)(7) Deferred Compensation Plan
Permits employees of public school systems or of certain types of
non-profit organizations to enter into a deferred compensation arrangement for
the purchase of shares of each of the Classes.
457 Deferred Compensation Plan
Permits employees of state and local governments and certain other
entities to enter into a deferred compensation arrangement for the purchase of
shares of each of the Classes.
Prototype Profit Sharing or Money Purchase Pension Plan
Offers self-employed individuals, partnerships and corporations a
tax-qualified plan which provides for the investment of contributions in Class A
Shares or Class C Shares. Class B Shares are not available for purchase by such
plans.
-14-
<PAGE>
(DGVF-ABC)
Prototype 401(k) Defined Contribution Plan
Permits employers to establish a tax-qualified plan based on salary
deferral contributions for investment in Class A or Class C Shares. Class B
Shares are not available for purchase by such plans.
Allied Plans
Class A Shares are available for purchase by participants in certain
401(k) Defined Contribution Plans ("Allied Plans") which are made available
under a joint venture agreement between the Distributor and another institution
through which mutual funds are marketed and which allow investments in Class A
Shares of designated Delaware Group funds ("eligible Delaware Group fund
shares"), as well as shares of designated classes of non- Delaware Group funds
("eligible non-Delaware Group fund shares"). Class B Shares and Class C Shares
are not eligible for purchase by Allied Plans.
With respect to purchases made in connection with an Allied Plan, the
value of eligible Delaware Group and eligible non-Delaware Group fund shares
held by the Allied Plan may be combined with the dollar amount of new purchases
by that Allied Plan to obtain a reduced front-end sales charge on additional
purchases of eligible Delaware Group fund shares. See Front-End Sales Charge
Alternative - Class A Shares under Classes of Shares.
Participants in Allied Plans may exchange all or part of their eligible
Delaware Group fund shares for other eligible Delaware Group fund shares or for
eligible non-Delaware Group fund shares at net asset value without payment of a
front-end sales charge. However, exchanges of eligible fund shares, both
Delaware Group and non- Delaware Group, which were not subject to a front-end
sales charge, will be subject to the applicable sales charge if exchanged for
eligible Delaware Group fund shares to which a sales charge applies. No sales
charge will apply if the eligible fund shares were previously acquired through
the exchange of eligible shares on which a sales charge was already paid or
through the reinvestment of dividends. See Investing by Exchange under How to
Buy Shares.
A dealer's commission may be payable on purchases of eligible Delaware
Group fund shares under an Allied Plan. In determining a financial adviser's
eligibility for a dealer's commission on net asset value purchases of eligible
Delaware Group fund shares in connection with Allied Plans, all participant
holdings in the Allied Plan will be aggregated. See Front-End Sales Charge
Alternative - Class A Shares under Classes of Shares.
The Limited CDSC is applicable to redemptions of net asset value
purchases from an Allied Plan on which a dealer's commission has been paid.
Waivers of the Limited CDSC, as described under Waiver of Limited Contingent
Deferred Sales Charge - Class A Shares under Redemption and Exchange, apply to
redemptions by participants in Allied Plans except in the case of exchanges
between eligible Delaware Group and non-Delaware Group fund shares. When
eligible Delaware Group fund shares are exchanged into eligible non-Delaware
Group fund shares, the Limited CDSC will be imposed at the time of the exchange,
unless the joint venture agreement specifies that the amount of the Limited CDSC
will be paid by the financial adviser or selling dealer. See Contingent Deferred
Sales Charge for Certain Redemptions of Class A Shares Purchased at Net Asset
Value under Redemption and Exchange.
-15-
<PAGE>
(DGVF-ABC)
CLASSES OF SHARES
Alternative Purchase Arrangements
Shares may be purchased at a price equal to the next determined net
asset value per share, subject to a sales charge which may be imposed, at the
election of the purchaser, at the time of the purchase for Class A Shares
("front-end sales charge alternative"), or on a contingent deferred basis for
Class B Shares ("deferred sales charge alternative") or Class C Shares ("level
sales charge alternative").
Class A Shares. An investor who elects the front-end sales charge
alternative acquires Class A Shares, which incur a sales charge when they are
purchased, but generally are not subject to any sales charge when they are
redeemed. Class A Shares are subject to annual 12b-1 Plan expenses of up to a
maximum of 0.30% of average daily net assets of such shares. Certain purchases
of Class A Shares qualify for reduced front-end sales charges. See Front-End
Sales Charge Alternative - Class A Shares, below. See also Contingent Deferred
Sales Charge for Certain Redemptions of Class A Shares Purchased at Net Asset
Value under Redemption and Exchange and Distribution (12b-1) and Service under
Management of the Fund.
Class B Shares. An investor who elects the deferred sales charge
alternative acquires Class B Shares, which do not incur a front-end sales charge
when they are purchased, but are subject to a contingent deferred sales charge
if they are redeemed within six years of purchase. Class B Shares are subject to
annual 12b-1 Plan expenses of up to a maximum of 1% (0.25% of which are service
fees to be paid to the Distributor, dealers or others for providing personal
service and/or maintaining shareholder accounts) of average daily net assets of
such shares for approximately eight years after purchase. Class B Shares permit
all of the investor's dollars to work from the time the investment is made. The
higher 12b-1 Plan expenses paid by Class B Shares will cause such shares to have
a higher expense ratio and to pay lower dividends than Class A Shares. At the
end of approximately eight years after purchase, the Class B Shares will
automatically be converted into Class A Shares and, thereafter, for the
remainder of the life of the investment, the annual 0.30% of 12b-1 Plan fee for
the Class A Shares will apply. See Automatic Conversion of Class B Shares,
below.
Class C Shares. An investor who elects the level sales charge
alternative acquires Class C Shares, which do not incur a front-end sales charge
when they are purchased, but are subject to a contingent deferred sales charge
if they are redeemed within 12 months of purchase. Class C Shares are subject to
annual 12b-1 Plan expenses of up to a maximum of 1% (0.25% of which are service
fees to be paid to the Distributor, dealers or others for providing personal
service and/or maintaining shareholder accounts) of average daily net assets of
such shares for the life of the investment. The higher 12b-1 Plan expenses paid
by Class C Shares will cause such shares to have a higher expense ratio and to
pay lower dividends than Class A Shares. Unlike Class B Shares, Class C Shares
do not convert to another class.
The alternative purchase arrangements described above permit investors
to choose the method of purchasing shares that is most suitable given the amount
of their purchase, the length of time they expect to hold their shares and other
relevant circumstances. Investors should determine whether, given their
particular circumstances, it is more advantageous to purchase Class A Shares and
incur a front-end sales charge, purchase Class B Shares and have the entire
initial purchase amount invested in the Fund with their investment being subject
to a CDSC if they redeem shares within six years of purchase, or purchase Class
C Shares and have the entire initial purchase amount invested in the Fund with
their investment being subject to a CDSC if they redeem shares within 12 months
of purchase. In addition, investors should consider the level of annual 12b-1
Plan expenses applicable to each Class. The higher 12b-1 Plan expenses on Class
B Shares and Class C Shares will be offset to the extent a return is realized on
the additional money initially invested upon the purchase of such shares.
However, there can be no assurance as to the return, if any, that will be
realized on such additional money. In comparing Class B Shares to
-16-
<PAGE>
(DGVF-ABC)
Class C Shares, investors should also consider the desirability of an automatic
conversion feature, which is available only for Class B Shares.
Prospective investors should refer to Appendix A - Investment
Illustrations in this Prospectus for an illustration of the potential effect
that each of the purchase options may have on a long-term shareholder's
investment.
For the distribution and related services provided to, and the expenses
borne on behalf of, the Fund, the Distributor and others will be paid, in the
case of Class A Shares, from the proceeds of the front-end sales charge and
12b-1 Plan fees and, in the case of Class B Shares and Class C Shares, from the
proceeds of the 12b-1 Plan fees and, if applicable, the CDSC incurred upon
redemption. Financial advisers may receive different compensation for selling
Class A, Class B and Class C Shares. Investors should understand that the
purpose and function of the respective 12b-1 Plans and the CDSCs applicable to
Class B Shares and Class C Shares are the same as those of the 12b-1 Plan and
the front-end sales charge applicable to Class A Shares in that such fees and
charges are used to finance the distribution of the respective Classes. See
Distribution (12b-1) and Service under Management of the Fund.
Dividends paid on Class A, Class B and Class C Shares, to the extent
any dividends are paid, will be calculated in the same manner, at the same time,
on the same day and will be in the same amount, except that the additional
amount of 12b-1 Plan expenses relating to Class B Shares and Class C Shares will
be borne exclusively by such shares. See Calculation of Offering Price and Net
Asset Value Per Share.
The NASD has adopted certain rules relating to investment company sales
charges. Equity Funds V, Inc. and the Distributor intend to operate in
compliance with these rules.
-17-
<PAGE>
(DGVF-ABC)
Front-End Sales Charge Alternative - Class A Shares
Class A Shares may be purchased at the offering price, which reflects a
maximum front-end sales charge of 4.75%. See Calculation of Offering Price and
Net Asset Value Per Share.
Purchases of $100,000 or more carry a reduced front-end sales charge as
shown in the following table.
<TABLE>
<CAPTION>
Value Fund A Class
- --------------------------------------------------------------------------------------------------------------------------
Dealer's
Front-End Sales Charge as % of Commission***
Amount of Purchase Offering Amount as % of
Price Invested** Offering Price
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.75% 5.01% 4.00%
$100,000 but under $250,000 3.75 3.88 3.00
$250,000 but under $500,000 2.50 2.57 2.00
$500,000 but under $1,000,000* 2.00 2.06 1.60
</TABLE>
* There is no front-end sales charge on purchases of Class A Shares of $1
million or more but, under certain limited circumstances, a 1% Limited
CDSC may apply upon redemption of such shares.
** Based upon the net asset value per share of the Class A Shares as of
the end of Equity Funds V, Inc.'s most recent fiscal year.
*** Financial institutions or their affiliated brokers may receive an
agency transaction fee in the percentages set forth above.
- -------------------------------------------------------------------------------
The Fund must be notified when a sale takes place which would qualify
for the reduced front-end sales charge on the basis of previous or
current purchases. The reduced front-end sales charge will be granted
upon confirmation of the shareholder's holdings by the Fund. Such
reduced front-end sales charges are not retroactive.
From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during
which the Distributor may reallow to dealers up to the full amount of
the front-end sales charge shown above. In addition, certain dealers
who enter into an agreement to provide extra training and information
on Delaware Group products and services and who increase sales of
Delaware Group funds may receive an additional commission of up to .15%
of the offering price. Dealers who receive 90% or more of the sales
charge may be deemed to be underwriters under the Securities Act of
1933.
- -------------------------------------------------------------------------------
-18-
<PAGE>
(DGVF-ABC)
For initial purchases of Class A Shares of $1,000,000 or more, a
dealer's commission may be paid by the Distributor to financial advisers through
whom such purchases are made in accordance with the following schedule:
Dealer's Commission
(as a percentage of
Amount of Purchase amount purchased)
------------------ -------------------
Up to $2 million 1.00%
Next $1 million up to $3 million 0.75
Next $2 million up to $5 million 0.50
Amount over $5 million 0.25
In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds as to
which a Limited CDSC applies may be aggregated with those of the Class A Shares
of the Fund. Financial advisers also may be eligible for a dealer's commission
in connection with certain purchases made under a Letter of Intention or
pursuant to an investor's Right of Accumulation. Financial advisers should
contact the Distributor concerning the applicability and calculation of the
dealer's commission in the case of combined purchases.
An exchange from other Delaware Group funds will not qualify for
payment of the dealer's commission, unless a dealer's commission or similar
payment has not been previously paid on the assets being exchanged. The schedule
and program for payment of the dealer's commission are subject to change or
termination at any time by the Distributor at its discretion.
Redemptions of Class A Shares purchased at net asset value may result
in the imposition of a Limited CDSC if the dealer's commission described above
was paid in connection with the purchase of those shares. See Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased at Net
Asset Value under Redemption and Exchange.
Combined Purchases Privilege
By combining your holdings of Class A Shares with your holdings of
Class B Shares and/or Class C Shares of the Fund and shares of the other funds
in the Delaware Group, except those noted below, you can reduce the front-end
sales charges on any additional purchases of Class A Shares. Shares of Delaware
Group Premium Fund, Inc. beneficially owned in connection with ownership of
variable insurance products may be combined with other Delaware Group fund
holdings. Shares of other funds that do not carry a front-end sales charge or
CDSC may not be included unless they were acquired through an exchange from a
Delaware Group fund that does carry a front-end sales charge or CDSC.
This privilege permits you to combine your purchases and holdings with
those of your spouse, your children under 21 and any trust, fiduciary or
retirement account for the benefit of such family members.
It also permits you to use these combinations under a Letter of
Intention. A Letter of Intention allows you to make purchases over a 13-month
period and qualify the entire purchase for a reduction in front-end sales
charges on Class A Shares.
-19-
<PAGE>
(DGVF-ABC)
Combined purchases of $1,000,000 or more, including certain purchases
made at net asset value pursuant to a Right of Accumulation or under a Letter of
Intention, may result in the payment of a dealer's commission and the
applicability of a Limited CDSC. Investors should consult their financial
advisers or the Shareholder Service Center about the operation of these
features. See Front-End Sales Charge Alternative - Class A Shares, above.
Buying Class A Shares at Net Asset Value
Class A Shares of the Fund may be purchased at net asset value under
the Delaware Group Dividend Reinvestment Plan and, under certain circumstances,
the Exchange Privilege and the 12-Month Reinvestment Privilege. See The Delaware
Difference and Redemption and Exchange for additional information.
Purchases of Class A Shares may be made at net asset value by current
and former officers, directors and employees (and members of their families) of
the Manager, any affiliate, any of the funds in the Delaware Group, certain of
their agents and registered representatives and employees of authorized
investment dealers and by employee benefit plans for such entities. Individual
purchases, including those in retirement accounts, must be for accounts in the
name of the individual or a qualifying family member.
Purchases of Class A Shares may also be made by clients of registered
representatives of an authorized investment dealer at net asset value within 12
months after the registered representative changes employment, if the purchase
is funded by proceeds from an investment where a front-end sales charge,
contingent deferred sales charge or other sales charge has been assessed.
Purchases of Class A Shares may also be made at net asset value by bank
employees who provide services in connection with agreements between the bank
and unaffiliated brokers or dealers concerning sales of shares of Delaware Group
funds. In addition, purchases of Class A Shares may be made by financial
institutions investing for the account of their trust customers when they are
not eligible to purchase shares of the Fund's institutional class. Officers,
directors and key employees of institutional clients of the Manager or any of
its affiliates may purchase Class A Shares at net asset value. Moreover,
purchases may be effected at net asset value for the benefit of the clients of
brokers, dealers and registered investment advisers affiliated with a broker or
dealer, if such broker, dealer or investment adviser has entered into an
agreement with the Distributor providing specifically for the purchase of Class
A Shares in connection with special investment products, such as wrap accounts
or similar fee based programs.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from such
accounts will be made at net asset value. Loan repayments made to a Delaware
Group account in connection with loans originated from accounts previously
maintained by another investment firm will also be invested at net asset value.
The Fund must be notified in advance that an investment qualifies for
purchase at net asset value.
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Group Investment Plans
Group Investment Plans (e.g., SEP/IRA, SAR/SEP, Prototype Profit
Sharing, Pension and 401(k) Defined Contribution Plans) may benefit from the
reduced front-end sales charges available on Class A Shares set forth in the
table on page 00, based on total plan assets. In addition, 403(b)(7) and 457
Retirement Plan Accounts may benefit from a reduced front-end sales charge on
Class A Shares based on the total amount invested by all participants in the
plan by satisfying the following criteria: (i) the employer for which the plan
was established has 250 or more eligible employees and the plan lists only one
broker of record, or (ii) the plan includes employer contributions and the plan
lists only one broker of record. If a company has more than one plan investing
in the Delaware Group of funds, then the total amount invested in all plans will
be aggregated to determine the applicable front-end sales charge reduction on
each purchase, both initial and subsequent, if, at the time of each such
purchase, the company notifies the Fund that it qualifies for the reduction.
Employees participating in such Group Investment Plans may also combine the
investments held in their plan account to determine the front-end sales charge
applicable to purchases in non-retirement Delaware Group investment accounts if,
at the time of each such purchase, they notify the Fund that they are eligible
to combine purchase amounts held in their plan account.
For additional information on retirement plans, including plan forms,
applications, minimum investments and any applicable account maintenance fees,
contact your investment dealer or the Distributor.
For other retirement plans and special services, see Retirement
Planning.
Deferred Sales Charge Alternative - Class B Shares
Class B Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently anticipates
compensating dealers or brokers for selling Class B Shares at the time of
purchase from its own assets in an amount equal to no more than 4% of the dollar
amount purchased. In addition, from time to time, upon written notice to all of
its dealers, the Distributor may hold special promotions for specified periods
during which the Distributor may pay additional compensation to dealers or
brokers for selling Class B Shares at the time of purchase. As discussed below,
however, Class B Shares are subject to annual 12b-1 Plan expenses and, if
redeemed within six years of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class B Shares. These
payments support the compensation paid to dealers or brokers for selling Class B
Shares. Payments to the Distributor and others under the Class B 12b-1 Plan may
be in an amount equal to no more than 1% annually. The combination of the CDSC
and the proceeds of the 12b-1 Plan fees makes it possible for the Fund to sell
Class B Shares without deducting a front-end sales charge at the time of
purchase.
Holders of Class B Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for the Class B Shares
described in this Prospectus, even after the exchange. Such CDSC schedule may be
higher than the CDSC schedule for the Class B Shares acquired as a result of the
exchange. See Redemption and Exchange.
Automatic Conversion of Class B Shares
Class B Shares, other than shares acquired through reinvestment of
dividends, held for eight years after purchase are eligible for automatic
conversion into Class A Shares. Conversions of Class B Shares into Class A
Shares will occur only four times in any calendar year, on the last business day
of the second
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full week of March, June, September and December (each, a "Conversion Date"). If
the eighth anniversary after a purchase of Class B Shares falls on a Conversion
Date, an investor's Class B Shares will be converted on that date. If the eighth
anniversary occurs between Conversion Dates, an investor's Class B Shares will
be converted on the next Conversion Date after such anniversary. Consequently,
if a shareholder's eighth anniversary falls on the day after a Conversion Date,
that shareholder will have to hold Class B Shares for as long as three
additional months after the eighth anniversary of purchase before the shares
will automatically convert into Class A Shares.
Class B Shares of a fund acquired through a reinvestment of dividends
will convert to the corresponding Class A Shares of that fund (or, in the case
of Delaware Group Cash Reserve, Inc., the Delaware Cash Reserve Consultant
Class) pro-rata with Class B Shares of that fund not acquired through dividend
reinvestment.
All such automatic conversions of Class B Shares will constitute
tax-free exchanges for federal income tax purposes. See Taxes.
Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently anticipates
compensating dealers or brokers for selling Class C Shares at the time of
purchase from its own assets in an amount equal to no more than 1% of the dollar
amount purchased. As discussed below, however, Class C Shares are subject to
annual 12b-1 Plan expenses and, if redeemed within 12 months of purchase, a
CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees are paid to the
Distributor and others for providing distribution and related services, and
bearing related expenses, in connection with the sale of Class C Shares. These
payments support the compensation paid to dealers or brokers for selling Class C
Shares. Payments to the Distributor and others under the Class C 12b-1 Plan may
be in an amount equal to no more than 1% annually.
Holders of Class C Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for the Class C Shares as
described in this Prospectus. See Redemption and Exchange.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B Shares redeemed within six years of purchase may be subject to
a CDSC at the rates set forth below and Class C Shares redeemed within 12 months
of purchase may be subject to a CDSC of 1%. CDSCs are charged as a percentage of
the dollar amount subject to the CDSC. The charge will be assessed on an amount
equal to the lesser of the net asset value at the time of purchase of the shares
being redeemed or the net asset value of those shares at the time of redemption.
No CDSC will be imposed on increases in net asset value above the initial
purchase price, nor will a CDSC be assessed on redemptions of shares acquired
through reinvestments of dividends or capital gains distributions. For purposes
of this formula, the "net asset value at the time of purchase" will be the net
asset value at purchase of the Class B Shares or the Class C Shares of the Fund,
even if those shares are later exchanged for shares of another Delaware Group
fund. In the event of an exchange of the shares, the "net asset value of such
shares at the time of redemption" will be the net asset value of the shares that
were acquired in the exchange.
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The following table sets forth the rates of the CDSC for the Class B
Shares of the Fund:
Contingent Deferred
Sales Charge (as a
Percentage of
Dollar Amount
Year After Purchase Made Subject to Charge)
-------------------------- --------------------------
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares, Class B Shares will still be subject to the
annual 12b-1 Plan expenses of up to 1% of average daily net assets of those
shares. See Automatic Conversion of Class B Shares, above. Investors are
reminded that the Class A Shares into which the Class B Shares will convert are
subject to ongoing annual 12b-1 Plan expenses of up to a maximum of 0.30% of
average daily net assets of such shares.
In determining whether a CDSC applies to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are redeemed
first, followed by shares acquired through the reinvestment of dividends or
distributions, and finally by shares held longest during the six-year period.
With respect to Class C Shares, it will be assumed that shares held for more
than 12 months are redeemed first followed by shares acquired through the
reinvestment of dividends or distributions, and finally by shares held for 12
months or less.
All investments made during a calendar month, regardless of what day of
the month the investment occurred, will age one month on the last day of that
month and each subsequent month.
The CDSC is waived on certain redemptions of Class B Shares and Class C
Shares. See Waiver of Contingent Deferred Sales Charge - Class B Shares and
Class C Shares under Redemption and Exchange.
Other Payments to Dealers -- Class A, Class B and Class C Shares
From time to time at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of the Classes exceed certain limits, as
set by the Distributor, may receive from the Distributor an additional payment
of up to 0.25% of the dollar amount of such sales. The Distributor may also
provide additional promotional incentives or payments to dealers that sell
shares of the Delaware Group of funds. In some instances, these incentives or
payments may be offered only to certain dealers who maintain, have sold or may
sell certain amounts of shares.
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(DGVF-ABC)
Subject to pending amendments to the NASD's Rules of Fair Practice, in
connection with the promotion of Delaware Group fund shares, the Distributor
may, from time to time, pay to participate in dealer-sponsored seminars and
conferences, reimburse dealers for expenses incurred in connection with
preapproved seminars, conferences and advertising and may, from time to time,
pay or allow additional promotional incentives to dealers, which shall include
non-cash concessions, such as certain luxury merchandise or a trip to or
attendance at a business or investment seminar at a luxury resort, as part of
preapproved sales contests. Payment of non-cash compensation to dealers is
currently under review by the NASD and the Securities and Exchange Commission.
It is likely that the NASD's Rules of Fair Practice will be amended such that
the ability of the Distributor to pay non-cash compensation as described above
will be restricted in some fashion. The Distributor intends to comply with the
NASD's Rules of Fair Practice as they may be amended.
Value Fund Institutional Class
In addition to offering Class A, Class B and Class C Shares, the
Fund also offers Value Fund Institutional Class, which is described in a
separate prospectus and is available for purchase only by certain investors.
Value Fund Institutional Class shares generally are distributed directly by the
Distributor and do not have a front-end sales charge, a CDSC or a Limited CDSC,
and are not subject to 12b-1 Plan distribution expenses. To obtain the
prospectus that describes Value Fund Institutional Class, contact the
Distributor by writing to the address or by calling the telephone number listed
on the back of this Prospectus.
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(DGVF-ABC)
HOW TO BUY SHARES
Purchase Amounts
Generally, the minimum initial purchase is $1,000 for Class A Shares,
Class B Shares and Class C Shares. Subsequent purchases of shares of any Class
generally must be $100 or more. For purchases under a Uniform Gifts to Minors
Act or Uniform Transfers to Minors Act or through an Automatic Investing Plan,
there is a minimum initial purchase of $250 and a minimum subsequent purchase of
$25. Minimum purchase requirements do not apply to retirement plans other than
IRAs, for which there is a minimum initial purchase of $250, and a minimum
subsequent purchase of $25, regardless of which Class is selected.
There is a maximum purchase limitation of $250,000 on each purchase of
Class B Shares. For Class C Shares, each purchase must be in an amount that is
less than $1,000,000. An investor may exceed these maximum purchase limitations
by making cumulative purchases over a period of time. In doing so, an investor
should keep in mind that reduced front-end sales charges are available on
investments of $100,000 or more in Class A Shares, and that Class A Shares (i)
are subject to lower annual 12b-1 Plan expenses than Class B Shares and Class C
Shares and (ii) generally are not subject to a CDSC. For retirement plans, the
maximum purchase limitations apply only to the initial purchase of Class B
Shares or Class C Shares by the plan.
Investing through Your Investment Dealer
You can make a purchase of shares of the Fund through most investment
dealers who, as part of the service they provide, must transmit orders promptly.
They may charge for this service. If you want a dealer but do not have one, the
Delaware Group can refer you to one.
Investing by Mail
1. Initial Purchases--An Investment Application or, in the case of a retirement
account, an appropriate retirement plan application, must be completed, signed
and sent with a check, payable to Value Fund A Class, Value Fund B Class or
Value Fund C Class, to Delaware Group at 1818 Market Street, Philadelphia, PA
19103.
2. Subsequent Purchases--Additional purchases may be made at any time by mailing
a check payable to the specific Class selected. Your check should be identified
with your name(s) and account number. An investment slip (similar to a deposit
slip) is provided at the bottom of transaction confirmations and dividend
statements that you will receive from Equity Funds V, Inc. Use of this
investment slip can help expedite processing of your check when making
additional purchases. Your investment may be delayed if you send additional
purchases by certified mail.
Investing by Wire
You may purchase shares by requesting your bank to transmit funds by
wire to CoreStates Bank, N.A., ABA #031000011, account number 1412893401
(include your name(s) and your account number for the Class in which you are
investing).
1. Initial Purchases--Before you invest, telephone the Shareholder Service
Center to get an account number. If you do not call first, processing of your
investment may be delayed. In addition, you must promptly send your Investment
Application or, in the case of a retirement account, an appropriate retirement
plan application, to the specific Fund and Class selected, to Delaware Group at
1818 Market Street, Philadelphia, PA 19103.
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(DGVF-ABC)
2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You should advise the
Shareholder Service Center by telephone of each wire you send.
If you want to wire investments to a retirement plan account, call the
Shareholder Service Center for special wiring instructions.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware Group,
you may write and authorize an exchange of part or all of your investment into
shares of the Fund. If you wish to open an account by exchange, call the
Shareholder Service Center for more information. All exchanges are subject to
the eligibility and minimum purchase requirements set forth in each fund's
prospectus. See Redemption and Exchange for more complete information concerning
your exchange privilege.
Holders of Class A Shares may exchange all or part of their shares for
certain of the shares of other funds in the Delaware Group, including other
Class A Shares, but may not exchange their Class A Shares for Class B Shares or
Class C Shares of the Fund or of any other fund in the Delaware Group. Holders
of Class B Shares of the Fund are permitted to exchange all or part of their
Class B Shares only into Class B Shares of other Delaware Group funds.
Similarly, holders of Class C Shares of the Fund are permitted to exchange all
or part of their Class C Shares only into Class C Shares of other Delaware Group
funds. See Appendix B--Classes Offered for a list of Delaware Group Funds and
the classes they offer. Class B Shares of the Fund and Class C Shares of the
Fund acquired by exchange will continue to carry the CDSC and, in the case of
Class B Shares, the automatic conversion schedule of the fund from which the
exchange is made. The holding period of the Class B Shares of the Fund acquired
by exchange will be added to that of the shares that were exchanged for purposes
of determining the time of the automatic conversion into Class A Shares of the
Fund.
Permissible exchanges into Class A Shares of the Fund will be made
without a front-end sales charge, except for exchanges of shares that were not
previously subject to a front-end sales charge (unless such shares were acquired
through the reinvestment of dividends). Permissible exchanges into Class B
Shares or Class C Shares of the Fund will be made without the imposition of a
CDSC by the fund from which the exchange is being made at the time of the
exchange.
See Allied Plans under Retirement Planning for information on exchanges
by participants in an Allied Plan.
Additional Methods of Adding to Your Investment
Call the Shareholder Service Center for more information if you wish to
use the following services:
1. Automatic Investing Plan
The Automatic Investing Plan enables you to make regular monthly
investments without writing or mailing checks. You may authorize Equity Funds V,
Inc. to transfer a designated amount monthly from your checking account to your
Fund account. Many shareholders use this as an automatic savings plan.
Shareholders should allow a reasonable amount of time for initial purchases and
changes to these plans to become effective.
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(DGVF-ABC)
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
2. Direct Deposit
You may have your employer or bank make regular investments directly to
your account for you (for example: payroll deduction, pay by phone, annuity
payments). The Fund also accepts preauthorized recurring government and private
payments by Electronic Fund Transfer, which avoids mail time and check clearing
holds on payments such as social security, federal salaries, Railroad Retirement
benefits, etc.
* * *
Should investments through an automatic investing plan or by direct
deposit be reclaimed or returned for some reason, Equity Funds V, Inc. has the
right to liquidate your shares to reimburse the government or transmitting bank.
If there are insufficient funds in your account, you are obligated to reimburse
the Fund.
3. Wealth Builder Option
You can use our Wealth Builder Option to invest in the Fund through
regular liquidations of shares in your accounts in other funds in the Delaware
Group. You may also elect to invest in other mutual funds in the Delaware Group
through the Wealth Builder Option through regular liquidations of shares in your
Fund account.
Under this automatic exchange program, you can authorize regular
monthly amounts (minimum of $100 per fund) to be liquidated from your account in
one or more funds in the Delaware Group and invested automatically into any
other Delaware Group account that you may specify. If in connection with the
election of the Wealth Builder Option, you wish to open a new account to receive
the automatic investment, such new account must meet the minimum initial
purchase requirements described in the prospectus of the fund that you select.
Investments under this option are exchanges and are therefore subject to the
same conditions and limitations as other exchanges noted above. You can
terminate your participation at any time by written notice to the fund from
which the exchanges are made. See Redemption and Exchange.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
4. Dividend Reinvestment Plan
You can elect to have your distributions (capital gains and/or dividend
income) paid to you by check or reinvested in your account. Or, you may invest
your distributions in certain other funds in the Delaware Group, subject to the
exceptions noted below as well as the eligibility and minimum purchase
requirements set forth in each fund's prospectus.
Reinvestments of distributions into Class A Shares of the Fund or of
other Delaware Group funds are made without a front-end sales charge.
Reinvestments of distributions into Class B Shares of the Fund or of other
Delaware Group funds or into Class C Shares of the Fund or of other Delaware
Group funds are also made without any sales charge and will not be subject to a
CDSC if later redeemed. See Automatic Conversion of Class B Shares under Classes
of Shares for information concerning the automatic conversion of Class B Shares
acquired by reinvesting dividends.
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(DGVF-ABC)
Holders of Class A Shares of the Fund may not reinvest their
distributions into Class B Shares or Class C Shares of any fund in the Delaware
Group, including the Fund. Holders of Class B Shares of the Fund may reinvest
their distributions only into Class B Shares of the funds in the Delaware Group
which offer that class of shares. Similarly, holders of Class C Shares of the
Fund may reinvest their distributions only into Class C Shares of the funds in
the Delaware Group which offer that class of shares. See Appendix B--Classes
Offered for a list of those funds offering those classes of shares. For more
information about reinvestments, call the Shareholder Service Center.
Distributions for capital gains and/or dividends for participants in
the following retirement plans are automatically reinvested into the same
Delaware Group fund: SAR/SEP, SEP/IRA, Profit Sharing, Money Purchase Pension,
401(k), 403(b)(7), or 457 Plans.
Delaware Group Asset Planner
To invest in Delaware Group funds using the Delaware Group Asset
Planner asset allocation service, you should complete a Delaware Group Asset
Planner Account Registration Form, which is available only from a financial
adviser or investment dealer. As previously described, the Delaware Group Asset
Planner service offers a choice of four predesigned asset allocation strategies
(each with a different risk/reward profile) in predetermined percentages in
Delaware Group funds. Or, with the help of a financial adviser, you may design a
customized asset allocation strategy.
The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. Exchanges from existing Delaware
Group accounts into the Asset Planner service may be made at net asset value
under the circumstances described under Investing by Exchange, above. The
minimum initial investment per Strategy is $2,000; subsequent investments must
be at least $100. Individual fund minimums do not apply to investments made
using the Asset Planner service. Class A, Class B and Class C Shares are
available through the Asset Planner service. Generally, only shares within the
same class may be used within the same Strategy. However, Class A Shares of the
Fund and of other funds in the Delaware Group may be used in the same Strategy
with consultant class shares that are offered by certain other Delaware Group
funds. See Appendix B--Classes Offered for the funds in the Delaware Group that
offer consultant class shares.
An annual maintenance fee, currently $35 per Strategy, is typically due
at the time of initial investment and by September 30th of each subsequent year.
The fee, payable to Delaware Service Company, Inc. to defray extra costs
associated with administering the Asset Planner service, will be deducted
automatically from one of the funds within your Asset Planner account if not
paid by September 30th. However, effective November 1, 1996, the annual fee is
waived until further notice. Investors who utilize the Asset Planner for an IRA
will continue to pay an annual IRA fee of $15 per Social Security number. See
Part B.
Investors will receive a customized quarterly Strategy Report
summarizing all Delaware Group Asset Planner investment performance and account
activity during the prior period. Confirmation statements will be sent following
all transactions other than those involving a reinvestment of distributions.
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(DGVF-ABC)
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
Purchase Price and Effective Date
The offering price and net asset value of Class A, Class B and
Class C Shares are determined as of the close of regular trading on the New York
Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the Exchange is
open.
The effective date of a purchase made through an investment dealer is
the date the order is received by the Fund. The effective date of a direct
purchase is the day your wire, electronic transfer or check is received, unless
it is received after the time the offering price or net asset value of shares is
determined, as noted above. Purchase orders received after such time will be
effective the next business day.
The Conditions of Your Purchase
The Fund reserves the right to reject any purchase order. If a purchase
is canceled because your check is returned unpaid, you are responsible for any
loss incurred. The Fund can redeem shares from your account(s) to reimburse
itself for any loss, and you may be restricted from making future purchases in
any of the funds in the Delaware Group. The Fund reserves the right to reject
purchase orders paid by third-party checks or checks that are not drawn on a
domestic branch of a United States financial institution. If a check drawn on a
foreign financial institution is accepted, you may be subject to additional bank
charges for clearance and currency conversion.
The Fund also reserves the right, following shareholder notification,
to charge a service fee on non- retirement accounts that, as a result of a
redemption, have remained below the minimum stated account balance for a period
of three or more consecutive months. Holders of such accounts may be notified of
their insufficient account balance and advised that they have until the end of
the current calendar quarter to raise their balance to the stated minimum. If
the account has not reached the minimum balance requirement by that time, the
Fund will charge a $9 fee for that quarter and each subsequent calendar quarter
until the account is brought up to the minimum balance. The service fee will be
deducted from the account during the first week of each calendar quarter for the
previous quarter, and will be used to help defray the cost of maintaining
low-balance accounts. No fees will be charged without proper notice, and no CDSC
will apply to such assessments.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under the minimum initial purchase
amount as a result of redemptions. An investor making the minimum initial
investment may be subject to involuntary redemption without the imposition of a
CDSC or Limited CDSC if he or she redeems any portion of his or her account.
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(DGVF-ABC)
REDEMPTION AND EXCHANGE
You can redeem or exchange your shares in a number of different ways.
The exchange service is useful if your investment requirements change and you
want an easy way to invest in other equity funds, tax- advantaged funds, bond
funds or money market funds. This service is also useful if you are anticipating
a major expenditure and want to move a portion of your investment into a fund
that has the checkwriting feature. Exchanges are subject to the requirements of
each fund and all exchanges of shares constitute taxable events. See Taxes.
Further, in order for an exchange to be processed, shares of the fund being
acquired must be registered in the state where the acquiring shareholder
resides. You may want to consult your financial adviser or investment dealer to
discuss which funds in the Delaware Group will best meet your changing
objectives, and the consequences of any exchange transaction. You may also call
the Delaware Group directly for fund information.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after the Fund receives your request in good order,
subject, in the case of a redemption, to any applicable CDSC or Limited CDSC.
Redemption or exchange requests received in good order after the time the
offering price and net asset value of shares are determined, as noted above,
will be processed on the next business day. See Purchase Price and Effective
Date under How to Buy Shares. A shareholder submitting a redemption request may
indicate that he or she wishes to receive redemption proceeds of a specific
dollar amount. In the case of such a request, and in the case of certain
redemptions from retirement plan accounts, the Fund will redeem the number of
shares necessary to deduct the applicable CDSC in the case of Class B and Class
C Shares, or, if applicable, the Limited CDSC in the case of Class A Shares and
tender to the shareholder the requested amount, assuming the shareholder holds
enough shares in his or her account for the redemption to be processed in this
manner. Otherwise, the amount tendered to the shareholder upon redemption will
be reduced by the amount of the applicable CDSC or Limited CDSC. Redemption
proceeds will be distributed promptly, as described below, but not later than
seven days after receipt of a redemption request.
Except as noted below, for a redemption request to be in "good order,"
you must provide your account number, account registration, and the total number
of shares or dollar amount of the transaction. For exchange requests, you must
also provide the name of the fund you want to receive the proceeds. Exchange
instructions and redemption requests must be signed by the record owner(s)
exactly as the shares are registered. You may request a redemption or an
exchange by calling the Shareholder Service Center at 800-523-1918. The Fund may
suspend, terminate, or amend the terms of the exchange privilege upon 60 days'
written notice to shareholders.
The Fund will process written and telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. The Fund will honor redemption requests as to shares for which a check
was tendered as payment, but the Fund will not mail or wire the proceeds until
it is reasonably satisfied that the check has cleared, which may take up to 15
days from the purchase date. You can avoid this potential delay if you purchase
shares by wiring Federal Funds. The Fund reserves the right to reject a written
or telephone redemption request or delay payment of redemption proceeds if there
has been a recent change to the shareholder's address of record.
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(DGVF-ABC)
There is no front-end sales charge or fee for exchanges made between
shares of funds which both carry a front-end sales charge. Any applicable
front-end sales charge will apply to exchanges from shares of funds not subject
to a front-end sales charge, except for exchanges involving assets that were
previously invested in a fund with a front-end sales charge and/or exchanges
involving the reinvestment of dividends.
Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for shares of other funds in the Delaware Group (in each
case, "New Shares") in a permitted exchange, will not be subject to a CDSC that
might otherwise be due upon redemption of the Original Shares. However, such
shareholders will continue to be subject to the CDSC and, in the case of Class B
Shares, the automatic conversion schedule of the Original Shares as described in
this Prospectus and any CDSC assessed upon redemption will be charged by the
fund from which the Original Shares were exchanged. In an exchange of Class B
Shares from the Fund, the Fund's CDSC schedule may be higher than the CDSC
schedule relating to the New Shares acquired as a result of the exchange. For
purposes of computing the CDSC that may be payable upon a disposition of the New
Shares, the period of time that an investor held the Original Shares is added to
the period of time that an investor held the New Shares. With respect to Class B
Shares, the automatic conversion schedule of the Original Shares may be longer
than that of the New Shares. Consequently, an investment in New Shares by
exchange may subject an investor to the higher 12b-1 fees applicable to Class B
Shares of the Fund for a longer period of time than if the investment in New
Shares were made directly.
Various redemption and exchange methods are outlined below. Except for
the CDSC applicable to certain redemptions of Class B and Class C Shares and the
Limited CDSC applicable to certain redemptions of Class A Shares purchased at
net asset value, there is no fee charged by the Fund or the Distributor for
redeeming or exchanging your shares, but such fees could be charged in the
future. You may have your investment dealer arrange to have your shares redeemed
or exchanged. Your investment dealer may charge for this service.
All authorizations given by shareholders, including selection of any of
the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the Fund or its agent.
Written Redemption
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103
to redeem some or all of your shares. The request must be signed by all owners
of the account or your investment dealer of record. For redemptions of more than
$50,000, or when the proceeds are not sent to the shareholder(s) at the address
of record, the Fund requires a signature by all owners of the account and a
signature guarantee for each owner. Each signature guarantee must be supplied by
an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. The Fund may require further documentation from corporations,
executors, retirement plans, administrators, trustees or guardians.
Payment is normally mailed the next business day after receipt of your
redemption request. If your Class A Shares are in certificate form, the
certificate must accompany your request and also be in good order. Certificates
are issued for Class A Shares only if a shareholder submits a specific request.
Certificates are not issued for Class B Shares or Class C Shares.
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(DGVF-ABC)
Written Exchange
You may also write to the Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your shares into another mutual
fund in the Delaware Group, subject to the same conditions and limitations as
other exchanges noted above.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your Class A Shares in certificate form, you may
redeem or exchange only by written request and you must return your
certificates.
The Telephone Redemption--Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such services available with respect to your account. The Fund
reserves the right to modify, terminate or suspend these procedures upon 60
days' written notice to shareholders. It may be difficult to reach the Fund by
telephone during periods when market or economic conditions lead to an unusually
large volume of telephone requests.
Neither the Fund nor its Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Fund will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Instructions received by telephone are
generally tape recorded, and a written confirmation will be provided for all
purchase, exchange and redemption transactions initiated by telephone. By
exchanging shares by telephone, you are acknowledging prior receipt of a
prospectus for the fund into which your shares are being exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption proceeds of
$50,000 or less mailed to you at your address of record. Checks will be payable
to the shareholder(s) of record. Payment is normally mailed the next business
day after receipt of the redemption request. This service is only available to
individual, joint and individual fiduciary- type accounts.
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must complete an Authorization Form and have your signature
guaranteed. For your protection, your authorization must be on file. If you
request a wire, your funds will normally be sent the next business day.
CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted from your
redemption. If you ask for a check, it will normally be mailed the next business
day after receipt of your redemption request to your predesignated bank account.
There are no separate fees for this redemption method, but the mail time may
delay getting funds into your bank account. Simply call the Shareholder Service
Center prior to the time the offering price and net asset value are determined,
as noted above.
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(DGVF-ABC)
Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to
adjust your investment holdings as your liquidity requirements and investment
objectives change. You or your investment dealer of record can exchange your
shares into other funds in the Delaware Group under the same registration,
subject to the same conditions and limitations as other exchanges noted above.
As with the written exchange service, telephone exchanges are subject to the
requirements of each fund, as described above. Telephone exchanges may be
subject to limitations as to amounts or frequency.
Systematic Withdrawal Plans
1. Regular Plans
This plan provides shareholders with a consistent monthly (or
quarterly) payment. This is particularly useful to shareholders living on fixed
incomes, since it can provide them with a stable supplemental amount. With
accounts of at least $5,000, you may elect monthly withdrawals of $25 (quarterly
$75) or more. The Fund does not recommend any particular monthly amount, as each
shareholder's situation and needs vary. Payments are normally made by check. In
the alternative, you may elect to have your payments transferred from your Fund
account to your predesignated bank account through the MoneyLine Direct Deposit
Service. Your funds will normally be credited to your bank account two business
days after the payment date. There are no separate fees for this redemption
method. See MoneyLine Direct Deposit Service under The Delaware Difference for
more information about this service.
2. Retirement Plans
For shareholders eligible under the applicable retirement plan to
receive benefits in periodic payments, the Systematic Withdrawal Plan provides
you with maximum flexibility. A number of formulas are available for calculating
your withdrawals depending upon whether the distributions are required or
optional. Withdrawals must be for $25 or more; however, no minimum account
balance is required. The MoneyLine Direct Deposit Service described above is not
available for certain retirement plans.
* * *
Shareholders should not purchase additional shares while participating
in a Systematic Withdrawal Plan.
Redemptions of Class A Shares via a Systematic Withdrawal Plan may be
subject to a Limited CDSC if the original purchase was made at net asset value
within the 12 months prior to the withdrawal and a dealer's commission was paid
on that purchase. See Contingent Deferred Sales Charge for Certain Redemptions
of Class A Shares Purchased at Net Asset Value, below.
The applicable CDSC for Class B Shares and Class C Shares redeemed via
a Systematic Withdrawal Plan will be waived if, on the date that the Plan is
established, the annual amount selected to be withdrawn is less than 12% of the
account balance. If the annual amount selected to be withdrawn exceeds 12% of
the account balance on the date that the Systematic Withdrawal Plan is
established, all redemptions under the Plan will be subject to the applicable
CDSC. Whether a waiver of the CDSC is available or not, the first shares to be
redeemed for each Systematic Withdrawal Plan payment will be those not subject
to a CDSC because they have either satisfied the required holding period or were
acquired through the reinvestment of distributions. The 12% annual limit will be
reset on the date that any Systematic Withdrawal Plan is modified (for example,
a change in the amount selected to be withdrawn or the frequency or date of
withdrawals), based on the balance in the account on that date. See Waiver of
Contingent Deferred Sales Charge - Class B and Class C Shares, below.
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(DGVF-ABC)
For more information on Systematic Withdrawal Plans, call the
Shareholder Service Center.
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value
A Limited CDSC will be imposed on certain redemptions of Class A Shares
(or shares into which such Class A Shares are exchanged) made within 12 months
of purchase, if such purchases were made at net asset value and triggered the
payment by the Distributor of the dealer's commission previously described. See
Classes of Shares.
The Limited CDSC will be paid to the Distributor and will be equal to
the lesser of 1% of: (1) the net asset value at the time of purchase of the
Class A Shares being redeemed; or (2) the net asset value of such Class A Shares
at the time of redemption. For purposes of this formula, the "net asset value at
the time of purchase" will be the net asset value at purchase of the Class A
Shares even if those shares are later exchanged for shares of another Delaware
Group fund and, in the event of an exchange of Class A Shares, the "net asset
value of such shares at the time of redemption" will be the net asset value of
the shares acquired in the exchange.
Redemptions of such Class A Shares held for more than 12 months will
not be subjected to the Limited CDSC and an exchange of such Class A Shares into
another Delaware Group fund will not trigger the imposition of the Limited CDSC
at the time of such exchange. The period a shareholder owns shares into which
Class A Shares are exchanged will count towards satisfying the 12-month holding
period. The Limited CDSC is assessed if such 12-month period is not satisfied
irrespective of whether the redemption triggering its payment is of Class A
Shares of the Fund or Class A Shares acquired in the exchange.
In determining whether a Limited CDSC is payable, it will be assumed
that shares not subject to the Limited CDSC are the first redeemed followed by
other shares held for the longest period of time. The Limited CDSC will not be
imposed upon shares representing reinvested dividends or capital gains
distributions, or upon amounts representing share appreciation. All investments
made during a calendar month, regardless of what day of the month the investment
occurred, will age one month on the last day of that month and each subsequent
month.
Waiver of Limited Contingent Deferred Sales Charge - Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission has
been paid will be waived in the following instances: (i) redemptions that result
from the Fund's right to liquidate a shareholder's account if the aggregate net
asset value of the shares held in the account is less than the then-effective
minimum account size; (ii) distributions to participants from a retirement plan
qualified under section 401(a) or 401(k) of the Internal Revenue Code of 1986,
as amended (the "Code"), or due to death of a participant in such a plan; (iii)
redemptions pursuant to the direction of a participant or beneficiary of a
retirement plan qualified under section 401(a) or 401(k) of the Code with
respect to that retirement plan; (iv) distributions from a section 403(b)(7)
Plan or an IRA due to death, disability, or attainment of age 59 1/2; (v)
returns of excess contributions to an IRA; (vi) distributions by other employee
benefit plans to pay benefits; (vii) distributions described in (ii), (iv), and
(vi) above pursuant to a Systematic Withdrawal Plan; and (viii) redemptions by
the classes of shareholders who are permitted to purchase shares at net asset
value, regardless of the size of the purchase (see Buying Class A Shares at Net
Asset Value under Classes of Shares).
Waiver of Contingent Deferred Sales Charge - Class B and Class C Shares
The CDSC is waived on certain redemptions of Class B Shares in
connection with the following redemptions: (i) redemptions that result from the
Fund's right to liquidate a shareholder's account if the aggregate net asset
value of the shares held in the account is less than the then-effective minimum
account size; (ii) returns of excess contributions to an IRA or 403(b)(7)
Deferred Compensation Plan; (iii) required minimum distributions from an IRA,
403(b)(7) Deferred Compensation Plan or 457 Deferred Compensation Plan; and (iv)
distributions from an account if the redemption results from the death of all
registered owners of the account (in the case of accounts established under the
Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust accounts,
the waiver applies upon the death of all beneficial owners) or a total and
permanent disability (as defined in Section 72 of the Code) of all registered
owners occurring after the purchase of the shares being redeemed.
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(DGVF-ABC)
The CDSC on Class C Shares is waived in connection with the following
redemptions: (i) redemptions that result from the Fund's right to liquidate a
shareholder's account if the aggregate net asset value of the shares held in the
account is less than the then-effective minimum account size; (ii) returns of
excess contributions to an IRA, 403(b)(7) Deferred Compensation Plan, Profit
Sharing Plan, Money Purchase Pension Plan or 401(k) Defined
Contribution Plan; (iii) required minimum distributions from an IRA, 403(b)(7)
Deferred Compensation Plan, 457 Deferred Compensation Plan, Profit Sharing Plan,
Money Purchase Pension Plan or 401(k) Defined Contribution Plan; (iv)
distributions from a 403(b)(7) Deferred Compensation Plan, 457 Deferred
Compensation Plan, Profit Sharing Plan or 401(k) Defined Contribution Plan,
under hardship provisions of the plan; (v) distributions from a 403(b)(7)
Deferred Compensation Plan, 457 Deferred Compensation Plan, Profit Sharing Plan,
Money Purchase Pension Plan or a 401(k) Defined Contribution Plan upon
attainment of normal retirement age under the plan or upon separation from
service; (vi) distributions from an IRA on or after attainment of age 59 1/2;
and (vii) distributions from an account if the redemption results from the death
of all registered owners of the account (in the case of accounts established
under the Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust
accounts, the waiver applies upon the death of all beneficial owners) or a total
and permanent disability (as defined in Section 72 of the Code) of all
registered owners occurring after the purchase of the shares being redeemed.
In addition, the CDSC will be waived on Class B and Class C Shares
redeemed in accordance with a Systematic Withdrawal Plan if the annual amount
selected to be withdrawn under the Plan does not exceed 12% of the value of the
account on the date that the Systematic Withdrawal Plan was established or
modified.
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(DGVF-ABC)
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net capital
gains and net investment income earned during the year. Such payments, if any,
will generally be made once a year during the first quarter following the end of
the Fund's fiscal year.
Each class of the Fund will share proportionately in the investment
income and expenses of the Fund, except that the per share dividends from net
investment income on Class A Shares, Class B Shares and Class C Shares will vary
due to the expenses under the 12b-1 Plan applicable to each Class. Generally,
the dividends per share on Class B Shares and Class C Shares can be expected to
be lower than the dividends per share on Class A Shares because the expenses
under the 12b-1 Plans relating to Class B and Class C Shares will be higher than
the expenses under the 12b-1 Plan relating to Class A Shares. See Distribution
(12b-1) and Service under Management of the Fund.
Both dividends and distributions, if any, are automatically reinvested
in your account at net asset value unless you elect otherwise. Any check in
payment of dividends or other distributions which cannot be delivered by the
United States Post Office or which remains uncashed for a period of more than
one year may be reinvested in your account at the then-current net asset value
and the dividend option may be changed from cash to reinvest. If you elect to
take your dividends and distributions in cash and such dividends and
distributions are in an amount of $25 or more, you may choose the MoneyLine
Direct Deposit Service and have such payments transferred from your Fund account
to your predesignated bank account. The MoneyLine Direct Deposit Service is not
available for certain retirement plans. See MoneyLine Direct Deposit Service
under The Delaware Difference for more information about this service.
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(DGVF-ABC)
TAXES
The tax discussion set forth below is included for general information
only. Investors should consult their own tax advisers concerning the federal,
state, local or foreign tax consequences of an investment in the Fund.
The Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Code. As such, the Fund
will not be subject to federal income tax, or to any excise tax, to the extent
its earnings are distributed as provided in the Code.
The Fund intends to distribute substantially all of its net investment
income and net capital gains, if any. Dividends from net investment income or
net short-term capital gains will be taxable to those investors who are subject
to income taxes as ordinary income, whether received in cash or in additional
shares. For corporate investors, dividends from net investment income will
generally qualify in part for the corporate dividends-received deduction. The
portion of dividends paid by the Fund that so qualifies will be designated each
year in a notice from the Fund to the Fund's shareholders. For the fiscal year
ended November 30, 1996, 13.93% of the Fund's dividends from net investment
income qualified for the corporate dividends-received deduction.
Distributions paid by the Fund from long-term capital gains, whether
received in cash or in additional shares, are taxable to those investors who are
subject to income taxes as long-term capital gains, regardless of the length of
time an investor has owned shares in the Fund. The Fund does not seek to realize
any particular amount of capital gains during a year; rather, realized gains are
a by-product of Fund management activities. Consequently, capital gains
distributions may be expected to vary considerably from year to year. Also, for
those investors subject to tax, if purchases of shares in the Fund are made
shortly before the record date for a dividend or capital gains distribution, a
portion of the investment will be returned as a taxable distribution.
Although dividends generally will be treated as distributed when paid,
dividends which are declared in October, November, or December to shareholders
of record on a specified date in one of those months, but which, for operational
reasons, may not be paid to the shareholder until the following January, will be
treated for tax purposes as if paid by the Fund and received by the shareholder
on December 31 of the year declared.
The sale of shares of the Fund is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may be
realized from an ordinary redemption of shares or an exchange of shares between
the Fund and any other fund in the Delaware Group. Any loss incurred on a sale
or exchange of Fund shares that had been held for six months or less will be
treated as a long-term capital loss to the extent of capital gain dividends
received with respect to such shares. All or a portion of the sales charge
incurred in acquiring the Fund's shares will be excluded from the federal tax
basis of any of such shares sold or exchanged within 90 days of their purchase
(for purposes of determining gain or loss upon sale of such shares) if the sale
proceeds are reinvested in the Fund or in another fund in the Delaware Group of
funds and a sales charge that would otherwise apply to the reinvestment is
reduced or eliminated. Any portion of such sales charge excluded from the tax
basis of the shares sold will be added to the tax basis of the shares acquired
in the reinvestment.
The automatic conversion of Class B Shares into Class A Shares at the
end of approximately eight years after purchase will be tax-free for federal tax
purposes. See Automatic Conversion of Class B Shares under Classes of Shares.
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(DGVF-ABC)
In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital gains
realized from certain types of U.S. government securities may be exempt from
state personal income taxes. Shares of the Fund are exempt from Pennsylvania
county personal property taxes.
Each year, Equity Funds V, Inc. will mail to you information on the tax
status of the Fund's dividends and distributions. Shareholders will also receive
each year information as to the portion of dividend income, if any, that is
derived from U.S. government securities that are exempt from state income tax.
Of course, shareholders who are not subject to tax on their income would not be
required to pay tax on amounts distributed to them by the Fund.
Equity Funds V, Inc. is required to withhold 31% of taxable dividends,
capital gains distributions, and redemptions paid to shareholders who have not
complied with IRS taxpayer identification regulations. You may avoid this
withholding requirement by certifying on your Investment Application your proper
Taxpayer Identification Number and by certifying that you are not subject to
backup withholding.
See Accounting and Tax Issues and Distributions and Taxes in Part B for
additional information on tax matters relating to the Fund and its shareholders.
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(DGVF-ABC)
CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE
The net asset value ("NAV") per share is computed by adding the value
of all securities and other assets in the portfolio, deducting any liabilities
(expenses and fees are accrued daily) and dividing by the number of shares
outstanding. Portfolio securities for which market quotations are available are
priced at market value. Foreign securities expressed in foreign currency values
will be converted into U.S. dollar values at the mean between the currencies'
bid and offered quotations. Short-term investments having a maturity of less
than 60 days are valued at amortized cost, which approximates market value. All
other securities are valued at their fair value as determined in good faith and
in a method approved by Equity Funds V, Inc.'s Board of Directors.
Class A Shares are purchased at the offering price per share, while
Class B Shares and Class C Shares are purchased at the NAV per share. The
offering price per share of Class A Shares consists of the NAV per share next
computed after the order is received, plus any applicable front-end sales
charges.
The offering price and NAV are computed as of the close of regular
trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern time) on
days when the Exchange is open.
The net asset values of all outstanding shares of each class of the
Fund will be computed on a pro-rata basis for each outstanding share based on
the proportionate participation in the Fund represented by the value of shares
of that class. All income earned and expenses incurred by the Fund will be borne
on a pro-rata basis by each outstanding share of a class, based on each class'
percentage in the Fund represented by the value of shares of such classes,
except that Value Fund Institutional Class will not incur any of the expenses
under Equity Funds V, Inc.'s 12b-1 Plans and Class A, Class B and Class C
Shares alone will bear the 12b-1 Plan expenses payable under their respective
Plans. Due to the specific distribution expenses and other costs that will be
allocable to each class, the NAV of each class of the Fund will vary.
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(DGVF-ABC)
MANAGEMENT OF THE FUND
Directors
The business and affairs of Equity Funds V, Inc. are managed under the
direction of its Board of Directors. Part B contains additional information
regarding Equity Funds V, Inc.'s directors and officers.
Investment Manager
The Manager furnishes investment management services to the Fund.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On November 30, 1996, the Manager and its affiliates
within the Delaware Group, including Delaware International Advisers Ltd., were
managing in the aggregate more than $32 billion in assets in the various
institutional or separately managed (approximately $20,311,203,919) and
investment company (approximately $11,765,348,126) accounts.
The Manager is an indirect, wholly owned subsidiary of Delaware
Management Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a
wholly owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH and the Manager are now indirect, wholly owned subsidiaries, and
subject to the ultimate control, of Lincoln National. Lincoln National, with
headquarters in Fort Wayne, Indiana, is a diversified organization with
operations in many aspects of the financial services industry, including
insurance and investment management. In connection with the merger, a new
Investment Management Agreement between the Fund and the Manager was executed
following shareholder approval.
The Manager manages the Fund's portfolio and makes investment
decisions. The Manager also administers Equity Funds V, Inc.'s affairs and pays
the salaries of all the directors, officers and employees of Equity Funds V,
Inc. who are affiliated with the Manager. For these services, the Manager is
paid an annual fee of 3/4 of 1% of the average daily net assets of the Fund,
less all directors' fees paid to the unaffiliated directors of Equity Funds V,
Inc. The Fund's fee is higher than that paid by many other funds and may be
higher or lower than that paid by funds with comparable investment objectives.
Investment management fees paid by the Fund for the fiscal year ended November
30, 1996 were 0.75% of average daily net assets.
David C. Dalrymple has had primary responsibility for making day-to-day
investment decisions for the Fund since August 21, 1995. Prior to then, Mr.
Dalrymple served as an assistant portfolio manager of Delaware Group Equity
Funds IV, Inc. Mr. Dalrymple holds a BS in Business Administration from Clarkson
College in Potsdam, NY, and an MBA from Cornell Johnson School of Management in
Ithaca, NY. Prior to joining the Delaware Group in 1991, he spent five years as
an assistant portfolio manager for Lord Abbett and Co. in New York. Mr.
Dalrymple is a CFA charterholder and a member of the Financial Analysts of
Philadelphia.
In making investment decisions for the Fund, Mr. Dalrymple consults
with Wayne A. Stork and Richard G. Unruh, Jr. Mr. Stork, Chairman of the Manager
and Equity Funds V, Inc.'s Board of Directors, is a graduate of Brown University
and attended New York University's Graduate School of Business Administration.
Mr. Stork joined the Delaware Group in 1962 and has served in various executive
capacities at different times within the Delaware organization. A graduate of
Brown University, Mr. Unruh received his MBA from the University of
Pennsylvania's Wharton School and joined the Delaware Group in 1982 after 19
years of investment management experience with Kidder, Peabody & Co. Inc. Mr.
Unruh was named an Executive Vice President of Equity Funds V, Inc. in 1994. He
is also a member of the Board of Directors of the Manager and was named an
Executive Vice President of the Manager in 1994.
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(DGVF-ABC)
Portfolio Trading Practices
The Fund normally will not invest for short-term trading purposes.
However, the Fund may sell securities without regard to the length of time they
have been held. The degree of portfolio activity will affect brokerage costs of
the Fund and may affect taxes payable by the Fund's shareholders to the extent
that net capital gains are realized. Given the Fund's investment objective, its
annual portfolio turnover rate may exceed 100%. A turnover rate of 100% would
occur, for example, if all the investments in the Fund's portfolio at the
beginning of the year were replaced by the end of the year. During the past two
fiscal years, the Fund's portfolio turnover rates were 65% for 1995 and 87% for
1996.
The Fund uses its best efforts to obtain the best available price and
most favorable execution for portfolio transactions. Orders may be placed with
brokers or dealers who provide brokerage and research services to the Manager or
its advisory clients. These services may be used by the Manager in servicing any
of its accounts. Subject to best price and execution, the Fund may consider a
broker/dealer's sales of its shares in placing portfolio orders and may place
orders with broker/dealers that have agreed to defray certain Fund expenses such
as custodian fees.
Performance Information
From time to time, the Fund may quote total return performance of the
Classes in advertising and other types of literature.
Total return will be based on a hypothetical $1,000 investment,
reflecting the reinvestment of all distributions at net asset value and: (i) in
the case of Class A Shares, the impact of the maximum front-end sales charge at
the beginning of each specified period; and (ii) in the case of Class B Shares
and Class C Shares, the deduction of any applicable CDSC at the end of the
relevant period. Each presentation will include the average annual total return
for one-, five- and ten-year or life-of-fund periods, as relevant. The Fund may
also advertise aggregate and average total return information concerning a Class
over additional periods of time. In addition, the Fund may present total return
information that does not reflect the deduction of the maximum front-end sales
charge or any applicable CDSC. In this case, such total return information would
be more favorable than total return information that includes the deductions of
the maximum front-end sales charge or any applicable CDSC.
Because securities prices fluctuate, investment results of the Classes
will fluctuate over time. Past performance is not a guarantee of future results.
Distribution (12b-1) and Service
The Distributor, Delaware Distributors, L.P., serves as the national
distributor of the Fund's shares under a Distribution Agreement with Equity
Funds V, Inc. dated April 3, 1995, as amended on November 29, 1995.
Equity Funds V, Inc. has adopted a separate distribution plan under
Rule 12b-1 for each of the Class A Shares, Class B Shares and Class C Shares
(the "Plans"). Each Plan permits the Fund to pay the Distributor from the assets
of the respective Classes a monthly fee for the Distributor's services and
expenses in distributing and promoting sales of shares.
These expenses include, among other things, preparing and distributing
advertisements, sales literature, and prospectuses and reports used for sales
purposes, compensating sales and marketing personnel, holding special promotions
for specified periods of time, and paying distribution and maintenance fees to
brokers,
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(DGVF-ABC)
dealers and others. In connection with the promotion of shares of the Classes,
the Distributor may, from time to time, pay to participate in dealer-sponsored
seminars and conferences, and reimburse dealers for expenses incurred in
connection with preapproved seminars, conferences and advertising. The
Distributor may pay or allow additional promotional incentives to dealers as
part of preapproved sales contests and/or to dealers who provide extra training
and information concerning a Class and increase sales of the Class. In addition,
the Fund may make payments from the 12b-1 Plan fees of its respective Classes
directly to others, such as banks, who aid in the distribution of Class shares
or provide services in respect of a Class, pursuant to service agreements with
Equity Funds V, Inc.
The 12b-1 Plan expenses relating to each of the Class B Shares and
Class C Shares are also used to pay the Distributor for advancing the commission
costs to dealers with respect to the initial sale of such shares.
The aggregate fees paid by the Fund from the assets of the respective
Classes to the Distributor and others under the Plans may not exceed (i) 0.30%
of the Class A Shares' average daily net assets in any year, and (ii) 1% (0.25%
of which are service fees to be paid by the Fund to the Distributor, dealers and
others, for providing personal service and/or maintaining shareholder accounts)
of each of the Class B Shares' and Class C Shares' average daily net assets in
any year. Class A, Class B and Class C Shares will not incur any distribution
expenses beyond these limits, which may not be increased without shareholder
approval.
While payments pursuant to the Plans may not exceed 0.30% annually with
respect to Class A Shares, and 1% annually with respect to each of the Class B
Shares and the Class C Shares, the Plans do not limit fees to amounts actually
expended by the Distributor. It is therefore possible that the Distributor may
realize a profit in any particular year. However, the Distributor currently
expects that its distribution expenses will likely equal or exceed payments to
it under the Plans. The Distributor may, however, incur such additional expenses
and make additional payments to dealers from its own resources to promote the
distribution of shares of the Classes. The monthly fees paid to the Distributor
under the Plans are subject to the review and approval of Equity Funds V, Inc.'s
unaffiliated directors, who may reduce the fees or terminate the Plans at any
time.
The Plans do not apply to Value Fund Institutional Class of shares.
Those shares are not included in calculating the Plans' fees, and the Plans are
not used to assist in the distribution and marketing of Value Fund Institutional
Class.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Fund
pursuant to an amended and restated agreement dated November 29, 1996. The
Transfer Agent also provides accounting services to the Fund pursuant to the
terms of a separate Fund Accounting Agreement. The directors of Equity Funds V,
Inc. annually review service fees paid to the Transfer Agent.
The Distributor and the Transfer Agent are also indirect, wholly owned
subsidiaries of DMH.
Expenses
The Fund is responsible for all of its own expenses other than those
borne by the Manager under the Investment Management Agreement and those borne
by the Distributor under the Distribution Agreement. For the fiscal year ended
November 30, 1996, the ratios of expenses to average daily net assets were 1.45%
for Class A Shares, 2.15% for Class B Shares and 2.15% for Class C Shares. The
expense ratio of each Class reflects the impact of its 12b-1 Plan.
-42-
<PAGE>
(DGVF-ABC)
Shares
Equity Funds V, Inc. is an open-end management investment company. The
Fund's portfolio of assets is diversified as defined by the 1940 Act. Commonly
known as a mutual fund, Equity Funds V, Inc. was organized as a Maryland
corporation on January 16, 1987. In addition to the Fund, Equity Funds V, Inc.
presently offers one other series of shares, the Retirement Income Fund series.
Fund shares have a par value of $.01, equal voting rights, except as
noted below, and are equal in all other respects.
Equity Funds V, Inc. shares have noncumulative voting rights which
means that the holders of more than 50% of Equity Funds V, Inc.'s shares voting
for the election of directors can elect 100% of the directors if they choose to
do so. Under Maryland law, Equity Funds V, Inc. is not required, and does not
intend, to hold annual meetings of shareholders unless, under certain
circumstances, it is required to do so under the 1940 Act. Shareholders of 10%
or more of Equity Funds V, Inc.'s outstanding shares may request that a special
meeting be called to consider the removal of a director.
In addition to Class A Shares, Class B Shares and Class C Shares, the
Fund also offers Value Fund Institutional Class shares. Shares of each class
represent proportionate interests in the assets of the Fund and have the same
voting and other rights and preferences as the other classes of the Fund, except
that shares of Value Fund Institutional Class are not subject to, and may not
vote on matters affecting, the Distribution Plans under Rule 12b-1 relating to
Class A, Class B and Class C Shares. Similarly, as a general matter, the
shareholders of Class A Shares, Class B Shares and Class C Shares may vote only
on matters affecting the 12b-1 Plan that relates to the class of shares that
they hold. However, Class B Shares may vote on any proposal to increase
materially the fees to be paid by the Fund under the 12b-1 Plan relating to
Class A Shares.
Prior to September 6, 1994, Value Fund A Class was known as the
Value Fund class and Value Fund Institutional Class was known as the Value
Fund (Institutional) class.
-43-
<PAGE>
(DGVF-ABC)
OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS
Foreign Securities
The Fund may invest up to 25% of its assets in foreign securities.
Foreign markets may be more volatile than U.S. markets. Such investments involve
sovereign risk in addition to the normal risks associated with U.S. securities.
These risks include political risks, foreign taxes and exchange controls and
currency fluctuations. For example, foreign portfolio investments may fluctuate
in value due to changes in currency rates (i.e., the value of foreign
investments would increase with a fall in the value of the dollar, and decrease
with a rise in the value of the dollar) and control regulations apart from
market fluctuations. The Fund may also experience delays in foreign securities
settlement.
The Fund will, from time to time, conduct foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or through entering into contracts to purchase
or sell foreign currencies at a future date (i.e., a "forward foreign currency"
contract or "forward" contract). Investors should be aware that there are costs
and risks associated with such currency transactions. The Fund may enter into
forward contracts to "lock in" the price of a security it has agreed to purchase
or sell, in terms of U.S. dollars or other currencies in which the transaction
will be consummated. When the Manager believes that the currency of a particular
foreign country may suffer a decline against the U.S. dollar or against another
currency, the Fund may enter into a forward contract to sell, for a fixed amount
of U.S. dollars or other appropriate currency, the amount of foreign currency
approximating the value of some or all of the Fund's securities denominated in
such foreign currency. It is impossible to predict precisely the market value of
portfolio securities at the expiration of the forward contract. Accordingly, it
may be necessary for the Fund to purchase or sell additional foreign currency on
the spot market (and bear the expense of such purchase or sale) if the market
value of the security is less than or greater than the amount of foreign
currency the Fund is obligated to deliver.
The Fund may incur gains or losses from currency transactions. No type
of foreign currency transaction will eliminate fluctuations in the prices of the
Fund's foreign securities or will prevent losses if the prices of such
securities should decline.
The Fund's Custodian for its foreign securities is The Chase Manhattan
Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245.
Rule 144A Securities
The Fund may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933. Rule 144A permits many privately
placed and legally restricted securities to be freely traded among certain
institutional buyers such as the Fund. The Fund may invest no more than 10% of
the value of its net assets in illiquid securities.
While maintaining oversight, the Board of Directors has delegated to
the Manager the day-to-day function of determining whether or not individual
Rule 144A Securities are liquid for purposes of the Fund's 10% limitation on
investments in illiquid assets. The Board has instructed the Manager to consider
the following factors in determining the liquidity of a Rule 144A Security: (i)
the frequency of trades and trading volume for the security; (ii) whether at
least three dealers are willing to purchase or sell the security and the number
of potential purchasers; (iii) whether at least two dealers are making a market
in the security; and (iv) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security, the method
of soliciting offers, and the mechanics of transfer).
-44-
<PAGE>
(DGVF-ABC)
If the Manager determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
Fund's holdings of illiquid securities exceed the Fund's 10% limit on investment
in such securities, the Manager will determine what action to take to ensure
that the Fund continues to adhere to such limitation.
Repurchase Agreements
The Fund may also use repurchase agreements that are at least 100%
collateralized by U.S. government securities. Repurchase agreements help the
Fund to invest cash on a temporary basis. The Fund may invest cash balances in
joint repurchase agreements with other Delaware Group funds. Under a repurchase
agreement, the Fund acquires ownership and possession of a security, and the
seller agrees to buy the security back at a specified time and higher price. If
the seller is unable to repurchase the security, the Fund could experience
delays in liquidating the securities. To minimize this possibility, the Fund
considers the creditworthiness of banks and dealers when entering into
repurchase agreements.
Portfolio Loan Transactions
The Fund may loan up to 25% of its assets to qualified broker/dealers
or institutional investors for their use relating to short sales or other
security transactions.
The major risk to which the Fund would be exposed on a loan transaction
is the risk that the borrower would go bankrupt at a time when the value of the
security goes up. Therefore, the Fund will only enter into loan arrangements
after a review of all pertinent facts by the Manager, subject to overall
supervision by the Board of Directors, including the creditworthiness of the
borrowing broker, dealer or institution and then only if the consideration to be
received from such loans would justify the risk. Creditworthiness will be
monitored on an ongoing basis by the Manager.
* * *
The Fund is permitted under certain circumstances to borrow money.
Investment securities will not be purchased while the Fund has an outstanding
borrowing.
Call Options
Writing Covered Call Options
A covered call option obligates the Fund to sell one of its securities
for an agreed price up to an agreed date. When the Fund writes a call, it
receives a premium and agrees to sell the callable securities to a purchaser of
a corresponding call during the call period (usually not more than nine months)
at a fixed exercise price regardless of market price changes during the call
period. The advantage is that the Fund receives premium income for the limited
purpose of offsetting the costs of purchasing put options or offsetting any
capital loss or decline in market value of the security. However, if the
Manager's forecast is wrong, the Fund may not fully participate in the market
appreciation if the security's price rises.
Writing a Call Option on Stock Indices
Writing a call option on stock indices is similar to the writing of a
call option on an individual stock. Stock indices used will include, but not be
limited to, the S&P 100 and the S&P Over-The-Counter ("OTC") 250.
-45-
<PAGE>
(DGVF-ABC)
Put Options
Purchasing a Put Option
A put option gives the Fund the right to sell one of its securities for
an agreed price up to an agreed date. The advantage is that the Fund can be
protected should the market value of the security decline. However, the Fund
must pay a premium for this right which would be lost if the option is not
exercised.
Purchasing a Put Option on Stock Indices
Purchasing a protective put option on stock indices is similar to the
purchase of protective puts on an individual stock. Indices used will include,
but not be limited to, the S&P 100 and the S&P OTC 250.
Closing Transactions
Closing transactions essentially let the Fund offset a put option or
covered call option prior to its exercise or expiration. If the Fund cannot
effect a closing transaction, it may have to hold a security it would otherwise
sell or deliver a security it might want to hold.
Part B sets forth other more specific investment restrictions.
-46-
<PAGE>
(DGVF-ABC)
APPENDIX B--CLASSES OFFERED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Growth of Capital A Class B Class C Class Consultant Class
Trend Fund x x x -
Enterprise Fund x x x -
DelCap Fund x x x -
Value Fund x x x -
U.S. Growth Fund x x x -
Total Return
Devon Fund x x x -
Decatur Total Return Fund x x x -
Decatur Income Fund x x x -
Delaware Fund x x x -
Global Diversification
Emerging Markets Fund x x x -
New Pacific Fund x x x -
International Equity Fund x x x -
World Growth Fund x x x -
Global Assets Fund x x x -
Global Bond Fund x x x -
Current Income
Delchester Fund x x x -
Strategic Income Fund x x x -
Corporate Income Fund x x x -
Federal Bond Fund x x x -
U.S. Government Fund x x x -
Limited-Term Government Fund x x x -
Tax-Free Current Income
Tax-Free Pennsylvania Fund x x x -
Tax-Free USA Fund x x x -
Tax-Free Insured Fund x x x -
Tax-Free USA Intermediate Fund x x x -
Money Market Funds
Delaware Cash Reserve x x x x
U.S. Government Money Fund x - - x
Tax-Free Money Fund x - - x
</TABLE>
-47-
<PAGE>
(DGVF-ABC)
APPENDIX C -- RATINGS
Bonds
Excerpts from Moody's description of its bond ratings: Aaa--judged to
be the best quality. They carry the smallest degree of investment risk;
Aa--judged to be of high quality by all standards; A--possess favorable
attributes and are considered "upper medium" grade obligations; Baa--considered
as medium grade obligations. Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or may
be characteristically unreliable over any great length of time; Ba--judged to
have speculative elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class; B--generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small; Caa--are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest; Ca--represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings; C--the lowest
rated class of bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Excerpts from S&P's description of its bond ratings: AAA--highest grade
obligations. They possess the ultimate degree of protection as to principal and
interest; AA--also qualify as high grade obligations, and in the majority of
instances differ from AAA issues only in a small degree; A--strong ability to
pay interest and repay principal although more susceptible to changes in
circumstances; BBB--regarded as having an adequate capacity to pay interest and
repay principal; BB, B, CCC, CC--regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions; C--reserved
for income bonds on which no interest is being paid; D--in default, and payment
of interest and/or repayment of principal is in arrears.
-48-
<PAGE>
(DGVF-ABC)
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, tax-free funds, money market funds,
global and international funds and closed-end equity funds give investors the
ability to create a portfolio that fits their personal financial goals. For more
information, contact your financial adviser or call Delaware Group at
800-523-4640.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
<PAGE>
- ------------------------------------------------------------------------------
VALUE FUND
- ------------------------------------------------------------------------------
A CLASS
- ------------------------------------------------------------------------------
B CLASS
- ------------------------------------------------------------------------------
C CLASS
- ------------------------------------------------------------------------------
P R O S P E C T U S
- ------------------------------------------------------------------------------
JANUARY 29, 1997
DELAWARE
GROUP
==================
<PAGE>
(DGVF-ABC)
APPENDIX A - INVESTMENT ILLUSTRATIONS
Illustrations of Hypothetical Returns on Investments Based on Purchase Option
$10,000 Purchase
<TABLE>
<CAPTION>
Scenario 1 Scenario 2
No Redemption Redeem 1st Year
-------------------------------------- -------------------------------------
Year Class A Class B Class C Class A Class B Class C
---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000
1 10,478 10,930 10,930 10,478 10,530 10,830+
2 11,525 11,946 11,946
3 12,678 13,058 13,058
4 13,946 14,272 14,272
5 15,340 15,599 15,599
6 16,874 17,050 17,050
7 18,562 18,636 18,636
8 20,418+ 20,369 20,369
9 22,459 22,405* 22,263
10 24,705 24,646* 24,333
</TABLE>
(RESTUBBED FROM ABOVE)
<TABLE>
<CAPTION>
Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
------------------------------------- ------------------------------------
Year Class A Class B Class C Class A Class B Class C
---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000
1 10,478 10,930 10,930 10,478 10,930 10,930
2 11,525 11,946 11,946 11,525 11,946 11,946
3 12,678 12,758 13,058+ 12,678 13,058 13,058
4 13,946 14,272 14,272
5 15,340 15,399 15,599+
6
7
8
9
10
</TABLE>
* This assumes that Class B Shares were converted to
Class A Shares at the end of the eighth year.
<PAGE>
$250,000 Purchase
<TABLE>
<CAPTION>
Scenario 1 Scenario 2
No Redemption Redeem 1st Year
---------------------------------------- ------------------------------------
Year Class A Class B Class C Class A Class B Class C
---- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 263,250 270,750+
2 294,938 298,662 298,662
3 324,431 326,438 326,438
4 356,874+ 356,797 356,797
5 392,562 389,979 389,979
6 431,818 426,247 426,247
7 475,000 465,888 465,888
8 522,500 509,215 509,215
9 574,750 560,137* 556,572
10 632,225 616,150* 608,333
</TABLE>
(RESTUBBED FROM ABOVE)
<TABLE>
<CAPTION>
Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
------------------------------------------ --------------------------------------
Year Class A Class B Class C Class A Class B Class C
---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 273,250 273,250
2 294,938 298,662 298,662 294,938 298,662 298,662
3 324,431 318,938 326,438+ 324,431 326,438 326,438
4 356,874+ 356,797 356,797
5 392,562 384,979 389,979
6
7
8
9
10
</TABLE>
*This assumes that Class B Shares were converted to
Class A Shares at the end of the eighth year.
Assumes a hypothetical return for Class A of 10% per year, a hypothetical return
for Class B of 9.3% per year for years 1-8 and 10% for years 9-10, and a
hypothetical return for Class C of 9.3% per year.
Hypothetical returns vary due to the different expense structures for each
Class and do not represent actual performance.
Class A purchase subject to appropriate sales charge breakpoint (4.75% @
$10,000; 3.75% @ $100,000; 2.50% @ $250,000).
Class B purchase assessed appropriate CDSC upon redemption (4%-4%-3%-3%-2%-1%
in years 1-2-3-4-5-6).
Class C purchase assessed 1% CDSC upon redemption in year 1.
Figures marked "+" identify which Class offers the greater return potential
based on investment amount, the holding period and the expense structure for
each Class.
<PAGE>
(DGVF-IC)
PROSPECTUS
VALUE FUND INSTITUTIONAL JANUARY 29, 1997
----------------------------------------------------------------------
1818 Market Street, Philadelphia, PA 19103
For more information about Value Fund Institutional Class
call Delaware Group at 800-828-5052.
This Prospectus describes the shares of the Value Fund series (the
"Fund") of Delaware Fund Equity Funds V, Inc. ("Equity Funds V, Inc.") (formerly
Delaware Group Value Fund, Inc.), a professionally-managed mutual fund of the
series type. The Fund intends to achieve its objective of capital appreciation
by investing primarily in common stocks whose market values appear low relative
to their underlying value or future potential.
The Fund offers Value Fund Institutional Class (the "Class") of shares.
This Prospectus relates only to the Class and sets forth information
that you should read and consider before you invest. Please retain it for future
reference. The Fund's Statement of Additional Information ("Part B of Equity
Funds V, Inc.'s registration statement), dated January 29, 1997, as it may be
amended from time to time, contains additional information about the Fund and
has been filed with the Securities and Exchange Commission. Part B is
incorporated by reference into this Prospectus and is available, without charge,
by writing to Delaware Distributors, L.P. at the above address or by calling the
above number. The Fund's financial statements appear in its Annual Report, which
will accompany any response to requests for Part B.
The Fund also offers Value Fund A Class, Value Fund B Class and Value
Fund C Class. Shares of these classes are subject to sales charges and other
expenses, which may affect their performance. A prospectus for these classes can
be obtained by writing to Delaware Distributors, L.P. at the above address or by
calling 800-523-4640.
-1-
<PAGE>
(DGVF-IC)
TABLE OF CONTENTS
Cover Page Classes of Shares
Synopsis How to Buy Shares
Summary of Expenses Redemption and Exchange
Financial Highlights Dividends and Distributions
Investment Objective and Policy Taxes
Suitability Calculation of Net Asset Value Per Share
Investment Strategy Management of the Fund
Risk Factors Other Investment Policies
and Risk Considerations
Appendix A--Ratings
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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.
-2-
<PAGE>
(DGVF-IC)
SYNOPSIS
Investment Objective
The investment objective of the Fund is to seek capital appreciation by
investing primarily in common stocks whose market values appear low relative to
their underlying value or future potential. For further details, see Investment
Objective and Policy and Other Investment Policies and Risk Considerations.
Risk Factors and Special Considerations
The Fund may enter into options for hedging purposes to counterbalance
portfolio volatility. While the Fund does not engage in options for speculative
purposes, there are risks that result from use of these instruments by the Fund,
and the investor should review the descriptions of these risks in this
Prospectus. See Investment Strategy under Investment Objective and Policy and
Other Investment Policies and Risk Considerations.
Investment Manager, Distributor and Service Agent
Delaware Management Company, Inc. (the "Manager") furnishes investment
management services to the Fund, subject to the supervision and direction of
Equity Funds V, Inc.'s Board of Directors. The Manager also provides investment
management services to certain of the other funds in the Delaware Group.
Delaware Distributors, L.P. (the "Distributor") is the national distributor for
the Fund and for all of the other mutual funds in the Delaware Group. Delaware
Service Company, Inc. (the "Transfer Agent") is the shareholder servicing,
dividend disbursing, accounting services and transfer agent for the Fund and for
all of the other mutual funds in the Delaware Group. See Summary of Expenses and
Management of the Fund for further information regarding the Manager and the
fees payable under the Fund's Investment Management Agreement.
Purchase Price
Shares of the Class offered by this Prospectus are available at net
asset value, without a front-end or contingent deferred sales charge and are not
subject to distribution fees under a Rule 12b-1 distribution plan. See Classes
of Shares.
Redemption and Exchange
Shares of the Class are redeemed or exchanged at the net asset value
calculated after receipt of the redemption or exchange request. See Redemption
and Exchange.
Open-End Investment Company
Equity Funds V, Inc., which was organized as a Maryland corporation on
January 16, 1987, is an open-end management investment company. The Fund's
portfolio of assets is diversified as defined by the Investment Company Act of
1940 (the "1940 Act"). See Shares under Management of the Fund.
-3-
<PAGE>
(DGVF-IC)
SUMMARY OF EXPENSES
Shareholder Transaction Expenses
- --------------------------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)........................................None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)........................................None
Exchange Fees..............................................................None*
Annual Operating Expenses
(as a percentage of average daily net assets)
- --------------------------------------------------------------------------------
Management Fees............................................................0.75%
12b-1 Fees..................................................................None
Other Operating Expenses...................................................0.40%
-----
Total Operating Expenses..............................................1.15%
=====
*Exchanges are subject to the requirements of each fund and a front-end sales
charge may apply.
For expense information about Value Fund Class A Shares, Value Fund
Class B Shares and Value Fund Class C Shares, see the separate prospectus
relating to those classes.
The following example illustrates the expenses that an investor would
pay on a $1,000 investment over various time periods, assuming (1) a 5% annual
rate of return and (2) redemption at the end of each time period. As noted in
the table above, the Fund charges no redemption fees.
1 year 3 years 5 years 10 years
------ ------- ------- --------
$12 $37 $63 $140
The purpose of the above tables is to assist the investor in
understanding the various costs and expenses that an investor in the Class will
bear directly or indirectly.
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.
-4-
<PAGE>
(DGVF-IC)
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
Delaware Group Equity Funds V, Inc. - Value Fund and have been audited by Ernst
& Young LLP, independent auditors. The data should be read in conjunction with
the financial statements, related notes, and the report of Ernst & Young LLP
covering such financial information, all of which are incorporated by reference
into Part B. Further information about the Fund's performance is contained in
its Annual Report to shareholders. A copy of the Fund's Annual Report (including
the report of Ernst & Young LLP) may be obtained from Equity Funds V, Inc. upon
request at no charge.
- --------------------------------------------------------------------------------
-5-
<PAGE>
(DGVF-IC)
DGVF-IC-CHT
<TABLE>
<CAPTION>
Period
11/9/92(3)
Year Ended through
11/30/96(3) 11/30/95(3) 11/30/94(3) 11/30/93(3) 11/30/92 11/30/92(1) 11/30/91(1)
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period...........$22.860 $19.400 $20.140 $17.750 $17.090 $15.320 $11.050
Income From Investment Operations
Net Investment Income ......................... 0.193 0.297 0.195 0.092 0.004 0.060 (0.006)
Net Gains (Losses) on Securities
(both realized and unrealized)..... 4.047 3.628 (0.685) 3.158 0.656 3.360 4.681
----- ----- ------- ----- ----- ----- -----
Total From Investment Operations 4.240 3.925 (0.490) 3.250 0.660 3.420 4.675
----- ----- ------- ----- ----- ----- -----
Less Distributions
Dividends (from net investment income)......... (0.300) (0.215) (0.080) (0.040) none none (0.155)
Distributions (from capital gains) (0.890) (0.250) (0.170) (0.820) none (0.990) (0.250)
Returns of Capital............................. none none none none none none none
---- ---- ---- ---- ---- ---- ----
Total Distributions...................... (1.190) (0.465) (0.250) (0.860) none (0.990) (0.405)
------- ------- ------- ------- ---- ------- -------
Net Asset Value, End of Period $25.910 $22.860 $19.400 $20.140 $17.750 $17.750 $15.320
======= ======= ======= ======= ======= ======= ======
Total Return................................... 19.45% 20.76% (2.51%) 19.00% 3.86% 22.99%(4) 43.61%(4)
- ------------
- --------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)...... $16,373 $7,294 $6,385 $5,476 $1,558 $38,792 $12,041
Ratio of Expenses to Average Daily Net Assets.. 1.15% 1.18% 1.16% 1.34% 1.63% 1.93% 2.26%
Ratio of Net Investment Income
to Average Daily Net Assets.............. 0.81% 1.48% 1.05% 0.55% 0.69% 0.39% (0.07%)
Portfolio Turnover Rate........................ 87% 65% 14% 32% 68% 68% 99%
Average Commission Rate Paid................... $0.060 N/A N/A N/A N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Period
6/24/87(1)(2)
Year Ended through
11/30/90(1) 11/30/89(1) 11/30/88(1) 11/30/87
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........ $14.030 $10.440 $7.740 $9.530
Income From Investment Operations
Net Investment Income ...................... 0.149 0.131 0.054 0.058
Net Gains (Losses) on Securities
(both realized and unrealized).. (2.269) 3.529 2.691 (1.848)
------- ------- ------- -------
Total From Investment Operations (2.120) 3.660 2.745 (1.790)
------- ------- ------- -------
Less Distributions
Dividends (from net investment income)...... (0.140) (0.070) (0.045) none
Distributions (from capital gains) (0.720) none none none
Returns of Capital.......................... none none none none
---- ---- ---- ----
Total Distributions................... (0.860) (0.070) (0.045) none
------- ------- ------- ----
Net Asset Value, End of Period $11.050 $14.030 $10.440 $7.740
======= ======= ======= =======
Total Return................................ (16.14%)(4) 35.28%(4)(5) 35.57%(4)(5) (18.78%)(4)(5)
</TABLE>
- --------------------------------------------
Ratios/Supplemental Data
<TABLE>
<S> <C> <C> <C> <C>
Net Assets, End of Period (000's omitted) $7,746 $11,055 $ 6,797 $8,780
Ratio of Expenses to Average Daily Net Assets. 1.79% 1.98%(6) 2.02%(6) 1.50%(6)
Ratio of Net Investment Income
to Average Daily Net Assets............. 1.12% 1.14%(7) 0.35%(7) 1.74%(7)
Portfolio Turnover Rate....................... 69% 103% 66% 60%
Average Commission Rate Paid.................. N/A N/A N/A N/A
</TABLE>
<PAGE>
- ---------------------
(1) Data are derived from data of Value Fund A Class (until September 6, 1994,
referred to as Value Fund class) and reflect the impact of Rule 12b-1
distribution expenses paid by Value Fund A Class. Value Fund Institutional
Class shares (until September 6, 1994, referred to as Value Fund
(Institutional) class) are not subject to Rule 12b-1 distribution expenses
and per share data for periods beginning on and after November 9, 1992 will
not reflect the deduction of such expenses.
(2) Date of initial public offering of Value Fund A Class; ratios and total
return for this period have been annualized.
(3) Per share data are derived from data of Value Fund Institutional Class
which commenced operations on November 9, 1992. Ratios have been annualized
but total return has not been annualized.
(4) Does not reflect any maximum sales charges that are or were in effect for
Value Fund A Class.
(5) Total return reflects the expense limitation referenced in Notes 6 and 7.
(6) Ratio of expenses to average daily net assets prior to expense limitation
was 2.16% for 1989, 2.23% for 1988 and 2.26% for 1987.
(7) Ratio of net investment income to average daily net assets prior to expense
limitation was 0.97% for 1989, 0.14% for 1998 and 0.99% for 1987.
<PAGE>
(DGVF-IC)
INVESTMENT OBJECTIVE AND POLICY
The objective of the Fund is capital appreciation. The Fund's strategy
is to invest primarily in common stocks and issues convertible into common
stocks which, in the opinion of the Manager, have market values that appear low
relative to their underlying value or future earnings and growth potential.
SUITABILITY
The Fund may be suitable for investors interested in long-term capital
appreciation. Providing current income is not an objective of the Fund. Any
income produced is expected to be minimal. Investors should not consider a
purchase of Fund shares as equivalent to a complete investment program. The
Delaware Group includes a family of funds, generally available through
registered investment dealers, which may be used together to create a more
complete investment program.
Ownership of Fund shares reduces the bookkeeping and administrative
inconvenience that would be involved with direct purchases of the Fund's
portfolio securities.
Net asset value may fluctuate at times in response to market conditions
and, as a result, the Fund is not appropriate for a short-term investor.
INVESTMENT STRATEGY
While management believes that the Fund's objective may best be
attained by investing in common stocks, the Fund may also invest in other
securities including, but not limited to, convertible securities, warrants,
preferred stocks, bonds and foreign securities. Fixed-income securities are
expected to receive only minor emphasis.
The Fund will purchase securities which the Manager believes to be
undervalued in relation to asset value or long-term earning power of the
companies. The Manager may also invest in securities of companies where current
or anticipated favorable changes within a company provide an opportunity for
capital appreciation. The Manager's emphasis will be on securities of companies
that may be temporarily out of favor or whose value is not yet recognized by the
market.
The Fund may invest without regard to a minimum grade level where there
are favorable changes in a company's earnings or growth potential or where
general economic conditions and/or the interest rate environment provide an
opportunity for appreciation in these securities. Investment characteristics and
certain risks associated with the types of securities in which the Fund will
generally invest are described in this Prospectus. See Risk Factors for more
specific information and risks associated with foreign and lower rated
securities. The strategies employed are dependent upon the judgment of the
Manager.
While not a fundamental policy, under normal market conditions the Fund
intends to invest 65% of its net assets in securities issued by small- to
mid-cap companies, those having a market capitalization generally of less than
$3 billion. As a general matter, small- to mid-cap companies may have more
limited product lines, markets and financial resources than large-cap companies.
In addition, securities of small- to mid-cap companies, generally, may trade
less frequently (and with a lesser volume), may be more volatile and may be
somewhat less liquid than securities issued by larger capitalization companies.
The Manager will consider the financial strength of the company, the
nature of its management and any developments affecting the security, the
company or the industry. Securities may be out of favor due to a variety of
factors, such as lack of an institutional following, unfavorable developments
affecting the issuer of the securities, such as poor earning reports, dividend
reductions, or cyclical economic or business conditions. Other securities
-6-
<PAGE>
(DGVF-IC)
considered by the Manager would include those of companies where current or
anticipated favorable changes such as a new product or service, technological
breakthrough, management change, projected takeovers, changes in capitalization
or redefinition of future corporate operations provide an opportunity for
capital appreciation. The Manager will also consider securities where trading
patterns suggest that significant positions are being accumulated by officers of
the company, outside investors or the company itself. The Manager feels it may
uncover situations where those who have a vested interest in the company feel
the securities are undervalued and have appreciation potential.
In investing for capital appreciation, the Fund may hold securities for
any period of time. The degree of portfolio activity will affect brokerage costs
of the Fund and may affect taxes payable by the Fund's shareholders.
See Portfolio Trading Practices under Management of the Fund.
Should the market warrant a temporary, defensive approach, the Fund may
also invest in fixed-income obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities, as well as money market
instruments, and corporate bonds rated A or above by Moody's Investors Service,
Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P"). (Appendix A to this
Prospectus describes these ratings.)
If the Manager believes that market conditions warrant, the Fund may
employ options strategies. The Fund may write covered call options on individual
issues as well as write call options on stock indices. A call option is
"covered" if, during the term of the option, the Fund owns or has the right to
obtain at no added cost the security underlying the call option, owns a call
option on the underlying securities with an exercise price no higher than the
exercise price on the call option written or, subject to any regulatory
restrictions, has segregated an amount of cash or liquid high grade debt
obligations at least equal to the current price of the underlying securities.
The Fund may also purchase put options on individual issues and on stock
indices. The Manager will employ these techniques in an attempt to protect
appreciation attained, to offset capital losses and/or to take advantage of the
liquidity available in the option markets. The ability to hedge effectively
using options on stock indices will depend, in part, on the correlation between
the composition of the index and the Fund's portfolio as well as the price
movement of individual securities. The Fund does not currently intend to write
or purchase options on stock indices.
While there is no limit on the amount of the Fund's assets which may be
invested in covered call options, the Fund will not invest more than 2% of its
net assets in put options. The Fund will only use exchange-traded options.
Although the Fund will constantly strive to attain the objective of
capital appreciation, there can be no assurance that it will be attained. The
objective of the Fund may not be changed without shareholder approval.
RISK FACTORS
Investors should be willing to accept the risks associated with
investments in domestic and international securities (and currency hedging
transactions in connection with international investing). Investing in
international securities may be speculative and subject the Fund to additional
risks. Investing in a company temporarily out of favor may involve the risk that
the anticipated favorable change may not occur and, as a result, that security
may decline in value or not appreciate as expected.
The Fund may also purchase, at times, lower rated or unrated
securities, including corporate bonds and convertible securities without regard
to a grade minimum, which may be considered speculative and may increase the
portfolio's credit risk. Although the Fund will ordinarily place minor emphasis
on fixed-income securities and will not typically purchase bonds or other
securities rated below B by Moody's or S&P (i.e., high-yield, high-risk
securities, also known as "junk bonds"), it may do so if the Manager believes
that capital appreciation is likely. While the Fund is authorized to invest up
to 25% of its net assets in securities rated below B, it does not presently
-7-
<PAGE>
(DGVF-IC)
intend to invest more than 5% of its net assets in securities of this type.
Investing in such lower rated securities may involve certain risks not typically
associated with higher rated securities. Such securities are considered very
speculative and may possibly be in default or have interest payments in arrears.
See High-Yield, High-Risk Securities in Part B for additional information on the
risks associated with such securities. See Appendix A to this Prospectus for
more rating information.
For additional information about the Fund's investment policies and
certain risks associated with investments in certain types of securities, see
Other Investment Policies and Risk Considerations.
-8-
<PAGE>
(DGVF-IC)
CLASSES OF SHARES
The Distributor serves as the national distributor for the Fund. Shares
of the Class may be purchased directly by contacting the Fund or its agent or
through authorized investment dealers. All purchases of shares of the Class are
at net asset value. There is no front-end or contingent deferred sales charge.
Investment instructions given on behalf of participants in an
employer-sponsored retirement plan are made in accordance with directions
provided by the employer. Employees considering purchasing shares of the Class
as part of their retirement program should contact their employer for details.
Shares of the Class are available for purchase only by: (a) retirement
plans introduced by persons not associated with brokers or dealers that are
primarily engaged in the retail securities business and rollover individual
retirement accounts from such plans; (b) tax-exempt employee benefit plans of
the Manager or its affiliates and securities dealer firms with a selling
agreement with the Distributor; (c) institutional advisory accounts of the
Manager or its affiliates and those having client relationships with Delaware
Investment Advisers, a division of the Manager, or its affiliates and their
corporate sponsors, as well as subsidiaries and related employee benefit plans
and rollover individual retirement accounts from such institutional advisory
accounts; (d) a bank, trust company and similar financial institution investing
for its own account or for the account of its trust customers for whom such
financial institution is exercising investment discretion in purchasing shares
of the Class, except where the investment is part of a program that requires
payment to the financial institution of a Rule 12b-1 fee; and (e) registered
investment advisers investing on behalf of clients that consist solely of
institutions and high net-worth individuals having at least $1,000,000 entrusted
to the adviser for investment purposes, but only if the adviser is not
affiliated or associated with a broker or dealer and derives compensation for
its services exclusively from its clients for such advisory services.
Value Fund A Class, Value Fund B Class and Value Fund C Class
In addition to offering Value Fund Institutional Class of shares, the
Fund also offers Value Fund A Class, Value Fund B Class and Value Fund C Class,
which are described in a separate prospectus. Shares of Value Fund A Class,
Value Fund B Class and Value Fund C Class may be purchased through authorized
investment dealers or directly by contacting the Fund or the Distributor. Value
Fund A Class carries a front-end sales charge and has annual 12b-1 expenses
equal to a maximum of 0.30%. The maximum front-end sales charge as a percentage
of the offering price is 4.75% and is reduced on certain transactions of
$100,000 or more. Value Fund B Class and Value Fund C Class have no front-end
sales charge but are subject to annual 12b-1 expenses equal to a maximum of 1%.
Shares of Value Fund B Class and Value Fund C Class and certain shares of Value
Fund A Class may be subject to a contingent deferred sales charge upon
redemption. To obtain a prospectus relating to such classes, contact the
Distributor by writing to the address or by calling the phone numbers listed on
the cover of this Prospectus.
-9-
<PAGE>
(DGVF-IC)
HOW TO BUY SHARES
The Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer. In all instances, investors must
qualify to purchase shares of the Class.
Investing Directly by Mail
1. Initial Purchases--An Investment Application or, in the case of a retirement
plan account, an appropriate retirement plan application, must be completed,
signed and sent with a check payable to Value Fund Institutional Class, to
Delaware Group at 1818 Market Street, Philadelphia, PA 19103.
2. Subsequent Purchases--Additional purchases may be made at any time by mailing
a check payable to Value Fund Institutional Class. Your check should be
identified with your name(s) and account number.
Investing Directly by Wire
You may purchase shares by requesting your bank to transmit funds by
wire to CoreStates Bank, N.A., ABA #031000011, account number 1412893401
(include your name(s) and your account number for the Fund).
1. Initial Purchases--Before you invest, telephone the Client Services
Department at 800-828-5052 to get an account number. If you do not call first,
it may delay processing your investment. In addition, you must promptly send
your Investment Application or, in the case of a retirement plan account, an
appropriate retirement plan application, to Value Fund Institutional Class, to
Delaware Group at 1818 Market Street, Philadelphia, PA 19103.
2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You must advise your Client
Services Representative by telephone at 800-828- 5052 prior to sending your
wire.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware Group
and you qualify to purchase shares of the Class, you may write and authorize an
exchange of part or all of your investment into the Fund. However, shares of
Value Fund B Class and Value Fund C Class and Class B Shares and Class C Shares
of the other funds in the Delaware Group offering such classes of shares may not
be exchanged into the Class. If you wish to open an account by exchange, call
your Client Services Representative at 800-828-5052 for more information. See
Redemption and Exchange for more complete information concerning your exchange
privilege.
Investing through Your Investment Dealer
You can make a purchase of Fund shares through most investment dealers
who, as part of the service they provide, must transmit orders promptly to the
Fund. They may charge for this service.
Purchase Price and Effective Date
The purchase price (net asset value) of the Class is determined as of
the close of regular trading on the New York Stock Exchange (ordinarily, 4 p.m.,
Eastern time) on days when the Exchange is open.
The effective date of a purchase made through an investment dealer is
the date the order is received by the Fund. The effective date of a direct
purchase is the day your wire, electronic transfer or check is received, unless
it is received after the time the share price is determined, as noted above.
Purchase orders received after such time will be effective the next business
day.
The Conditions of Your Purchase
The Fund reserves the right to reject any purchase order. If a purchase
is canceled because your check is
-10-
<PAGE>
(DGVF-IC)
returned unpaid, you are responsible for any loss incurred. The Fund can redeem
shares from your account(s) to reimburse itself for any loss, and you may be
restricted from making future purchases in any of the funds in the Delaware
Group. The Fund reserves the right to reject purchases by third-party checks or
checks that are not drawn on a domestic branch of a United States financial
institution. If a check drawn on a foreign financial institution is accepted,
you may be subject to additional bank charges for clearance and currency
conversion.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under $250 as a result of redemptions.
-11-
<PAGE>
(DGVF-IC)
REDEMPTION AND EXCHANGE
Redemption and exchange requests made on behalf of participants in an
employer-sponsored retirement plan are made in accordance with directions
provided by the employer. Employees should therefore contact their employer for
details.
Your shares will be redeemed or exchanged based on the net asset value
next determined after the Fund receives your request in good order. Redemption
and exchange requests received in good order after the time the net asset value
of shares is determined, as noted above, will be processed on the next business
day. See Purchase Price and Effective Date under How to Buy Shares. Except as
otherwise noted below, for a redemption request to be in "good order," you must
provide your account number, account registration, and the total number of
shares or dollar amount of the transaction. With regard to exchanges, you must
also provide the name of the fund you want to receive the proceeds. Exchange
instructions and redemption requests must be signed by the record owner(s)
exactly as the shares are registered. You may request a redemption or an
exchange by calling the Fund at 800-828-5052. Redemption proceeds will be
distributed promptly, as described below, but not later than seven days after
receipt of a redemption request.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses.
The Fund will process written and telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. The Fund will honor redemption requests as to shares for which a check
was tendered as payment, but the Fund will not mail or wire the proceeds until
it is reasonably satisfied that the check has cleared, which may take up to 15
days from the purchase date. You can avoid this potential delay if you purchase
shares by wiring Federal Funds. The Fund reserves the right to reject a written
or telephone redemption request or delay payment of redemption proceeds if there
has been a recent change to the shareholder's address of record.
Shares of the Class may be exchanged into any other Delaware Group
mutual fund, provided: (1) the investment satisfies the eligibility and other
requirements set forth in the prospectus of the fund being acquired, including
the payment of any applicable front-end sales charge; and (2) the shares of the
fund being acquired are in a state where that fund is registered. If exchanges
are made into other shares that are eligible for purchase only by those
permitted to purchase shares of the Class, such exchange will be exchanged at
net asset value. Shares of the Class may not be exchanged into the Class B
Shares or Class C Shares of the funds in the Delaware Group. The Fund may
suspend, terminate or amend the terms of the exchange privilege upon 60 days'
written notice to shareholders.
Various redemption and exchange methods are outlined below. No fee is
charged by the Fund or the Distributor for redeeming or exchanging your shares.
You may also have your investment dealer arrange to have your shares redeemed or
exchanged. Your investment dealer may charge for this service.
All authorizations given by shareholders, including selection of any of
the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the Fund or its agent.
-12-
<PAGE>
(DGVF-IC)
Written Redemption and Exchange
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103
to redeem some or all of your shares or to request an exchange of any or all
your shares into another mutual fund in the Delaware Group, subject to the same
conditions and limitations as other exchanges noted above. The request must be
signed by all owners of the account or your investment dealer of record.
For redemptions of more than $50,000, or when the proceeds are not sent
to the shareholder(s) at the address of record, the Fund requires a signature by
all owners of the account and may require a signature guarantee. Each signature
guarantee must be supplied by an eligible guarantor institution. The Fund
reserves the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness. The Fund may require further
documentation from corporations, executors, retirement plans, administrators,
trustees or guardians.
Payment is normally mailed the next business day after receipt of your
redemption request. Certificates are issued for shares only if you submit a
specific request. If your shares are in certificate form, the certificate must
accompany your request and also be in good order.
You also may submit your written request for redemption or exchange by
facsimile transmission at the following number: 215-255-8864.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your shares in certificate form, you may redeem or
exchange only by written request and you must return your certificates.
The Telephone Redemption--Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such services available with respect to your account. The Fund
reserves the right to modify, terminate or suspend these procedures upon 60
days' written notice to shareholders. It may be difficult to reach the Fund by
telephone during periods when market or economic conditions lead to an unusually
large volume of telephone requests.
Neither the Fund nor its Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Fund will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. A written confirmation will be provided
for all purchase, exchange and redemption transactions initiated by telephone.
By exchanging shares by telephone, you are acknowledging prior receipt of a
prospectus for the fund into which your shares are being exchanged.
-13-
<PAGE>
(DGVF-IC)
Telephone Redemption-Check to Your Address of Record
You or your investment dealer of record can have redemption proceeds of
$50,000 or less mailed to you at your address of record. Checks will be payable
to the shareholder(s) of record. Payment is normally mailed the next business
day after receipt of the redemption request.
Telephone Redemption-Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must submit a written authorization and you may need to have your
signature guaranteed. For your protection, your authorization must be on file.
If you request a wire, your funds will normally be sent the next business day.
If you ask for a check, it will normally be mailed the next business day after
receipt of your redemption request to your predesignated bank account. There are
no fees for this redemption method, but the mail time may delay getting funds
into your bank account. Simply call your Client Services Representative prior to
the time the net asset value is determined, as noted above.
Telephone Exchange
You or your investment dealer of record can exchange shares into any
fund in the Delaware Group under the same registration. As with the written
exchange service, telephone exchanges are subject to the same conditions and
limitations as other exchanges noted above. Telephone exchanges may be subject
to limitations as to amounts or frequency.
-14-
<PAGE>
(DGVF-IC)
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute substantially all of its net capital
gains and net investment income earned during the year. Such payments, if any,
will be made once a year during the first quarter of the next fiscal year.
Each class of the Fund will share proportionately in the investment
income and expenses of the Fund, except that the Class will not incur any
distribution fee under the 12b-1 Plans which apply to Value Fund A Class, Value
Fund B Class and Value Fund C Class.
Both dividends and distributions, if any, are automatically reinvested
in your account at net asset value.
-15-
<PAGE>
(DGVF-IC)
TAXES
The tax discussion set forth below is included for general information
only. Investors should consult their own tax advisers concerning the federal,
state, local or foreign tax consequences of an investment in the Fund.
The Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Internal Revenue Code
(the "Code"). As such, the Fund will not be subject to federal income tax, or to
any excise tax, to the extent its earnings are distributed as provided in the
Code.
The Fund intends to distribute substantially all of its net investment
income and net capital gains, if any. Dividends from net investment income or
net short-term capital gains will be taxable to those investors who are subject
to income taxes as ordinary income, even though received in additional shares.
For corporate investors, dividends from net investment income will generally
qualify in part for the corporate dividends-received deduction. The portion of
dividends paid by the Fund that so qualifies will be designated each year in a
notice from Equity Funds V, Inc. to the Fund's shareholders. For the fiscal year
ended November 30, 1996, 13.93% of the Fund's dividends from net investment
income qualified for the corporate dividends-received deduction.
Distributions paid by the Fund from long-term capital gains, received
in additional shares, are taxable to those investors who are subject to income
taxes as long-term capital gains, regardless of the length of time an investor
has owned shares in the Fund. The Fund does not seek to realize any particular
amount of capital gains during a year; rather, realized gains are a by-product
of Fund management activities. Consequently, capital gains distributions may be
expected to vary considerably from year to year. Also, for those investors
subject to tax, if purchases of shares in the Fund are made shortly before the
record date for a dividend or capital gains distribution, a portion of the
investment will be returned as a taxable distribution.
Although dividends generally will be treated as distributed when paid,
dividends which are declared in October, November, or December to shareholders
of record on a specified date in one of those months, but which, for operational
reasons, may not be paid to the shareholder until the following January, will be
treated for tax purposes as if paid by the Fund and received by the shareholder
on December 31 of the year declared.
The sale of shares of the Fund is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may be
realized from an ordinary redemption of shares or an exchange of shares between
the Fund and any other fund in the Delaware Group. Any loss incurred on a sale
or exchange of Fund shares that had been held for six months or less will be
treated as a long-term capital loss to the extent of capital gain dividends
received with respect to such shares.
In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital gains
realized from certain types of U.S. government securities may be exempt from
state personal income taxes. Shares of the Fund are exempt from Pennsylvania
county personal property taxes.
Each year, Equity Funds V, Inc. will mail to you information on the tax
status of the Fund's dividends and distributions. Shareholders will also receive
each year information as to the portion of dividend income, if any, that is
derived from U.S. government securities that are exempt from state income tax.
Of course, shareholders who are not subject to tax on their income would not be
required to pay tax on amounts distributed to them by the Fund.
The Fund is required to withhold 31% of taxable dividends, capital
gains distributions, and redemptions paid to shareholders who have not complied
with IRS taxpayer identification regulations. You may avoid this
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(DGVF-IC)
withholding requirement by certifying on your Investment Application your proper
Taxpayer Identification Number and by certifying that you are not subject to
backup withholding.
See Accounting and Tax Issues and Distributions and Taxes in Part B for
additional information on tax matters relating to the Fund and its shareholders.
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(DGVF-IC)
CALCULATION OF NET ASSET VALUE PER SHARE
The purchase and redemption price of the Class is the net asset value
("NAV") per share of Class shares next computed after the order is received. The
NAV is computed as of the close of regular trading on the New York Stock
Exchange (ordinarily, 4 p.m., Eastern time) on days when the Exchange is open.
The NAV per share is computed by adding the value of all securities and
other assets in the portfolio, deducting any liabilities (expenses and fees are
accrued daily) and dividing by the number of shares outstanding. Portfolio
securities for which market quotations are available are priced at market value.
Foreign securities expressed in foreign currency values will be converted into
U.S. dollar values at the mean between the currencies' bid and offered
quotations. Short-term investments having a maturity of less than 60 days are
valued at amortized cost, which approximates market value. All other securities
are valued at their fair value as determined in good faith and in a method
approved by the Fund's Board of Directors.
The net asset values of all outstanding shares of each class of the
Fund will be computed on a pro-rata basis for each outstanding share based on
the proportionate participation in the Fund represented by the value of shares
of that class. All income earned and expenses incurred by the Fund will be borne
on a pro-rata basis by each outstanding share of a class, based on each class'
percentage in the Fund represented by the value of shares of such classes,
except that the Class will not incur any of the expenses under the Fund's 12b-1
Plans and Value Fund A, B and C Classes alone will bear the 12b-1 Plan fees
payable under their respective Plans. Due to the specific distribution expenses
and other costs that will be allocable to each class, the net asset value of and
dividends paid to each class of the Fund will vary.
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(DGVF-IC)
MANAGEMENT OF THE FUND
Directors
The business and affairs of Equity Funds V, Inc. are managed under the
direction of its Board of Directors. Part B contains additional information
regarding Equity Funds V, Inc.'s directors and officers.
Investment Manager
The Manager furnishes investment management services to the Fund.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On November 30, 1996, the Manager and its affiliates
within the Delaware Group, including Delaware International Advisers Ltd., were
managing in the aggregate more than $32 billion in assets in the various
institutional or separately managed (approximately $20,311,203,919) and
investment company (approximately $11,765,348,126) accounts.
The Manager is an indirect, wholly owned subsidiary of Delaware
Management Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a
wholly owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH and the Manager are now indirect, wholly owned subsidiaries, and
subject to the ultimate control, of Lincoln National. Lincoln National, with
headquarters in Fort Wayne, Indiana, is a diversified organization with
operations in many aspects of the financial services industry, including
insurance and investment management. In connection with the merger, a new
Investment Management Agreement between the Fund and the Manager was executed
following shareholder approval.
The Manager manages the Fund's portfolio and makes investment decisions
for the Fund which are implemented by the Fund's Trading Department. The Manager
also administers Equity Funds V, Inc.'s affairs and pays the salaries of all the
directors, officers and employees of Equity Funds V, Inc. who are affiliated
with the Manager. For these services, the Manager is paid an annual fee of 3/4
of 1% of the average daily net assets of the Fund, less all directors' fees paid
to the unaffiliated directors of Equity Funds V, Inc.. The Fund's fee is higher
than that paid by many other funds. The fee may be higher or lower than that
paid by funds with comparable investment objectives. Investment management fees
paid by the Fund for the fiscal year ended November 30, 1996 were 0.75% of
average daily net assets.
David C. Dalrymple has had primary responsibility for making day-to-day
investment decisions for the Fund since August 21, 1995. Prior to then, Mr.
Dalrymple served as an assistant portfolio manager of Delaware Group Equity
Funds IV, Inc. Mr. Dalrymple holds a BS in Business Administration from Clarkson
College in Potsdam, NY, and an MBA from Cornell Johnson School of Management in
Ithaca, NY. Prior to joining the Delaware Group in 1991, he spent five years as
an assistant portfolio manager for Lord Abbett and Co. in New York. Mr.
Dalrymple is a CFA charterholder and a member of the Financial Analysts of
Philadelphia.
In making investment decisions for the Fund, Mr. Dalrymple consults
with Wayne A. Stork and Richard G. Unruh, Jr. Mr. Stork, Chairman of the Manager
and Equity Funds V, Inc.'s Board of Directors, is a graduate of Brown University
and attended New York University's Graduate School of Business Administration.
Mr. Stork joined the Delaware Group in 1962 and has served in various executive
capacities at different times within the Delaware organization. A graduate of
Brown University, Mr. Unruh received his MBA from the University of
Pennsylvania's Wharton School and joined the Delaware Group in 1982 after 19
years of investment management experience with Kidder, Peabody & Co. Inc. Mr.
Unruh was named an Executive Vice President of Equity Funds V, Inc. in 1994. He
is also a member of the Board of the Manager and was named an Executive Vice
President of the Manager in 1994.
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(DGVF-IC)
Portfolio Trading Practices
The Fund normally will not invest for short-term trading purposes.
However, the Fund may sell securities without regard to the length of time they
have been held. The degree of portfolio activity will affect brokerage costs of
the Fund and may affect taxes payable by the Fund's shareholders to the extent
that net capital gains are realized. Given the Fund's investment objective, its
annual portfolio turnover rate may exceed 100%. A turnover rate of 100% would
occur, for example, if all the investments in the Fund's portfolio at the
beginning of the year were replaced by the end of the year. The turnover rate
also may be affected by cash requirements for redemptions and repurchases of
Fund shares. For the past two fiscal years, the Fund's portfolio turnover rates
were 65% for 1995 and 87% for 1996.
The Fund uses its best efforts to obtain the best available price and
most favorable execution for portfolio transactions. Orders may be placed with
brokers or dealers who provide brokerage and research services to the Manager or
its advisory clients. These services may be used by the Manager in servicing any
of its accounts. Subject to best price and execution, the Fund may consider a
broker/dealer's sales of Fund shares in placing portfolio orders and may place
orders with broker/dealers that have agreed to defray certain Fund expenses such
as custodian fees.
Performance Information
From time to time, the Fund may quote total return performance for the
Class in advertising and other types of literature.
Total return will be based on a hypothetical $1,000 investment,
reflecting the reinvestment of all distributions at net asset value. Each
presentation will include the average annual total return for one-, five- and
ten-year or life-of-fund periods, as relevant. The Fund may also advertise
aggregate and average total return information concerning the Class over
additional periods of time.
Because securities prices fluctuate, investment results of the Class
will fluctuate over time and past performance should not be considered a
guarantee of future results.
Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent following
all transactions other than those involving a reinvestment of dividends. You
should examine statements and confirmations immediately and promptly report any
discrepancy by calling your Client Services Representative.
Financial Information about the Fund
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. Equity Funds V, Inc.'s fiscal year ends
on November 30.
Distribution and Service
The Distributor, Delaware Distributors, L.P., serves as the national
distributor for the Fund's shares under a Distribution Agreement with Equity
Funds V, Inc. dated April 3, 1995, as amended on November 29, 1995. The
Distributor bears all of the costs of promotion and distribution.
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(DGVF-IC)
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Fund
pursuant to an amended and restated agreement dated as of November 29, 1996. The
Transfer Agent also provides accounting services to the Fund pursuant to the
terms of a separate Fund Accounting Agreement. The directors annually review
service fees paid to the Transfer Agent. Certain recordkeeping and other
shareholder services that otherwise would be performed by the Transfer Agent may
be performed by certain other entities and the Transfer Agent may elect to enter
into an agreement to pay such other entities for those services. In addition,
participant account maintenance fees may be assessed for certain recordkeeping
services provided as part of retirement plan and administration service
packages. These fees are based on the number of participants in the plan and the
various services selected. Fees will be quoted upon request and are subject to
change.
The Distributor and the Transfer Agent are indirect, wholly owned
subsidiaries of DMH.
Expenses
The Fund is responsible for all of its own expenses other than those
borne by the Manager under the Investment Management Agreement and those borne
by the Distributor under the Distribution Agreement. For the fiscal year ended
November 30, 1996, the ratio of operating expenses to average daily net assets
for the Class was 1.15%.
Shares
Equity Funds V, Inc. is an open-end management investment company. The
Fund's portfolio of assets is diversified as defined by the 1940 Act. Commonly
known as a mutual fund, Equity Funds V, Inc. was organized as a Maryland
corporation on January 16, 1987. In addition to the Fund, Equity Funds V, Inc.
presently offers one other series of shares, the Retirement Income Fund series.
Fund shares have a par value of $.01, equal voting rights, except as
noted below, and are equal in all other respects. Equity Funds V, Inc.'s shares
have noncumulative voting rights which means that the holders of more than 50%
of Equity Funds V, Inc.'s shares voting for the election of directors can elect
100% of the directors if they choose to do so. Under Maryland law, Equity Funds
V, Inc. is not required, and does not intend, to hold annual meetings of
shareholders unless, under certain circumstances, it is required to do so under
the 1940 Act. Shareholders of 10% or more of Equity Funds V, Inc.'s outstanding
shares may request that a special meeting be called to consider the removal of a
director.
In addition to the Class, the Fund also offers Value Fund A Class,
Value Fund B Class and Value Fund C Class. Shares of each class represent
proportionate interests in the assets of the Fund and have the same voting and
other rights and preferences as the Class, except that shares of the Class are
not subject to, and may not vote on matters affecting, the Distribution Plans
under Rule 12b-1 relating to Value Fund A Class, Value Fund B Class and Value
Fund C Class.
Prior to September 6, 1994, Value Fund Institutional Class was known as
the Value Fund (Institutional) class and Value Fund A Class was known as the
Value Fund class.
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(DGVF-IC)
OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS
Foreign Securities
The Fund may invest up to 25% of its assets in foreign securities.
Foreign markets may be more volatile than U.S. markets. Such investments involve
sovereign risk in addition to the normal risks associated with U.S. securities.
These risks include political risks, foreign taxes and exchange controls and
currency fluctuations. For example, foreign portfolio investments may fluctuate
in value due to changes in currency rates (i.e., the value of foreign
investments would increase with a fall in the value of the dollar, and decrease
with a rise in the value of the dollar) and control regulations apart from
market fluctuations. The Fund may also experience delays in foreign securities
settlement.
The Fund will, from time to time, conduct foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or through entering into contracts to purchase
or sell foreign currencies at a future date (i.e., a "forward foreign currency"
contract or "forward" contract). Investors should be aware that there are costs
and risks associated with such currency transactions. The Fund may enter into
forward contracts to "lock in" the price of a security it has agreed to purchase
or sell, in terms of U.S. dollars or other currencies in which the transaction
will be consummated. When the Manager believes that the currency of a particular
foreign country may suffer a decline against the U.S. dollar or against another
currency, the Fund may enter into a forward contract to sell, for a fixed amount
of U.S. dollars or other appropriate currency, the amount of foreign currency
approximating the value of some or all of the Fund's securities denominated in
such foreign currency. It is impossible to predict precisely the market value of
portfolio securities at the expiration of the forward contract. Accordingly, it
may be necessary for the Fund to purchase or sell additional foreign currency on
the spot market (and bear the expense of such purchase or sale) if the market
value of the security is less than or greater than the amount of foreign
currency the Fund is obligated to deliver.
The Fund may incur gains or losses from currency transactions. No type
of foreign currency transaction will eliminate fluctuations in the prices of the
Fund's foreign securities or will prevent losses if the prices of such
securities should decline.
The Fund's Custodian for its foreign securities is The Chase Manhattan
Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245.
Rule 144A Securities
The Fund may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933. Rule 144A permits many privately
placed and legally restricted securities to be freely traded among certain
institutional buyers such as the Fund. The Fund may invest no more than 10% of
the value of its net assets in illiquid securities.
While maintaining oversight, the Board of Directors has delegated to
the Manager the day-to-day function of determining whether or not individual
Rule 144A Securities are liquid for purposes of the Fund's 10% limitation on
investments in illiquid assets. The Board has instructed the Manager to consider
the following factors in determining the liquidity of a Rule 144A Security: (i)
the frequency of trades and trading volume for the security; (ii) whether at
least three dealers are willing to purchase or sell the security and the number
of potential purchasers; (iii) whether at least two dealers are making a market
in the security; and (iv) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security, the method
of soliciting offers, and the mechanics of transfer).
If the Manager determines that a Rule 144A Security which was
previously determined to be liquid is no
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(DGVF-IC)
longer liquid and, as a result, the Fund's holdings of illiquid securities
exceed the Fund's 10% limit on investment in such securities, the Manager will
determine what action to take to ensure that the Fund continues to adhere to
such limitation.
Repurchase Agreements
The Fund may also use repurchase agreements that are at least 100%
collateralized by U.S. government securities. Repurchase agreements help the
Fund to invest cash on a temporary basis. The Fund may invest cash balances in
joint repurchase agreements with other Delaware Group funds. Under a repurchase
agreement, the Fund acquires ownership and possession of a security, and the
seller agrees to buy the security back at a specified time and higher price. If
the seller is unable to repurchase the security, the Fund could experience
delays in liquidating the securities. To minimize this possibility, the Fund
considers the creditworthiness of banks and dealers when entering into
repurchase agreements.
Portfolio Loan Transactions
The Fund may loan up to 25% of its assets to qualified broker/dealers
or institutional investors for their use relating to short sales or other
security transactions.
The major risk to which the Fund would be exposed on a loan transaction
is the risk that the borrower would go bankrupt at a time when the value of the
security goes up. Therefore, the Fund will only enter into loan arrangements
after a review of all pertinent facts by the Manager, subject to overall
supervision by the Board of Directors, including the creditworthiness of the
borrowing broker, dealer or institution and then only if the consideration to be
received from such loans would justify the risk. Creditworthiness will be
monitored on an ongoing basis by the Manager.
* * *
The Fund is permitted under certain circumstances to borrow money.
Investment securities will not be purchased while the Fund has an outstanding
borrowing.
Call Options
Writing Covered Call Options
A covered call option obligates the Fund to sell one of its securities
for an agreed price up to an agreed date. When the Fund writes a call, it
receives a premium and agrees to sell the callable securities to a purchaser of
a corresponding call during the call period (usually not more than nine months)
at a fixed exercise price regardless of market price changes during the call
period. The advantage is that the Fund receives premium income for the limited
purpose of offsetting the costs of purchasing put options or offsetting any
capital loss or decline in market value of the security. However, if the
Manager's forecast is wrong, the Fund may not fully participate in the market
appreciation if the security's price rises.
Writing a Call Option on Stock Indices
Writing a call option on stock indices is similar to the writing of a
call option on an individual stock. Stock indices used will include, but not be
limited to, the S&P 100 and the S&P Over-The-Counter ("OTC") 250.
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(DGVF-IC)
Put Options
Purchasing a Put Option
A put option gives the Fund the right to sell one of its securities for
an agreed price up to an agreed date. The advantage is that the Fund can be
protected should the market value of the security decline. However, the Fund
must pay a premium for this right which would be lost if the option is not
exercised.
Purchasing a Put Option on Stock Indices
Purchasing a protective put option on stock indices is similar to the
purchase of protective puts on an individual stock. Indices used will include,
but not be limited to, the S&P 100 and the S&P OTC 250.
Closing Transactions
Closing transactions essentially let the Fund offset a put option or
covered call option prior to its exercise or expiration. If the Fund cannot
effect a closing transaction, it may have to hold a security it would otherwise
sell or deliver a security it might want to hold.
Part B sets forth other more specific investment restrictions.
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(DGVF-IC)
APPENDIX A -- RATINGS
Bonds
Excerpts from Moody's description of its bond ratings: Aaa--judged to
be the best quality. They carry the smallest degree of investment risk;
Aa--judged to be of high quality by all standards; A--possess favorable
attributes and are considered "upper medium" grade obligations; Baa--considered
as medium grade obligations. Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or may
be characteristically unreliable over any great length of time; Ba--judged to
have speculative elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class; B--generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small; Caa--are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest; Ca--represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings; C--the lowest
rated class of bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Excerpts from S&P's description of its bond ratings: AAA--highest grade
obligations. They possess the ultimate degree of protection as to principal and
interest; AA--also qualify as high grade obligations, and in the majority of
instances differ from AAA issues only in a small degree; A--strong ability to
pay interest and repay principal although more susceptible to changes in
circumstances; BBB--regarded as having an adequate capacity to pay interest and
repay principal; BB, B, CCC, CC--regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions; C--reserved
for income bonds on which no interest is being paid; D--in default, and payment
of interest and/or repayment of principal is in arrears.
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(DGVF-IC)
For more information, contact Delaware Group at 800-828-5052.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
<PAGE>
- --------------------------------------------
VALUE FUND INSTITUTIONAL
- --------------------------------------------
- --------------------------------------------
P R O S P E C T U S
- --------------------------------------------
JANUARY 29, 1997
DELAWARE
GROUP
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<PAGE>
(RIF-ABC)
_________________________
The Delaware Group includes funds with a
wide range of investment objectives. Stock funds, RETIREMENT INCOME FUND
income funds, tax-free funds, money market funds, _________________________
global and international funds and closed-end A CLASS
equity funds give investors the ability to create B CLASS
a portfolio that fits their personal financial C CLASS
goals. For more information, contact your _________________________
financial adviser or call Delaware Group at
800-523-4640.
INVESTMENT MANAGER
Delaware Management Company, Inc.
One Commerce Square
Philadelphia, PA 19103
PROSPECTUS
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P. _________________________
1818 Market Street
Philadelphia, PA 19103
JANUARY 29, 1997
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN DELAWARE
The Chase Manhattan Bank GROUP
4 Chase Metrotech Center
Brooklyn, NY 11245
<PAGE>
(RIF-ABC)
RETIREMENT INCOME FUND A CLASS SHARES
RETIREMENT INCOME FUND B CLASS SHARES
RETIREMENT INCOME FUND C CLASS SHARES PROSPECTUS
JANUARY 29, 1997
1818 Market Street, Philadelphia, PA 19103
For Prospectus and Performance:
Nationwide 800-523-4640
Information on Existing Accounts:
(SHAREHOLDERS ONLY)
Nationwide 800-523-1918
Dealer Services:
(BROKER/DEALERS ONLY)
Nationwide 800-362-7500
Representatives of Financial Institutions:
Nationwide 800-659-2259
This Prospectus describes the Retirement Income Fund A Class of shares
("Class A Shares"), the Retirement Income Fund B Class of shares ("Class B
Shares") and the Retirement Income Fund C Class of shares ("Class C Shares")
(individually, a "Class" and collectively, the "Classes") of the Retirement
Income Fund series (the "Fund") of Delaware Group Equity Funds V, Inc. ("Equity
Funds V, Inc."), a professionally-managed mutual fund of the series type. The
objective of the Fund is to seek to provide investors with high current income
and the potential for capital appreciation.
This Fund has the authority to invest up to all of its net assets in
lower rated securities, commonly known as "junk bonds" and "lower rated equity
securities." Such securities involve greater risks, including default risks,
than higher rated securities. Purchasers should carefully assess these risks
before investing in this Fund. See Investment Objective and Policies, Special
Risk Considerations, and Appendix C--Ratings.
This Prospectus sets forth information that you should read and
consider before you invest. Please retain it for future reference. The Fund's
Statement of Additional Information ("Part B" of Equity Funds V, Inc.'s
Registration Statement), dated January 29, 1997, as it may be amended from time
to time, contains additional information about the Fund and has been filed with
the Securities and Exchange Commission. Part B is incorporated by reference into
this Prospectus and is available, without charge, by writing to Delaware
Distributors, L.P. at the above address or by calling the above numbers.
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(RIF-ABC)
The Fund also offers Retirement Income Fund Institutional Class, which
is available for purchase only by certain investors. A prospectus for Retirement
Income Fund Institutional Class can be obtained by writing to Delaware
Distributors, L.P. at the above address or by calling the above numbers.
TABLE OF CONTENTS
Cover Page Classes of Shares
Synopsis How to Buy Shares
Summary of Expenses Redemption and Exchange
Investment Objective and Policies Dividends and Distributions
Suitability Taxes
Investment Strategy Calculation of Offering Price and
Special Risk Considerations Net Asset Value Per Share
High-Yield Securities Management of the Fund
Lower Rated Convertible Securities Other Investment Policies and
and Preferred Stock Risk Considerations
Foreign Securities Appendix A--Investment Illustrations
The Delaware Difference Appendix B--Classes Offered
Plans and Services Appendix C--Ratings
Retirement Planning
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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.
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(RIF-ABC)
SYNOPSIS
Investment Objective
The investment objective of the Fund is to seek to provide investors
with high current income and an investment that has the potential for capital
appreciation. The Fund seeks to achieve its investment objective by investing
principally in equity securities which generate income through dividends or
otherwise ("income generating equity securities") and debt securities including,
but not limited to, dividend paying common stocks, securities of real estate
investment trusts, preferred stocks, warrants, rights, convertible securities,
non-convertible debt securities, high-yield, high risk securities, investment
grade fixed-income securities, U.S. government securities and foreign equity and
fixed-income securities. For further details, see Investment Objective and
Policies and Other Investment Policies and Risk Considerations.
Risk Factors
Prospective investors should consider the following:
1. The Fund has the authority to invest up to all of its net assets in
lower rated securities. Up to 45% of its net assets may be invested in
high-yield, higher risk fixed-income securities ("junk bonds"). In addition, the
Fund may invest in certain income generating equity securities such as
convertible securities and preferred stock, rated below investment grade. These
securities generally will have speculative characteristics similar to those of
lower rated fixed-income securities. The Fund may invest an unrestricted portion
of its total assets in such lower rated income generating equity securities.
Such securities may increase the risks of an investment in this Fund. See High-
Yield Securities under Special Risk Considerations.
2. Investing in securities of foreign governments and non-United States
companies which are generally denominated in foreign currencies and the
utilization of forward foreign currency exchange contracts involve certain risk
and opportunity considerations not typically associated with investing in United
States government securities and securities of United States companies. See
Special Risk Considerations and Other Investment Policies and Risk
Considerations.
3. The Fund has the ability to engage in options transactions for
hedging purposes to counterbalance portfolio volatility. While the Fund does not
engage in options transactions for speculative purposes, there are risks which
result from the use of options, and an investor should carefully review the
descriptions of these risks in this Prospectus. Certain options may be
considered to be derivative securities. See Options under Other Investment
Policies and Risk Considerations.
4. The Fund may invest up to 20% of its net assets in issuers organized
or having a majority of their assets or deriving a majority of their operating
income in foreign countries. Investment in foreign securities involve risks
which are in addition to those risks inherent in domestic investments. See
Foreign Securities under Special Risk Considerations.
Investment Manager, Distributor and Service Agent Delaware Management
Company, Inc. (the "Manager") furnishes investment management services to the
Fund, subject to the supervision and direction of Equity Funds V, Inc.'s Board
of Directors. The Manager also provides investment management services to
certain other funds in the Delaware Group. Delaware Distributors, L.P. (the
"Distributor") is the national distributor for the Fund and for all of the other
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(RIF-ABC)
mutual funds in the Delaware Group. Delaware Service Company, Inc. (the
"Transfer Agent") is the shareholder servicing, dividend disbursing, accounting
services and transfer agent for the Fund and for all of the other mutual funds
in the Delaware Group. See Summary of Expenses and Management of the Fund for
further information regarding the Manager and the fees payable under the Fund's
Investment Management Agreement.
Sales Charges
The price of Class A Shares includes a maximum front-end sales charge
of 4.75% of the offering price, which, based on the initial net asset of $8.50
per share, is equivalent to 4.94% of the amount invested. The sales charge is
reduced on certain transactions of at least $100,000 but under $1,000,000. For
purchases of $1,000,000 or more, the front-end sales charge is eliminated. Class
A Shares are subject to annual 12b-1 Plan expenses for the life of the
investment.
The price of Class B Shares is equal to the net asset value per share.
Class B Shares are subject to a contingent deferred sales charge ("CDSC") of:
(i) 4% if shares are redeemed within two years of purchase; (ii) 3% if shares
are redeemed during the third or fourth year following purchase; (iii) 2% if
shares are redeemed during the fifth year following purchase; and (iv) 1% if
shares are redeemed during the sixth year following purchase. Class B Shares are
subject to annual 12b-1 Plan expenses for approximately eight years after
purchase. See Deferred Sales Charge Alternative - Class B Shares and Automatic
Conversion of Class B Shares under Classes of Shares.
The price of Class C Shares is equal to the net asset value per share.
Class C Shares are subject to a CDSC of 1% if shares are redeemed within 12
months of purchase. Class C Shares are subject to annual 12b-1 Plan expenses for
the life of the investment.
See Classes of Shares and Distribution (12b-1) and Service under
Management of the Fund.
Purchase Amounts
Generally, the minimum initial investment in any Class is $1,000.
Subsequent investments must generally be at least $100.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that is less than $1,000,000. An investor may exceed these maximum purchase
limitations for Class B Shares and Class C Shares by making cumulative purchases
over a period of time. An investor should keep in mind, however, that reduced
front-end sales charges apply to investments of $100,000 or more in Class A
Shares, and that Class A Shares are subject to lower annual 12b-1 Plan expenses
than Class B and Class C Shares and generally are not subject to a CDSC. The
minimum and maximum purchase amounts for retirement plans may vary. See How to
Buy Shares.
Redemption and Exchange
Class A Shares of the Fund may be redeemed or exchanged at the net
asset value calculated after receipt of the redemption or exchange request.
Neither the Fund nor the Distributor assesses a charge for redemptions or
exchanges of Class A Shares, except for certain redemptions of shares purchased
at net asset value, which may be subject to a CDSC if a dealer's commission was
paid in connection with such purchases. See Front-End Sales Charge Alternative -
Class A Shares under Classes of Shares.
-4-
<PAGE>
(RIF-ABC)
Class B Shares and Class C Shares may be redeemed or exchanged at the
net asset value calculated after receipt of the redemption or exchange request
subject, in the case of redemptions, to any applicable CDSC. Neither the Fund
nor the Distributor assesses any charges other than the CDSC for redemptions or
exchanges of Class B or Class C Shares. There are certain limitations on an
investor's ability to exchange shares between the various classes of shares that
are offered. See Redemption and Exchange.
Open-End Investment Company
Equity Funds V, Inc., which was organized as a Maryland corporation on
January 16, 1987, is an open-end management investment company. The Fund's
portfolio of assets is diversified as defined by the Investment Company Act of
1940 (the "1940 Act"). See Shares under Management of the Fund.
-5-
<PAGE>
(RIF-ABC)
SUMMARY OF EXPENSES
A general comparison of the sales arrangements and other expenses
applicable to Class A, Class B and Class C Shares follows:
Class A Class B Class C
Shareholder Transaction Expenses Shares Shares Shares
- --------------------------------------------------------------------------------
Maximum Sales Charge Imposed
on Purchases (as a percentage
of offering price). . . . . . . . . 4.75% None None
Maximum Sales Charge Imposed on
Reinvested Dividends (as a
percentage of offering price) . . . None None None
Maximum Contingent Deferred Sales
Charge (as a percentage of
original purchase price or
redemption proceeds,
as applicable). . . . . . . . . . . None* 4.00%* 1.00%*
Redemption Fees. . . . . . . . . . . . None** None** None**
Annual Operating Expenses
(as a percentage of Class A Class B Class C
average daily net assets) Shares Shares Shares
- --------------------------------------------------------------------------------
Management Fees . . . . . . . . . . .
(after voluntary waivers) 0.00% 0.00% 0.00%
12b-1 Plan Expenses
(including service fees)
(after voluntary waivers). . . . . 0.00%+ 0.00%+ 0.00%+
Other Operating Expenses++. . . . . . 0.75% 0.75% 0.75%
----- ----- -----
Total Operating Expenses+++. . .
(after voluntary waivers) 0.75% 0.75% 0.75%
===== ===== =====
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<PAGE>
(RIF-ABC)
*Class A purchases of $1 million or more may be made at net asset value.
However, if in connection with any such purchase a dealer commission is paid to
the financial adviser through whom such purchase is effected, a CDSC of 1% will
be imposed on certain redemptions within 12 months of purchase ("Limited CDSC").
Class B Shares are subject to a CDSC of: (i) 4% if shares are redeemed within
two years of purchase; (ii) 3% if shares are redeemed during the third or fourth
year following purchase; (iii) 2% if shares are redeemed during the fifth year
following purchase; (iv) 1% if shares are redeemed during the sixth year
following purchase; and (v) 0% thereafter. Class C Shares are subject to a CDSC
of 1% if the shares are redeemed within 12 months of purchase. See Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased at Net
Asset Value under Redemption and Exchange and Deferred Sales Charge Alternative
- - Class B Shares and Level Sales Charge Alternative - Class C Shares under
Classes of Shares.
**CoreStates Bank, N.A. currently charges $7.50 per redemption for redemptions
payable by wire.
+Class A Shares, Class B Shares and Class C Shares are subject to separate 12b-1
Plans. Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted by rules of the National Association
of Securities Dealers, Inc. (the "NASD"). The Distributor has elected
voluntarily to waive its right to receive 12b-1 Plan fees (including service
fees) from the commencement of the public offering of the Classes through May
31, 1997. In absence of those waivers, 12b-1 Plan expenses would equal 0.30% for
Class A Shares and 1.00% for each of the Class B and Class C Shares. See
Distribution (12b-1) and Service under Management of the Fund.
++Because the Fund has no operating history, "Other Operating Expenses" for all
Classes are estimates based on expenses expected to be incurred during the
Fund's first fiscal year.
+++"Total Operating Expenses" and "Other Operating Expenses" for the Class A
Shares, the Class B Shares and the Class C Shares are based on estimated amounts
for the first full fiscal year of the Classes, after giving effect to the
voluntary expense waiver. As noted above, the Distributor has elected
voluntarily to waive 12b-1 Plan expenses through May 31, 1997. Also, the Manager
has elected voluntarily to waive that portion, if any, of the annual management
fees payable by the Fund and to pay certain expenses of the Fund to the extent
necessary to ensure that the Total Operating Expenses of each Class of the Fund,
excluding each such Class' 12b-1 fees, do not exceed 0.75%, from the
commencement of the public offering of the Classes through May 31, 1997. If the
voluntary expense waivers by the Distributor and the Manager were not in effect,
it is estimated that for the first full year, the Total Operating Expenses, as a
percentage of average daily net assets, would be 2.56%, 3.36%, and 3.36%,
respectively, for the Class A Shares, the Class B Shares and the Class C Shares,
reflecting management fees of 0.65%.
For expense information about Retirement Income Fund Institutional
Class of shares, see the separate prospectus relating to that class.
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<PAGE>
(RIF-ABC)
The following example illustrates the expenses that an investor would
pay on a $1,000 investment over various time periods, assuming (1) a 5% annual
rate of return, (2) redemption and no redemption at the end of each time period
and (3) for Class B Shares and Class C Shares, payment of a CDSC at the time of
redemption, if applicable. The following example assumes the voluntary waiver of
the management fees by the Manager and of the 12b-1 Plan fees by the Distributor
as discussed in this Prospectus.
<TABLE>
<CAPTION>
Assuming Redemption Assuming No Redemption
1 year 3 years 1 year 3 years
------ ------- ------ -------
<S> <C> <C> <C> <C>
Class A Shares $55(1) $70 $55 $70
Class B Shares(2) $48 $54 $8 $24
Class C Shares $18 $24 $8 $24
</TABLE>
The purpose of the above tables is to assist the investor in
understanding the various costs and expenses that an investor in each Class will
bear directly or indirectly.
(1) Generally, no redemption charge is assessed upon redemption of Class A
Shares. Under certain circumstances, however, a Limited CDSC, which has
not been reflected in this calculation, may be imposed on certain
redemptions within 12 months of purchase. See Contingent Deferred Sales
Charge for Certain Redemptions of Class A Shares Purchased at Net Asset
Value under Redemption and Exchange.
(2) At the end of approximately eight years after purchase, Class B Shares
will be automatically converted into Class A Shares. The example above
does not assume conversion of Class B Shares since it reflects figures
only for one and three years. See Automatic Conversion of Class B
Shares under Classes of Shares for a description of the automatic
conversion feature.
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.
-8-
<PAGE>
(RIF-ABC)
INVESTMENT OBJECTIVE AND POLICIES
The objective of the Fund is to seek to provide investors with high
current income and an investment that has the potential for capital
appreciation. Although the Fund will constantly strive to attain its objective,
there can be no assurance that it will be attained.
SUITABILITY
The Fund may be suitable for investors interested in high current
income and a potential for capital appreciation. In particular, the Fund may be
suitable for retirees who are seeking income that may be equivalent to or in
excess of that available from investments in certificates of deposit but who
also desire an investment which has the potential for capital appreciation as a
hedge against inflation. The Fund may also be suitable for investors seeking to
diversify their investment portfolio and obtain the potential for a moderate
level of income. The Manager believes that the Fund's combined investments in
income generating equity securities and debt securities could provide an income
return which would exceed that of an investment exclusively in equity
securities. Because the Fund will invest at least 50% of its total assets in
income generating equity and equity equivalent securities, the Manager also
believes that investors will have the opportunity to benefit from capital
appreciation. The net asset value per share of each Class may fluctuate in
response to the condition of individual companies and general market and
economic conditions and, as a result, the Fund is not appropriate for a
short-term investor. The Fund cannot assure a specific yield, rate of return or
that principal will be protected. However, through the cautious selection and
supervision of its portfolio, the Manager will strive to achieve the Fund's
investment objective.
The types of securities in which the Fund may invest are subject to
price fluctuations particularly due to changes in interest rates. Investors
should consider asset value fluctuation, as well as yield, in making an
investment decision. While investments in unrated, lower-rated and certain
restricted securities have the potential for higher yields, they are more
speculative and increase the credit risk of the Fund's portfolio. Changes in the
market value of portfolio securities will not affect interest income from such
securities, but will be reflected in a Class' net asset value. In addition,
investments in foreign securities involve special risks, including those related
to currency fluctuations, as well as to political, economic and social
situations different from and potentially more volatile than those in the United
States. Investors should be willing to accept the risks, including the risk of
net asset value fluctuations, associated with investing in these types of
securities. See Special Risk Considerations and Other Investment Policies and
Risk Considerations for a complete discussion of the risk factors affecting the
Fund's portfolio securities.
An investor should not consider a purchase of Fund shares as equivalent
to a complete investment or retirement program. The Delaware Group includes a
family of funds, generally available through registered investment dealers,
which may be used together to create a more complete investment or retirement
program.
Ownership of Fund shares can reduce the bookkeeping and administrative
inconveniences that would be connected with direct purchases of the types of
securities in which the Fund invests.
INVESTMENT STRATEGY
The objective of the Fund is to seek to provide investors with high
current income and an investment that has the potential for capital
appreciation. The Manager will seek to achieve this objective by investing in a
-9-
<PAGE>
(RIF-ABC)
combination of income generating equity securities and debt securities
including, but not limited to, dividend paying common stocks, securities of real
estate investment trusts, preferred stocks, warrants, rights, convertible
securities, non-convertible debt securities, high-yield, high risk securities,
investment grade fixed-income securities, U.S. government securities and foreign
equity and fixed-income securities. Under normal circumstances, at least 50% of
the Fund's total assets will be invested in income generating equity securities.
In making investments in income generating equity securities, the Fund may
invest an unrestricted portion of its total assets in convertible securities and
preferred stock rated below investment grade. While debt securities may comprise
up to 50% of the Fund's total assets, no more than 45% of the Fund's total
assets will be invested in high-yield, high risk debt securities. No more than
25% of the Fund's total assets will be invested in any one industry sector nor,
as to 75% of the Fund's total assets, will more than 5% be invested in
securities of any one issuer. The Fund may invest up to 20% of its total assets
in foreign equity and debt securities. The Fund will not, however, invest more
than 5% of its total assets in securities of issuers principally located or
principally operating in markets of emerging countries.
Within the percentage guidelines set forth above, the Manager will
determine the proportion of the Fund's assets that will be allocated to income
generating equity securities and equity equivalents and to debt securities,
based on its analysis of economic and market conditions and its assessment of
the income and potential for appreciation that can be achieved from investment
in such asset classes. It is expected that the proportion of the Fund's total
assets invested in income generating equity securities and equity equivalent
securities will vary from 50% to 100% of the Fund's total assets. The proportion
of the Fund's total assets in debt securities will correspondingly vary from 0%
to 50% of the Fund's total assets.
The following is a more detailed description of some of the securities
in which the Fund may invest.
Common Stock
Common stock is generally considered to be shares of a corporation that
entitle the holder to a pro-rata share of the profits of the corporation, if
any, without a preference over any other shareholder or class of shareholders,
including holders of the corporation's preferred stock and other senior equity.
Common stock usually carries with it the right to vote and frequently an
exclusive right to do so. Holders of common stock also have the right to
participate in the remaining assets of the corporation after all other claims
are paid, including those of debt securities and preferred stock. In selecting
common stocks for investment, the Manager will focus primarily on a security's
dividend-paying capacity rather than on its potential for appreciation.
Preferred Stock
Generally, preferred stock receives dividends prior to distributions on
common stock and usually has a priority of claim over common stockholders if the
issuer of the stock is liquidated. Unlike common stock, preferred stock does not
usually have voting rights; preferred stock, in some instances, is convertible
into common stock. Dividends on typical preferred stock are cumulative, causing
dividends to accrue even if not declared by the board of directors. There is,
however, no assurance that dividends will be declared by the boards of directors
of issuers of the preferred stocks in which the Fund invests. Preferred stock in
which the Fund may invest may be rated below investment grade (i.e., "Ba" or
lower by Moody's Investors Service, Inc. ("Moody's") or "BB" or lower by
Standard & Poor's Ratings Group ("S&P") or similarly rated by other comparable
rating agencies) or, if unrated, determined to be of comparable quality by the
Manager.
-10-
<PAGE>
(RIF-ABC)
Convertible Securities
Traditional convertible securities include corporate bonds, notes and
preferred stocks that may be converted into or exchanged for common stock, and
other securities that also provide an opportunity for equity participation.
These securities are generally convertible either at a stated price or a stated
rate (that is, for a specific number of shares of common stock or other
security). As with other fixed-income securities, the price of a convertible
security to some extent varies inversely with interest rates. While providing a
fixed-income stream (generally higher in yield than the income derivable from a
common stock but lower than that afforded by a non-convertible debt security), a
convertible security also affords the investor an opportunity, through its
conversion feature, to participate in the capital appreciation of the common
stock into which it is convertible. As the market price of the underlying common
stock declines, convertible securities tend to trade increasingly on a yield
basis and so may not experience market value declines to the same extent as the
underlying common stock. When the market price of the underlying common stock
increases, the price of a convertible security tends to rise as a reflection of
the value of the underlying common stock. To obtain such a higher yield, the
Fund may be required to pay for a convertible security an amount in excess of
the value of the underlying common stock. Common stock acquired by the Fund upon
conversion of a convertible security will generally be held for so long as the
Manager anticipates such stock will provide the Fund with opportunities which
are consistent with the Fund's investment objectives and policies. Convertible
securities in which the Fund may invest may be rated below investment grade
(i.e., "Ba" or lower by Moody's or "BB" or lower by S&P or similarly rated by
other comparable rating agencies) or, if unrated, determined to be of comparable
quality by the Manager.
Real Estate Investment Trust Securities
Real Estate Investment Trusts ("REITs") are pooled investment vehicles
which invest primarily in income-producing real estate or real estate related
loans or interests. REITs are generally classified as equity REITs, mortgage
REITs or a combination of equity and mortgage REITs. Equity REITs invest the
majority of their assets directly in real property and derive income primarily
from the collection of rents. Equity REITs can also realize capital gains by
selling properties that have appreciated in value. Mortgage REITs invest the
majority of their assets in real estate mortgages and derive income from the
collection of interest payments. Like investment companies such as Equity Funds
V, Inc., REITs are not taxed on income distributed to shareholders provided they
comply with several requirements of the Internal Revenue Code (the "Code").
REITs are subject to substantial cash flow dependency, defaults by borrowers,
self-liquidation, and the risk of failing to qualify for tax-free pass-through
of income under the Code, and/or maintain exemptions from the 1940 Act. Equity
REITs may be affected by changes in the value of the underlying property owned
by the REITs, while mortgage REITs may be affected by the quality of any credit
extended.
REITs invest all of their assets in the real estate and real estate
related sectors of the economy, and are subject to the risks of financing
projects. REITs may have limited financial resources, may trade less frequently
and in a limited volume, and are more volatile than the high-yield, high risk
securities in which the Fund may also invest.
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<PAGE>
(RIF-ABC)
High-Yield, High Risk Securities
Debt Securities
High-yield, high risk debt securities, like all debt securities,
represent money borrowed that must be repaid and has a fixed amount, a specific
maturity or maturities and usually a specific rate of interest or original
purchase discount. Unlike common and preferred stock, debt securities, including
high-yield, high risk debt securities, do not represent an equity interest in
the issuer. However, debt securities have a priority claim over stockholders if
the issuer is liquidated. The Fund may invest in a wide variety of debt
securities, although it is anticipated that under normal market conditions, the
Fund primarily will invest in high-yield corporate debt obligations, including
zero coupon bonds and pay-in-kind securities ("PIKs"), debentures, convertible
debentures, corporate notes (including convertible notes) and units consisting
of bonds with stock or warrants to buy stock attached. See Zero Coupon Bonds and
Pay-In-Kind Bonds under Other Investment Policies and Risk Considerations.
The Fund will invest in both rated and unrated bonds. The rated bonds
that the Fund may purchase in this sector of its portfolio will be rated BBB or
lower by S&P or Fitch Investors Service, Inc. ("Fitch"), Baa or lower by
Moody's, or similarly rated by another nationally recognized statistical rating
organization. See Appendix C to this Prospectus for more rating information and
High-Yield Securities under Special Risk Considerations for a description of the
risks associated with investing in lower-rated fixed-income securities. Unrated
bonds may be more speculative in nature than rated bonds.
Convertible Securities and Preferred Stock
The Fund may invest in convertible securities and preferred stock rated
below investment grade or which are unrated but are of comparable quality as
determined by the Manager. The Fund includes these securities in its income
generating equity securities category and they are in addition to the
high-yield, high risk debt securities discussed above. Such securities are
judged to have speculative elements and may be subject to greater risks with
respect to the timely repayment of principal and timely payment of interest and
dividends. See Investment Objectives and Policies--Investment Strategy and
Special Risk Considerations. Also see Lower Rated Convertible Securities and
Preferred Stock under Special Risk Considerations.
Foreign Securities
The Fund may invest up to 20% of its total assets in securities of
issuers organized or having a majority of their assets or deriving a majority of
their operating income in foreign countries. These income generating equity
securities and debt securities include foreign government securities, equity
securities and debt obligations of foreign companies, and securities issued by
supranational entities. A supranational entity is an entity established or
financially supported by the national governments of one or more countries to
promote reconstruction or development. Examples of supranational entities
include, among others, the International Bank for Reconstruction and Development
(more commonly known as the World Bank), the European Economic Community, the
European Coal and Steel Community, the European Investment Bank, the
Inter-Development Bank, the Export-Import Bank and the Asian Development Bank.
-12-
<PAGE>
(RIF-ABC)
The Fund may invest in sponsored and unsponsored American Depositary
Receipts, European Depositary Receipts, or Global Depositary Receipts
("Depositary Receipts"). Depositary Receipts are receipts typically issued by a
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. "Sponsored" Depositary Receipts are issued jointly by
the issuer of the underlying security and a depository, and "unsponsored"
Depositary Receipts are issued without the participation of the issuer of the
deposited security. The Fund may also invest in Brady Bonds, which are described
more fully under the Other Investment Policies and Risk Considerations section
of this Prospectus.
The Fund may invest in securities issued in any currency and may hold
foreign currencies. Securities of issuers within a given country may be
denominated in the currency of another country or in multinational currency
units, such as the European Currency Unit. The Fund may, from time to time,
purchase or sell foreign currencies and/or engage in forward foreign currency
transactions in order to expedite settlement of Fund transactions and to
minimize currency value fluctuations. See Other Investment Policies and Risk
Considerations for a further description of the Fund's foreign currency
transactions.
While the Fund may purchase securities of issuers in any foreign
country, developed and underdeveloped, no more than 5% of the Fund's assets may
be invested in direct obligations or equity securities of issuers located in
emerging market countries. See Emerging Market Securities under Special Risk
Considerations.
The Fund will invest in both rated and unrated foreign securities. The
rated securities that the Fund may purchase in the international sector of its
portfolio may include those rated BBB or lower by S&P or Fitch, Baa or lower by
Moody's, or similarly rated by another nationally reorganized statistical rating
organization. See Appendix C to this Prospectus for more rating information and
Foreign Securities and High-Yield Securities under Special Risk Considerations
for a description of the risks associated with investing in foreign securities
and lower-rated securities.
The Fund may also invest in zero coupon bonds, purchase shares of other
investment companies and may engage in short sales. See Zero Coupon Bonds and
Pay-In-Kind Bonds and Investment Company Securities under Other Investment
Polices and Risk Considerations.
* * *
For a description of the Fund's other investment policies and for a
further description of some of the policies described above, see Other
Investment Policies and Risk Considerations.
In unusual market conditions, in order to meet redemption requests, for
temporary defensive purposes, and pending investment or at such other times when
suitable income generating equity or debt securities are not available, the Fund
may hold a substantial portion of its assets in (i) cash, (ii) debt securities
issued by the U.S. government, its agencies or instrumentalities, (iii)
commercial paper, (iv) certificates of deposit and bankers' acceptances or
repurchase agreements with respect to any of the foregoing investments. The Fund
will only invest in commercial paper of companies rated "A-2" or better by S&P
or "P-2" or better by Moody's or similarly rated by another comparable rating
agency or, if not so rated, of equivalent investment quality as determined by
the Manager. See Appendix C to this Prospectus for more rating information.
-13-
<PAGE>
(RIF-ABC)
The Fund's designation as an open-end investment company and as a
diversified fund may not be changed unless authorized by the vote of a majority
of the Fund's outstanding voting securities. A "majority vote of the outstanding
voting securities" is the vote by the holders of the lesser of a) 67% or more of
the Fund's voting securities present in person or represented by proxy if the
holders of more than 50% of the outstanding voting securities of the Fund are
present or represented by proxy; or b) more than 50% of the outstanding voting
securities. Part B lists other more specific investment restrictions of the Fund
which may not be changed without a majority shareholder vote.
The remaining investment policies of the Fund not identified above or
in Part B are not fundamental and may be changed by the Board of Directors of
Equity Funds V, Inc. without a shareholder vote.
-14-
<PAGE>
(RIF-ABC)
SPECIAL RISK CONSIDERATIONS
Generally
The Fund may invest a substantial portion of its assets in fixed-income
securities. The market values of fixed-income securities generally fall when
interest rates rise and, conversely, rise when interest rates fall. Lower- rated
and unrated fixed-income securities tend to reflect short-term corporate and
market developments to a greater extent than higher-rated fixed-income
securities, which react primarily to fluctuations in the general level of
interest rates. These lower-rated or unrated securities generally have higher
yields, but, as a result of factors such as reduced creditworthiness of issuers,
increased risk of default and a more limited and less liquid secondary market,
are subject to greater volatility and risk of loss of income and principal than
are higher-rated securities. The Manager will attempt to reduce such risk
through portfolio diversification, credit analysis, and attention to trends in
the economy, industries and financial markets.
High-Yield Securities
The Fund may invest up to 45% of its total assets in bonds rated BBB or
lower by S&P or Fitch, Baa or lower by Moody's, or similarly rated by another
rating organization, and in unrated corporate bonds. See Appendix C to this
Prospectus for more rating information. Investing in these so-called "junk" or
"high-yield" bonds entails certain risks, including the risk of loss of
principal and default on interest payments, which may be greater than the risks
involved in investment grade bonds, and which should be considered by investors
contemplating an investment in the Fund. Such bonds are sometimes issued by
companies whose earnings at the time of issuance are less than the projected
debt service on the junk bonds. In addition to the considerations discussed
elsewhere in this Prospectus, those risks include the following:
Youth and Volatility of the High-Yield Market. Although the market for
high-yield bonds has been in existence for many years, including periods of
economic downturns, the high-yield market grew rapidly during the long economic
expansion which took place in the United States during the 1980s. During that
economic expansion, the use of high-yield debt securities to fund highly
leveraged corporate acquisitions and restructurings increased dramatically. As a
result, the high-yield market grew substantially during that economic expansion.
Although experts disagree on the impact recessionary periods have had and will
have on the high-yield market, some analysts believe a protracted economic
downturn would severely disrupt the market for high-yield bonds, would adversely
affect the value of outstanding bonds and would adversely affect the ability of
high-yield issuers to repay principal and interest. Those analysts cite
volatility experienced in the high-yield market in the past as evidence for
their position. It is likely that protracted periods of economic uncertainty
would result in increased volatility in the market prices of high-yield bonds,
an increase in the number of high-yield bond defaults and corresponding
volatility in a Class' net asset value.
Redemptions. If, as a result of volatility in the high-yield market or other
factors, the Fund experiences substantial net redemptions of the Fund's shares
for a sustained period of time (i.e., more shares of the Fund are redeemed than
are purchased), the Fund may be required to sell certain of its high-yield
securities without regard to the investment merits of the securities to be sold.
If the Fund sells a substantial number of securities to generate proceeds for
redemptions, the asset base of the Fund will decrease and the Fund's expense
ratios may increase.
-15-
<PAGE>
(RIF-ABC)
Liquidity and Valuation. The secondary market for high-yield securities is
currently dominated by institutional investors, including mutual funds, and
certain financial institutions. There is generally no established retail
secondary market for high-yield securities. As a result, the secondary market
for high-yield securities is more limited and less liquid than other secondary
securities markets. The high-yield secondary market is particularly susceptible
to liquidity problems when the institutions that dominate it temporarily cease
buying bonds for regulatory, financial or other reasons, such as the savings and
loan crisis. A less liquid secondary market may have an adverse effect on the
Fund's ability to dispose of particular issues, when necessary, to meet the
Fund's liquidity needs or in response to a specific economic event, such as the
deterioration in the creditworthiness of the issuer. In addition, a less liquid
secondary market makes it more difficult for the Fund to obtain precise
valuations of the high-yield securities in its portfolio. During periods
involving such liquidity problems, judgment plays a greater role in valuing
high-yield securities than is normally the case. The secondary market for
high-yield securities is also generally considered to be more likely to be
disrupted by adverse publicity and investor perceptions than the more
established secondary securities markets. The privately placed high-yield
securities that the Fund may purchase are particularly susceptible to the
liquidity and valuation risks outlined above.
Lower Rated Convertible Securities and Preferred Stock
The Fund may invest in lower rated convertible securities and preferred
stock (i.e., "Ba" or lower for convertible securities or "ba" or lower for
preferred stock by Moody's or "BB" or lower for convertible securities or
preferred stock by S&P or similarly rated by other comparable rating agencies)
or, if unrated, determined to be of comparable quality by the Manager. Investing
in lower rated convertible securities and preferred stock entails certain risks,
including the risk of loss of principal which may be greater than the risks
involved in investing in higher rated securities, and which should be considered
by investors contemplating an investment in the Fund. The Fund may have
difficulty disposing of such securities because the trading market for such
securities may be thinner than the market for higher rated convertible
securities and preferred stock. To the extent a secondary trading market for
these securities does exist, it generally is not as liquid as the secondary
trading market for higher rated securities. The lack of a liquid secondary
market as well as adverse publicity with respect to these securities, may have
an adverse impact on market price and the Fund's ability to dispose of
particular issues in response to a specific economic event such as a
deterioration in the creditworthiness of the issuer. The lack of a liquid
secondary market for certain securities also may make it more difficult for the
Fund to obtain accurate market quotations for purposes of pricing the Fund's
portfolio and calculating its net asset value. The market behavior of
convertible securities and preferred stocks in lower rating categories is often
more volatile than that of higher quality securities. Lower quality convertible
securities and preferred stocks are judged by Moody's and S&P to have
speculative elements or characteristics; their future cannot be considered as
well assured and earnings and asset protection may be moderate or poor in
comparison to investment grade securities. In addition, such lower quality
securities face major ongoing uncertainties or exposure to adverse business,
financial or economic conditions, which could lead to inadequate capacity to
meet timely payments. A description of the ratings used by Moody's and S&P for
such securities is set forth in Appendix C to this Prospectus. See also Special
Risk Considerations--High-Yield Securities.
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Foreign Securities
The Fund has the ability to purchase income generating equity
securities and debt securities in any foreign country. Investors should consider
carefully the substantial risks involved in investing in securities issued by
companies and governments of foreign nations. These risks are in addition to the
usual risks inherent in domestic investments. There is the possibility of
expropriation, nationalization or confiscatory taxation, taxation of income
earned in foreign nations or other taxes imposed with respect to investments in
foreign nations, foreign exchange controls (which may include suspension of the
ability to transfer currency from a given country), default in foreign
government securities, political or social instability or diplomatic
developments which could affect investments in securities of issuers in those
nations.
In addition, in many countries, there is substantially less publicly
available information about issuers than is available in reports about companies
in the United States. Foreign companies are not subject to uniform accounting,
auditing and financial reporting standards, and auditing practices and
requirements may not be comparable to those applicable to United States
companies. Consequently, financial data about foreign companies may not
accurately reflect the real condition of those issuers and securities markets.
Further, the Fund may encounter difficulty or be unable to pursue legal
remedies and obtain judgments in foreign courts. Commission rates on securities
transactions in foreign countries, which are sometimes fixed rather than subject
to negotiation as in the United States, are likely to be higher. Further, the
settlement period of securities transactions in foreign markets may be longer
than in domestic markets, and may be subject to administrative uncertainties. In
many foreign countries, there is less government supervision and regulation of
business and industry practices, stock exchanges, brokers and listed companies
than in the United States, and capital requirements for brokerage firms are
generally lower. The foreign securities markets of many of the countries in
which the Fund may invest may also be smaller, less liquid and subject to
greater price volatility than those in the United States.
Emerging Market Securities. The Fund may invest up to 5% of its assets
in income generating equity securities and debt securities of issuers located in
emerging market nations. Compared to the United States and other developed
countries, emerging countries may have volatile social conditions, relatively
unstable governments and political systems, economies based on only a few
industries and economic structures that are less diverse and mature, and
securities markets that trade a small number of securities, which can result in
a low or nonexistent volume of trading. Prices in these securities markets tend
to be volatile and, in the past, securities in these countries have offered
greater potential for gain (as well as loss) than securities of companies
located in developed countries. Until recently, there has been an absence of a
capital market structure or market-oriented economy in certain emerging
countries. Further, investments and opportunities for investments by foreign
investors are subject to a variety of national policies and restrictions in many
emerging countries. Also, the repatriation of both investment income and capital
from several foreign countries is restricted and controlled under certain
regulations, including, in some cases, the need for certain governmental
consents. Countries such as those in which the Fund may invest may have
historically experienced and may continue to experience, substantial, and in
some periods extremely high rates of inflation for many years, high interest
rates, exchange rate fluctuations or currency depreciation, large amounts of
external debt, balance of payments and trade difficulties and extreme poverty
and unemployment. Other factors which may influence the ability or willingness
to service debt include, but are not limited to, a country's cash flow
situation, the availability of sufficient foreign exchange on the date a payment
is due, the relative size of its debt service burden to the economy as a whole,
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its government's policy towards the International Monetary Fund, the World Bank
and other international agencies and the political constraints to which a
government debtor may be subject. The Manager currently considers countries such
as Argentina, Brazil, Chile, China, Mexico, India, Portugal, Poland and Thailand
to be emerging markets. This list is not intended to be exhaustive, but rather
representative of the types of countries now considered by the Manager to
present special investment risks.
See Other Investment Policies and Risk Considerations for a further
description of certain risks associated with certain of the Fund's investments,
including the risks associated with investments in foreign government securities
and engaging in foreign currency transactions and options.
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THE DELAWARE DIFFERENCE
PLANS AND SERVICES
The Delaware Difference is our commitment to provide you with superior
information and quality service on your investments in the Delaware Group of
funds.
SHAREHOLDER PHONE DIRECTORY
Investor Information Center
800-523-4640
Fund Information; Literature; Price; Yield and Performance Figures
Shareholder Service Center
800-523-1918
Information on Existing Regular Investment Accounts and Retirement Plan
Accounts; Wire Investments; Wire Liquidations; Telephone
Liquidations and Telephone Exchanges
Delaphone
800-362-FUND
(800-362-3863)
Performance Information
You can call the Investor Information Center at any time for current
performance information. Current yield and total return information may also be
included in advertisements and information given to shareholders. Yields are
computed on an annual basis over a 30-day period.
Shareholder Services
During business hours, you can call the Delaware Group's Shareholder
Service Center. Our representatives can answer any questions about your account,
the Fund, various service features and other funds in the Delaware Group.
Delaphone Service
Delaphone is an account inquiry service for investors with
Touch-Tone(R) phone service. It enables you to get information on your account
faster than the mailed statements and confirmations. Delaphone also provides
current performance information on the Fund, as well as other funds in the
Delaware Group. Delaphone is available seven days a week, 24 hours a day.
Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent following
all transactions other than those involving a reinvestment of dividends. You
should examine statements and confirmations immediately and promptly report any
discrepancy by calling the Shareholder Service Center.
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Duplicate Confirmations
If your financial adviser or investment dealer is noted on your
investment application, we will send a duplicate confirmation to him or her.
This makes it easier for your adviser to help you manage your investments.
Tax Information
Each year, Equity Funds V, Inc. will mail to you information on the tax
status of your dividends and distributions.
Dividend Payments
Dividends, capital gains and other distributions are automatically
reinvested in your account. You may, however, elect to have the dividends earned
in one fund automatically invested in another Delaware Group fund with a
different investment objective, subject to certain exceptions and limitations.
For more information, see Additional Methods of Adding to Your
Investment - Dividend Reinvestment Plan under How to Buy Shares or call the
Shareholder Service Center.
Right of Accumulation
With respect to Class A Shares, the Right of Accumulation feature
allows you to combine the value of your current holdings of Class A Shares,
Class B Shares and Class C Shares of the Fund with the dollar amount of new
purchases of Class A Shares of the Fund to qualify for a reduced front-end sales
charge on such purchases of Class A Shares. Under the Combined Purchases
Privilege, you may also include certain shares that you own in other funds in
the Delaware Group. See Classes of Shares.
Letter of Intention
The Letter of Intention feature permits you to obtain a reduced
front-end sales charge on purchases of Class A Shares by aggregating certain of
your purchases of Delaware Group fund shares over a 13-month period. See Classes
of Shares and Part B.
12-Month Reinvestment Privilege
The 12-Month Reinvestment Privilege permits you to reinvest proceeds
from a redemption of Class A Shares, within one year of the date of the
redemption, without paying a front-end sales charge. See Part B.
Exchange Privilege
The Exchange Privilege permits shareholders to exchange all or part of
their shares into shares of the other funds in the Delaware Group, subject to
certain exceptions and limitations. For additional information on exchanges, see
Investing by Exchange under How to Buy Shares and Redemption and Exchange.
Wealth Builder Option
You may elect to invest in the Fund through regular liquidations of
shares in your accounts in other funds in the Delaware Group. Investments under
this feature are exchanges and are therefore subject to the same conditions and
limitations as other exchanges of Fund shares. See Additional Methods of Adding
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to Your Investment - Wealth Builder Option and Investing by Exchange under How
to Buy Shares and Redemption and Exchange.
Delaware Group Asset Planner
Delaware Group Asset Planner is an asset allocation service that gives
you, working with a professional financial adviser, the ability to more easily
design and maintain investments in a diversified selection of Delaware Group
mutual funds. The Asset Planner service offers a choice of four predesigned
allocation strategies (each with a different risk/reward profile) made up of
separate investments in predetermined percentages of Delaware Group funds. With
the guidance of a financial adviser, you may also tailor an allocation strategy
that meets your personal needs and goals. See How to Buy Shares.
Financial Information about the Fund
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. Equity Funds V, Inc.'s fiscal year ends
on November 30.
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RETIREMENT PLANNING
Under certain circumstances, an investment in the Fund may be suitable
for tax-deferred retirement plans. Among the retirement plans noted below, Class
B Shares are available for investment only by Individual Retirement Accounts,
Simplified Employee Pension Plans, 457 Deferred Compensation Plans and 403(b)(7)
Deferred Compensation Plans.
Retirement plans may be subject to plan establishment fees, annual
maintenance fees and/or other administrative or trustee fees. Fees are based
upon the number of participants in the plan as well as the services selected.
Additional information about fees is included in retirement plan materials. Fees
are quoted upon request.
Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders. Certain
retirement plans may qualify to purchase Retirement Income Fund Institutional
Class. For additional information on any of the plans and Delaware's retirement
services, call the Shareholder Service Center or see Part B.
Individual Retirement Account ("IRA")
Individuals, even if they participate in an employer-sponsored
retirement plan, may establish their own retirement program for investments in
each of the Classes. Contributions to an IRA may be tax-deductible and earnings
are tax-deferred. Under the Tax Reform Act of 1986, the tax deductibility of IRA
contributions is restricted, and in some cases eliminated, for individuals who
participate in certain employer-sponsored retirement plans and whose annual
income exceeds certain limits. Existing IRAs and future contributions up to the
IRA maximums, whether deductible or not, still earn on a tax-deferred basis.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Classes is available for investment by a
SEP/IRA.
Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
New SAR/SEP plans may not be established after December 31, 1996.
Employers must have no more than 25 eligible employees to maintain an existing
SEP/IRA that permits salary deferral contributions. An employer may also elect
to make additional contributions to this plan. Class B Shares are not available
for purchase by such plans.
403(b)(7) Deferred Compensation Plan
Permits employees of public school systems or of certain types of
non-profit organizations to enter into a deferred compensation arrangement for
the purchase of shares of each of the Classes.
457 Deferred Compensation Plan
Permits employees of state and local governments and certain other
entities to enter into a deferred compensation arrangement for the purchase of
shares of each of the Classes.
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Prototype Profit Sharing or Money Purchase Pension Plan
Offers self-employed individuals, partnerships and corporations a
tax-qualified plan which provides for the investment of contributions in Class A
Shares or Class C Shares. Class B Shares are not available for purchase by such
plans.
Prototype 401(k) Defined Contribution Plan
Permits employers to establish a tax-qualified plan based on salary
deferral contributions for investment in Class A or Class C Shares. Class B
Shares are not available for purchase by such plans.
Allied Plans
Class A Shares are available for purchase by participants in certain
401(k) Defined Contribution Plans ("Allied Plans") which are made available
under a joint venture agreement between the Distributor and another institution
through which mutual funds are marketed and which allow investments in Class A
Shares of designated Delaware Group funds ("eligible Delaware Group fund
shares"), as well as shares of designated classes of non- Delaware Group funds
("eligible non-Delaware Group fund shares"). Class B Shares and Class C Shares
are not eligible for purchase by Allied Plans.
With respect to purchases made in connection with an Allied Plan, the
value of eligible Delaware Group and eligible non-Delaware Group fund shares
held by the Allied Plan may be combined with the dollar amount of new purchases
by that Allied Plan to obtain a reduced front-end sales charge on additional
purchases of eligible Delaware Group fund shares. See Front-End Sales Charge
Alternative - Class A Shares under Classes of Shares.
Participants in Allied Plans may exchange all or part of their eligible
Delaware Group fund shares for other eligible Delaware Group fund shares or for
eligible non-Delaware Group fund shares at net asset value without payment of a
front-end sales charge. However, exchanges of eligible fund shares, both
Delaware Group and non- Delaware Group, which were not subject to a front-end
sales charge, will be subject to the applicable sales charge if exchanged for
eligible Delaware Group fund shares to which a sales charge applies. No sales
charge will apply if the eligible fund shares were previously acquired through
the exchange of eligible shares on which a sales charge was already paid or
through the reinvestment of dividends. See Investing by Exchange under How to
Buy Shares.
A dealer's commission may be payable on purchases of eligible Delaware
Group fund shares under an Allied Plan. In determining a financial adviser's
eligibility for a dealer's commission on net asset value purchases of eligible
Delaware Group fund shares in connection with Allied Plans, all participant
holdings in the Allied Plan will be aggregated. See Front-End Sales Charge
Alternative - Class A Shares under Classes of Shares.
The Limited CDSC is applicable to redemptions of net asset value
purchases from an Allied Plan on which a dealer's commission has been paid.
Waivers of the Limited CDSC, as described under Waiver of Limited Contingent
Deferred Sales Charge - Class A Shares under Redemption and Exchange, apply to
redemptions by participants in Allied Plans except in the case of exchanges
between eligible Delaware Group and non-Delaware Group fund shares. When
eligible Delaware Group fund shares are exchanged into eligible non-Delaware
Group fund shares, the Limited CDSC will be imposed at the time of the exchange,
unless the joint venture agreement specifies that the amount of the Limited CDSC
will be paid by the financial adviser or selling dealer. See Contingent Deferred
Sales Charge for Certain Redemptions of Class A Shares Purchased at Net Asset
Value under Redemption and Exchange.
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CLASSES OF SHARES
Alternative Purchase Arrangements
Shares may be purchased at a price equal to the next determined net
asset value per share, subject to a sales charge which may be imposed, at the
election of the purchaser, at the time of the purchase for Class A Shares
("front-end sales charge alternative"), or on a contingent deferred basis for
Class B Shares ("deferred sales charge alternative") or Class C Shares ("level
sales charge alternative").
Class A Shares. An investor who elects the front-end sales charge
alternative acquires Class A Shares, which incur a sales charge when they are
purchased, but generally are not subject to any sales charge when they are
redeemed. Absent any applicable fee waiver, Class A Shares are subject to annual
12b-1 Plan expenses of up to a maximum of 0.30% average daily net assets of such
shares. Certain purchases of Class A Shares qualify for reduced front-end sales
charges. See Front-End Sales Charge Alternative - Class A Shares, below. See
also Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value under Redemption and Exchange and Distribution
(12b-1) and Service under Management of the Fund.
Class B Shares. An investor who elects the deferred sales charge
alternative acquires Class B Shares, which do not incur a front-end sales charge
when they are purchased, but are subject to a contingent deferred sales charge
if they are redeemed within six years of purchase. Absent any applicable fee
waiver, Class B Shares are subject to annual 12b-1 Plan expenses of up to a
maximum of 1% (0.25% of which are service fees to be paid to the Distributor,
dealers or others for providing personal service and/or maintaining shareholder
accounts) of average daily net assets of such shares for approximately eight
years after purchase. Class B Shares permit all of the investor's dollars to
work from the time the investment is made. If no waiver of 12b-1 fees is in
effect, the higher 12b-1 Plan expenses paid by Class B Shares will cause such
shares to have a higher expense ratio and to pay lower dividends than Class A
Shares. At the end of approximately eight years after purchase, the Class B
Shares will automatically be converted into Class A Shares and, thereafter, for
the remainder of the life of the investment, the annual 0.30% 12b-1 Plan fees
for the Class A Shares will apply. See Automatic Conversion of Class B Shares,
below.
Class C Shares. An investor who elects the level sales charge
alternative acquires Class C Shares, which do not incur a front-end sales charge
when they are purchased, but are subject to a contingent deferred sales charge
if they are redeemed within 12 months of purchase. Absent any applicable fee
waiver, Class C Shares are subject to annual 12b-1 Plan expenses of up to a
maximum of 1% (0.25% of which are service fees to be paid to the Distributor,
dealers or others for providing personal service and/or maintaining shareholder
accounts) of average daily net assets of such shares for the life of the
investment. If no waiver of 12b-1 fees is in effect, the higher 12b-1 Plan
expenses paid by Class C Shares will cause such shares to have a higher expense
ratio and to pay lower dividends than Class A Shares. Unlike Class B Shares,
Class C Shares do not convert to another class.
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(RIF-ABC)
The alternative purchase arrangements described above permit investors
to choose the method of purchasing shares that is most suitable given the amount
of their purchase, the length of time they expect to hold their shares and other
relevant circumstances. Investors should determine whether, given their
particular circumstances, it is more advantageous to purchase Class A Shares and
incur a front-end sales charge, purchase Class B Shares and have the entire
initial purchase amount invested in the Fund with their investment being subject
to a CDSC if they redeem shares within six years of purchase, or purchase Class
C Shares and have the entire initial purchase amount invested in the Fund with
their investment being subject to a CDSC if they redeem shares within 12 months
of purchase. In addition, investors should consider the level of annual 12b-1
Plan expenses applicable to each Class. If no waiver of 12b-1 fees is in effect,
the higher 12b-1 Plan expenses on Class B Shares and Class C Shares will be
offset to the extent a return is realized on the additional money initially
invested upon the purchase of such shares. However, there can be no assurance as
to the return, if any, that will be realized on such additional money. In
comparing Class B Shares to Class C Shares, investors should also consider the
desirability of an automatic conversion feature, which is available only for
Class B Shares.
Prospective investors should refer to Appendix A--Investment
Illustrations in this Prospectus for an illustration of the potential effect
that each of the purchase options may have on a long-term shareholder's
investment.
For the distribution and related services provided to, and the expenses
borne on behalf of, the Fund, absent any applicable fee waiver, the Distributor
and others will be paid, in the case of Class A Shares, from the proceeds of
the front-end sales charge and 12b-1 Plan fees and, in the case of Class B
Shares and Class C Shares, from the proceeds of the 12b-1 Plan fees and, if
applicable, the CDSC incurred upon redemption. Financial advisers may receive
different compensation for selling Class A, Class B and Class C Shares.
Investors should understand that the purpose and function of the respective
12b-1 Plans and the CDSCs applicable to Class B Shares and Class C Shares are
the same as those of the 12b-1 Plan and the front-end sales charge applicable to
Class A Shares in that such fees and charges are used to finance the
distribution of the respective Classes. See 12b-1 Distribution Plans - Class A,
Class B and Class C Shares.
Dividends paid on Class A, Class B and Class C Shares, to the extent
any dividends are paid, will be calculated in the same manner, at the same time,
on the same day and will be in the same amount, except that, when assessed, the
additional amount of 12b-1 Plan expenses relating to Class B Shares and Class C
Shares will be borne exclusively by such shares. See Calculation of Offering
Price and Net Asset Value Per Share.
The NASD has adopted certain rules relating to investment company sales
charges. Equity Funds V, Inc. and the Distributor intend to operate in
compliance with these rules.
Front-End Sales Charge Alternative - Class A Shares
Class A Shares may be purchased at the offering price, which reflects a
maximum front-end sales charge of 4.75%. See Calculation of Offering Price and
Net Asset Value Per Share.
Purchases of $100,000 or more carry a reduced front-end sales charge as
shown in the following table.
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<TABLE>
<CAPTION>
Retirement Income Fund A Class
- ----------------------------------------------------------------------------------------------
Dealer's
Front-End Sales Charge Commission***
as % of as % of
Offering Amount Offering
Amount of Purchase Price Invested** Price
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.75% 4.94% 4.00%
$100,000 but
under $250,000 3.75 3.89 3.00
$250,000 but
under $500,000 2.50 2.59 2.00
$500,000 but
under $1,000,000* 2.00 2.00 1.60
* There is no front-end sales charge on purchases of Class A Shares of $1 million or
more but, under certain limited circumstances, a 1% Limited CDSC may apply upon
redemption of such shares.
** Based upon the initial net asset value of $8.50 per share of the Class A Shares.
*** Financial institutions or their affiliated brokers may receive an agency transaction
fee in the percentages set forth above.
- ----------------------------------------------------------------------------------------------
The Fund must be notified when a sale takes place which would qualify for the
reduced front-end sales charge on the basis of previous or current purchases. The
reduced front-end sales charge will be granted upon confirmation of the shareholder's
holdings by the Fund. Such reduced front-end sales charges are not retroactive.
From time to time, upon written notice to all of its dealers, the Distributor may
hold special promotions for specified periods during which the Distributor may
reallow to dealers up to the full amount of the front-end sales charge shown above.
In addition, certain dealers who enter into an agreement to provide extra training
and information on Delaware Group products and services and who increase sales of
Delaware Group funds may receive an additional commission of up to 0.15% of the
offering price. Dealers who receive 90% or more of the sales charge may be deemed
to be underwriters under the Securities Act of 1933.
- ----------------------------------------------------------------------------------------------
</TABLE>
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For initial purchases of Class A Shares of $1,000,000 or more, a
dealer's commission may be paid by the Distributor to financial advisers through
whom such purchases are made in accordance with the following schedule:
Amount of Purchase Dealer's Commission
------------------- -------------------------------------
(as a percentage of amount purchased)
Up to $2 million 1.00%
Next $1 million up to $3 million 0.75
Next $2 million up to $5 million 0.50
Amount over $5 million 0.25
In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds as to
which a Limited CDSC applies may be aggregated with those of the Class A Shares
of the Fund. Financial advisers also may be eligible for a dealer's commission
in connection with certain purchases made under a Letter of Intention or
pursuant to an investor's Right of Accumulation. Financial advisers should
contact the Distributor concerning the applicability and calculation of the
dealer's commission in the case of combined purchases.
An exchange from other Delaware Group funds will not qualify for
payment of the dealer's commission, unless a dealer's commission or similar
payment has not been previously paid on the assets being exchanged. The schedule
and program for payment of the dealer's commission are subject to change or
termination at any time by the Distributor at its discretion.
Redemptions of Class A Shares purchased at net asset value may result
in the imposition of a Limited CDSC if the dealer's commission described above
was paid in connection with the purchase of those shares. See Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased at Net
Asset Value under Redemption and Exchange.
Combined Purchases Privilege
By combining your holdings of Class A Shares with your holdings of
Class B Shares and/or Class C Shares of the Fund and shares of other funds in
the Delaware Group, except those noted below, you can reduce the front-end sales
charges on any additional purchases of Class A Shares. Shares of Delaware Group
Premium Fund, Inc. beneficially owned in connection with ownership of variable
insurance products may be combined with other Delaware Group fund holdings.
Shares of other funds that do not carry a front-end sales charge or CDSC may not
be included unless they were acquired through an exchange from a Delaware Group
fund that does carry a front-end sales charge or CDSC.
This privilege permits you to combine your purchases and holdings with
those of your spouse, your children under 21 and any trust, fiduciary or
retirement account for the benefit of such family members.
It also permits you to use these combinations under a Letter of
Intention. A Letter of Intention allows you to make purchases over a 13-month
period and qualify the entire purchase for a reduction in front-end sales
charges on Class A Shares.
Combined purchases of $1,000,000 or more, including certain purchases
made at net asset value pursuant to a Right of Accumulation or under a Letter of
Intention, may result in the payment of a dealer's commission and
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the applicability of a Limited CDSC. Investors should consult their financial
advisers or the Shareholder Service Center about the operation of these
features. See Front-End Sales Charge Alternative - Class A Shares, above.
Buying Class A Shares at Net Asset Value
Class A Shares of the Fund may be purchased at net asset value under
the Delaware Group Dividend Reinvestment Plan and, under certain circumstances,
the Exchange Privilege and the 12-Month Reinvestment Privilege. See The Delaware
Difference and Redemption and Exchange for additional information.
Purchases of Class A Shares may be made at net asset value by current
and former officers, directors and employees (and members of their families) of
the Manager, any affiliate, any of the funds in the Delaware Group, certain of
their agents and registered representatives and employees of authorized
investment dealers and by employee benefit plans for such entities. Individual
purchases, including those in retirement accounts, must be for accounts in the
name of the individual or a qualifying family member.
Purchases of Class A Shares may also be made by clients of registered
representatives of an authorized investment dealer at net asset value within 12
months after the registered representative changes employment, if the purchase
is funded by proceeds from an investment where a front-end sales charge,
contingent deferred sales charge or other sales charge has been assessed.
Purchases of Class A Shares may also be made at net asset value by bank
employees who provide services in connection with agreements between the bank
and unaffiliated brokers or dealers concerning sales of shares of Delaware Group
funds. In addition, purchases of Class A Shares may be made by financial
institutions investing for the account of their trust customers when they are
not eligible to purchase shares of a Fund's institutional class. Officers,
directors and key employees of institutional clients of the Manager or any of
its affiliates may purchase Class A Shares at net asset value. Moreover,
purchases may be effected at net asset value for the benefit of the clients of
brokers, dealers and registered investment advisers affiliated with a broker or
dealer, if such broker, dealer or investment adviser has entered into an
agreement with the Distributor providing specifically for the purchase of Class
A Shares in connection with special investment products, such as wrap accounts
or similar fee based programs.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from such
accounts will be made at net asset value. Loan repayments made to a Delaware
Group account in connection with loans originated from accounts previously
maintained by another investment firm will also be invested at net asset value.
The Fund must be notified in advance that an investment qualifies for
purchase at net asset value.
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Group Investment Plans
Group Investment Plans (e.g., SEP/IRA, SAR/SEP, Prototype Profit
Sharing, Pension and 401(k) Defined Contribution Plans) may benefit from the
reduced front-end sales charges available on Class A Shares set forth in the
table on page 00, based on total plan assets. In addition, 403(b)(7) and 457
Retirement Plan Accounts may benefit from a reduced front-end sales charge on
Class A Shares based on the total amount invested by all participants in the
plan by satisfying the following criteria: (i) the employer for which the plan
was established has 250 or more eligible employees and the plan lists only one
broker of record, or (ii) the plan includes employer contributions and the plan
lists only one broker of record. If a company has more than one plan investing
in the Delaware Group of funds, then the total amount invested in all plans will
be aggregated to determine the applicable front-end sales charge reduction on
each purchase, both initial and subsequent, if, at the time of each such
purchase, the company notifies the Fund that it qualifies for the reduction.
Employees participating in such Group Investment Plans may also combine the
investments held in their plan account to determine the front-end sales charge
applicable to purchases in non-retirement Delaware Group investment accounts if,
at the time of each such purchase, they notify the Fund that they are eligible
to combine purchase amounts held in their plan account.
For additional information on retirement plans, including plan forms,
applications, minimum investments and any applicable account maintenance fees,
contact your investment dealer or the Distributor.
For other retirement plans and special services, see Retirement
Planning.
Deferred Sales Charge Alternative - Class B Shares
Class B Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently anticipates
compensating dealers or brokers for selling Class B Shares at the time of
purchase from its own assets in an amount equal to no more than 4% of the dollar
amount purchased. In addition, from time to time, upon written notice to all of
its dealers, the Distributor may hold special promotions for specified periods
during which the Distributor may pay additional compensation to dealers or
brokers for selling Class B Shares at the time of purchase. As discussed below,
however, absent any applicable fee waiver, Class B Shares are subject to annual
12b-1 Plan expenses and, if redeemed within six years of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees, if any, are paid
to the Distributor and others for providing distribution and related services,
and bearing related expenses, in connection with the sale of Class B Shares.
These payments support the compensation paid to dealers or brokers for selling
Class B Shares. Payments to the Distributor and others under the Class B 12b-1
Plan may be in an amount equal to no more than 1% annually. The combination of
the CDSC and the proceeds of the 12b-1 Plan fees makes it possible for the Fund
to sell Class B Shares without deducting a front-end sales charge at the time of
purchase.
Holders of Class B Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for the Class B Shares
described in this Prospectus, even after the exchange. Such CDSC schedule may be
higher than the CDSC schedule for the Class B Shares acquired as a result of the
exchange. See Redemption and Exchange.
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Automatic Conversion of Class B Shares
Class B Shares, other than shares acquired through reinvestment of
dividends, held for eight years after purchase are eligible for automatic
conversion into Class A Shares. Conversions of Class B Shares into Class A
Shares will occur only four times in any calendar year, on the last business day
of the second full week of March, June, September and December (each, a
"Conversion Date"). If the eighth anniversary after a purchase of Class B Shares
falls on a Conversion Date, an investor's Class B Shares will be converted on
that date. If the eighth anniversary occurs between Conversion Dates, an
investor's Class B Shares will be converted on the next Conversion Date after
such anniversary. Consequently, if a shareholder's eighth anniversary falls on
the day after a Conversion Date, that shareholder will have to hold Class B
Shares for as long as three additional months after the eighth anniversary of
purchase before the shares will automatically convert into Class A Shares.
Class B Shares of a fund acquired through a reinvestment of dividends
will convert to the corresponding Class A Shares of that fund (or, in the case
of Delaware Group Cash Reserve, Inc., the Delaware Cash Reserve Consultant
Class) pro-rata with Class B Shares of that fund not acquired through dividend
reinvestment.
All such automatic conversions of Class B Shares will constitute
tax-free exchanges for federal income tax purposes. See Taxes.
Level Sales Charge Alternative - Class C Shares
Class C Shares may be purchased at net asset value without a front-end
sales charge and, as a result, the full amount of the investor's purchase
payment will be invested in Fund shares. The Distributor currently anticipates
compensating dealers or brokers for selling Class C Shares at the time of
purchase from its own assets in an amount equal to no more than 1% of the dollar
amount purchased. As discussed below, however, absent any applicable fee waiver,
Class C Shares are subject to annual 12b-1 Plan expenses and, if redeemed within
12 months of purchase, a CDSC.
Proceeds from the CDSC and the annual 12b-1 Plan fees, if any, are paid
to the Distributor and others for providing distribution and related services,
and bearing related expenses, in connection with the sale of Class C Shares.
These payments support the compensation paid to dealers or brokers for selling
Class C Shares. Payments to the Distributor and others under the Class C 12b-1
Plan may be in an amount equal to no more than 1% annually.
Holders of Class C Shares who exercise the exchange privilege described
below will continue to be subject to the CDSC schedule for the Class C Shares as
described in this Prospectus. See Redemption and Exchange.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B Shares redeemed within six years of purchase may be subject to
a CDSC at the rates set forth below and Class C Shares redeemed within 12 months
of purchase may be subject to a CDSC of 1%. CDSCs are charged as a percentage of
the dollar amount subject to the CDSC. The charge will be assessed on an amount
equal to the lesser of the net asset value at the time of purchase of the shares
being redeemed or the net asset value of those shares at the time of redemption.
No CDSC will be imposed on increases in net asset value above the initial
purchase price, nor will a CDSC be assessed on redemptions of shares acquired
through reinvestments of dividends or capital gains distributions. For purposes
of this formula, the "net asset value at the time of purchase" will be the net
asset value at purchase of the Class B Shares or the Class C Shares of the Fund,
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even if those shares are later exchanged for shares of another Delaware Group
fund. In the event of an exchange of the shares, the "net asset value of such
shares at the time of redemption" will be the net asset value of the shares that
were acquired in the exchange.
The following table sets forth the rates of the CDSC for the Class B
Shares of the Fund:
Contingent Deferred
Sales Charge (as a
Percentage of
Dollar Amount
Year After Purchase Made Subject to Charge)
------------------------ --------------------
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares, Class B Shares will still be subject to the
annual 12b-1 Plan expenses of up to 1% of average daily net assets of those
shares, absent any applicable fee waiver. See Automatic Conversion of Class B
Shares, above. Investors are reminded that the Class A Shares into which the
Class B Shares will convert are subject to ongoing annual 12b-1 Plan expenses of
up to a maximum of 0.30% of average daily net assets of such shares.
In determining whether a CDSC applies to a redemption of Class B
Shares, it will be assumed that shares held for more than six years are redeemed
first, followed by shares acquired through the reinvestment of dividends or
distributions, and finally by shares held longest during the six-year period.
With respect to Class C Shares, it will be assumed that shares held for more
than 12 months are redeemed first followed by shares acquired through the
reinvestment of dividends or distributions, and finally by shares held for 12
months or less.
All investments made during a calendar month, regardless of what day of
the month the investment occurred, will age one month on the last day of that
month and each subsequent month.
The CDSC is waived on certain redemptions of Class B Shares and Class C
Shares. See Waiver of Contingent Deferred Sales Charge - Class B and Class C
Shares under Redemption and Exchange.
Other Payments to Dealers -- Class A, Class B and Class C Shares
From time to time at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of the Classes exceed certain limits, as
set by the Distributor, may receive from the Distributor an additional payment
of up to 0.25% of the dollar amount of such sales. The Distributor may also
provide additional promotional incentives or payments to dealers that sell
shares of the Delaware Group of funds. In some instances, these incentives or
payments may be offered only to certain dealers who maintain, have sold or may
sell certain amounts of shares.
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Subject to pending amendments to the NASD's Rules of Fair Practice, in
connection with the promotion of Delaware Group fund shares, the Distributor
may, from time to time, pay to participate in dealer-sponsored seminars and
conferences, reimburse dealers for expenses incurred in connection with
preapproved seminars, conferences and advertising and may, from time to time,
pay or allow additional promotional incentives to dealers, which shall include
non-cash concessions, such as certain luxury merchandise or a trip to or
attendance at a business or investment seminar at a luxury resort, as part of
preapproved sales contests. Payment of non-cash compensation to dealers is
currently under review by the NASD and the Securities and Exchange Commission.
It is likely that the NASD's Rules of Fair Practice will be amended such that
the ability of the Distributor to pay non-cash compensation as described above
will be restricted in some fashion. The Distributor intends to comply with the
NASD's Rules of Fair Practice as they may be amended.
Retirement Income Fund Institutional Class
In addition to offering Class A, Class B and Class C Shares, the
Fund also offers Retirement Income Fund Institutional Class, which is described
in a separate prospectus and is available for purchase only by certain
investors. Retirement Income Fund Institutional Class shares generally are
distributed directly by the Distributor and do not have a front-end sales
charge, a CDSC or a Limited CDSC, and are not subject to 12b-1 Plan distribution
expenses. To obtain the prospectus that describes Retirement Income Fund
Institutional Class, contact the Distributor by writing to the address or by
calling the telephone number listed on the back of this Prospectus.
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HOW TO BUY SHARES
Purchase Amounts
Generally, the minimum initial purchase is $1,000 for Class A Shares,
Class B Shares and Class C Shares. Subsequent purchases of shares of any Class
generally must be $100 or more. For purchases under a Uniform Gifts to Minors
Act or Uniform Transfers to Minors Act or through an Automatic Investing Plan,
there is a minimum initial purchase of $250 and a minimum subsequent purchase of
$25. Minimum purchase requirements do not apply to retirement plans other than
IRAs, for which there is a minimum initial purchase of $250, and a minimum
subsequent purchase of $25, regardless of which Class is selected.
There is a maximum purchase limitation of $250,000 on each purchase of
Class B Shares. For Class C Shares, each purchase must be in an amount that is
less than $1,000,000. An investor may exceed these maximum purchase limitations
by making cumulative purchases over a period of time. In doing so, an investor
should keep in mind that reduced front-end sales charges are available on
investments of $100,000 or more in Class A Shares, and that Class A Shares (i)
are subject to lower annual 12b-1 Plan expenses than Class B Shares and Class C
Shares and (ii) generally are not subject to a CDSC. For retirement plans, the
maximum purchase limitations apply only to the initial purchase of Class B
Shares or Class C Shares by the plan.
Investing through Your Investment Dealer
You can make a purchase of shares of the Fund through most investment
dealers who, as part of the service they provide, must transmit orders promptly.
They may charge for this service. If you want a dealer but do not have one, the
Delaware Group can refer you to one.
Investing by Mail
1. Initial Purchases--An Investment Application or, in the case of a retirement
account, an appropriate retirement plan application, must be completed, signed
and sent with a check, payable to Retirement Income Fund A Class, Retirement
Income Fund B Class or Retirement Income Fund C Class, to Delaware Group at 1818
Market Street, Philadelphia, PA 19103.
2. Subsequent Purchases--Additional purchases may be made at any time by mailing
a check payable to the specific Fund and Class selected. Your check should be
identified with your name(s) and account number. An investment slip (similar to
a deposit slip) is provided at the bottom of transaction confirmations and
dividend statements that you will receive from Equity Funds V, Inc. Use of this
investment slip can help expedite processing of your check when making
additional purchases. Your investment may be delayed if you send additional
purchases by certified mail.
Investing by Wire
You may purchase shares by requesting your bank to transmit funds by
wire to CoreStates Bank, N.A., ABA #031000011, account number 1412893401
(include your name(s) and your account number for the Class in which you are
investing).
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1. Initial Purchases--Before you invest, telephone the Shareholder Service
Center to get an account number. If you do not call first, processing of your
investment may be delayed. In addition, you must promptly send your Investment
Application or, in the case of a retirement account, an appropriate retirement
plan application, to the specific Fund and Class selected, to Delaware Group at
1818 Market Street, Philadelphia, PA 19103.
2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You should advise the
Shareholder Service Center by telephone of each wire you send.
If you want to wire investments to a retirement plan account, call the
Shareholder Service Center for special wiring instructions.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware Group,
you may write and authorize an exchange of part or all of your investment into
shares of the Fund. If you wish to open an account by exchange, call the
Shareholder Service Center for more information. All exchanges are subject to
the eligibility and minimum purchase requirements set forth in each fund's
prospectus. See Redemption and Exchange for more complete information concerning
your exchange privilege.
Holders of Class A Shares may exchange all or part of their shares for
certain of the shares of other funds in the Delaware Group, including other
Class A Shares, but may not exchange their Class A Shares for Class B Shares or
Class C Shares of the Fund or of any other fund in the Delaware Group. Holders
of Class B Shares of the Fund are permitted to exchange all or part of their
Class B Shares only into Class B Shares of other Delaware Group funds.
Similarly, holders of Class C Shares of the Fund are permitted to exchange all
or part of their Class C Shares only into Class C Shares of other Delaware Group
funds. See Appendix B--Classes Offered for a list of Delaware Group funds and
the classes they offer. Class B Shares of the Fund and Class C Shares of the
Fund acquired by exchange will continue to carry the CDSC and, in the case of
Class B Shares, the automatic conversion schedule of the fund from which the
exchange is made. The holding period of Class B Shares of the Fund acquired by
exchange will be added to that of the shares that were exchanged for purposes of
determining the time of the automatic conversion into Class A Shares of the
Fund.
Permissible exchanges into Class A Shares of the Fund will be made
without a front-end sales charge, except for exchanges of shares that were not
previously subject to a front-end sales charge (unless such shares were acquired
through the reinvestment of dividends). Permissible exchanges into Class B
Shares or Class C Shares of the Fund will be made without the imposition of a
CDSC by the fund from which the exchange is being made at the time of the
exchange.
See Allied Plans under Retirement Planning for information on exchanges
by participants in an Allied Plan.
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Additional Methods of Adding to Your Investment
Call the Shareholder Service Center for more information if you wish to
use the following services:
1. Automatic Investing Plan
The Automatic Investing Plan enables you to make regular monthly
investments without writing or mailing checks. You may authorize Equity Funds V,
Inc. to transfer a designated amount monthly from your checking account to your
Fund account. Many shareholders use this as an automatic savings plan.
Shareholders should allow a reasonable amount of time for initial purchases and
changes to these plans to become effective.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
2. Direct Deposit
You may have your employer or bank make regular investments directly to
your account for you (for example: payroll deduction, pay by phone, annuity
payments). The Fund also accepts preauthorized recurring government and private
payments by Electronic Fund Transfer, which avoids mail time and check clearing
holds on payments such as social security, federal salaries, Railroad Retirement
benefits, etc.
* * *
Should investments through an automatic investing plan or by direct
deposit be reclaimed or returned for some reason, Equity Funds V, Inc. has the
right to liquidate your shares to reimburse the government or transmitting bank.
If there are insufficient funds in your account, you are obligated to reimburse
the Fund.
3. Wealth Builder Option
You can use our Wealth Builder Option to invest in the Fund through
regular liquidations of shares in your accounts in other funds in the Delaware
Group. You may also elect to invest in other mutual funds in the Delaware Group
through the Wealth Builder Option through regular liquidations of shares in your
Fund account.
Under this automatic exchange program, you can authorize regular
monthly amounts (minimum of $100 per fund) to be liquidated from your account in
one or more funds in the Delaware Group and invested automatically into any
other Delaware Group account that you may specify. If in connection with the
election of the Wealth Builder Option, you wish to open a new account to receive
the automatic investment, such new account must meet the minimum initial
purchase requirements described in the prospectus of the fund that you select.
All investments under this option are exchanges and are therefore subject to the
same conditions and limitations as other exchanges noted above. You can
terminate your participation at any time by written notice to the fund from
which the exchanges are made. See Redemption and Exchange.
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This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
4. Dividend Reinvestment Plan
You can elect to have your distributions (capital gains and/or dividend
income) reinvested in your Fund account or invested in certain other funds in
the Delaware Group, subject to the exceptions noted below as well as the
eligibility and minimum purchase requirements set forth in each fund's
prospectus.
Reinvestments of distributions into Class A Shares of the Fund or of
other Delaware Group funds are made without a front-end sales charge.
Reinvestments of distributions into Class B Shares of the Fund or of other
Delaware Group funds or into Class C Shares of the Fund or of other Delaware
Group funds are also made without any sales charge and will not be subject to a
CDSC if later redeemed. See Automatic Conversion of Class B Shares under Classes
of Shares for information concerning the automatic conversion of Class B Shares
acquired by reinvesting dividends.
Holders of Class A Shares of the Fund may not reinvest their
distributions into Class B Shares or Class C Shares of any fund in the Delaware
Group, including the Fund. Holders of Class B Shares of the Fund may reinvest
their distributions only into Class B Shares of the funds in the Delaware Group
which offer that class of shares. Similarly, holders of Class C Shares of the
Fund may reinvest their distributions only into Class C Shares of the funds in
the Delaware Group which offer that class of shares. See Appendix B--Classes
Offered for a list of the funds offering those classes of shares. For more
information about reinvestments, call the Shareholder Service Center.
Distributions for capital gains and/or dividends for participants in
the following retirement plans are automatically reinvested into the same
Delaware Group fund: SAR/SEP, SEP/IRA, Profit Sharing, Money Purchase Pension,
401(k), 403(b)(7), or 457 Plans.
Delaware Group Asset Planner
To invest in Delaware Group funds using the Delaware Group Asset
Planner asset allocation service, you should complete a Delaware Group Asset
Planner Account Registration Form, which is available only from a financial
adviser or investment dealer. As previously described, the Delaware Group Asset
Planner service offers a choice of four predesigned asset allocation strategies
(each with a different risk/reward profile) in predetermined percentages in
Delaware Group funds. Or, with the help of a financial adviser, you may design a
customized asset allocation strategy.
The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. Exchanges from existing Delaware
Group accounts into the Asset Planner service may be made at net asset value
under the circumstances described under Investing by Exchange, above. The
minimum initial investment per Strategy is $2,000; subsequent investments must
be at least $100. Individual fund minimums do not apply to investments made
using the Asset Planner service. Class A, Class B and Class C Shares are
available through the Asset Planner service. Generally, only shares within the
same class may be used within the same Strategy. However, Class A Shares of the
Fund and of other funds in the Delaware Group may be used in the same Strategy
with consultant class shares that are offered by certain other Delaware Group
funds. See Appendix B--Classes Offered for the Delaware Group funds that offer
consultant class shares.
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An annual maintenance fee, currently $35 per Strategy, is typically due
at the time of initial investment and by September 30th of each subsequent year.
The fee, payable to Delaware Service Company, Inc. to defray extra costs
associated with administering the Asset Planner service, will be deducted
automatically from one of the funds within your Asset Planner account if not
paid by September 30th. However, the annual fee will be waived until further
notice. Investors who utilize the Asset Planner for an IRA will pay an annual
IRA fee of $15 per Social Security Number. See Part B.
Investors will receive a customized quarterly Strategy Report
summarizing all Delaware Group Asset Planner investment performance and account
activity during the prior period. Confirmation statements will be sent following
all transactions other than those involving a reinvestment of distributions.
Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.
Purchase Price and Effective Date
The offering price and net asset value of Class A, Class B and
Class C Shares are determined as of the close of regular trading on the New York
Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the Exchange is
open.
The effective date of a purchase made through an investment dealer is
the date the order is received by the Fund. The effective date of a direct
purchase is the day your wire, electronic transfer or check is received unless
it is received after the time the offering price or net asset value of shares is
determined, as noted above. Purchase orders received after such time will be
effective the next business day.
The Conditions of Your Purchase
The Fund reserves the right to reject any purchase order. If a purchase
is canceled because your check is returned unpaid, you are responsible for any
loss incurred. The Fund can redeem shares from your account(s) to reimburse
itself for any loss, and you may be restricted from making future purchases in
any of the funds in the Delaware Group. The Fund reserves the right to reject
purchase orders paid by third-party checks or checks that are not drawn on a
domestic branch of a United States financial institution. If a check drawn on a
foreign financial institution is accepted, you may be subject to additional bank
charges for clearance and currency conversion.
The Fund also reserves the right, following shareholder notification,
to charge a service fee on non-retirement accounts that, as a result of a
redemption, have remained below the minimum stated account balance for a period
of three or more consecutive months. Holders of such accounts may be notified of
their insufficient account balance and advised that they have until the end of
the current calendar quarter to raise their balance to the stated minimum. If
the account has not reached the minimum balance requirement by that time, the
Fund will charge a $9 fee for that quarter and each subsequent calendar quarter
until the account is brought up to the minimum balance. The service fee will be
deducted from the account during the first week of each calendar quarter for the
previous quarter, and will be used to help defray the cost of maintaining
low-balance accounts. No fees will be charged without proper notice, and no CDSC
will apply to such assessments.
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The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under the minimum initial purchase
amount as a result of redemptions. An investor making the minimum initial
investment may be subject to involuntary redemption without the imposition of a
CDSC or Limited CDSC if he or she redeems any portion of his or her account.
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REDEMPTION AND EXCHANGE
You can redeem or exchange your shares in a number of different ways.
The exchange service is useful if your investment requirements change and you
want an easy way to invest in other equity funds, tax- advantaged funds, bond
funds or money market funds. This service is also useful if you are anticipating
a major expenditure and want to move a portion of your investment into a fund
that has the checkwriting feature. Exchanges are subject to the requirements of
each fund and all exchanges of shares constitute taxable events. See Taxes.
Further, in order for an exchange to be processed, shares of the fund being
acquired must be registered in the state where the acquiring shareholder
resides. You may want to consult your financial adviser or investment dealer to
discuss which funds in the Delaware Group will best meet your changing
objectives, and the consequences of any exchange transaction. You may also call
the Delaware Group directly for fund information.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses.
Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after the Fund receives your request in good order,
subject, in the case of a redemption, to any applicable CDSC or Limited CDSC.
Redemption or exchange requests received in good order after the time the
offering price and net asset value of shares are determined, as noted above,
will be processed on the next business day. See Purchase Price and Effective
Date under How to Buy Shares. A shareholder submitting a redemption request may
indicate that he or she wishes to receive redemption proceeds of a specific
dollar amount. In the case of such a request, and in the case of certain
redemptions from retirement plan accounts, the Fund will redeem the number of
shares necessary to deduct the applicable CDSC in the case of Class B and Class
C Shares, and, if applicable, the Limited CDSC in the case of Class A Shares and
tender to the shareholder the requested amount, assuming the shareholder holds
enough shares in his or her account for the redemption to be processed in this
manner. Otherwise, the amount tendered to the shareholder upon redemption will
be reduced by the amount of the applicable CDSC or Limited CDSC. Redemption
proceeds will be distributed promptly, as described below, but not later than
seven days after receipt of a redemption request.
Except as noted below, for a redemption request to be in "good order,"
you must provide your account number, account registration, and the total number
of shares or dollar amount of the transaction. For exchange requests, you must
also provide the name of the fund you want to receive the proceeds. Exchange
instructions and redemption requests must be signed by the record owner(s)
exactly as the shares are registered. You may request a redemption or an
exchange by calling the Shareholder Service Center at 800-523-1918. The Fund may
suspend, terminate, or amend the terms of the exchange privilege upon 60 days'
written notice to shareholders.
The Fund will process written and telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. The Fund will honor redemption requests as to shares for which a check
was tendered as payment, but the Fund will not mail or wire the proceeds until
it is reasonably satisfied that the check has cleared, which may take up to 15
days from the purchase date. You can avoid this potential delay if you
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purchase shares by wiring Federal Funds. The Fund reserves the right to reject
a written or telephone redemption request or delay payment of redemption
proceeds if there has been a recent change to the shareholder's address of
record.
There is no front-end sales charge or fee for exchanges made between
shares of funds which both carry a front-end sales charge. Any applicable
front-end sales charge will apply to exchanges from shares of funds not subject
to a front-end sales charge, except for exchanges involving assets that were
previously invested in a fund with a front-end sales charge and/or exchanges
involving the reinvestment of dividends.
Holders of Class B Shares or Class C Shares that exchange their shares
("Original Shares") for shares of other funds in the Delaware Group (in each
case, "New Shares") in a permitted exchange, will not be subject to a CDSC that
might otherwise be due upon redemption of the Original Shares. However, such
shareholders will continue to be subject to the CDSC and, in the case of Class B
Shares, the automatic conversion schedule of the Original Shares as described in
this Prospectus and any CDSC assessed upon redemption will be charged by the
Fund from which the Original Shares were exchanged. In an exchange of Class B
Shares from the Fund, the Fund's CDSC schedule may be higher than the CDSC
schedule relating to the New Shares acquired as a result of the exchange. For
purposes of computing the CDSC that may be payable upon a disposition of the New
Shares, the period of time that an investor held the Original Shares is added to
the period of time that an investor held the New Shares. With respect to Class B
Shares, the automatic conversion schedule of the Original Shares may be longer
than that of the New Shares. Consequently, an investment in New Shares by
exchange may subject an investor, absent any applicable fee waiver, to the
higher 12b-1 fees applicable to Class B Shares of the Fund for a longer period
of time than if the investment in New Shares were made directly.
Various redemption and exchange methods are outlined below. Except for
the CDSC applicable to certain redemptions of Class B and Class C Shares and the
Limited CDSC applicable to certain redemptions of Class A Shares purchased at
net asset value, there is no fee charged by the Fund or the Distributor for
redeeming or exchanging your shares, but such fees could be charged in the
future. You may have your investment dealer arrange to have your shares redeemed
or exchanged. Your investment dealer may charge for this service.
All authorizations given by shareholders, including selection of any of
the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the Fund or its agent.
Written Redemption
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103
to redeem some or all of your shares. The request must be signed by all owners
of the account or your investment dealer of record. For redemptions of more than
$50,000, or when the proceeds are not sent to the shareholder(s) at the address
of record, the Fund requires a signature by all owners of the account and a
signature guarantee for each owner. Each signature guarantee must be supplied by
an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. The Fund may require further documentation from corporations,
executors, retirement plans, administrators, trustees or guardians.
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Payment is normally mailed the next business day after receipt of your
redemption request. If your Class A Shares are in certificate form, the
certificate must accompany your request and also be in good order. Certificates
are issued for Class A Shares only if a shareholder submits a specific request.
Certificates are not issued for Class B Shares or Class C Shares.
Written Exchange
You may also write to the Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your shares into another mutual
fund in the Delaware Group, subject to the same conditions and limitations as
other exchanges noted above.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your Class A Shares in certificate form, you may
redeem or exchange only by written request and you must return your
certificates.
The Telephone Redemption--Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such services available with respect to your account. The Fund
reserves the right to modify, terminate or suspend these procedures upon 60
days' written notice to shareholders. It may be difficult to reach the Fund by
telephone during periods when market or economic conditions lead to an unusually
large volume of telephone requests.
Neither the Fund nor its Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Fund will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Instructions received by telephone are
generally tape recorded, and a written confirmation will be provided for all
purchase, exchange and redemption transactions initiated by telephone. By
exchanging shares by telephone, you are acknowledging prior receipt of a
prospectus for the fund into which your shares are being exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption proceeds of
$50,000 or less mailed to you at your address of record. Checks will be payable
to the shareholder(s) of record. Payment is normally mailed the next business
day after receipt of the redemption request. This service is only available to
individual, joint and individual fiduciary-type accounts.
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must complete an Authorization Form and have your signature
guaranteed. For your protection, your authorization must be on file. If you
request a wire, your funds will normally be sent the next business day.
CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted from your
redemption. If you ask for a check, it will normally be mailed the next business
day after receipt of your redemption request to your predesignated bank account.
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There are no separate fees for this redemption method, but the mail time may
delay getting funds into your bank account. Simply call the Shareholder Service
Center prior to the time the offering price and net asset value are determined,
as noted above.
Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to
adjust your investment holdings as your liquidity requirements and investment
objectives change. You or your investment dealer of record can exchange your
shares into other funds in the Delaware Group under the same registration,
subject to the same conditions and limitations as other exchanges noted above.
As with the written exchange service, telephone exchanges are subject to the
requirements of each fund, as described above. Telephone exchanges may be
subject to limitations as to amounts or frequency.
Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares
Purchased at Net Asset Value
A Limited CDSC will be imposed on certain redemptions of Class A Shares
(or shares into which such Class A Shares are exchanged) made within 12 months
of purchase, if such purchases were made at net asset value and triggered the
payment by the Distributor of the dealer's commission previously described. See
Classes of Shares.
The Limited CDSC will be paid to the Distributor and will be equal to
the lesser of 1% of: (1) the net asset value at the time of purchase of the
Class A Shares being redeemed; or (2) the net asset value of such Class A Shares
at the time of redemption. For purposes of this formula, the "net asset value at
the time of purchase" will be the net asset value at purchase of the Class A
Shares even if those shares are later exchanged for shares of another Delaware
Group fund and, in the event of an exchange of Class A Shares, the "net asset
value of such shares at the time of redemption" will be the net asset value of
the shares acquired in the exchange.
Redemptions of such Class A Shares held for more than 12 months will
not be subjected to the Limited CDSC and an exchange of such Class A Shares into
another Delaware Group fund will not trigger the imposition of the Limited CDSC
at the time of such exchange. The period a shareholder owns shares into which
Class A Shares are exchanged will count towards satisfying the 12-month holding
period. The Limited CDSC is assessed if such 12-month period is not satisfied
irrespective of whether the redemption triggering its payment is of Class A
Shares of the Fund or Class A Shares acquired in the exchange.
In determining whether a Limited CDSC is payable, it will be assumed
that shares not subject to the Limited CDSC are the first redeemed followed by
other shares held for the longest period of time. The Limited CDSC will not be
imposed upon shares representing reinvested dividends or capital gains
distributions, or upon amounts representing share appreciation. All investments
made during a calendar month, regardless of what day of the month the investment
occurred, will age one month on the last day of that month and each subsequent
month.
Waiver of Limited Contingent Deferred Sales Charge - Class A Shares
The Limited CDSC for Class A Shares on which a dealer's commission has
been paid will be waived in the following instances: (i) redemptions that result
from the Fund's right to liquidate a shareholder's account if the aggregate net
asset value of the shares held in the account is less than the then-effective
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minimum account size; (ii) distributions to participants from a retirement plan
qualified under section 401(a) or 401(k) of the Internal Revenue Code of 1986,
as amended (the "Code"), or due to death of a participant in such a plan; (iii)
redemptions pursuant to the direction of a participant or beneficiary of a
retirement plan qualified under section 401(a) or 401(k) of the Code with
respect to that retirement plan; (iv) distributions from a section 403(b)(7)
Plan or an IRA due to death, disability, or attainment of age 59 1/2; (v)
returns of excess contributions to an IRA; (vi) distributions by other employee
benefit plans to pay benefits; and (vii) redemptions by the classes of
shareholders who are permitted to purchase shares at net asset value, regardless
of the size of the purchase (see Buying Class A Shares at Net Asset Value under
Classes of Shares).
Waiver of Contingent Deferred Sales Charge - Class B and Class C Shares
The CDSC is waived on certain redemptions of Class B Shares in
connection with the following redemptions: (i) redemptions that result from the
Fund's right to liquidate a shareholder's account if the aggregate net asset
value of the shares held in the account is less than the then-effective minimum
account size; (ii) returns of excess contributions to an IRA or 403(b)(7)
Deferred Compensation Plan; (iii) required minimum distributions from an IRA,
403(b)(7) Deferred Compensation Plan or 457 Deferred Compensation Plan; and (iv)
distributions from an account if the redemption results from the death of all
registered owners of the account (in the case of accounts established under the
Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust accounts,
the waiver applies upon the death of all beneficial owners) or a total and
permanent disability (as defined in Section 72 of the Code) of all registered
owners occurring after the purchase of the shares being redeemed.
The CDSC on Class C Shares is waived in connection with the following
redemptions: (i) redemptions that result from the Fund's right to liquidate a
shareholder's account if the aggregate net asset value of the shares held in the
account is less than the then-effective minimum account size; (ii) returns of
excess contributions to an IRA, 403(b)(7) Deferred Compensation Plan, Profit
Sharing Plan, Money Purchase Pension Plan or 401(k) Defined Contribution Plan;
(iii) required minimum distributions from an IRA, 403(b)(7) Deferred
Compensation Plan, 457 Deferred Compensation Plan, Profit Sharing Plan, Money
Purchase Pension Plan or 401(k) Defined Contribution Plan; (iv) distributions
from a 403(b)(7) Deferred Compensation Plan, 457 Deferred Compensation Plan,
Profit Sharing Plan, or 401(k) Defined Contribution Plan, under hardship
provisions of the plan; (v) distributions from a 403(b)(7) Deferred Compensation
Plan, 457 Deferred Compensation Plan, Profit Sharing Plan, Money Purchase
Pension Plan or a 401(k) Defined Contribution Plan upon attainment of normal
retirement age under the plan or upon separation from service; (vi)
distributions from an IRA on or after attainment of age 59 1/2; and (vii)
distributions from an account if the redemption results from the death of all
registered owners of the account (in the case of accounts established under the
Uniform Gifts to Minors or Uniform Transfers to Minors Acts or trust accounts,
the waiver applies upon the death of all beneficial owners) or a total and
permanent disability (as defined in Section 72 of the Code) of all registered
owners occurring after the purchase of the shares being redeemed.
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DIVIDENDS AND DISTRIBUTIONS
The Fund expects to declare and pay dividends monthly. However, the
Fund does not anticipate declaring or paying dividends during the first few
months following the commencement of its operations. Both dividends and
distributions, if any, are automatically reinvested in your account at net asset
value unless you elect to have them reinvested in shares of another Delaware
Group fund. Distributions from net realized securities profits, if any, will be
distributed twice a year. The first payment normally would be made during the
first quarter of the next fiscal year. The second payment would be made near the
end of the calendar year to comply with certain requirements of the Internal
Revenue Code (the "Code").
Each Class of the Fund will share proportionately in the investment
income and expenses of the Fund, except that, absent any applicable fee waiver,
the per share dividends from net investment income on Class A Shares, Class B
Shares and Class C Shares will vary due to the expenses under the 12b-1 Plan
applicable to each Class. Generally, except in the absence of a fee waiver, the
dividends per share on Class B Shares and Class C Shares can be expected to be
lower than the dividends per share on Class A Shares because the expenses under
the 12b-1 Plans relating to Class B and Class C Shares will be higher than the
expenses under the 12b-1 Plan relating to Class A Shares. See Distribution
(12b-1) and Service under Management of the Fund.
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TAXES
The tax discussion set forth below is included for general information
only. Investors should consult their own tax advisers concerning the federal,
state, local or foreign tax consequences of an investment in the Fund.
The Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Code. As such, the Fund
will not be subject to federal income tax, or to any excise tax, to the extent
its earnings are distributed as provided in the Code.
The Fund intends to distribute substantially all of its net investment
income and net capital gains, if any. Dividends from net investment income or
net short-term capital gains will be taxable to those investors who are subject
to income taxes as ordinary income, whether received in cash or in additional
shares. It is expected that only a nominal portion of the Fund's dividends will
be eligible for the dividends-received deduction for corporations.
Distributions paid by the Fund from long-term capital gains, whether
received in cash or in additional shares, are taxable to those investors who are
subject to income taxes as long-term capital gains, regardless of the length of
time an investor has owned shares in the Fund. The Fund does not seek to realize
any particular amount of capital gains during a year; rather, realized gains are
a by-product of Fund management activities. Consequently, capital gains
distributions may be expected to vary considerably from year to year. Also, for
those investors subject to tax, if purchases of shares in the Fund are made
shortly before the record date for a dividend or capital gains distribution, a
portion of the investment will be returned as a taxable distribution.
Although dividends generally will be treated as distributed when paid,
dividends which are declared in October, November or December to shareholders of
record on a specified date in one of those months, but which, for operational
reasons, may not be paid to the shareholder until the following January, will be
treated for tax purposes as if paid by the Fund and received by the shareholder
on December 31 of the calendar year in which they are declared.
The sale of shares of the Fund is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may be
realized from an ordinary redemption of shares or an exchange of shares between
the Fund and any other fund in the Delaware Group. Any loss incurred on a sale
or exchange of Fund shares that had been held for six months or less will be
treated as a long-term capital loss to the extent of capital gain dividends
received with respect to such shares. All or a portion of the sales charge
incurred in acquiring Fund shares will be excluded from the federal tax basis of
any of such shares sold or exchanged within 90 days of their purchase (for
purposes of determining gain or loss upon the sale of such shares) if the sale
proceeds are reinvested in the Fund or in another fund in the Delaware Group of
funds and a sales charge that would otherwise apply to the reinvestment is
reduced or eliminated. Any portion of such sales charge excluded from the tax
basis of the shares sold will be added to the tax basis of the shares acquired
in the reinvestment.
The automatic conversion of Class B Shares into Class A Shares at the
end of approximately eight years after purchase will be tax-free for federal tax
purposes. See Automatic Conversion of Class B Shares under Classes of Shares.
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The Fund may be subject to foreign withholding taxes on income from
certain of its foreign securities.
In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital gains
realized from certain types of U.S. government securities may be exempt from
state personal income taxes. Shares of the Fund are exempt from Pennsylvania
county personal property taxes.
Each year, Equity Funds V, Inc. will mail to you information on the tax
status of the Fund's dividends and distributions. Shareholders will also receive
each year information as to the portion of dividend income, if any, that is
derived from U.S. government securities that are exempt from state income tax.
Of course, shareholders who are not subject to tax on their income would not be
required to pay tax on amounts distributed to them by the Fund.
Equity Funds V, Inc. is required to withhold 31% of taxable dividends,
capital gains distributions, and redemptions paid to shareholders who have not
complied with IRS taxpayer identification regulations. You may avoid this
withholding requirement by certifying on your Investment Application your proper
Taxpayer Identification Number and by certifying that you are not subject to
backup withholding.
See Accounting and Tax Issues and Distribution and Taxes in Part B for
additional information on tax matters relating to the Fund and its shareholders.
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CALCULATION OF OFFERING PRICE AND NET ASSET VALUE PER SHARE
The net asset value ("NAV") per share is computed by adding the value
of all securities and other assets in the portfolio, deducting any liabilities
(expenses and fees are accrued daily) and dividing by the number of shares
outstanding. Equity securities for which market quotations are available are
priced at market value. Foreign securities expressed in foreign currency values
will be converted into U.S. dollar values at the mean between the currencies'
bid and offered quotations. Debt securities are priced on the basis of
valuations provided by an independent pricing service using methods approved by
Equity Funds V, Inc.'s Board of Directors. Short-term investments having a
maturity of less than 60 days are valued at amortized cost, which approximates
market value. All other securities are valued at their fair value as determined
in good faith and in a method approved by Equity Funds V, Inc.'s Board of
Directors.
Class A Shares are purchased at the offering price per share, while
Class B Shares and Class C Shares are purchased at the NAV per share. The
offering price per share of Class A Shares consists of the NAV per share next
computed after the order is received, plus any applicable front-end sales
charges.
The offering price and NAV are computed as of the close of regular
trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern time) on
days when the Exchange is open.
The net asset values of all outstanding shares of each class of the
Fund will be computed on a pro-rata basis for each outstanding share based on
the proportionate participation in the Fund represented by the value of shares
of that class. All income earned and expenses incurred by the Fund will be borne
on a pro-rata basis by each outstanding share of a class, based on each class'
percentage in the Fund represented by the value of shares of such classes,
except that Retirement Income Fund Institutional Class will not incur any of the
expenses under Equity Funds V, Inc.'s 12b-1 Plans and Class A, Class B and
Class C Shares alone will bear the 12b-1 Plan expenses, if any, payable under
their respective Plans.
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MANAGEMENT OF THE FUND
Directors
The business and affairs of Equity Funds V, Inc. are managed under the
direction of its Board of Directors. Part B contains additional information
regarding Equity Funds V, Inc.'s directors and officers.
Investment Manager
The Manager furnishes investment management services to the Fund.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On November 30, 1996, the Manager and its affiliates
in the Delaware Group, including Delaware International Advisers Ltd., were
managing in the aggregate more than $32 billion in assets in the various
institutional or separately managed (approximately $20,311,203,919) and
investment company (approximately $11,765,348,126) accounts.
The Manager is an indirect, wholly owned subsidiary of Delaware
Management Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a
wholly owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH and the Manager are now indirect, wholly owned subsidiaries, and
subject to the ultimate control, of Lincoln National. Lincoln National, with
headquarters in Fort Wayne, Indiana, is a diversified organization with
operations in many aspects of the financial services industry, including
insurance and investment management.
The Manager manages the Fund's portfolio and makes investment decisions
for the Fund. The Manager also administers Equity Funds V, Inc.'s affairs and
pays the salaries of all the directors, officers and employees of Equity Funds
V, Inc. who are affiliated with the Manager. For these services, the Manager is
paid an annual fee equal to: 0.65% on the first $500 million of average daily
net assets, 0.625% on the next $500 million and 0.60% on the average daily net
assets in excess of $1 billion.
Babak Zenouzi oversees the Fund's asset allocation strategy and has
primary responsibility for making day-to-day investment decisions for the Fund's
investments in income generating equity securities. Mr. Zenouzi, a Vice
President/Portfolio Manager of Equity Funds V, Inc., has been a member of the
Fund's management team since its inception. Mr. Zenouzi holds a BS in Finance
and Economics from Babson College in Wellesley, Massachusetts, and an MS in
Finance from Boston College. Prior to joining the Manager in 1992, he was with
The Boston Company where he held the positions of assistant vice president,
senior financial analyst, financial analyst and portfolio accountant.
Gerald T. Nichols has primary responsibility for making day-to-day
investment decisions for the Fund regarding its investments in debt securities.
Mr. Nichols, a Vice President/Senior Portfolio Manager of Equity Funds V, Inc.,
has been a member of the Fund's management team since its inception. Mr. Nichols
is a graduate of the University of Kansas, where he received a BS in Business
Administration and an MS in Finance. Prior to joining the Manager, he was a high
yield credit analyst at Waddell & Reed, Inc. and subsequently the investment
officer for a private merchant banking firm. He is a CFA charterholder.
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Portfolio Trading Practices
The Fund normally will not invest for short-term trading purposes.
However, the Fund may sell securities without regard to the length of time they
have been held. The degree of portfolio activity will affect brokerage costs of
the Fund and may affect taxes payable by the Fund's shareholders. Given the
Fund's investment objective, its annual portfolio turnover rate is not expected
to exceed 100%. A turnover rate of 100% would occur, for example, if all the
investments in the Fund's portfolio at the beginning of the year were replaced
by the end of the year.
The Fund uses its best efforts to obtain the best available price and
most favorable execution for portfolio transactions. Orders may be placed with
brokers or dealers who provide brokerage and research services to the Manager or
to their advisory clients. These services may be used by the Manager in
servicing any of its accounts. Subject to best price and execution, the Fund may
consider a broker/dealer's sales of Fund shares in placing portfolio orders and
may place orders with broker/dealers that have agreed to defray certain Fund
expenses such as custodian fees.
Performance Information
From time to time, the Fund may quote yield or total return performance
of the Classes in advertising and other types of literature.
The current yield for each Class will be calculated by dividing the
annualized net investment income earned by that Class during a recent 30-day
period by the maximum offering price per share on the last day of the period.
The yield formula provides for semi-annual compounding, which assumes that net
investment income is earned and reinvested at a constant rate and annualized at
the end of a six-month period.
Total return will be based on a hypothetical $1,000 investment,
reflecting the reinvestment of all distributions at net asset value and: (i) in
the case of Class A Shares, the impact of the maximum front-end sales charge at
the beginning of each specified period; and (ii) in the case of Class B Shares
and Class C Shares, the deduction of any applicable CDSC at the end of the
relevant period. Each presentation will include the average annual total return
for one-, five- and ten-year or life-of-fund periods, as relevant. The Fund may
also advertise aggregate and average total return information concerning a Class
over additional periods of time. In addition, the Fund may present total return
information that does not reflect the deduction of the maximum front-end sales
charge or any applicable CDSC. In this case, such total return information would
be more favorable than total return information that includes the deductions of
the maximum front-end sales charge or any applicable CDSC.
Yield and net asset value fluctuate and are not guaranteed. Past
performance is not a guarantee of future results.
Distribution (12b-1) and Service
The Distributor, Delaware Distributors, L.P., serves as the national
distributor of the Fund's shares under a Distribution Agreement with Equity
Funds V, Inc. dated as of November 29, 1996.
Equity Funds V, Inc. has adopted a separate distribution plan under
Rule 12b-1 for each of the Class A Shares, Class B Shares and Class C Shares of
the Fund (the "Plans"). Each Plan permits the Fund to pay the Distributor from
the assets of the respective Classes a monthly fee for the Distributor's
services and expenses in distributing and promoting sales of shares.
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These expenses include, among other things, preparing and distributing
advertisements, sales literature, and prospectuses and reports used for sales
purposes, compensating sales and marketing personnel, holding special promotions
for specified periods of time, and paying distribution and maintenance fees to
brokers, dealers and others. In connection with the promotion of shares of the
Classes, the Distributor may, from time to time, pay to participate in
dealer-sponsored seminars and conferences, and reimburse dealers for expenses
incurred in connection with preapproved seminars, conferences, and advertising.
The Distributor may pay or allow additional promotional incentives to dealers as
part of preapproved sales contests and/or to dealers who provide extra training
and information concerning a Class and increase sales of the Class. In addition,
the Fund may make payments from the 12b-1 Plan fees of the respective Class
directly to others, such as banks, who aid in the distribution of Class shares
or provide services in respect of a Class, pursuant to service agreements with
Equity Funds V, Inc. The Distributor has elected voluntarily to waive its right
to receive 12b-1 fees (including service fees) from the commencement of the
public offering of the Classes through May 31, 1997.
The 12b-1 Plan expenses relating to each of the Class B Shares and
Class C Shares of the Fund are also used to pay the Distributor for advancing
the commission costs to dealers with respect to the initial sale of such shares.
Absent any applicable fee waiver, the aggregate fees paid by the Fund
from the assets of the respective Classes to the Distributor and others under
the Plans may not exceed (i) 0.30% of the Class A Shares' average daily net
assets in any year, and (ii) 1% (0.25% of which are service fees to be paid to
the Distributor, dealers and others, for providing personal service and/or
maintaining shareholder accounts) of each of the Class B Shares' and Class C
Shares' average daily net assets in any year. Class A, Class B and Class C
Shares will not incur any distribution expenses beyond these limits, which may
not be increased without shareholder approval.
While payments, if any, pursuant to the Plans may not exceed 0.30%
annually with respect to the Class A Shares, and 1% annually with respect to
each of the Class B Shares and the Class C Shares, the Plans do not limit fees
to amounts actually expended by the Distributor. It is therefore possible that
the Distributor may realize a profit in any particular year. However, the
Distributor currently expects that its distribution expenses will likely equal
or exceed payments to it under the Plans. The Distributor may, however, incur
such additional expenses and make additional payments to dealers from its own
resources to promote the distribution of shares of the Classes. The monthly fees
paid to the Distributor under the Plans are subject to the review and approval
of Equity Funds V, Inc.'s unaffiliated directors, who may reduce the fees or
terminate the Plans at any time.
The Plans do not apply to Retirement Income Fund Institutional Class of
shares. Those shares are not included in calculating the Plans' fees, and the
Plans are not used to assist in the distribution and marketing of Retirement
Income Fund Institutional Class shares.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Fund
pursuant to an amended and restated agreement dated as of November 29, 1996. The
Transfer Agent also provides accounting services to the Fund pursuant to the
terms of a separate Fund Accounting Agreement. The directors of Equity Funds V,
Inc. annually review service fees paid to the Transfer Agent.
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The Distributor and the Transfer Agent are also indirect, wholly owned
subsidiaries of DMH.
Expenses
The Fund is responsible for all of its own expenses other than those
borne by the Manager under the Investment Management Agreement and those borne
by the Distributor under the Distribution Agreement. The expense ratio of each
Class will reflect the impact of its 12b-1 Plan.
Shares
Equity Funds V, Inc. is an open-end management investment company. The
Fund's portfolio of assets is diversified as defined by the 1940 Act. Commonly
known as a mutual fund, Equity Funds V, Inc. was organized as a Maryland
corporation on January 16, 1987. In addition to the Fund, Equity Funds V, Inc.
presently offers one other series of shares, the Value Fund series.
Equity Funds V, Inc.'s shares have a par value of $0.01, equal voting
rights, except as noted below, and are equal in all other respects. Equity Funds
V, Inc.'s shares have noncumulative voting rights which means that the holders
of more than 50% of Equity Funds V, Inc.'s shares voting for the election of
directors can elect 100% of the directors if they choose to do so. Under
Maryland law, Equity Funds V, Inc. is not required, and does not intend, to hold
annual meetings of shareholders unless, under certain circumstances, it is
required to do so under the 1940 Act. Shareholders of 10% or more of Equity
Funds V, Inc.'s shares may request that a special meeting be called to consider
the removal of a director.
In addition to Class A Shares, Class B Shares and Class C Shares, the
Fund also offers Retirement Income Fund Institutional Class of shares. Shares of
each Class represent proportionate interests in the assets of the Fund and have
the same voting and other rights and preferences as the other classes of the
Fund, except that shares of Retirement Income Fund Institutional Class are not
subject to, and may not vote on matters affecting, the Distribution Plans under
Rule 12b-1 relating to Class A, Class B and Class C Shares. Similarly, as a
general matter, the shareholders of Class A Shares, Class B Shares and Class
C Shares may vote only on matters affecting the 12b-1 Plan that relates to the
class of shares that they hold. However, Class B Shares may vote on any
proposal to increase materially the fees to be paid by the Fund under the Rule
12b-1 Plan relating to Class A Shares.
Lincoln National Corporation Employees' Retirement Trust (the "Trust")
has made an initial investment in the Fund. As a result, as of December 31,
1996, the Trust owns 99% of the outstanding shares of the Fund. Subject to
certain limited exceptions, there are no limitations on the Trust's ability to
redeem its shares of the Fund and it may elect to do so at any time.
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OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS
U.S. Government Securities
U.S. Treasury securities are backed by the "full faith and credit" of
the United States. Securities issued or guaranteed by federal agencies and U.S.
government sponsored instrumentalities may or may not be backed by the full
faith and credit of the United States. In the case of securities not backed by
the full faith and credit of the United States, investors in such securities
look principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert a claim against
the United States itself in the event the agency or instrumentality does not
meet its commitment. Agencies which are backed by the full faith and credit of
the United States include the Export-Import Bank, Farmers Home Administration,
Federal Financing Bank, the Federal Housing Administration, the Maritime
Administration, the Small Business Administration, and others. Certain agencies
and instrumentalities, such as the Government National Mortgage Association
("GNMA"), are, in effect, backed by the full faith and credit of the United
States through provisions in their charters that they may make "indefinite and
unlimited" drawings on the Treasury, if needed to service its debt. Debt from
certain other agencies and instrumentalities, including the Federal Home Loan
Bank and Federal National Mortgage Association, are not guaranteed by the United
States, but those institutions are protected by the discretionary authority for
the U.S. Treasury to purchase certain amounts of their securities to assist the
institutions in meeting their debt obligations. Finally, other agencies and
instrumentalities, such as the Farm Credit System, the Tennessee Valley
Authority and the Federal Home Loan Mortgage Corporation, are federally
chartered institutions under U.S. government supervision, but their debt
securities are backed only by the creditworthiness of those institutions, not
the U.S. government.
An instrumentality of a U.S. government agency is a government agency
organized under Federal charter with government supervision. Instrumentalities
issuing or guaranteeing securities include, among others, Federal Home Loan
Banks, the Federal Land Banks, Central Bank for Cooperatives, Federal
Intermediate Credit Banks and the Federal National Mortgage Association.
The maturities of such securities usually range from three months to
thirty years. While such securities are guaranteed as to principal and interest
by the U.S. government or its instrumentalities, their market values may
fluctuate and are not guaranteed, which may, along with the other securities in
the Fund's portfolio, cause a Class' daily net asset value to fluctuate.
Brady Bonds
Among the foreign fixed-income securities in which the Fund may invest
are Brady Bonds. Brady Bonds are debt securities issued under the framework of
the Brady Plan, an initiative announced by former U.S. Treasury Secretary
Nicholas F. Brady in 1989 as a mechanism for debtor nations to restructure their
outstanding external indebtedness (generally commercial bank debt). Brady Bonds
are not direct or indirect obligations of the U.S. government or any of its
agencies or instrumentalities and are not guaranteed by the U.S. government or
any of its agencies or instrumentalities. In so restructuring its external debt,
a debtor nation negotiates with its existing bank lenders, as well as
multilateral institutions such as the World Bank and the International Monetary
Fund, to exchange its commercial bank debt for newly issued bonds (Brady Bonds).
The Manager believes that economic reforms undertaken by countries in connection
with the issuance of Brady Bonds make the debt of countries which have issued or
have announced plans to issue Brady Bonds an attractive opportunity for
investment. Investors, however, should recognize that the Brady Plan only sets
forth general guiding principles for economic reform and debt reduction,
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emphasizing that solutions must be negotiated on a case-by-case basis between
debtor nations and their creditors. In addition, Brady Bonds have been issued
only recently and, accordingly, do not have a long payment history.
Foreign Government Securities
With respect to investment in debt issues of foreign governments,
including Brady Bonds, the ability of a foreign government or government-related
issuer to make timely and ultimate payments on its external debt obligations
will also be strongly influenced by the issuer's balance of payments, including
export performance, its access to international credits and investments,
fluctuations in interest rates and the extent of its foreign reserves. A country
whose exports are concentrated in a few commodities or whose economy depends on
certain strategic imports could be vulnerable to fluctuations in international
prices of these commodities or imports. If foreign government or
government-related issuers cannot generate sufficient earnings from foreign
trade to service its external debt, they may need to depend on continuing loans
and aid from foreign governments, commercial banks and multilateral
organizations, and inflows of foreign investment. The commitment on the part of
these foreign governments, multilateral organizations and others to make such
disbursements may be conditioned on the government's implementation of economic
reforms and/or economic performance and the timely service of its obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due may curtail the willingness of such
third parties to lend funds, which may further impair the issuer's ability or
willingness to service its debts in a timely manner. The cost of servicing
external debt generally will also be adversely affected by rising international
interest rates because many external debt obligations bear interest at rates
which are adjusted based upon international interest rates. The ability to
service external debt will also depend on the level of the relevant government's
international currency reserves and its access to foreign exchange. Currency
devaluations may affect the ability of a government issuer to obtain sufficient
foreign exchange to service its external debt. If a foreign governmental issuer
defaults on its obligations, the Fund may have limited legal recourse against
the issuer and/or guarantor.
Zero Coupon Bonds and Pay-In-Kind Bonds
Although the Fund does not intend to purchase a substantial amount of
zero coupon bonds or PIK bonds, from time to time, the Fund may acquire zero
coupon bonds and, to a lesser extent, PIK bonds. Zero coupon bonds are debt
obligations which do not entitle the holder to any periodic payments of interest
prior to maturity or a specified date when the securities begin paying current
interest, and therefore are issued and traded at a discount from their face
amounts or par value. PIK bonds pay interest through the issuance to holders of
additional securities. Zero coupon bonds and PIK bonds are generally considered
to be more interest-sensitive than income bearing bonds, to be more speculative
than interest-bearing bonds, and to have certain tax consequences which could,
under certain circumstances, be adverse to the Fund. For example, with zero
coupon bonds, the Fund accrues, and is required to distribute to shareholders,
income on such bonds. However, the Fund may not receive the cash associated with
this income until the bonds are sold or mature. If the Fund did not have
sufficient cash to make the required distribution of accrued income, the Fund
could be required to sell other securities in its portfolio or to borrow to
generate the cash required.
Borrowings
The Fund may borrow money as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Fund will not borrow money in excess
of one-third of the value of its net assets. The Fund has no intention of
increasing its net income through borrowing. Any borrowing will be done from
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a bank and, to the extent that such borrowing exceeds 5% of the value of the
Fund's net assets, asset coverage of at least 300% is required. In the event
that such asset coverage shall at any time fall below 300%, the Fund shall,
within three days thereafter (not including Sundays or holidays, or such longer
period as the Securities and Exchange Commission may prescribe by rules and
regulations), reduce the amount of its borrowings to such an extent that the
asset coverage of such borrowings shall be at least 300%. The Fund will not
pledge more than 10% of its net assets, or issue senior securities as defined in
the 1940 Act, except for notes to banks. Investment securities will not be
purchased while the Fund has an outstanding borrowing.
When-Issued and Delayed Delivery Securities
The Fund may purchase securities on a when-issued or delayed delivery
basis. In such transactions, instruments are purchased with payment and delivery
taking place in the future in order to secure what is considered to be an
advantageous yield or price at the time of the transaction. Delivery of and
payment for these securities may take as long as a month or more after the date
of the purchase commitment. The Fund will maintain with its custodian bank a
separate account with a segregated portfolio of liquid securities in an amount
at least equal to these commitments. The payment obligation and the interest
rates that will be received are each fixed at the time the Fund enters into the
commitment and no interest accrues to the Fund until settlement. Thus, it is
possible that the market value at the time of settlement could be higher or
lower than the purchase price if the general level of interest rates has
changed.
Portfolio Loan Transactions
The Fund may loan up to 25% of its assets to qualified broker/dealers
or institutional investors.
The major risk to which the Fund would be exposed on a loan transaction
is the risk that the borrower would become bankrupt at a time when the value of
the security goes up. Therefore, the Fund will only enter into loan arrangements
after a review of all pertinent facts by the Manager, subject to overall
supervision by the Board of Directors, including the creditworthiness of the
borrowing broker, dealer or institution and then only if the consideration to be
received from such loans would justify the risk. Creditworthiness will be
monitored on an ongoing basis by the Manager.
Rule 144A Securities
The Fund may invest in restricted securities, including privately
placed securities, some of which may be eligible for resale without registration
pursuant to Rule 144A ("Rule 144A Securities") under the Securities Act of 1933.
Rule 144A permits many privately placed and legally restricted securities to be
freely traded among certain institutional buyers such as the Fund. The Fund may
invest no more than 15% of the value of its net assets in illiquid securities.
While maintaining oversight, the Board of Directors has delegated to
the Manager the day-to-day function of determining whether or not individual
Rule 144A Securities are liquid for purposes of the Fund's 15% limitation on
investments in illiquid securities. The Board has instructed the Manager to
consider the following factors in determining the liquidity of a Rule 144A
Security: (i) the frequency of trades and trading volume for the security; (ii)
whether at least three dealers are willing to purchase or sell the security and
the number of potential purchasers; (iii) whether at least two dealers are
making a market in the security; (iv) the nature of the security and the nature
of the marketplace trades (e.g., the time needed to dispose of the security, the
method of soliciting offers, and the mechanics of transfer).
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If the Manager determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
Fund's holdings of illiquid securities exceed the Fund's 15% limit on
investments in such securities, the Manager will determine what action to take
to ensure that the Fund continues to adhere to such limitation.
Investment Company Securities
Any investments that the Fund makes in either closed-end or open-end
investment companies will be limited by the 1940 Act, and would involve an
indirect payment of a portion of the expenses, including advisory fees, of such
other investment companies. Under the 1940 Act's current limitations, the Fund
may not (1) own more than 3% of the voting stock of another investment company;
(2) invest more than 5% of the Fund's total assets in the shares of any one
investment company; nor (3) invest more than 10% of the Fund's total assets in
shares of other investment companies. If the Fund elects to limit its investment
in other investment companies to closed-end investment companies, the 3%
limitation described above is increased to 10%. These percentage limitations
also apply to the Fund's investments in unregistered investment companies.
Repurchase Agreements
In order to invest its short-term cash reserves or when in a temporary
defensive posture, the Fund may enter into repurchase agreements with banks or
broker/dealers deemed to be creditworthy by the Manager, under guidelines
approved by the Board of Directors. A repurchase agreement is a short-term
investment in which the purchaser (i.e. the Fund) acquires ownership of a debt
security and the seller agrees to repurchase the obligation at a future time and
set price, thereby determining the yield during the purchaser's holding period.
Generally, repurchase agreements are of short duration, often less than one week
but on occasion for longer periods. Not more than 15% of the Fund's assets may
be invested in repurchase agreements of over seven-days' maturity or other
illiquid assets. Should an issuer of a repurchase agreement fail to repurchase
the underlying security, the loss to the Fund, if any, would be the difference
between the repurchase price and the market value of the security. The Fund will
limit its investments in repurchase agreements to those which the Manager under
guidelines of the Board of Directors determines to present minimal credit risks
and which are of high quality. In addition, the Fund must have collateral of at
least 100% of the repurchase price, including the portion representing the
Fund's yield under such agreements, which is monitored on a daily basis.
Foreign Currency Transactions
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will, however, from time to time, purchase or sell
foreign currencies and/or engage in forward foreign currency transactions in
order to expedite settlement of portfolio transactions and to minimize currency
value fluctuations. The Fund may conduct its foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or through entering into contracts to purchase
or sell foreign currencies at a future date (i.e., a "forward foreign currency"
contract or "forward" contract). A forward contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract, agreed upon by the parties, at a
price set at the time of the contract. The Fund will convert currency on a spot
basis from time to time, and investors should be aware of the costs of currency
conversion.
The Fund may enter into forward contracts to "lock in" the price of a
security it has agreed to purchase or sell, in terms of U.S. dollars or other
currencies in which the transaction will be consummated. By entering into a
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forward contract for the purchase or sale, for a fixed amount of U.S. dollars or
foreign currency, of the amount of foreign currency involved in the underlying
security transaction, the Fund will be able to protect itself against a possible
loss resulting from an adverse change in currency exchange rates during the
period between the date the security is purchased or sold and the date on which
payment is made or received.
When the Manager believes that the currency of a particular country may
suffer a significant decline against the U.S. dollar or against another
currency, the Fund may enter into a forward foreign currency contract to sell,
for a fixed amount of U.S. dollars or other appropriate currency, the amount of
foreign currency approximating the value of some or all of the Fund's securities
denominated in such foreign currency.
The Fund will not enter into forward contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of the
value of the Fund's securities or other assets denominated in that currency.
At the maturity of a forward contract, the Fund may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Fund may realize a gain or loss from currency
transactions. With respect to forward foreign currency contracts, the precise
matching of forward contract amounts and the value of the securities involved is
generally not possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and the
date it matures. The projection of short-term currency strategy is highly
uncertain.
It is impossible to forecast the market value of Fund securities at the
expiration of the contract. Accordingly, it may be necessary for the Fund to
purchase additional foreign currency on the spot market (and bear the expense of
such purchase) if the market value of the security is less than the amount of
foreign currency the Fund is obligated to deliver and if a decision is made to
sell the security and make delivery of the foreign currency. Conversely, it may
be necessary to sell on the spot market some of the foreign currency received
upon the sale of a security if its market value exceeds the amount of foreign
currency the Fund is obligated to deliver.
Options
The Manager may employ options techniques in an attempt to protect
appreciation attained and to increase shareholder return by seeking to take
advantage of the liquidity available in the options market. The Fund may
purchase call options on foreign or U.S. securities and indices and enter into
related closing transactions and the Fund may write covered call options on such
securities. The Fund may also purchase put options on such securities and
indices and enter into related closing transactions.
A call option enables the purchaser, in return for the premium paid, to
purchase securities from the writer of the option at an agreed price up to an
agreed date. A covered call option obligates the writer, in return for the
premium received, to sell the securities subject to the option to the purchaser
of the option for an agreed upon price up to an agreed date. The advantage is
that the purchaser may hedge against an increase in the price of securities it
ultimately wishes to buy or take advantage of a rise in a particular index. The
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Fund will only purchase call options to the extent that premiums paid on all
outstanding call options do not exceed 2% of its total assets. The Fund may
write covered call options in an amount not to exceed 10% of its total assets.
A put option enables the purchaser of the option, in return for the
premium paid, to sell the security underlying the option to the writer at the
exercise price during the option period, and the writer of the option has the
obligation to purchase the security from the purchaser of the option. The Fund
will only purchase put options to the extent that the premiums on all
outstanding put options do not exceed 2% of its total assets. The advantage is
that the purchaser can be protected should the market value of the security
decline or should a particular index decline.
An option on a securities index gives the purchaser of the option, in
return for the premium paid, the right to receive from the seller cash equal to
the difference between the closing price of the index and the exercise price of
the option.
Closing transactions essentially let the Fund offset put options or
call options prior to exercise or expiration. If the Fund cannot effect closing
transactions, it may have to hold a security it would otherwise sell or deliver
a security it might want to hold.
In purchasing put and call options, the premium paid by the Fund plus
any transaction costs will reduce any benefit realized by the Fund upon exercise
of the option. With respect to writing covered call options, the Fund may lose
the potential market appreciation of the securities subject to the option, if
the Manager's judgment is wrong and the price of the security moves in the
opposite direction from what was anticipated.
The Fund may use both Exchange-traded and over-the-counter options.
Certain over-the-counter options may be illiquid. The Fund will only invest in
such options to the extent consistent with its 15% limitation on investment in
illiquid securities. The Fund will comply with Securities and Exchange
Commission asset segregation and coverage requirements when engaging in these
types of transactions.
Futures
Futures contracts are agreements for the purchase or sale for future
delivery of securities. When a futures contract is sold, the Fund incurs a
contractual obligation to deliver the securities underlying the contract at a
specified price on a specified date during a specified future month. A purchase
of a futures contract means the acquisition of a contractual right to obtain
delivery to the Fund of the securities called for by the contract at a specified
price during a specified future month.
While futures contracts provide for the delivery of securities,
deliveries usually do not occur. Contracts are generally terminated by entering
into an offsetting transaction. When the Fund enters into a futures transaction,
it must deliver to the futures commission merchant selected by the Fund an
amount referred to as "initial margin." This amount is maintained by the futures
commission merchant in a segregated account. Thereafter, a "variation margin"
may be paid by the Fund to, or drawn by the Fund from, such account in
accordance with controls set for such account, depending upon changes in the
price of the underlying securities subject to the futures contract.
The Fund may also purchase and write options to buy or sell futures
contracts. Options on futures are similar to options on securities except that
options on futures give the purchaser the right, in return for the premium paid,
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to assume a position in a futures contract, rather than actually to purchase or
sell the futures contract, at a specified exercise price at any time during the
period of the option.
The purpose of the purchase or sale of futures contracts with respect
to a certain security is to protect the Fund against the adverse effects of
fluctuations in interest rates without actually buying or selling that security.
Similarly, when it is expected that interest rates may decline, futures
contracts may be purchased to hedge in anticipation of subsequent purchases of
securities at higher prices.
Foreign currency futures contracts operate similarly to futures
contracts related to securities. When the Fund sells a futures contract on a
foreign currency it is obligated to deliver that foreign currency at a specified
future date. Similarly, a purchase by the Fund gives it a contractual right to
receive a foreign currency. This enables the Fund to "lock-in" exchange rates.
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APPENDIX B--CLASSES OFFERED
<TABLE>
<CAPTION>
Growth of Capital A Class B Class C Class Consultant Class
<S> <C> <C> <C> <C>
Trend Fund x x x -
Enterprise Fund x x x -
DelCap Fund x x x -
Value Fund x x x -
U.S. Growth Fund x x x -
Total Return
Devon Fund x x x -
Decatur Total Return Fund x x x -
Decatur Income Fund x x x -
Delaware Fund x x x -
Global Diversification
Emerging Markets Fund x x x -
New Pacific Fund x x x -
International Equity Fund x x x -
World Growth Fund x x x -
Global Assets Fund x x x -
Global Bond Fund x x x -
Current Income
Delchester Fund x x x -
Strategic Income Fund x x x -
Corporate Income Fund x x x -
Federal Bond Fund x x x -
U.S. Government Fund x x x -
Limited-Term Government Fund x x x -
Tax-Free Current Income
Tax-Free Pennsylvania Fund x x x -
Tax-Free USA Fund x x x -
Tax-Free Insured Fund x x x -
Tax-Free USA Intermediate Fund x x x -
Money Market Funds
Delaware Cash Reserve x x x x
U.S. Government Money Fund x - - x
Tax-Free Money Fund x - - x
</TABLE>
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APPENDIX C--RATINGS
The Fund's assets may be invested in securities rated BBB or lower by
S&P or Fitch, Baa or lower by Moody's, in securities similarly rated by another
nationally recognized statistical rating organization, and in unrated securities
that are deemed by the Manager to be comparable in quality to similar rated
securities. Credit ratings evaluate only the safety of principal, interest and
dividends and do not consider the market value risk associated with high-yield
securities.
General Rating Information
Bonds and Convertible Securities
Excerpts from Moody's description of its bond ratings: Aaa--judged to
be the best quality. They carry the smallest degree of investment risk;
Aa--judged to be of high quality by all standards; A--possess favorable
attributes and are considered "upper medium" grade obligations; Baa--considered
as medium grade obligations. Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or may
be characteristically unreliable over any great length of time; Ba--judged to
have speculative elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class; B--generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small; Caa--are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest; Ca--represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings; C--the lowest
rated class of bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Excerpts from S&P's description of its bond ratings: AAA--highest grade
obligations. They possess the ultimate degree of protection as to principal and
interest; AA--also qualify as high grade obligations, and in the majority of
instances differ from AAA issues only in a small degree; A--strong ability to
pay interest and repay principal although more susceptible to changes in
circumstances; BBB--regarded as having an adequate capacity to pay interest and
repay principal; BB, B, CCC, CC--regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions; C--reserved
for income bonds on which no interest is being paid; D--in default, and payment
of interest and/or repayment of principal is in arrears.
Excerpts from Fitch's description of its bond ratings:
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events; AA--Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA. Because bonds rated in
the AAA and AA categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated F-1+; A--Bonds
considered to be investment grade and of high credit quality. The obligor's
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ability to pay interest and repay principal is considered to be strong, but may
be more vulnerable to adverse changes in economic conditions and circumstances
than bonds with higher ratings; BBB-- Bonds considered to be investment grade
and of satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse impact on
these bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for bonds
with higher ratings; BB--Bonds are considered speculative. The obligor's ability
to pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service requirements;
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue; CCC--Bonds have certain identifiable characteristics which,
if not remedied, may lead to default. The ability to meet obligations requires
an advantageous business and economic environment; CC-- Bonds are minimally
protected. Default in payment of interest and/or principal seems probable over
time; C--Bonds are in imminent default in payment of interest or principal; and
DDD, DD and D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D" represents
the lowest potential for recovery.
Plus and minus signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the "AAA" category.
Commercial Paper
Excerpts from Moody's description of its two highest commercial paper
ratings: P-1--the highest grade possessing greatest relative strength;
P-2--second highest grade possessing less relative strength than the highest
grade.
Excerpts from S&P's description of its two highest commercial paper
ratings: A-1--judged to be the highest investment grade category possessing the
highest relative strength; A-2--investment grade category possessing less
relative strength than the highest rating.
Preferred Stock
The following are excerpts from S&P's description of its preferred
stock ratings:
An S&P preferred stock rating is an assessment of the capacity and
willingness of an issuer to pay preferred stock dividends and any applicable
sinking fund obligations. A preferred stock rating differs from a bond rating
inasmuch as it is assigned to an equity issue, which issue is intrinsically
different from, and subordinated to, a debt issue. Therefore, to reflect this
difference, the preferred stock rating symbol will normally not be higher than
the debt rating symbol assigned to, or that would be assigned to, the senior
debt of the same issuer.
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The preferred stock ratings are based on the following considerations:
1. Likelihood of payment--capacity and willingness of the issuer to
meet the timely payment of preferred stock dividends and any applicable sinking
fund requirements in accordance with the terms of the obligation.
2. Nature of, and provisions of, the issue.
3. Relative position of the issue in the event of bankruptcy,
reorganization, or other arrangements affecting creditors' rights.
AAA This is the highest rating that may be assigned by S&P to a
preferred stock issue and indicates an extremely strong
capacity to pay the preferred stock obligations.
AA A preferred stock issue rated "AA" also qualifies as a
high-quality fixed-income security. The capacity to pay
preferred stock obligations is very strong, although not as
overwhelming as for issues rated "AAA."
A An issue rated "A" is backed by a sound capacity to pay the
preferred stock obligations, although it is somewhat more
susceptible to the adverse effects of changes in circumstances
and economic conditions.
BBB An issue rated "BBB" is regarded as backed by an adequate
capacity to pay the preferred stock obligations. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely
to lead to a weakened capacity to make payments for a
preferred stock in this category than for issues in the "A"
category.
BB, B, Preferred stocks rated "BB," "B" and "CCC" are regarded, on
CCC balance, as predominantly speculative with respect to the
issuer's capacity to pay preferred stock obligations. "BB"
indicates the lowest degree of speculation and "CCC" the
highest degree of speculation. While such issues will likely
have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to
adverse conditions.
CC The rating "CC" is reserved for a preferred stock issue in
arrears on dividends or sinking fund payments but that is
currently paying.
C A preferred stock rated "C" is a non-paying issue.
D A preferred stock rated "D" is a non-paying issue with the
issuer in default on debt instruments.
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(RIF-ABC)
NR indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligations as a matter of policy.
Plus (+) or Minus (-) To provide more detailed indications of preferred
stock quality, the ratings from "AA" to "CCC" may be modified by the addition of
a plus or minus sign to show relative standing within the major rating
categories.
The following are excerpts from Moody's description of its preferred
stock ratings:
"aaa" An issue which is rated "aaa" is considered to be a
top-quality preferred stock. This rating indicates good asset
protection and the least risk of dividend impairment within
the universe of preferred stocks.
"aa" An issue which is rated "aa" is considered a high-grade
preferred stock. This rating indicates that there is a
reasonable assurance the earnings and asset protection will
remain relatively well-maintained in the foreseeable future.
"a" An issue which is rated "a" is considered to be an
upper-medium grade preferred stock. While risks are judged to
be somewhat greater than in the "aaa" and "aa" classification,
earnings and asset protection are, nevertheless, expected to
be maintained at adequate levels.
"baa" An issue which is rated "baa" is considered to be a
medium-grade preferred stock, neither high protected nor
poorly secured. Earnings and asset protection appear adequate
at present but may be questionable over any great length of
time.
"ba" An issue which is rated "ba" is considered to have speculative
elements and its future cannot be considered well assured.
Earnings and asset protection may be very moderate and not
well safeguarded during adverse periods. Uncertainty of
position characterizes preferred stocks in this class.
"b" An issue which is rated "b" generally lacks the
characteristics of a desirable investment. Assurance of
dividend payments and maintenance of other terms of the issue
over any long period of time may be small.
"caa" An issue which is rated "caa" is likely to be in arrears on
dividends payments. This rating designation does not purport
to indicate the future status of payments.
"ca" An issue which is rated "ca" is speculative in a high degree
and is likely to be in arrears on dividends with little
likelihood of eventual payments.
"c" This is the lowest rated class of preferred or preference
stock. Issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Moody's applies numerical modifiers 1, 2, and 3 in each rating
classification; the modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.
-63-
<PAGE>
(RIF-ABC)
APPENDIX A--INVESTMENT ILLUSTRATIONS
Illustrations of Hypothetical Returns on Investments Based on Purchase Option
$10,000 Purchase
<TABLE>
<CAPTION>
Scenario 1 Scenario 2
No Redemption Redeem 1st Year
-------------------------------------- -------------------------------------
Year Class A Class B Class C Class A Class B Class C
---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 9,525 10,000 10,000
1 10,192 10,630 10,630 10,192 10,230 10,530+
2 10,905 11,300 11,300
3 11,669 12,012 12,012
4 12,485 12,768 12,768
5 13,359 13,573 13,573
6 14,294 14,428 14,428
7 15,295 15,337 15,337
8 16,366+ 16,303 16,303
9 17,511 17,444* 17,330
10 18,737 18,665* 18,422
Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
-------------------------------------- -------------------------------------
Year Class A Class B Class C Class A Class B Class C
---- -------------------------------------- ------- ------- -------
0 9,525 10,000 10,000 9,525 10,000 10,000
1 10,192 10,630 10,630 10,192 10,630 10,630
2 10,905 11,300 11,300 10,905 11,300 11,300
3 11,669 11,712 12,012+ 11,669 12,012 12,012
4 12,485 12,768 12,768
5 13,359 13,373 13,573+
6
7
8
9
10
</TABLE>
*This assumes that Class B Shares were converted to Class A
Shares at the end of the eighth year.
<PAGE>
<TABLE>
<CAPTION>
$250,000 Purchase
Scenario 1 Scenario 2
No Redemption Redeem 1st Year
-------------------------------------- -------------------------------------
Year Class A Class B Class C Class A Class B Class C
---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
0 243,750 250,000 250,000 243,750 250,000 250,000
1 260,813 265,750 265,750 260,813 255,750 263,250+
2 279,069 282,492 282,492
3 298,604 300,289 300,289
4 319,507+ 319,207 319,207
5 341,872 339,318 339,318
6 365,803 360,695 360,695
7 391,409 383,418 383,418
8 418,808 407,574 407,574
9 448,124 436,104* 433,251
10 479,493 466,631* 460,546
Scenario 3 Scenario 4
Redeem 3rd Year Redeem 5th Year
-------------------------------------- -------------------------------------
Year Class A Class B Class C Class A Class B Class C
---- ------- ------- ------- ------- ------- -------
0 243,750 250,000 250,000 243,750 250,000 250,000
1 260,813 265,750 265,750 260,813 265,750 265,750
2 279,069 282,492 282,492 279,069 282,492 282,492
3 298,604 292,789 300,289+ 298,604 300,289 300,289
4 319,507+ 319,207 319,207
5 341,872 334,318 339,318
6
7
8
9
10
</TABLE>
*This assumes that Class B Shares were converted to Class A
Shares at the end of the eighth year.
Illustrations do not reflect any applicable waiver of 12b-1 fees. If such fee
waivers were reflected, the illustrations represented above would be different.
Assumes a hypothetical return for Class A of 7% per year, a hypothetical return
for Class B of 6.3% for years 1-8 and 7% for years 9-10, and a hypothetical
return for Class C of 6.3% per year. Hypothetical returns vary due to the
different expense structure for each Class and do not represent actual
performance.
Class A purchase subject to appropriate sales charge breakpoint (4.75%
@ $10,000; 3.75% @ $100,000; 2.50% @ $250,000).
Class B purchase assessed appropriate CDSC upon redemption (4%-4%-3%-3%-2%-1%
in years 1-2-3-4-5-6).
Class C purchase assessed 1% CDSC upon redemption in year 1.
Figures marked "+" identify which class offers the greater return potential
based on investment amount, the holding period and the expense structure for
each Class.
-64-
<PAGE>
For more information contact the ___________________________
Delaware Group at 800-828-5052.
RETIREMENT INCOME FUND
___________________________
INSTITUTIONAL
___________________________
INVESTMENT MANAGER
Delaware Management Company, Inc. P R O S P E C T U S
One Commerce Square
Philadelphia, PA 19103 ___________________________
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street JANUARY 29, 1997
Philadelphia, PA 19103
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103
CUSTODIAN
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
DELAWARE
GROUP
----------
<PAGE>
RETIREMENT INCOME FUND PROSPECTUS
INSTITUTIONAL CLASS SHARES JANUARY 29, 1997
1818 Market Street, Philadelphia, PA 19103
For more information about
Retirement Income Fund Institutional Class
call the Delaware Group at 800-828-5052.
This Prospectus describes the Retirement Income Fund Institutional
Class of shares (the "Class") of the Retirement Income Fund series (the "Fund")
of Delaware Group Equity Funds V, Inc. ("Equity Funds V, Inc."), a
professionally-managed mutual fund of the series type. The objective of the Fund
is to seek to provide investors with high current income and the potential for
capital appreciation.
This Fund has the authority to invest up to all of its net assets in
lower rated securities, commonly known as "junk bonds" and "lower rated equity
securities." Such securities involve greater risks, including default risks,
than higher rated securities. Purchasers should carefully assess these risks
before investing in this Fund. See Investment Objective and Policies, Special
Risk Considerations, and Appendix A--Ratings.
This Prospectus relates only to the Class and sets forth information
that you should read and consider before you invest. Please retain it for future
reference. The Fund's Statement of Additional Information ("Part B" of Equity
Funds V, Inc.'s registration statement), dated January 29, 1997, as it may be
amended from time to time, contains additional information about the Fund and
has been filed with the Securities and Exchange Commission. Part B is
incorporated by reference into this Prospectus and is available, without charge,
by writing to Delaware Distributors, L.P. at the above address or by calling the
above number.
The Fund also offers Retirement Income Fund A Class, Retirement Income
Fund B Class and Retirement Income Fund C Class. Shares of these classes are
subject to sales charges and other expenses, which may affect their performance.
A prospectus for these classes can be obtained by writing to Delaware
Distributors, L.P. at the above address or by calling 800-523-4640.
-1-
<PAGE>
TABLE OF CONTENTS
Cover Page Classes of Shares
Synopsis How to Buy Shares
Summary of Expenses Redemption and Exchange
Investment Objective and Policies Dividends and Distributions
Suitability Taxes
Investment Strategy Calculation of Net Asset
Special Risk Considerations Value Per Share
High-Yield Securities Management of the Fund
Lower Rated Convertible Securities Other Investment Policies and
and Preferred Stock Risk Considerations
Foreign Securities Appendix A--Ratings
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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.
-2-
<PAGE>
SYNOPSIS
Investment Objective
The investment objective of the Fund is to seek to provide investors
with high current income and an investment that has the potential for capital
appreciation. The Fund seeks to achieve its investment objective by investing
principally in equity securities which generate income through dividends or
otherwise ("income generating equity securities") and debt securities including,
but not limited to, dividend paying common stocks, securities of real estate
investment trusts, preferred stocks, warrants, rights, convertible securities,
non-convertible debt securities, high-yield, high risk securities, investment
grade fixed-income securities, U.S. government securities and foreign equity and
fixed-income securities. For further details, see Investment Objective and
Policies and Other Investment Policies and Risk Considerations.
Risk Factors
Prospective investors should consider the following:
1. The Fund has the authority to invest up to all of its net assets in
lower rated securities. Up to 45% of its net assets may be invested in
high-yield, higher risk fixed-income securities ("junk bonds"). In addition, the
Fund may invest in certain income generating equity securities such as
convertible securities and preferred stock, rated below investment grade. These
securities generally will have speculative characteristics similar to those of
lower rated fixed-income securities. The Fund may invest an unrestricted portion
of its total assets in such lower rated income generating equity securities.
Such securities may increase the risks of an investment in this Fund. See
High-Yield Securities under Special Risk Considerations.
2. Investing in securities of foreign governments and non-United States
companies which are generally denominated in foreign currencies and the
utilization of forward foreign currency exchange contracts involve certain risk
and opportunity considerations not typically associated with investing in United
States government securities and securities of United States companies. See
Special Risk Considerations and Other Investment Policies and Risk
Considerations.
3. The Fund has the ability to engage in options transactions for
hedging purposes to counterbalance portfolio volatility. While the Fund does not
engage in options transactions for speculative purposes, there are risks which
result from the use of options, and an investor should carefully review the
descriptions of these risks in this Prospectus. Certain options may be
considered to be derivative securities. See Options under Other Investment
Policies and Risk Considerations.
4. The Fund may invest up to 20% of its net assets in issuers organized
or having a majority of their assets or deriving a majority of their operating
income in foreign countries. Investment in foreign securities involve risks
which are in addition to those risks inherent in domestic investments. See
Foreign Securities under Special Risk Considerations.
Investment Manager, Distributor and Service Agent
Delaware Management Company, Inc. (the "Manager") furnishes investment
management services to the Fund, subject to the supervision and direction of
Equity Funds V, Inc.'s Board of Directors. The Manager also provides investment
management services to certain other funds in the Delaware Group.
-3-
<PAGE>
Delaware Distributors, L.P. (the "Distributor") is the national distributor for
the Fund and for all of the other mutual funds in the Delaware Group. Delaware
Service Company, Inc. (the "Transfer Agent") is the shareholder servicing,
dividend disbursing, accounting services and transfer agent for the Fund and for
all of the other mutual funds in the Delaware Group. See Summary of Expenses and
Management of the Fund for further information regarding the Manager and the
fees payable under the Fund's Investment Management Agreement.
Purchase Price
Shares of the Class offered by this Prospectus are available at net
asset value, without a front-end or contingent deferred sales charge, and are
not subject to distribution fees under a Rule 12b-1 distribution plan. See
Classes of Shares.
Redemption and Exchange
Shares of the Class are redeemed or exchanged at the net asset value
calculated after receipt of the redemption or exchange request. See Redemption
and Exchange.
Open-End Investment Company
Equity Funds V, Inc., which was organized as a Maryland corporation on
January 16, 1987, is an open-end management investment company. The Fund's
portfolio of assets is diversified as defined by the Investment Company Act of
1940 (the "1940 Act"). See Shares under Management of the Fund.
-4-
<PAGE>
SUMMARY OF EXPENSES
Shareholder Transaction Expenses
- --------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price). . . . . None
Maximum Sales Charge Imposed on
Reinvested Dividends (as a
percentage of offering price). . . . . . . . None
Exchange Fees . . . . . . . . . . . . . . . . . . . . None*
Annual Operating Expenses
(as a percentage of average daily net assets)
- --------------------------------------------------------------
Management Fees (after voluntary waivers) . . . . . . 0.00%
12b-1 Fees. . . . . . . . . . . . . . . . . . . . . . None
Other Operating Expenses+ . . . . . . . . . . . . . . 0.75%
-----
Total Operating Expenses+
(after voluntary waivers) . . . . . 0.75%
=====
Because the Fund has no operating history, "Other Operating Expenses"
are estimated based on expenses expected to be incurred during the Fund's first
fiscal year.
*Exchanges are subject to the requirements of each fund and a front-end sales
charge may apply.
+"Total Operating Expenses" and "Other Operating Expenses" for the Class are
based on estimated amounts for the first full fiscal year of the Class, after
giving effect to the voluntary expense waiver. The Manager has elected
voluntarily to waive that portion, if any, of the annual management fees payable
by the Fund and to pay certain expenses of the Fund to the extent necessary to
ensure that the "Total Operating Expenses" of the Class do not exceed 0.75%
during the commencement of the public offering of the Class through May 31,
1997. If the voluntary expense waivers were not in effect, it is estimated
-5-
<PAGE>
that the "Total Operating Expenses," as a percentage of average daily net
assets, would be 2.26% for the Class' first full fiscal year, reflecting
management fees of 0.65%.
For expense information about Retirement Income Fund A Class,
Retirement Income Fund B Class and Retirement Income Fund C Class, see the
separate prospectus relating to those classes.
The following example illustrates the expenses that an investor would
pay on a $1,000 investment over various time periods, assuming (1) a 5% annual
rate of return, and (2) redemption at the end of each time period. As noted in
the table above, Equity Funds V, Inc. charges no redemption fees. The following
example reflects the waiver of investment management fees by the Manager as
discussed above.
1 year 3 years
------ -------
$8 $24
The purpose of the above tables is to assist the investor in understanding the
various costs and expenses that an investor in the Class will bear directly or
indirectly.
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.
-6-
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The objective of the Fund is to seek to provide investors with high
current income and an investment that has the potential for capital
appreciation. Although the Fund will constantly strive to attain its objective,
there can be no assurance that it will be attained.
SUITABILITY
The Fund may be suitable for investors interested in high current
income and a potential for capital appreciation. In particular, the Fund may be
suitable for retirees who are seeking income that may be equivalent to or in
excess of that available from investments in certificates of deposit but who
also desire an investment which has the potential for capital appreciation as a
hedge against inflation. The Fund may also be suitable for investors seeking to
diversify their investment portfolio and obtain the potential for a moderate
level of income. The Manager believes that the Fund's combined investments in
income generating equity securities and debt securities could provide an income
return which would exceed that of an investment exclusively in equity
securities. Because the Fund will invest at least 50% of its total assets in
income generating equity and equity equivalent securities, the Manager also
believes that investors will have the opportunity to benefit from capital
appreciation. The net asset value per share of the Class may fluctuate in
response to the condition of individual companies and general market and
economic conditions and, as a result, the Fund is not appropriate for a
short-term investor. The Fund cannot assure a specific yield, rate of return or
that principal will be protected. However, through the cautious selection and
supervision of its portfolio, the Manager will strive to achieve the Fund's
investment objective.
The types of securities in which the Fund may invest are subject to
price fluctuations particularly due to changes in interest rates. Investors
should consider asset value fluctuation, as well as yield, in making an
investment decision. While investments in unrated, lower-rated and certain
restricted securities have the potential for higher yields, they are more
speculative and increase the credit risk of the Fund's portfolio. Changes in the
market value of portfolio securities will not affect interest income from such
securities, but will be reflected in the Class' net asset value. In addition,
investments in foreign securities involve special risks, including those related
to currency fluctuations, as well as to political, economic and social
situations different from and potentially more volatile than those in the United
States. Investors should be willing to accept the risks, including the risk of
net asset value fluctuations, associated with investing in these types of
securities. See Special Risk Considerations and Other Investment Policies and
Risk Considerations for a complete discussion of the risk factors affecting the
Fund's portfolio securities.
An investor should not consider a purchase of Fund shares as equivalent
to a complete investment or retirement program. The Delaware Group includes a
family of funds, generally available through registered investment dealers,
which may be used together to create a more complete investment or retirement
program.
Ownership of Fund shares can reduce the bookkeeping and administrative
inconveniences that would be connected with direct purchases of the types of
securities in which the Fund invests.
INVESTMENT STRATEGY
The objective of the Fund is to seek to provide investors with high
current income and an investment that has the potential for capital
appreciation. The Manager will seek to achieve this
-7-
<PAGE>
objective by investing in a combination of income generating equity securities
and debt securities including, but not limited to, dividend paying common
stocks, securities of real estate investment trusts, preferred stocks, warrants,
rights, convertible securities, non-convertible debt securities, high-yield,
high risk securities, investment grade fixed-income securities, U.S. government
securities and foreign equity and fixed-income securities. Under normal
circumstances, at least 50% of the Fund's total assets will be invested in
income generating equity securities. In making investments in income generating
equity securities, the Fund may invest an unrestricted portion of its total
assets in convertible securities and preferred stock rated below investment
grade. While debt securities may comprise up to 50% of the Fund's total assets,
no more than 45% of the Fund's total assets will be invested in high-yield, high
risk debt securities. No more than 25% of the Fund's total assets will be
invested in any one industry sector nor, as to 75% of the Fund's total assets,
will more than 5% be invested in securities of any one issuer. The Fund may
invest up to 20% of its total assets in foreign equity and debt securities. The
Fund will not, however, invest more than 5% of its total assets in securities of
issuers principally located or principally operating in markets of emerging
countries.
Within the percentage guidelines set forth above, the Manager will
determine the proportion of the Fund's assets that will be allocated to income
generating equity securities and equity equivalents and to debt securities,
based on its analysis of economic and market conditions and its assessment of
the income and potential for appreciation that can be achieved from investment
in such asset classes. It is expected that the proportion of the Fund's total
assets invested in income generating equity securities and equity equivalent
securities will vary from 50% to 100% of the Fund's total assets. The proportion
of the Fund's total assets in debt securities will correspondingly vary from 0%
to 50% of the Fund's total assets.
The following is a more detailed description of some of the securities
in which the Fund may invest.
Common Stock
Common stock is generally considered to be shares of a corporation that
entitle the holder to a pro-rata share of the profits of the corporation, if
any, without a preference over any other shareholder or class of shareholders,
including holders of the corporation's preferred stock and other senior equity.
Common stock usually carries with it the right to vote and frequently an
exclusive right to do so. Holders of common stock also have the right to
participate in the remaining assets of the corporation after all other claims
are paid, including those of debt securities and preferred stock. In selecting
common stocks for investment, the Manager will focus primarily on a security's
dividend-paying capacity rather than on its potential for appreciation.
Preferred Stock
Generally, preferred stock receives dividends prior to distributions on
common stock and usually has a priority of claim over common stockholders if the
issuer of the stock is liquidated. Unlike common stock, preferred stock does not
usually have voting rights; preferred stock, in some instances, is convertible
into common stock. Dividends on typical preferred stock are cumulative, causing
dividends to accrue even if not declared by the board of directors. There is,
however, no assurance that dividends will be declared by the boards of directors
of issuers of the preferred stocks in which the Fund invests. Preferred stock in
which the Fund may invest may be rated below investment grade (i.e., "Ba" or
lower by Moody's Investors Service, Inc. ("Moody's") or "BB" or lower by
Standard & Poor's Ratings Group ("S&P") or similarly rated by other comparable
rating agencies) or, if unrated, determined to be of comparable quality by the
Manager.
-8-
<PAGE>
Convertible Securities
Traditional convertible securities include corporate bonds, notes and
preferred stocks that may be converted into or exchanged for common stock, and
other securities that also provide an opportunity for equity participation.
These securities are generally convertible either at a stated price or a stated
rate (that is, for a specific number of shares of common stock or other
security). As with other fixed-income securities, the price of a convertible
security to some extent varies inversely with interest rates. While providing a
fixed-income stream (generally higher in yield than the income derivable from a
common stock but lower than that afforded by a non-convertible debt security), a
convertible security also affords the investor an opportunity, through its
conversion feature, to participate in the capital appreciation of the common
stock into which it is convertible. As the market price of the underlying common
stock declines, convertible securities tend to trade increasingly on a yield
basis and so may not experience market value declines to the same extent as the
underlying common stock. When the market price of the underlying common stock
increases, the price of a convertible security tends to rise as a reflection of
the value of the underlying common stock. To obtain such a higher yield, the
Fund may be required to pay for a convertible security an amount in excess of
the value of the underlying common stock. Common stock acquired by the Fund upon
conversion of a convertible security will generally be held for so long as the
Manager anticipates such stock will provide the Fund with opportunities which
are consistent with the Fund's investment objectives and policies. Convertible
securities in which the Fund may invest may be rated below investment grade
(i.e., "Ba" or lower by Moody's or "BB" or lower by S&P or similarly rated by
other comparable rating agencies) or, if unrated, determined to be of comparable
quality by the Manager.
Real Estate Investment Trust Securities
Real Estate Investment Trusts ("REITs") are pooled investment vehicles
which invest primarily in income-producing real estate or real estate related
loans or interests. REITs are generally classified as equity REITs, mortgage
REITs or a combination of equity and mortgage REITs. Equity REITs invest the
majority of their assets directly in real property and derive income primarily
from the collection of rents. Equity REITs can also realize capital gains by
selling properties that have appreciated in value. Mortgage REITs invest the
majority of their assets in real estate mortgages and derive income from the
collection of interest payments. Like investment companies such as Equity Funds
V, Inc., REITs are not taxed on income distributed to shareholders provided they
comply with several requirements of the Internal Revenue Code (the "Code").
REITs are subject to substantial cash flow dependency, defaults by borrowers,
self-liquidation, and the risk of failing to qualify for tax-free pass-through
of income under the Code, and/or maintain exemptions from the 1940 Act. Equity
REITs may be affected by changes in the value of the underlying property owned
by the REITs, while mortgage REITs may be affected by the quality of any credit
extended.
REITs invest all of their assets in the real estate and real estate
related sectors of the economy, and are subject to the risks of financing
projects. REITs may have limited financial resources, may trade less frequently
and in a limited volume, and are more volatile than the high-yield, high risk
securities in which the Fund may also invest.
-9-
<PAGE>
High-Yield, High Risk Securities
Debt Securities
High-yield, high risk debt securities, like all debt securities,
represent money borrowed that must be repaid and has a fixed amount, a specific
maturity or maturities and usually a specific rate of interest or original
purchase discount. Unlike common and preferred stock, debt securities, including
high-yield, high risk debt securities, do not represent an equity interest in
the issuer. However, debt securities have a priority claim over stockholders if
the issuer is liquidated. The Fund may invest in a wide variety of debt
securities, although it is anticipated that under normal market conditions, the
Fund primarily will invest in high-yield corporate debt obligations, including
zero coupon bonds and pay-in-kind securities ("PIKs"), debentures, convertible
debentures, corporate notes (including convertible notes) and units consisting
of bonds with stock or warrants to buy stock attached. See Zero Coupon Bonds and
Pay-In-Kind Bonds under Other Investment Policies and Risk Considerations.
The Fund will invest in both rated and unrated bonds. The rated bonds
that the Fund may purchase in this sector of its portfolio will be rated BBB or
lower by S&P or Fitch Investors Service, Inc. ("Fitch"), Baa or lower by
Moody's, or similarly rated by another nationally recognized statistical rating
organization. See Appendix A to this Prospectus for more rating information and
High-Yield Securities under Special Risk Considerations for a description of the
risks associated with investing in lower-rated fixed-income securities. Unrated
bonds may be more speculative in nature than rated bonds.
Convertible Securities and Preferred Stock
The Fund may invest in convertible securities and preferred stock rated
below investment grade or which are unrated but are of comparable quality as
determined by the Manager. The Fund includes these securities in its income
generating equity securities category and they are in addition to the
high-yield, high risk debt securities discussed above. Such securities are
judged to have speculative elements and may be subject to greater risks with
respect to the timely repayment of principal and timely payment of interest and
dividends. See Investment Objectives and Policies--Investment Strategy and
Special Risk Considerations. Also see Lower Rated Convertible Securities and
Preferred Stock under Special Risk Considerations.
Foreign Securities
The Fund may invest up to 20% of its total assets in securities of
issuers organized or having a majority of their assets or deriving a majority of
their operating income in foreign countries. These income generating equity
securities and debt securities include foreign government securities, equity
securities and debt obligations of foreign companies, and securities issued by
supranational entities. A supranational entity is an entity established or
financially supported by the national governments of one or more countries to
promote reconstruction or development. Examples of supranational entities
include, among others, the International Bank for Reconstruction and Development
(more commonly known as the World Bank), the European Economic Community, the
European Coal and Steel Community, the European Investment Bank, the
Inter-Development Bank, the Export-Import Bank and the Asian Development Bank.
The Fund may invest in sponsored and unsponsored American Depositary
Receipts, European Depositary Receipts, or Global Depositary Receipts
("Depositary Receipts"). Depositary Receipts are receipts typically issued by a
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. "Sponsored" Depositary Receipts are issued jointly by
the issuer of the underlying security and a depository, and "unsponsored"
Depositary Receipts are issued without the
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participation of the issuer of the deposited security. The Fund may also invest
in Brady Bonds, which are described more fully under the Other Investment
Policies and Risk Considerations section of this Prospectus.
The Fund may invest in securities issued in any currency and may hold
foreign currencies. Securities of issuers within a given country may be
denominated in the currency of another country or in multinational currency
units, such as the European Currency Unit. The Fund may, from time to time,
purchase or sell foreign currencies and/or engage in forward foreign currency
transactions in order to expedite settlement of Fund transactions and to
minimize currency value fluctuations. See Other Investment Policies and Risk
Considerations for a further description of the Fund's foreign currency
transactions.
While the Fund may purchase securities of issuers in any foreign
country, developed and underdeveloped, no more than 5% of the Fund's assets may
be invested in direct obligations or equity securities of issuers located in
emerging market countries. See Emerging Market Securities under Special Risk
Considerations.
The Fund will invest in both rated and unrated foreign securities. The
rated securities that the Fund may purchase in the international sector of its
portfolio may include those rated BBB or lower by S&P or Fitch, Baa or lower by
Moody's, or similarly rated by another nationally reorganized statistical rating
organization. See Appendix A to this Prospectus for more rating information and
Foreign Securities and High-Yield Securities under Special Risk Considerations
for a description of the risks associated with investing in foreign securities
and lower-rated securities.
The Fund may also invest in zero coupon bonds, purchase shares of other
investment companies and may engage in short sales. See Zero Coupon Bonds and
Pay-In-Kind Bonds and Investment Company Securities under Other Investment
Polices and Risk Considerations.
* * *
For a description of the Fund's other investment policies and for a
further description of some of the policies described above, see Other
Investment Policies and Risk Considerations.
In unusual market conditions, in order to meet redemption requests, for
temporary defensive purposes, and pending investment or at such other times when
suitable income generating equity or debt securities are not available, the Fund
may hold a substantial portion of its assets in (i) cash, (ii) debt securities
issued by the U.S. government, its agencies or instrumentalities, (iii)
commercial paper, (iv) certificates of deposit and bankers' acceptances or
repurchase agreements with respect to any of the foregoing investments. The Fund
will only invest in commercial paper of companies rated "A-2" or better by S&P
or "P-2" or better by Moody's or similarly rated by another comparable rating
agency or, if not so rated, of equivalent investment quality as determined by
the Manager. See Appendix A to this Prospectus for more rating information.
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The Fund's designation as an open-end investment company and as a
diversified fund may not be changed unless authorized by the vote of a majority
of the Fund's outstanding voting securities. A "majority vote of the outstanding
voting securities" is the vote by the holders of the lesser of a) 67% or more of
the Fund's voting securities present in person or represented by proxy if the
holders of more than 50% of the outstanding voting securities of the Fund are
present or represented by proxy; or b) more than 50% of the outstanding voting
securities. Part B lists other more specific investment restrictions of the Fund
which may not be changed without a majority shareholder vote.
The remaining investment policies of the Fund not identified above or
in Part B are not fundamental and may be changed by the Board of Directors of
Equity Funds V, Inc. without a shareholder vote.
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SPECIAL RISK CONSIDERATIONS
Generally
The Fund may invest a substantial portion of its assets in fixed-income
securities. The market values of fixed-income securities generally fall when
interest rates rise and, conversely, rise when interest rates fall. Lower-rated
and unrated fixed-income securities tend to reflect short-term corporate and
market developments to a greater extent than higher-rated fixed-income
securities, which react primarily to fluctuations in the general level of
interest rates. These lower-rated or unrated securities generally have higher
yields, but, as a result of factors such as reduced creditworthiness of issuers,
increased risk of default and a more limited and less liquid secondary market,
are subject to greater volatility and risk of loss of income and principal than
are higher-rated securities. The Manager will attempt to reduce such risk
through portfolio diversification, credit analysis, and attention to trends in
the economy, industries and financial markets.
High-Yield Securities
The Fund may invest up to 45% of its total assets in bonds rated BBB or
lower by S&P or Fitch, Baa or lower by Moody's, or similarly rated by another
rating organization, and in unrated corporate bonds. See Appendix A to this
Prospectus for more rating information. Investing in these so-called "junk" or
"high-yield" bonds entails certain risks, including the risk of loss of
principal and default on interest payments, which may be greater than the risks
involved in investment grade bonds, and which should be considered by investors
contemplating an investment in the Fund. Such bonds are sometimes issued by
companies whose earnings at the time of issuance are less than the projected
debt service on the junk bonds. In addition to the considerations discussed
elsewhere in this Prospectus, those risks include the following:
Youth and Volatility of the High-Yield Market. Although the market for
high-yield bonds has been in existence for many years, including periods of
economic downturns, the high-yield market grew rapidly during the long economic
expansion which took place in the United States during the 1980s. During that
economic expansion, the use of high-yield debt securities to fund highly
leveraged corporate acquisitions and restructurings increased dramatically. As a
result, the high-yield market grew substantially during that economic expansion.
Although experts disagree on the impact recessionary periods have had and will
have on the high-yield market, some analysts believe a protracted economic
downturn would severely disrupt the market for high-yield bonds, would adversely
affect the value of outstanding bonds and would adversely affect the ability of
high-yield issuers to repay principal and interest. Those analysts cite
volatility experienced in the high-yield market in the past as evidence for
their position. It is likely that protracted periods of economic uncertainty
would result in increased volatility in the market prices of high-yield bonds,
an increase in the number of high-yield bond defaults and corresponding
volatility in the Class' net asset value.
Redemptions. If, as a result of volatility in the high-yield market or other
factors, the Fund experiences substantial net redemptions of the Fund's shares
for a sustained period of time (i.e., more shares of the Fund are redeemed than
are purchased), the Fund may be required to sell certain of its high-yield
securities without regard to the investment merits of the securities to be sold.
If the Fund sells a substantial number of securities to generate proceeds for
redemptions, the asset base of the Fund will decrease and the Fund's expense
ratios may increase.
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<PAGE>
Liquidity and Valuation. The secondary market for high-yield securities is
currently dominated by institutional investors, including mutual funds, and
certain financial institutions. There is generally no established retail
secondary market for high-yield securities. As a result, the secondary market
for high-yield securities is more limited and less liquid than other secondary
securities markets. The high-yield secondary market is particularly susceptible
to liquidity problems when the institutions that dominate it temporarily cease
buying bonds for regulatory, financial or other reasons, such as the savings and
loan crisis. A less liquid secondary market may have an adverse effect on the
Fund's ability to dispose of particular issues, when necessary, to meet the
Fund's liquidity needs or in response to a specific economic event, such as the
deterioration in the creditworthiness of the issuer. In addition, a less liquid
secondary market makes it more difficult for the Fund to obtain precise
valuations of the high-yield securities in its portfolio. During periods
involving such liquidity problems, judgment plays a greater role in valuing
high-yield securities than is normally the case. The secondary market for
high-yield securities is also generally considered to be more likely to be
disrupted by adverse publicity and investor perceptions than the more
established secondary securities markets. The privately placed high-yield
securities that the Fund may purchase are particularly susceptible to the
liquidity and valuation risks outlined above.
Lower Rated Convertible Securities and Preferred Stock
The Fund may invest in lower rated convertible securities and preferred
stock (i.e., "Ba" or lower for convertible securities or "ba" or lower for
preferred stock by Moody's or "BB" or lower for convertible securities or
preferred stock by S&P or similarly rated by other comparable rating agencies)
or, if unrated, determined to be of comparable quality by the Manager. Investing
in lower rated convertible securities and preferred stock entails certain risks,
including the risk of loss of principal which may be greater than the risks
involved in investing in higher rated securities, and which should be considered
by investors contemplating an investment in the Fund. The Fund may have
difficulty disposing of such securities because the trading market for such
securities may be thinner than the market for higher rated convertible
securities and preferred stock. To the extent a secondary trading market for
these securities does exist, it generally is not as liquid as the secondary
trading market for higher rated securities. The lack of a liquid secondary
market as well as adverse publicity with respect to these securities, may have
an adverse impact on market price and the Fund's ability to dispose of
particular issues in response to a specific economic event such as a
deterioration in the creditworthiness of the issuer. The lack of a liquid
secondary market for certain securities also may make it more difficult for the
Fund to obtain accurate market quotations for purposes of pricing the Fund's
portfolio and calculating its net asset value. The market behavior of
convertible securities and preferred stocks in lower rating categories is often
more volatile than that of higher quality securities. Lower quality convertible
securities and preferred stocks are judged by Moody's and S&P to have
speculative elements or characteristics; their future cannot be considered as
well assured and earnings and asset protection may be moderate or poor in
comparison to investment grade securities. In addition, such lower quality
securities face major ongoing uncertainties or exposure to adverse business,
financial or economic conditions, which could lead to inadequate capacity to
meet timely payments. A description of the ratings used by Moody's and S&P for
such securities is set forth in Appendix A to this Prospectus. See also Special
Risk Considerations--High-Yield Securities.
Foreign Securities
The Fund has the ability to purchase income generating equity
securities and debt securities in any foreign country. Investors should consider
carefully the substantial risks involved in investing in securities issued by
companies and governments of foreign nations. These risks are in addition to the
usual risks
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<PAGE>
inherent in domestic investments. There is the possibility of expropriation,
nationalization or confiscatory taxation, taxation of income earned in foreign
nations or other taxes imposed with respect to investments in foreign nations,
foreign exchange controls (which may include suspension of the ability to
transfer currency from a given country), default in foreign government
securities, political or social instability or diplomatic developments which
could affect investments in securities of issuers in those nations.
In addition, in many countries, there is substantially less publicly
available information about issuers than is available in reports about companies
in the United States. Foreign companies are not subject to uniform accounting,
auditing and financial reporting standards, and auditing practices and
requirements may not be comparable to those applicable to United States
companies. Consequently, financial data about foreign companies may not
accurately reflect the real condition of those issuers and securities markets.
Further, the Fund may encounter difficulty or be unable to pursue legal
remedies and obtain judgments in foreign courts. Commission rates on securities
transactions in foreign countries, which are sometimes fixed rather than subject
to negotiation as in the United States, are likely to be higher. Further, the
settlement period of securities transactions in foreign markets may be longer
than in domestic markets, and may be subject to administrative uncertainties. In
many foreign countries, there is less government supervision and regulation of
business and industry practices, stock exchanges, brokers and listed companies
than in the United States, and capital requirements for brokerage firms are
generally lower. The foreign securities markets of many of the countries in
which the Fund may invest may also be smaller, less liquid and subject to
greater price volatility than those in the United States.
Emerging Market Securities. The Fund may invest up to 5% of its assets
in income generating equity securities and debt securities of issuers located in
emerging market nations. Compared to the United States and other developed
countries, emerging countries may have volatile social conditions, relatively
unstable governments and political systems, economies based on only a few
industries and economic structures that are less diverse and mature, and
securities markets that trade a small number of securities, which can result in
a low or nonexistent volume of trading. Prices in these securities markets tend
to be volatile and, in the past, securities in these countries have offered
greater potential for gain (as well as loss) than securities of companies
located in developed countries. Until recently, there has been an absence of a
capital market structure or market-oriented economy in certain emerging
countries. Further, investments and opportunities for investments by foreign
investors are subject to a variety of national policies and restrictions in many
emerging countries. Also, the repatriation of both investment income and capital
from several foreign countries is restricted and controlled under certain
regulations, including, in some cases, the need for certain governmental
consents. Countries such as those in which the Fund may invest may have
historically experienced and may continue to experience, substantial, and in
some periods extremely high rates of inflation for many years, high interest
rates, exchange rate fluctuations or currency depreciation, large amounts of
external debt, balance of payments and trade difficulties and extreme poverty
and unemployment. Other factors which may influence the ability or willingness
to service debt
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<PAGE>
include, but are not limited to, a country's cash flow situation, the
availability of sufficient foreign exchange on the date a payment is due, the
relative size of its debt service burden to the economy as a whole, its
government's policy towards the International Monetary Fund, the World Bank and
other international agencies and the political constraints to which a government
debtor may be subject. The Manager currently considers countries such as
Argentina, Brazil, Chile, China, Mexico, India, Portugal, Poland and Thailand to
be emerging markets. This list is not intended to be exhaustive, but rather
representative of the types of countries now considered by the Manager to
present special investment risks.
See Other Investment Policies and Risk Considerations for a further
description of certain risks associated with certain of the Fund's investments,
including the risks associated with investments in foreign government securities
and engaging in foreign currency transactions and options.
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<PAGE>
CLASSES OF SHARES
The Distributor serves as the national distributor for the Fund. Shares
of the Class may be purchased directly by contacting the Fund or its agent or
through authorized investment dealers. All purchases of shares of the Class are
at net asset value. There is no front-end or contingent deferred sales charge.
Investment instructions given on behalf of participants in an
employer-sponsored retirement plan are made in accordance with directions
provided by the employer. Employees considering purchasing shares of the Class
as part of their retirement program should contact their employer for details.
Shares of the Class are available for purchase only by: (a) retirement
plans introduced by persons not associated with brokers or dealers that are
primarily engaged in the retail securities business and rollover individual
retirement accounts from such plans; (b) tax-exempt employee benefit plans of
the Manager or its affiliates and securities dealer firms with a selling
agreement with the Distributor; (c) institutional advisory accounts of the
Manager or its affiliates and those having client relationships with Delaware
Investment Advisers, a division of the Manager, or its affiliates and their
corporate sponsors, as well as subsidiaries and related employee benefit plans
and rollover individual retirement accounts from such institutional advisory
accounts; (d) a bank, trust company and similar financial institution investing
for its own account or for the account of its trust customers for whom such
financial institution is exercising investment discretion in purchasing shares
of the Class, except where the investment is part of a program that requires
payment to the financial institution of a Rule 12b-1 fee; and (e) registered
investment advisers investing on behalf of clients that consist solely of
institutions and high net-worth individuals having at least $1,000,000 entrusted
to the adviser for investment purposes, but only if the adviser is not
affiliated or associated with a broker or dealer and derives compensation for
its services exclusively from its clients for such advisory services.
Retirement Income Fund A Class, Retirement Income Fund B Class and Retirement
Income Fund C Class In addition to offering Retirement Income Fund
Institutional Class, the Fund also offers Retirement Income
Fund A Class, Retirement Income Fund B Class and Retirement Income Fund C Class,
which are described in a separate prospectus. Shares of Retirement Income Fund A
Class, Retirement Income Fund B Class and Retirement Income Fund C Class may be
purchased through authorized investment dealers or directly by contacting the
Fund or its Distributor. Retirement Income Fund A Class carries a front-end
sales charge and, absent any applicable fee waiver, has annual 12b-1 expenses
equal to a maximum of 0.30%. The maximum front-end sales charge as a percentage
of the offering price is 4.75% and is reduced on certain transactions of
$100,000 or more. Retirement Income Fund B Class and Retirement Income Fund C
Class have no front-end sales charge but, absent any applicable fee waiver, are
subject to annual 12b-1 expenses equal to a maximum of 1%. Shares of Retirement
Income Fund B Class and Retirement Income Fund C Class and certain shares of
Retirement Income Fund A Class may be subject to a contingent deferred sales
charge upon redemption. To obtain a prospectus relating to such classes, contact
the Distributor by writing to the address or by calling the phone numbers listed
on the cover of this Prospectus.
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HOW TO BUY SHARES
The Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer. In all instances, investors must
qualify to purchase shares of the Class.
Investing Directly by Mail
1. Initial Purchases--An Investment Application or, in the case of a retirement
plan account, an appropriate retirement plan application, must be completed,
signed and sent with a check payable to Retirement Income Fund Institutional
Class, to Delaware Group at 1818 Market Street, Philadelphia, PA 19103.
2. Subsequent Purchases--Additional purchases may be made at any time by mailing
a check payable to Retirement Income Fund Institutional Class. Your check should
be identified with your name(s) and account number.
Investing Directly by Wire
You may purchase shares by requesting your bank to transmit funds by
wire to CoreStates Bank, N.A., ABA #031000011, account number 1412893401
(include your name(s) and your account number).
1. Initial Purchases--Before you invest, telephone the Client Services
Department at 800-828-5052 to get an account number. If you do not call first,
it may delay processing your investment. In addition, you must promptly send
your Investment Application or, in the case of a retirement plan account, an
appropriate retirement plan application, to Retirement Income Fund Institutional
Class, to Delaware Group at 1818 Market Street, Philadelphia, PA 19103.
2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You must advise your Client
Services Representative by telephone at 800-828- 5052 prior to sending your
wire.
Investing by Exchange
If you have an investment in another mutual fund in the Delaware Group
and you qualify to purchase shares of the Class, you may write and authorize an
exchange of part or all of your investment into the Fund. However, shares of
Retirement Income Fund B Class and Retirement Income Fund C Class and Class B
Shares and Class C Shares of the other funds in the Delaware Group offering such
a class of shares may not be exchanged into the Class. If you wish to open an
account by exchange, call your Client Services Representative at 800-828-5052
for more information. See Redemption and Exchange for more complete information
concerning your exchange privileges.
Investing through Your Investment Dealer
You can make a purchase of Fund shares through most investment dealers
who, as part of the service they provide, must transmit orders promptly to the
Fund. They may charge for this service.
Purchase Price and Effective Date
The purchase price (net asset value) is determined as of the close of
regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern
time) on days when the Exchange is open.
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The effective date of a purchase made through an investment dealer is
the date the order is received by the Fund. The effective date of a direct
purchase is the day your wire, electronic transfer or check is received, unless
it is received after the time the share price is determined, as noted above.
Purchase orders received after such time will be effective the next business
day.
The Conditions of Your Purchase
The Fund reserves the right to reject any purchase order. If a purchase
is canceled because your check is returned unpaid, you are responsible for any
loss incurred. The Fund can redeem shares from your account(s) to reimburse
itself for any loss, and you may be restricted from making future purchases in
any of the funds in the Delaware Group. The Fund reserves the right to reject
purchase orders paid by third-party checks or checks that are not drawn on a
domestic branch of a United States financial institution. If a check drawn on a
foreign financial institution is accepted, you may be subject to additional bank
charges for clearance and currency conversion.
The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under $250 as a result of redemptions.
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REDEMPTION AND EXCHANGE
Redemption and exchange requests made on behalf of participants in an
employer-sponsored retirement plan are made in accordance with directions
provided by the employer. Employees should therefore contact their employer for
details.
Your shares will be redeemed or exchanged based on the net asset value
next determined after the Fund receives your request in good order. Redemption
and exchange requests received in good order after the time the net asset value
of shares is determined, as noted above, will be processed on the next business
day. See Purchase Price and Effective Date under How to Buy Shares. Except as
otherwise noted below, for a redemption request to be in "good order," you must
provide your account number, account registration, and the total number of
shares or dollar amount of the transaction. With regard to exchanges, you must
also provide the name of the fund you want to receive the proceeds. Exchange
instructions and redemption requests must be signed by the record owner(s)
exactly as the shares are registered. You may request a redemption or an
exchange by calling the Fund at 800-828-5052. Redemption proceeds will be
distributed promptly, as described below, but not later than seven days after
receipt of a redemption request.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses.
The Fund will process written and telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. The Fund will honor redemption requests as to shares for which a check
was tendered as payment, but the Fund will not mail or wire the proceeds until
it is reasonably satisfied that the check has cleared, which may take up to 15
days from the purchase date. You can avoid this potential delay if you purchase
shares by wiring Federal Funds. The Fund reserves the right to reject a written
or telephone redemption request or delay payment of redemption proceeds if there
has been a recent change to the shareholder's address of record.
Shares of the Class may be exchanged into any other Delaware Group
mutual fund, provided: (1) the investment satisfies the eligibility and other
requirements set forth in the prospectus of the fund being acquired, including
the payment of any applicable front-end sales charge; and (2) the shares of the
fund being acquired are in a state where that fund is registered. If exchanges
are made into other shares that are eligible for purchase only by those
permitted to purchase shares of the Class, such exchange will be exchanged at
net asset value. Shares of the Class may not be exchanged into Class B Shares or
Class C Shares of the funds in the Delaware Group. The Fund may suspend,
terminate or amend the terms of the exchange privilege upon 60 days' written
notice to shareholders.
Various redemption and exchange methods are outlined below. No fee is
charged by the Fund or the Distributor for redeeming or exchanging your shares.
You may also have your investment dealer arrange to have your shares redeemed or
exchanged. Your investment dealer may charge for this service.
All authorizations, including selection of any of the features
described below, shall continue in effect until such time as a written
revocation or modification has been received by the Fund or its agent.
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<PAGE>
Written Redemption and Exchange
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103
to redeem some or all of your shares or to request an exchange of any or all of
your shares into another mutual fund in the Delaware Group, subject to the same
conditions and limitations as other exchanges noted above. The request must be
signed by all owners of the account or your investment dealer of record.
For redemptions of more than $50,000, or when the proceeds are not sent
to the shareholder(s) at the address of record, the Fund requires a signature by
all owners of the account and may require a signature guarantee. Each signature
guarantee must be supplied by an eligible guarantor institution. The Fund
reserves the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness. The Fund may require further
documentation from corporations, executors, retirement plans, administrators,
trustees or guardians.
Payment is normally mailed the next business day after receipt of your
redemption request. Certificates are issued for shares only if you submit a
specific request. If your shares are in certificate form, the certificate must
accompany your request and also be in good order.
You also may submit your written request for redemption or exchange by
facsimile transmission at the following number: 215-255-8864.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your shares in certificate form, you may redeem or
exchange only by written request and you must return your certificates.
The Telephone Redemption--Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such services available with respect to your account. The Fund
reserves the right to modify, terminate or suspend these procedures upon 60
days' written notice to shareholders. It may be difficult to reach the Fund by
telephone during periods when market or economic conditions lead to an unusually
large volume of telephone requests.
Neither the Fund nor its Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Fund will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. A written confirmation will be provided
for all purchase, exchange and redemption transactions initiated by telephone.
By exchanging shares by telephone, you are acknowledging prior receipt of a
prospectus for the fund into which your shares are being exchanged.
Telephone Redemption--Check to Your Address of Record
You or your investment dealer of record can have redemption proceeds of
$50,000 or less mailed to you at your record address. Checks will be payable to
the shareholder(s) of record. Payment is normally mailed the next business day
after receipt of the redemption request.
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<PAGE>
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must submit a written authorization and you may need to have your
signature guaranteed. For your protection, your authorization must be on file.
If you request a wire, your funds will normally be sent the next business day.
If you ask for a check, it will normally be mailed the next business day after
receipt of your redemption request to your predesignated bank account. There are
no fees for this redemption method, but the mail time may delay getting funds
into your bank account. Simply call your Client Services Representative prior to
the time the net asset value is determined, as noted above.
Telephone Exchange
You or your investment dealer of record can exchange shares into any
fund in the Delaware Group under the same registration. As with the written
exchange service, telephone exchanges are subject to the same conditions and
limitations as other exchanges noted above. Telephone exchanges may be subject
to limitations as to amounts or frequency.
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DIVIDENDS AND DISTRIBUTIONS
The Fund expects to declare and pay dividends monthly. However, the
Fund does not anticipate declaring or paying dividends during the first few
months following the commencement of its operations. Distributions from net
realized securities profits, if any, will be distributed twice a year. The first
payment normally would be made during the first quarter of the next fiscal year.
The second payment would be made near the end of the calendar year to comply
with certain requirements of the Internal Revenue Code (the "Code"). Both
dividends and distributions, if any, are automatically reinvested in your
account at net asset value.
Each Class of the Fund will share proportionately in the investment
income and expenses of the Fund, except that the Class will not incur
distribution fees under the Rule 12b-1 Plans which, absent any applicable fee
waiver, apply to Retirement Income Fund A Class, Retirement Income Fund B Class
and Retirement Income Fund C Class.
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TAXES
The tax discussion set forth below is included for general information
only. Investors should consult their own tax advisers concerning the federal,
state, local or foreign tax consequences of an investment in the Fund.
The Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Code. As such, the Fund
will not be subject to federal income tax, or to any excise tax, to the extent
its earnings are distributed as provided in the Code.
The Fund intends to distribute substantially all of its net investment
income and net capital gains, if any. Dividends from net investment income or
net short-term capital gains will be taxable to those investors who are subject
to income taxes as ordinary income, even though received in additional shares.
It is expected that only a nominal portion of the Fund's dividends will be
eligible for the dividends-received deduction for corporations.
Distributions paid by the Fund from long-term capital gains, received
in additional shares, are taxable to those investors who are subject to income
taxes as long-term capital gains, regardless of the length of time an investor
has owned shares in the Fund. The Fund does not seek to realize any particular
amount of capital gains during a year; rather, realized gains are a by-product
of Fund management activities. Consequently, capital gains distributions may be
expected to vary considerably from year to year. Also, for those investors
subject to tax, if purchases of shares in the Fund are made shortly before the
record date for a dividend or capital gains distribution, a portion of the
investment will be returned as a taxable distribution.
Although dividends generally will be treated as distributed when paid,
dividends which are declared in October, November or December to shareholders of
record on a specified date in one of those months, but which, for operational
reasons, may not be paid to the shareholder until the following January, will be
treated for tax purposes as if paid by the Fund and received by the shareholder
on December 31 of the calendar year in which they are declared.
The sale of shares of the Fund is a taxable event and may result in a
capital gain or loss to shareholders subject to tax. Capital gain or loss may be
realized from an ordinary redemption of shares or an exchange of shares between
the Fund and any other fund in the Delaware Group. Any loss incurred on a sale
or exchange of Fund shares that had been held for six months or less will be
treated as a long-term capital loss to the extent of capital gain dividends
received with respect to such shares.
The Fund may be subject to foreign withholding taxes on income from
certain of its foreign securities.
In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital gains
realized from certain types of U.S. government securities may be exempt from
state personal income taxes. Shares of the Fund are exempt from Pennsylvania
county personal property taxes.
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Each year, Equity Funds V, Inc. will mail to you information on the tax
status of the Fund's dividends and distributions. Shareholders will also receive
each year information as to the portion of dividend income, if any, that is
derived from U.S. government securities that are exempt from state income tax.
Of course, shareholders who are not subject to tax on their income would not be
required to pay tax on amounts distributed to them by the Fund.
Equity Funds V, Inc. is required to withhold 31% of taxable dividends,
capital gains distributions, and redemptions paid to shareholders who have not
complied with IRS taxpayer identification regulations. You may avoid this
withholding requirement by certifying on your Investment Application your proper
Taxpayer Identification Number and by certifying that you are not subject to
backup withholding.
See Accounting and Tax Issues and Distributions and Taxes in Part B for
additional information on tax matters relating to the Fund and its shareholders.
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CALCULATION OF NET ASSET VALUE PER SHARE
The purchase and redemption price of Class shares is the net asset
value ("NAV") per share of the Class next computed after the order is received.
The NAV is computed as of the close of regular trading on the New York Stock
Exchange (ordinarily, 4 p.m., Eastern time) on days when the Exchange is open.
The NAV per share is computed by adding the value of all securities and
other assets in the portfolio, deducting any liabilities (expenses and fees are
accrued daily) and dividing by the number of shares outstanding. Portfolio
securities for which market quotations are available are priced at market value.
Foreign securities expressed in foreign currency values will be converted into
U.S. dollar values at the mean between the currencies' bid and offered
quotations. Debt securities are priced on the basis of valuations provided by an
independent pricing service using methods approved by Equity Funds V, Inc.'s
Board of Directors. Short-term investments having a maturity of less than 60
days are valued at amortized cost, which approximates market value. All other
securities are valued at their fair value as determined in good faith and in a
method approved by Equity Funds V, Inc.'s Board of Directors.
The net asset values of all outstanding shares of each class of the
Fund will be computed on a pro-rata basis for each outstanding share based on
the proportionate participation in the Fund represented by the value of shares
of that class. All income earned and expenses incurred by the Fund will be borne
on a pro-rata basis by each outstanding share of a class, based on each class'
percentage in the Fund represented by the value of shares of such classes,
except that the Class will not incur any of the expenses under the Fund's 12b-1
Plans and Retirement Income Fund A, B and C Classes alone will bear the 12b-1
Plan fees payable under their respective Plans.
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MANAGEMENT OF THE FUND
Directors
The business and affairs of Equity Funds V, Inc. are managed under the
direction of its Board of Directors. Part B contains additional information
regarding Equity Funds V, Inc.'s directors and officers.
Investment Manager
The Manager furnishes investment management services to the Fund.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On November 30, 1996, the Manager and its affiliates
within the Delaware Group, including Delaware International Advisers Ltd., were
managing in the aggregate more than $32 billion in assets in the various
institutional or separately managed (approximately $20,311,203,919) and
investment company (approximately $11,765,348,126) accounts.
The Manager is an indirect, wholly owned subsidiary of Delaware
Management Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a
wholly owned subsidiary of Lincoln National Corporation ("Lincoln National") was
completed. DMH and the Manager are now indirect, wholly owned subsidiaries, and
subject to the ultimate control, of Lincoln National. Lincoln National, with
headquarters in Fort Wayne, Indiana, is a diversified organization with
operations in many aspects of the financial services industry, including
insurance and investment management.
The Manager manages the Fund's portfolio and makes investment decisions
for the Fund, which are implemented by the Fund's Trading Department. The
Manager also administers Equity Funds V, Inc.'s affairs and pays the salaries of
all the directors, officers and employees of Equity Funds V, Inc. who are
affiliated with the Manager. For these services, the Manager is paid an annual
fee equal to 0.65% on the first $500 million of average daily net assets, 0.625%
on the next $500 million and 0.60% on the average daily net assets in excess of
$1 billion.
Babak Zenouzi oversees the Fund's asset allocation strategy and has
primary responsibility for making day-to-day investment decisions for the Fund's
investments in income generating equity securities. Mr. Zenouzi, a Vice
President/Portfolio Manager of Equity Funds V, Inc., has been a member of the
Fund's management team since its inception. Mr. Zenouzi holds a BS in Finance
and Economics from Babson College in Wellesley, Massachusetts, and an MS in
Finance from Boston College. Prior to joining the Manager in 1992, he was with
The Boston Company where he held the positions of assistant vice president,
senior financial analyst, financial analyst and portfolio accountant.
Gerald T. Nichols has primary responsibility for making day-to-day
investment decisions for the Fund regarding its investments in debt securities.
Mr. Nichols, a Vice President/Senior Portfolio Manager of Equity Funds V, Inc.,
has been a member of the Fund's management team since its inception. Mr. Nichols
is a graduate of the University of Kansas, where he received a BS in Business
Administration and an MS in Finance. Prior to joining the Manager, he was a high
yield credit analyst at Waddell & Reed, Inc. and subsequently the investment
officer for a private merchant banking firm. He is a CFA charterholder.
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Portfolio Trading Practices
The Fund normally will not invest for short-term trading purposes.
However, the Fund may sell securities without regard to the length of time they
have been held. The degree of portfolio activity will affect brokerage costs of
the Fund and may affect taxes payable by the Fund's shareholders. Given the
Fund's investment objective, its annual portfolio turnover rate is not expected
to exceed 100%. A turnover rate of 100% would occur, for example, if all the
investments in the Fund's portfolio at the beginning of the year were replaced
by the end of the year.
The Fund uses its best efforts to obtain the best available price and
most favorable execution for portfolio transactions. Orders may be placed with
brokers or dealers who provide brokerage and research services to the Manager or
to their advisory clients. These services may be used by the Manager in
servicing any of its accounts. Subject to best price and execution, the Fund may
consider a broker/dealer's sales of Fund shares in placing portfolio orders and
may place orders with broker/dealers that have agreed to defray certain Fund
expenses such as custodian fees.
Performance Information
From time to time, the Fund may quote yield or total return performance
of the Class in advertising and other types of literature.
The current yield for the Class will be calculated by dividing the
annualized net investment income earned by the Class during a recent 30-day
period by the net asset value per share on the last day of the period. The yield
formula provides for semi-annual compounding, which assumes that net investment
income is earned and reinvested at a constant rate and annualized at the end of
a six-month period.
Total return will be based on a hypothetical $1,000 investment,
reflecting the reinvestment of all distributions at net asset value. Each
presentation will include the average annual total return for one-, five- and
ten-year or life-of-fund periods, as relevant. The Fund may also advertise
aggregate and average total return information concerning the Class over
additional periods of time.
Yield and net asset value fluctuate and are not guaranteed. Past
performance is not a guarantee of future results.
Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. A confirmation statement will be sent following
all transactions other than those involving a reinvestment of dividends. You
should examine statements and confirmations immediately and promptly report any
discrepancy by calling your Client Services Representative.
Financial Information about the Fund
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. Equity Funds V, Inc.'s fiscal year ends
on November 30.
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Distribution and Service
The Distributor, Delaware Distributors, L.P., serves as the national
distributor of the Fund's shares under a Distribution Agreement with Equity
Funds V, Inc. dated as of November 29, 1996. The Distributor bears all of the
costs of promotion and distribution.
The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Fund under
an amended and restated agreement dated as of November 29, 1996. The Transfer
Agent also provides accounting services to the Fund pursuant to the terms of a
separate Fund Accounting Agreement. The directors annually review service fees
paid to the Transfer Agent. Certain recordkeeping and other shareholder services
that otherwise would be performed by the Transfer Agent may be performed by
certain other entities and the Transfer Agent may elect to enter into an
agreement to pay such other entities for their services. In addition,
participant account maintenance fees may be assessed for certain recordkeeping
services provided as part of retirement plan and administration service
packages. These fees are based on the number of participants in the plan and the
various services selected. Fees will be quoted upon request and are subject to
change.
The Distributor and the Transfer Agent are also indirect, wholly owned
subsidiaries of DMH.
Expenses
The Fund is responsible for all of its own expenses other than those
borne by the Manager under the Investment Management Agreement and those borne
by the Distributor under the Distribution Agreement.
Shares
Equity Funds V, Inc. is an open-end management investment company. The
Fund's portfolio of assets is diversified as defined by the 1940 Act. Commonly
known as a mutual fund, Equity Funds V, Inc. was organized as a Maryland
corporation on January 16, 1987. In addition to the Fund, Equity Funds V, Inc.
presently offers one other series of shares, the Value Fund series.
Equity Funds V, Inc.'s shares have a par value of $.01, equal voting
rights, except as noted below, and are equal in all other respects. Equity Funds
V, Inc.'s shares have noncumulative voting rights which means that the holders
of more than 50% of Equity Funds V, Inc.'s shares voting for the election of
directors can elect 100% of the directors if they choose to do so. Under
Maryland law, Equity Funds V, Inc. is not required, and does not intend, to hold
annual meetings of shareholders unless, under certain circumstances, it is
required to do so under the 1940 Act. Shareholders of 10% or more of Equity
Funds V, Inc.'s outstanding shares may request that a special meeting be called
to consider the removal of a director.
In addition to the Class, the Fund also offers Retirement Income Fund A
Class, Retirement Income Fund B Class and Retirement Income Fund C Class. Shares
of each class represent proportionate interests in the assets of the Fund and
have the same voting and other rights and preferences as the other classes of
the Fund, except that shares of the Class are not subject to, and may not vote
on matters affecting, the Distribution Plans under Rule 12b-1 relating to
Retirement Income Fund A Class, Retirement Income Fund B Class and Retirement
Income Fund C Class.
Lincoln National Corporation Employees' Retirement Trust (the "Trust")
has made an initial investment in the Fund. As a result, as of December 31,
1996, the Trust owns 99% of the
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outstanding shares of the Fund. Subject to certain limited exceptions, there are
no limitations on the Trust's ability to redeem its shares of the Fund and it
may elect to do so at any time.
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OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS
U.S. Government Securities
U.S. Treasury securities are backed by the "full faith and credit" of
the United States. Securities issued or guaranteed by federal agencies and U.S.
government sponsored instrumentalities may or may not be backed by the full
faith and credit of the United States. In the case of securities not backed by
the full faith and credit of the United States, investors in such securities
look principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert a claim against
the United States itself in the event the agency or instrumentality does not
meet its commitment. Agencies which are backed by the full faith and credit of
the United States include the Export-Import Bank, Farmers Home Administration,
Federal Financing Bank, the Federal Housing Administration, the Maritime
Administration, the Small Business Administration, and others. Certain agencies
and instrumentalities, such as the Government National Mortgage Association
("GNMA"), are, in effect, backed by the full faith and credit of the United
States through provisions in their charters that they may make "indefinite and
unlimited" drawings on the Treasury, if needed to service its debt. Debt from
certain other agencies and instrumentalities, including the Federal Home Loan
Bank and Federal National Mortgage Association, are not guaranteed by the United
States, but those institutions are protected by the discretionary authority for
the U.S. Treasury to purchase certain amounts of their securities to assist the
institutions in meeting their debt obligations. Finally, other agencies and
instrumentalities, such as the Farm Credit System, the Tennessee Valley
Authority and the Federal Home Loan Mortgage Corporation, are federally
chartered institutions under U.S. government supervision, but their debt
securities are backed only by the creditworthiness of those institutions, not
the U.S. government.
An instrumentality of a U.S. government agency is a government agency
organized under Federal charter with government supervision. Instrumentalities
issuing or guaranteeing securities include, among others, Federal Home Loan
Banks, the Federal Land Banks, Central Bank for Cooperatives, Federal
Intermediate Credit Banks and the Federal National Mortgage Association.
The maturities of such securities usually range from three months to
thirty years. While such securities are guaranteed as to principal and interest
by the U.S. government or its instrumentalities, their market values may
fluctuate and are not guaranteed, which may, along with the other securities in
the Fund's portfolio, cause the Class' daily net asset value to fluctuate.
Brady Bonds
Among the foreign fixed-income securities in which the Fund may invest
are Brady Bonds. Brady Bonds are debt securities issued under the framework of
the Brady Plan, an initiative announced by former U.S. Treasury Secretary
Nicholas F. Brady in 1989 as a mechanism for debtor nations to restructure their
outstanding external indebtedness (generally commercial bank debt). Brady Bonds
are not direct or indirect obligations of the U.S. government or any of its
agencies or instrumentalities and are not guaranteed by the U.S. government or
any of its agencies or instrumentalities. In so restructuring its external debt,
a debtor nation negotiates with its existing bank lenders, as well as
multilateral institutions such as the World Bank and the International Monetary
Fund, to exchange its commercial bank debt for newly issued bonds (Brady Bonds).
The Manager believes that economic reforms undertaken by countries in connection
with the issuance of Brady Bonds make the debt of countries which have issued or
have announced plans to issue Brady Bonds an attractive opportunity for
investment. Investors, however,
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should recognize that the Brady Plan only sets forth general guiding principles
for economic reform and debt reduction, emphasizing that solutions must be
negotiated on a case-by-case basis between debtor nations and their creditors.
In addition, Brady Bonds have been issued only recently and, accordingly, do not
have a long payment history.
Foreign Government Securities
With respect to investment in debt issues of foreign governments,
including Brady Bonds, the ability of a foreign government or government-related
issuer to make timely and ultimate payments on its external debt obligations
will also be strongly influenced by the issuer's balance of payments, including
export performance, its access to international credits and investments,
fluctuations in interest rates and the extent of its foreign reserves. A country
whose exports are concentrated in a few commodities or whose economy depends on
certain strategic imports could be vulnerable to fluctuations in international
prices of these commodities or imports. If foreign government or
government-related issuers cannot generate sufficient earnings from foreign
trade to service its external debt, they may need to depend on continuing loans
and aid from foreign governments, commercial banks and multilateral
organizations, and inflows of foreign investment. The commitment on the part of
these foreign governments, multilateral organizations and others to make such
disbursements may be conditioned on the government's implementation of economic
reforms and/or economic performance and the timely service of its obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due may curtail the willingness of such
third parties to lend funds, which may further impair the issuer's ability or
willingness to service its debts in a timely manner. The cost of servicing
external debt generally will also be adversely affected by rising international
interest rates because many external debt obligations bear interest at rates
which are adjusted based upon international interest rates. The ability to
service external debt will also depend on the level of the relevant government's
international currency reserves and its access to foreign exchange. Currency
devaluations may affect the ability of a government issuer to obtain sufficient
foreign exchange to service its external debt. If a foreign governmental issuer
defaults on its obligations, the Fund may have limited legal recourse against
the issuer and/or guarantor.
Zero Coupon Bonds and Pay-In-Kind Bonds
Although the Fund does not intend to purchase a substantial amount of
zero coupon bonds or PIK bonds, from time to time, the Fund may acquire zero
coupon bonds and, to a lesser extent, PIK bonds. Zero coupon bonds are debt
obligations which do not entitle the holder to any periodic payments of interest
prior to maturity or a specified date when the securities begin paying current
interest, and therefore are issued and traded at a discount from their face
amounts or par value. PIK bonds pay interest through the issuance to holders of
additional securities. Zero coupon bonds and PIK bonds are generally considered
to be more interest-sensitive than income bearing bonds, to be more speculative
than interest-bearing bonds, and to have certain tax consequences which could,
under certain circumstances, be adverse to the Fund. For example, with zero
coupon bonds, the Fund accrues, and is required to distribute to shareholders,
income on such bonds. However, the Fund may not receive the cash associated with
this income until the bonds are sold or mature. If the Fund did not have
sufficient cash to make the required distribution of accrued income, the Fund
could be required to sell other securities in its portfolio or to borrow to
generate the cash required.
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Borrowings
The Fund may borrow money as a temporary measure for extraordinary
purposes or to facilitate redemptions. The Fund will not borrow money in excess
of one-third of the value of its net assets. The Fund has no intention of
increasing its net income through borrowing. Any borrowing will be done from a
bank and, to the extent that such borrowing exceeds 5% of the value of the
Fund's net assets, asset coverage of at least 300% is required. In the event
that such asset coverage shall at any time fall below 300%, the Fund shall,
within three days thereafter (not including Sundays or holidays, or such longer
period as the Securities and Exchange Commission may prescribe by rules and
regulations), reduce the amount of its borrowings to such an extent that the
asset coverage of such borrowings shall be at least 300%. The Fund will not
pledge more than 10% of its net assets, or issue senior securities as defined in
the 1940 Act, except for notes to banks. Investment securities will not be
purchased while the Fund has an outstanding borrowing.
When-Issued and Delayed Delivery Securities
The Fund may purchase securities on a when-issued or delayed delivery
basis. In such transactions, instruments are purchased with payment and delivery
taking place in the future in order to secure what is considered to be an
advantageous yield or price at the time of the transaction. Delivery of and
payment for these securities may take as long as a month or more after the date
of the purchase commitment. The Fund will maintain with its custodian bank a
separate account with a segregated portfolio of liquid securities in an amount
at least equal to these commitments. The payment obligation and the interest
rates that will be received are each fixed at the time the Fund enters into the
commitment and no interest accrues to the Fund until settlement. Thus, it is
possible that the market value at the time of settlement could be higher or
lower than the purchase price if the general level of interest rates has
changed.
Portfolio Loan Transactions
The Fund may loan up to 25% of its assets to qualified broker/dealers
or institutional investors.
The major risk to which the Fund would be exposed on a loan transaction
is the risk that the borrower would become bankrupt at a time when the value of
the security goes up. Therefore, the Fund will only enter into loan arrangements
after a review of all pertinent facts by the Manager, subject to overall
supervision by the Board of Directors, including the creditworthiness of the
borrowing broker, dealer or institution and then only if the consideration to be
received from such loans would justify the risk. Creditworthiness will be
monitored on an ongoing basis by the Manager.
Rule 144A Securities
The Fund may invest in restricted securities, including privately
placed securities, some of which may be eligible for resale without registration
pursuant to Rule 144A ("Rule 144A Securities") under the Securities Act of 1933.
Rule 144A permits many privately placed and legally restricted securities to be
freely traded among certain institutional buyers such as the Fund. The Fund may
invest no more than 15% of the value of its net assets in illiquid securities.
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While maintaining oversight, the Board of Directors has delegated to
the Manager the day-to-day function of determining whether or not individual
Rule 144A Securities are liquid for purposes of the Fund's 15% limitation on
investments in illiquid securities. The Board has instructed the Manager to
consider the following factors in determining the liquidity of a Rule 144A
Security: (i) the frequency of trades and trading volume for the security; (ii)
whether at least three dealers are willing to purchase or sell the security and
the number of potential purchasers; (iii) whether at least two dealers are
making a market in the security; (iv) the nature of the security and the nature
of the marketplace trades (e.g., the time needed to dispose of the security, the
method of soliciting offers, and the mechanics of transfer).
If the Manager determines that a Rule 144A Security which was
previously determined to be liquid is no longer liquid and, as a result, the
Fund's holdings of illiquid securities exceed the Fund's 15% limit on
investments in such securities, the Manager will determine what action to take
to ensure that the Fund continues to adhere to such limitation.
Investment Company Securities
Any investments that the Fund makes in either closed-end or open-end
investment companies will be limited by the 1940 Act, and would involve an
indirect payment of a portion of the expenses, including advisory fees, of such
other investment companies. Under the 1940 Act's current limitations, the Fund
may not (1) own more than 3% of the voting stock of another investment company;
(2) invest more than 5% of the Fund's total assets in the shares of any one
investment company; nor (3) invest more than 10% of the Fund's total assets in
shares of other investment companies. If the Fund elects to limit its investment
in other investment companies to closed-end investment companies, the 3%
limitation described above is increased to 10%. These percentage limitations
also apply to the Fund's investments in unregistered investment companies.
Repurchase Agreements
In order to invest its short-term cash reserves or when in a temporary
defensive posture, the Fund may enter into repurchase agreements with banks or
broker/dealers deemed to be creditworthy by the Manager, under guidelines
approved by the Board of Directors. A repurchase agreement is a short-term
investment in which the purchaser (i.e. the Fund) acquires ownership of a debt
security and the seller agrees to repurchase the obligation at a future time and
set price, thereby determining the yield during the purchaser's holding period.
Generally, repurchase agreements are of short duration, often less than one week
but on occasion for longer periods. Not more than 15% of the Fund's assets may
be invested in repurchase agreements of over seven days' maturity or other
illiquid assets. Should an issuer of a repurchase agreement fail to repurchase
the underlying security, the loss to the Fund, if any, would be the difference
between the repurchase price and the market value of the security. The Fund will
limit its investments in repurchase agreements to those which the Manager under
guidelines of the Board of Directors determines to present minimal credit risks
and which are of high quality. In addition, the Fund must have collateral of at
least 100% of the repurchase price, including the portion representing the
Fund's yield under such agreements, which is monitored on a daily basis.
Foreign Currency Transactions
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will, however, from time to time, purchase or sell
foreign currencies and/or engage in forward foreign currency transactions in
order to
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expedite settlement of portfolio transactions and to minimize currency value
fluctuations. The Fund may conduct its foreign currency exchange transactions on
a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market or through entering into contracts to purchase or sell foreign
currencies at a future date (i.e., a "forward foreign currency" contract or
"forward" contract). A forward contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract, agreed upon by the parties, at a price set at the
time of the contract. The Fund will convert currency on a spot basis from time
to time, and investors should be aware of the costs of currency conversion.
The Fund may enter into forward contracts to "lock in" the price of a
security it has agreed to purchase or sell, in terms of U.S. dollars or other
currencies in which the transaction will be consummated. By entering into a
forward contract for the purchase or sale, for a fixed amount of U.S. dollars or
foreign currency, of the amount of foreign currency involved in the underlying
security transaction, the Fund will be able to protect itself against a possible
loss resulting from an adverse change in currency exchange rates during the
period between the date the security is purchased or sold and the date on which
payment is made or received.
When the Manager believes that the currency of a particular country may
suffer a significant decline against the U.S. dollar or against another
currency, the Fund may enter into a forward foreign currency contract to sell,
for a fixed amount of U.S. dollars or other appropriate currency, the amount of
foreign currency approximating the value of some or all of the Fund's securities
denominated in such foreign currency.
The Fund will not enter into forward contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of the
value of the Fund's securities or other assets denominated in that currency.
At the maturity of a forward contract, the Fund may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Fund may realize a gain or loss from currency
transactions. With respect to forward foreign currency contracts, the precise
matching of forward contract amounts and the value of the securities involved is
generally not possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and the
date it matures. The projection of short-term currency strategy is highly
uncertain.
It is impossible to forecast the market value of Fund securities at the
expiration of the contract. Accordingly, it may be necessary for the Fund to
purchase additional foreign currency on the spot market (and bear the expense of
such purchase) if the market value of the security is less than the amount of
foreign currency the Fund is obligated to deliver and if a decision is made to
sell the security and make delivery of the foreign currency. Conversely, it may
be necessary to sell on the spot market some of the foreign currency received
upon the sale of a security if its market value exceeds the amount of foreign
currency the Fund is obligated to deliver.
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Options
The Manager may employ options techniques in an attempt to protect
appreciation attained and to increase shareholder return by seeking to take
advantage of the liquidity available in the options market. The Fund may
purchase call options on foreign or U.S. securities and indices and enter into
related closing transactions and the Fund may write covered call options on such
securities. The Fund may also purchase put options on such securities and
indices and enter into related closing transactions.
A call option enables the purchaser, in return for the premium paid, to
purchase securities from the writer of the option at an agreed price up to an
agreed date. A covered call option obligates the writer, in return for the
premium received, to sell the securities subject to the option to the purchaser
of the option for an agreed upon price up to an agreed date. The advantage is
that the purchaser may hedge against an increase in the price of securities it
ultimately wishes to buy or take advantage of a rise in a particular index. The
Fund will only purchase call options to the extent that premiums paid on all
outstanding call options do not exceed 2% of its total assets. The Fund may
write covered call options in an amount not to exceed 10% of its total assets.
A put option enables the purchaser of the option, in return for the
premium paid, to sell the security underlying the option to the writer at the
exercise price during the option period, and the writer of the option has the
obligation to purchase the security from the purchaser of the option. The Fund
will only purchase put options to the extent that the premiums on all
outstanding put options do not exceed 2% of its total assets. The advantage is
that the purchaser can be protected should the market value of the security
decline or should a particular index decline.
An option on a securities index gives the purchaser of the option, in
return for the premium paid, the right to receive from the seller cash equal to
the difference between the closing price of the index and the exercise price of
the option.
Closing transactions essentially let the Fund offset put options or
call options prior to exercise or expiration. If the Fund cannot effect closing
transactions, it may have to hold a security it would otherwise sell or deliver
a security it might want to hold.
In purchasing put and call options, the premium paid by the Fund plus
any transaction costs will reduce any benefit realized by the Fund upon exercise
of the option. With respect to writing covered call options, the Fund may lose
the potential market appreciation of the securities subject to the option, if
the Manager's judgment is wrong and the price of the security moves in the
opposite direction from what was anticipated.
The Fund may use both Exchange-traded and over-the-counter options.
Certain over-the-counter options may be illiquid. The Fund will only invest in
such options to the extent consistent with its 15% limitation on investment in
illiquid securities. The Fund will comply with Securities and Exchange
Commission asset segregation and coverage requirements when engaging in these
types of transactions.
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Futures
Futures contracts are agreements for the purchase or sale for future
delivery of securities. When a futures contract is sold, the Fund incurs a
contractual obligation to deliver the securities underlying the contract at a
specified price on a specified date during a specified future month. A purchase
of a futures contract means the acquisition of a contractual right to obtain
delivery to the Fund of the securities called for by the contract at a specified
price during a specified future month.
While futures contracts provide for the delivery of securities,
deliveries usually do not occur. Contracts are generally terminated by entering
into an offsetting transaction. When the Fund enters into a futures transaction,
it must deliver to the futures commission merchant selected by the Fund an
amount referred to as "initial margin." This amount is maintained by the futures
commission merchant in a segregated account. Thereafter, a "variation margin"
may be paid by the Fund to, or drawn by the Fund from, such account in
accordance with controls set for such account, depending upon changes in the
price of the underlying securities subject to the futures contract.
The Fund may also purchase and write options to buy or sell futures
contracts. Options on futures are similar to options on securities except that
options on futures give the purchaser the right, in return for the premium paid,
to assume a position in a futures contract, rather than actually to purchase or
sell the futures contract, at a specified exercise price at any time during the
period of the option.
The purpose of the purchase or sale of futures contracts with respect
to a certain security is to protect the Fund against the adverse effects of
fluctuations in interest rates without actually buying or selling that security.
Similarly, when it is expected that interest rates may decline, futures
contracts may be purchased to hedge in anticipation of subsequent purchases of
securities at higher prices.
Foreign currency futures contracts operate similarly to futures
contracts related to securities. When the Fund sells a futures contract on a
foreign currency it is obligated to deliver that foreign currency at a specified
future date. Similarly, a purchase by the Fund gives it a contractual right to
receive a foreign currency. This enables the Fund to "lock-in" exchange rates.
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APPENDIX A--RATINGS
The Fund's assets may be invested in securities rated BBB or lower by
S&P or Fitch, Baa or lower by Moody's, in securities similarly rated by another
nationally recognized statistical rating organization, and in unrated securities
that are deemed by the Manager to be comparable in quality to similar rated
securities. Credit ratings evaluate only the safety of principal, interest and
dividends and do not consider the market value risk associated with high-yield
securities.
General Rating Information
Bonds and Convertible Securities
Excerpts from Moody's description of its bond ratings: Aaa--judged to
be the best quality. They carry the smallest degree of investment risk;
Aa--judged to be of high quality by all standards; A--possess favorable
attributes and are considered "upper medium" grade obligations; Baa--considered
as medium grade obligations. Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or may
be characteristically unreliable over any great length of time; Ba--judged to
have speculative elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class; B--generally lack
characteristics of the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any long period
of time may be small; Caa--are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest; Ca--represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings; C--the lowest
rated class of bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Excerpts from S&P's description of its bond ratings: AAA--highest grade
obligations. They possess the ultimate degree of protection as to principal and
interest; AA--also qualify as high grade obligations, and in the majority of
instances differ from AAA issues only in a small degree; A--strong ability to
pay interest and repay principal although more susceptible to changes in
circumstances; BBB--regarded as having an adequate capacity to pay interest and
repay principal; BB, B, CCC, CC--regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions; C--reserved
for income bonds on which no interest is being paid; D--in default, and payment
of interest and/or repayment of principal is in arrears.
Excerpts from Fitch's description of its bond ratings: AAA--Bonds considered to
be investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events; AA--Bonds considered
to be investment grade and of very high credit quality. The obligor's ability to
pay interest and repay principal is very strong, although not quite as strong as
bonds rated AAA. Because bonds rated in the AAA and AA categories are not
significantly vulnerable to foreseeable future developments, short-term debt of
these issuers is generally rated F-1+; A--Bonds considered to be investment
grade and of high credit quality.
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<PAGE>
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings; BBB--Bonds considered to be
investment grade and of satisfactory credit quality. The obligor's ability to
pay interest and repay principal is considered to be adequate. Adverse changes
in economic conditions and circumstances, however, are more likely to have
adverse impact on these bonds, and therefore impair timely payment. The
likelihood that the ratings of these bonds will fall below investment grade is
higher than for bonds with higher ratings; BB--Bonds are considered speculative.
The obligor's ability to pay interest and repay principal may be affected over
time by adverse economic changes. However, business and financial alternatives
can be identified which could assist the obligor in satisfying its debt service
requirements; B--Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue; CCC--Bonds have certain identifiable
characteristics which, if not remedied, may lead to default. The ability to meet
obligations requires an advantageous business and economic environment;
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time; C--Bonds are in imminent default in payment
of interest or principal; and DDD, DD and D--Bonds are in default on interest
and/or principal payments. Such bonds are extremely speculative and should be
valued on the basis of their ultimate recovery value in liquidation or
reorganization of the obligor. "DDD" represents the highest potential for
recovery on these bonds, and "D" represents the lowest potential for recovery.
Plus and minus signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the "AAA" category.
Commercial Paper
Excerpts from Moody's description of its two highest commercial paper
ratings: P-1--the highest grade possessing greatest relative strength;
P-2--second highest grade possessing less relative strength than the highest
grade.
Excerpts from S&P's description of its two highest commercial paper
ratings: A-1--judged to be the highest investment grade category possessing the
highest relative strength; A-2--investment grade category possessing less
relative strength than the highest rating.
Preferred Stock
The following are excerpts from S&P's description of its preferred
stock ratings:
An S&P preferred stock rating is an assessment of the capacity and
willingness of an issuer to pay preferred stock dividends and any applicable
sinking fund obligations. A preferred stock rating differs from a bond rating
inasmuch as it is assigned to an equity issue, which issue is intrinsically
different from, and subordinated to, a debt issue. Therefore, to reflect this
difference, the preferred stock rating symbol will normally not be higher than
the debt rating symbol assigned to, or that would be assigned to, the senior
debt of the same issuer.
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<PAGE>
The preferred stock ratings are based on the following considerations:
1. Likelihood of payment--capacity and willingness of the issuer to
meet the timely payment of preferred stock dividends and any applicable sinking
fund requirements in accordance with the terms of the obligation.
2. Nature of, and provisions of, the issue.
3. Relative position of the issue in the event of bankruptcy,
reorganization, or other arrangements affecting creditors' rights.
AAA This is the highest rating that may be assigned by S&P to a preferred
stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations.
AA A preferred stock issue rated "AA" also qualifies as a high-quality
fixed-income security. The capacity to pay preferred stock obligations
is very strong, although not as overwhelming as for issues rated "AAA."
A An issue rated "A" is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions.
BBB An issue rated "BBB" is regarded as backed by an adequate capacity to
pay the preferred stock obligations. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to make
payments for a preferred stock in this category than for issues in the
"A" category.
BB, B, Preferred stocks rated "BB," "B" and "CCC" are regarded, on balance,
CCC as predominantly speculative with respect to the issuer's capacity
to pay preferred stock obligations. "BB" indicates the lowest degree of
speculation and "CCC" the highest degree of speculation. While such
issues will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to
adverse conditions.
CC The rating "CC" is reserved for a preferred stock issue in arrears on
dividends or sinking fund payments but that is currently paying.
C A preferred stock rated "C" is a non-paying issue.
D A preferred stock rated "D" is a non-paying issue with the issuer in
default on debt instruments.
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<PAGE>
NR indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligations as a matter of policy.
Plus (+) or Minus (-) To provide more detailed indications of preferred
stock quality, the ratings from "AA" to "CCC" may be modified by the addition of
a plus or minus sign to show relative standing within the major rating
categories.
The following are excerpts from Moody's description of its preferred
stock ratings:
"aaa" An issue which is rated "aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the
least risk of dividend impairment within the universe of preferred
stocks.
"aa" An issue which is rated "aa" is considered a high-grade preferred stock.
This rating indicates that there is a reasonable assurance the earnings
and asset protection will remain relatively well-maintained in the
foreseeable future.
"a" An issue which is rated "a" is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in
the "aaa" and "aa" classification, earnings and asset protection are,
nevertheless, expected to be maintained at adequate levels.
"baa" An issue which is rated "baa" is considered to be a medium-grade
preferred stock, neither high protected nor poorly secured. Earnings and
asset protection appear adequate at present but may be questionable over
any great length of time.
"ba" An issue which is rated "ba" is considered to have speculative elements
and its future cannot be considered well assured. Earnings and asset
protection may be very moderate and not well safeguarded during adverse
periods. Uncertainty of position characterizes preferred stocks in this
class.
"b" An issue which is rated "b" generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of
other terms of the issue over any long period of time may be small.
"caa" An issue which is rated "caa" is likely to be in arrears on dividends
payments. This rating designation does not purport to indicate the
future status of payments.
"ca" An issue which is rated "ca" is speculative in a high degree and is
likely to be in arrears on dividends with little likelihood of eventual
payments.
"c" This is the lowest rated class of preferred or preference stock. Issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies numerical modifiers 1, 2, and 3 in each rating
classification; the modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a
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<PAGE>
mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category.
<PAGE>
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PART B--STATEMENT OF ADDITIONAL INFORMATION
JANUARY 29, 1997
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DELAWARE GROUP EQUITY FUNDS V, INC.
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1818 Market Street
Philadelphia, PA 19103
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For more information about Value Fund Institutional Class and
Retirement Income Fund Institutional Class: 800-828-5052
For Prospectus and Performance of Value Fund A Class,
Value Fund B Class, Value Fund C Class,
Retirement Income Fund A Class,
Retirement Income Fund B Class and
Retirement Income Fund C Class: Nationwide 800-523-4640
Information on Existing Accounts of Value Fund A Class,
Value Fund B Class, Value Fund C Class,
Retirement Income Fund A Class,
Retirement Income Fund B Class and
Retirement Income Fund C Class:
(SHAREHOLDERS ONLY) Nationwide 800-523-1918
Dealer Services: (BROKER/DEALERS ONLY) Nationwide 800-362-7500
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TABLE OF CONTENTS
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Cover Page
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Investment Policies and Portfolio Techniques
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Accounting and Tax Issues
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Performance Information
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Trading Practices and Brokerage
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Purchasing Shares
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Investment Plans
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Determining Offering Price and
Net Asset Value
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Redemption and Repurchase
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Distributions and Taxes
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Investment Management Agreements
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Officers and Directors
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Exchange Privilege
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General Information
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Appendix A--IRA Information
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Appendix B--The Company Life Cycle
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Financial Statements
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<PAGE>
Delaware Group Equity Funds V, Inc. ("Equity Funds V, Inc.") (formerly
Delaware Group Value Fund, Inc.) is a professionally-managed mutual fund of the
series type which currently offers two series of portfolios: the Value Fund
series ("Value Fund") and the Retirement Income Fund series ("Retirement Income
Fund") (individually a "Fund", and collectively, the "Funds").
Each Fund of Equity Funds V, Inc. offers three retail classes: Value
Fund A Class and Retirement Income Fund A Class (the "Class A Shares"); Value
Fund B Class and Retirement Income Fund B Class (the "Class B Shares"); and
Value Fund C Class and Retirement Income Fund C Class (the "Class C Shares").
Class A Shares, Class B Shares and Class C Shares are collectively referred to
as the "Fund Classes." Each Fund also offers an institutional class: Value Fund
Institutional Class and Retirement Income Fund Institutional Class (the
"Institutional Classes"). Each class is individually referred to as a "Class"
and collectively referred to as "Classes."
Class B Shares, Class C Shares and Institutional Class shares of a Fund
may be purchased at a price equal to the next determined net asset value per
share. Class A Shares may be purchased at the public offering price, which is
equal to the next determined net asset value per share, plus a front-end sales
charge. Class A Shares are subject to a maximum front-end sales charge of 4.75%
and, absent any applicable fee waiver, annual Rule 12b-1 Plan ("12b-1 Plan")
expenses of up to 0.30%. Class B Shares are subject to a contingent deferred
sales charge ("CDSC") which may be imposed on redemptions made within six years
of purchase and, absent any applicable fee waiver, annual 12b-1 Plan expenses of
up to 1%, which are assessed against Class B Shares for approximately eight
years after purchase. See Automatic Conversion of Class B Shares under Classes
of Shares in the Fund Classes' Prospectuses. Class C Shares are subject to a
CDSC which may be imposed on redemptions made within 12 months of purchase and,
absent any applicable fee waiver, annual 12b-1 Plan expenses of up to 1%, which
are assessed against the Class C Shares for the life of the investment.
Retirement Income Fund will not pay a 12b-1 fee with respect to any Class until
May 31, 1997.
This Statement of Additional Information ("Part B" of the registration
statement) supplements the information contained in the current Prospectuses for
the Fund Classes dated January 29, 1997 and the current Prospectuses for the
Institutional Classes dated November 29, 1997, as they may be amended from time
to time. Part B should be read in conjunction with the respective Class'
Prospectus. Part B is not itself a prospectus but is, in its entirety,
incorporated by reference into each Class' Prospectus. A prospectus relating to
the Fund Classes and a prospectus relating to the Institutional Classes may be
obtained by writing or calling your investment dealer or by contacting the
Fund's national distributor, Delaware Distributors, L.P. (the "Distributor"),
1818 Market Street, Philadelphia, PA 19103.
All references to "shares" in this Part B refer to all Classes of
shares of Equity Funds V, Inc., except where noted.
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<PAGE>
INVESTMENT POLICIES AND PORTFOLIO TECHNIQUES
Investment Restrictions--Value Fund has adopted the following
restrictions which, along with its investment objective, cannot be changed
without approval by the holders of a "majority" of the Fund's outstanding
shares, which is a vote by the holders of the lesser of a) 67% or more of the
voting securities of the Fund present in person or by proxy at a meeting, if the
holders of more than 50% of the outstanding voting securities are present or
represented by proxy or b) more than 50% of the outstanding voting securities of
the Fund. The percentage limitations contained in the restrictions and policies
set forth herein apply at the time of purchase of securities.
The Value Fund shall not:
1. Invest more than 5% of the market or other fair value of its assets
in the securities of any one issuer (other than obligations of, or guaranteed
by, the U.S. government, its agencies or instrumentalities).
2. Invest in securities of other investment companies except as part of
a merger, consolidation or other acquisition.
3. Make loans, except to the extent that purchases of debt obligations
(including repurchase agreements), in accordance with the Fund's investment
objective and policies, are considered loans and except that the Fund may loan
up to 25% of its assets to qualified broker/dealers or institutional investors
for their use relating to short sales or other security transactions.
4. Purchase or sell real estate but this shall not prevent the Fund
from investing in securities secured by real estate or interests therein.
5. Purchase more than 10% of the outstanding voting and nonvoting
securities of any issuer, or invest in companies for the purpose of exercising
control or management.
6. Engage in the underwriting of securities of other issuers, except
that in connection with the disposition of a security, the Fund may be deemed to
be an "underwriter" as that term is defined in the Securities Act of 1933.
7. Make any investment which would cause more than 25% of the market or
other fair value of its total assets to be invested in the securities of issuers
all of which conduct their principal business activities in the same industry.
This restriction does not apply to obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
8. Write or purchase puts, calls or combinations thereof, except that
the Fund may write covered call options with respect to any or all parts of its
portfolio securities and purchase put options if the Fund owns the security
covered by the put option at the time of purchase, and that premiums paid on all
put options outstanding do not exceed 2% of its total assets. The Fund may sell
put options previously purchased and enter into closing transactions with
respect to covered call and put options. In addition, the Fund may write call
options and purchase put options on stock indices and enter into closing
transactions with respect to such options.
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<PAGE>
9. Purchase securities on margin, make short sales of securities or
maintain a net short position.
10. Invest more than 5% of the value of its total assets in securities
of companies less than three years old. Such three-year period shall include the
operation of any predecessor company or companies.
11. Invest in warrants valued at lower of cost or market exceeding 5%
of the Fund's net assets. Included in that amount, but not to exceed 2% of the
Fund's net assets, may be warrants not listed on the New York Stock Exchange or
American Stock Exchange.
12. Purchase or retain the securities of any issuer which has an
officer, director or security holder who is a director or officer of the Fund or
of its investment manager if or so long as the directors and officers of the
Fund and of its investment manager together own beneficially more than 5% of any
class of securities of such issuer.
13. Invest in interests in oil, gas or other mineral exploration or
development programs.
14. Invest more than 10% of the Fund's net assets in repurchase
agreements maturing in more than seven days and other illiquid assets.
15. Borrow money in excess of one-third of the value of its net assets
and then only as a temporary measure for extraordinary purposes or to facilitate
redemptions. The Fund has no intention of increasing its net income through
borrowing. Any borrowing will be done from a bank and to the extent that such
borrowing exceeds 5% of the value of the Fund's net assets, asset coverage of at
least 300% is required. In the event that such asset coverage shall at any time
fall below 300%, the Fund shall, within three days thereafter (not including
Sunday or holidays) or such longer period as the Securities and Exchange
Commission may prescribe by rules and regulations, reduce the amount of its
borrowings to such an extent that the asset coverage of such borrowings shall be
at least 300%. The Fund will not pledge more than 10% of its net assets. The
Fund will not issue senior securities as defined in the Investment Company Act
of 1940 (the "1940 Act"), except for notes to banks. Investment securities will
not normally be purchased while the Fund has an outstanding borrowing.
Value Fund has a policy, which may not be changed without shareholder
approval, that it will not invest in commodities; however, the Fund reserves the
right to invest in financial futures and options thereon, including stock index
futures, to the extent these instruments are considered commodities.
In addition, although not a fundamental investment restriction, Value
Fund currently does not invest its assets in real estate limited partnerships.
Retirement Income Fund has adopted the following restrictions which
cannot be changed without approval by the holders of a "majority" of the Fund's
outstanding shares, which is a vote by the holders of the lesser of a) 67% or
more of the voting securities of the Fund present in person or by proxy at a
meeting, if the holders of more than 50% of the outstanding voting securities
are present or represented by proxy or b) more than 50% of the outstanding
voting securities of the Fund. The percentage limitations contained in the
restrictions and policies set forth herein apply at the time of purchase of
securities.
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<PAGE>
Retirement Income Fund shall not:
1. With respect to 75% of its total assets, invest more than 5% of the
value of its assets in securities of any one issuer (except obligations issued,
or guaranteed by, the U.S. government, its agencies or instrumentalities or
certificates of deposit for any such securities, and cash and cash items) or
purchase more than 10% of the outstanding voting securities of any one company.
2. Invest in securities of other investment companies, except that the
Fund may invest in securities of open-end, closed-end and unregistered
investment companies, in accordance with the limitations contained in the 1940
Act.
3. Make loans, except to the extent that purchases of debt obligations
(including repurchase agreements), in accordance with the Fund's investment
objectives and policies, are considered loans and except that the Fund may loan
up to 25% of its assets to qualified broker/dealers or institutional investors
for their use relating to short sales or other security transactions.
4. Purchase or sell real estate. This restriction shall not preclude
the Fund's purchase of securities issued by real estate investment trusts, the
purchase of securities issued by companies that deal in real estate, or the
investment in securities secured by real estate or interests therein.
5. Invest in companies for the purpose of exercising control or
management.
6. Engage in the underwriting of securities of other issuers, except
that the Fund may acquire restricted or not readily marketable securities under
circumstances where, if such securities are sold, the Fund might be deemed to be
an underwriter for purposes of the Securities Act of 1933 ("1933 Act").
7. Make any investment which would cause more than 25% of the market
or other fair value of its total assets to be invested in securities of issuers
all of which conduct their principal business activities in the same industry.
This restriction does not apply to obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
8. Buy or sell commodities or commodity contracts, except that the
Fund may invest in financial futures and options thereon, including stock index
futures, to the extent these instruments are considered commodities.
9. Invest in interests in oil, gas or other mineral exploration or
development programs.
10. Purchase securities on margin, except that the Fund may satisfy
margin requirements with respect to futures transactions.
11. Borrow money in excess of one-third of the value of its net assets
and then only as a temporary measure for extraordinary purposes or to facilitate
redemptions. The Fund has no intention of increasing its net income through
borrowing. Any borrowing will be done from a bank and to the extent that such
borrowing exceeds 5% of the value of the Fund's net assets, asset coverage of at
least 300% is required. In the event that such asset coverage shall at any time
fall below 300%, the Fund shall, within three days thereafter (not including
Sunday or holidays) or such longer period as the Securities and Exchange
Commission may prescribe
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<PAGE>
by rules and regulations, reduce the amount of its borrowings to such an extent
that the asset coverage of such borrowings shall be at least 300%. The Fund
shall not issue senior securities as defined by the 1940 Act, except for notes
to banks. Investment securities will not normally be purchased while the Fund
has an outstanding borrowing.
In addition to the above fundamental investment restrictions,
Retirement Income Fund has the following investment restrictions which may be
amended or changed without approval of shareholders.
1. Retirement Income Fund will not purchase or retain securities of a
company which has an officer or director who is an officer or director of Equity
Funds V, Inc., or an officer, director or partner of Delaware Management
Company, Inc. (the "Manager") if, to the knowledge of the Fund, one or more of
such persons beneficially owns more than 1/2 of 1% of the shares of the company,
and in the aggregate more than 5% thereof.
2. Other than securities of real estate investment trusts, Retirement
Income Fund will not invest in the securities of companies which have a record
of less than three years' continuous operation, including any predecessor
company or companies, if such investment at the time of purchase would cause
more than 5% of the Fund's total assets to be invested in the securities of such
company or companies.
Investment Policies--The application of each Fund's investment policy
will be dependent upon the judgment of the Manager. In accordance with the
judgment of the Manager, the proportions of a Fund's assets invested in
particular industries will vary from time to time. The securities in which each
Fund invests may or may not be listed on a national stock exchange, but if they
are not so listed, they will generally have an established over-the-counter
market.
In addition, from time to time, the Funds may also engage in the
following investment techniques:
Repurchase Agreements
A repurchase agreement is a short-term investment by which the
purchaser acquires ownership of a debt security and the seller agrees to
repurchase the obligation at a future time and set price, thereby determining
the yield during the purchaser's holding period. Should an issuer of a
repurchase agreement fail to repurchase the underlying security, the loss to the
Funds, if any, would be the difference between the repurchase price and the
market value of the security. Each Fund will limit its investments in repurchase
agreements to those which the Manager, under the guidelines of the Board of
Directors, determines to present minimal credit risks and which are of high
quality. In addition, each Fund must have collateral of at least 100% of the
repurchase price, including the portion representing such Fund's yield under
such agreements which is monitored on a daily basis. While the Funds are
permitted to do so, they normally do not invest in repurchase agreements, except
to invest cash balances.
The funds in the Delaware Group have obtained an exemption from the
joint-transaction prohibitions of Section 17(d) of the 1940 Act to allow the
Delaware Group funds jointly to invest cash balances. The Funds may invest cash
balances in a joint repurchase agreement in accordance with the terms of the
Order and subject generally to the conditions described below.
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<PAGE>
Portfolio Loan Transactions
Each Fund may loan up to 25% of its assets to qualified broker/dealers
or institutional investors for their use relating to short sales or other
security transactions.
It is the understanding of the Manager that the staff of the Securities
and Exchange Commission permits portfolio lending by registered investment
companies if certain conditions are met. These conditions are as follows: 1)
each transaction must have 100% collateral in the form of cash, short-term U.S.
government securities, or irrevocable letters of credit payable by banks
acceptable to a Fund from the borrower; 2) this collateral must be valued daily
and should the market value of the loaned securities increase, the borrower must
furnish additional collateral to the Fund; 3) the Fund must be able to terminate
the loan after notice, at any time; 4) the Fund must receive reasonable interest
on any loan, and any dividends, interest or other distributions on the lent
securities, and any increase in the market value of such securities; 5) the Fund
may pay reasonable custodian fees in connection with the loan; and 6) the voting
rights on the lent securities may pass to the borrower; however, if the
directors of Equity Funds V, Inc. know that a material event will occur
affecting a loan, they must either terminate the loan in order to vote the proxy
or enter into an alternative arrangement with the borrower to enable the
directors to vote the proxy.
The major risk to which a Fund would be exposed on a loan transaction
is the risk that a borrower would go bankrupt at a time when the value of the
security goes up. Therefore, each Fund will only enter into loan arrangements
after a review of all pertinent facts by the Manager, under the supervision of
the Board of Directors, including the creditworthiness of the borrowing broker,
dealer or institution and then only if the consideration to be received from
such loans would justify the risk. Creditworthiness will be monitored on an
ongoing basis by the Manager.
Non-Traditional Equity Securities
Retirement Income Fund may invest in convertible preferred stocks that
offer enhanced yield features, such as Preferred Equity Redemption Cumulative
Stock ("PERCS"), which provide an investor, such as the Fund, with the
opportunity to earn higher dividend income than is available on a company's
common stock. A PERCS is a preferred stock which generally features a mandatory
conversion date, as well as a capital appreciation limit which is usually
expressed in terms of a stated price. Upon the conversion date, most PERCS
convert into common stock of the issuer (PERCS are generally not convertible
into cash at maturity). Under a typical arrangement, if after a predetermined
number of years the issuer's common stock is trading at a price below that set
by the capital appreciation limit, each PERCS would convert to one share of
common stock. If, however, the issuer's common stock is trading at a price above
that set by the capital appreciation limit, the holder of the PERCS would
receive less than one full share of common stock. The amount of that fractional
share of common stock received by the PERCS holder is determined by dividing the
price set by the capital appreciation limit of the PERCS by the market price of
the issuer's common stock. PERCS can be called at any time prior to maturity,
and hence do not provide call protection. However, if called early, the issuer
may pay a call premium over the market price to the investor. This call premium
declines at a preset rate daily, up to the maturity date of the PERCS.
Retirement Income Fund may also invest in other enhanced convertible
securities. These include but are not limited to ACES (Automatically Convertible
Equity Securities), PEPS (Participating Equity Preferred Stock), PRIDES
(Preferred Redeemable Increased Dividend Equity Securities), SAILS (Stock
Appreciation Income Linked Securities), TECONS (Term Convertible Notes), QICS
(Quarterly Income
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Cumulative Securities) and DECS (Dividend Enhanced Convertible Securities).
ACES, PEPS, PRIDES, SAILS, TECONS, QICS, and DECS all have the following
features: they are company-issued convertible preferred stock; unlike PERCS,
they do not have capital appreciation limits; they seek to provide the investor
with high current income, with some prospect of future capital appreciation;
they are typically issued with three to four-year maturities; they typically
have some built-in call protection for the first two to three years; investors
have the right to convert them into shares of common stock at a preset
conversion ratio or hold them until maturity; and upon maturity, they will
automatically convert to either cash or a specified number of shares of common
stock.
* * *
Restricted Securities
Each Fund may invest in restricted securities, including unregistered
securities eligible for resale without registration pursuant to Rule 144A ("Rule
144A Securities") under the 1933 Act. Rule 144A Securities may be freely traded
among qualified institutional investors without registration under the 1933 Act.
All of the Funds' option activities will be engaged in a manner that is
consistent with the Securities and Exchange Commission's position concerning
segregation of assets with a Fund's custodian bank.
Investing in Rule 144A Securities could have the effect of increasing
the level of a Fund's illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities. After
the purchase of a Rule 144A Security, however, the Board of Directors and the
Manager will continue to monitor the liquidity of that security to ensure that
Value Fund has no more than 10% and Retirement Income Fund has no more than 15%
of their respective net assets invested in illiquid securities.
Options
Value Fund may write call options and purchase put options on a covered
basis only, and will not engage in option writing strategies for speculative
purposes. Retirement Income Fund may purchase call and put options and write
call options on a covered basis only. The Funds will not engage in option
strategies for speculative purposes.
A. Covered Call Writing--Value Fund may write covered call options from
time to time on such portion of its portfolio, without limit, as the Manager
determines is appropriate in seeking to obtain that Fund's investment objective.
Retirement Income Fund may write covered call options in an amount not to exceed
10% of its total assets. A call option gives the purchaser of such option the
right to buy, and the writer, in this case a Fund, has the obligation to sell
the underlying security at the exercise price during the option period. The
advantage to a Fund of writing covered calls is that the Fund receives
additional income, in the form of a premium, which may offset any capital loss
or decline in market value of the security. However, if the security rises in
value, a Fund may not fully participate in the market appreciation.
During the option period, a covered call option writer may be assigned
an exercise notice by the broker/dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing purchase
transaction. A closing purchase transaction cannot be effected with respect to
an option once the option writer has received an exercise notice for such
option.
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With respect to both options on actual portfolio securities owned by
the Funds and options on stock indices, the Funds may enter into closing
purchase transactions. A closing purchase transaction is one in which a Fund,
when obligated as a writer of an option, terminates its obligation by purchasing
an option of the same series as the option previously written.
Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option, to prevent an underlying security from
being called, to permit the sale of the underlying security or to enable a Fund
to write another call option on the underlying security with either a different
exercise price or expiration date or both. A Fund may realize a net gain or loss
from a closing purchase transaction depending upon whether the net amount of the
original premium received on the call option is more or less than the cost of
effecting the closing purchase transaction. Any loss incurred in a closing
purchase transaction may be partially or entirely offset by the premium received
from a sale of a different call option on the same underlying security. Such a
loss may also be wholly or partially offset by unrealized appreciation in the
market value of the underlying security. Conversely, a gain resulting from a
closing purchase transaction could be offset in whole or in part by a decline in
the market value of the underlying security.
If a call option expires unexercised, a Fund will realize a short-term
capital gain in the amount of the premium on the option, less the commission
paid. Such a gain, however, may be offset by depreciation in the market value of
the underlying security during the option period. If a call option is exercised,
a Fund will realize a gain or loss from the sale of the underlying security
equal to the difference between the cost of the underlying security, and the
proceeds of the sale of the security plus the amount of the premium on the
option, less the commission paid.
The market value of a call option generally reflects the market price
of an underlying security. Other principal factors affecting market value
include supply and demand, interest rates, the price volatility of the
underlying security and the time remaining until the expiration date.
A Fund will write call options only on a covered basis, which means
that the Fund will own the underlying security subject to a call option at all
times during the option period or securities convertible or exchangeable into
the securities subject to the call option at no additional consideration or a
Fund owns a call option on the relevant securities with an exercise price no
higher than the exercise price on the call option written or subject to any
regulatory restrictions, an amount of cash or liquid high grade debt obligations
at least equal to the current underlying securities. Unless a closing purchase
transaction is effected, a Fund would be required to continue to hold a security
which it might otherwise wish to sell, or deliver a security it would want to
hold. Options written by a Fund will normally have expiration dates between one
and nine months from the date written. The exercise price of a call option may
be below, equal to or above the current market value of the underlying security
at the time the option is written.
B. Purchasing Call Options--Retirement Income Fund may purchase call
options in an amount not to exceed 2% of its total assets. When Retirement
Income Fund purchases a call option, in return for a premium paid by the Fund to
the writer of the option, the Fund obtains the right to buy the security
underlying the option at a specified exercise price at any time during the term
of the option. The advantage of purchasing call options is that the Fund may
alter its portfolio's characteristics and modify portfolio maturities without
incurring the cost associated with portfolio transactions.
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Retirement Income Fund may, following the purchase of a call option,
liquidate its position by effecting a closing sale transaction. This is
accomplished by selling an option of the same series as the option previously
purchased. The Fund will realize a profit from a closing sale transaction if the
price received on the transaction is more than the premium paid to purchase the
original call option; the Fund will realize a loss from a closing sale
transaction if the price received on the transaction is less than the premium
paid to purchase the original call option. There is no assurance, however, that
a liquid secondary market on an exchange will exist for any particular option,
or at any particular time, and for some options no secondary market on an
exchange may exist. In such event, it may not be possible to effect closing
transactions in particular options, with the result that the Fund would have to
exercise its options in order to realize any profit and would incur brokerage
commissions upon the exercise of such options and upon the subsequent
disposition of the underlying securities acquired through the exercise of such
options. Further, unless the price of the underlying security changes
sufficiently, a call option purchased by the Fund may expire without any value
to the Fund.
C. Purchasing Put Options--Each Fund may invest up to 2% of its total
assets in the purchase of put options. The Funds will, at all times during which
they hold a put option, own the security covered by such option.
The Funds intend to purchase put options in order to protect against a
decline in the market value of the underlying security below the exercise price
less the premium paid for the option ("protective puts"). The ability to
purchase put options will allow the Funds to protect an unrealized gain in an
appreciated security in their portfolios without actually selling the security.
If the security does not drop in value, the Funds will lose the value of the
premium paid. Each Fund may sell a put option which it has previously purchased
prior to the sale of the securities underlying such option. Such sales will
result in a net gain or loss depending on whether the amount received on the
sale is more or less than the premium and other transaction costs paid on the
put option which is sold.
The Funds may enter into closing sale transactions. A closing sale
transaction is one in which a Fund, when it is the holder of an outstanding
option, liquidates its position by selling an option of the same series as the
option previously purchased.
Options on Stock Indices
A stock index assigns relative values to the common stocks included in
the index with the index fluctuating with changes in the market values of the
underlying common stock.
Options on stock indices are similar to options on stocks but have
different delivery requirements. Stock options provide the right to take or make
delivery of the underlying stock at a specified price. A stock index option
gives the holder the right to receive a cash "exercise settlement amount" equal
to (i) the amount by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing value of
the underlying index on the date of exercise, multiplied by (ii) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the stock index upon which the option is based being greater than (in the case
of a call) or less than (in the case of a put) the exercise price of the option.
The amount of cash received will be equal to such difference between the closing
price of the index and exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. Gain or loss to a Fund on
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transactions in stock index options will depend on price movements in the stock
market generally (or in a particular industry or segment of the market) rather
than price movements of individual securities.
As with stock options, the Funds may offset their positions in stock
index options prior to expiration by entering into closing transactions, on an
Exchange or they may let the options expire unexercised.
A stock index fluctuates with changes in the market values of the stock
so included. Some stock index options are based on a broad market index such as
the Standard & Poor's 500 ("S&P 500") or the New York Stock Exchange Composite
Index, or a narrower market index such as the Standard & Poor's 100 ("S&P 100").
Indices are also based on an industry or market segment such as the AMEX Oil and
Gas Index or the Computer and Business Equipment Index. Options on stock indices
are currently traded on the following Exchanges among others: The Chicago Board
Options Exchange, New York Stock Exchange and American Stock Exchange.
The effectiveness of purchasing or writing stock index options as a
hedging technique will depend upon the extent to which price movements in a
Fund's portfolio correlate with price movements of the stock index selected.
Because the value of an index option depends upon movements in the level of the
index rather than the price of a particular stock, whether a Fund will realize a
gain or loss from the purchase or writing of options on an index depends upon
movements in the level of stock prices in the stock market generally or, in the
case of certain indices, in an industry or market segment, rather than movements
in the price of a particular stock. Since each Fund's portfolio will not
duplicate the components of an index, the correlation will not be exact.
Consequently, a Fund bears the risk that the prices of the securities being
hedged will not move in the same amount as the hedging instrument. It is also
possible that there may be a negative correlation between the index or other
securities underlying the hedging instrument and the hedged securities which
would result in a loss on both such securities and the hedging instrument.
Accordingly, successful use by the Funds of options on stock indices will be
subject to the Manager's ability to predict correctly movements in the direction
of the stock market generally or of a particular industry. This requires
different skills and techniques than predicting changes in the price of
individual stocks.
Positions in stock index options may be closed out only on an Exchange
which provides a secondary market. There can be no assurance that a liquid
secondary market will exist for any particular stock index option. Thus, it may
not be possible to close such an option. The inability to close options
positions could have an adverse impact on a Fund's ability to effectively hedge
its securities. Each Fund will enter into an option position only if there
appears to be a liquid secondary market for such options.
The Funds will not engage in transactions in options on stock indices
for speculative purposes but only to protect appreciation attained, to offset
capital losses and to take advantage of the liquidity available in the option
markets.
Foreign Securities
Each Fund may invest in securities of foreign companies. However, Value
Fund will not invest more than 25% of the value of its total assets, at the time
of purchase, in foreign securities (other than securities of Canadian issuers
registered under the Securities Exchange Act of 1934 or American Depositary
Receipts, on which there are no such limits). Retirement Income Fund may, in
addition to investing in
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securities of foreign companies, invest in foreign government securities. No
more than 20% of the value of Retirement Income Fund's total assets, at the time
of purchase, will be invested in foreign securities (other than securities of
Canadian issuers registered under the Securities Exchange Act of 1934 or
American Depositary Receipts, on which there are no such limits).
There has been in the past, and there may be again in the future, an
interest equalization tax levied by the United States in connection with the
purchase of foreign securities such as those purchased by the Funds. Payment of
such interest equalization tax, if imposed, would reduce a Fund's rate of return
on its investment. Dividends paid by foreign issuers may be subject to
withholding and other foreign taxes which may decrease the net return on such
investments as compared to dividends paid to the Funds by United States
corporations.
Investors should recognize that investing in foreign corporations
involves certain considerations, including those set forth below, which are not
typically associated with investing in United States corporations. Foreign
corporations are not generally subject to uniform accounting, auditing and
financial standards and requirements comparable to those applicable to United
States corporations. There may also be less supervision and regulation of
foreign stock exchanges, brokers and listed corporations than exist in the
United States. The Funds may be affected either unfavorably or favorably by
fluctuations in the relative rates of exchange as between the currencies of
different nations and control regulations. Furthermore, there may be the
possibility of expropriation or confiscatory taxation, political, economic or
social instability or diplomatic developments which could affect assets of the
Funds held in foreign countries.
The Funds will, from time to time, conduct foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or through entering into contracts to purchase
or sell foreign currencies at a future date (i.e., a "forward foreign currency"
contract or "forward" contract). Investors should be aware that there are costs
and risks associated with such currency transactions. The Funds may enter into
forward contracts to "lock in" the price of a security it has agreed to purchase
or sell, in terms of U.S. dollars or other currencies in which the transaction
will be consummated. When the Manager believes that the currency of a particular
foreign country may suffer a decline against the U.S. dollar or against another
currency, a Fund may enter into a forward contract to sell, for a fixed amount
of U.S. dollars or other appropriate currency, the amount of foreign currency
approximating the value of some or all of that Fund's securities denominated in
such foreign currency. It is impossible to predict precisely the market value of
portfolio securities at the expiration of the forward contract. Accordingly, it
may be necessary for a Fund to purchase or sell additional foreign currency on
the spot market (and bear the expense of such purchase or sale) if the market
value of the security is less than or greater than the amount of foreign
currency the Fund is obligated to deliver.
The Funds may incur gains or losses from currency transactions. No type
of foreign currency transaction will eliminate fluctuations in the prices of the
Funds' foreign securities or will prevent loss if the prices of such securities
should decline.
Each Fund's Custodian for its foreign securities is The Chase Manhattan
Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245.
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Futures and Options on Futures
Retirement Income Fund may enter into contracts for the purchase or
sale for future delivery of securities. While futures contracts provide for the
delivery of securities, deliveries usually do not occur. Contracts are generally
terminated by entering into an offsetting transaction. When Retirement Income
Fund enters into a futures transaction, it must deliver to the futures
commission merchant selected by the Fund an amount referred to as "initial
margin." This amount is maintained by the futures commission merchant in an
account at the Fund's Custodian Bank. Thereafter, a "variation margin" may be
paid by the Fund to, or drawn by the Fund from, such account in accordance with
controls set for such account, depending upon changes in the price of the
underlying securities subject to the futures contract.
Retirement Income Fund may enter into such futures contracts to protect
against the adverse effects of fluctuations in interest rates without actually
buying or selling securities. For example, if interest rates are expected to
increase, the Fund might enter into futures contracts for the sale of debt
securities. Such a sale would have much the same effect as selling an equivalent
value of the debt securities owned by the Fund. If interest rates did increase,
the value of the debt securities in the portfolio would decline, but the value
of the futures contracts to the Fund would increase at approximately the same
rate, thereby keeping the net asset value of the Fund from declining as much as
it otherwise would have. Similarly, when it is expected that interest rates may
decline, futures contracts may be purchased to hedge in anticipation of
subsequent purchases of securities at higher prices. Because the fluctuations in
the value of futures contracts should be similar to those of debt securities,
the Fund could take advantage of the anticipated rise in value of debt
securities without actually buying them until the market had stabilized. At that
time, the futures contracts could be liquidated and the Fund could then buy debt
securities on the cash market.
With respect to options on futures contracts, when the Fund is not
fully invested, it may purchase a call option on a futures contract to hedge
against a market advance due to declining interest rates. The purchase of a call
option on a futures contract is similar in some respects to the purchase of a
call option on an individual security. Depending on the pricing of the option
compared to either the price of the futures contract upon which it is based, or
the price of the underlying debt securities, it may or may not be less risky
than ownership of the futures contract or underlying debt securities.
The writing of a call option on a futures contract constitutes a
partial hedge against the declining price of the security which is deliverable
upon exercise of the futures contract. If the futures price at the expiration of
the option is below the exercise price, the Fund will retain the full amount of
the option premium which provides a partial hedge against any decline that may
have occurred in the Fund's holdings. The writing of a put option on a futures
contract constitutes a partial hedge against the increasing price of the
security which is deliverable upon exercise of the futures contract. If the
futures price at the expiration of the option is higher than the exercise price,
the Fund will retain the full amount of option premium which provides a partial
hedge against any increase in the price of securities which the Fund intends to
purchase.
If a put or call option that the Fund has written is exercised, the
Fund will incur a loss which will be reduced by the amount of the premium it
receives. Depending on the degree of correlation between changes in the value of
its portfolio securities and changes in the value of its futures positions, the
Fund's losses from existing options on futures may, to some extent, be reduced
or increased by changes in the value of portfolio securities. The purchase of a
put option on a futures contract is similar in some respects to the purchase of
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protective puts on portfolio securities. For example, the Fund will purchase a
put option on a futures contract to hedge the Fund's securities against the risk
of rising interest rates.
To the extent that interest rates move in an unexpected direction, the
Fund may not achieve the anticipated benefits of futures contracts or options on
futures contracts or may realize a loss. For example, if the Fund is hedged
against the possibility of an increase in interest rates which would adversely
affect the price of securities held in its portfolio and interest rates decrease
instead, the Fund will lose part or all of the benefit of the increased value of
its securities which it has because it will have offsetting losses in its
futures position. In addition, in such situations, if the Fund had insufficient
cash, it may be required to sell securities from its portfolio to meet daily
variation margin requirements. Such sales of securities may, but will not
necessarily, be at increased prices which reflect the rising market. The Fund
may be required to sell securities at a time when it may be disadvantageous to
do so.
Further, with respect to options on futures contracts, the Fund may
seek to close out an option position by writing or buying an offsetting position
covering the same securities or contracts and have the same exercise price and
expiration date. The ability to establish and close out positions on options
will be subject to the maintenance of a liquid secondary market, which cannot be
assured.
High-Yield, High Risk Securities
Investing in so-called "high-yield" or "high risk" securities entails
certain risks, including the risk of loss of principal, which may be greater
than the risks involved in investment grade securities, and which should be
considered by investors contemplating an investment in the Funds. Such
securities are sometimes issued by companies whose earnings at the time of
issuance are less than the projected debt service on the high-yield securities.
The risks include the following:
A. Youth and Volatility of the High-Yield Market--Although the market
for high-yield securities has been in existence for many years, including
periods of economic downturns, the high-yield market grew rapidly during the
long economic expansion which took place in the United States during the 1980s.
During that economic expansion, the use of high-yield debt securities to fund
highly leveraged corporate acquisitions and restructurings increased
dramatically. As a result, the high-yield market grew substantially during that
economic expansion. Although experts disagree on the impact recessionary periods
have had and will have on the high-yield market, some analysts believe a
protracted economic downturn would severely disrupt the market for high-yield
securities, would adversely affect the value of outstanding bonds and would
adversely affect the ability of high-yield issuers to repay principal and
interest. Those analysts cite volatility experienced in the high-yield market in
the past as evidence for their position. It is likely that protracted periods of
economic uncertainty would result in increased volatility in the market prices
of high-yield securities, an increase in the number of high-yield bond defaults
and corresponding volatility in a Fund's net asset value.
Value Fund will not ordinarily purchase securities rated below B by
Moody's and S&P. However, it may do so if the Manager believes that capital
appreciation is likely. Value Fund will not invest more than 25% of its assets
in such securities. While Retirement Income Fund will not invest more than 45%
of its assets in high-yield, high risk debt securities, it has the authority to
invest up to all of its net assets in lower rated securities, which would
include income generating equity securities such as convertible securities and
preferred stocks.
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B. Liquidity and Valuation--The secondary market for high-yield
securities is currently dominated by institutional investors, including mutual
funds and certain financial institutions. There is generally no established
retail secondary market for high-yield securities. As a result, the secondary
market for high-yield securities is more limited and less liquid than other
secondary securities markets. The high-yield secondary market is particularly
susceptible to liquidity problems when the institutions which dominate it
temporarily cease buying such securities for regulatory, financial or other
reasons, such as the savings and loan crisis. A less liquid secondary market may
have an adverse effect on a Fund's ability to dispose of particular issues, when
necessary, to meet a Fund's liquidity needs or in response to a specific
economic event, such as the deterioration in the creditworthiness of the issuer.
In addition, a less liquid secondary market makes it more difficult for a Fund
to obtain precise valuations of the high-yield securities in its portfolio.
During periods involving such liquidity problems, judgment plays a greater role
in valuing high-yield securities than is normally the case. The secondary market
for high-yield securities is also generally considered to be more likely to be
disrupted by adverse publicity and investor perceptions than the more
established secondary securities markets. Privately placed high-yield securities
are particularly susceptible to the liquidity and valuation risks outlined
above.
C. Legislative and Regulatory Action and Proposals--There are a variety
of legislative actions which have been taken or which are considered from time
to time by the United States Congress which could adversely affect the market
for high-yield bonds. For example, Congressional legislation limited the
deductibility of interest paid on certain high-yield bonds used to finance
corporate acquisitions. Also, Congressional legislation has, with some
exceptions, generally prohibited federally-insured savings and loan institutions
from investing in high-yield securities. Regulatory actions have also affected
the high-yield market. For example, many insurance companies have restricted or
eliminated their purchases of high-yield bonds as a result of, among other
factors, actions taken by the National Association of Insurance Commissioners.
If similar legislative and regulatory actions are taken in the future, they
could result in further tightening of the secondary market for high-yield issues
and could reduce the number of new high-yield securities being issued.
Short Sales
Retirement Income Fund may make short sales in an attempt to protect
against market declines. Typically, short sales are transactions in which the
Fund sells a security it does not own in anticipation of a decline in the market
value of that security. At the time a short sale is effected, the Fund incurs an
obligation to replace the security borrowed at whatever its price may be at the
time the Fund purchases it for delivery to the lender. The price at such time
may be more or less than the price at which the security was sold by the Fund.
When a short sale transaction is closed out by delivery of the security, any
gain or loss on the transaction is taxable as short-term capital gain or loss.
Until the security is replaced, the Fund is required to pay to the lender
amounts equal to any dividends or interest which accrue during the period of the
loan. To borrow the security, the Fund also may be required to pay a premium,
which would increase the cost of the security sold. The proceeds of the short
sale will be retained by the broker, to the extent necessary to meet margin
requirements, until the short position is closed out.
Until the Fund replaces a borrowed security in connection with a short
sale, the Fund will be required to maintain daily a segregated account,
containing cash or U.S. government securities, at such a level that (i) the
amount deposited in the account plus the amount deposited with the broker as
collateral will at all times be equal to at least 100% of the current value of
the security sold short, and (ii) the amount deposited in the
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segregated account plus the amount deposited with the broker as collateral will
not be less than the market value of the security at the time it was sold short.
The Fund will incur a loss as a result of a short sale if the price of
the security sold short increases between the date of the short sale and the
date on which the Fund replaces the borrowed security; conversely, the Fund will
realize a gain if the security declines in price between those dates. This
result is the opposite of what one would expect from a cash purchase of a long
position in a security. The amount of any gain will be decreased, and the amount
of any loss increased, by the amount of any premium or amounts in lieu of
interest the Fund may be required to pay in connection with a short sale.
In addition to the short sales discussed above, the Fund also may make
short sales "against the box," a transaction in which the Fund enters into a
short sale of a security which the Fund owns. The proceeds of the short sale are
held by a broker until the settlement date, at which time the Fund delivers the
security to close the short position. The Fund receives the net proceeds from
the short sale.
The ability of the Fund to effect short sales may be limited because of
certain requirements the Fund must satisfy to maintain its status as a regulated
investment company. See Accounting and Tax Issues - Other Tax Requirements.
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ACCOUNTING AND TAX ISSUES
When the Fund writes a call, or purchases a put option, an amount equal
to the premium received or paid by it is included in the section of the Fund's
assets and liabilities as an asset and as an equivalent liability.
In writing a call, the amount of the liability is subsequently "marked
to market" to reflect the current market value of the option written. The
current market value of a written option is the last sale price on the principal
Exchange on which such option is traded or, in the absence of a sale, the mean
between the last bid and asked prices. If an option which the Fund has written
expires on its stipulated expiration date, the Fund reports a realized gain. If
the Fund enters into a closing purchase transaction with respect to an option
which the Fund has written, the Fund realizes a gain (or loss if the cost of the
closing transaction exceeds the premium received when the option was sold)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is extinguished. Any such gain or loss is a
short-term capital gain or loss for federal income tax purposes. If a call
option which the Fund has written is exercised, the Fund realizes a capital gain
or loss (long-term or short-term, depending on the holding period of the
underlying security) from the sale of the underlying security and the proceeds
from such sale are increased by the premium originally received.
The premium paid by the Fund for the purchase of a put option is
recorded in the section of the Fund's assets and liabilities as an investment
and subsequently adjusted daily to the current market value of the option. For
example, if the current market value of the option exceeds the premium paid, the
excess would be unrealized appreciation and, conversely, if the premium exceeds
the current market value, such excess would be unrealized depreciation. The
current market value of a purchased option is the last sale price on the
principal Exchange on which such option is traded or, in the absence of a sale,
the mean between the last bid and asked prices. If an option which the Fund has
purchased expires on the stipulated expiration date, the Fund realizes a
short-term or long-term capital loss for federal income tax purposes in the
amount of the cost of the option. If the Fund sells the put option, it realizes
a short-term or long-term capital gain or loss, depending on whether the
proceeds from the sale are greater or less than the cost of the option. If the
Fund exercises a put option, it realizes a capital gain or loss (long-term or
short-term, depending on the holding period of the underlying security) from the
sale of the underlying security and the proceeds from such sale will be
decreased by the premium originally paid. However, since the purchase of a put
option is treated as a short sale for federal income tax purposes, the holding
period of the underlying security will be affected by such a purchase.
Options on Certain Stock Indices--Accounting for options on certain
stock indices will be in accordance with generally accepted accounting
principles. The amount of any realized gain or loss on closing out such a
position will result in a realized capital gain or loss for tax purposes. Such
options held by the Fund at the end of each fiscal year will be required to be
marked to market for federal income tax purposes. Sixty percent of any net gain
or loss recognized on such deemed sales or on any actual sales will be treated
as long-term capital gain or loss, and the remainder will be treated as
short-term capital gain or loss.
Other Tax Requirements--Each Fund has qualified, and intends to
continue to qualify, as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). A Fund must meet several
requirements to maintain its status as a regulated investment company. Among
these requirements are that at least 90% of its investment company taxable
income be derived from dividends, interest, payment with respect to securities
loans and gains
-17-
<PAGE>
from the sale or disposition of securities; that at the close of each quarter of
its taxable year at least 50% of the value of its assets consists of cash and
cash items, government securities, securities of other regulated investment
companies and, subject to certain diversification requirements, other
securities; and that less than 30% of its gross income be derived from sales of
securities held for less than three months.
The requirement that not more than 30% of a Fund's gross income be
derived from gains from the sale or other disposition of securities held for
less than three months may restrict a Fund in its ability to write covered call
options on securities which it has held less than three months, to write options
which expire in less than three months, to sell securities which have been held
less than three months and to effect closing purchase transactions with respect
to options which have been written less than three months prior to such
transactions. Consequently, in order to avoid realizing a gain within the
three-month period, a Fund may be required to defer the closing out of a
contract beyond the time when it might otherwise be advantageous to do so. A
Fund may also be restricted in the sale of purchased put options and the
purchase of put options for the purpose of hedging underlying securities because
of the application of the short sale holding period rules with respect to such
underlying securities.
The straddle rules of Section 1092 may apply. Generally, the straddle
provisions require the deferral of losses to the extent of unrecognized gains
related to the offsetting positions in the straddle. Excess losses, if any, can
be recognized in the year of loss. Deferred losses will be carried forward and
recognized in the following year, subject to the same limitation.
-18-
<PAGE>
PERFORMANCE INFORMATION
From time to time, each Fund may state each of its Classes' total
return in advertisements and other types of literature. Any statement of total
return performance data for a Class will be accompanied by information on its
average annual compounded total rate of return for that Class over, as relevant,
the most recent one-, five- and ten-year (or life of fund, if applicable)
periods. Each Fund may also advertise aggregate and average total return
information of its Classes over additional periods of time. The net asset value
of a Class fluctuates so shares, when redeemed, may be worth more or less than
the original investment, and a Class' results should not be considered as
representative of future performance.
The average annual total rate of return for each Class is based on a
hypothetical $1,000 investment that includes capital appreciation and
depreciation during the stated periods. The following formula will be used for
the actual computations:
n
P(1+T) = ERV
Where : P = a hypothetical initial purchase order of $1,000 from
which, in the case of only Class A Shares, the maximum
front-end sales charge is deducted;
T = average annual total return;
n = number of years;
ERV = redeemable value of the hypothetical
$1,000 purchase at the end of the period
after the deduction of the applicable CDSC,
if any, with respect to Class B Shares and
Class C Shares.
In presenting performance information for Class A Shares, the Limited
CDSC, applicable to only certain redemptions of those shares, will not be
deducted from any computation of total return. See the Prospectus for the Fund
Classes for a description of the Limited CDSC and the limited instances in which
it applies. All references to a CDSC in this Performance Information section
will apply to Class B Shares or Class C Shares.
Aggregate or cumulative total return is calculated in a similar manner,
except that the results are not annualized. Each calculation assumes the maximum
front-end sales charge, if any, is deducted from the initial $1,000 investment
at the time it is made with respect to Class A Shares, and that all
distributions are reinvested at net asset value, and, with respect to Class B
Shares and Class C Shares, reflects the deduction of the CDSC that would be
applicable upon complete redemption of such shares. In addition, each Fund may
present total return information that does not reflect the deduction of the
maximum front-end sales charge or any applicable CDSC.
The performance of Class A Shares and the Institutional Class of Value
Fund, as shown below, is the average annual total return through November 30,
1996, computed as described above. The average annual total return for Class A
Shares at offer reflects the maximum front-end sales charge of 4.75% paid on the
purchase of shares. The average annual total return for Class A Shares at net
asset value (NAV) does not reflect the payment of any front-end sales charge.
Pursuant to applicable regulation, total return shown for Value Fund
-19-
<PAGE>
Institutional Class for the periods prior to the commencement of operations of
such Class is calculated by taking the performance of Value Fund Class A Shares
and adjusting it to reflect the elimination of all sales charges. However, for
those periods, no adjustment has been made to eliminate the impact of 12b-1
payments, and performance would have been affected had such an adjustment been
made.
Average Annual Total Return
Value Fund Value Fund Value Fund
A Class A Class Institutional
(at Offer)(2) (at NAV) Class(3)
1 year
ended
11/30/96 13.40% 19.08% 19.45%
3 years
ended
11/30/96 9.91% 11.70% 12.04%
5 years
ended
11/30/96 14.13% 15.24% 15.53%
Period
6/24/87(1)
through
11/30/96 14.10% 14.69% 14.84%
(1) Date of initial public offering of Value Fund A Class.
(2) Prior to November 29, 1995, the maximum front-end sales charge was 5.75%.
Effective November 29, 1995, the maximum front-end sales charge was reduced
to 4.75% and the above performance figures are calculated using 4.75% as
the applicable sales charge, and are more favorable than they would have
been had they been calculated using 5.75%.
(3) Date of initial public offering of Value Fund Institutional Class was
November 9, 1992.
-20-
<PAGE>
The performance of Class B Shares of Value Fund, as shown below, is the
average annual total return quotation through November 30, 1996. The average
annual total return for Class B Shares including deferred sales charge reflects
the deduction of the applicable CDSC that would be paid if the shares were
redeemed at November 30, 1996. The average annual total return for Class B
Shares excluding deferred sales charge assumes the shares were not redeemed at
November 30, 1996 and therefore does not reflect the deduction of a CDSC.
Average Annual Total Return
Value Fund B Class Value Fund B Class
(Including Deferred (Excluding Deferred
Sales Charge) Sales Charge)
1 year
ended
11/30/96 14.26% 18.26%
Period
9/6/94(1)
through
11/30/96 13.05% 14.20%
(1) Date of initial public offering of Value Fund B Class.
The performance of Class C Shares of Value Fund, as shown below, is the
aggregate total return quotation through November 30, 1996. The aggregate total
return for Class C Shares including deferred sales charge reflects the deduction
of the applicable CDSC that would be paid if the shares were redeemed at
November 30, 1996. The aggregate total return for Class C Shares excluding
deferred sales charge assumes the shares were not redeemed at November 30, 1996
and therefore does not reflect the deduction of a CDSC.
Aggregate Total Return
Value Fund C Class Value Fund C Class
(Including Deferred (Excluding Deferred
Sales Charge) Sales Charge)
1 year
ended
11/30/96 17.23% 18.23%
Period
11/29/95(1)
through
11/30/96 19.43% 19.43%
(1) Date of initial public offering of Value Fund C Class.
-21-
<PAGE>
Securities prices fluctuated during the periods covered and past
results should not be considered as representative of future performance. Total
return for Retirement Income Fund is not provided because such shares were
not offered prior to November 30, 1996.
From time to time, each Fund may also quote its Classes' actual total
return performance, dividend results and other performance information in
advertising and other types of literature and may compare that information to,
or may separately illustrate similar information reported by, the S&P 500 Stock
Index, the Dow Jones Industrial Average, the Russell 2000 Index TR, the NASDAQ
Composite Index and other unmanaged indices.
The S&P 500 Stock Index and the Dow Jones Industrial Average are
industry-accepted unmanaged indices of generally-conservative securities used
for measuring general market performance. The Russell 2000 Index TR is a total
return weighted index which is comprised of 2,000 of the smallest stocks (on the
basis of capitalization) in the Russell 3000 Index and is calculated on a
monthly basis. The NASDAQ Composite Index is a market capitalization price only
index that tracks the performance of domestic common stocks traded on the
regular NASDAQ market as well as National Market System traded foreign common
stocks and American Depository Receipts. The total return performance reported
for these indices will reflect the reinvestment of all distributions on a
quarterly basis and market price fluctuations. The indices do not take into
account any sales charge or other fees. In seeking its investment objective,
Value Fund's portfolio primarily includes common stocks considered by the
Manager to be more aggressive than those tracked by these indices.
Total return performance of each Class will be computed by adding all
reinvested income and realized securities profits distributions plus the change
in net asset value during a specific period and dividing by the offering price
at the beginning of the period. It will not reflect any income taxes payable by
shareholders on the reinvested distributions included in the calculation.
Because securities prices fluctuate, past performance should not be considered
as a representation of the results which may be realized from an investment in
the Fund in the future.
Each Fund may also state total return performance of its Classes in the
form of an average annual return. This average annual return figure will be
computed by taking the sum of annual returns, then dividing that figure by the
number of years in the overall period indicated. The computation will reflect
the impact of the maximum front-end sales charge or CDSC, if any, paid on the
illustrated investment amount against the first year's return. The performance
of Class B Shares and Class C Shares may also be computed without taking into
account any applicable CDSC. From time to time, each Fund may also quote actual
total return performance in advertising and other types of literature compared
to indices or averages of alternative financial products available to
prospective investors. For example, the performance comparisons may include the
average return of various bank instruments, some of which may carry certain
return guarantees offered by leading banks and thrifts as monitored by Bank Rate
Monitor, and those of generally-accepted corporate bond and government security
price indices of various durations prepared by Lehman Brothers and Salomon
Brothers, Inc. These indices are not managed for any investment goal.
Statistical and performance information and various indices compiled
and maintained by organizations such as the following may also be used in
preparing exhibits comparing certain industry trends and competitive mutual fund
performance to comparable activity and performance of the Funds and in
illustrating general financial planning principles. From time to time, certain
mutual fund performance ranking information, calculated and provided by these
organizations may also be used in the promotion of sales of each Fund. Any
indices used are not managed for any investment goal.
CDA Technologies, Inc., Lipper Analytical Services, Inc. and
Morningstar, Inc. are performance evaluation services that maintain
statistical performance databases, as reported by a diverse universe of
independently-managed mutual funds.
-22-
<PAGE>
Ibbotson Associates, Inc. is a consulting firm that provides a variety
of historical data including total return, capital appreciation and
income on the stock market as well as other investment asset classes,
and inflation. With their permission, this information will be used
primarily for comparative purposes and to illustrate general financial
planning principles.
Interactive Data Corporation is a statistical access service that
maintains a database of various international industry indicators, such
as historical and current price/earning information, individual equity
and fixed-income price and return information.
Compustat Industrial Databases, a service of Standard & Poor's, may
also be used in preparing performance and historical stock and bond
market exhibits. This firm maintains fundamental databases that provide
financial, statistical and market information covering more than 7,000
industrial and non-industrial companies.
Russell Indexes is an investment analysis service that provides both
current and historical stock performance information, focusing on the
business fundamentals of those firms issuing the security.
Salomon Brothers and Lehman Brothers are statistical research firms
that maintain databases of international market, bond market, corporate
and government-issued securities of various maturities. This
information, as well as unmanaged indices compiled and maintained by
these firms, will be used in preparing comparative illustrations. In
addition, the performance of multiple indices compiled and maintained
by these firms may be combined to create a blended performance result
for comparative performances. Generally, the indices selected will be
representative of the types of securities in which the Funds may invest
and the assumptions that were used in calculating the blended
performance will be described.
Comparative information on the Consumer Price Index may also be
included. The Consumer Price Index, as prepared by the U.S. Bureau of Labor
Statistics, is the most commonly used measure of inflation. It indicates the
cost fluctuations of a representative group of consumer goods. It does not
represent a return from an investment.
The following tables are examples, for purposes of illustration only,
of cumulative total return performance for Class A Shares, Class B Shares, Class
C Shares and the Institutional Class of Value Fund through November 30, 1996.
For these purposes, the calculations assume the reinvestment of any realized
securities profits distributions and income dividends paid during the period,
but does not reflect any income taxes payable by shareholders on the reinvested
distributions. The performance of Class A Shares reflects the maximum front-end
sales charge paid on the purchase of shares but may also be shown without
reflecting the impact of any front-end sales charge. The performance of Class B
Shares and Class C Shares is calculated both with the applicable CDSC included
and excluded. Comparative information on the S&P 500 Stock Index, the Dow Jones
Industrial Average and the NASDAQ Composite Index is also included.
-23-
<PAGE>
<TABLE>
<CAPTION>
Cumulative Total Return
Standard
Value Fund Institu- & Poor's Dow Jones NASDAQ
A Class(2) tional 500 Stock Industrial Composite
(at Offer) Class(3) Index(4) Average(4) Index(4)
<S> <C> <C> <C> <C> <C>
3 months
ended
11/30/96 3.00% 8.28% 16.73% 16.77% 13.24%
6 months
ended
11/30/96 1.30%(5) 6.54% 14.37% 16.90% 3.96%
9 months
ended
11/30/96 8.09% 13.74% 20.19% 20.94% 17.50%
1 year
ended
11/30/96 13.40% 19.45% 27.85% 31.50% 22.04%
3 years
ended
11/30/96 32.76% 40.63% 76.89% 91.16% 71.35%
5 years
ended
11/30/96 93.67% 105.82% 130.62% 158.05% 146.73%
Period
6/24/87(1)
through
11/30/96 247.16% 269.16% 231.38% 263.80% 204.38%
</TABLE>
(1) Date of initial public offering of Value Fund A Class.
(2) Prior to November 29, 1995, the maximum front-end sales charge was 5.75%.
Effective November 29, 1995, the maximum front-end sales charge was reduced
to 4.75% and the above performance figures are calculated using 4.75% as
the applicable sales charge, and are more favorable than they would have
been had they been calculated using 5.75%.
(3) Date of initial public offering of Value Fund Institutional Class was
November 9, 1992. Pursuant to applicable regulation, total return shown for
the Institutional Class for the periods prior to the commencement of
operations of such Class is calculated by taking the performance of Class A
Shares and adjusting it to reflect the elimination of all sales charges.
However, for those periods, no adjustment has been made to eliminate the
impact of 12b-1 payments, and performance would have been affected had such
an adjustment been made.
(4) Source: Interactive Data Corp.
(5) For the six months ended November 30, 1996, cumulative total return for
Value Fund A Class at net asset value was 6.35%.
-24-
<PAGE>
<TABLE>
<CAPTION>
Cumulative Total Return
Value Fund Value Fund
B Class B Class
(Including (Excluding Standard
Deferred Deferred & Poor's Dow Jones NASDAQ
Sales Sales 500 Stock Industrial Composite
Charge) Charge) Index(2) Average(2) Index(2)
<S> <C> <C> <C> <C> <C>
3 months
ended
11/30/96 3.98% 7.98% 16.73% 16.77% 13.24%
6 months
ended
11/30/96 2.01% 6.01% 14.37% 16.90% 3.96%
9 months
ended
11/30/96 8.89% 12.89% 20.19% 20.94% 17.50%
1 year
ended
11/30/96 14.26% 18.26% 27.85% 31.50% 22.04%
Period
9/6/94(1)
through
11/30/96 31.55% 34.55% 68.26% 76.28% 68.83%
</TABLE>
(1) Date of initial public offering of Value Fund B Class.
(2) Source: Interactive Data Corp.
-25-
<PAGE>
<TABLE>
<CAPTION>
Cumulative Total Return
Value Fund Value Fund
C Class C Class Standard
(Including (Excluding & Poor's Dow Jones NASDAQ
Deferred Deferred 500 Stock Industrial Composite
Sales Charge) Sales Charge) Index Average Index
<S> <C> <C> <C> <C> <C>
3 months
ended
11/30/96 6.99% 7.99% 16.73% 16.77% 13.24%
6 months
ended
11/30/96 4.97% 5.97% 14.37% 16.90% 3.96%
9 months
ended
11/30/96 11.95% 12.95% 20.19% 20.94% 17.50%
1 year
ended
11/30/96 17.23% 18.23% 27.85% 31.50% 22.04%
Period
11/29/95(1)
through
11/30/96 19.55% 19.55% 27.85% 31.50% 22.04%
</TABLE>
(1) Date of initial public offering of Value Fund C Class.
Total return for Retirement Income Fund is not provided because such
shares were not offered prior to November 30, 1996.
Because every investor's goals and risk threshold are different, the
Distributor, as distributor for each Fund and other mutual funds in the Delaware
Group, will provide general information about investment alternatives and
scenarios that will allow investors to assess their personal goals. This
information will include general material about investing as well as materials
reinforcing various industry-accepted principles of prudent and responsible
financial planning. One typical way of addressing these issues is to compare an
individual's goals and the length of time the individual has to attain these
goals to his or her risk threshold. In addition, the Distributor will provide
information that discusses the Manager's overriding investment philosophy and
how that philosophy impacts a Fund's, and other Delaware Group funds',
investment disciplines employed in seeking their objectives. The Distributor may
also from time to time cite general or specific information about the
institutional clients of the Manager, including the number of such clients
serviced by the Manager.
Dollar-Cost Averaging
For many people, deciding when to invest can be a difficult decision.
Security prices tend to move up and down over various market cycles and logic
says to invest when prices are low. However, even experts can't always pick the
-26-
<PAGE>
highs and the lows. By using a strategy known as dollar-cost averaging, you
schedule your investments ahead of time. If you invest a set amount on a regular
basis, that money will always buy more shares when the price is low and fewer
when the price is high. You can choose to invest at any regular interval--for
example, monthly or quarterly--as long as you stick to your regular schedule.
Dollar-cost averaging looks simple and it is, but there are important things to
remember.
-27-
<PAGE>
Dollar-cost averaging works best over longer time periods, and it
doesn't guarantee a profit or protect against losses in declining markets. If
you need to sell your investment when prices are low, you may not realize a
profit no matter what investment strategy you utilize. That's why dollar-cost
averaging can make sense for long-term goals. Since the potential success of a
dollar-cost averaging program depends on continuous investing, even through
periods of fluctuating prices, you should consider your dollar-cost averaging
program a long-term commitment and invest an amount you can afford and probably
won't need to withdraw. You also should consider your financial ability to
continue to purchase shares during periods of low fund share prices. Delaware
Group offers three services -- Automatic Investing Program, Direct Deposit
Program and the Wealth Builder Option -- that can help to keep your regular
investment program on track. See Investing by Electronic Fund Transfer - Direct
Deposit Purchase Plan and Automatic Investing Plan under Investment Plans and
Wealth Builder Option under Investment Plans for a complete description of these
services, including restrictions or limitations.
The example below illustrates how dollar-cost averaging can work. In a
fluctuating market, the average cost per share over a period of time will be
lower than the average price per share for the same time period.
Number
Investment Price Per of Shares
Amount Share Purchased
Month 1 $100 $10.00 10
Month 2 $100 $12.50 8
Month 3 $100 $ 5.00 20
Month 4 $100 $10.00 10
-----------------------------------------------------------
$400 $37.50 48
Total Amount Invested: $400
Total Number of Shares Purchased: 48
Average Price Per Share: $9.38 ($37.50/4)
Average Cost Per Share: $8.33 ($400/48 shares)
This example is for illustration purposes only. It is not intended to represent
the actual performance of the Fund.
-28-
<PAGE>
THE POWER OF COMPOUNDING
When you opt to reinvest your current income for additional Fund
shares, your investment is given yet another opportunity to grow. It's called
the Power of Compounding and the following chart illustrates just how powerful
it can be.
COMPOUNDED RETURNS
Results at various assumed fixed rates of return on a $10,000
investment compounded quarterly for 10 years:
9% 11% 13%
Rate of Rate of Rate of
Return Return Return
------ ------ ------
1 year $10,931 $11,146 $11,365
2 years $11,948 $12,424 $12,916
3 years $13,060 $13,848 $14,679
4 years $14,276 $15,435 $16,682
5 years $15,605 $17,204 $18,959
6 years $17,057 $19,176 $21,546
7 years $18,645 $21,374 $24,487
8 years $20,381 $23,824 $27,829
9 years $22,278 $26,554 $31,627
10 years $24,352 $29,598 $35,943
These figures are calculated assuming a fixed constant investment
return and assume no fluctuation in the value of principal. These figures, which
do not reflect payment of applicable taxes or sales charges, are not intended to
be a projection of investment results and do not reflect the actual performance
results of any of the Classes.
-29-
<PAGE>
TRADING PRACTICES AND BROKERAGE
Each Fund selects brokers or dealers to execute transactions for the
purchase or sale of portfolio securities on the basis of its judgment of their
professional capability to provide the service. The primary consideration is to
have brokers or dealers execute transactions at best price and execution. Best
price and execution refers to many factors, including the price paid or received
for a security, the commission charged, the promptness and reliability of
execution, the confidentiality and placement accorded the order and other
factors affecting the overall benefit obtained by the account on the
transaction. A number of trades are made on a net basis where a Fund either buys
the securities directly from the dealer or sells them to the dealer. In these
instances, there is no direct commission charged but there is a spread (the
difference between the buy and sell price) which is the equivalent of a
commission. When a commission is paid, a Fund pays reasonably competitive
brokerage commission rates based upon the professional knowledge of its trading
department as to rates paid and charged for similar transactions throughout the
securities industry. In some instances, a Fund pays a minimal share transaction
cost when the transaction presents no difficulty.
During the fiscal years ended November 30, 1994, 1995 and 1996, the
aggregate dollar amounts of brokerage commissions paid by Value Fund were
$89,843, $384,243 and $515,711, respectively.
The Manager may allocate out of all commission business generated by
all of the funds and accounts under its management, brokerage business to
brokers or dealers who provide brokerage and research services. These services
include advice, either directly or through publications or writings, as to the
value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends; assisting in
determining portfolio strategy; providing computer software and hardware used in
security analyses; and providing portfolio performance evaluation and technical
market analyses. Such services are used by the Manager in connection with its
investment decision-making process with respect to one or more funds and
accounts managed by it, and may not be used, or used exclusively, with respect
to the fund or account generating the brokerage.
During the fiscal year ended November 30, 1996, portfolio transactions
of Value Fund in the amount of $93,378,030, resulting in brokerage commissions
of $275,294, were directed to brokers for brokerage and research services
provided.
As provided in the Securities Exchange Act of 1934 and each Fund's
Investment Management Agreement, higher commissions are permitted to be paid to
broker/dealers who provide brokerage and research services than to
broker/dealers who do not provide such services if such higher commissions are
deemed reasonable in relation to the value of the brokerage and research
services provided. Although transactions are directed to broker/dealers who
provide such brokerage and research services, the Funds believe that the
commissions paid to such broker/dealers are not, in general, higher than
commissions that would be paid to broker/dealers not providing such services and
that such commissions are reasonable in relation to the value of the brokerage
and research services provided. In some instances, services may be provided to
the Manager which constitute in some part brokerage and research services used
by the Manager in connection with its investment decision-making process and
constitute in some part services used by the Manager in connection with
administrative or other functions not related to its investment decision-making
process. In such cases, the Manager will make a good faith allocation of
brokerage and research services and will pay out of its own resources for
services used by the Manager in connection with administrative or other
functions not related to its investment decision-making process. In addition, so
long as no fund is disadvantaged, portfolio transactions which generate
commissions or their equivalent are allocated to broker/dealers who provide
daily portfolio pricing services to a Fund and to other funds in the Delaware
Group. Subject to best price and execution, commissions allocated to brokers
providing such pricing services may or may not be generated by the funds
receiving the pricing service.
-30-
<PAGE>
The Manager may place a combined order for two or more accounts or
funds engaged in the purchase or sale of the same security if, in its judgment,
joint execution is in the best interest of each participant and will result in
best price and execution. Transactions involving commingled orders are allocated
in a manner deemed equitable to each account or fund. When a combined order is
executed in a series of transactions at different prices, each account
participating in the order may be allocated an average price obtained from the
executing broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or fund may obtain, it is the opinion of the Manager and Equity Funds V,
Inc.'s Board of Directors that the advantages of combined orders outweigh the
possible disadvantages of separate transactions.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. (the "NASD"), and subject to seeking best price and
execution, a Fund may place orders with broker/dealers that have agreed to
defray certain Fund expenses such as custodian fees, and may, at the request of
the Distributor, give consideration to sales of Fund shares as a factor in the
selection of brokers and dealers to execute Fund portfolio transactions.
Portfolio Turnover
Portfolio trading will be undertaken principally to accomplish each
Fund's objective in relation to anticipated movements in the general level of
interest rates. Each Fund is free to dispose of portfolio securities at any
time, subject to complying with the Code and the 1940 Act, when changes in
circumstances or conditions make such a move desirable in light of the
investment objective. A Fund will not attempt to achieve or be limited to a
predetermined rate of portfolio turnover, such a turnover always being
incidental to transactions undertaken with a view to achieving a Fund's
investment objective.
Under certain market conditions, a Fund may experience high rates of
portfolio turnover which could exceed 100%. The portfolio turnover rate of a
Fund is calculated by dividing the lesser of purchases or sales of portfolio
securities for the particular fiscal year by the monthly average of the value of
the portfolio securities owned by the Fund during the particular fiscal year,
exclusive of securities whose maturities at the time of acquisition are one year
or less.
-31-
<PAGE>
The degree of portfolio activity may affect brokerage costs of a Fund
and taxes payable by a Fund's shareholders to the extent of any net realized
capital gains. A turnover rate of 100% would occur, for example, if all the
investments in a Fund's portfolio at the beginning of the year were replaced by
the end of the year. Portfolio turnover will also be increased if a Fund writes
a large number of call options which are subsequently exercised. The turnover
rate also may be affected by cash requirements from redemptions and repurchases
of Fund shares. Total brokerage costs generally increase with higher portfolio
turnover rates. In investing for capital appreciation, Value Fund may hold
securities for any period of time.
During the past two fiscal years, Value Fund's portfolio turnover rates
were 65% for 1995 and 87% for 1996.
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<PAGE>
PURCHASING SHARES
The Distributor serves as the national distributor for each Fund's four
classes of shares - Class A Shares, Class B Shares, Class C Shares and the
Institutional Class, and has agreed to use its best efforts to sell shares of
each Fund. See the Prospectuses for information on how to invest. Shares of each
Fund are offered on a continuous basis and may be purchased through authorized
investment dealers or directly by contacting Equity Funds V, Inc. or the
Distributor.
The minimum initial investment generally is $1,000 for Class A Shares,
Class B Shares and Class C Shares. Subsequent purchases generally must be at
least $100. The initial and subsequent investment minimums for Class A Shares
will be waived for purchases by officers, directors and employees of any
Delaware Group fund, the Manager or any of the Manager's affiliates if the
purchases are made pursuant to a payroll deduction program. Shares purchased
pursuant to the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act
and shares purchased in connection with an Automatic Investing Plan are subject
to a minimum initial purchase of $250 and a minimum subsequent purchase of $25.
Accounts opened under the Delaware Group Asset Planner service are subject to a
minimum initial investment of $2,000 per Asset Planner Strategy selected. There
are no minimum purchase requirements for the Institutional Classes, but certain
eligibility requirements must be satisfied.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000. For Class C Shares, each purchase must be in an amount
that is less than $1,000,000. See Investment Plans for purchase limitations
applicable to retirement plans. Equity Funds V, Inc. will reject any purchase
order for more than $250,000 of Class B Shares and $1,000,000 or more of Class C
Shares. An investor may exceed these limitations by making cumulative purchases
over a period of time. An investor should keep in mind, however, that reduced
front-end sales charges apply to investments of $100,000 or more in Class A
Shares, and that Class A Shares, absent any applicable fee waiver, are subject
to lower annual 12b-1 Plan expenses than Class B Shares and Class C Shares and
generally are not subject to a CDSC.
Selling dealers have the responsibility of transmitting orders
promptly. Equity Funds V, Inc. reserves the right to reject any order for the
purchase of its shares of either Fund if in the opinion of management such
rejection is in such Fund's best interest.
The NASD has adopted amendments to its Rules of Fair Practice relating
to investment company sales charges. Equity Funds V, Inc. and the Distributor
intend to operate in compliance with these rules.
Class A Shares are purchased at the offering price which reflects a
maximum front-end sales charge of 4.75%; however, lower front-end sales charges
apply for larger purchases. See the table below. Class A Shares, absent any
applicable fee waivers, are also subject to annual 12b-1 Plan expenses.
Class B Shares are purchased at net asset value and are subject to a
CDSC of: (i) 4% if shares are redeemed within two years of purchase; (ii) 3% if
shares are redeemed during the third or fourth year following purchase; (iii) 2%
if shares are redeemed during the fifth year following purchase; and (iv) 1% if
shares are redeemed during the sixth year following purchase. Class B Shares are
also subject to annual 12b-1 Plan expenses which, absent any applicable fee
waiver, are higher than those to which Class A Shares are subject and are
assessed against the Class B Shares for approximately eight years after
purchase. See Automatic Conversion of Class B Shares under Classes of Shares in
the Fund Classes' Prospectuses.
Class C Shares are purchased at net asset value and are subject to a
CDSC of 1% if shares are redeemed within 12 months following purchase. Class C
Shares, absent any applicable fee waivers, are also subject to annual 12b-1 Plan
expenses for the life of the investment which are equal to those to which Class
B Shares are subject.
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<PAGE>
The Distributor has voluntarily elected to waive the payment of 12b-1
Plan expenses by Retirement Income Fund from the commencement of the public
offering through May 31, 1997.
Institutional Class shares are purchased at the net asset value per
share without the imposition of a front-end or contingent deferred sales charge,
or 12b-1 Plan expenses. See Determining Offering Price and Net Asset Value and
Plans Under Rule 12b-1 for the Fund Classes in this Part B.
Class A Shares, Class B Shares, Class C Shares and Institutional Class
shares represent a proportionate interest in a Fund's assets and will receive a
proportionate interest in that Fund's income, before application, as to the
Class A, Class B and Class C Shares, of any expenses, if any, under that Fund's
12b-1 Plans.
Certificates representing shares purchased are not ordinarily issued
unless, in the case of Class A Shares or Institutional Class shares, a
shareholder submits a specific request. Certificates are not issued in the case
of Class B Shares or Class C Shares. However, purchases not involving the
issuance of certificates are confirmed to the investor and credited to the
shareholder's account on the books maintained by Delaware Service Company, Inc.
(the "Transfer Agent"). The investor will have the same rights of ownership with
respect to such shares as if certificates had been issued. An investor that is
permitted to obtain a certificate may receive a certificate representing shares
purchased by sending a letter to the Transfer Agent requesting the certificate.
No charge is assessed by Equity Funds V, Inc. for any certificate issued.
Investors who hold certificates representing any of their shares may only redeem
those shares by written request. The investor's certificate(s) must accompany
such request.
Alternative Purchase Arrangements
The alternative purchase arrangements of Class A, Class B and Class C
Shares permit investors to choose the method of purchasing shares that is most
suitable for their needs given the amount of their purchase, the length of time
they expect to hold their shares and other relevant circumstances. Investors
should determine whether, given their particular circumstances, it is more
advantageous to purchase Class A Shares and incur a front-end sales charge and,
absent any applicable fee waiver, annual 12b-1 Plan expenses of up to a maximum
of 0.30% of the average daily net assets of Class A Shares, or to purchase
either Class B or Class C Shares and have the entire initial purchase amount
invested in a Fund with the investment thereafter subject to a CDSC and, absent
any applicable fee waiver, annual 12b-1 Plan expenses. Class B Shares are
subject to a CDSC if the shares are redeemed within six years of purchase, and
Class C Shares are subject to a CDSC if the shares are redeemed within 12 months
of purchase. Class B and Class C Shares are each subject to annual 12b-1 Plan
expenses of up to a maximum of 1% (0.25% of which are service fees to be paid to
the Distributor, dealers or others for providing personal service and/or
maintaining shareholder accounts) of average daily net assets of the respective
Class. Class B Shares will automatically convert to Class A Shares at the end of
approximately eight years after purchase and, thereafter, be subject to annual
12b-1 Plan expenses of up to a maximum of 0.30% of average daily net assets of
such shares. Unlike Class B Shares, Class C Shares do not convert to another
class.
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<PAGE>
Class A Shares - Value Fund and Retirement Income Fund
Purchases of $100,000 or more of Class A Shares at the offering price
carry reduced front-end sales charges as shown in the accompanying table, and
may include a series of purchases over a 13-month period under a Letter of
Intention signed by the purchaser. See Special Purchase Features - Class A
Shares, below for more information on ways in which investors can avail
themselves of reduced front-end sales charges and other purchase features.
<TABLE>
<CAPTION>
Value Fund
Retirement Income Fund
Class A Shares
- -------------------------------------------------------------------------------------------------------------------------------
Dealer's
Front-End Sales Charge as % of Commission***
Amount of Purchase Offering Amount as % of
Price Invested** Offering Price
- -------------------------------------------------------------------------------------------------------------------------------
Retirement Income
Value Fund Fund
<S> <C> <C> <C> <C>
Less than $100,000 4.75% 5.01% 4.95% 4.00%
$100,000 but under $250,000 3.75 3.88 3.89 3.00
$250,000 but under $500,000 2.50 2.57 2.59 2.00
$500,000 but under $1,000,000* 2.00 2.06 2.00 1.60
</TABLE>
* There is no front-end sales charge on purchases of $1 million or more of
Class A Shares but, under certain limited circumstances, a 1% contingent
deferred sales charge may apply upon redemption of such shares. The
contingent deferred sales charge ("Limited CDSC") that may be applicable
arises only in the case of certain shares that were purchased at net asset
value and triggered the payment of a dealer's commission.
** In the case of Value Fund, based on the net asset value per share of Class
A Shares as of the end of Equity Funds V, Inc.'s most recent fiscal year.
In the case of Retirement Income Fund based on an initial net asset value
of $8.50 per share.
*** Financial institutions or their affiliated brokers may receive an agency
transaction fee in the percentages set forth above.
- --------------------------------------------------------------------------------
A Fund must be notified when a sale takes place which would qualify for
the reduced front-end sales charge on the basis of previous or current
purchases. The reduced front-end sales charge will be granted upon
confirmation of the shareholder's holdings by such Fund. Such reduced
front-end sales charges are not retroactive.
From time to time, upon written notice to all of its dealers, the
Distributor may hold special promotions for specified periods during
which the Distributor may reallow to dealers up to the full amount of
the front-end sales charge shown above. Dealers who receive 90% or more
of the sales charge may be deemed to be underwriters under the
Securities Act of 1933.
- --------------------------------------------------------------------------------
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<PAGE>
Certain dealers who enter into an agreement to provide extra training
and information on Delaware Group products and services and who increase sales
of Delaware Group funds may receive an additional commission of up to 0.15% of
the offering price in connection with sales of Class A Shares. Such dealers must
meet certain requirements in terms of organization and distribution capabilities
and their ability to increase sales. The Distributor should be contacted for
further information on these requirements as well as the basis and circumstances
upon which the additional commission will be paid. Participating dealers may be
deemed to have additional responsibilities under the securities laws.
Dealer's Commission
For initial purchases of Class A Shares of $1,000,000 or more, a
dealer's commission may be paid by the Distributor to financial advisers through
whom such purchases are effected in accordance with the following schedule:
Dealer's Commission
(as a percentage of
Amount of Purchase amount purchased)
------------------ -----------------
Up to $2 million 1.00%
Next $1 million up to $3 million 0.75
Next $2 million up to $5 million 0.50
Amount over $5 million 0.25
In determining a financial adviser's eligibility for the dealer's
commission, purchases of Class A Shares of other Delaware Group funds as to
which a Limited CDSC applies (see Contingent Deferred Sales Charge for Certain
Redemptions of Class A Shares Purchased at Net Asset Value under Redemption and
Exchange in the Fund Classes' Prospectuses) may be aggregated with those of the
Class A Shares of a Fund. Financial advisers also may be eligible for a dealer's
commission in connection with certain purchases made under a Letter of Intention
or pursuant to an investor's Right of Accumulation. Financial advisers should
contact the Distributor concerning the applicability and calculation of the
dealer's commission in the case of combined purchases.
An exchange from other Delaware Group funds will not qualify for
payment of the dealer's commission, unless a dealer's commission or similar
payment has not been previously paid on the assets being exchanged. The schedule
and program for payment of the dealer's commission are subject to change or
termination at any time by the Distributor at its discretion.
Contingent Deferred Sales Charge - Class B Shares and Class C Shares
Class B and Class C Shares are purchased without a front-end sales
charge. Class B Shares redeemed within six years of purchase may be subject to a
CDSC at the rates set forth below, and Class C Shares redeemed within 12 months
of purchase may be subject to a CDSC of 1%. CDSCs are charged as a percentage of
the dollar amount subject to the CDSC. The charge will be assessed on an amount
equal to the lesser of the net asset value at the time of purchase of the shares
being redeemed or the net asset value of those shares at the time of redemption.
No CDSC will be imposed on increases in net asset value above the initial
purchase price, nor will a CDSC be assessed on redemptions of shares acquired
through reinvestment of dividends or capital gains distributions. See Waiver of
Contingent Deferred Sales Charge - Class B and Class
-36-
<PAGE>
C Shares under Redemption and Exchange in the Prospectuses for the Fund Classes
for a list of the instances in which the CDSC is waived.
The following table sets forth the rates of the CDSC for Class B Shares
of each Fund:
Contingent Deferred
Sales Charge (as a
Percentage of
Dollar Amount
Year After Purchase Made Subject to Charge)
------------------------ ------------------
0-2 4%
3-4 3%
5 2%
6 1%
7 and thereafter None
During the seventh year after purchase and, thereafter, until converted
automatically into Class A Shares, Class B Shares, absent any applicable fee
waivers, will still be subject to the annual 12b-1 Plan expenses of up to 1% of
average daily net assets of those shares. At the end of approximately eight
years after purchase, the investor's Class B Shares will be automatically
converted into Class A Shares of the same Fund. See Automatic Conversion of
Class B Shares under Classes of Shares in the Fund Classes' Prospectuses. Such
conversion will constitute a tax-free exchange for federal income tax purposes.
See Taxes in the Prospectuses for the Fund Classes.
Plans Under Rule 12b-1 for the Fund Classes
Pursuant to Rule 12b-1 under the 1940 Act, Equity Funds V, Inc. has
adopted a separate plan for each of the Class A Shares, the Class B Shares and
the Class C Shares of each Fund (the "Plans"). Each Plan permits a Fund to pay
for certain distribution, promotional and related expenses involved in the
marketing of only the class to which the Plan applies. The Plans do not apply to
the Institutional Classes of shares. Such shares are not included in calculating
the Plans' fees, and the Plans are not used to assist in the distribution and
marketing of shares of the Institutional Classes. Shareholders of the
Institutional Classes may not vote on matters affecting the Plans.
The Plans permit a Fund, pursuant to its Distribution Agreement, to pay
out of the assets of the Class A Shares, Class B Shares and Class C Shares
monthly fees to the Distributor for its services and expenses in distributing
and promoting sales of shares of such classes. These expenses include, among
other things, preparing and distributing advertisements, sales literature and
prospectuses and reports used for sales purposes, compensating sales and
marketing personnel, and paying distribution and maintenance fees to securities
brokers and dealers who enter into agreements with the Distributor. The Plan
expenses relating to Class B and Class C Shares are also used to pay the
Distributor for advancing the commission costs to dealers with respect to the
initial sale of such shares.
-37-
<PAGE>
In addition, absent any applicable fee waiver, each Fund may make
payments out of the assets of the Class A, Class B and Class C Shares directly
to other unaffiliated parties, such as banks, who either aid in the distribution
of shares of, or provide services to, such classes.
The maximum aggregate fee payable by a Fund under its Plans, and a
Fund's Distribution Agreement, is on an annual basis, 0.30% of the Class A
Shares' average daily net assets for the year, and 1% (0.25% of which are
service fees to be paid to the Distributor, dealers and others for providing
personal service and/or maintaining shareholder accounts) of each of the Class B
Shares' and the Class C Shares' average daily net assets for the year. Equity
Funds V, Inc.'s Board of Directors may reduce these amounts at any time. The
Distributor has elected voluntarily to waive all payments under the 12b-1 Plan
for the Class A Shares, Class B Shares and Class C Shares of Retirement Income
Fund during the commencement of the public offering of the Fund through May 31,
1997.
All of the distribution expenses incurred by the Distributor and
others, such as broker/dealers, in excess of the amount paid on behalf of Class
A, Class B and Class C Shares would be borne by such persons without any
reimbursement from such Fund Classes. Subject to seeking best price and
execution, a Fund may, from time to time, buy or sell portfolio securities from
or to firms which receive payments under its Plans.
From time to time, the Distributor may pay additional amounts from its
own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plans and the Distribution Agreements, as amended, have been
approved by the Board of Directors of Equity Funds V, Inc., including a majority
of the directors who are not "interested persons" (as defined in the 1940 Act)
of Equity Funds V, Inc. and who have no direct or indirect financial interest in
the Plans by vote cast in person at a meeting duly called for the purpose of
voting on the Plans and such Agreements. Continuation of the Plans and the
Distribution Agreements, as amended, must be approved annually by the Board of
Directors in the same manner as specified above.
Each year, the directors must determine whether continuation of the
Plans is in the best interest of shareholders of, respectively, Class A Shares,
Class B Shares and Class C Shares and that there is a reasonable likelihood of
the Plan relating to a Fund Class providing a benefit to that Class. The Plans
and the Distribution Agreements, as amended, may be terminated with respect to a
class at any time without penalty by a majority of those directors who are not
"interested persons" or by a majority vote of the outstanding voting securities
of the relevant Fund Class. Any amendment materially increasing the maximum
percentage payable under the Plans must likewise be approved by a majority vote
of the outstanding voting securities of the relevant Fund Class, as well as by a
majority vote of those directors who are not "interested persons." With respect
to the Class A Share Plan, any material increase in the maximum percentage
payable thereunder must also be approved by a majority of the outstanding voting
securities of the Class B Shares. Also, any other material amendment to the
Plans must be approved by a majority vote of the directors including a majority
of the noninterested directors of Equity Funds V, Inc. having no interest in the
Plans. In addition, in order for the Plans to remain effective, the selection
and nomination of directors who are not "interested persons" of Equity Funds V,
Inc. must be effected by the directors who themselves are not "interested
persons" and who have no direct or indirect financial interest in the Plans.
Persons authorized to make payments under the Plans must provide written reports
at least quarterly to the Board of Directors for their review.
-38-
<PAGE>
For the fiscal year ended November 30, 1996, payments from the Class A
Shares, Class B Shares and Class C Shares of Value Fund amounted to $546,433,
$89,664 and $15,240, respectively. Such amounts were used for the following
purposes:
<TABLE>
<CAPTION>
Value Fund Value Fund Value Fund
A Class B Class C Class
------- ------- -------
<S> <C> <C> <C>
Advertising ---- ---- ----
Annual/Semi-Annual Reports $37,911 ---- ----
Broker Trails $441,648 $22,509 ----
Broker Sales Charges ---- $33,584 $14,274
Dealer Service Expenses ---- ---- ----
Interest on Broker Sales Charges ---- $29,181 $966
Commissions to Wholesalers $17,497 $3,627 ----
Promotional-Broker Meetings $8,513 $763 ----
Promotional-Other $20,520 ---- ----
Prospectus Printing $10,455 ---- ----
Telephone $1,732 ---- ----
Wholesaler Expenses $8,157 ---- ----
Other ---- ---- ----
</TABLE>
Other Payments to Dealers - Class A, Class B and Class C Shares
From time to time, at the discretion of the Distributor, all registered
broker/dealers whose aggregate sales of Fund Classes exceed certain limits as
set by the Distributor, may receive from the Distributor an additional payment
of up to 0.25% of the dollar amount of such sales. The Distributor may also
provide additional promotional incentives or payments to dealers that sell
shares of the Delaware Group of funds. In some instances, these incentives or
payments may be offered only to certain dealers who maintain, have sold or may
sell certain amounts of shares.
Payments to dealers made in connection with seminars, conferences or
contests relating to the promotion of Fund shares may be in an amount up to 100%
of the expenses incurred or awards made. The Distributor may also pay a portion
of the expense of preapproved dealer advertisements promoting the sale of
Delaware Group fund shares.
Special Purchase Features - Class A Shares
Buying Class A Shares at Net Asset Value
Class A Shares may be purchased without a front-end sales charge under
the Dividend Reinvestment Plan and, under certain circumstances, the Exchange
Privilege and the 12-Month Reinvestment Privilege.
Current and former officers, directors and employees of Equity Funds V,
Inc., any other fund in the Delaware Group, the Manager, or any of the Manager's
affiliates that may in the future be created, legal counsel to the funds and
registered representatives and employees of broker/dealers who have entered into
Dealer's Agreements with the Distributor may purchase Class A Shares and any
such class of shares of any of the funds in the Delaware Group, including any
fund that may be created, at the net asset value per share. Family members of
such persons at their direction, and any employee benefit plan established by
any of the foregoing funds, corporations, counsel or broker/dealers may also
purchase shares at net asset value.
Purchases of Class A Shares may also be made by clients of registered
representatives of an authorized investment dealer at net asset value within 12
months of a change of the registered representative's employment, if the
-39-
<PAGE>
purchase is funded by proceeds from an investment where a front-end sales
charge, contingent deferred sales charge or other sales charge has been
assessed. Purchases of Class A Shares may also be made at net asset value by
bank employees who provide services in connection with agreements between the
bank and unaffiliated brokers or dealers concerning sales of shares of Delaware
Group funds. In addition, purchases of Class A Shares may be made by financial
institutions investing for the account of their trust customers when they are
not eligible to purchase shares of a Fund's Institutional Class. Officers,
directors and key employees of institutional clients of the Manager or any of
its affiliates may purchase Class A Shares at net asset value. Moreover,
purchases may be effected at net asset value for the benefit of the clients of
brokers, dealers and registered investment advisers affiliated with a broker or
dealer, if such broker, dealer or investment adviser has entered into an
agreement with the Distributor providing specifically for the purchase of Class
A Shares in connection with special investment products, such as wrap accounts
or similar fee based programs. Such purchasers are required to sign a letter
stating that the purchase is for investment only and that the securities may not
be resold except to the issuer. Such purchasers may also be required to sign or
deliver such other documents as Equity Funds V, Inc. may reasonably require to
establish eligibility for purchase at net asset value.
Investments in Class A Shares made by plan level and/or participant
retirement accounts that are for the purpose of repaying a loan taken from such
accounts will be made at net asset value. Loan repayments made to a Delaware
Group account in connection with loans originated from accounts previously
maintained by another investment firm will also be invested at net asset value.
The Funds must be notified in advance that the trade qualifies for
purchase at net asset value.
Letter of Intention
The reduced front-end sales charges described above with respect to
Class A Shares are also applicable to the aggregate amount of purchases made
within a 13-month period pursuant to a written Letter of Intention provided by
the Distributor and signed by the purchaser, and not legally binding on the
signer or Equity Funds V, Inc., which provides for the holding in escrow by the
Transfer Agent, of 5% of the total amount of the Class A Shares intended to be
purchased until such purchase is completed within the 13-month period. A Letter
of Intention may be dated to include shares purchased up to 90 days prior to the
date the Letter is signed. The 13-month period begins on the date of the
earliest purchase. If the intended investment is not completed, except as noted
below, the purchaser will be asked to pay an amount equal to the difference
between the front-end sales charge on the Class A Shares purchased at the
reduced rate and the front-end sales charge otherwise applicable to the total
shares purchased. If such payment is not made within 20 days following the
expiration of the 13-month period, the Transfer Agent will surrender an
appropriate number of the escrowed shares for redemption in order to realize the
difference. Such purchasers may include the value (at offering price at the
level designated in their Letter of Intention) of all their shares of the Funds
and of any class of any of the other mutual funds in the Delaware Group (except
shares of any Delaware Group fund which do not carry a front-end sales charge,
CDSC or Limited CDSC, other than shares of Delaware Group Premium Fund, Inc.
beneficially owned in connection with the ownership of variable insurance
products, unless they were acquired through an exchange from a Delaware Group
fund which carried a front-end sales charge, CDSC or Limited CDSC) previously
purchased and still held as of the date of their Letter of Intention toward the
completion of such Letter.
Employers offering a Delaware Group retirement plan may also complete a
Letter of Intention to obtain a reduced front-end sales charge on investments of
Class A Shares made by the plan. The aggregate investment level of the Letter of
Intention will be determined and accepted by the Transfer Agent at the point of
plan establishment. The level and any reduction in front-end sales charge will
be based on actual plan participation and the projected investments in Delaware
Group funds that are offered with a front-end sales charge, CDSC or Limited CDSC
for a 13-month period. The Transfer Agent reserves the right to adjust the
signed Letter of Intention based on this acceptance criteria. The 13-month
period will begin on the date this Letter of Intention is accepted by the
Transfer Agent. If actual investments exceed the anticipated level and equal an
amount that would qualify the plan for further discounts, any front-end sales
charges will
-40-
<PAGE>
be automatically adjusted. In the event this Letter of Intention is not
fulfilled within the 13-month period, the plan level will be adjusted (without
completing another Letter of Intention) and the employer will be billed for the
difference in front-end sales charges due, based on the plan's assets under
management at that time. Employers may also include the value (at offering price
at the level designated in their Letter of Intention) of all their shares
intended for purchase that are offered with a front-end sales charge, CDSC or
Limited CDSC of any class. Class B Shares and Class C Shares of a Fund and other
Delaware Group funds which offer corresponding classes of shares may also be
aggregated for this purpose.
Combined Purchases Privilege
In determining the availability of the reduced front-end sales charge
previously set forth with respect to Class A Shares, purchasers may combine the
total amount of any combination of Class A Shares, Class B Shares and/or Class C
Shares of the Funds, as well as shares of any other class of any of the other
Delaware Group funds (except shares of any Delaware Group fund which do not
carry a front-end sales charge, CDSC or Limited CDSC, other than shares of
Delaware Group Premium Fund, Inc. beneficially owned in connection with the
ownership of variable insurance products, unless they were acquired through an
exchange from a Delaware Group fund which carried a front-end sales charge, CDSC
or Limited CDSC).
The privilege also extends to all purchases made at one time by an
individual; or an individual, his or her spouse and their children under 21; or
a trustee or other fiduciary of trust estates or fiduciary accounts for the
benefit of such family members (including certain employee benefit programs).
Right of Accumulation
In determining the availability of the reduced front-end sales charge
with respect to Class A Shares, purchasers may also combine any subsequent
purchases of Class A Shares, Class B Shares and Class C Shares of a Fund, as
well as shares of any other class of any of the other Delaware Group funds which
offer such classes (except shares of any Delaware Group fund which do not carry
a front-end sales charge, CDSC or Limited CDSC, other than shares of Delaware
Group Premium Fund, Inc. beneficially owned in connection with the ownership of
variable insurance products, unless they were acquired through an exchange from
a Delaware Group fund which carried a front-end sales charge, CDSC or Limited
CDSC). If, for example, any such purchaser has previously purchased and still
holds Class A Shares and/or shares of any other of the classes described in the
previous sentence with a value of $40,000 and subsequently purchases $60,000 at
offering price of additional shares of Class A Shares, the charge applicable to
the $60,000 purchase would currently be 3.75%. For the purpose of this
calculation, the shares presently held shall be valued at the public offering
price that would have been in effect were the shares purchased simultaneously
with the current purchase. Investors should refer to the table of sales charges
for Class A Shares to determine the applicability of the Right of Accumulation
to their particular circumstances.
-41-
<PAGE>
12-Month Reinvestment Privilege
Holders of Class A Shares of a Fund (and of the Institutional Classes
holding shares which were acquired through an exchange from one of the other
mutual funds in the Delaware Group offered with a front-end sales charge) who
redeem such shares of a Fund have one year from the date of redemption to
reinvest all or part of their redemption proceeds in Class A Shares of that Fund
or in Class A Shares of any of the other funds in the Delaware Group, subject to
applicable eligibility and minimum purchase requirements, in states where shares
of such other funds may be sold, at net asset value without the payment of a
front-end sales charge. This privilege does not extend to Class A Shares where
the redemption of the shares triggered the payment of a Limited CDSC. Persons
investing redemption proceeds from direct investments in mutual funds in the
Delaware Group offered without a front-end sales charge will be required to pay
the applicable sales charge when purchasing Class A Shares. The reinvestment
privilege does not extend to a redemption of either Class B Shares or Class C
Shares.
Any such reinvestment cannot exceed the redemption proceeds (plus any
amount necessary to purchase a full share). The reinvestment will be made at the
net asset value next determined after receipt of remittance. A redemption and
reinvestment could have income tax consequences. It is recommended that a tax
adviser be consulted with respect to such transactions. Any reinvestment
directed to a fund in which the investor does not then have an account will be
treated like all other initial purchases of a fund's shares. Consequently, an
investor should obtain and read carefully the prospectus for the fund in which
the investment is intended to be made before investing or sending money. The
prospectus contains more complete information about the fund, including charges
and expenses.
Investors should consult their financial advisers or the Transfer
Agent, which also serves as the Funds' shareholder servicing agent, about the
applicability of the Limited CDSC (see Contingent Deferred Sales Charge for
Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange in the Fund Classes' Prospectuses) in connection with
the features described above.
Group Investment Plans
Group Investment Plans which are not eligible to purchase shares of the
Institutional Classes may also benefit from the reduced front-end sales charges
for investments in Class A Shares set forth in the table on page 00, based on
total plan assets. If a company has more than one plan investing in the Delaware
Group of funds, then the total amount invested in all plans would be used in
determining the applicable front-end sales charge reduction upon each purchase,
both initial and subsequent, upon notification to the Fund in which the
investment is being made at the time of each such purchase. Employees
participating in such Group Investment Plans may also combine the investments
made in their plan account when determining the applicable front-end sales
charge on purchases to non-retirement Delaware Group investment accounts if they
so notify the Fund in connection with each purchase. For other retirement plans
and special services, see Retirement Plans for the Fund Classes under Investment
Plans.
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The Institutional Classes
The Institutional Class of each Fund is available for purchase only by:
(a) retirement plans introduced by persons not associated with brokers or
dealers that are primarily engaged in the retail securities business and
rollover individual retirement accounts from such plans; (b) tax-exempt employee
benefit plans of the Manager or its affiliates and securities dealer firms with
a selling agreement with the Distributor; (c) institutional advisory accounts of
the Manager or its affiliates and those having client relationships with
Delaware Investment Advisers, a division of the Manager, or its affiliates and
their corporate sponsors, as well as subsidiaries and related employee benefit
plans and rollover individual retirement accounts from such institutional
advisory accounts; (d) a bank, trust company and similar financial institution
investing for its own account or for the account of its trust customers for whom
such financial institution is exercising investment discretion in purchasing
shares of the Class, except where the investment is part of a program that
requires payment to the financial institution of a Rule 12b-1 fee; and (e)
registered investment advisers investing on behalf of clients that consist
solely of institutions and high net-worth individuals having at least $1,000,000
entrusted to the adviser for investment purposes, but only if the adviser is not
affiliated or associated with a broker or dealer and derives compensation for
its services exclusively from its clients for such advisory services.
Shares of the Institutional Classes are available for purchase at net
asset value, without the imposition of a front-end or contingent deferred sales
charge and are not subject to Rule 12b-1 expenses.
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INVESTMENT PLANS
Reinvestment Plan/Open Account
Unless otherwise designated by shareholders in writing, dividends from
net investment income and distributions from realized securities profits, if
any, will be automatically reinvested in additional shares of the respective
Fund Class of Value Fund in which an investor has an account (based on the net
asset value in effect on the reinvestment date) and will be credited to the
shareholder's account on that date. All dividends and distributions of each
Class of Retirement Income Fund and of Value Fund Institutional Class are
reinvested in the accounts of the holders of such shares (based on the net asset
value in effect on the reinvestment date). A confirmation of each dividend
payment from net investment income and of distributions from realized securities
profits, if any, will be mailed to shareholders in the first quarter of the
fiscal year.
Under the Reinvestment Plan/Open Account, shareholders may purchase and
add full and fractional shares to their plan accounts at any time either through
their investment dealers or by sending a check or money order to specific Fund
and Class in which shares are being purchased. Such purchases, which must meet
the minimum subsequent purchase requirements set forth in the Prospectuses and
this Part B, are made for Class A Shares at the public offering price and, for
Class B Shares, Class C Shares and Institutional Classes shares at the net asset
value, at the end of the day of receipt. A reinvestment plan may be terminated
at any time. This plan does not assure a profit nor protect against depreciation
in a declining market.
Reinvestment of Dividends in Other Delaware Group Funds
Subject to applicable eligibility and minimum initial purchase
requirements and the limitations set forth below, holders of Class A, Class B
and Class C Shares may automatically reinvest dividends and/or distributions in
any of the mutual funds in the Delaware Group, including the Funds, in states
where their shares may be sold. Such investments will be at net asset value at
the close of business on the reinvestment date without any front-end sales
charge or service fee. The shareholder must notify the Transfer Agent in writing
and must have established an account in the fund into which the dividends and/or
distributions are to be invested. Any reinvestment directed to a fund in which
the investor does not then have an account will be treated like all other
initial purchases of a fund's shares. Consequently, an investor should obtain
and read carefully the prospectus for the fund in which the investment is
intended to be made before investing or sending money. The prospectus contains
more complete information about the fund, including charges and expenses. See
also Additional Methods of Adding to Your Investment - Dividend Reinvestment
Plan under How to Buy Shares in the Prospectuses for the Fund Classes.
Subject to the following limitations, dividends and/or distributions
from other funds in the Delaware Group may be invested in shares of the Funds,
provided an account has been established. Dividends from Class A Shares may not
be directed to Class B Shares or Class C Shares. Dividends from Class B Shares
may only be directed to other Class B Shares and dividends from Class C Shares
may only be directed to other Class C Shares. See Appendix B--Classes Offered in
the Fund Classes' Prospectuses for the funds in the Delaware Group that are
eligible for investment by holders of Fund shares.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
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Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan--Investors may arrange for either Fund to
accept for investment in Class A, Class B or Class C Shares, through an agent
bank, preauthorized government or private recurring payments. This method of
investment assures the timely credit to the shareholder's account of payments
such as social security, veterans' pension or compensation benefits, federal
salaries, Railroad Retirement benefits, private payroll checks, dividends, and
disability or pension fund benefits. It also eliminates lost, stolen and delayed
checks.
Automatic Investing Plan--Shareholders of Class A, Class B and Class C
Shares may make automatic investments by authorizing, in advance, monthly
payments directly from their checking account for deposit into their Fund
account. This type of investment will be handled in either of the following
ways. (1) If the shareholder's bank is a member of the National Automated
Clearing House Association ("NACHA"), the amount of the investment will be
electronically deducted from his or her account by Electronic Fund Transfer
("EFT"). The shareholder's checking account will reflect a debit each month at a
specified date although no check is required to initiate the transaction. (2) If
the shareholder's bank is not a member of NACHA, deductions will be made by
preauthorized checks, known as Depository Transfer Checks. Should the
shareholder's bank become a member of NACHA in the future, his or her
investments would be handled electronically through EFT.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans.
* * *
Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent investments
under such Plans must be for $25 or more. An investor wishing to take advantage
of either service must complete an authorization form. Either service can be
discontinued by the shareholder at any time without penalty by giving written
notice.
Payments to a Fund from the federal government or its agencies on
behalf of a shareholder may be credited to the shareholder's account after such
payments should have been terminated by reason of death or otherwise. Any such
payments are subject to reclamation by the federal government or its agencies.
Similarly, under certain circumstances, investments from private sources may be
subject to reclamation by the transmitting bank. In the event of a reclamation,
a Fund may liquidate sufficient shares from a shareholder's account to reimburse
the government or the private source. In the event there are insufficient shares
in the shareholder's account, the shareholder is expected to reimburse the Fund.
Direct Deposit Purchases by Mail
Shareholders may authorize a third party, such as a bank or employer,
to make investments directly to their Fund accounts. Either Fund will accept
these investments, such as bank-by-phone, annuity payments and payroll
allotments, by mail directly from the third party. Investors should contact
their employers or financial institutions who in turn should contact Equity
Funds V, Inc. for proper instructions.
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Wealth Builder Option
Shareholders can use the Wealth Builder Option to invest in the Fund
Classes through regular liquidations of shares in their accounts in other mutual
funds in the Delaware Group. Shareholders of the Fund Classes may elect to
invest in one or more of the other mutual funds in the Delaware Group through
the Wealth Builder Option. See Wealth Builder Option and Redemption and Exchange
in the Prospectuses for the Fund Classes.
Under this automatic exchange program, shareholders can authorize
regular monthly investments (minimum of $100 per fund) to be liquidated from
their account and invested automatically into other mutual funds in the Delaware
Group, subject to the conditions and limitations set forth in the Fund Classes'
Prospectuses. The investment will be made on the 20th day of each month (or, if
the fund selected is not open that day, the next business day) at the public
offering price or net asset value, as applicable, of the fund selected on the
date of investment. No investment will be made for any month if the value of the
shareholder's account is less than the amount specified for investment.
Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the fund
into which investments are made could fluctuate. Since this program involves
continuous investment regardless of such fluctuating value, investors selecting
this option should consider their financial ability to continue to participate
in the program through periods of low fund share prices. This program involves
automatic exchanges between two or more fund accounts and is treated as a
purchase of shares of the fund into which investments are made through the
program. See Exchange Privilege for a brief summary of the tax consequences of
exchanges. Shareholders can terminate their participation at any time by written
notice to their Fund.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, Profit Sharing and Money Purchase Pension Plans, 401(k)
Defined Contribution Plans, 403(b)(7) Deferred Compensation Plans or 457
Deferred Compensation Plans. This option also is not available to shareholders
of the Institutional Classes.
Retirement Plans for the Fund Classes
An investment in either Fund may be suitable for tax-deferred
retirement plans. Among the retirement plans noted below, Class B Shares are
available for investment only by Individual Retirement Accounts, Simplified
Employee Pension Plans, 457 Deferred Compensation Plans and 403(b)(7) Deferred
Compensation Plans. The CDSC may be waived on certain redemptions of Class B
Shares and Class C Shares. See Waiver of Contingent Deferred Sales Charge -
Class B and Class C Shares under Redemption and Exchange in the Prospectuses for
the Fund Classes for a list of the instances in which the CDSC is waived.
Each purchase of Class B Shares is subject to a maximum purchase
limitation of $250,000 for retirement plans. Each purchase of Class C Shares
must be in an amount that is less than $1,000,000 for such plans. The maximum
purchase limitations apply only to the initial purchase of shares by the
retirement plan.
Minimum investment limitations generally applicable to other investors
do not apply to retirement plans other than Individual Retirement Accounts, for
which there is a minimum initial purchase of $250 and a minimum subsequent
purchase of $25 regardless of which Class is selected. Retirement plans may be
subject to plan establishment fees, annual maintenance fees and/or other
administrative or trustee fees. Fees are based
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upon the number of participants in the plan as well as the services selected.
Additional information about fees is included in retirement plan materials. Fees
are quoted upon request. Annual maintenance fees may be shared by Delaware
Management Trust Company, the Transfer Agent, other affiliates of the Manager
and others that provide services to such Plans.
Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders. Certain
retirement plans may qualify to purchase shares of the Institutional Classes.
See The Institutional Classes, above. For additional information on any of the
plans and Delaware's retirement services, call the Shareholder Service Center
telephone number.
It is advisable for an investor considering any one of the retirement
plans described below to consult with an attorney, accountant or a qualified
retirement plan consultant. For further details, including applications for any
of these plans, contact your investment dealer or the Distributor.
Taxable distributions from the retirement plans described below may be
subject to withholding.
Please contact your investment dealer or the Distributor for the
special application forms required for the Plans described below.
Prototype Profit Sharing or Money Purchase Pension Plans
Prototype Plans are available for self-employed individuals,
partnerships and corporations. These plans can be maintained as Section 401(k),
profit sharing or money purchase pension plans. Contributions may be invested
only in Class A and Class C Shares.
Individual Retirement Account ("IRA")
A document is available for an individual who wants to establish an IRA
and make contributions which may be tax-deductible, even if the individual is
already participating in an employer-sponsored retirement plan. Even if
contributions are not deductible for tax purposes, as indicated below, earnings
will be tax-deferred. In addition, an individual may make contributions on
behalf of a spouse who has no compensation for the year or, for years prior to
1997, elects to be treated as having no compensation for the year. Investments
in each of the Fund Classes are permissible.
An individual can contribute up to $2,000 of his or her IRA each year.
Contributions may or may not be deductible depending upon the taxpayers adjusted
gross income and whether the taxpayer or his or her spouse is an active
participant in an employer-sponsored retirement plan. Even if a taxpayer (or his
or her spouse) is an active participant in an employer-sponsored retirement
plan, the full $2,000 deduction is still available if the taxpayer's adjusted
gross income is below $25,000 ($40,000 for taxpayers filing joint returns). A
partial deduction is allowed for married couples with incomes between $40,000
and $50,000, and for single individuals with incomes between $25,000 and
$35,000. No deductions are available for contributions to IRAs by taxpayers
whose adjusted gross income before IRA deductions exceeds $50,000 ($35,000 for
singles) and who are active participants in an employer-sponsored retirement
plan. Taxpayers who are not allowed deductions on IRA contributions still can
make nondeductible IRA contributions of as much as $2,000 for each working
spouse ($2,250 for one-income couples for years prior to 1997), and defer taxes
on interest or other earnings from the IRAs. Special rules apply for determining
the deductibility of contributions made by married individuals filing separate
returns.
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Effective for tax years beginning after 1996, one-income couples can
contribute up to $2,000 to each spouse's IRA provided the combined compensation
of both spouses is at least equal to the total contributions for both spouses.
If the working spouse is an active participant in an employer-sponsored
retirement plan and earns over $40,000, the maximum deduction limit is reduced
in the same way that the limit is reduced for contributions to a non-spousal
IRA.
A company or association may establish a Group IRA for employees or
members who want to purchase shares of a Fund. Purchases of $1 million or more
of Class A Shares qualify for purchase at net asset value but may, under certain
circumstances, be subject to a Limited CDSC. See Purchasing Shares for
information on reduced front-end sales charges applicable to Class A Shares.
Investments generally must be held in the IRA until age 59 1/2 in order
to avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in which
the participant reaches age 70 1/2. Individuals are entitled to revoke the
account, for any reason and without penalty, by mailing written notice of
revocation to Delaware Management Trust Company within seven days after the
receipt of the IRA Disclosure Statement or within seven days after the
establishment of the IRA, except, if the IRA is established more than seven days
after receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the year
received. Excess contributions removed after the tax filing deadline, plus
extensions, for the year in which the excess contributions were made are subject
to a 6% excise tax on the amount of excess. Premature distributions
(distributions made before age 59 1/2, except for death, disability and certain
other limited circumstances) will be subject to a 10% excise tax on the amount
prematurely distributed, in addition to the income tax resulting from the
distribution. See Alternative Purchase Arrangements - Class B Shares and Class C
Shares under Classes of Shares, Contingent Deferred Sales Charge - Class B
Shares and Class C Shares under Classes of Shares, and Waiver of Contingent
Deferred Sales Charge - Class B and Class C Shares under Redemption and Exchange
in the Fund Classes' Prospectuses concerning the applicability of a CDSC upon
redemption.
Effective January 1, 1997, the 10% premature distribution penalty will
not apply to distributions from an IRA that are used to pay medical expenses in
excess of 7.5% of adjusted gross income or to pay health insurance premiums by
an individual who has received unemployment compensation for 12 consecutive
weeks.
See Appendix A for additional IRA information.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees. Each of the Fund Classes is available for investment by a
SEP/IRA.
Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")
New SAR/SEP plans may not be established after December 31, 1996. In
addition, employers must have 25 or fewer eligible employees to maintain an
existing SEP/IRA which permits salary deferral contributions. SAR/SEP plans may
only invest in Class A Shares and Class C Shares.
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Prototype 401(k) Defined Contribution Plan
Section 401(k) of the Code permits employers to establish qualified
plans based on salary deferral contributions. Plan documents are available to
enable employers to establish a plan. An employer may also elect to make profit
sharing contributions and/or matching contributions with investments in only
Class A Shares and Class C Shares or certain other funds in the Delaware Group.
Purchases under the plan may be combined for purposes of computing the reduced
front-end sales charge applicable to Class A Shares as set forth in the table on
page 00.
Deferred Compensation Plan for Public Schools and Non-Profit Organizations
("403(b)(7)")
Section 403(b)(7) of the Code permits public school systems and certain
non-profit organizations to use mutual fund shares held in a custodial account
to fund deferred compensation arrangements for their employees. A custodial
account agreement is available for those employers who wish to purchase any of
the Fund Classes in conjunction with such an arrangement. Applicable front-end
sales charges with respect to Class A Shares for such purchases are set forth in
the table on page 00.
Deferred Compensation Plan for State and Local Government Employees ("457")
Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation plan
for their employees who wish to participate. This enables employees to defer a
portion of their salaries and any federal (and possibly state) taxes thereon.
Such plans may invest in shares of any of the Fund Classes. Although investors
may use their own plan, there is available a Delaware Group 457 Deferred
Compensation Plan. Interested investors should contact the Distributor or their
investment dealers to obtain further information. Applicable front-end sales
charges for such purchases of Class A Shares are set forth in the table on page
00.
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DETERMINING OFFERING PRICE AND NET ASSET VALUE
Orders for purchases of Class A Shares are effected at the offering
price next calculated by the Fund in which shares are being purchased after
receipt of the order by the Fund or its agent. Orders for purchases of Class B
Shares, Class C Shares and the Institutional Classes are effected at the net
asset value per share next calculated after receipt of the order by the Fund in
which shares are being purchased or its agent. Selling dealers have the
responsibility of transmitting orders promptly.
The offering price for Class A Shares consists of the net asset value
per share plus any applicable sales charges. Offering price and net asset value
are computed as of the close of regular trading on the New York Stock Exchange
(ordinarily, 4 p.m., Eastern time) on days when the Exchange is open. The New
York Stock Exchange is scheduled to be open Monday through Friday throughout the
year except for New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. When the New York Stock
Exchange is closed, the Funds will generally be closed, pricing calculations
will not be made and purchase and redemption orders will not be processed.
An example showing how to calculate the net asset value per share and,
in the case of Class A Shares, the offering price per share, is included in
Value Fund's financial statements which are incorporated by reference into this
Part B.
Each Fund's net asset value per share is computed by adding the value
of all the securities and other assets in the portfolio, deducting any
liabilities and dividing by the number of shares outstanding. Expenses and fees
are accrued daily. In determining a Fund's total net assets, portfolio
securities primarily listed or traded on a national or foreign securities
exchange, except for bonds, are valued at the last sales price on that exchange
upon which such securities are primarily traded. Options are valued at the last
reported sales price or, if no sales are reported, at the mean between bid and
asked prices. For valuation purposes, foreign securities initially expressed in
foreign currency values will be converted into U.S. dollar values at the mean
between the bid and offered quotations of such currencies against U.S. dollars
as last quoted by any recognized dealer. Securities not traded on a particular
day, over-the-counter securities, and government and agency securities are
valued at the mean value between bid and asked prices. Money market instruments
having a maturity of less than 60 days are valued at amortized cost. Debt
securities (other than short-term obligations) are valued on the basis of
valuations provided by a pricing service when such prices are believed to
reflect the fair value of such securities. Use of a pricing service has been
approved by the Board of Directors. Prices provided by a pricing service take
into account appropriate factors such as institutional trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data. Subject to the foregoing, securities for
which market quotations are not readily available and other assets are valued at
fair value as determined in good faith and in a method approved by the Board of
Directors.
Each Class of a Fund will bear, pro-rata, all of the common expenses of
that Fund. The net asset values of all outstanding shares of each Class of a
Fund will be computed on a pro-rata basis for each outstanding share based on
the proportionate participation in that Fund represented by the value of shares
of that Class. All income earned and expenses incurred by a Fund will be borne
on a pro-rata basis by each outstanding share of a Class, based on each Class'
percentage in that Fund represented by the value of shares of such Classes,
except that the Institutional Classes
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will not incur any of the expenses under Value Fund Inc.'s 12b-1 Plans and the
Class A, Class B and Class C Shares alone will bear any 12b-1 Plan expenses
payable under their respective Plans. Due to the specific distribution expenses
and other costs that will be allocable to each Class, the net asset value of
each Class of Value Fund will vary. During the period the current waivers of
12b-1 Plan expenses by the Distributor in connection with the distribution of
Class A, Class B and Class C Shares of Retirement Income Fund remain applicable
no such variance shall arise.
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REDEMPTION AND REPURCHASE
Any shareholder may require a Fund to redeem shares by sending a
written request, signed by the record owner or owners exactly as the shares are
registered, to the Fund at 1818 Market Street, Philadelphia, PA 19103. In
addition, certain expedited redemption methods described below are available
when stock certificates have not been issued. Certificates are issued for Class
A Shares and Institutional Class shares only if a shareholder specifically
requests them. Certificates are not issued for Class B Shares or Class C Shares.
If stock certificates have been issued for shares being redeemed, they must
accompany the written request. For redemptions of $50,000 or less paid to the
shareholder at the address of record, the request must be signed by all owners
of the shares or the investment dealer of record, but a signature guarantee is
not required. When the redemption is for more than $50,000, or if payment is
made to someone else or to another address, signatures of all record owners are
required and a signature guarantee may be required. Each signature guarantee
must be supplied by an eligible guarantor institution. Each Fund reserves the
right to reject a signature guarantee supplied by an eligible institution based
on its creditworthiness. The Funds may request further documentation from
corporations, retirement plans, executors, administrators, trustees or
guardians.
In addition to redemption of Fund shares, the Distributor, acting as
agent of the Funds, offers to repurchase Fund shares from broker/dealers acting
on behalf of shareholders. The redemption or repurchase price, which may be more
or less than the shareholder's cost, is the net asset value per share next
determined after receipt of the request in good order by the respective Fund or
its agent, less any applicable CDSC or Limited CDSC. This is computed and
effective at the time the offering price and net asset value are determined. See
Determining Offering Price and Net Asset Value. The Funds and the Distributor
end their business days at 5 p.m., Eastern time. This offer is discretionary and
may be completely withdrawn without further notice by the Distributor.
Orders for the repurchase of Fund shares which are submitted to the
Distributor prior to the close of its business day will be executed at the net
asset value per share computed that day (subject to the applicable CDSC or
Limited CDSC), if the repurchase order was received by the broker/dealer from
the shareholder prior to the time the offering price and net asset value are
determined on such day. The selling dealer has the responsibility of
transmitting orders to the Distributor promptly. Such repurchase is then settled
as an ordinary transaction with the broker/dealer (who may make a charge to the
shareholder for this service) delivering the shares repurchased.
Certain redemptions of Class A Shares purchased at net asset value may
result in the imposition of a Limited CDSC. See Contingent Deferred Sales Charge
for Certain Redemptions of Class A Shares Purchased at Net Asset Value under
Redemption and Exchange in the Prospectuses for the Fund Classes. Class B Shares
are subject to a CDSC of: (i) 4% if shares are redeemed within two years of
purchase; (ii) 3% if shares are redeemed during the third or fourth year
following purchase; (iii) 2% if shares are redeemed during the fifth year
following purchase; and (iv) 1% if shares are redeemed during the sixth year
following purchase. Class C Shares are subject to a CDSC of 1% if shares are
redeemed within 12 months following purchase. See Contingent Deferred Sales
Charge - Class B Shares and Class C Shares under Classes of Shares in the
Prospectuses for the Fund Classes. Except for the applicable CDSC or Limited
CDSC, and with respect to the expedited payment by wire described below for
which, in the case of the Fund Classes, there is currently a $7.50 bank wiring
cost, neither the Funds nor the Distributor charges a fee for redemptions or
repurchases, but such fees could be charged at any time in the future.
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Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later than seven days, after receipt of a redemption request
in good order; provided, however, that each commitment to mail or wire
redemption proceeds by a certain time, as described below, is modified by the
qualifications described in the next paragraph.
Each Fund will process written or telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. A Fund will honor redemption requests as to shares for which a check
was tendered as payment, but a Fund will not mail or wire the proceeds until it
is reasonably satisfied that the check has cleared. This potential delay can be
avoided by making investments by wiring Federal Funds.
If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason, the
Fund involved will automatically redeem from the shareholder's account the
shares purchased by the check plus any dividends earned thereon. Shareholders
may be responsible for any losses to a Fund or to the Distributor.
In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result of
which disposal by a Fund of securities owned by it is not reasonably practical,
or it is not reasonably practical for a Fund fairly to value its assets, or in
the event that the Securities and Exchange Commission has provided for such
suspension for the protection of shareholders, a Fund may postpone payment or
suspend the right of redemption or repurchase. In such case, the shareholder may
withdraw the request for redemption or leave it standing as a request for
redemption at the net asset value next determined after the suspension has been
terminated.
Payment for shares redeemed or repurchased may be made in either cash
or kind, or partly in cash and partly in kind. Any portfolio securities paid or
distributed in kind would be valued as described in Determining Offering Price
and Net Asset Value. Subsequent sale by an investor receiving a distribution in
kind could result in the payment of brokerage commissions. However, Equity Funds
V, Inc. has elected to be governed by Rule 18f-1 under the 1940 Act pursuant to
which each Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value of such Fund during any 90-day period for
any one shareholder.
The value of a Fund's investments is subject to changing market prices.
Thus, a shareholder reselling shares to a Fund may sustain either a gain or
loss, depending upon the price paid and the price received for such shares.
Small Accounts
Before a Fund involuntarily redeems shares from an account that, under
the circumstances noted in the relevant Prospectus, has remained below the
minimum amounts required by the Fund's Prospectuses and sends the proceeds to
the shareholder, the shareholder will be notified in writing that the value of
the shares in the account is less than the minimum required and will be allowed
60 days from the date of notice to make an additional investment to meet the
required minimum. See The Conditions of Your Purchase under How to Buy Shares in
the Prospectuses. Any redemption in an inactive account established with a
minimum investment may trigger mandatory redemption. No CDSC or Limited CDSC
will apply to the redemptions described in this paragraph.
Effective November 29, 1995, the minimum initial investment in Value
Fund A Class was increased from $250 to $1,000. Accounts of Value Fund A Class
that were established prior to November 29, 1995 and maintain a balance in
excess of $250 will not presently be subject to the $9 quarterly service fee
that may be assessed against accounts with balances below the stated minimum nor
subject to involuntary redemption.
* * *
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Each Fund has made available certain redemption privileges, as
described below. The Funds reserves the right to suspend or terminate these
expedited payment procedures upon 60 days' written notice to shareholders.
Expedited Telephone Redemptions
Shareholders of the Fund Classes or their investment dealers of record
wishing to redeem any amount of shares of $50,000 or less for which certificates
have not been issued may call the Shareholder Service Center at 800-523-1918 or,
in the case of shareholders of the Institutional Classes, their Client Services
Representative at 800-828-5052 prior to the time the offering price and net
asset value are determined, as noted above, and have the proceeds mailed to them
at the address of record. Checks payable to the shareholder(s) of record will
normally be mailed the next business day, but no later than seven days, after
the receipt of the redemption request. This option is only available to
individual, joint and individual fiduciary-type accounts.
In addition, redemption proceeds of $1,000 or more can be transferred
to your predesignated bank account by wire or by check by calling the phone
numbers listed above. An authorization form must have been completed by the
shareholder and filed with the relevant Fund before the request is received.
Payment will be made by wire or check to the bank account designated on the
authorization form as follows:
1. Payment by Wire: Request that Federal Funds be wired to the bank
account designated on the authorization form. Redemption proceeds will normally
be wired on the next business day following receipt of the redemption request.
There is a $7.50 wiring fee (subject to change) charged by CoreStates Bank, N.A.
which will be deducted from the withdrawal proceeds each time the shareholder
requests a redemption from Class A Shares, Class B Shares and Class C Shares. If
the proceeds are wired to the shareholder's account at a bank which is not a
member of the Federal Reserve System, there could be a delay in the crediting of
the funds to the shareholder's bank account.
2. Payment by Check: Request a check be mailed to the bank account
designated on the authorization form. Redemption proceeds will normally be
mailed the next business day, but no later than seven days, from the date of the
telephone request. This procedure will take longer than the Payment by Wire
option (1 above) because of the extra time necessary for the mailing and
clearing of the check after the bank receives it.
Redemption Requirements: In order to change the name of the bank and
the account number it will be necessary to send a written request to the
relevant Fund and a signature guarantee may be required. Each signature
guarantee must be supplied by an eligible guarantor institution. The Funds
reserve the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness.
To reduce the shareholder's risk of attempted fraudulent use of the
telephone redemption procedure, payment will be made only to the bank account
designated on the authorization form.
If expedited payment under these procedures could adversely affect a
Fund, such Fund may take up to seven days to pay the shareholder.
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<PAGE>
Neither the Funds nor the Funds' Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, each Fund will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, such Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Telephone instructions received by
shareholders of the Fund Classes are generally tape recorded. A written
confirmation will be provided for all purchase, exchange and redemption
transactions initiated by telephone.
Systematic Withdrawal Plans
Shareholders of Class A, Class B and Class C Shares of Value Fund who
own or purchase $5,000 or more of shares at the offering price, or net asset
value, as applicable, for which certificates have not been issued may establish
a Systematic Withdrawal Plan for monthly withdrawals of $25 or more, or
quarterly withdrawals of $75 or more, although Value Fund does not recommend any
specific amount of withdrawal. This $5,000 minimum does not apply for Value
Fund's prototype retirement plans. Shares purchased with the initial investment
and through reinvestment of cash dividends and realized securities profits
distributions will be credited to the shareholder's account and sufficient full
and fractional shares will be redeemed at the net asset value calculated on the
third business day preceding the mailing date.
Checks are dated either the 1st or the 15th of the month, as selected
by the shareholder (unless such date falls on a holiday or a weekend), and are
normally mailed within two business days. Both ordinary income dividends and
realized securities profits distributions will be automatically reinvested in
additional shares of the Class at net asset value. This plan is not recommended
for all investors and should be started only after careful consideration of its
operation and effect upon the investor's savings and investment program. To the
extent that withdrawal payments from the plan exceed any dividends and/or
realized securities profits distributions paid on shares held under the plan,
the withdrawal payments will represent a return of capital, and the share
balance may in time be depleted, particularly in a declining market.
The sale of shares for withdrawal payments constitutes a taxable event
and a shareholder may incur a capital gain or loss for federal income tax
purposes. This gain or loss may be long-term or short-term depending on the
holding period for the specific shares liquidated. Premature withdrawals from
retirement plans may have adverse tax consequences.
Withdrawals under this plan made concurrently with the purchases of
additional shares may be disadvantageous to the shareholder. Purchases of Class
A Shares of Value Fund through a periodic investment program in a fund managed
by the Manager must be terminated before a Systematic Withdrawal Plan with
respect to such shares can take effect, except if the shareholder is a
participant in one of our retirement plans or is investing in Delaware Group
funds which do not carry a sales charge. Redemptions of Class A Shares pursuant
to a Systematic Withdrawal Plan may be subject to a Limited CDSC if the purchase
was made at net asset value and a dealer's commission has been paid on that
purchase. Redemptions of Class B Shares or Class C Shares pursuant to a
Systematic Withdrawal Plan may be subject to a CDSC, unless the annual amount
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<PAGE>
selected to be withdrawn is less than 12% of the account balance on the date
that the Systematic Withdrawal Plan was established. See Waiver of Contingent
Deferred Sales Charge - Class B and Class C Shares and Waiver of Limited
Contingent Deferred Sales Charge - Class A Shares under Redemption and Exchange
in the Prospectus for the Fund Classes of Value Fund. Shareholders should
consult their financial advisers to determine whether a Systematic Withdrawal
Plan would be suitable for them.
An investor wishing to start a Systematic Withdrawal Plan must complete
an authorization form. If the recipient of Systematic Withdrawal Plan payments
is other than the registered shareholder, the shareholder's signature on this
authorization must be guaranteed. Each signature guarantee must be supplied by
an eligible guarantor institution. Value Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. This plan may be terminated by the shareholder or the Transfer
Agent at any time by giving written notice.
The Systematic Withdrawal Plan is not available for the Institutional
Classes or, currently, any of the Fund Classes of Retirement Income Fund.
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<PAGE>
DISTRIBUTIONS AND TAXES
Each Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Code. As such, a Fund
will not be subject to federal income tax on net investment income and net
realized capital gains which are distributed to shareholders.
Each Class of shares of a Fund will share proportionately in the
investment income and expenses of that Fund, except that, absent any applicable
fee waiver, Class A Shares, Class B Shares and Class C Shares alone will incur
distribution fees under their respective 12b-1 Plans.
Value Fund intends to pay out substantially all of its net investment
income and net realized capital gains. Such payments, if any, will be made once
a year during the first quarter of the following fiscal year. Retirement Income
Fund expects to declare and pay dividends from net investment income monthly to
shareholders of each Class of the Fund's shares. However, Retirement Income Fund
does not anticipate declaring or paying dividends during the first few months
following the commencement of its operations. All dividends and any capital
gains distributions will be automatically credited to the shareholder's account
in additional shares of the same class of the Fund at net asset value unless, in
the case of shareholders in the Fund Classes of Value Fund, the shareholder
requests in writing that such dividends and/or distributions be paid in cash.
Dividend payments of $1.00 or less will be automatically reinvested,
notwithstanding a shareholder's election to receive dividends in cash. If such a
shareholder's dividends increase to greater than $1.00, the shareholder would
have to file a new election in order to begin receiving dividends in cash again.
Any check in payment of dividends or other distributions which cannot
be delivered by the United States Post Office or which remains uncashed for a
period of more than one year may be reinvested in the shareholder's account at
the then-current net asset value and the dividend option may be changed from
cash to reinvest. Value Fund may deduct from a shareholder's account the costs
of the Fund's effort to locate a shareholder if a shareholder's mail is returned
by the United States Post Office or the Fund is otherwise unable to locate the
shareholder or verify the shareholder's mailing address. These costs may include
a percentage of the account when a search company charges a percentage fee in
exchange for their location services.
Dividends from investment income and short-term capital gains
distributions are treated by shareholders as ordinary income for federal income
tax purposes. Distributions of long-term capital gains, if any, are taxable to
shareholders as long-term capital gains, regardless of the length of time an
investor has held such shares, and these gains are currently taxed at long-term
capital gain rates. The tax status of dividends and distributions paid to
shareholders will not be affected by whether they are paid in cash or in
additional shares. Persons not subject to tax will not be required to pay taxes
on distributions.
A portion of each Fund's dividends may qualify for the
dividends-received deduction for corporations provided in the federal income tax
law. The portion of dividends paid by each Fund that so qualifies will be
designated each year in a notice to that Fund's shareholders, and cannot exceed
the gross amount of dividends received by the Fund from domestic (U.S.)
corporations that would have qualified for the dividends-received deduction in
the hands of the Fund if the Fund was a regular corporation. The availability of
the dividends-received deduction is subject to certain holding period and debt
financing restrictions imposed under the Code on the corporation claiming the
deduction. For the fiscal year ended November 30, 1996, 13.93% of Value Fund's
dividends from net investment income was eligible for this deduction.
Shareholders will be notified annually by Equity Funds V, Inc. as to
the federal income tax status of dividends and distributions.
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<PAGE>
Distributions may also be subject to state and local taxes;
shareholders are advised to consult with their tax advisers in this regard.
Shares of each Fund will be exempt from Pennsylvania county personal property
taxes.
See also Other Tax Requirements under Accounting and Tax Issues in this
Part B.
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<PAGE>
INVESTMENT MANAGEMENT AGREEMENTS
The Manager, located at One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to each Fund, subject to the
supervision and direction of Equity Funds V, Inc.'s Board of Directors.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On November 30, 1996, the Manager and its affiliates
within the Delaware Group, including Delaware International Advisers Ltd., were
supervising in the aggregate more than $32 billion in assets in the various
institutional or separately managed (approximately $20,311,203,919) and
investment company (approximately $11,765,348,126) accounts.
The Investment Management Agreement for Value Fund is dated April 3,
1995, and was approved by shareholders on March 29, 1995. The Investment
Management Agreement for Retirement Income Fund is dated November 29, 1996, and
was approved by the initial shareholder on November 29, 1996. Each Agreement has
an initial term of two years and may be renewed each year only so long as such
renewal and continuance are specifically approved at least annually by the Board
of Directors or by vote of a majority of the outstanding voting securities of a
Fund, and only if the terms of and the renewal thereof have been approved by the
vote of a majority of the directors of Equity Funds V, Inc. who are not parties
thereto or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. Each Agreement is terminable
without penalty on 60 days' notice by the directors of Equity Funds V, Inc. or
by the Manager. Each Agreement will terminate automatically in the event of its
assignment.
The compensation paid by Value Fund for investment management services
is equal to 1/16 of 1% per month (the equivalent of 3/4 of 1% per year) of the
Fund's average daily net assets, less all directors' fees paid to the
unaffiliated directors by the Fund. This fee is higher than that paid by many
other funds; it may be higher or lower than that paid by funds with comparable
investment objectives. On November 30, 1996, the total net assets of Value Fund
were $224,760,464. Under the general supervision of the Board of Directors, the
Manager makes all investment decisions which are implemented by the Fund. The
Manager pays the salaries of all directors, officers and employees who are
affiliated with both the Manager and Equity Funds V, Inc. Investment management
fees paid by Value Fund for the fiscal years ended November 30, 1994, 1995 and
1996 amounted to $1,341,214, $1,371,155 and $1,513,474, respectively.
The annual compensation paid by Retirement Income Fund for
investment management services is equal to 0.65% on the first $500 million of
the Fund's average daily net assets, 0.625% of the next $500 million and 0.60%
of the average daily net assets in excess of $1 billion. The Manager pays the
salaries of all directors, officers and employees who are affiliated with both
the Manager and Equity Funds V, Inc.
The Manager has elected voluntarily to waive that portion, if any, of
the annual management fees payable by Retirement Income Fund and to pay certain
expenses of the Fund to the extent necessary to ensure that the total operating
expenses of each Class do not exceed 0.75% (exclusive of taxes, interest,
brokerage commissions, extraordinary expenses and 12b-1 expenses) during the
commencement of the public offering of the Fund through May 31, 1997.
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<PAGE>
Except for those expenses borne by the Manager under the Investment
Management Agreements and the Distributor under the Distribution Agreements,
each Fund is responsible for all of its own expenses. Among others, these
include each Fund's proportionate share of rent and certain other administrative
expenses; the investment management fees; transfer and dividend disbursing agent
fees and costs; custodian expenses; federal and state securities registration
fees; proxy costs; and the costs of preparing prospectuses and reports sent to
shareholders. The ratios of expenses to average daily net assets of Value Fund A
Class, Value Fund B Class and Value Fund C Class for the fiscal year ended
November 30, 1996 were 1.45%, 2.15% and 2.15%, respectively, which reflects the
impact of their 12b-1 Plans. The ratio of expenses to average daily net assets
for Value Fund Institutional Class for the fiscal year ended November 30, 1996
was 1.15%.
Distribution and Service
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), located at 1818 Market Street,
Philadelphia, PA 19103, serves as the national distributor of each Fund's shares
under a Distribution Agreement dated April 3, 1995, as amended on November 29,
1995 for Value Fund and under a Distribution Agreement dated November 29, 1996
for Retirement Income Fund. The Distributor is an affiliate of the Manager and
bears all of the costs of promotion and distribution, except for payments by
each Fund on behalf of Class A Shares, Class B Shares and Class C Shares under
their respective 12b-1 Plans. Prior to January 3, 1995, Delaware Distributors,
Inc. ("DDI") served as the national distributor of Value Fund's shares. On that
date, Delaware Distributors, L.P., a newly formed limited partnership, succeeded
to the business of DDI. All officers and employees of DDI became officers and
employees of Delaware Distributors, L.P. DDI is the corporate general partner of
Delaware Distributors, L.P. and both DDI and Delaware Distributors, L.P. are
indirect, wholly owned subsidiaries of Delaware Management Holdings, Inc. The
Distributor has elected voluntarily to waive payments under the 12b-1 Plan for
the Class A Shares, Class B Shares and the Class C Shares of Retirement
Income Fund during the commencement of the public offering of the Fund through
May 31, 1997.
The Transfer Agent, Delaware Service Company, Inc., another affiliate
of the Manager located at 1818 Market Street, Philadelphia, PA 19103, serves as
each Funds' shareholder servicing, dividend disbursing and transfer agent
pursuant to an agreement dated November 29, 1996. The Transfer Agent also
provides accounting services to the Funds pursuant to the terms of a separate
Fund Accounting Agreement. The Transfer Agent is also an indirect, wholly owned
subsidiary of Delaware Management Holdings, Inc.
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<PAGE>
OFFICERS AND DIRECTORS
The business and affairs of Equity Funds V, Inc. are managed under the
direction of its Board of Directors.
Certain officers and directors of Equity Funds V, Inc. hold identical
positions in each of the other funds in the Delaware Group. On December 31,
1996, Equity Fund V, Inc.'s officers and directors owned less than 1% of the
outstanding shares of Value Fund Class A Shares, Value Fund Class B Shares,
Value Fund Class C Shares and Value Fund Institutional Class Shares.
As of December 31, 1996, management believes the following accounts
held 5% or more of the outstanding shares of Value Fund Class A Shares, Value
Fund Class B Shares and Value Fund Class C Shares and approximately 2% of the
outstanding shares of Value Fund Institutional Class:
<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------
<S> <C> <C> <C>
Value Fund A Class Merrill Lynch, Pierce, Fenner & Smith
For the Sole Benefit of its Customers
Attention: Fund Administration
4800 Deer Lake Drive East - 3rd Floor
Jacksonville, FL 32246 742,062 8.39%
Value Fund B Class Merrill Lynch, Pierce, Fenner & Smith
For the Sole Benefit of its Customers
Attention: Fund Administration
4800 Deer Lake Drive East - 3rd Floor
Jacksonville, FL 32246 68,574 11.42%
Value Fund C Class Merrill Lynch, Pierce, Fenner & Smith
For the Sole Benefit of its Customers
Attention: Fund Administration
4800 Deer Lake Drive East - 3rd Floor
Jacksonville, FL 32246 172,732 24.03%
Value Fund Institutional Class Amalgamated Bank of New York
Cust. TWU-NYC PVT Bus Lines Pension Fund
Amivest Corp. Discretionary Investment Manager
P.O. Box 370 Cooper Station
New York, NY 10276 121,819 16.95%
</TABLE>
-61-
<PAGE>
<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------
<S> <C> <C> <C>
Value Fund Institutional Class Bank of New York
Cust. American Fed of Musicians and
Employees Pension Fund
Amivest Corp. Discretionary Investment Manager
48 Wall Street - 9th Floor
Attention: C. DiGiose
New York, NY 10005 112,378 15.64%
RS DMC Employee Profit Sharing Plan
Delaware Management Company
Employee Profit Sharing Trust
c/o Rick Seidel
1818 Market Street
Philadelphia, PA 19103 76,869 11.11%
Amalgamated Bank of New York
Cust. NYC Htl Trds Cncl and Htl Assn PN FD
Amivest Corp. Discretionary Investment Manager
P.O. Box 370 Cooper Station
New York, NY 10276 36,695 5.11%
Bank of New York
Cust. Annuity Fund of Local One IATSE
Amivest Corp. Discretionary Investment Manager 717103
Attn: William Biempca - Master/TR/Custody
One Wall Street - 7th Floor
New York, NY 10005 36,428 5.07%
Retirement Income Fund
A Class Delaware Management Co., Inc.
Attn: Joseph Hastings
1818 Market Street 1 100.00%
Retirement Income Fund Chicago Trust Co.
Institutional Class FBO Lincoln National Corp. Employee Retirement Plan
c/o Marshall & Ilsley Trust Co.
P.O. Box 2977
Milwaukee, WI 53201 236,431 99.99%
</TABLE>
DMH Corp., Delaware Management Company, Inc., Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware
Management Trust Company, Delaware International Holdings Ltd., Founders
Holdings, Inc., Delaware International Advisers Ltd., Delaware Capital
Management, Inc. and Delaware Investment & Retirement Services, Inc. are direct
or indirect, wholly owned subsidiaries of Delaware Management Holdings, Inc.
("DMH"). On April 3, 1995, a merger between DMH and a wholly owned subsidiary of
Lincoln National Corporation ("Lincoln National") was completed. In connection
with the merger, a new Investment Management Agreement between Equity Funds V,
Inc. and the Manager on behalf of Value Fund was executed following shareholder
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<PAGE>
approval. DMH and the Manager are now indirect, wholly owned subsidiaries, and
subject to the ultimate control, of Lincoln National. Lincoln National, with
headquarters in Fort Wayne, Indiana, is a diversified organization with
operations in many aspects of the financial services industry, including
insurance and investment management.
Directors and principal officers of Equity Funds V, Inc. are noted
below along with their ages and their business experience for the past five
years. Unless otherwise noted, the address of each officer and director is One
Commerce Square, Philadelphia, PA 19103.
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<PAGE>
*Wayne A. Stork (59)
Chairman,President, Chief Executive Officer, Director and/or Trustee
of Equity Funds V, Inc., 16 other investment companies in the
Delaware Group (which excludes Delaware Pooled Trust, Inc.),
Delaware Management Holdings, Inc., DMH Corp., Delaware
International Holdings Ltd. and Founders Holdings, Inc.
Chairman and Director of Delaware Pooled Trust, Inc., Delaware
Distributors, Inc., Delaware Capital Management, Inc. and
Delaware Investment & Retirement Services, Inc.
Chairman,President, Chief Executive Officer, Chief Investment Officer
and Director of Delaware Management Company, Inc.
Chairman, Chief Executive Officer and Director of Delaware
International Advisers Ltd.
Director of Delaware Service Company, Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware
organization.
Winthrop S. Jessup (51)
Executive Vice President of Equity Funds V, Inc., 16 other investment
companies in the Delaware Group (which excludes Delaware
Pooled Trust, Inc.) and Delaware Management Holdings, Inc.
President and Chief Executive Officer of Delaware Pooled Trust, Inc.
President and Director of Delaware Capital Management, Inc.
Executive Vice President and Director of DMH Corp., Delaware Management
Company, Inc., Delaware International Holdings Ltd. and
Founders Holdings, Inc.
Vice Chairman and Director of Delaware Distributors, Inc.
Vice Chairman of Delaware Distributors, L.P.
Director of Delaware Service Company, Inc., Delaware International
Advisers Ltd., Delaware Management Trust Company and Delaware
Investment & Retirement Services, Inc.
During the past five years, Mr. Jessup has served in various
executive capacities at different times within the Delaware
organization.
Richard G. Unruh, Jr. (57)
Executive Vice President of Equity Funds V, Inc. and each of the other
17 investment companies in the Delaware Group.
Executive Vice President and Director of Delaware Management Company,
Inc.
Senior Vice President of Delaware Management Holdings, Inc. and
Delaware Capital Management, Inc.
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware
organization.
- ----------
*Director affiliated with Equity Funds V, Inc.s' investment manager and
considered an "interested person" as defined in the 1940 Act.
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<PAGE>
Paul E. Suckow (49)
Executive Vice President/Chief Investment Officer, Fixed Income of
Equity Funds V, Inc., each of the other 17 investment
companies in the Delaware Group and Delaware Management
Company, Inc.
Executive Vice President/Chief Investment Officer, Fixed Income and
Director of Founders Holdings, Inc.
Senior Vice President/Chief Investment Officer, Fixed Income of
Delaware Management Holdings, Inc.
Senior Vice President of Delaware Capital Management, Inc.
Director of Founders CBO Corporation.
Director of HYPPCO Finance Company Ltd.
Before returning to the Delaware Group in 1993, Mr. Suckow was
Executive Vice President and Director of Fixed Income for
Oppenheimer Management Corporation, New York, NY from 1985 to
1992. Prior to that, Mr. Suckow was a fixed-income portfolio
manager for the Delaware Group.
Walter P. Babich (69)
Director and/or Trustee of Equity Funds V, Inc. and each of the other
17 investment companies in the Delaware Group.
460 North Gulph Road, King of Prussia, PA 19406.
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and
from 1988 to 1991, he was a partner of I&L Investors.
Anthony D. Knerr (58)
Director and/or Trustee of Equity Funds V, Inc. and each of the other
17 investment companies in the Delaware Group.
500 Fifth Avenue, New York, NY 10110.
Founder and Managing Director, Anthony Knerr & Associates.
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance
and Treasurer of Columbia University, New York. From 1987 to
1989, he was also a lecturer in English at the University. In
addition, Mr. Knerr was Chairman of The Publishing Group,
Inc., New York, from 1988 to 1990. Mr. Knerr founded The
Publishing Group, Inc. in 1988.
Ann R. Leven (56)
Director and/or Trustee of Equity Funds V, Inc. and each of the other
17 investment companies in the Delaware Group.
785 Park Avenue, New York, NY 10021.
Treasurer, National Gallery of Art.
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer
of the Smithsonian Institution, Washington, DC, and from 1975
to 1992, she was Adjunct Professor of Columbia Business
School.
W. Thacher Longstreth (76)
Director and/or Trustee of Equity Funds V, Inc. and each of the other
17 investment companies in the Delaware Group.
City Hall, Philadelphia, PA 19107.
Philadelphia City Councilman.
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<PAGE>
Charles E. Peck (71)
Director and/or Trustee of Equity Funds V, Inc. and each of the other
17 investment companies in the Delaware Group.
P.O. Box 1102, Columbia, MD 21044.
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive
Officer of The Ryland Group, Inc., Columbia, MD.
David K. Downes (57)
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer of Equity Funds V, Inc., each of the other 17
investment companies in the Delaware Group and Delaware
Management Company, Inc.
Chairman and Director of Delaware Management Trust Company.
Chief Executive Officer and Director of Delaware Investment &
Retirement Services, Inc.
Executive Vice President/Chief Administrative Officer/Chief Financial
Officer/Treasurer of Delaware Management Holdings, Inc.
Senior Vice President/Chief Financial Officer/Treasurer and Director
of DMH Corp.
Senior Vice President/Chief Administrative Officer and Director of
Delaware Distributors, Inc.
Senior Vice President/Chief Administrative Officer of Delaware
Distributors, L.P.
Senior Vice President/Chief Administrative Officer/Chief Financial
Officer and Director of Delaware Service Company, Inc.
Chief Financial Officer and Director of Delaware International
Holdings Ltd.
Senior Vice President/Chief Financial Officer/Treasurer of Delaware
Capital Management, Inc.
Senior Vice President/Chief Financial Officer and Director of
Founders Holdings, Inc.
Director of Delaware International Advisers Ltd.
Before joining the Delaware Group in 1992, Mr. Downes was Chief
Administrative Officer, Chief Financial Officer and Treasurer
of Equitable Capital Management Corporation, New York, from
December 1985 through August 1992, Executive Vice President
from December 1985 through March 1992 and Vice Chairman from
March 1992 through August 1992.
George M. Chamberlain, Jr. (49)
Senior Vice President and Secretary of Equity Funds V, Inc., each of
the other 17 investment companies in the Delaware Group,
Delaware Management Holdings, Inc. and Delaware Distributors,
L.P.
Executive Vice President, Secretary and Director of Delaware Management
Trust Company.
Senior Vice President, Secretary and Director of DMH Corp., Delaware
Management Company, Inc., Delaware Distributors, Inc.,
Delaware Service Company, Inc., Founders Holdings, Inc.,
Delaware Investment & Retirement Services, Inc. and Delaware
Capital Management, Inc.
Secretary and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd.
Attorney.
During the past five years, Mr. Chamberlain has served in various
capacities at different times within the Delaware
organization.
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<PAGE>
David C. Dalrymple (39)
Vice President/Senior Portfolio Manager of Equity Funds V, Inc. and
seven other investment companies in the Delaware Group.
Before joining the Delaware Group in 1991, Mr. Dalrymple was an
Assistant Portfolio Manager for Lord Abbett and Company, New
York, N.Y. from 1986 to 1991.
Gerald T. Nichols (38)
Vice President/Senior Portfolio Manager of Equity Funds V, Inc., of
12 other investment companies in the Delaware Group and of
Delaware Management Company, Inc.
Vice President of Founders Holdings, Inc.
Assistant Secretary, Treasurer and Director of Founders CBO
Corporation.
During the past five years, Mr. Nichols has served in various
capacities at different times within the Delaware
organization.
Babak Zenouzi (33)
Vice President/Portfolio Manager of Equity Funds V, Inc. and 10
other investment companies in the Delaware Group.
Vice President/Assistant Portfolio Manager of Delaware Investment
Advisers.
Before joining the Delaware Group in 1992, he was with The Boston
Company where he held the positions of assistant vice
president, senior financial analyst, financial analyst and
portfolio accountant.
Joseph H. Hastings (47)
Vice President/Corporate Controller of Equity Funds V, Inc., each
of the other 17 investment companies in the Delaware Group,
Delaware Management Holdings, Inc., DMH Corp., Delaware
Management Company, Inc., Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc.,
Delaware Capital Management, Inc., Founders Holdings, Inc. and
Delaware International Holdings Ltd.
Chief Financial Officer/Treasurer of Delaware Investment &
Retirement Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company.
Assistant Treasurer of Founders CBO Corporation.
1818 Market Street, Philadelphia, PA 19103.
Before joining the Delaware Group in 1992, Mr. Hastings was Chief
Financial Officer for Prudential Residential Services, L.P.,
New York, NY from 1989 to 1992. Prior to that, Mr. Hastings
served as Controller and Treasurer for Fine Homes
International, L.P., Stamford, CT from 1987 to 1989.
Michael P. Bishof (34)
Vice President/Treasurer of Equity Funds V, Inc., each of the other
17 investment companies in the Delaware Group, Delaware
Management Company, Inc., Delaware Distributors, Inc.,
Delaware Distributors, L.P., Delaware Service Company, Inc.
and Founders Holdings, Inc.
Vice President/Manager of Investment Accounting of Delaware
International Holdings Ltd.
Assistant Treasurer of Founders CBO Corporation.
Before joining the Delaware Group in 1995, Mr. Bishof was a Vice
President for Bankers Trust, New York, NY from 1994 to 1995, a
Vice President for CS First Boston Investment Management, New
York, NY from 1993 to 1994 and an Assistant Vice President for
Equitable Capital Management Corporation, New York, NY from
1987 to 1993.
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<PAGE>
The following is a compensation table listing for each director
entitled to receive compensation, the aggregate compensation received from
Equity Funds V, Inc. and the total compensation received from all Delaware Group
funds for the fiscal year ended November 30, 1996 and an estimate of annual
benefits to be received upon retirement under the Delaware Group Retirement Plan
for Directors/Trustees as of November 30, 1996.
<TABLE>
<CAPTION>
Pension or
Retirement
Benefits
Accrued Estimated Total
Aggregate as Part of Annual Compensation
Compensation Equity Benefits from all 17
from Equity Funds V, Inc. Upon Delaware
Name Funds V, Inc. Expenses Retirement* Group Funds
<S> <C> <C> <C> <C>
W. Thacher Longstreth $1,593 None $30,000 $45,145
Ann R. Leven $1,863 None $30,000 $53,280
Walter P. Babich $1,683 None $30,000 $49,144
Anthony D. Knerr $1,841 None $30,000 $52,280
Charles E. Peck $1,751 None $30,000 $48,280
</TABLE>
* Under the terms of the Delaware Group Retirement Plan for
Directors/Trustees, each disinterested director who, at the time of his or
her retirement from the Board, has attained the age of 70 and served on the
Board for at least five continuous years, is entitled to receive payments
from each fund in the Delaware Group for a period equal to the lesser of
the number of years that such person served as a director or the remainder
of such person's life. The amount of such payments will be equal, on an
annual basis, to the amount of the annual retainer that is paid to
directors of each fund at the time of such person's retirement. If an
eligible director retired as of November 30, 1996, he or she would be
entitled to annual payments totaling $30,000, in the aggregate, from all of
the funds in the Delaware Group, based on the number of funds in the
Delaware Group as of that date.
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<PAGE>
EXCHANGE PRIVILEGE
The exchange privileges available for shareholders of the Classes and
for shareholders of classes of other funds in the Delaware Group are set forth
in the relevant prospectuses for such classes. The following supplements that
information. Each Fund may modify, terminate or suspend the exchange privilege
upon 60 days' notice to shareholders.
All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses. A shareholder requesting an exchange will be sent a current prospectus
and an authorization form for any of the other mutual funds in the Delaware
Group. Exchange instructions must be signed by the record owner(s) exactly as
the shares are registered.
An exchange constitutes, for tax purposes, the sale of one fund or
series and the purchase of another. The sale may involve either a capital gain
or loss to the shareholder for federal income tax purposes.
In addition, investment advisers and dealers may make exchanges between
funds in the Delaware Group on behalf of their clients by telephone or other
expedited means. This service may be discontinued or revised at any time by the
Transfer Agent. Such exchange requests may be rejected if it is determined that
a particular request or the total requests at any time could have an adverse
effect on any of the funds. Requests for expedited exchanges may be submitted
with a properly completed exchange authorization form, as described above.
Telephone Exchange Privilege
Shareholders owning shares for which certificates have not been issued
or their investment dealers of record may exchange shares by telephone for
shares in other mutual funds in the Delaware Group. This service is
automatically provided unless the relevant Fund receives written notice from the
shareholder to the contrary.
Shareholders or their investment dealers of record may contact the
Shareholder Service Center at 800-523-1918 or, in the case of shareholders of
the Institutional Classes, their Client Services Representative at 800-828-5052,
to effect an exchange. The shareholder's current Fund account number must be
identified, as well as the registration of the account, the share or dollar
amount to be exchanged and the fund into which the exchange is to be made.
Requests received on any day after the time the offering price and net asset
value are determined will be processed the following day. See Determining
Offering Price and Net Asset Value. Any new account established through the
exchange will automatically carry the same registration, shareholder information
and dividend option as the account from which the shares were exchanged. The
exchange requirements of the fund into which the exchange is being made, such as
sales charges, eligibility and investment minimums, must be met. (See the
prospectus of the fund desired or inquire by calling the Transfer Agent or, as
relevant, your Client Services Representative.) Certain funds are not available
for retirement plans.
The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on short-term
swings in the securities market through frequent transactions in and out of
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<PAGE>
the funds in the Delaware Group. Telephone exchanges may be subject to
limitations as to amounts or frequency. The Transfer Agent and each Fund reserve
the right to record exchange instructions received by telephone and to reject
exchange requests at any time in the future.
As described in the Funds' Prospectuses, neither the Funds nor the
Transfer Agent is responsible for any shareholder loss incurred in acting upon
written or telephone instructions for redemption or exchange of Fund shares
which are reasonably believed to be genuine.
Right to Refuse Timing Accounts
With regard to accounts that are administered by market timing services
("Timing Firms") to purchase or redeem shares based on changing economic and
market conditions ("Timing Accounts"), the Funds will refuse any new timing
arrangements, as well as any new purchases (as opposed to exchanges) in Delaware
Group funds from Timing Firms. A Fund reserves the right to temporarily or
permanently terminate the exchange privilege or reject any specific purchase
order for any person whose transactions seem to follow a timing pattern who: (i)
makes an exchange request out of the Fund within two weeks of an earlier
exchange request out of the Fund, or (ii) makes more than two exchanges out of
the Fund per calendar quarter, or (iii) exchanges shares equal in value to at
least $5 million, or more than 1/4 of 1% of the Fund's net assets. Accounts
under common ownership or control, including accounts administered so as to
redeem or purchase shares based upon certain predetermined market indicators,
will be aggregated for purposes of the exchange limits.
Restrictions on Timed Exchanges
Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight Delaware Group funds: (1) Decatur
Income Fund, (2) Decatur Total Return Fund, (3) Delaware Fund, (4) Limited-Term
Government Fund, (5) Tax-Free USA Fund, (6) Delaware Cash Reserve, (7)
Delchester Fund and (8) Tax-Free Pennsylvania Fund. No other Delaware Group
funds are available for timed exchanges. Assets redeemed or exchanged out of
Timing Accounts in Delaware Group funds not listed above may not be reinvested
back into that Timing Account. Each Fund reserves the right to apply these same
restrictions to the account(s) of any person whose transactions seem to follow a
timing pattern (as described above).
Each Fund also reserves the right to refuse the purchase side of an
exchange request by any Timing Account, person, or group if, in the Manager's
judgment, the Fund would be unable to invest effectively in accordance with its
investment objectives and policies, or would otherwise potentially be adversely
affected. A shareholder's purchase exchanges may be restricted or refused if a
Fund receives or anticipates simultaneous orders affecting significant portions
of the Fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a Fund and therefore may be
refused.
Except as noted above, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.
* * *
Following is a summary of the investment objectives of the other
Delaware Group funds:
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<PAGE>
Delaware Fund seeks long-term growth by a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that are
believed to demonstrate potential for income and capital growth. Devon Fund
seeks current income and capital appreciation by investing primarily in
income-producing common stocks, with a focus on common stocks the Manager
believes have the potential for above average dividend increases over time.
Trend Fund seeks long-term growth by investing in common stock issued
by emerging growth companies exhibiting strong capital appreciation potential.
DelCap Fund seeks 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.
Decatur Income Fund seeks the highest possible current income by
investing primarily in common stocks that provide the potential for income and
capital appreciation without undue risk to principal. Decatur Total Return Fund
seeks long-term growth by investing primarily in securities that provide the
potential for income and capital appreciation without undue risk to principal.
Delchester Fund seeks as high a current income as possible by investing
principally in high yield, high risk corporate bonds, and also in U.S.
government securities and commercial paper. Strategic Income Fund seeks to
provide investors with high current income and total return by using a
multi-sector investment approach, investing principally in three sectors of the
fixed-income securities markets: high-yield, higher risk securities, investment
grade fixed-income securities and foreign government and other foreign
fixed-income securities.
U.S. Government Fund seeks high current income by investing primarily
in long-term debt obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities.
Limited-Term Government Fund seeks high, stable income by investing
primarily in a portfolio of short- and intermediate-term securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities and
instruments secured by such securities. U.S. Government Money Fund seeks maximum
current income with preservation of principal and maintenance of liquidity by
investing only in short-term securities issued or guaranteed as to principal and
interest by the U.S. government, its agencies or instrumentalities, and
repurchase agreements collateralized by such securities, while maintaining a
stable net asset value.
Delaware Cash Reserve seeks the highest level of income consistent with
the preservation of capital and liquidity through investments in short-term
money market instruments, while maintaining a stable net asset value.
Tax-Free USA Fund seeks high current income exempt from federal income
tax by investing in municipal bonds of geographically-diverse issuers. Tax-Free
Insured Fund invests in these same types of securities but with an emphasis on
municipal bonds protected by insurance guaranteeing principal and interest are
paid when due. Tax-Free USA Intermediate Fund seeks a high level of current
interest income exempt from federal income tax, consistent with the preservation
of capital by investing primarily in municipal bonds.
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<PAGE>
Tax-Free Money Fund seeks high current income, exempt from federal
income tax, by investing in short-term municipal obligations, while maintaining
a stable net asset value.
Tax-Free Pennsylvania Fund seeks a high level of current interest
income exempt from federal and, to the extent possible, certain Pennsylvania
state and local taxes, consistent with the preservation of capital.
International Equity Fund seeks to achieve long-term growth without
undue risk to principal by investing primarily in international securities that
provide the potential for capital appreciation and income. Global Bond Fund
seeks to achieve current income consistent with the preservation of principal by
investing primarily in global fixed-income securities that may also provide the
potential for capital appreciation. Global Assets Fund seeks to achieve
long-term total return by investing in global securities which will provide
higher current income than a portfolio comprised exclusively of equity
securities, along with the potential for capital growth. Emerging Markets Fund
seeks long-term capital appreciation by investing primarily in equity securities
of issuers located or operating in emerging countries.
Enterprise Fund seeks to provide maximum appreciation of capital by
investing in medium-sized companies which have a dominant position within their
industry, are undervalued, or have potential for growth in earnings. U.S. Growth
Fund seeks to maximize capital appreciation by investing in companies of all
sizes which have low dividend yields, strong balance sheets and high expected
earnings growth rates relative to their industry. World Growth Fund seeks to
maximize total return (capital appreciation and income), principally through
investments in an internationally diversified portfolio of equity securities.
New Pacific Fund seeks long-term capital appreciation by investing primarily in
companies which are domiciled in or have their principal business activities in
the Pacific Basin. Federal Bond Fund seeks to maximize current income consistent
with preservation of capital. The fund attempts to achieve this objective by
investing primarily in securities issued by the U.S. government, its agencies
and instrumentalities. Corporate Income Fund seeks to provide high current
income consistent with preservation of capital. The fund attempts to achieve
this objective primarily by investing in a diversified portfolio of investment
grade fixed-income securities issued by U.S.
corporations.
Delaware Group Premium Fund, Inc. offers ten funds available
exclusively as funding vehicles for certain insurance company separate accounts.
Equity/Income Series seeks the highest possible total rate of return by
selecting issues that exhibit the potential for capital appreciation while
providing higher than average dividend income. High Yield Series seeks as high a
current income as possible by investing in rated and unrated corporate bonds,
U.S. government securities and commercial paper. Capital Reserves Series seeks a
high stable level of current income while minimizing fluctuations in principal
by investing in a diversified portfolio of short- and intermediate-term
securities. Money Market Series seeks the highest level of income consistent
with preservation of capital and liquidity through investments in short-term
money market instruments. Growth Series seeks long-term capital appreciation by
investing its assets in a diversified portfolio of securities exhibiting the
potential for significant growth. Multiple Strategy Series seeks a balance of
capital appreciation, income and preservation of capital. It uses a
dividend-oriented valuation strategy to select securities issued by established
companies that are believed to demonstrate potential for income and capital
growth. International Equity Series seeks long-term growth without undue risk to
principal by investing primarily in equity securities of foreign issuers that
provide the potential for capital appreciation and income. Value Series seeks
capital appreciation by investing in small- to mid-cap common stocks whose
market values appear low relative to their underlying value or future earnings
and growth potential. Emphasis will also be placed on securities of companies
that may be temporarily out of favor or whose value is not yet recognized by
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<PAGE>
the market. Emerging Growth Series seeks long-term capital appreciation by
investing primarily in small-cap common stocks and convertible securities of
emerging and other growth-oriented companies. These securities will have been
judged to be responsive to changes in the marketplace and to have fundamental
characteristics to support growth. Income is not an objective. Global Bond
Series seeks to achieve current income consistent with the preservation of
principal by investing primarily in global fixed-income securities that may also
provide the potential for capital appreciation.
For more complete information about any of the Delaware Group funds,
including charges and expenses, you can obtain a prospectus from the
Distributor. Read it carefully before you invest or forward funds.
Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).
-73-
<PAGE>
GENERAL INFORMATION
The Manager is the investment manager of the Funds. The Manager also
provides investment management services to certain of the other funds in the
Delaware Group. The Manager, through a separate division, also manages private
investment accounts. While investment decisions of the Funds are made
independently from those of the other funds and accounts, investment decisions
for such other funds and accounts may be made at the same time as investment
decisions for the Funds.
The Manager, or its affiliate Delaware International Advisers Ltd.,
also manages the investment options for Delaware Medallion(sm) III Variable
Annuity. Medallion is issued by Allmerica Financial Life Insurance and Annuity
Company (First Allmerica Financial Life Insurance Company in New York and
Hawaii). Delaware Medallion offers ten different investment series ranging from
domestic equity funds, international equity and bond funds and domestic fixed
income funds. Each investment series available through Medallion utilizes an
investment strategy and discipline the same as or similar to one of the Delaware
Group mutual funds available outside the annuity. See Delaware Group Premium
Fund, Inc., above.
Access persons and advisory persons of the Delaware Group of funds, as
those terms are defined in Rule 17j-1 under the 1940 Act, who provide services
to the Manager, Delaware International Advisers Ltd. or their affiliates, are
permitted to engage in personal securities transactions subject to the
exceptions set forth in Rule 17j-1 and the following general restrictions and
procedures: (1) certain blackout periods apply to personal securities
transactions of those persons; (2) transactions must receive advance clearance
and must be completed on the same day as the clearance is received; (3) certain
persons are prohibited from investing in initial public offerings of securities
and other restrictions apply to investments in private placements of securities;
(4) opening positions may only be closed-out at a profit after a 60-day holding
period has elapsed; and (5) the Compliance Officer must be informed periodically
of all securities transactions and duplicate copies of brokerage confirmations
and account statements must be supplied to the Compliance Officer.
The Distributor acts as national distributor for each Fund and for the
other mutual funds in the Delaware Group. As previously described, prior to
January 3, 1995, DDI served as the national distributor for Value Fund. The
Distributor and, in its capacity as such, DDI received net commissions from
Value Fund on behalf of Class A Shares, after reallowances to dealers, as
follows:
Fiscal Total Amount Amounts Net
Year of Underwriting Reallowed Commission
Ended Commission to Dealers to DDI
----- ---------- ---------- ------
November 30, 1996 $ 402,194 $ 335,756 $ 66,438
November 30, 1995 608,374 527,679 80,695
November 30, 1994 1,707,818 1,480,648 227,170
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<PAGE>
The Distributor and, in its capacity as such, DDI received in the
aggregate Limited CDSC payments with respect to Class A Shares of Value Fund as
follows:
Fiscal Year Ended Limited CDSC Payments
----------------- ---------------------
November 30, 1996 $ -0-
November 30, 1995 218
November 30, 1994 12,607
The Distributor and, in its capacity as such, DDI received in the
aggregate CDSC payments with respect to Class B Shares of Value Fund as follows:
Fiscal Year Ended CDSC Payments
----------------- -------------
November 30, 1996 $30,116
November 30, 1995 14,682
November 30, 1994* 995
*Date of initial public offering was September 6, 1994.
The Distributor received CDSC payments with respect to Class C Shares
of Value Fund as follows:
Fiscal Year Ended CDSC Payments
----------------- -------------
November 30, 1996 $56
November 30, 1995* - 0 -
*Date of initial public offering was November 29, 1995.
Effective as of January 3, 1995, all such payments described above have
been paid to the Distributor.
The Transfer Agent, an affiliate of the Manager, acts as shareholder
servicing, dividend disbursing and transfer agent for each Fund and for the
other mutual funds in the Delaware Group. The Transfer Agent is paid a fee by
each Fund for providing these services consisting of an annual per account
charge of $5.50 plus transaction charges for particular services according to a
schedule. Compensation is fixed each year and approved by the Board of
Directors, including a majority of the unaffiliated directors. The Transfer
Agent also provides accounting services to each Fund. Those services include
performing all functions related to calculating each Fund's net asset value and
providing all financial reporting services, regulatory compliance testing and
other related accounting services. For its services, the Transfer Agent is paid
a fee based on total assets of all funds in the Delaware Group for which it
provides such accounting services. Such fee is equal to 0.25% multiplied by the
total amount of assets in the complex for which the Transfer Agent furnishes
accounting services, where such aggregate complex assets are $10 billion or
less, and 0.20% of assets if such aggregate complex assets exceed $10 billion.
The fees are charged to each fund, including each Fund, on an aggregate pro-rata
basis. The asset-based fee payable to the Transfer Agent is subject to a minimum
fee calculated by determining the total number of investment portfolios and
associated classes.
The Manager and its affiliates own the name "Delaware Group." Under
certain circumstances, including the termination of Equity Funds V, Inc.'s
advisory relationship with the Manager or its distribution relationship with the
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<PAGE>
Distributor, the Manager and its affiliates could cause Equity Funds V, Inc. to
delete the words "Delaware Group" from Equity Funds V, Inc.'s name.
The Chase Manhattan Bank ("Chase"), 4 Chase Metrotech Center, Brooklyn,
NY 11245, is custodian of each Fund's securities and cash. As custodian for a
Fund, Chase maintains a separate account or accounts for the Fund; receives,
holds and releases portfolio securities on account of the Fund; receives and
disburses money on behalf of the Fund; and collects and receives income and
other payments and distributions on account of the Fund's portfolio securities.
The legality of the issuance of the shares offered hereby, registered
pursuant to Rule 24f-2 under the 1940 Act, has been passed upon for Equity Funds
V, Inc. by Stradley, Ronon, Stevens & Young, LLP, Philadelphia, Pennsylvania.
Capitalization
Equity Funds V, Inc. has a present authorized capitalization of one
billion shares of capital stock with a $.01 par value per share. The Board of
Directors has allocated three hundred fifty million shares to Value Fund. Of
such three hundred fifty million shares allocated to Value Fund, one hundred
fifty million shares have been allocated to Value Fund A Class, one hundred
million shares have been allocated to Value Fund B Class, fifty million shares
have been allocated to Value Fund C Class and fifty million shares have been
allocated to Value Fund Institutional Class. The Board of Directors has
allocated two hundred million shares to Retirement Income Fund. Of such two
hundred million shares allocated to Retirement Income Fund, one hundred million
shares have been allocated to Retirement Income Fund A Class, twenty five
million shares have been allocated to Retirement Income Fund B Class, twenty
five million shares have been allocated to Retirement Income Fund C Class and
fifty million shares have been allocated to Retirement Income Institutional
Class.
Each Class of each Fund represents a proportionate interest in the
assets of that Fund, and each has the same voting and other rights and
preferences as the other classes except that shares of an Institutional Class
may not vote on any matter affecting a Fund Classes' Plans under Rule 12b-1.
Similarly, as a general matter, shareholders of Class A Shares, Class B Shares
and Class C Shares may vote only on matters affecting the 12b-1 Plan that
relates to the class of shares that they hold. However, Class B Shares of each
Fund may vote on any proposal to increase materially the fees to be paid by a
Fund under the Rule 12b-1 Plan relating to Class A Shares. General expenses of a
Fund will be allocated on a pro-rata basis to the classes according to asset
size, except that expenses of the Rule 12b-1 Plans of that Fund's Class A, Class
B and Class C Shares will be allocated solely to those classes. While shares of
Equity Funds V, Inc. have equal voting rights on matters effecting both Funds,
each Fund would vote separately on any matter which it is directly affected by,
such as any change in its own investment objective and policy or action to
dissolve the Fund and as otherwise prescribed by the 1940 Act. Shares of each
Fund have a priority in that Fund's assets, and in gains on and income from the
portfolios of that Fund.
Prior to November 9, 1992, Equity Funds V, Inc. offered only one
series, now known as Value Fund, and one class of shares, Value Fund A Class.
Beginning November 9, 1992, Equity Funds V, Inc. began offering Value Fund
Institutional Class, beginning September 6, 1994, Equity Funds V, Inc. began
offering Value Fund B Class, and beginning November 29, 1995, Equity Funds
V, Inc. began offering Value Fund C Class. Prior to September 6, 1994, Value
Fund A Class was known as the Value Fund class and Value Fund
Institutional Class was known as the Value Fund (Institutional) class.
Effective as of the close of business November 29, 1996, the name
Delaware Group Value Fund, Inc. was changed to Delaware Group Equity Funds V,
Inc.
All shares have no preemptive rights, are fully transferable and, when
issued, are fully paid and nonassessable and, except as described above, have
equal voting rights.
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<PAGE>
Noncumulative Voting
Equity Funds V, Inc. shares have noncumulative voting rights which
means that the holders of more than 50% of the shares of Equity Funds V, Inc.
voting for the election of directors can elect all the directors if they choose
to do so, and, in such event, the holders of the remaining shares will not be
able to elect any directors.
This Part B does not include all of the information contained in the
Registration Statement which is on file with the Securities and Exchange
Commission.
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<PAGE>
APPENDIX A--IRA INFORMATION
An individual can contribute up to $2,000 to his or her IRA each year.
Contributions may or may not be deductible depending upon the taxpayers adjusted
gross income and whether the taxpayer or his or her spouse is an active
participant in an employer-sponsored retirement plan. Even if a taxpayer (or his
or her spouse) is an active participant in an employer-sponsored retirement
plan, the full $2,000 deduction is still available if the taxpayer's adjusted
gross income is below $25,000 ($40,000 for taxpayers filing joint returns). A
partial deduction is allowed for married couples with incomes between $40,000
and $50,000, and for single individuals with incomes between $25,000 and
$35,000. No deductions are available for contributions to IRAs by taxpayers
whose adjusted gross income before IRA deductions exceeds $50,000 ($35,000 for
singles) and who are active participants in an employer-sponsored retirement
plan. Taxpayers who were not allowed deductions on IRA contributions still can
make nondeductible IRA contributions of as much as $2,000 for each working
spouse ($2,250 for one-income couples for years prior to 1997), and defer taxes
on interest or other earnings from the IRAs. Special rules apply for determining
the deductibility of contributions made by married individuals filing separate
returns.
Effective for tax years beginning after 1996, one-income couples can
contribute up to $2,000 to each spouse's IRA provided the combined compensation
of both spouses is at least equal to the total contributions for both spouses.
If the working spouse is an active participant in an employer-sponsored
retirement plan and earns over $40,000, the maximum deduction limit is reduced
in the same way that the limit is reduced for contributions to a non-spousal
IRA.
As illustrated in the following tables, maintaining an IRA remains a
valuable opportunity.
For many, an IRA will continue to offer both an up-front tax break with
its tax deduction each year and the real benefit that comes with tax-deferred
compounding. For others, losing the tax deduction will impact their taxable
income status each year. Over the long term, however, being able to defer taxes
on earnings still provides an impressive investment opportunity--a way to have
money grow faster due to tax-deferred compounding.
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<PAGE>
Even if your IRA contribution is no longer deductible, the benefits of
saving on a tax-deferred basis can be substantial. The following tables
illustrate the benefits of tax-deferred versus taxable compounding. Each
reflects a constant 10% rate of return, compounded annually, with the
reinvestment of all proceeds. The tables do not take into account any sales
charges or fees. Of course, earnings accumulated in your IRA will be subject to
tax upon withdrawal. If you choose a mutual fund with a fluctuating net asset
value, like either Fund, your bottom line at retirement could be lower--it could
also be much higher.
$2,000 Invested Annually Assuming a 10% Annualized Return
15% Tax Bracket Single - $0 - $24,650
--------------- Joint - $0 - $41,200
<TABLE>
<CAPTION>
How Much You
End of Cumulative How Much You Have With Full
Year Investment Amount Have Without IRA IRA Deduction
<S> <C> <C> <C>
1 $ 2,000 $ 1,844 $ 2,200
5 10,000 10,929 13,431
10 20,000 27,363 35,062
15 30,000 52,074 69,899
20 40,000 89,231 126,005
25 50,000 145,103 216,364
30 60,000 229,114 361,887
35 70,000 355,438 596,254
40 80,000 545,386 973,704
</TABLE>
[Without IRA--investment of $1,700 ($2,000 less 15%) earning 8.5% (10% less
15%)]
28% Tax Bracket Single - $24,651 - $59,750
--------------- Joint - $41,201 - $99,600
<TABLE>
<CAPTION>
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,544 $ 1,584 $ 2,200
5 10,000 8,913 9,670 13,431
10 20,000 21,531 25,245 35,062
15 30,000 39,394 50,328 69,899
20 40,000 64,683 90,724 126,005
25 50,000 100,485 155,782 216,364
30 60,000 151,171 260,559 361,887
35 70,000 222,927 429,303 596,254
40 80,000 324,512 701,067 973,704
</TABLE>
[Without IRA--investment of $1,440 ($2,000 less 28%) earning 7.2% (10% less
28%)]
[With IRA--No Deduction--investment of $1,440 ($2,000 less 28%) earning
10%]
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<PAGE>
31% Tax Bracket Single - $59,751 - $124,650
--------------- Joint - $99,601 - $151,750
<TABLE>
<CAPTION>
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,475 $ 1,518 $ 2,200
5 10,000 8,467 9,268 13,431
10 20,000 20,286 24,193 35,062
15 30,000 36,787 48,231 69,899
20 40,000 59,821 86,943 126,005
25 50,000 91,978 149,291 216,364
30 60,000 136,868 249,702 361,887
35 70,000 199,536 411,415 596,254
40 80,000 287,021 671,855 973,704
</TABLE>
[Without IRA--investment of $1,380 ($2,000 less 31%) earning 6.9% (10% less
31%)]
[With IRA--No Deduction--investment of $1,380 ($2,000 less 31%) earning
10%]
36% Tax Bracket* Single - $124,651 - $271,050
--------------- Joint - $151,751 - $271,050
<TABLE>
<CAPTION>
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,362 $ 1,408 $ 2,200
5 10,000 7,739 8,596 13,431
10 20,000 18,292 22,440 35,062
15 30,000 32,683 44,736 69,899
20 40,000 52,308 80,643 126,005
25 50,000 79,069 138,473 216,364
30 60,000 115,562 231,608 361,887
35 70,000 165,327 381,602 596,254
40 80,000 233,190 623,170 973,704
</TABLE>
[Without IRA--investment of $1,280 ($2,000 less 36%) earning 6.4% (10% less
36%)]
[With IRA--No Deduction--investment of $1,280 ($2,000 less 36%) earning
10%]
-80-
<PAGE>
39.6% Tax Bracket* Single - over $271,050
----------------- Joint - over $271,050
<TABLE>
<CAPTION>
End of Cumulative How Much You How Much You Have with Full IRA
Year Investment Amount Have Without IRA No Deduction Deduction
<S> <C> <C> <C> <C>
1 $ 2,000 $ 1,281 $ 1,329 $ 2,200
5 10,000 7,227 8,112 13,431
10 20,000 16,916 21,178 35,062
15 30,000 29,907 42,219 69,899
20 40,000 47,324 76,107 126,005
25 50,000 70,677 130,684 216,364
30 60,000 101,986 218,580 361,887
35 70,000 143,965 360,137 596,254
40 80,000 200,249 588,117 973,704
</TABLE>
[Without IRA--investment of $1,208 ($2,000 less 39.6%) earning 6.04% (10% less
39.6%)]
[With IRA--No Deduction--investment of $1,208 ($2,000 less 39.6%)
earning 10%]
* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate.
In addition, a 10% surtax (not applicable to capital gains) applies to
certain high-income taxpayers. It is computed by applying a 39.6% rate to
taxable income in excess of $263,750. The above tables do not reflect the
personal exemption phaseout nor the limitations of itemized deductions that
may apply.
-81-
<PAGE>
<TABLE>
<CAPTION>
$2,000 SINGLE INVESTMENT AT A RETURN OF 10% COMPOUNDED ANNUALLY
TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 $ 3,595 $ 3,719 $ 3,898 $ 4,008 $ 4,522 $ 5,187
15 4,820 5,072 5,441 5,675 6,799 8,354
20 6,463 6,916 7,596 8,034 10,224 13,455
30 11,618 12,861 14,803 16,102 23,117 34,899
40 20,884 23,916 28,849 32,272 52,266 90,519
$2,000 INVESTED ANNUALLY AT A RETURN OF 10% COMPOUNDED ANNUALLY
TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAXABLE - TAX
YEARS 39.6%* 36%* 31% 28% 15% DEFERRED
- --------------------------------------------------------------------------------------------------------------------------
10 $ 28,006 $ 28,581 $ 29,400 $ 29,904 $ 32,192 $ 35,062
15 49,514 51,067 53,314 54,714 61,264 69,899
20 78,351 81,731 86,697 89,838 104,978 126,005
30 168,852 180,566 198,360 209,960 269,546 361,887
40 331,537 364,360 415,973 450,711 641,631 973,704
</TABLE>
* For tax years beginning after 1992, a 36% tax rate applies to all taxable
income in excess of the maximum dollar amounts subject to the 31% tax rate.
In addition, a 10% surtax (not applicable to capital gains) applies to
certain high-income taxpayers. It is computed by applying a 39.6% rate to
taxable income in excess of $263,750. The above tables do not reflect the
personal exemption phaseout nor the limitations of itemized deductions that
may apply.
-82-
<PAGE>
THE VALUE OF STARTING YOUR IRA EARLY
The following illustrates how much more you would have contributing
$2,000 each January--the earliest opportunity--compared to contributing on April
15th of the following year--the latest, for each tax year.
After 5 years $3,528 more
10 years $6,113
20 years $17,228
30 years $47,295
Compounded returns for the longest period of time is the key. The above
illustration assumes a 10% rate of return and the reinvestment of all proceeds.
And it pays to shop around. If you get just 2% more per year, it can
make a big difference when you retire. A constant 8% versus 10% return, both
compounded annually, illustrates the point. This chart is based on a yearly
investment of $2,000 on January 1. After 30 years the difference can mean as
much as 50% more!
8% Return 10% Return
--------- ----------
10 years $ 31,291 $ 35,062
20 years $ 98,846 $126,005
30 years $244,692 $361,887
The statistical exhibits above are for illustration purposes only and
do not reflect the actual Fund performance either in the past or in the future.
-83-
<PAGE>
APPENDIX B--THE COMPANY LIFE CYCLE
Traditional business theory contends that a typical company progresses
through basically four stages of development, keyed closely to a firm's sales.
1. Emerging Growth--a period of experimentation in which the company
builds awareness of a new product or firm.
2. Accelerated Development--a period of rapid growth with potentially
high profitability and acceptance of the product.
3. Maturing Phase--a period of diminished real growth due to dependence
on replacement or sustained product demand.
4. Cyclical Stage--a period in which a company faces a potential
saturation of demand for its product. At this point, a firm either diversifies
or becomes obsolete.
Hypothetical Corporate Life Cycle
[CHART APPEARS HERE]
Hypothetical Corporate Life Cycle Chart shows in a line illustration, the stages
that a typical company would go through, beginning with the emerging state where
sales growth continues at a steep pace to the mature phase where growth levels
off to the cyclical stage where sales show more definitive highs and lows.
The above chart illustrates the path traditionally followed by
companies that successfully survive the growth sequence.
-84-
<PAGE>
FINANCIAL STATEMENTS
Ernst & Young LLP serves as the independent auditors for Delaware Group
Equity Funds V, Inc. and, in its capacity as such, audits the annual financial
statements of the Funds. Value Fund's Statement of Net Assets, Statement of
Operations, Statements of Changes in Net Assets and Notes to Financial
Statements, as well as the report of Ernst & Young LLP, independent auditors,
for the fiscal year ended November 30, 1996, are included in Delaware Group
Equity Funds V, Inc. - Value Fund Annual Report to shareholders. The financial
statements, the notes relating thereto and the report of Ernst & Young LLP,
listed above are incorporated by reference from the Annual Report into this Part
B. Retirement Income Fund was not offered to the public prior to November 30,
1996.
-85-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
The Delaware Group ---------------------------------------------
includes funds with a wide range of
investment objectives. Stock funds, DELAWARE GROUP EQUITY FUNDS V, INC.
income funds, tax-free funds, money (formerly Delaware Group Value Fund, Inc.)
market funds, global and
international funds and closed-end ---------------------------------------------
equity funds give investors the
ability to create a portfolio that
fits their personal financial VALUE FUND
goals. For more information, ---------------------------------------------
shareholders of the Fund Classes
should contact their financial A CLASS
adviser or call Delaware Group at ---------------------------------------------
800-523- 4640 and shareholders of
the Institutional Class should B CLASS
contact Delaware Group at ---------------------------------------------
800-828-5052.
C CLASS
---------------------------------------------
INSTITUTIONAL CLASS
---------------------------------------------
INVESTMENT MANAGER
Delaware Management Company, Inc. RETIREMENT INCOME FUND
One Commerce Square ---------------------------------------------
Philadelphia, PA 19103
A CLASS
NATIONAL DISTRIBUTOR ---------------------------------------------
Delaware Distributors, L.P.
1818 Market Street B CLASS
Philadelphia, PA 19103 ---------------------------------------------
SHAREHOLDER SERVICING, C CLASS
DIVIDEND DISBURSING, ---------------------------------------------
ACCOUNTING SERVICES
AND TRANSFER AGENT INSTITUTIONAL CLASS
Delaware Service Company, Inc. =============================================
1818 Market Street
Philadelphia, PA 19103
CLASSES OF DELAWARE GROUP
LEGAL COUNSEL EQUITY FUNDS V, INC.
Stradley, Ronon, Stevens & Young, LLP ---------------------------------------------
One Commerce Square
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square PART B
Philadelphia, PA 19103
STATEMENT OF
CUSTODIAN ADDITIONAL INFORMATION
The Chase Manhattan Bank ---------------------------------------------
4 Chase Metrotech Center
Brooklyn, NY 11245
JANUARY 29, 1997
</TABLE>
DELAWARE
GROUP
--------
<PAGE>
PART C
Other Information
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Part A - Financial Highlights
* Part B - Statement of Net Assets
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Accountant's Report
* The financial statements and Accountant's Report listed above
are incorporated by reference into Part B from the
Registrant's Annual Report for Value Fund for the fiscal year
ended November 30, 1996.
(b) Exhibits:
(1) Articles of Incorporation.
(a) Articles of Incorporation, as amended
and supplemented through November 28,
1995, incorporated into this filing by
reference to Post- Effective Amendment
No. 13 filed September 14, 1995 and
Post- Effective Amendment No. 15 filed
January 29, 1996.
(b) Executed Articles Supplementary
(November 27, 1996) attached as
Exhibit.
(c) Executed Articles of Amendment
(November 27, 1996) attached as
Exhibit.
(2) By-Laws. By-Laws, as amended through September
14, 1995, incorporated into this filing by
reference to Post-Effective Amendment No. 13
filed September 14, 1995.
(3) Voting Trust Agreement. Inapplicable.
<PAGE>
PART C - Other Information
(Continued)
(4) Copies of all Instruments Defining the Rights
of Holders.
(a) Articles of Incorporation, Articles of
Amendment and Articles Supplementary.
(i) Article Second of Articles
Supplementary (May 27, 1992 and
September 6, 1994) and Article
Fifth and Article Eighth of
Articles of Incorporation
(January 16, 1987) incorporated
into this filing by reference
to Post-Effective Amendment No.
13 filed September 14, 1995 and
Article Third of Articles
Supplementary (November 28,
1995) incorporated into this
filing by reference to
Post-Effective Amendment No. 15
filed January 29, 1996.
(ii) Executed Articles Supplementary
(November 27, 1996) attached
as Exhibit 24(b)(1)(b).
(b) By-Laws. Article II, Article III, as
amended, and Article XIII, which was
subsequently redesignated as Article
XIV, incorporated into this filing by
reference to Post-Effective Amendment
No. 13 filed September 14, 1995.
(5) Investment Management Agreement.
(a) Investment Management Agreement between
Delaware Management Company, Inc. and
the Registrant (April 3, 1995) on
behalf of Value Fund incorporated into
this filing by reference to
Post-Effective Amendment No. 13 filed
September 14, 1995.
(b) Executed Investment Management
Agreement (November 29, 1996) between
Delaware Management Company, Inc. and
the Registrant on behalf of Retirement
Income Fund attached as Exhibit.
(6) (a) Distribution Agreement.
(i) Executed Distribution Agreement
between Delaware Distributors,
L.P. and the Registrant (April
3, 1995) and Amendment No. 1 to
Distribution Agreement
(November 29, 1995)
incorporated into this filing
by reference to Post-Effective
Amendment No. 15 filed January
29, 1996.
(ii) Executed Distribution Agreement
(November 29, 1996) between
Delaware Distributors, L.P. and
the Registrant on behalf of
Retirement Income Fund attached
as Exhibit.
<PAGE>
PART C - Other Information
(Continued)
(b) Administration and Service Agreement.
Form of Administration and Service
Agreement (as amended November 1995)
incorporated into this filing by
reference to Post-Effective Amendment
No. 15 filed January 29, 1996.
(c) Dealer's Agreement. Dealer's Agreement
(as amended November 1995) incorporated
into this filing by reference to
Post-Effective Amendment No. 15 filed
January 29, 1996.
(d) Mutual Fund Agreement. Mutual Fund
Agreement for the Delaware Group of
Funds (as amended November 1995)
incorporated into this filing by
reference to Post-Effective Amendment
No. 15 filed January 29, 1996.
(7) Bonus, Profit Sharing, Pension Contracts.
Amended and Restated Profit Sharing Plan
(November 17, 1994) incorporated into this
filing by reference to Post-Effective Amendment
No. 13 filed September 14, 1995 and Amendment
to Profit Sharing Plan (December 21, 1995)
incorporated into this filing by reference to
Post-Effective Amendment No. 15 filed January
29, 1996.
(8) Custodian Agreement.
(a) Executed Custodian Agreement (May 1,
1996) between The Chase Manhattan Bank
and the Registrant on behalf of Value
Fund (Module) incorporated into this
filing by reference to Post-Effective
Amendment No. 16 filed September 13,
1996.
(b) Form of Securities Lending Agreement
between The Chase Manhattan Bank and
the Registrant on behalf of Value Fund
incorporated into this filing by
reference to Post-Effective Amendment
No. 16 filed September 13, 1996.
(c) Form of Custodian Agreement (1996)
between The Chase Manhattan Bank and
the Registrant on behalf of Retirement
Income Fund attached as Exhibit.
(d) Form of Securities Lending Agreement
(1996) between The Chase Manhattan Bank
and the Registrant on behalf of
Retirement Income Fund attached as
Exhibit.
<PAGE>
PART C - Other Information
(Continued)
(9) Other Material Contracts.
(a) Executed Amended and Restated
Shareholders Services Agreement
(November 29, 1996) between Delaware
Service Company, Inc. and the
Registrant on behalf of Value Fund and
Retirement Income Fund attached as
Exhibit.
(b) Executed Delaware Group of Funds Fund
Accounting Agreement (August 19, 1996)
between Delaware Service Company, Inc.
and the Registrant on behalf of Value
Fund and Retirement Income Fund
attached as Exhibit.
(c) Executed Amendment No. 1 (September 30,
1996) to Delaware Group of Funds Fund
Accounting Agreement attached as
Exhibit.
(d) Executed Amendment No. 2 (November 29,
1996) to Delaware Group of Funds Fund
Accounting Agreement attached as
Exhibit.
(e) Executed Amendment No. 3 (December 27,
1996) to Delaware Group of Funds Fund
Accounting Agreement attached as
Exhibit.
(10) Opinion and Consent of Counsel. To be filed
with letter relating to Rule 24f-2 on or about
January 29, 1997.
(11) Consent of Auditors. Attached as Exhibit.
(12) Inapplicable.
(13) Undertaking of Initial Shareholder.
Incorporated into this filing by reference to
Pre-Effective Amendment No. 2 filed June 17,
1987.
(14) Model Plans. Incorporated into this filing by
reference to Post-Effective Amendment No. 9
filed January 29, 1993, Post-Effective
Amendment No. 10 filed January 28, 1994 and
Post-Effective Amendment No. 13 filed September
14, 1995.
**(15) Plans under Rule 12b-1.
(a) Plan under Rule 12b-1 for Value Fund A
Class (November 29, 1995) incorporated
into this filing by reference to
Post-Effective Amendment No. 15 filed
January 29, 1996.
(b) Plan under Rule 12b-1 for Value Fund B
Class (November 29, 1995) incorporated
into this filing by reference to
Post-Effective Amendment No. 15 filed
January 29, 1996.
** Relates to Value Fund's and Retirement Income Fund's retail classes only.
<PAGE>
PART C - Other Information
(Continued)
(c) Plan under Rule 12b-1 for Value Fund C
Class (November 29, 1995) incorporated
into this filing by reference to
Post-Effective Amendment No. 15 filed
January 29, 1996.
(d) Plan under Rule 12b-1 for Retirement
Income Fund A Class (November 29, 1996)
attached as Exhibit.
(e) Plan under Rule 12b-1 for Retirement
Income Fund B Class (November 29, 1996)
attached as Exhibit.
(f) Plan under Rule 12b-1 for Retirement
Income Fund C Class (November 29, 1996)
attached as Exhibit.
(16) Schedules of Computation for each Performance
Quotation.
(a) Incorporated into this filing by
reference to Post-Effective Amendment
No. 13 filed September 14, 1995,
Post-Effective Amendment No. 15 filed
January 29, 1996 and Post-Effective
Amendment No. 16 filed September 13,
1996.
(b) Schedules of Computation for each
Performance Quotation for Value Fund
for periods not previously
electronically filed attached as
Exhibit.
(17) Financial Data Schedules. Attached as Exhibit.
(18) Plan under Rule 18f-3.
(a) Plan under Rule 18f-3 (as amended May
1, 1996) (Module) incorporated into
this filing by reference to
Post-Effective Amendment No. 16 filed
September 13, 1996.
(b) Amended Appendix A (September 30, 1996)
to Plan under Rule 18f-3 attached as
Exhibit.
(c) Amended Appendix A (November 29, 1996)
to Plan under Rule 18f-3 attached as
Exhibit.
(19) Other: Directors' Power of Attorney.
Incorporated into this filing by reference to
Post-Effective Amendment No. 13 filed September
14, 1995.
<PAGE>
PART C - Other Information
(Continued)
Item 25. Persons Controlled by or under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------
Delaware Group Equity Funds V, Inc.'s
Value Fund:
Value Fund A Class
Common Stock Par Value 13,497 Accounts as of
$.01 Per Share December 31, 1996
Value Fund B Class
Common Stock Par Value 1,132 Accounts as of
$.01 Per Share December 31, 1996
Value Fund C Class
Common Stock Par Value 162 Accounts as of
$.01 Per Share December 31, 1996
Value Fund Institutional Class
Common Stock Par Value 40 Accounts as of
$.01 Per Share December 31, 1996
Delaware Group Equity Funds V, Inc.'s
Retirement Income Fund:
Retirement Income Fund A Class
Common Stock Par Value 1 Account as of
$.01 Per Share December 31, 1996
Retirement Income Fund B Class
Common Stock Par Value 0 Accounts as of
$.01 Per Share December 31, 1996
<PAGE>
PART C - Other Information
(Continued)
Number of
Title of Class Record Holders
-------------- --------------
Retirement Income Fund C Class
Common Stock Par Value 0 Accounts as of
$.01 Per Share December 31, 1996
Retirement Income Fund
Institutional Class
Common Stock Par Value 2 Accounts as of
$.01 Per Share December 31, 1996
Item 27. Indemnification. Incorporated into this filing by reference
to initial Registration Statement filed January 23, 1987 and
Article VII of the By-Laws, as amended, incorporated into this
filing by reference to Post-Effective Amendment No. 13 filed
September 14, 1995.
Item 28. Business and Other Connections of Investment Adviser.
Delaware Management Company, Inc. (the "Manager") serves as
investment manager to the Registrant and also serves as investment manager or
sub-adviser to certain of the other funds in the Delaware Group (Delaware Group
Trend Fund, Delaware Group Equity Funds I, Inc., Delaware Group Equity Funds II,
Inc., Delaware Group Equity Funds IV, Inc., Delaware Group Income Funds, Inc.,
Delaware Group Government Fund, Inc., Delaware Group Limited-Term Government
Funds, Inc., Delaware Group Cash Reserve, Inc., Delaware Group Tax-Free Fund,
Inc., DMC Tax-Free Income Trust-Pennsylvania, Delaware Group Tax-Free Money
Fund, Inc., Delaware Group Premium Fund, Inc., Delaware Group Global &
International Funds, Inc., Delaware Pooled Trust, Inc., Delaware Group Adviser
Funds, Inc., Delaware Group Dividend and Income Fund, Inc. and Delaware Group
Global Dividend and Income Fund, Inc.) and provides investment advisory services
to institutional accounts, primarily retirement plans and endowment funds. In
addition, certain directors of the Manager also serve as directors/trustees of
the other Delaware Group funds, and certain officers are also officers of these
other funds. A company indirectly owned by the Manager's parent company acts as
principal underwriter to the mutual funds in the Delaware Group (see Item 29
below) and another such company acts as the shareholder servicing, dividend
disbursing, accounting services and transfer agent for all of the mutual funds
in the Delaware Group.
<PAGE>
PART C - Other Information
(Continued)
The following persons serving as directors or officers of the Manager
have held the following positions during the past two years:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Wayne A. Stork Chairman of the Board, President, Chief Executive Officer, Chief Investment
Officer and Director of Delaware Management Company, Inc.; President, Chief
Executive Officer, Chairman of the Board and Director of the Registrant and,
with the exception of Delaware Pooled Trust, Inc., each of the other funds in the
Delaware Group, Delaware Management Holdings, Inc., DMH Corp., Delaware
International Holdings Ltd. and Founders Holdings, Inc.; Chairman of the Board
and Director of Delaware Pooled Trust, Inc., Delaware Distributors, Inc.,
Delaware Capital Management, Inc. and Delaware Investment & Retirement
Services, Inc.; Chairman, Chief Executive Officer and Director of Delaware
International Advisers Ltd.; and Director of Delaware Service Company, Inc.
Winthrop S. Jessup Executive Vice President and Director of Delaware Management Company, Inc.,
DMH Corp., Delaware International Holdings Ltd. and Founders Holdings, Inc.;
Executive Vice President of the Registrant and, with the exception of Delaware
Pooled Trust, Inc., each of the other funds in the Delaware Group and Delaware
Management Holdings, Inc.; President and Chief Executive Officer of Delaware
Pooled Trust, Inc.; Vice Chairman of Delaware Distributors, L.P.; Vice
Chairman and Director of Delaware Distributors, Inc.; Director of Delaware
Service Company, Inc., Delaware Management Trust Company, Delaware
International Advisers Ltd. and Delaware Investment & Retirement Services,
Inc.; and President and Director of Delaware Capital Management, Inc.
Richard G. Unruh, Jr. Executive Vice President and Director of Delaware Management Company, Inc.;
Executive Vice President of the Registrant and each of the other funds in the
Delaware Group; Senior Vice President of Delaware Management Holdings, Inc.
and Delaware Capital Management, Inc; and Director of Delaware International
Advisers Ltd.
Board of Directors, Chairman of Finance Committee, Keystone Insurance Company
since 1989, 2040 Market Street, Philadelphia, PA; Board of Directors, Chairman
of Finance Committee, Mid Atlantic, Inc. since 1989, 2040 Market Street,
Philadelphia, PA
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Paul E. Suckow Executive Vice President/Chief Investment Officer, Fixed Income of Delaware
Management Company, Inc., the Registrant and each of the other funds in the
Delaware Group; Executive Vice President/Chief Investment Officer and
Director of Founders Holdings, Inc.; Senior Vice President/Chief Investment
Officer, Fixed Income of Delaware Management Holdings, Inc.; Senior Vice
President of Delaware Capital Management, Inc.; and Director of Founders CBO
Corporation
Director, HYPPCO Finance Company Ltd.
David K. Downes Senior Vice President, Chief Administrative Officer and Chief Financial Officer
of Delaware Management Company, Inc., the Registrant and each of the other
funds in the Delaware Group; Chairman and Director of Delaware Management
Trust Company; Executive Vice President and Chief Operating Officer, Chief
Administrative Officer, Chief Financial Officer and Treasurer of Delaware
Management Holdings, Inc.; Senior Vice President, Chief Financial Officer,
Treasurer and Director of DMH Corp.; Senior Vice President and Chief
Administrative Officer of Delaware Distributors, L.P.; Senior Vice President,
Chief Administrative Officer and Director of Delaware Distributors, Inc.; Senior
Vice President, Chief Administrative Officer, Chief Financial Officer and Director
of Delaware Service Company, Inc.; Chief Financial Officer and Director of
Delaware International Holdings Ltd.; Senior Vice President, Chief Financial
Officer and Treasurer of Delaware Capital Management, Inc.; Senior Vice
President, Chief Financial Officer and Director of Founders Holdings, Inc.; Chief
Executive Officer and Director of Delaware Investment & Retirement Services,
Inc.; and Director of Delaware International Advisers Ltd.
Chief Executive Officer, Chief Financial Officer and Treasurer of Forewarn, Inc.
since 1992, 8 Clayton Place, Newtown Square, PA
George M. Chamberlain, Jr. Senior Vice President, Secretary and Director of Delaware Management
Company, Inc., DMH Corp., Delaware Distributors, Inc., Delaware Service
Company, Inc., Founders Holdings, Inc., Delaware Capital Management, Inc.
and Delaware Investment & Retirement Services, Inc.; Senior Vice President and
Secretary of the Registrant, each of the other funds in the Delaware Group,
Delaware Distributors, L.P. and Delaware Management Holdings, Inc.;
Executive Vice President, Secretary and Director of Delaware Management
Trust Company; Secretary and Director of Delaware International Holdings Ltd.;
and Director of Delaware International Advisers Ltd.
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Richard J. Flannery Managing Director/Corporate Tax & Affairs of Delaware Management
Company, Inc., Delaware Management Holdings, Inc., DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service Company, Inc.,
Delaware Management Trust Company, Founders CBO Corporation, Delaware
Capital Management, Inc. and Delaware Investment & Retirement Services, Inc.;
Vice President of the Registrant and each of the other funds in the Delaware
Group; Managing Director/Corporate Tax & Affairs and Director of Founders
Holdings, Inc.; Managing Director and Director of Delaware International
Holdings Ltd.; and Director of Delaware International Advisers Ltd.
Director, HYPPCO Finance Company Ltd.
Limited Partner of Stonewall Links, L.P. since 1991, Bulltown Rd., Elverton,
PA; Director and Member of Executive Committee of Stonewall Links, Inc. since
1991, Bulltown Rd., Elverton, PA
Michael P. Bishof(1) Vice President and Treasurer of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service Company, Inc.
and Founders Holdings, Inc.; Assistant Treasurer of Founders CBO Corporation;
and Vice President and Manager of Investment Accounting of Delaware
International Holdings Ltd.
Eric E. Miller Vice President and Assistant Secretary of Delaware Management Company, Inc.,
the Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Distributors, L.P., Delaware
Distributors Inc., Delaware Service Company, Inc., Delaware Management Trust
Company, Founders Holdings, Inc., Delaware Capital Management, Inc. and
Delaware Investment & Retirement Services, Inc.
Richelle S. Maestro Vice President and Assistant Secretary of Delaware Management Company, Inc.,
the Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., Delaware Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc., DMH Corp., Delaware Management
Trust Company, Delaware Capital Management, Inc., Delaware Investment &
Retirement Services, Inc. and Founders Holdings, Inc.; Secretary of Founders
CBO Corporation; and Assistant Secretary of Delaware International Holdings
Ltd.
General Partner of Tri-R Associates since 1989, 10001 Sandmeyer Lane,
Philadelphia, PA
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Joseph H. Hastings Vice President/Corporate Controller of Delaware Management Company, Inc.,
the Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Capital
Management, Inc., Founders Holdings, Inc. and Delaware International Holdings
Ltd.; Executive Vice President, Chief Financial Officer and Treasurer of
Delaware Management Trust Company; Chief Financial Officer and Treasurer of
Delaware Investment & Retirement Services, Inc.; and Assistant Treasurer of
Founders CBO Corporation
Richard Salus(2) Vice President/Assistant Controller of Delaware Management Company, Inc.
Bruce A. Ulmer Vice President/Director of Internal Audit of Delaware Management Company,
Inc., the Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp. and Delaware Management Trust
Company; and Vice President/Internal Audit of Delaware Investment &
Retirement Services, Inc.
Steven T. Lampe(3) Vice President/Taxation of Delaware Management Company, Inc., the
Registrant, each of the other funds in the Delaware Group, Delaware
Management Holdings, Inc., DMH Corp., Delaware Distributors, L.P., Delaware
Distributors, Inc., Delaware Service Company, Inc., Delaware Management
Trust Company, Founders Holdings, Inc., Founders CBO Corporation, Delaware
Capital Management, Inc. and Delaware Investment & Retirement Services, Inc.
Lisa O. Brinkley Vice President/Compliance of Delaware Management Company, Inc., the Registrant,
each of the other funds in the Delaware Group, DMH Corp., Delaware
Distributors, L.P., Delaware Distributors, Inc., Delaware Service Company,
Inc., Delaware Management Trust Company, Delaware Capital Management, Inc. and
Delaware Investment & Retirement Services, Inc.
Rosemary E. Milner Vice President/Legal of Delaware Management Company, Inc., the Registrant,
each of the other funds in the Delaware Group, Delaware Distributors, L.P. and
Delaware Distributors, Inc.
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Douglas L. Anderson Vice President/Operations of Delaware Management Company, Inc., Delaware
Investment and Retirement Services, Inc. and Delaware Service Company, Inc.;
and Vice President/Operations and Director of Delaware Management Trust
Company
Michael T. Taggart Vice President/Facilities Management and Administrative Services of Delaware
Management Company, Inc.
Gerald T. Nichols Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
the Registrant, each of the tax-exempt funds, the fixed income funds and the
closed-end funds in the Delaware Group; Vice President of Founders Holdings,
Inc.; and Treasurer, Assistant Secretary and Director of Founders CBO
Corporation
Gary A. Reed Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
each of the tax-exempt funds and the fixed income funds in the Delaware Group
and Delaware Capital Management, Inc.
Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
each of the tax-exempt funds, the fixed income funds and the closed-end funds
in the Delaware Group; Vice President of Founders Holdings, Inc.; and President
and Director of Founders CBO Corporation.
Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
each of the tax-exempt funds and the fixed income funds in the Delaware Group
and Delaware Capital Management, Inc.
Roger A. Early Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
each of the tax-exempt funds and the fixed income funds in the Delaware Group
Mitchell L. Conery(4) Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc. and each of the fixed income funds in the Delaware Group
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address* Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Edward N. Antoian Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
the Registrant and each of the equity funds in the Delaware Group and Delaware
Capital Management, Inc.
General Partner of Zeke Investment Partners since 1991, 569 Canterbury Lane,
Berwyn, PA
George H. Burwell Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., the Registrant and each of the equity funds in the Delaware Group
John B. Fields Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
the Registrant, each of the equity funds in the Delaware Group and Delaware
Capital Management, Inc.
David C. Dalrymple Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., the Registrant and each of the equity funds in the Delaware Group
Gerald S. Frey(5) Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., the Registrant and each of the equity funds in the Delaware Group
Faye P. Staples(6) Vice President/Human Resources of Delaware Management Company, Inc.,
Delaware Distributors, L.P. and Delaware Distributors, Inc.; and Vice
President/Director of Human Resources of Delaware Service Company, Inc.
</TABLE>
1 VICE PRESIDENT/GLOBAL INVESTMENT MANAGEMENT OPERATIONS, Bankers Trust and
VICE PRESIDENT, CS First Boston Investment Management prior to June 1995.
2 SENIOR MANAGER, Ernst & Young LLP prior to December 1996.
3 TAX MANAGER, Price Waterhouse prior to October 1995.
4 INVESTMENT OFFICER, Travelers Insurance prior to January 1997 and RESEARCH
ANALYST, CS First Boston Investment Management prior to March 1995.
5 SENIOR DIRECTOR, Morgan Grenfell Capital Management prior to June 1996.
6 VICE PRESIDENT/HUMAN RESOURCES, Nova Care prior to September 1995.
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
Item 29. Principal Underwriters.
(a) Delaware Distributors, L.P. serves as principal
underwriter for all the mutual funds in the Delaware
Group.
(b) Information with respect to each director, officer
or partner of principal underwriter:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ ---------------------- ---------------------
<S> <C> <C>
Delaware Distributors, Inc. General Partner None
Delaware Management
Company, Inc. Limited Partner Investment Manager
Delaware Capital
Management, Inc. Limited Partner None
Winthrop S. Jessup Vice Chairman Executive Vice President
Bruce Barton President and Chief None
Executive Officer
David K. Downes Senior Vice President and Senior Vice President/Chief
Chief Administrative Officer Administrative Officer/Chief
Financial Officer
George M. Chamberlain, Jr. Senior Vice President/ Senior Vice President/
Secretary Secretary
J. Lee Cook Senior Vice President/ None
Eastern Sales Division
Thomas E. Sawyer Senior Vice President/ None
Western Sales Division
Stephen H. Slack Senior Vice President/ None
Wholesaler
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
William F. Hostler Senior Vice President/ None
Marketing Services
Dana B. Hall Senior Vice President/ None
Key Accounts
J. Chris Meyer Senior Vice President/ None
Product Development
Richard J. Flannery Managing Director/Corporate Vice President
& Tax Affairs
Eric E. Miller Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Michael P. Bishof Vice President/Treasurer Vice President/Treasurer
Steven T. Lampe Vice President/Taxation Vice President/Taxation
Joseph H. Hastings Vice President/ Vice President/
Corporate Controller Corporate Controller
Lisa O. Brinkley Vice President/ Vice President/
Compliance Compliance
Rosemary E. Milner Vice President/Legal Vice President/Legal
Susan J. Black Vice President/ None
Manager Key Accounts
Daniel H. Carlson Vice President/ None
Marketing Manager
Gregory J. McMillan Vice President/ None
National Accounts
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Diane M. Anderson Vice President/ None
Retirement Services
Denise F. Guerriere Vice President/Client Services None
Julia R. Vander Els Vice President/ None
Client Services
Jerome J. Alrutz Vice President/ None
Client Services
Joanne A. Mettenheimer Vice President/ None
National Accounts
Christopher H. Price Vice President/Annuity None
Marketing & Administration
Steven J. DeAngelis Vice President/ None
Product Development
Susan T. Friestedt Vice President/ None
Customer Service
Dinah J. Huntoon Vice President/ None
Product Management
Soohee Lee Vice President/Fixed Income None
Product Management
Ellen M. Krott Vice President/ None
Communications
Holly W. Riemel Vice President/ None
Telemarketing
Frank Albanese Vice President/Wholesaler None
Terrence L. Bussard Vice President/Wholesaler None
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
William S. Carroll Vice President/Wholesaler None
William S. Castetter Vice President/Wholesaler None
Thomas J. Chadie Vice President/Wholesaler None
Thomas C. Gallagher Vice President/Wholesaler None
Douglas R. Glennon Vice President/Wholesaler None
William M. Kimbrough Vice President/Wholesaler None
Mac McAuliffe Vice President/Wholesaler None
Patrick L. Murphy Vice President/Wholesaler None
Henry W. Orvin Vice President/Wholesaler None
Philip G. Rickards Vice President/Wholesaler None
Elizabeth Roman Vice President/Wholesaler None
Michael W. Rose Vice President/Wholesaler None
Edward B. Sheridan Vice President/Wholesaler None
Robert E. Stansbury Vice President/Wholesaler None
Larry D. Stone Vice President/Wholesaler None
Faye P. Staples Vice President/Human Resources None
John Wells Vice President/Marketing None
Technology
</TABLE>
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
(c) Not Applicable.
<PAGE>
PART C - Other Information
(Continued)
Item 30. Location of Accounts and Records.
All accounts and records are maintained in Philadelphia at 1818
Market Street, Philadelphia, PA 19103 or One Commerce Square,
Philadelphia, PA 19103.
Item 31. Management Services. None.
Item 32. Undertakings.
(a) Not Applicable.
(b) The Registrant hereby undertakes to file a post-effective
amendment, using financial statements which need not be
certified, within four to six months from the initial
public offering of shares of Retirement Income Fund.
(c) The Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.
(d) The Registrant hereby undertakes to promptly call a meeting
of shareholders for the purpose of voting upon the question
of removal of any director when requested in writing to do
so by the record holders of not less than 10% of the
outstanding shares.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Philadelphia and Commonwealth of Pennsylvania on
this 27th day of January 1997.
DELAWARE GROUP EQUITY FUNDS V, INC.
By /s/Wayne A. Stork
-----------------------------
Wayne A. Stork
President, Chairman of the Board,
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------ ------------------------------------- ----------------
<S> <C> <C>
President, Chairman of the Board,
/s/Wayne A. Stork Chief Executive Officer and Director January 27, 1997
- ------------------------------
Wayne A. Stork
Senior Vice President/Chief Administrative
Officer/Chief Financial Officer (Principal
Financial Officer and Principal Accounting
/s/David K. Downes Officer January 27, 1997
- ------------------------------
David K. Downes
/s/Ann R. Leven * Director January 27, 1997
- ------------------------------
Ann R. Leven
/s/Anthony D. Knerr * Director January 27, 1997
- ------------------------------
Anthony D. Knerr
/s/Walter P. Babich * Director January 27, 1997
- ------------------------------
Walter P. Babich
/s/Charles E. Peck * Director January 27, 1997
- ------------------------------
Charles E. Peck
/s/W. Thacher Longstreth * Director January 27, 1997
- ------------------------------
W. Thacher Longstreth
</TABLE>
*By /s/Wayne A. Stork
------------------------------
Wayne A. Stork
as Attorney-in-Fact for
each of the persons indicated
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Exhibits
to
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- -------
EX-99.B1B Executed Articles Supplementary (November 27, 1996)
EX-99.B1C Executed Articles of Amendment (November 27, 1996)
EX-99.B5B Executed Investment Management Agreement (November 29, 1996)
between Delaware Management Company, Inc. and the Registrant
on behalf of Retirement Income Fund
EX-99.B6AII Executed Distribution Agreement (November 29, 1996) between
Delaware Distributors, L.P. and the Registrant on behalf of
Retirement Income Fund
EX-99.B8C Form of Custodian Agreement (1996) between The Chase
Manhattan Bank and the Registrant on behalf of Retirement
Income Fund
EX-99.B8D Form of Securities Lending Agreement (1996) between The
Chase Manhattan Bank and the Registrant on behalf of
Retirement Income Fund
EX-99.B9A Executed Amended and Restated Shareholders Services
Agreement (November 29, 1996) between Delaware Service
Company, Inc. and the Registrant on behalf of Value Fund and
Retirement Income Fund
EX-99.B9B Executed Delaware Group of Funds Fund Accounting Agreement
(August 19, 1996) between Delaware Service Company, Inc. and
the Registrant on behalf of Value Fund and Retirement Income
Fund
EX-99.B9C Executed Amendment No. 1 (September 30, 1996) to Delaware
Group of Funds Fund Accounting Agreement
EX-99.B9D Executed Amendment No. 2 (November 29, 1996) to Delaware
Group of Funds Fund Accounting Agreement
EX-99.B9E Executed Amendment No. 3 (December 27, 1996) to Delaware
Group of Funds Fund Accounting Agreement
EX-99.B11 Consent of Auditors
EX-99.B15D Plan under Rule 12b-1 for Retirement Income Fund A Class
(November 29, 1996)
EX-99.B15E Plan under Rule 12b-1 for Retirement Income Fund B Class
(November 29, 1996)
EX-99.B15F Plan under Rule 12b-1 for Retirement Income Fund C Class
(November 29, 1996)
EX-99.B16B Schedules of Computation for each Performance Quotation for
Value Fund for periods not previously electronically filed
<PAGE>
EX-27 Financial Data Schedules
EX-99.B18B Amended Appendix A (September 30, 1996) to Plan under Rule
18f-3
EX-99.B18C Amended Appendix A (November 29, 1996) to Plan under Rule
18f-3
<PAGE>
DELAWARE GROUP EQUITY FUNDS V, INC.
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
Delaware Group Equity Funds V, Inc. (formerly known as
Delaware Group Value Fund, Inc.), a Maryland corporation having its principal
office in Baltimore, Maryland (the "Corporation"), hereby certifies, in
accordance with Section 2-208 and Section 2-208.1 of the Maryland General
Corporation Law, to the State Department of Assessments and Taxation of
Maryland, that:
FIRST: The Corporation has authority to issue a total of Five
Hundred Million (500,000,000) shares of common stock with a par value of One
Cent ($0.01) per share (the "Common Stock") of the Corporation, having an
aggregate par value of Five Million Dollars ($5,000,000). Of such Five Hundred
Million (500,000,000) shares of the Common Stock, Three Hundred Fifty Million
(350,000,000) shares have been allocated to the Value Fund series of the Common
Stock as follows: (1) One Hundred Fifty Million (150,000,000) shares of the
Value Fund series of the Common Stock have been allocated to the Value Fund A
Class, (2) One Hundred Million (100,000,000) shares of the Value Fund series of
the Common Stock have been allocated to the Value Fund B Class, and (3) Fifty
Million (50,000,000) shares of the Value Fund series of the Common Stock have
been allocated to each of the Value Fund C Class and Value Fund Institutional
Class.
SECOND: The Board of Directors of the Corporation, at a
meeting held on November 21, 1996, adopted resolutions increasing the aggregate
number of shares of Common Stock that the Corporation has authority to issue
from Five Hundred Million (500,000,000) shares to One Billion (1,000,000,000)
shares, designating one additional series of the Corporation's Common Stock as
the Retirement Income Fund series, and classifying and allocating Two Hundred
Million (200,000,000) shares of authorized, unissued and unclassified Common
Stock to the Retirement Income Fund series. The Two Hundred Million
(200,000,000) shares of the Common Stock which have been allocated to the
Retirement Income Fund series have been further allocated as follows: (1) One
Hundred Million (100,000,000) shares of the Retirement Income Fund series of the
Common Stock have been allocated to the Retirement Income Fund A Class, (2)
Fifty Million (50,000,000) shares of the Retirement Income Fund series of the
Common Stock have been allocated to the Retirement Income Fund Institutional
Class, and (3) Twenty-Five Million (25,000,000) shares of the Retirement Income
Fund series of the Common Stock have been allocated to each of the Retirement
Income
<PAGE>
Fund B Class and the Retirement Income Fund C Class. Four Hundred Fifty Million
(450,000,000) shares of the Corporation's Common Stock remain authorized but
unissued and unallocated shares.
THIRD: As a result of the aforesaid increase in the authorized
Common Stock and classifications, the Corporation has authority to issue One
Billion (1,000,000,000) shares of Common Stock with a par value of One Cent
($0.01) per share, having an aggregate par value of Ten Million Dollars
($10,000,000). Of such One Billion (1,000,000,000) shares of Common Stock, Five
Hundred Fifty Million (550,000,000) shares of the Common Stock have been
allocated as follows: Three Hundred Fifty Million (350,000,000) shares have been
allocated to the Value Fund series, and Two Hundred Million (200,000,000) shares
have been allocated to the Retirement Income Fund series. The Three Hundred
Fifty Million (350,000,000) shares of the Corporation's Common Stock which have
been allocated to the Value Fund series have been further classified and
allocated as follows: (1) One Hundred Fifty Million (150,000,000) shares of the
Value Fund series of the Common Stock have been allocated to the Value Fund A
Class, (2) One Hundred Million (100,000,000) shares of the Value Fund series of
the Common Stock have been allocated to the Value Fund B Class, and (3) Fifty
Million (50,000,000) shares of the Value Fund series of the Common Stock have
been allocated to each of the Value Fund Institutional Class and the Value Fund
C Class. The Two Hundred Million (200,000,000) shares of the Corporation's
Common Stock allocated to the Retirement Income Fund series have been further
classified and allocated as follows: (1) One Hundred Million (100,000,000)
shares of the Retirement Income Fund series of the Common Stock have been
allocated to the Retirement Income Fund A Class, (2) Fifty Million (50,000,000)
shares of the Retirement Income Fund series of the Common Stock have been
allocated to the Retirement Income Fund Institutional Class, and (3) Twenty-Five
Million (25,000,000) shares of the Retirement Income Fund series of the Common
Stock have been allocated to each of the Retirement Income Fund B Class and the
Retirement Income Fund C Class. Four Hundred Fifty Million (450,000,000) shares
of the Corporation's Common Stock remain authorized but unissued and unallocated
shares.
FOURTH: The shares of the Retirement Income Fund A Class, the
Retirement Income Fund B Class, the Retirement Income Fund C Class and the
Retirement Income Fund Institutional Class of the Retirement Income Fund series
shall represent proportionate interests in the same portfolio of investments.
The shares of the Retirement Income Fund A Class, the Retirement Income Fund B
Class, the Retirement Income Fund C Class and the Retirement Income Fund
Institutional Class of the Retirement Income Fund series shall have the same
preferences, conversion or other rights, voting powers, restrictions,
limitations as to
-2-
<PAGE>
dividends, qualifications, or terms or conditions of redemption, all as set
forth in the Articles of Incorporation of the Corporation, except for the
differences hereinafter set forth:
1. The dividends and distributions of investment income and
capital gains with respect to shares of the Retirement Income
Fund A Class, the Retirement Income Fund B Class, the
Retirement Income Fund C Class and the Retirement Income Fund
Institutional Class of the Retirement Income Fund series of
the Common Stock shall be in such amounts as may be declared
from time to time by the Board of Directors, and such
dividends and distributions may vary with respect to each such
class from the dividends and distributions of investment
income and capital gains with respect to the other classes of
the Retirement Income Fund series of the Common Stock, to
reflect differing allocations of the expenses of the
Corporation among the classes and any resultant difference
among the net asset values per share of the classes, to such
extent and for such purposes as the Board of Directors may
deem appropriate. The allocation of investment income and
capital gains and expenses and liabilities of the Retirement
Income Fund series among its four classes of Common Stock
shall be determined by the Board of Directors in a manner that
is consistent with the orders, as applicable, dated April 10,
1987 and September 6, 1994 (Investment Company Act of 1940
Release Nos. 15675 and 20529) issued by the Securities and
Exchange Commission, and any amendments to such orders, any
existing or future order or any Multiple Class Plan adopted by
the Corporation in accordance with Rule 18f-3 under the
Investment Company Act of 1940, as amended, that modifies or
supersedes such orders.
2. Except as may otherwise be required by law, pursuant to any
applicable order, rule or interpretation issued by the
Securities and Exchange Commission, or otherwise, the holders
of shares of the Retirement Income Fund A Class, the
Retirement Income Fund B Class, the Retirement Income Fund C
Class and the Retirement Income Fund Institutional Class of
the Retirement Income Fund series of the Common Stock shall
have (i) exclusive voting rights with respect to any matter
submitted to a vote of stockholders that affects only holders
of shares of the Retirement Income Fund A Class, the
Retirement Income Fund B Class, the Retirement Income Fund C
Class and the Retirement Income Fund Institutional Class of
the Retirement Income Fund series, respectively, including,
without limitation, the provisions of any Distribution Plan
-3-
<PAGE>
adopted pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended (a "Distribution Plan"), applicable to
shares of the Retirement Income Fund A Class, the Retirement
Income Fund B Class and the Retirement Income Fund C Class,
and (ii) no voting rights with respect to the provisions of
any Distribution Plan applicable to any other class of the
Retirement Income Fund series of the Common Stock or with
regard to any other matter submitted to a vote of stockholders
which does not affect holders of shares of the Retirement
Income Fund A Class, the Retirement Income Fund B Class and
the Retirement Income Fund C Class.
3. (a) Other than shares described in paragraph (3)(b) herein,
each share of the Retirement Income Fund B Class shall be
converted automatically, and without any action or choice on
the part of the holder thereof, into shares of the Retirement
Income Fund A Class on the Conversion Date. The term
"Conversion Date" when used herein shall mean a date set forth
in the prospectus of the Retirement Income Fund B Class, as
such prospectus may be amended from time to time, that is no
later than three months after either (i) the date on which the
eighth anniversary of the date of issuance of the share
occurs, or (ii) any such other anniversary date as may be
determined by the Board of Directors and set forth in the
prospectus of the Retirement Income Fund B Class, as such
prospectus may be amended from time to time; provided that any
such other anniversary date determined by the Board of
Directors shall be a date that will occur prior to the
anniversary date set forth in clause (i) and any such other
date theretofore determined by the Board of Directors pursuant
to this clause (ii); but further provided that, subject to the
provisions of the next sentence, for any shares of the
Retirement Income Fund B Class acquired through an exchange,
or through a series of exchanges, as permitted by the
Corporation as provided in the prospectus of the Retirement
Income Fund B Class, as such prospectus may be amended from
time to time, from another investment company or another
series of the Corporation (an "eligible investment company"),
the Conversion Date shall be the conversion date applicable to
the shares of stock of the eligible investment company
originally subscribed for in lieu of the Conversion Date of
any stock acquired through exchange if such eligible
investment company issuing the stock originally subscribed for
had a conversion feature, but not later than the Conversion
Date determined under (i) above. For the purpose of
calculating the holding period required for conversion, the
date of issuance of
-4-
<PAGE>
a share of the Retirement Income Fund B Class shall mean (i)
in the case of a share of the Retirement Income Fund B Class
obtained by the holder thereof through an original
subscription to the Corporation, the date of the issuance of
such share of the Retirement Income Fund B Class, or (ii) in
the case of a share of the Retirement Income Fund B Class
obtained by the holder thereof through an exchange, or through
a series of exchanges, from an eligible investment company,
the date of issuance of the share of the eligible investment
company to which the holder originally subscribed.
(b) Each share of the Retirement Income Fund B Class
(i) purchased through the automatic reinvestment of a dividend
or distribution with respect to the Retirement Income Fund B
Class or the corresponding class of any other investment
company or of any other series of the Corporation issuing such
class of shares or (ii) issued pursuant to an exchange
privilege granted by the Corporation in an exchange or series
of exchanges for shares originally purchased through the
automatic reinvestment of a dividend or distribution with
respect to shares of capital stock of an eligible investment
company, shall be segregated in a separate sub-account on the
stock records of the Corporation for each of the holders of
record thereof. On any Conversion Date, a number of the shares
held in the separate sub-account of the holder of record of
the share or shares being converted, calculated in accordance
with the next following sentence, shall be converted
automatically, and without any action or choice on the part of
the holder, into shares of the Retirement Income Fund A Class.
The number of shares in the holder's separate sub-account so
converted shall (i) bear the same ratio to the total number of
shares maintained in the separate sub-account on the
Conversion Date (immediately prior to conversion) as the
number of shares of the holder converted on the Conversion
Date pursuant to paragraph (3)(a) hereof bears to the total
number of Retirement Income Fund B Class shares of the holder
on the Conversion Date (immediately prior to conversion) after
subtracting the shares then maintained in the holder's
separate sub-account, or (ii) be such other number as may be
calculated in such other manner as may be determined by the
Board of Directors and set forth in the prospectus of the
Retirement Income Fund B Class, as such prospectus may be
amended from time to time.
(c) The number of shares of the Retirement Income
Fund A Class into which a share of the Retirement
-5-
<PAGE>
Income Fund B Class is converted pursuant to paragraphs 3(a)
and 3(b) hereof shall equal the number (including for this
purpose fractions of a share) obtained by dividing the net
asset value per share of the Retirement Income Fund B Class
for purposes of sales and redemption thereof on the Conversion
Date by the net asset value per share of the Retirement Income
Fund A Class for purposes of sales and redemption thereof on
the Conversion Date.
(d) On the Conversion Date, the shares of the
Retirement Income Fund B Class converted into shares of the
Retirement Income Fund A Class will no longer be deemed
outstanding and the rights of the holders thereof (except the
right to receive (i) the number of shares of the Retirement
Income Fund A Class into which the shares of the Retirement
Income Fund B Class have been converted and (ii) declared but
unpaid dividends to the Conversion Date or such other date set
forth in the prospectus of the Retirement Income Fund B Class,
as such prospectus may be amended from time to time and (iii)
the right to vote converting shares of the Retirement Income
Fund B Class held as of any record date occurring on or before
the Conversion Date and theretofore set with respect to any
meeting held after the Conversion Date) will cease.
Certificates representing shares of the Retirement Income Fund
A Class resulting from the conversion need not be issued until
certificates representing shares of the Retirement Income Fund
B Class converted, if issued, have been received by the
Corporation or its agent duly endorsed for transfer.
(e) The automatic conversion of the Retirement Income
Fund B Class into the Retirement Income Fund A Class, as set
forth in paragraphs 3(a) and 3(b) of this Article FOURTH shall
be suspended at any time that the Board of Directors
determines (i) that there is not available a reasonably
satisfactory opinion of counsel to the effect that (x) the
assessment of the higher fee under the Distribution Plan with
respect to the Retirement Income Fund B Class does not result
in the Corporation's dividends or distributions constituting a
"preferential dividend" under the Internal Revenue Code of
1986, as amended, and (y) the conversion of the Retirement
Income Fund B Class does not constitute a taxable event under
federal income tax law, or (ii) any other condition to
conversion set forth in the prospectus of the Retirement
Income Fund B Class, as such prospectus may be amended from
time to time, is not satisfied.
-6-
<PAGE>
(f) The automatic conversion of the Retirement Income
Fund B Class into Retirement Income Fund A Class, as set forth
in paragraphs 3(a) and 3(b) hereof, may also be suspended by
action of the Board of Directors at any time that the Board of
Directors determines such suspension to be appropriate in
order to comply with, or satisfy the requirements of the
Investment Company Act of 1940, as amended, and in effect from
time to time, or any rule, regulation or order issued
thereunder relating to voting by the holders of the Retirement
Income Fund B Class on any Distribution Plan with respect to,
as relevant, the Retirement Income Fund A Class and in effect
from time to time, and in connection with, or in lieu of, any
such suspension, the Board of Directors may provide holders of
the Retirement Income Fund B Class with alternative conversion
or exchange rights into other classes of stock of the
Corporation in a manner consistent with the law, rule,
regulation or order giving rise to the possible suspension of
the conversion right.
4. The shares of the Retirement Income Fund C Class and the
Retirement Income Fund Institutional Class shall not
automatically convert into shares of the Retirement Income
Fund A Class of the Retirement Income Fund series of the
Common Stock as do the shares of the Retirement Income Fund B
Class of the Retirement Income Fund series of the Common
Stock.
FIFTH: The shares of the Retirement Income Fund A Class, the
Retirement Income Fund B Class, the Retirement Income Fund C Class and the
Retirement Income Fund Institutional Class of the Retirement Income Fund series
have been classified by the Board of Directors pursuant to authority contained
in the Articles of Incorporation of the Corporation.
SIXTH: The Corporation is registered as an open-end
management investment company under the Investment Company Act of
1940, as amended.
SEVENTH: The total number of shares of Common Stock that the
Corporation has authority to issue has been increased by the Board of Directors
in accordance with Section 2-105(c) of the Maryland General Corporation Law.
EIGHTH: These Articles Supplementary shall become
effective at 5:00 p.m. on November 27, 1996.
IN WITNESS WHEREOF, Delaware Group Equity Funds V, Inc.
has caused these Articles Supplementary to be signed in its name
-7-
<PAGE>
and on its behalf by its Senior Vice President and attested by its Assistant
Secretary on this 27th day of November, 1996.
DELAWARE GROUP EQUITY FUNDS V, INC.
By: /s/ George M. Chamberlain, Jr.
-------------------------------
George M. Chamberlain, Jr.
Senior Vice President
ATTEST:
/s/ Eric E. Miller
- --------------------------------
Eric E. Miller
Assistant Secretary
-8-
<PAGE>
THE UNDERSIGNED, Senior Vice President of DELAWARE GROUP
EQUITY FUNDS V, INC., who executed on behalf of the said Corporation the
foregoing Articles Supplementary, of which this instrument is made a part,
hereby acknowledges, in the name of and on behalf of said Corporation, said
Articles Supplementary to be the corporate act of said Corporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the authorization and
approval thereof are true in all material respects, under the penalties of
perjury.
By: /s/ George M. Chamberlain, Jr.
-------------------------------
George M. Chamberlain, Jr.
Senior Vice President
-9-
<PAGE>
DELAWARE GROUP VALUE FUND, INC.
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
DELAWARE GROUP VALUE FUND, INC., a Maryland corporation having
its principal office in Baltimore, Maryland (the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland, that:
ONE: The Corporation is registered as an open-end
management investment company under the Investment Company Act of
1940, as amended.
TWO: The first sentence of ARTICLE SECOND of the
Articles of Incorporation, as amended and supplemented, is hereby
amended to read as follows:
SECOND: The name of the corporation is Delaware
Group Equity Funds V, Inc.
THREE: The Articles of Incorporation of the
Corporation, as amended and supplemented, are further amended by changing the
name of the Series I of the Common Stock to the Value Fund series of the Common
Stock, and by deleting the old name of such series from the Articles of
Incorporation, as amended and supplemented to date, and inserting in lieu
thereof, the new name of such series as changed hereby.
FOUR: The Articles of Incorporation of the
Corporation, as amended and supplemented, are further amended by changing the
names of the Value Fund Class of shares and the Value Fund (Institutional) Class
of shares of the Value Fund series (formerly known as the Series I) of the
Common Stock to, respectively, the Value Fund A Class of shares and the Value
Fund Institutional Class of shares, and by deleting the old names of such
classes from the Articles of Incorporation, as amended and supplemented to date,
and inserting in lieu thereof, the new names of such classes as changed hereby.
The names of the other two classes of the common stock of the
Value Fund series of the Common Stock of the Corporation (the Value Fund B Class
and the Value Fund C Class) shall remain the same.
FIVE: The amendments to the Articles of Incorporation
of the Corporation as set forth above have been duly approved by a majority of
the entire Board of Directors of
<PAGE>
the Corporation as required by law and are limited to changes permitted by
Section 2-605(a)(4) of the Maryland General Corporation Law to be made without
action by the stockholders of the Corporation.
SIX: The amendments to the Articles of Incorporation
of the Corporation as set forth above do not change the preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption of the shares that are the
subject of the name changes.
SEVEN: These Articles of Amendment shall become
effective at 4:30 p.m. on November 27, 1996.
IN WITNESS WHEREOF, DELAWARE GROUP VALUE FUND, INC. has caused
these Articles of Amendment to be signed in its name and on its behalf by its
Senior Vice President and attested by its Assistant Secretary on this 27th day
of November, 1996.
DELAWARE GROUP VALUE FUND, INC.
By: /S/George M. Chamberlain, Jr.
--------------------------------
George M. Chamberlain, Jr.
Senior Vice President
ATTEST:
/s/Eric E. Miller
- ----------------------------
Eric E. Miller
Assistant Secretary
-2-
<PAGE>
THE UNDERSIGNED, Senior Vice President of DELAWARE GROUP VALUE
FUND, INC., who executed on behalf of said Corporation the foregoing Articles of
Amendment, of which this certificate is made a part, hereby acknowledges, in the
name and on behalf of said Corporation, the foregoing Articles of Amendment to
be the corporate act of said Corporation and further certifies that, to the best
of his knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof are true in all material respects,
under the penalties of perjury.
/s/George M. Chamberlain, Jr.
-----------------------------
George M. Chamberlain, Jr.
Senior Vice President
-3-
<PAGE>
DELAWARE GROUP VALUE FUND, INC.
RETIREMENT INCOME FUND
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made by and between DELAWARE GROUP VALUE FUND, INC. (the
"Fund"), a Maryland corporation, for its RETIREMENT INCOME FUND series (the
"Series"), and DELAWARE MANAGEMENT COMPANY, INC. (the "Investment Manager"), a
Delaware corporation.
W I T N E S S E T H:
WHEREAS, the Fund has been organized and operates as an investment
company registered under the Investment Company Act of 1940 and engages in the
business of investing and reinvesting its assets in securities; and
WHEREAS, the Investment Manager is a registered Investment Adviser
under the Investment Advisers Act of 1940 and engages in the business of
providing investment management services; and
WHEREAS, the Investment Manager serves as the investment manager for
the other series of the Fund, known as the Value Fund series, pursuant to an
Investment Management Agreement dated as of April 3, 1995, and the Fund desires
to retain the Investment Manager to serve as the investment manager for this
Series effective as of the date of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
1. The Fund hereby employs the Investment Manager to manage the
investment and reinvestment of the Series' assets and to administer its affairs,
subject to the direction of the Board
<PAGE>
and officers of the Fund for the period and on the terms hereinafter set forth.
The Investment Manager hereby accepts such employment and agrees during such
period to render the services and assume the obligations herein set forth for
the compensation herein provided. The Investment Manager shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized, have no authority to act for or represent the
Fund in any way, or in any way be deemed an agent of the Fund. The Investment
Manager shall regularly make decisions as to what securities to purchase and
sell on behalf of the Series, and shall give written instructions to the Trading
Department maintained by the Fund for implementation of such decisions, and
shall furnish the Board of Directors of the Fund with such information and
reports regarding the Series' investments as the Investment Manager deems
appropriate or as the Directors of the Fund may reasonably request.
2. The Fund shall conduct its own business and affairs and shall bear
the expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings;
-2-
<PAGE>
miscellaneous office expenses; brokerage commissions; custodian fees; legal and
accounting fees; taxes; and federal and state registration fees. The Series
shall bear all of its own organizational costs.
Directors, officers and employees of the Investment Manager
may be directors, officers and employees of the funds of which Delaware
Management Company, Inc. is Investment Manager. Directors, officers and
employees of the Investment Manager who are directors, officers and/or employees
of the funds shall not receive any compensation from the funds for acting in
such dual capacity.
In the conduct of the respective businesses of the parties
hereto and in the performance of this Agreement, the Fund and Investment Manager
may share facilities common to each, with appropriate proration of expenses
between them.
3. (a) The Fund shall place and execute its own orders for the purchase
and sale of portfolio securities with broker/dealers. Subject to the primary
objective of obtaining the best available prices and execution, the Fund will
place orders for the purchase and sale of portfolio securities with such
broker/dealers selected from among those designated from time to time by the
Investment Manager, who provide statistical, factual and financial information
and services to the Fund, to the Investment Manager, or to any other fund for
which the Investment Manager provides investment advisory services and/or with
broker/dealers who sell shares of the Fund or who sell shares of
-3-
<PAGE>
any other fund for which the Investment Manager provides investment advisory
services. Broker/dealers who sell shares of the funds of which Delaware
Management Company, Inc. is investment manager, shall only receive orders for
the purchase or sale of portfolio securities to the extent that the placing of
such orders is in compliance with the Rules of the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc.
(b) Notwithstanding the provisions of subparagraph (a) above
and subject to such policies and procedures as may be adopted by the Board of
Directors and officers of the Fund, the Investment Manager may ask the Fund, and
the Fund may agree, to pay a member of an exchange, broker or dealer an amount
of commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, in such instances where it, and the Investment
Manager, have determined in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or the Investment Manager's overall responsibilities with
respect to the Fund and to other funds or other advisory accounts for which the
Investment Manager exercises investment discretion.
4. As compensation for the services to be rendered to the
Fund by the Investment Manager under the provisions of this
-4-
<PAGE>
Agreement, the Fund shall pay to the Investment Manager monthly from the Series'
assets a fee based on the average daily net assets of the Series during the
month. Such fee shall be calculated in accordance with the following schedule.
Equivalent
Monthly Rate Annual Rate Average Daily Net Assets
- ------------ ----------- ------------------------
7.50/120 of 1% 0.750% on the first $500,000,000
7.25/120 of 1% 0.725% on the next $500,000,000
7.00/120 of 1% 0.700% on assets over $1,000,000,000
If this Agreement is terminated prior to the end of any
calendar month, the management fee shall be prorated for the portion of any
month in which this Agreement is in effect according to the proportion which the
number of calendar days during which the Agreement is in effect bears to the
number of calendar days in the month, and shall be payable within 10 days after
the date of termination.
5. The services to be rendered by the Investment Manager to the Fund
under the provisions of this Agreement are not to be deemed to be exclusive, and
the Investment Manager shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
6. The Investment Manager, its directors, officers, employees, agents
and shareholders may engage in other businesses, may render investment advisory
services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
-5-
<PAGE>
Fund or to any other investment company, corporation, association, firm or
individual.
7. In the absence of willful misfeasance, bad faith, gross negligence,
or a reckless disregard of the performance of duties of the Investment Manager
to the Fund, the Investment Manager shall not be subject to liabilities to the
Fund or to any shareholder of the Fund for any action or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security, or otherwise.
8. This Agreement shall be executed and become effective as of the date
written below. It shall continue in effect for a period of two years from such
date and may be renewed thereafter only so long as such renewal and continuance
is specifically approved at least annually by the Board of Directors of the Fund
or by vote of a majority of the outstanding voting securities of the Series and
only if the terms and the renewal hereof have been approved by the vote of a
majority of the Directors of the Fund who are not parties hereto or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. Notwithstanding the foregoing, this Agreement may be
terminated by the Fund at any time, without the payment of a penalty, on sixty
days' written notice to the Investment Manager of the Fund's intention to do so,
pursuant to action by the Board of Directors of the Fund or pursuant to vote of
a majority of the outstanding voting securities of the Series.
-6-
<PAGE>
The Investment Manager may terminate this Agreement at any time, without the
payment of penalty, on sixty days' written notice to the Fund of its intention
to do so. Upon termination of this Agreement, the obligations of all the parties
hereunder shall cease and terminate as of the date of such termination, except
for any obligation to respond for a breach of this Agreement committed prior to
such termination, and except for the obligation of the Fund to pay to the
Investment Manager the fee provided in paragraph 4 hereof, prorated to the date
of termination. This Agreement shall automatically terminate in the event of its
assignment.
9. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
10. For the purposes of this Agreement, the terms "vote of a majority
of the outstanding voting securities;" "interested persons;" and "assignment"
shall have the meanings defined in the Investment Company Act of 1940.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by having it signed by their duly authorized officers as of the 29th
day of November, 1996.
DELAWARE GROUP VALUE FUND, INC.
for the RETIREMENT INCOME FUND
By: /s/ David K. Downes
--------------------------------
Name: David K. Downes
Title: Senior Vice President/Chief
Administrative Officer/Chief
Financial Officer
Attest: /s/ Richelle S. Maestro
--------------------------------
Name: Richelle S. Maestro
Title: Vice President/
Assistant Secretary
DELAWARE MANAGEMENT COMPANY, INC.
By: /s/ Wayne A. Stork
--------------------------------
Name: Wayne A. Stork
Title: Chairman, President, Chief Executive
Officer, Chief Investment Officer
Attest: /s/ Eric E. Miller
--------------------------------
Name: Eric E. Miller
Title: Vice President/
Assistant Secretary
-8-
<PAGE>
DELAWARE GROUP VALUE FUND, INC.
RETIREMENT INCOME FUND
DISTRIBUTION AGREEMENT
Distribution Agreement (the "Agreement") made as of this 29th day of
November, 1996 by and between DELAWARE GROUP VALUE FUND, INC., a Maryland
corporation (the "Fund"), for the RETIREMENT INCOME FUND series (the "Series"),
and DELAWARE DISTRIBUTORS, L.P. (the "Distributor"), a Delaware limited
partnership.
WITNESSETH
WHEREAS, the Fund is an investment company regulated by
Federal and State regulatory bodies, and
WHEREAS, the Distributor is engaged in the business of
promoting the distribution of the securities of investment companies and, in
connection therewith and acting solely as agent for such investment companies
and not as principal, advertising, promoting, offering and selling their
securities to the public, and
WHEREAS, the Fund desires to enter into an agreement with the
Distributor on behalf of the Series, pursuant to which the Distributor shall
serves as the national distributor of the Series' Retirement Income Fund A Class
("Class A Shares"), Retirement Income Fund B Class (the "Class B Shares"),
Retirement Income Fund C Class (the "Class C Shares"), and Retirement Income
Fund Institutional Class (the "Institutional Class Shares"), which Series and
classes may do business under these or such other names as the Board of
Directors may designate from time to time, on the terms and conditions set forth
below,
<PAGE>
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. The Fund hereby engages the Distributor to promote the distribution of the
Series' shares and, in connection therewith and as agent for the Fund and
not as principal, to advertise, promote, offer and sell the Series' shares
to the public.
2. (a) The Distributor agrees to serve as distributor of the Series' shares
and, as agent for the Fund and not as principal, to advertise, promote
and use its best efforts to sell the Series' shares wherever their sale
is legal, either through dealers or otherwise, in such places and in
such manner, not inconsistent with the law and the provisions of this
Agreement and the Fund's Registration Statement under the Securities
Act of 1933, including the Prospectuses contained therein, and the
Statement of Additional Information contained therein as may be
mutually determined by the Fund and the Distributor from time to time.
(b) For the Institutional Class Shares, the Distributor will bear all costs
of financing any activity which is primarily intended to result in the
sale of that class of shares, including, but not necessarily limited
to, advertising, compensation of underwriters, dealers and sales
personnel, the printing and mailing of sales literature and
distribution of that class of shares.
<PAGE>
(c) For its services as agent for the Class A Shares, Class
B Shares, and Class C Shares, the Distributor shall be entitled to
compensation on each sale or redemption, as appropriate, of shares of
such classes equal to any front-end or deferred sales charge described
in the Prospectus from time to time and may allow concessions to
dealers in such amounts and on such terms as are therein set forth.
(d) For the Class A Shares, Class B Shares, and Class C
Shares, the Fund shall, in addition, compensate the Distributor for its
services as provided in the Distribution Plan as adopted on behalf of
the Class A Shares, Class B Shares, and Class C Shares, respectively,
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"Plans"), copies of which as presently in force are attached hereto as,
respectively, Exhibit "A," "B," and "C."
3. (a) The Fund agrees to make available for sale by the Fund through the
Distributor all or such part of the authorized but unissued shares of
the Series as the Distributor shall require from time to time, and
except as provided in Paragraph 3(b) hereof, the Fund will not sell
Series' shares other than through the efforts of the Distributor.
(b) The Fund reserves the right from time to time (1) to sell and issue
shares other than for cash; (2) to issue shares
-3-
<PAGE>
in exchange for substantially all of the assets of any corporation or
trust, or in exchange of shares of any corporation or trust; (3) to pay
stock dividends to its shareholders, or to pay dividends in cash or
stock at the option of its stockholders, or to sell stock to existing
stockholders to the extent of dividends payable from time to time in
cash, or to split up or combine its outstanding shares of common stock;
(4) to offer shares for cash to its stockholders as a whole, by the use
of transferable rights or otherwise, and to sell and issue shares
pursuant to such offers; and (5) to act as its own distributor in any
jurisdiction in which the Distributor is not registered as a
broker-dealer.
4. The Fund warrants the following:
(a) The Fund is, or will be, a properly registered investment company, and
any and all Series' shares which it will sell through the Distributor
are, or will be, properly registered with the Securities and Exchange
Commission ("SEC").
(b) The provisions of this Agreement do not violate the terms of any
instrument by which the Fund is bound, nor do they violate any law or
regulation of any body having jurisdiction over the Fund or its
property.
5. (a) The Fund will supply to the Distributor a conformed copy of the
Registration Statement, all amendments thereto,
-4-
<PAGE>
all exhibits, and each Prospectus and Statement of Additional
Information.
(b) The Fund will register or qualify the Series' shares for sale in such
states as is deemed desirable.
(c) The Fund, without expense to the Distributor,
(1) will give and continue to give such financial statements and
other information as may be required by the SEC or the proper
public bodies of the states in which the Series' shares may be
qualified;
(2) from time to time, will furnish to the Distributor as soon as
reasonably practicable true copies of its periodic reports to
stockholders;
(3) will promptly advise the Distributor in person or by
telephone or telegraph, and promptly confirm such advice in
writing, (a) when any amendment or supplement to the
Registration Statement becomes effective, (b) of any request
by the SEC for amendments or supplements to the Registration
Statement or the Prospectuses or for additional information,
and (c) of the issuance by the SEC of any Stop Order
suspending the effectiveness of the Registration Statement, or
the initiation of any proceedings for that purpose;
(4) if at any time the SEC shall issue any Stop Order suspending
the effectiveness of the Registration Statement, will make
every reasonable effort to obtain the lifting of such order at
the earliest possible moment;
(5) will from time to time, use its best effort to keep a
sufficient supply of Series' shares authorized, any increases
being subject to the approval of shareholders as may be
required;
(6) before filing any further amendment to the Registration
Statement or to any Prospectus, will furnish to the
Distributor copies of the proposed amendment and will not, at
any time, whether before or after the effective date of the
Registration Statement, file any amendment to the Registration
Statement or supplement to any Prospectus of which the
Distributor shall not previously have been advised or to which
the Distributor shall
-5-
<PAGE>
reasonably object (based upon the accuracy or completeness
thereof) in writing;
(7) will continue to make available to its stockholders (and
forward copies to the Distributor) of such periodic, interim
and any other reports as are now, or as hereafter may be,
required by the provisions of the Investment Company Act of
1940; and
(8) will, for the purpose of computing the offering price of
Series' shares, advise the Distributor within one hour after
the close of the New York Stock Exchange (or as soon as
practicable thereafter) on each business day upon which the
New York Stock Exchange may be open of the net asset value per
share of the Series' shares of common stock outstanding,
determined in accordance with any applicable provisions of law
and the provisions of the Articles of Incorporation, as
amended, of the Fund as of the close of business on such
business day. In the event that prices are to be calculated
more than once daily, the Fund will promptly advise the
Distributor of the time of each calculation and the price
computed at each such time.
6. The Distributor agrees to submit to the Fund, prior to its use, the form of
all sales literature proposed to be generally disseminated by or for the
Distributor, all advertisements proposed to be used by the Distributor, all
sales literature or advertisements prepared by or for the Distributor for
such dissemination or for use by others in connection with the sale of the
Series' shares, and the form of dealers' sales contract the Distributor
intends to use in connection with sales of the Series' shares. The
Distributor also agrees that the Distributor will submit such sales
literature and advertisements to the NASD, SEC or other regulatory agency as
from time to time may be appropriate, considering practices then current in
the industry. The Distributor agrees not to
-6-
<PAGE>
use such form of dealers' sales contract or to use or to permit others to
use such sales literature or advertisements without the written consent of
the Fund if any regulatory agency expresses objection thereto or if the Fund
delivers to the Distributor a written objection thereto.
7. The purchase price of each share sold hereunder shall be the offering
price per share mutually agreed upon by the parties hereto, and as described
in the Fund's Prospectuses, as amended from time to time, determined in
accordance with any applicable provision of law, the provisions of its
Articles of Incorporation and the Rules of Fair Practice of the National
Association of Securities Dealers, Inc.
8. The responsibility of the Distributor hereunder shall be limited to the
promotion of sales of Series' shares. The Distributor shall undertake to
promote such sales solely as agent of the Fund, and shall not purchase or
sell such shares as principal. Orders for Series' shares and payment for
such orders shall be directed to the Fund's agent, Delaware Service Company,
Inc. for acceptance on behalf of the Fund. The Distributor is not empowered
to approve orders for sales of Series' shares or accept payment for such
orders. Sales of Series' shares shall be deemed to be made when and where
accepted by Delaware Service Company, Inc. on behalf of the Fund.
-7-
<PAGE>
9. With respect to the apportionment of costs between the Fund and the
Distributor of activities with which both are concerned, the following will
apply:
(a) The Fund and the Distributor will cooperate in preparing the
Registration Statements, the Prospectuses, the Statement of Additional
Information, and all amendments, supplements and replacements thereto.
The Fund will pay all costs incurred in the preparation of the Fund's
Registration Statement, including typesetting, the costs incurred in
printing and mailing Prospectuses and Annual, Semi-Annual and other
financial reports to its own shareholders and fees and expenses of
counsel and accountants.
(b) The Distributor will pay the costs incurred in printing and mailing
copies of Prospectuses to prospective investors.
(c) The Distributor will pay advertising and promotional expenses,
including the costs of literature sent to prospective investors.
(d) The Fund will pay the costs and fees incurred in registering or
qualifying the Series' shares with the various states and with the SEC.
(e) The Distributor will pay the costs of any additional copies of Fund
financial and other reports and other Fund literature supplied to the
Distributor by the Fund for sales promotion purposes.
-8-
<PAGE>
10. The Distributor may engage in other business, provided such other
business does not interfere with the performance by the Distributor of its
obligations under this Agreement.
11. The Fund agrees to indemnify, defend and hold harmless from the assets
of the Series the Distributor and each person, if any, who controls the
Distributor within the meaning of Section 15 of the Securities Act of 1933,
from and against any and all losses, damages, or liabilities to which,
jointly or severally, the Distributor or such controlling person may become
subject, insofar as the losses, damages or liabilities arise out of the
performance of its duties hereunder except that the Fund shall not be liable
for indemnification of the Distributor or any controlling person thereof for
any liability to the Fund or its security holders to which they would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of their duties under this Agreement.
12. Copies of financial reports, Registration Statements and Prospectuses,
as well as demands, notices, requests, consents, waivers, and other
communications in writing which it may be necessary or desirable for either
party to deliver or furnish to the other will be duly delivered or
furnished, if delivered to such party at its address shown below during
regular business hours, or if sent to that party by registered mail or by
prepaid telegram filed with an office or with an agent of Western Union or
another nationally recognized telegraph
-9-
<PAGE>
service, in all cases within the time or times herein prescribed, addressed
to the recipient at 1818 Market Street, Philadelphia, Pennsylvania 19103, or
at such other address as the Fund or the Distributor may designate in
writing and furnish to the other.
13. This Agreement shall not be assigned, as that term is defined in the
Investment Company Act of 1940, by the Distributor and shall terminate
automatically in the event of its attempted assignment by the Distributor.
This Agreement shall not be assigned by the Fund without the written consent
of the Distributor signed by its duly authorized officers and delivered to
the Fund. Except as specifically provided in the indemnification provision
contained in Paragraph 11 herein, this Agreement and all conditions and
provisions hereof are for the sole and exclusive benefit of the parties
hereto and their legal successors and no express or implied provision of
this Agreement is intended or shall be construed to give any person other
than the parties hereto and their legal successors any legal or equitable
right, remedy or claim under or in respect of this Agreement or any
provisions herein contained.
14. (a) This Agreement shall remain in force for a period of two years from the
date hereof and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the Board of
Directors or by vote of a majority of the outstanding
-10-
<PAGE>
voting securities of the Series and only if the terms and the renewal
thereof have been approved by the vote of a majority of the Directors
of the Fund who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of
voting on such approval.
(b) The Distributor may terminate this Agreement on written notice to the
Fund at any time in case the effectiveness of the Registration
Statement shall be suspended, or in case Stop Order proceedings are
initiated by the SEC in respect of the Registration Statement and such
proceedings are not withdrawn or terminated within thirty days. The
Distributor may also terminate this Agreement at any time by giving the
Fund written notice of its intention to terminate the Agreement at the
expiration of three months from the date of delivery of such written
notice of intention to the Fund.
(c) The Fund may terminate this Agreement at any time on at least thirty
days prior written notice to the Distributor (1) if proceedings are
commenced by the Distributor or any of its partners for the
Distributor's liquidation or dissolution or the winding up of the
Distributor's affairs; (2) if a receiver or trustee of the Distributor
or any of its property is appointed and such appointment is not vacated
within thirty days thereafter; (3) if, due to any action by or before
any court or any federal or
-11-
<PAGE>
state commission, regulatory body, or administrative agency or other
governmental body, the Distributor shall be prevented from selling
securities in the United States or because of any action or conduct on
the Distributor's part, sales of the shares are not qualified for sale.
The Fund may also terminate this Agreement at any time upon prior
written notice to the Distributor of its intention to so terminate at
the expiration of three months from the date of the delivery of such
written notice to the Distributor.
-12-
<PAGE>
15. The validity, interpretation and construction of this Agreement, and of each
part hereof, will be governed by the laws of the Commonwealth of
Pennsylvania.
16. In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of the
Agreement, which shall continue to be in force.
DELAWARE DISTRIBUTORS, L.P.
By: DELAWARE DISTRIBUTORS, INC.,
General Partner
Attest:
By: /s/Richelle S. Maestro By: /s/David K. Downes
------------------------- -----------------------------
Name: Richelle S. Maestro Name: David K. Downes
Title: Vice President/ Title: Senior Vice President/
Assistant Secretary Chief Administrative
Officer/Chief Financial
Officer
DELAWARE GROUP VALUE FUND, INC.
for the RETIREMENT INCOME FUND
Attest:
By: /s/Eric E. Miller By: /s/Wayne A. Stork
------------------------- -----------------------------
Name: Eric E. Miller Name: Wayne A. Stork
Title: Vice President/ Title: Chairman/President and
Assistant Secretary Chief Executive Officer
-13-
<PAGE>
EXHIBIT A
DISTRIBUTION PLAN
DELAWARE GROUP VALUE FUND, INC.
RETIREMENT INCOME FUND
RETIREMENT INCOME FUND A CLASS
The following Distribution Plan (the "Plan") has been adopted
pursuant to Rule l2b-l under the Investment Company Act of l940 (the "Act") by
Delaware Group Value Fund, Inc. (the "Fund"), for the Retirement Income Fund
series (the "Series") on behalf of the Retirement Income Fund A Class ("Class"),
which Fund, Series and Class may do business under these or such other names as
the Board of Directors of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Series and shareholders of the Class. The Plan has been
approved by a majority of the outstanding voting securities of the Class, as
defined in the Act.
A-1
<PAGE>
The Fund is a corporation organized under the laws of the
State of Maryland, is authorized to issue different series and classes of
securities and is an open-end management investment company registered under the
Act. Delaware Management Company, Inc. serves as the Series' investment adviser
and manager pursuant to an Investment Management Agreement. Delaware Service
Company, Inc. serves as the Series' shareholder servicing, dividend disbursing
and transfer agent. Delaware Distributors, L.P. (the "Distributor") is the
principal underwriter and national distributor for the Series' shares, including
shares of the Class, pursuant to the Distribution Agreement between the
Distributor and the Fund on behalf of the Series ("Distribution Agreement").
The Plan provides that:
l. The Fund shall pay to the Distributor a monthly fee not to
exceed 0.3% (3/10 of l%) per annum of the Series' average daily net assets
represented by shares of the Class (the "Maximum Amount") as may be determined
by the Fund's Board of Directors from time to time. Such monthly fee shall be
reduced by the aggregate sums paid by the Fund on behalf of the Series to
persons other than broker-dealers (the "Service Providers") who may, pursuant to
servicing agreements, provide to the Series services in the Series' marketing of
shares of the Class.
2. (a) The Distributor shall use the monies paid to it
pursuant to paragraph l above to furnish, or cause or encourage others to
furnish, services and incentives in connection with the
A-2
<PAGE>
promotion, offering and sale of Class shares and, where suitable and
appropriate, the retention of Class shares by shareholders.
(b) The Service Providers shall use the monies paid
respectively to them to reimburse themselves for the actual costs they have
incurred in confirming that their customers have received the Prospectus and
Statement of Additional Information, if applicable, and as a fee for (l)
assisting such customers in maintaining proper records with the Fund, (2)
answering questions relating to their respective accounts, and (3) aiding in
maintaining the investment of their respective customers in the Class.
3. The Distributor shall report to the Fund at least monthly
on the amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Plan; both the Distributor and the Service Providers shall
furnish the Board of Directors of the Fund with such other information as the
Board may reasonably request in connection with the payments made under the Plan
and the use thereof by the Distributor and the Service Providers, respectively,
in order to enable the Board to make an informed determination of the amount of
the Fund's payments and whether the Plan should be continued.
4. The officers of the Fund shall furnish to the Board of
Directors of the Fund, for their review, on a quarterly basis, a written report
of the amounts expended under the Plan and the purposes for which such
expenditures were made.
A-3
<PAGE>
5. This Plan shall take effect at such time as the Distributor
shall notify the Fund in writing of the commencement of the Plan (the
"Commencement Date"); thereafter, the Plan shall continue in effect for a period
of more than one year from the Commencement Date only so long as such
continuance is specifically approved at least annually by a vote of the Board of
Directors of the Fund, and of the non-interested Directors, cast in person at a
meeting called for the purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a
majority of the non-interested Directors or by vote of a majority of the
outstanding voting securities of the Class.
(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph l thereof without
approval by the shareholders of the Class.
7. All material amendments to this Plan shall be approved by
the non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested Directors shall be committed to the
discretion of such non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42)
of the Act shall govern the meaning of "interested person(s)" and "vote of a
majority of the outstanding voting securities," respectively, for the purposes
of this Plan.
A-4
<PAGE>
This Plan shall take effect on the Commencement Date, as
previously defined.
November 29, 1996
A-5
<PAGE>
EXHIBIT B
DISTRIBUTION PLAN
DELAWARE GROUP VALUE FUND, INC.
RETIREMENT INCOME FUND
RETIREMENT INCOME FUND B CLASS
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Value Fund, Inc. (the "Fund"), for the Retirement Income Fund series (the
"Series") on behalf of the Retirement Income Fund B Class (the "Class"), which
Fund, Series and Class may do business under these or such other names as the
Board of Directors of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Series and shareholders of the Class. The Plan has been
approved by a vote of the holders of a majority of the outstanding voting
securities of the Class, as defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and
B-1
<PAGE>
classes of securities and is an open-end management investment company
registered under the Act. Delaware Management Company, Inc. serves as the
Series' investment adviser and manager pursuant to an Investment Management
Agreement. Delaware Service Company, Inc. serves as the Series' shareholder
servicing, dividend disbursing and transfer agent. Delaware Distributors, L.P.
(the "Distributor") is the principal underwriter and national distributor for
the Series' shares, including shares of the Class, pursuant to the Distribution
Agreement between the Distributor and the Fund on behalf of the Series
("Distribution Agreement").
The Plan provides that:
1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the Series' average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses
B-2
<PAGE>
and reports used for sales purposes, as well as compensation related to sales
and marketing personnel, and holding special promotions. In addition, such fees
may be used to pay for advancing the commission costs to dealers with respect to
the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above
shall be used to pay dealers or others for, among other things, furnishing
personal services and maintaining shareholder accounts, which services include
confirming that customers have received the Prospectus and Statement of
Additional Information, if applicable; assisting such customers in maintaining
proper records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
B-3
<PAGE>
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested
B-4
<PAGE>
person(s)" and "vote of a majority of the outstanding voting securities,"
respectively, for the purposes of this Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1996
B-5
<PAGE>
EXHIBIT C
DISTRIBUTION PLAN
DELAWARE GROUP VALUE FUND, INC.
RETIREMENT INCOME FUND
RETIREMENT INCOME FUND C CLASS
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Value Fund, Inc. (the "Fund"), for the Retirement Income Fund series (the
"Series) on behalf of the Retirement Income Fund C Class (the "Class"), which
Fund, Series and Class may do business under these or such other names as the
Board of Directors of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Series and shareholders of the Class. The Plan has been
approved by a vote of the holders of a majority of the outstanding voting
securities of the Class, as defined in the Act.
C-1
<PAGE>
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Series' investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Series' shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Series' shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Fund on behalf of the Series ("Distribution Agreement").
The Plan provides that:
1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Series' average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Directors
from time to time.
(b) In addition to the amounts described in paragraph 1(a) above, the
Fund shall pay: (i) to the Distributor for payment to dealers or others or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.
2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor
C-2
<PAGE>
under the Plan may be used for, among other things, preparation and distribution
of advertisements, sales literature and prospectuses and reports used for sales
purposes, as well as compensation related to sales and marketing personnel, and
holding special promotions. In addition, such fees may be used to pay for
advancing the commission costs to dealers with respect to the sale of Class
shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board
C-3
<PAGE>
to make an informed determination of the amount of the Fund's payments and
whether the Plan should be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
C-4
<PAGE>
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1996
C-5
<PAGE>
FORM OF AGREEMENT
GLOBAL CUSTODY AGREEMENT
AGREEMENT, effective May 1, 1996, between THE CHASE MANHATTAN BANK,
N.A. (the "Bank") and those registered investment companies listed on Schedule A
hereto (each a "Customer') on behalf of certain of their respective series, as
listed on Schedule A (individually and collectively the "Series").
1. Customer Accounts.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer on behalf of each
Series ("Custody Account") for any and all stocks, shares, bonds, debentures,
notes, mortgages or other obligations for the payment of money, bullion, coin
and any certificates, receipts, warrants or other instruments representing
rights to receive, purchase or subscribe for the same or evidencing or
representing any other rights or interests therein and other similar property
whether certificated or uncertificated as may be received by the Bank or its
Subcustodian (as defined in Section 3) for the account of the Customer
("Securities"); and
(b) A deposit account in the name of the Customer on behalf of each
Series ("Deposit Account") for any and all cash in any currency received by the
Bank or its Subcustodian for the account of the Customer, which cash shall not
be subject to withdrawal by draft or check.
The Customer warrants its authority to: 1) deposit the cash and
Securities ("Assets") received in the Accounts and 2) give Instructions (as
defined in Section 11) concerning the Accounts. Such Instructions shall
specifically indicate to which Series such Assets belong or, if such Assets
belong to more than one Series, shall allocate such Assets to the appropriate
Series. The Bank may deliver securities of the same class in place of those
deposited in the Custody Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional Accounts
under the terms of this Agreement.
2. Maintenance of Securities and Cash at Bank and Subcustodian
Locations.
Unless Instructions specifically require another location acceptable to
the Bank:
(a) Securities will be held in the country or other
<PAGE>
jurisdiction in which the principal trading market for such Securities is
located, where such Securities are to be presented for payment or where such
Securities are acquired; and
(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
To the extent available and permissible under applicable law and
regulation, Cash held pursuant to Instructions shall be held in interest bearing
accounts. If interest bearing accounts are not available, such cash may be held
in non-interest bearing accounts. The Bank is authorized to maintain cash
balances on deposit for the Customer with itself or one of its affiliates.
Interest bearing accounts shall bear interest at such reasonable rates of
interest as may from time to time be paid on such accounts by the Bank or its
affiliates.
(iii) For each Series that is exclusively a domestic Series, the following
additional provisions shall apply:
(x) In the event that during a given calendar month a Series has maintained an
average daily cash balance greater than zero, the Bank shall provide an earnings
credit against custody fees otherwise owing hereunder by such Series during such
calendar month in an amount equal to the product of (A) 75% of the 90 day U.S.
government Treasury bill rate as quoted in the Wall Street Journal for the last
"Business Day" (being a day on which the Bank is open for the transaction of all
its ordinary business) of such calendar month, (B) the average daily cash
balance for such month, and (C) the number of days in such calendar month
divided by 365.
(y) In the event that during a given calendar month a Series has maintained an
average daily cash balance less than or equal to zero, the Bank shall be paid
interest on such amount by such Series in an amount equal to the product of (A)
the "Overnight Fed Funds Rate" (as defined below) plus 25 basis points for the
last Business Day of such calendar month, (B) the average daily cash balance for
such month, and (C) the number of days in such calendar month divided by 365.
(z) For purposes of (y) above, the term "Overnight Fed Funds Rate" shall mean
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published by the Federal Reserve Bank of New York (with the rate for the last
Business Day of a given calendar month being the rate so published on the
Business Day immediately following such Day), or, if such rate is note so
published, the average quotations, for the last Business Day of a given calendar
month, of such transactions received by the Bank from three Federal funds
brokers of recognized standing selected by the Bank.
If the Customer wishes to have any of its Assets held in the
<PAGE>
custody of an institution other than the established Subcustodians as defined in
Section 3 (or their securities depositories), such arrangement must be
authorized by a written agreement, signed by the Bank and the Customer.
3. Subcustodians and Securities Depositories.
The Bank may act under this Agreement through the subcustodians listed
in Schedule B of this Agreement with which the Bank has entered into
subcustodial agreements ("Subcustodians"). The Customer authorizes the Bank to
hold Assets in the Accounts in accounts which the Bank has established with one
or more of its branches or Subcustodians. The Bank and Subcustodians are
authorized to hold any of the Securities in their account with any securities
depository in which they participate.
The Bank reserves the right to add new, replace or remove
Subcustodians. The Customer will be given reasonable notice by the Bank of any
amendment to Schedule B. Upon request by the Customer, the Bank will identify
the name, address and principal place of business of any Subcustodian of the
Customer's Assets and the name and address of the governmental agency or other
regulatory authority that supervises or regulates such Subcustodian.
Upon receipt of Instructions, the Bank shall cease using any
Subcustodian with respect to the customer, and arrange for delivery of
Securities held with such Subcustodian to another entity as designated by the
Customer; provided that, the Bank shall have no responsibility for the
performance of such other entity.
4. Use of Subcustodian.
(a) The Bank will identify the Assets on its books as belonging to the
Customer.
(b) A Subcustodian will hold such Assets together with assets belonging
to other customers of the Bank in accounts identified on such Subcustodian's
books as special custody accounts for the exclusive benefit of customers of the
Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject
only to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only to
the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for holding
its customer's assets shall provide that: (i) such assets will not be subject to
any right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, (ii) the beneficial
ownership of such assets will be freely transferable without the payment of
<PAGE>
money or value other than for safe custody or administration; (iii) adequate
records will be maintained identifying the assets held pursuant to such
agreement as belonging to the customers of the Bank; (iv) subject to applicable
law, Subcustodian shall permit independent public accountants for Bank and
customers of the Bank reasonable access to Subcustodian's books and records as
they pertain to the subcustody account in connection with such accountants'
examination of the books and records of such account; and (v) the Bank will
receive periodic reports with respect to the safekeeping of assets in the
subcustody account, including advices and/or notifications of any transfers to
or from such subcustody account. The foregoing shall not apply to the extent of
any special agreement or arrangement made by the Customer with any particular
Subcustodian.
(e) Upon request of the Customer, the Bank shall deliver to the
Customer annually a report stating: (i) the identity of each Subcustodian then
acting on behalf of the Bank and the name and address of the governmental agency
or other regulatory authority that supervises or regulates such Subcustodian;
(ii) the countries in which each Subcustodian is located; and (iii) as long as
Securities and Exchange Commission ("SEC") Rule 17f-5 under the Investment
Company Act of 1940, as amended ("1940 Act"), requires the Customer's Board of
Directors/Trustees directly to approve its foreign custody arrangements, such
other information relating to such Subcustodians as may reasonably be requested
by the Customer to ensure compliance with Rule 17f-5. As long as Rule 17f-5
requires the Customer's Board of Directors/Trustees directly to approve its
foreign custody arrangements, the Bank shall also furnish annually to the
Customer information concerning such Subcustodians similar in kind and scope as
that furnished to the Customer in connection with the initial approval hereof.
The Bank shall timely advise the Customer of any material adverse change in the
facts or circumstances upon which such information is based where such changes
would affect the eligibility of the Subcustodian under Rule 17f-5 as soon as
practicable after it becomes aware of any such material adverse change in the
normal course of its custodial activities.
5. Deposit Account Transactions
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required by
the Bank.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, the Bank, in its discretion,
may advance the Customer such excess amount which shall be deemed a loan payable
on demand, bearing interest at the rate customarily charged by the Bank on
similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation
<PAGE>
to the Deposit Account, with interest, dividends, redemptions or any other
amount due, the Customer will promptly return any such amount upon oral or
written notification: (i) that such amount has not been received in the ordinary
course of business or (ii) that such amount was incorrectly credited. If the
Customer does not promptly return any amount upon such notification, the Bank
shall be entitled, upon oral or written notification to the Customer, to reverse
such credit by debiting the Deposit Account for the amount previously credited.
The Bank or its Subcustodian shall have no duty or obligation to institute legal
proceedings, file a claim or a proof of claim in any insolvency proceeding or
take any other action with respect to the collection of such amount, but may act
for the Customer upon Instructions after consultation with the Customer.
6. Custody Account Transactions.
(a) Securities will be transferred, exchanged or delivered by the Bank
or its Subcustodian upon receipt by the Bank of Instructions which include all
information required by the Bank. Settlement and payment for Securities received
for, and delivery of Securities out of, the Custody Account may be made in
accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of Securities to a
purchaser, dealer or their agents against a receipt with the expectation of
receiving later payment and free delivery. Delivery of Securities out of the
Custody Account may also be made in any manner specifically required by
Instructions acceptable to the Bank.
(b) The Bank shall credit or debit the Accounts on a contractual
settlement date with cash or Securities with respect to any sale, exchange or
purchase of Securities in those countries set forth in Appendix A hereto;
provided that, the Bank may amend Appendix A from time to time in its sole
discretion and shall advise the Customer of such amendments. Otherwise,
transactions will be credited or debited to the Accounts on the date cash or
Securities are actually received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by the Bank in its discretion, after the contractual
settlement date for the related transaction; provided that, the Bank shall give
Customer prior notification of any such reversal. Where the foregoing
notification is oral, the Bank shall promptly provide written confirmation of
the same (which confirmation may be electronic).
(ii) If any Securities delivered pursuant to this Section 6 are
returned by the recipient thereof, the Bank may reverse the credits and debits
of the particular transaction at any time.
<PAGE>
7. Actions of the Bank.
The Bank shall follow Instructions received regarding assets held in
the Accounts. However, until it receives Instructions to the contrary, the Bank
will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items which
call for payment upon presentation, to the extent that the Bank or Subcustodian
is actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian, subject to applicable SEC rules and regulations under the Act.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any
transfers of Assets to or from the Accounts. Such statements, advices or
notifications shall indicate the identity of the entity having custody of the
Assets. Unless the Customer advises the Bank orally and then promptly sends the
Bank a written exception or objection to any Bank statement within 180 days of
receipt, the Customer shall be deemed to have approved such statement.
All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of the
Customer. Subject to the standard of care in Section 12 hereof, the Bank shall
have no liability for any loss occasioned by delay in the actual receipt of
notice by the Bank or by its Subcustodians of any payment, redemption or other
transaction regarding Securities in the Custody Account in respect of which the
Bank has agreed to take any action under this Agreement.
8. Corporate Actions; Proxies; Tax Reclaims.
a. Corporate Actions. Whenever the Bank receives information
concerning the Securities which requires discretionary action by the beneficial
owner of the Securities (other than a proxy), such as subscription rights, bonus
issues, stock repurchase plans and rights offerings, or legal notices or other
material intended to be
<PAGE>
transmitted to securities holders ("Corporate Actions"), the Bank will give the
Customer written notice (which may be electronic) of such Corporate Actions to
the extent that the Bank's central corporate actions department has actual
knowledge of a Corporate Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank will endeavor to obtain
Instructions from the Customer or its Authorized Person (as defined in ss.10
hereof), but if Instructions are not received in time for the Bank to take
timely action, or actual notice of such Corporate Action was received too late
to seek Instructions, the Bank is authorized to sell such rights entitlement or
fractional interest and to credit the Deposit Account with the proceeds or take
any other action it deems, in good faith, to be appropriate in which case it
shall be held harmless for any such action.
b. Proxy Voting. With respect to domestic U.S. and Canadian Securities
(the latter if held in DTC), the Bank will send to the Customer or the
Authorized Person (as defined in Section 10) for a Custody Account, such proxies
(signed in blank, if issued in the name of the Bank's nominee or the nominee of
a central depository) and communications with respect to Securities in the
Custody Account as call for voting or relate to legal proceedings within a
reasonable time after sufficient copies are received by the Bank for forwarding
to its customers. In addition, the Bank will follow coupon payments,
redemptions, exchanges or similar matters with respect to Securities in the
Custody Account and advise the Customer or the Authorized Person for such
Account of rights issued, tender offers or any other discretionary rights with
respect to such Securities, in each case, of which the Bank has received notice
from the issuer of the Securities, or as to which notice is published in
publications routinely utilized by the Bank for this purpose.
With respect to Securities other than the foregoing, proxy voting
services shall be provided in accordance with separate proxy voting agreement
annexed hereto a Appendix B.
The foregoing proxy voting services may be provided by Bank, in whole
or in part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank), provided that the Bank shall be liable for the
performance of any such third parties to the same extent as the Bank would have
been if it performed such services itself.
c. Tax Reclaims. (i) Subject to the provisions hereof, the Bank will
apply for a reduction of withholding tax and any refund of any tax paid or tax
credits which apply in each applicable market in respect of income payments on
Securities for the benefit of the Customer which the Bank believes may be
available to such Customer. Where such reports are available, the Bank shall
<PAGE>
periodically report to Customer concerning the making of applications for a
reduction of withholding tax and refund of any tax paid or tax credits which
apply in each applicable market in respect of income payments on Securities for
the benefit of the Customer.
(ii) The provision of tax reclaim services by the Bank is conditional
upon the Bank receiving from the beneficial owner of Securities (A) a
declaration of its identity and place of residence and (B) certain other
documentation (pro forma copies of which are available from the Bank). The Bank
shall use reasonable means to advise the Customer of the declarations,
documentation and information which the Customer is to provide to the Bank in
order for the Bank to provide the tax reclaim services described herein. The
Customer acknowledges that, if the Bank does not receive such declarations,
documentation and information, additional United Kingdom taxation will be
deducted from all income received in respect of Securities issued outside the
United Kingdom and that U.S. non-resident alien tax or U.S. backup withholding
tax will be deducted from U.S. source income. The Customer shall provide to the
Bank such documentation and information as it may require in connection with
taxation, and warrants that, when given, this information shall be true and
correct in every respect, not misleading in any way, and contain all material
information. The Customer undertakes to notify the Bank immediately if any such
information requires updating or amendment.
(iii) Subject to subsection (vii) hereof, the Bank shall not be liable
to the Customer or any third party for any tax, fines or penalties payable by
the Bank or the Customer, and shall be indemnified accordingly, whether these
result from the inaccurate completion of documents by the Customer or any third
party, or as a result of the provision to the Bank or any third party of
inaccurate or misleading information or the withholding of material information
by the Customer or any other third party, or as a result of any delay of any
revenue authority or any other matter beyond the control of the Bank.
(iv) The Customer confirms that the Bank is authorized to deduct from
any cash received or credited to the Cash Account any taxes or levies required
by any revenue or governmental authority for whatever reason in respect of the
Securities or Cash Accounts.
(v) The Bank shall perform tax reclaim services only with respect to
taxation levied by the revenue authorities of the countries notified to the
Customer from time to time and the Bank may, by notification in writing, at its
absolute discretion, supplement or amend the markets in which the tax reclaim
services are offered. Other than as expressly provided in this sub-clause, the
Bank shall have no responsibility with regard to the Customer's tax position or
status in any jurisdiction. Except as provided in Section 8(c)(ii) and pursuant
to Instructions, the Bank shall take no action in the servicing of the
Customer's Securities which, in and of itself, creates a taxable nexus for the
Customer in any
<PAGE>
jurisdiction other than with respect to interest, dividends and capital gains
that may otherwise be subject to tax by such jurisdiction with respect to a
foreign investor not otherwise engaged in a trade or business in such
jurisdiction in a given taxable year. Bank shall not be liable for any tax
liability caused, directly or indirectly, by Customer's actions or status in any
jurisdiction.
(vi) In connection with obtaining tax relief, the Customer confirms
that the Bank is authorized to disclose any information requested by any revenue
authority or any governmental body in relation to the Customer or the Securities
and/or Cash held for the Customer. This provision does not authorize any other
voluntary disclosure to any revenue authority or any governmental body without
the prior written consent of Customer.
(vii) Tax reclaim services may be provided by the Bank or, in whole or
in part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank); provided that the Bank shall be liable for the
performance of any such third party to the same extent as the Bank would have
been if it performed such services itself.
9. Nominees.
Securities which are ordinarily held in registered form may be
registered in a nominee name of the Bank, Subcustodian or securities depository,
as the case may be. The Bank may without notice to the Customer cause any such
Securities to cease to be registered in the name of any such nominee and to be
registered in the name of the Customer. In the event that any Securities
registered in a nominee name are called for partial redemption by the issuer,
the Bank may allot the called portion to the respective beneficial holders of
such class of security in any manner the Bank deems to be fair and equitable.
The Customer agrees to hold the Bank, Subcustodians, and their respective
nominees harmless from any liability arising directly or indirectly from their
status as a mere record holder of Securities in the Custody Account.
10. Authorized Persons.
As used in this Agreement, the term "Authorized Person" means employees
or agents including investment managers as have been designated by written
notice from the Customer or its designated agent to act on behalf of the
Customer under this Agreement. Such persons shall continue to be Authorized
Persons until such time as the Bank receives Instructions from the Customer or
its designated agent that any such employee or agent is no longer an Authorized
Person.
11. Instructions.
<PAGE>
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information system
acceptable to the Bank which the Bank reasonably believes in good faith to have
been given by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded. For purposes hereof,
reasonableness shall mean compliance with applicable procedures.
Any Instructions delivered to the Bank by telephone (including cash
transfer instructions as described below) shall promptly thereafter be confirmed
in writing by any two Authorized Persons (which confirmation may bear the
facsimile signature of such Persons), but the Customer will hold the Bank
harmless for the failure of such Authorized Persons to send such confirmation in
writing, the failure of such confirmation to conform to the telephone
instructions received or the Bank's failure to produce such confirmation at any
subsequent time; provided that, where the Bank receives a telephone Instruction
from an Authorized Person requiring the transfer of cash, prior to executing
such Instruction the Bank will, to confirm such Instruction, call back any one
of the individuals on a list of persons authorized to confirm such oral transfer
Instructions (which Person shall be a person other than the initiator of the
transfer Instruction) and the Bank shall not execute the Instruction until it
has received such confirmation. Either party may electronically record any
Instructions given by telephone, and any other telephone discussions with
respect to the Custody Account. The Customer shall be responsible for
safeguarding any testkeys, identification codes or other security devices which
the Bank shall make available to the Customer or its Authorized Persons.
12. Standard of Care; Liabilities.
(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained in Instructions
which are consistent with the provisions of this Agreement as follows:
(i) The Bank will use reasonable care with respect to its obligations
under this Agreement and the safekeeping of Assets. The Bank shall be liable to
the Customer for any loss which shall occur as the result of the failure of a
Subcustodian to exercise reasonable care with respect to the safekeeping of such
Assets to the same extent that the Bank would be liable to the Customer if the
Bank were holding such Assets in New York. In the event that Securities are lost
by reason of the failure of the Bank or its Subcustodian to use reasonable care,
the Bank shall be liable to the Customer based on the market value of the
property which is the subject of the loss on the date it is replaced by the Bank
and
<PAGE>
without reference to any special conditions or circumstances, it being
understood that for purposes of measuring damages hereunder, the value of
Securities which are sold by the Customer prior to the replacement thereof shall
be equal to the sale price thereof less the expenses of such sale incurred by
the Customer. The Bank shall act with reasonable promptness in making such
replacements. In no event shall the Bank be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Bank has been advised of the likelihood of such
loss or damage and regardless of the form of action. Subject to the Bank's
obligations pursuant to ss.4(e) hereof, the Bank will not be responsible for the
insolvency of any Subcustodian which is not a branch or affiliate of Bank.
(ii) The Bank will not be responsible for any act, omission, default or
the solvency of any broker or agent which it or a Subcustodian appoints unless
such appointment was made negligently or in bad faith.
(iii) (a) The Bank shall be indemnified by, and without liability to
the Customer for any action taken or omitted by the Bank whether pursuant to
Instructions or otherwise pursuant to this Agreement if such act or omission was
in good faith, without negligence. In performing its obligations under this
Agreement, the Bank may rely on the genuineness of any Customer document which
it reasonably believes in good faith to have been validly executed. (b) The Bank
shall hold Customer harmless from, and shall indemnify Customer for, any loss,
liability, claim or expense incurred by Customer (including, but not limited to,
Customer's reasonable legal fees) to the extent that such loss, liability, claim
or expense arises from the negligence or willful misconduct on the part of the
Bank or a Subcustodian; provided that, in no event shall the Bank be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Bank has been advised
of the likelihood of such loss or damage and regardless of the form of action.
Subject to the Bank's obligations pursuant to Section 4(e) hereof, the Bank will
not be responsible for the insolvency of any Subcustodian which is not a branch
or affiliate of Bank.
(iv) The Customer agrees to pay for and hold the Bank harmless from any
liability or loss resulting from the imposition or assessment of any taxes or
other governmental charges, and any related expenses with respect to income from
or Assets in the Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the advice of
counsel (who may be counsel for the Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
(vi) The Bank need not maintain any insurance for the benefit of the
Customer.
<PAGE>
(vii) Without limiting the foregoing, the Bank shall not be liable for
any loss which results from: 1) the general risk of investing, or 2) investing
or holding Assets in a particular country including, but not limited to, losses
resulting from nationalization, expropriation or other governmental actions;
regulation of the banking or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions which prevent the orderly
execution of securities transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other for any loss due to
forces beyond their control including, but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear fusion,
fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to the Customer or
an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to investments or
the retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any default
in the payment of principal or income of any security other than a Security.
(iv) except as may be otherwise provided in any securities lending
agreement between the Customer and the Bank, evaluate or report to the Customer
or an Authorized Person regarding the financial condition of any broker, agent
or other party to which Securities are delivered or payments are made pursuant
to this Agreement;
(v) except for trades settled at DTC where the broker provides to the
Bank the trade confirmation and the Customer provides for the Bank to receive
the trade instruction, review or reconcile trade confirmations received from
brokers. The Customer or its Authorized Persons (as defined in Section 10)
issuing Instructions shall bear any responsibility to review such confirmations
against Instructions issued to and statements issued by the Bank.
(c) The Customer authorizes the Bank to act, hereunder, in its capacity
as a custodian notwithstanding that the Bank or any of its divisions or
affiliates may have a material interest in a transaction, or circumstances are
such that the Bank may have a potential conflict of duty or interest including
the fact that the Bank or any of its affiliates may provide brokerage services
to other customers, act as financial advisor to the issuer of Securities, act as
a lender to the issuer of Securities, act in the
<PAGE>
same transaction as agent for more than one customer, have a material interest
in the issue of Securities, or earn profits from any of the activities listed
herein.
13. Fees and Expenses.
The Customer agrees to pay the Bank for its services under this
Agreement such amount as may be agreed upon in writing ("Fee Schedule"),
together with the Bank's reasonable out-of-pocket or incidental expenses (as
further defined in the Fee Schedule), including, but not limited to, legal fees.
The Bank shall have a lien on and is authorized to charge any Accounts of the
Customer for any amount owing to the Bank under any provision of this Agreement.
14. Miscellaneous.
(a) Foreign Exchange Transactions. To facilitate the administration of
the Customer's trading and investment activity, the Bank is authorized to enter
into spot or forward foreign exchange contracts with the Customer or an
Authorized Person for the Customer and may also provide foreign exchange through
its subsidiaries, affiliates or Subcustodians. Instructions, including standing
instructions, may be issued with respect to such contracts but the Bank may
establish rules or limitations concerning any foreign exchange facility made
available. In all cases where the Bank, its subsidiaries, affiliates or
Subcustodians enter into a foreign exchange contract related to Accounts, the
terms and conditions of the then current foreign exchange contract of the Bank,
its subsidiary, affiliate or Subcustodian and, to the extent not inconsistent,
this Agreement shall apply to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it is
a resident of the United States and agrees to notify the Bank of any changes in
residency. The Bank may rely upon this certification or the certification of
such other facts as may be required to administer the Bank's obligations under
this Agreement. The Customer will indemnify the Bank against all losses,
liability, claims or demands arising directly or indirectly from any such
certifications.
(c) Access to Records. Applicable accounts, books and records of the
Bank shall be open to inspection and audit at all reasonable times during normal
business hours upon reasonable advance notice by Customer's independent public
accountants and by employees of Customer designated to the Bank. All such
materials shall, to the extent applicable, be maintained and preserved in
conformity with the Act and the rules and regulations thereunder, including
without limitation, SEC Rules 31a-1 and 31a-2. Subject to restrictions under
applicable law, the Bank shall also obtain an undertaking to permit the
Customer's independent public accountants reasonable access to the records of
any Subcustodian which has
<PAGE>
physical possession of any Assets as may be required in connection with the
examination of the Customer's books and records.
(d) Governing Law; Successors and Assigns. This Agreement shall be
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that the
Assets deposited in the Accounts are Mutual Fund assets subject to certain
Securities and Exchange Commission ("SEC") rules and regulations.
This Agreement consists exclusively of this document together with
Schedules A and B, Appendices 1 and 2, Exhibits I - _______ and the following
Rider(s) [Check applicable rider(s)]:
X MUTUAL FUND
----
X SPECIAL TERMS AND CONDITIONS
----
There are no other provisions of this Agreement, and this Agreement
supersedes any other agreements, whether written or oral, between the parties.
Any amendment to this Agreement must be in writing, executed by both parties.
(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or unenforceable in any respect on the basis
of any particular circumstances or in any jurisdiction, the validity, legality
and enforceability of such provision or provisions under other circumstances or
in other jurisdictions and of the remaining provisions will not in any way be
affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no failure
or delay on the part of either party in exercising any power or right under this
Agreement operates as a waiver, nor does any single or partial exercise of any
power or right preclude any other or further exercise, or the exercise of any
other power or right. No waiver by a party of any provision of this Agreement,
or waiver of any breach or default, is effective unless in writing and signed by
the party against whom the waiver is to be enforced.
(h) Notices. All notices under this Agreement shall be effective when
actually received. Any notices or other communications which may be required
under this Agreement are to be sent to the parties at the following addresses or
such other addresses as may subsequently be given to the other party in writing:
<PAGE>
Bank: The Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex:
-------------------------------------
Customer: Delaware Group of Funds
1818 Market St.
Philadelphia, PA 19103
att: Messrs. Bishof and O'Conner
or telex:
--------------------------------------
(i) Termination. This Agreement may be terminated by the Customer or
the Bank by giving sixty (60) days written notice to the other, provided that
such notice to the Bank shall specify the names of the persons to whom the Bank
shall deliver the Assets in the Accounts. If notice of termination is given by
the Bank, the Customer shall, within sixty (60) days following receipt of the
notice, deliver to the Bank Instructions specifying the names of the persons to
whom the Bank shall deliver the Assets. In either case the Bank will deliver the
Assets to the persons so specified, after deducting any amounts which the Bank
determines in good faith to be owed to it under Section 13. If within sixty (60)
days following receipt of a notice of termination by the Bank, the Bank does not
receive Instructions from the Customer specifying the names of the persons to
whom the Bank shall deliver the Assets, the Bank, at its election, may deliver
the Assets to a bank or trust company doing business in the State of New York to
be held and disposed of pursuant to the provisions of this Agreement, or to
Authorized Persons, or may continue to hold the Assets until Instructions are
provided to the Bank; provided that, where the Bank is the terminating party and
the Bank had not notified the Customer that termination was for breach of this
Agreement by the Customer, such 60 day period shall be extended for an
additional period as requested by Customer of up to 120 days.
Termination as to One or More Series. This Agreement may be terminated
as to one or more Series (but less than all the Series) by delivery of an
amended Schedule A deleting such Series, in which case termination as to the
deleted Series shall take effect sixty (60) days after the date of such
delivery. The execution and delivery of an amended Schedule A which deletes one
or more Series, shall constitute a termination hereof only with respect to such
deleted Series, shall be governed by the preceding provisions of Section 14 as
to the identification of a successor custodian and the delivery of the Assets of
the Series so deleted to such successor custodian, and shall not affect the
obligations of the Bank and the Customer hereunder with respect to the other
Series set forth in Schedule A, as amended from time to time.
<PAGE>
(j) Several Obligations of the Series. With respect to any obligations
of the Customer on behalf of the Series and their related Accounts arising
hereunder, the Custodian shall look for payment or satisfaction of any such
obligation solely to the assets and property of the Series and such Accounts to
which such obligation relates as though the Customer had separately contracted
with the Custodian by separate written instrument with respect to each Series
and its Accounts.
CUSTOMER
By:
---------------------------------
Title Vice President and Treasurer
THE CHASE MANHATTAN BANK, N.A.
By:
---------------------------------
Title Vice President
STATE OF )
: ss.
COUNTY OF )
On this day of , , before me personally came
, to me known, who being by me duly sworn, did depose and say that he/she
resides in New Providence, NJ at 31 Sagamore Drive; that he/she is Vice
President of THE CHASE MANHATTAN BANK, the entity described in and which
executed the foregoing instrument; that she knows the seal of said entity, that
the seal affixed to said instrument is such seal, that it was so affixed by
order of said entity, and that she signed his/her name thereto by like order.
Sworn to before me this
day of .
- --------------
Notary
<PAGE>
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this day of
,19 , before me personally came , to me
known, who being by me duly sworn, did depose and say that he/she
resides in at
; that he/she is
a Vice President of THE CHASE MANHATTAN BANK, (National Association), the
corporation described in and which executed the foregoing instrument; that
he/she knows the seal of said corporation, that the seal affixed to said
instrument is such corporate seal, that it was so affixed by order of the Board
of Directors of said corporation, and that he/she signed his/her name thereto by
like order.
Sworn to before me this__________________
day of __________________ , 19 _______ .
- -------------------------------------
Notary
<PAGE>
Schedule A
Delaware Pooled Trust, Inc. - Global Fixed Income Portfolio
Delaware Pooled Trust, Inc. - International Equity Portfolio
Delaware Pooled Trust, Inc. - Labor Select International Equity
Portfolio
Delaware Pooled Trust, Inc. - Real Estate Investment Trust
Portfolio
Delaware Pooled Trust, Inc. - High Yield Portfolio
Delaware Pooled Trust, Inc. - International Fixed Income Portfolio
Delaware Pooled Trust, Inc. - Defensive Equity Utility Portfolio
Delaware Group Global & International Funds, Inc. - International
Equity Fund
Delaware Group Global & International Funds, Inc. - Global Assets
Fund
Delaware Group Global & International Funds, Inc. - Global Bond
Fund
Delaware Group Global & International Funds, Inc. - Emerging
Markets Fund
Delaware Group Premium Fund, Inc. - International Equity Series
Delaware Group Premium Fund, Inc. - Equity Income Series
<PAGE>
Delaware Group Premium Fund, Inc. - High Yield Series
Delaware Group Premium Fund, Inc. - Capital Reserves Series
Delaware Group Premium Fund, Inc. - Money Market Series
Delaware Group Premium Fund, Inc. - Growth Series
Delaware Group Premium Fund, Inc. - Multiple Strategy Series
Delaware Group Premium Fund, Inc. - Value Series
Delaware Group Premium Fund, Inc. - Emerging Growth Series
Delaware Group Premium Fund, Inc. - Global Bond Series
Delaware Group Income Funds, Inc. - Delchester Fund
Delaware Group Income Funds, Inc. - High-Yield Opportunitites Fund
Delaware Group Delaware Fund, Inc. - Delaware Fund
Delaware Group Delaware Fund, Inc. - Devon Fund
Delaware Group Value Fund, Inc.
Delaware Group DelCap Fund, Inc.
Delaware Group Dividend & Income Fund, Inc.
Delaware Group Advisor Funds, Inc. - Enterprise Fund
Delaware Group Advisor Funds, Inc. - U.S. Growth Fund
Delaware Group Advisor Funds, Inc. - World Growth Fund
Delaware Group Advisor Funds, Inc. - New Pacific Fund
Delaware Group Advisor Funds, Inc. - Federal Bond Fund
Delaware Group Advisor Funds, Inc. - Corporate Income Fund
<PAGE>
SECURITIES LENDING AGREEMENT ("Lending Agreement"), dated as of
___________________ , 1996 between _____________________________________
("Lender"), having its principal place of business at ______________________ ,
and The Chase Manhattan Bank, N.A. ("Chase"), having its principal place of
business at One Chase Manhattan Plaza, New York, New York 10081.
It is hereby agreed as follows:
Section 1 - Definitions
Unless the context clearly requires otherwise, the following words
shall have the meanings set forth below when used herein:
a. "Account" shall mean the securities account established and
maintained by Chase on behalf of Lender pursuant to, as the case may be, a
separate custody agreement or a separate directed trust agreement ("Agreement")
between Chase and Lender, which Agreement provides, inter alia, for the
safekeeping of Securities received by Chase from time to time on behalf of
Lender.
b. "Agreement" shall have the meaning assigned thereto in Section 1(a)
hereof.
c. "Authorized Investment" shall mean any type of instrument, security,
participation or other property in which Cash Collateral may be invested or
reinvested, as described in Section 5(f) hereof and Appendix 4 hereto (and as
such Appendix may be amended from time to time by written agreement of the
parties).
d. "Authorized Person" shall mean, except to the extent that Chase is
advised to the contrary by Proper Instruction, any person who is authorized to
give instructions to Chase pursuant to the Agreement and any mandates given to
Chase in connection with such Agreement. An Authorized Person shall continue to
be so until such time as Chase receives Proper Instructions that nay such person
is no longer an Authorized Person.
e. "Borrower" shall mean an entity listed on Appendix 1 hereto, other
than an entity which Chase shall have been instructed to delete from list
pursuant to Written Instructions and as such Appendix may be amended in
accordance with Section 4(b) hereof.
f. "Business Day" shall have the meaning assigned thereto in the
applicable MSLA.
g. "Buy-in" shall have the meaning assigned thereto in Section 7(c)
hereof.
<PAGE>
h. "Cash Collateral" shall mean fed funds, New York Clearing House
Association funds and such non-U.S. currencies as may be pledged by a Borrower
in connection with a particular Loan.
i. "Collateral" shall have the meaning assigned thereto in the
applicable MSLA, together with Cash Collateral.
j. "Collateral Account" shall mean, as the case may be, an account
maintained by Chase with itself, with any Depository or with any Triparty
Institution and designated as a Collateral Account for the purpose of holding
any one or more of Collateral, Authorized Investments, and Proceeds in
connection with Loans hereunder.
k. "Collateral Amount" shall have the meaning assigned thereto in
Section 5(c) hereof.
l. "Collateral Criterion" shall have the meaning assigned thereto in
Section 5(c) hereof.
m. "Depository" shall mean: (1) the Depository Trust Company, the
Participants' Trust Company and any other securities depository or clearing
agency (and each of their respective successors and nominees) registered with
the U.S. Securities and Exchange Commission or registered with or regulated by
the applicable foreign equivalent thereof or otherwise able to act as a
securities depository or clearing agency, (ii) any transnational depository,
(iii) the Federal Reserve book-entry system for the receiving and delivering of
U.S. Government Securities, and (iv) any other national system for the receiving
and delivering of that country's government securities.
n. "Difference" shall have the meaning assigned thereto in Section 7(c)
hereof.
o. "Distributions" shall have the meaning assigned thereto in Section
3(b)(v) hereof.
p. "Dollars" shall have the meaning assigned thereto in Section 7(b)
hereof.
q. "Due Date" shall have the meaning assigned thereto in Section 7(b)
hereof.
r. "Insolvency Event" shall have the meaning assigned thereto in
Section 7(b) hereof.
s. "Letter of Credit" shall have the meaning assigned thereto in the
applicable MSLA and be issued by a bank listed on Appendix 2 hereto (as such
list may be amended by Chase from time to time on notice to Lender), other than
a bank deleted from such list pursuant to Written Instruction.
<PAGE>
t. "Loan" shall mean a loan of Securities hereunder and under the
applicable MSLA.
u. "Loan Fee" shall mean the amount payable by a Borrower to Chase
pursuant to the applicable MSLA in connection with Loans collateralized other
than by Cash Collateral.
v. "Market Value" shall have the meaning assigned thereto in the
applicable MSLA.
w. "MSLA" shall mean a master securities lending agreement between
Chase and a Borrower, pursuant to which Chase as agent lends securities on
behalf of its customers (including Lender) from time to time. A copy of Chase's
standard form of MSLA, including the international addendum thereto, is annexed
as Appendix 3.
x. "Net Assets" shall have the meaning assigned thereto in Section 8
hereof.
y. "Net Realized Income" shall have the meaning thereto in Section 8
hereof.
z. "Oral Instructions" shall have the meaning assigned thereto in
Section 10 hereof.
aa. "Proceeds" shall mean interest, dividends and other payments and
Distributions received by Chase in connection with Authorized Investments.
bb. "Proper Instructions" shall mean Oral Instructions and Written
Instructions.
cc. "Rebate" shall mean the amount payable by Chase on behalf of Lender
to a Borrower in connection with Loans collateralized by Cash Collateral.
dd. "Return Date" shall have the meaning assigned thereto in Section
7(c) hereof.
ee. "Securities" shall mean government securities (including U.S.
Government Securities), equity securities, bonds, debentures, other corporate
debt securities, notes, mortgages or other obligations, and any certificates,
warrants or other instruments representing rights to receive, purchase, or
subscribe for the same, or evidencing or representing any other rights or
interests therein and held pursuant to the Agreement.
ff. "Term Loan" shall have the meaning assigned thereto in Section 5(i)
hereof.
<PAGE>
gg. "Triparty Institution" shall mean a financial institution with
which Chase shall have previously entered a triparty agreement among itself,
such Triparty Institution and a particular Borrower providing, among other
things, for the holding of Collateral in a Collateral Account at such Triparty
Institution in Chase's name on behalf of Chase's lending customers and for the
substitution of Collateral; provided, however, that any substituted Collateral
shall meet the then standards for acceptable Collateral set by Chase.
hh. "U.S. Government Security" shall mean book-entry securities issued
by the U.S. Treasury defined in Subpart 0 of Treasury Department Circular No.
300 and any successor provisions) and any other securities issued or fully
guaranteed by the United States government or any agency, instrumentality or
establishment of the U.S. government, including, without limitation, securities
commonly known as "Ginnie Maes," Sally Maes," "Fannie Maes" and "Freddie Maes".
ii. "Written Instructions" shall have the meaning assigned thereto in
Section 10 hereof.
Section 2 - Appointment, Authority
(a) Appointment. Lender hereby appoints Chase as its agent to lend
Securities in the Account on Lender's behalf on a fully disclosed basis to
Borrowers from time to time in accordance with the terms hereof and on such
terms and conditions and at such times as Chase shall determine and Chase may
exercise all rights and powers provided under any MSLA as may be incidental
thereto, and Chase hereby accepts appointment as such agent and agrees to so
act.
(b) Authority. Lender hereby authorizes and empowers Chase to execute
in Lender's name on its behalf and at its risk all agreements and documents as
may be necessary to carry out any of the powers herein granted to Chase. Lender
grants Chase the authority set forth herein notwithstanding its awareness that
Chase, in its individual capacity or acting in a fiduciary capacity for other
accounts, may have transactions with the same institutions to which Chase may be
lending Securities hereunder, which transactions may give rise to actual or
potential conflict of interest situations. Chase shall not be bound to: (i)
account to Lender for any sum received or profit made by Chase for its own
account or the account of any other person or (ii) disclose or refuse to
disclose any information or take any other action if the same would or might in
Chase's judgment, made in good faith, constitute a breach of any law or
regulation or be otherwise actionable with respect to Chase; provided that, in
circumstances mentioned in (ii) above, Chase shall promptly inform Lender of the
relevant facts (except where doing so would, or might in Chase's judgment, made
in good faith, constitute a breach of any law or regulation or be otherwise
actionable as aforesaid).
<PAGE>
Section 3 - Representation and Warranties
(a) Representations of each party. Each party hereto represents and
warrants to the other that: (i) it has the power to execute and deliver this
Lending Agreement, to enter into the transactions contemplated hereby, and to
perform its obligations hereunder; (ii) it has taken all necessary action to
authorize such execution, delivery, and performance; (iii) this Lending
Agreement constitutes a legal, valid, and binding obligation enforceable against
it; and (iv) the execution, delivery, and performance by it of this Lending
Agreement shall at all times comply with all applicable laws and regulations.
(b) Representations of Lender. Lender represents and warrants to Chase
that: (i) this Lending Agreement is, and each Loan shall be, legally and validly
entered into, and does not and shall not violate any statute, regulation, rule,
order or judgment binding on Lender, or any provision of Lender's charter or
by-laws, or any agreement binding on Lender or affecting its property, and is
enforceable against Lender in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency or similar laws, or by equitable
principles relating to or limiting creditors' rights generally; (ii) the person
executing this Lending Agreement and all Authorized Persons acting on behalf of
Lender has and have been duly and properly authorized to do so; (iii) it is
lending Securities as principal and shall not transfer, assign or encumber its
interest in, or rights with respect to, any Securities available for Loan
hereunder; (iv) it is the beneficial owner of all Securities or otherwise has
the right to lend Securities; and (v) it is entitled to receive all interest,
dividends and other distributions ("Distributions") made by the issuer with
respect thereto. Lender shall promptly identify to Chase by notice, which notice
may be oral, any Securities that are no longer subject to the representations
contained in (b).
Section 4 - Borrowers
(a) MSLA. Lender hereby acknowledges receipt of the form of MSLA and
authorizes Chase to lend Securities in the Account to Borrowers thereunder
pursuant to an agreement substantially in the form thereof.
(b) Borrowers. Securities may be lent to any Borrower selected by Chase
in Chase's sole discretion, in accordance with the terms hereof. In that
connection, Appendix 1 may be amended from time to time by Chase on notice to
Lender.
<PAGE>
Section 5 - Loans
(a) Securities to be lent, Lending opportunities, Loan initiation. All
Securities of Lender held by Chase that are issued, settled or traded in the
markets that have been approved by Chase from time to time for purposes of
Chase's discretionary securities lending program shall be subject to the terms
hereof. Chase shall seek to assure that Lender receives a fair allocation of
lending opportunities vis-a-vis other lenders, taking into account the demand
for and availability of Securities, types of Collateral, eligibility of
Borrowers, limitations on investments of Cash Collateral, tax treatment, and
similar commercial factors. From time to time, Chase may lend to Borrowers
Securities held in the Account (except Securities that are no longer subject to
the representations set forth in Section 3) and shall deliver such Securities
against receipt of Collateral in accordance with the applicable MSLA. Chase
shall have the right to decline to make any Loans to any Borrower and to
discontinue lending to any Borrower in its sole discretion and without notice to
Lender.
(b) Receipt of Collateral, Collateral substitution. For each Loan,
Chase shall receive and hold Letters of Credit received as Collateral and Chase
or a Triparty Institution shall receive and hold all other Collateral required
by the applicable MSLA in a Collateral Account, and Chase is hereby authorized
and directed, without obtaining any further approval from Lender, to invest and
reinvest all or substantially all Cash Collateral. Chase shall credit, or where
applicable shall have a Triparty Institution credit, all Collateral, Authorized
Investments and Proceeds to a Collateral Account and Chase shall not mark its
books and records to identify Lender's interest therein, it being understood,
however, that all monies credited to a Collateral Account may for purposes of
investment be commingled with cash collateral held for other lenders of
securities on whose behalf Chase may act. Chase may, in its sole discretion,
liquidate any Authorized Investment and credit the net proceeds in a Collateral
Account. Chase shall accept substitutions of Collateral in accordance with the
applicable MSLA and shall credit, or where applicable shall have a Triparty
Institution credit, all such substitutions to a Collateral Account.
(c) Mark to market procedures. (i) Chase shall require initial
Collateral for a Loan in an amount determined by applying the then applicable
"Collateral Criterion" (as defined below) to the Market Value of the Security
that is the subject of the Loan. The Collateral Criterion with respect to a
given Security shall be an amount equal to the then applicable percentage
(currently 102% for securities issued in the U.S. and 105% for securities issued
outside of the U.S.) of the Market Value of the Security (plus accrued interest,
if any, with respect to debt securities) which is the subject of a Loan as
determined as of the close of trading on the preceding Business Day. (ii) Each
Business Day Chase shall determine if the Market Value of all Collateral
received by Chase from a given Borrower in connection with all loans to such
Borrower from all lenders is at least equal to the aggregate amount ("Collateral
Amount") determined by applying the applicable Collateral Criterion to each
security on loan to such Borrower from all lenders. (iii) In accordance with
general market practice, the Market Value of certain securities (including,
without limitation, U.S. Government Securities) whether on Loan or received as
Collateral, may be determined on a same day basis by reference to recognized
pricing services.
<PAGE>
(d) Demand for additional Collateral. If the determination made in
Section 5(c)(ii) above demonstrates that the Market Value of all Collateral
received from a given Borrower is not at least equal to the Collateral Amount,
Chase shall demand additional Collateral from such Borrower in accordance with
the applicable MSLA so as to meet the Collateral Amount by making specific
Loans; provided that, Chase may from time to time establish de minimis
guidelines pursuant to which a mark would not be made even where the aggregate
Collateral Amount has not been met.
(e) Changes in procedures applicable to Collateral. The Collateral
procedures set forth in Sections 5(b)-(d) above reflect Chase's current practice
and may be changed by Chase from time to time based on general market conditions
(including volatility of Securities on Loan and of securities Collateral), the
Market Value of Securities on Loan to a given Borrower, and in accordance with
general market practice and regulatory requirements. Chase shall notify Lender
of material revisions to the foregoing procedures.
(f) Investment of Cash Collateral. (i) Chase is hereby authorized to
invest and reinvest cash Collateral in accordance with the investment guidelines
(and the interpretations, procedures and definitions included therewith) annexed
hereto as Appendix 4. (ii) Authorized Investments are made for the account of,
and at the sole risk of, Lender. In that connection, Lender shall pay to Chase
on demand in cash an amount equal to any deficiency in the amount of Collateral
available for return to a Borrower pursuant to an applicable MSLA.
(g) Lender's rights with respect to Securities on Loan; Distribution
and voting rights. (i) An amount equal to the amount of all Distributions paid
with respect to Securities on Loan that Lender would have received had such
Securities not been on Loan shall be credited to Lender's account on the date
such Distributions are delivered by Borrower to Chase. Any non-cash Distribution
on Securities on Loan which is in the nature of a stock split or a stock
dividend, shall be added to the Loan (and shall be considered to constitute
Securities on Loan) as of the date such non-cash Distribution is received by the
Borrower and shall be subject to the provisions of this Lending Agreement;
provided that the Lender may, by giving chase ten (10) Business Days' notice
prior to the date of such non-cash Distribution (or such different amount of
time as Chase may from time to time require on advice to Lender), direct Chase
to request that the Borrower deliver such non-cash Distribution to Chase
pursuant to the applicable MSLA, in which case Chase shall credit such non-cash
Distribution to Lender's account on the date it is delivered to Chase. Without
regard to the reference to "delivered" in the foregoing, the "AutoCredit"
provisions of the Agreement shall apply where a Borrower fails to make a
Distribution payment to Chase, the effect of which would be for Chase to credit
Lender's account with Distributions on the payable date. (ii) During the term of
any Loan, Chase will permit the Securities on Loan to be transferred into the
name of and be voted by the Borrower or others. Lender shall not be entitled to
participate in any dividend reinvestment program or to vote proxies with respect
to Securities that are eligible for Loan (whether or not actually on Loan) as of
the applicable record date for such Securities.
(h) Advances, overdrafts and indebtedness, Security Interest. Chase
may, in its sole discretion, advance funds on behalf of Lender in order to pay
to Borrowers any Rebates or to
<PAGE>
return to Borrowers Cash Collateral to which they are entitled pursuant to the
applicable MSLA. Lender shall repay Chase on demand the amount of any advance or
any other amount owned by Lender hereunder plus accrued interest at a rate per
annum not to exceed the rate customarily charged by Chase for such loans at the
time such loan is made and shall otherwise be on such terms and conditions as
Chase customarily makes such loans available. In order to secure repayment of
any advance or other indebtedness of Lender to Chase arising hereunder, Chase
shall have a continuing lien and security interest in and to all assets now or
hereafter held in the Account and any Collateral Account (to which Lender is
entitled hereunder) and any other property at any time held by it for the
benefit of Lender or in which Lender may have an interest which is then in
Chase's possession or control or in the possession or control of any third party
acting on Chase's behalf. In this regard, Chase shall be entitled to all the
rights and remedies of a pledgee under common law and a secured party under the
New York Uniform Commercial Code and/or any other applicable laws and/or
regulations as then in effect.
(i) Termination of a Loan. (i) Loans shall generally be terminable on
demand. With the prior approval of Lender, however, Loans may be made on the
basis of a reasonably anticipated termination date ("Term Loan") and without
providing for the right of substitution of equivalent Securities. Termination of
a Term Loan prior to its anticipated termination date by either Lender or
Borrower may result in the terminating party having to pay non-terminating party
damages based on the cost of obtaining a replacement loan. (ii) Chase shall
terminate any Loan of Securities to a Borrower as soon as practicable after (a)
receipt by Chase of a notice of termination of the respective MSLA; (b) receipt
by Chase of Written Instructions directing it to terminate a Loan; (c) receipt
by Chase of Written Instructions instructing it to delete from Appendix 2 the
Borrower to whom such Loans was made; (d) receipt by Chase of Written
Instructions advising that the Security subject to a Loan is no longer subject
to the representation contained in Section 3 hereof; (e) receipt by Chase of
notice advising that an Event of Default (as defined in the applicable MSLA) has
occurred and is continuing beyond any applicable grace period; (f) whenever
Chase, in its sole discretion, elects to terminate such Loan other than a Term
Loan; or (g) termination of this Lending Agreement. (iii) If Securities which
are the subject of a Loan being terminated are to be sold by Lender, Written
Instructions shall in no event be given to Chase later than the trade date
established by Lender for such sale or such earlier date of which Chase may
advise Lender from time to time with respect to particular markets. Chase shall
not be liable for any failure of a Borrower to return Securities on Loans in a
time fashion.
(j) Recordkeeping and Reports. Chase shall establish and maintain such
records as are reasonably necessary to account for Loans that are made and the
income derived therefrom. Chase shall provide Lender with a monthly statement
describing the Loans made during the preceding month, and the income derived
from Loans, during the period covered by such statement. A party shall comply
with the reasonable requests of the other party for information necessary to the
requester's performance of its duties hereunder.
Section 6 - Default by Borrower
(1) Chase may assume (unless it has actual knowledge to the contrary)
that any representations made by a Borrower in connection with any Loan are
true, that no event which is
<PAGE>
or may become an Event of Default (as defined in the applicable MSLA) has
occurred and that a Borrower has complied with its obligations under the
applicable MSLA. Subject to Sections 7(b)-(d), Chase shall have no
responsibility for the accuracy or completeness of any information supplied, or
for any breach of any obligation, by any Borrower under or in connection with
any MSLA or Loan. Chase shall not be liable as a result of taking or omitting to
take any action provided that Chase shall have carried out its responsibilities
hereunder in good faith. (ii) If any Borrower with respect to any Loan affected
pursuant hereto and pursuant to the applicable MSLA fails to return any loaned
Securities when due thereunder for reasons other than relating to the solvency
of the Borrower, Chase shall then take whatever action its deems appropriate in
accordance with general market practice and Chase's reasonable judgment,
including, but no necessarily limited to, claiming compensation from such
Borrower on behalf of Lender in the event a trade executed by Lender fails on
account of such Borrower's failure timely to have returned Securities on Loan
or, where Chase deems it necessary, such other action as may be permitted by the
applicable MSLA, including collecting any applicable MSLA fails to return any
Securities on Loan when due thereunder for reasons relating to the solvency of
the Borrower, Chase shall take such action as its deems appropriate in
accordance with Chase's reasonable judgment under the applicable MSLA.
Section 7 - Standard of Care, Liabilities, Indemnification
(a) Standard of care, Liabilities. Except as provided in paragraphs (b)
and (c) hereof, Chase shall be liable for any costs, expenses, damages,
liabilities or claims (including attorneys' and accountants' fees) incurred by
Lender, except those costs, expenses, damages, liabilities and claims arising
out of the negligence, bad faith or willful misconduct of Chase. Chase shall
have no obligation hereunder for: (i) costs, expenses, damages, liabilities or
claims (including attorneys' and accountants' fees), which are sustained or
incurred by Lender by reason of any action or inaction by any pricing service,
any Depository or a Triparty Institution or their respective successors or
nominees; and (ii) any failure to perform any obligation due to any matters
beyond the control of Chase. In no event shall Chase be liable for indirect or
consequential damages or lost profits or loss of business, arising hereunder or
in connection herewith, even if previously informed of the possibility of such
damages and regardless of the form of action.
Except for any costs or expenses incurred by Chase in performing its
obligations pursuant to paragraphs (b) and (c) hereof any ordinary operating
expenses incurred by Chase in providing services hereunder, Lender shall
indemnify Chase and hold it harmless from and against any and all costs,
expenses, damages, liabilities or claims, including reasonable fees and expenses
of counsel, which Chase may sustain or incur or which may be asserted against
Chase by reason of or as a result of any action taken or omitted by Chase in
connection with operating under this Lending Agreement or enforcing Lender's
rights under the applicable MSLA, other than those costs, expenses, damages,
liabilities or claims arising out of the negligence, bad faith or willful
misconduct of Chase. The foregoing indemnity shall be a continuing obligation of
the Lender, its successors and assigns, notwithstanding the termination of any
Loans hereunder or of this Lending Agreement. Chase may charge any amounts to
which it is entitled hereunder against the Account, and Lender shall be entitled
to an accounting of all amounts so charged. Actions taken or omitted in reliance
upon Proper Instructions, or upon any information, order, indenture, stock
<PAGE>
certificate, power of attorney, assignment, affidavit or other instrument
reasonably believed by Chase, in good faith, to be genuine or bearing the
signature of a person or persons believed, in good faith, to be authorized to
sign, countersign or execute the same, shall be conclusively presumed to have
been taken or omitted in good faith.
(b) Indemnification of Lender in respect to Distributions. If the
Borrower in respect of any Loan effected pursuant hereto and pursuant to the
applicable MSLA fails, as a result of its bankruptcy, insolvency,
reorganization, liquidation, receivership or similar event (each an "Insolvency
Event"), to remit to Chase for Lender's account any Distributions on or with
respect to Securities on Loan when due (the "Due Date") in accordance with such
MSLA and such Due Date occurs at least one day prior to an Insolvency Event then
Chase shall at its expense (subject to paragraph (d) hereof) and within one (1)
Business Day of the Due Date, undertake the following: (i) with respect to
Distributions in the form of cash, Chase shall credit Lender's account with the
full amount of such Distributions and (ii) with respect to Distributions in the
form of securities, Chase shall, at its option, either purchase replacement
securities (of an equal amount of the same issue, class, type or series as the
Distributions) on the principal market in which such securities are traded or
credit Lender's account with the market value in United States dollars
("Dollars") of such Distributions on the Due Date as determined by Chase in good
faith. Market value shall be determined by Chase in accordance with the
applicable MSLA, including the computation of Dollar equivalents where
Securities on Loan and/or Collateral (and Proceeds) are denominated in a
currency other than Dollars.
(c) Indemnification of Lender in respect of Securities. If the Borrower
in respect of any Loan effected pursuant hereto and pursuant to the applicable
MSLA fails to return any Securities on Loan to Chase for Lender's account when
due thereunder (the "Return Date") which is the date of default, then Chase
shall, at its expense (subject to paragraph (d) hereof) and within one (1)
Business Day of the Return Date, credit Lender's account in Dollars with the
difference ("Difference") (where a positive number), if any, between (x) the
market value of such lent Securities on the Return Date (including, in the case
of debt Securities, accrued but unpaid interest), and (y) in the case of Loans
collateralized by (i) Cash Collateral, the greater of (A) the Market Value of
the Cash Collateral on the date of initial pledge as adjusted for any subsequent
marks-to-market through the Return Date and (B) the Market Value of Cash
Collateral investments on the Return Date, (ii) non-Cash Collateral comprising
securities Collateral, the greater of the Market Value of such Collateral on the
(A) Business Day immediately preceding the Return Date and (B) Return Date, or
(iii) non-Cash Collateral comprising Letter of Credit Collateral, the Market
Value of the Letter of Credit Collateral on the date of initial pledge as
adjusted for any subsequent marks-to-market through the Return Date. Market
Value shall be determined by Chase in accordance with the applicable MSLA,
including the computation of Dollar equivalents where Securities on Loan and/or
Collateral (and Proceeds) are denominated in a currency other than Dollars.
Where Cash Collateral and non-Cash Collateral have each been allocated to a Loan
as of the Return Date, the Difference payable by Chase shall be computed in
accordance with the foregoing as if there had been two Loans in effect on the
Return Date, one collateralized by Cash Collateral and the other collateralized
by non-Cash Collateral. In lieu of paying Lender the Difference, Chase may, at
its sole option and expense, purchase for Lender's
<PAGE>
account ("Buy-in") replacement securities of the same issue, type, class, and
series as that of the Securities on Loan.
(d) Subrogation. If Chase makes a payment or a purchase pursuant to
Section 7(b) or effects a Buy-in pursuant to Section 7(c), or if Chase effects a
Difference payment pursuant to Section 7(c) on account of a failure to return
Securities on Loan not arising from an Insolvency Event, Chase shall, to the
extent of such payment, purchase, Difference payment or Buy-in, be subrogated
to, and Lender shall assign and be deemed to have assigned to Chase, all of its
rights in, to and against the Borrower (and any guarantor thereof) in respect of
such Loan, any Collateral pledged by the Borrower in respect of such Loan, and
all proceeds of such Collateral. In the event that Lender receives or is
credited with any payment, benefit or value from or on behalf of the Borrower in
respect of rights to which Chase is subrogated as provided herein, Lender shall
promptly remit or pay to Chase the same (or its Dollar equivalent) but only to
the extent that Lender has been paid all amounts owed to it by Borrower.
Section 8 - Chase Compensation
(a) In connection with each Loan hereunder, Lender shall pay to Chase a
fee equal to ___% of (i) earnings (less any Rebate paid by Chase to a Borrower)
derived from Authorized Investments in connection with Loans collateralized by
cash, and (ii) any Securities Loan Fee paid or payable by the Borrower on Loans
not collateralized by cash. (b) The fee payable to Chase for services performed
pursuant to Section 5(f) hereof shall be equal to one tenth of the one percent
(0.1%) of the Fund's average daily Assets (with "Fund" being as defined in
Appendix 4 hereto). All securities in the Fund shall be valued based on their
amortized cost. Fees shall be accrued and charged daily against the Fund's yield
or assets, as appropriate, and shall be payable monthly in arrears on the first
business day of the month following the month in which earned. (c) Chase is
authorized, on a monthly basis, to charge all the foregoing fees (together with
reasonable expenses incurred by Chase hereunder) and any other amounts owed by
Lender hereunder against the Account and/or a Collateral Account.
Section 9 - Taxes
Lender shall be responsible for all filings, tax returns and reports on
any Loans undertaken by Chase on Lender's behalf which are to be made to any
authority whether governmental or otherwise and for the payment of all unpaid
calls, taxes (including, without limitations, any value added tax), imposts,
levies or duties due on any principal or interest, or any other liability or
payments arising out of or in connection with any Securities or any Collateral,
and in so far as Chase is under obligation (whether of a governmental nature or
otherwise) to pay the same on Lender's behalf Chase may do so out of any monies
or assets held by it pursuant to the terms of the Agreement or hereunder.
Section 10 - Instructions
(a)(i) Written Instructions. "Written Instructions" shall mean written
communications actually received by Chase from an Authorized Person or from a
person reasonably believed by
<PAGE>
Chase to be an Authorized Person by letter, memorandum, telegram, cable, telex,
telecopy facsimile, computer, video (CRT) terminal or other on-line system, or
any other method reasonably acceptable to Chase and whereby Chase is able to
verify with a reasonable degree of certainty the identity of the sender of such
communications or with communications are transmitted with proper testing or
authentication pursuant to terms and conditions which Chase may specify. (ii)
Oral Instructions. "Oral Instructions" shall mean oral communications actually
received by Chase from an Authorized Person or from a person reasonably believed
by Chase to be an Authorized Person. Oral Instructions shall promptly thereafter
be confirmed in writing by an Authorized Person (which confirmation may bear the
facsimile signature of such Person), but Lender will hold Chase harmless for the
failure of an Authorized Person to send such confirmation in writing, the
failure of such confirmation to conform to the Oral Instructions received, or
Chase's failure to produce such confirmation at any subsequent time. Lender
shall be responsible for safeguarding any testkeys, identification codes or
other security devices which Chase may make available to Lender or its
Authorized Persons.
(b) Unless otherwise expressly provided, all Proper Instructions shall
continue in full force and effect until canceled or superseded.
Section 11 - Pricing Services
Chase may use any pricing service referred to in an applicable MSLA and
any other recognized pricing service (including itself and any of its
affiliates) in order to perform its valuation responsibilities with respect to
Securities, Collateral and Authorized Investments, and Lender shall hold Chase
harmless from and against any loss or damage suffered or incurred as a result of
errors or omissions of any such pricing service.
Section 12 - Termination
This Lending Agreement may be terminated at any time by either party
upon delivery to the other party of notice specifying the date of such
termination, which shall be not less than 30 days after the date of receipt of
such notice. Notwithstanding any such notice, this Lending Agreement shall
continue in full force and effect with respect to all Loans outstanding on the
termination date, which Loans shall, however, be terminated as soon as
reasonably practicable.
Section 13 - Miscellaneous
(a) Legal proceedings. Chase may refrain from bringing any legal action
or proceeding arising out of or in connection with any Loan until it shall have
received such security as it may require for all costs, expenses (including
legal fees) and liabilities which it will or may expend or incur in relation
thereto.
(b) Integration, Lending Agreement to Govern. This Lending Agreement
and the Agreement contain the complete agreement of the parties with respect to
the subject matter hereof and supersede and replace any previously made
proposals, representations, warranties or
<PAGE>
agreements with respect thereto by the parties. In the event of any conflict
between this Lending Agreement, and the Agreement, this Lending Agreement shall
govern.
(c) Notice. Unless expressly provided herein to the contrary, notices
hereunder shall be in writing, and delivered by telecopier, overnight express
mail, first-class postage prepaid, delivered personally or by receipt courier
service. All such notices which are mailed shall be deemed delivered upon
receipt. Notices shall be addresses as follows (or to such other address as a
party may from time to time designate on notice duly given in accordance with
this paragraph): notices to Chase shall be addressed to it at 2 Chase Manhattan
Plaza, 19th Floor, New York, New York 10081, Attention: Securities Lending
Division; notices to be given to Lender shall be addressed
to it at its offices at Attention: .
(d) Amendments, Waiver. This Lending Agreement may be modified only by
a written amendment signed by both parties, and no waiver of any provisions
hereof shall be effective unless expressed in a writing signed by the party to
be charged.
(e) Government Law, Consent to Jurisdiction, Waiver of Immunity. This
Lending Agreement shall be construed in accordance with laws of the State of New
York, without regard to the conflict of laws principles thereof. Chase and
Lender each hereby consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any dispute arising
hereunder and Lender hereby waives any claim of forum non conveniens to the
extent that it may lawfully do so. To the extent that in any jurisdiction Lender
may now or hereafter be entitled to claim, for itself or its assets, immunity
from suit, execution, attachment (before or after judgment) or other legal
process, Lender irrevocably shall not claim, and it hereby waives, such
immunity.
<PAGE>
(f) Counterparts, Headings. This Lending Agreement may be executed in
several counterparts, each one of which shall constitute an original, and all
collectively shall constitute but one instrument. The headings of the sections
hereof are included for convenience of reference only and do not form part of
this Lending Agreement.
(g) Severability. Any provisions of this Lending Agreement which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceably in any jurisdiction
shall not invalidate or render unenforceable such provisions in any other
jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Lending Agreement as
of the date first above-written.
[Insert name of LENDER] THE CHASE MANHATTAN BANK, N.A.
By: By:
Title: Title:
<PAGE>
DELAWARE GROUP VALUE FUND, INC.
FIRST AMENDED AND RESTATED SHAREHOLDERS SERVICES AGREEMENT
THIS AGREEMENT, made as of this 29th day of November, 1996 by and
between DELAWARE GROUP VALUE FUND, INC. (the "Fund"), a Maryland Corporation,
for the VALUE FUND series and the RETIREMENT INCOME FUND series (collectively
"the Series"), and DELAWARE SERVICE COMPANY, INC. ("DSC"), a Delaware
Corporation, each having its principal office and place of business at 1818
Market Street, Philadelphia, Pennsylvania 19103.
W I T N E S S E T H:
WHEREAS, the Investment Management Agreements between the Fund and
Delaware Management Company, Inc. provide that the Fund shall conduct its own
business and affairs and shall bear the expenses and salaries necessary and
incidental thereto including, but not in limitation of the foregoing, the costs
incurred in: the maintenance of its corporate existence; the maintenance of its
own books, records and procedures; dealing with its own shareholders; the
payment of dividends; transfers of stock, including issuance and redemption of
shares; reports and notices to stockholders; calling and holding of stockholder
meetings; miscellaneous office expenses; brokerage commissions; legal and
accounting fees; taxes; and federal and state registration fees; and
WHEREAS, the Fund and DSC desire to have a written agreement concerning
the performance of the foregoing services and providing compensation therefor;
and
WHEREAS, the Fund and DSC previously entered into a Shareholder
Services Agreement dated November 29, 1996 providing for the provision of
services to the Value Fund
<PAGE>
series; and
WHEREAS, the Fund and DSC desire to amend and restate their Shareholder
Services Agreement dated as of November 29, 1996 to include the Fund's new
series, the Retirement Income Fund series.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, and intending legally to be bound, it is agreed:
I. APPOINTMENT AS AGENT
1.1 The Fund hereby appoints DSC Shareholder Services Agent for the
Series to provide as agent for the Fund services as Transfer Agent, Dividend
Disbursing Agent and Shareholder Servicing Agent and DSC hereby accepts such
appointment and agrees to provide the Fund, as its agent, the services described
herein.
1.2 The Fund shall pay DSC and DSC shall accept, for the services
provided hereunder, the compensation provided for in Section VIII hereof. The
Fund also shall reimburse DSC for expenses incurred or advanced by it for the
Fund in connection with its services hereunder.
II. DOCUMENTATION
2.1 The Fund represents that it has provided or made available to DSC
(or has given DSC an opportunity to examine) copies of, and DSC represents that
it has received from the Fund (or is otherwise familiar with), the following
documents:
(a) The Articles of Incorporation or other documents
evidencing the Fund's form of organization and any current amendments or
supplements thereto.
(b) The By-Laws of the Fund;
2
<PAGE>
(c) Any resolution or other action of the Fund or the Board of
Directors of the Fund establishing or affecting the rights, privileges or other
status of each class or series of shares of the Fund, including those relating
to the Series or altering or abolishing each such class or series;
(d) A certified copy of a resolution of the Board of Directors
of the Fund appointing DSC as Shareholder Services Agent for the Series and
authorizing the execution of this Agreement;
(e) The forms of share certificates of the Series in the forms
approved by the Board of Directors of the Fund;
(f) A copy of the Fund's currently effective Prospectuses and
Statement of Additional Information under the Securities Act of 1933, if
effective;
(g) Copies of all account application forms and other
documents relating to stockholder accounts in the Series;
(h) Copies of documents relating to Plans of the Fund for the
purchase, sale or repurchase of its shares, including periodic payment or
withdrawal plans, reinvestment plans or retirement plans;
(i) Any opinion of counsel to the Fund relating to the
authorization and validity of the shares of the Series issued or proposed to be
issued under the law of the State of the Fund's organization, including the
status thereof under any applicable securities laws;
(j) A certified copy of any resolution of the Board of
Directors of the Fund authorizing any person to give instructions to DSC under
this Agreement (with a specimen signature of such person if not already
provided), setting forth the scope of such authority; and
3
<PAGE>
(k) Any amendment, revocation or other documents altering,
adding, qualifying or repealing any document or authority called for under this
Section 2.1.
2.2 The Fund and DSC may consult as to forms or documents that may be
required in performing services hereunder.
2.3 The Fund shall provide or make available to DSC a certified copy of
any resolution of the stockholders or the Board of Directors of the Fund
providing for a dividend, capital gains distribution, distribution of capital,
stock dividend, stock split or other similar action affecting the authorization
or issuance of shares of the Fund or the payment of dividends.
2.4 In the case of any recapitalization or other capital adjustment
requiring a change in the form of stock certificates or the books recording the
same, the Fund shall deliver or make available to DSC:
(a) A certified copy of any document authorizing or effecting
such change;
(b) Written instructions from an authorized officer
implementing such change;
and
(c) An opinion of counsel to the Fund as to the validity of
such action, if requested by DSC.
2.5 The Fund warrants the following:
(a) The Fund is, or will be, a properly registered investment
company under the Investment Company Act of 1940 and any and all Series' shares
which it issues will be properly registered and lawfully issued under applicable
federal and state laws.
(b) The provisions of this contract do not violate the terms
of any instrument by which the Fund is bound; nor do they violate any law or
regulation of any body having
4
<PAGE>
jurisdiction over the Fund or its property.
2.6 DSC warrants the following:
(a) DSC is and will be properly registered as a transfer agent
under the Securities and Exchange Act of 1934 and is duly authorized to serve,
and may lawfully serve as such.
(b) The provisions of this contract do not violate the terms of any
instrument by which DSC is bound; nor do they violate any law or regulation of
any body having jurisdiction over DSC or its property.
III. STOCK CERTIFICATES
3.1 The Fund shall furnish or authorize DSC to obtain, at the Fund's
expense, a sufficient supply of blank stock certificates for the Series, and
from time to time will replenish such supply upon the request of DSC. The Fund
agrees to indemnify and exonerate, save and hold DSC harmless, from and against
any and all claims or demands that may be asserted against DSC concerning the
genuineness of any stock certificate supplied to DSC pursuant to this Section.
3.2 DSC shall safeguard, and shall account to the Fund, upon its demand
for, all such stock certificates: (a) as issued, showing to whom issued, or (b)
as unissued, establishing the safekeeping, cancellation or destruction thereof.
3.3 The Fund shall promptly inform DSC in writing of any change in the
officers authorized to sign stock certificates or in the form thereof. If an
officer whose manual or facsimile signature is affixed to any blank share
certificate shall die, resign or be removed prior to the issuance of such
certificate, DSC may nevertheless issue such certificate notwithstanding such
5
<PAGE>
death, resignation or removal, and the Fund shall with respect thereto promptly
provide to DSC any approval, adoption or ratification as may be required by DSC.
IV. TRANSFER AGENT
4.1 As Transfer Agent for the Fund, DSC shall issue, redeem and
transfer shares of the Series, and, in connection therewith but not in
limitation thereof, it shall:
(a) Upon receipt of authority to issue shares, determine the
total shares to be issued and issue such shares by crediting shares to accounts
created and maintained in the registration forms provided; as applicable,
prepare, issue and deliver stock certificates.
(b) Upon proper transfer authorization, transfer shares by
debiting transferor-stockholder accounts and crediting such shares to accounts
created and/or maintained for transferee-stockholders; if applicable, issue
and/or cancel stock certificates.
(c) Upon proper redemption authorization, determine the total
shares redeemed and to be redeemed; determine the total redemption payments made
and to be made; redeem shares by debiting stockholder accounts; as applicable
receive and cancel stock certificates for shares redeemed; and remit or cause to
be remitted the redemption proceeds to stockholders.
(d) Create and maintain accounts; reconcile and control cash
due and paid, shares issued and to be issued, cash remitted and to be remitted
and shares debited and credited to accounts; provide such notices, instructions
or authorizations as the Fund may require.
4.2 DSC shall not be required to issue, transfer or redeem Series'
shares upon receipt of DSC from the Fund, or from any federal or state
regulatory agency or authority, written notice that the issuance, transfer or
redemption of Series' shares has been suspended or discontinued.
V. DIVIDEND DISBURSING AGENT
6
<PAGE>
5.1 As Dividend Disbursing Agent for the Series, DSC shall disburse and
cause to be disbursed to stockholders of each Series dividends, capital gains
distributions or any payments from other sources as directed by the Fund. In
connection therewith, but not in the limitation thereof, DSC shall:
(a) Calculate the total disbursement due and payable and the
disbursement to each stockholder as to shares owned, in accordance with the
Fund's authorization.
(b) Calculate the total disbursements for each stockholder, as
aforesaid, to be disbursed in cash; prepare and mail checks therefor.
(c) Calculate the total disbursement for each stockholder of
each Series, as aforesaid, for which Series' shares are to be issued and
authorized and instruct the issuance of Series' shares therefor in accordance
with Section IV hereof.
(d) Prepare and mail or deliver such forms and notices
pertaining to disbursements as required by federal or state authority.
(e) Create and maintain records, reconcile and control
disbursements to be made and made, both as to cash and shares, as aforesaid;
provide such notices, instruction or authorization as the Fund may require.
5.2 DSC shall not be required to make any disbursement upon the receipt
of DSC from the Fund, or from any federal or state agency or authority, written
notice that such disbursement shall not be made.
VI. SHAREHOLDER SERVICING AGENT
6.1 As Shareholder Servicing Agent for the Series, DSC shall provide
those services ancillary to, but in implementation of, the services provided
under Sections I through V hereof,
7
<PAGE>
and those generally defined and accepted as shareholder services. In connection
therewith, but not in limitation thereof, DSC shall:
(a) Except where instructed in writing by the Fund not to do
so, and where in compliance with applicable law, accept orders on behalf of the
Fund; receive and process investments and applications; remit to the Fund or its
custodian payments for shares acquired and to be issued; and direct the issuance
of shares in accordance with Section IV hereof.
(b) Receive, record and respond to communications of
stockholders and their agents.
(c) As instructed by the Fund, prepare and mail stockholder
account information, mail Series stockholder reports and Series prospectuses.
(d) Prepare and mail proxies and material for Fund stockholder
meetings, receive and process proxies from stockholders, and deliver such
proxies as directed by the Fund.
(e) Administer investment plans offered by the Fund to
investors and stockholders of each Series, including retirement plans, including
activities not otherwise provided in Section I through V of this Agreement.
VII. PERFORMANCE OF DUTIES
7.1 The parties hereto intend that Series stockholders and their
stockholdings shall be confidential, and any information relating thereto shall
be released by DSC only to those persons or authorities who DSC has reason to
believe are authorized to receive such information; or, as instructed by the
Fund.
7.2 DSC may, in performing this Agreement, require the Fund or the
Fund's distributor to provide it with an adequate number of copies of
prospectuses, reports or other documents
8
<PAGE>
required to be furnished to investors or stockholders.
7.3 DSC may request or receive instructions from the Fund and may, at
the Fund's expense, consult with counsel for the Fund or its own counsel with
respect to any matter arising in connection with the performance of its duties
hereunder, and shall not be liable for any action taken or omitted by it in good
faith in accordance with such instructions or opinions of counsel.
7.4 DSC shall maintain reasonable insurance coverage for errors and
omissions and reasonable bond coverage for fraud.
7.5 Upon notice thereof to the Fund, DSC may employ others to provide
services to DSC in its performance of this Agreement.
7.6 Personnel and facilities of DSC used to perform services hereunder
may be used to perform similar services to other funds of the Delaware Group and
to others, and may be used to perform other services for the Fund, the other
funds of the Delaware Group and others.
7.7 DSC shall provide its services as transfer agent hereunder in
accordance with Section 17 of the Securities Exchange Act of 1934, and the rules
and regulations thereunder. Further, the parties intend that the processes,
procedures, safeguards and controls employed should be those generally applied
and accepted for the type services provided hereunder by other institutions
providing the same or similar services, and, those which should provide
efficient, safe and economical services so as to promote promptness and accuracy
and to maintain the integrity of the Fund's records.
7.8 The Fund and DSC may, from time to time, set forth in writing
Guidelines For Selective Procedures to be applicable to the services hereunder.
9
<PAGE>
VIII. COMPENSATION
8.1 The Fund and DSC acknowledge that because DSC has common ownership
and close management ties with the Fund's investment advisor and the Fund's
distributor and serves the other funds of the Delaware Group (DSC having been
originally established to provide the services hereunder for the funds of the
Delaware Group), advantages and benefits to the Fund in the employment of DSC
hereunder can be available which may not generally be available to it from
others providing similar services.
8.2 The Fund and DSC further acknowledge that the compensation by the
Fund to DSC is intended to induce DSC to provide services under this Agreement
of a nature and quality which the Board of Directors of the Fund, including a
majority who are not parties to this Agreement or interested person of the
parties hereto, has determined after due consideration to be necessary for the
conduct of the business of the Fund, in the best interests of the Fund, the
Series and their stockholders.
8.3 Compensation by the Fund to DSC hereunder shall be determined in
accordance with Schedule A hereto as it shall be amended from time to time as
provided for herein and which is incorporated herein as a part hereof.
8.4 Compensation as provided in Schedule A shall be reviewed and
approved in the manner set forth in Section 10.1 hereof by the Board of
Directors of the Fund at least annually and may be reviewed and approved more
frequently at the request of either party. The Board may request, and DSC shall
provide, such information as the Board may reasonably require to evaluate the
basis of and approve the compensation.
IX. STANDARD OF CARE
10
<PAGE>
9.1 The Fund acknowledges that DSC shall not be liable for, and in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of the performance of its duties under this Agreement, agrees to
indemnify DSC against, any claim or deficiency arising from the performance of
DSC's duties hereunder, including DSC's costs, counsel fees and expenses
incurred in investigation or defending any such claim or any administrative or
other proceeding, and acknowledges that any risk of loss or damage arising from
the conduct of the Fund's affairs in accordance herewith or in accordance with
Guidelines or instructions given hereunder, shall be borne by the Fund.
X. CONTRACTUAL STATUS
10.1 This Agreement shall be executed and become effective on the date
first written above if approved by a vote of the Board of Directors of the Fund,
including an affirmative vote of a majority of the non-interested members of the
Board, cast in person at a meeting called for the purpose of voting on such
approval. It shall continue in effect for an indeterminate period, and is
subject to termination on sixty (60) days notice by either party unless earlier
terminated or amended by agreement among the parties. Compensation under this
Agreement shall require approval by a majority vote of the Board of Directors of
the Fund, including an affirmative vote of the majority of the non-interested
members of the Board cast in person at a meeting called for the purpose of
voting on such approval.
10.2 This Agreement may not be assigned without the approval of the
Fund.
10.3 This Agreement shall be governed by the laws of the Commonwealth
of Pennsylvania.
11
<PAGE>
DELAWARE SERVICE COMPANY, INC.
ATTEST: /s/ Eric E.Miller By: /s/ David K. Downes
------------------------- ------------------------------
Title: Eric E. Miller David K. Downes
Vice President and Senior Vice President, Chief Administrative
Assistant Secretary Officer, Chief Financial Officer
DELAWARE GROUP VALUE FUND, INC.
for its VALUE FUND and
RETIREMENT INCOME FUND
ATTEST: /s/ John M. Zerr By: /s/ Wayne A. Stork
------------------------- ------------------------------
Title: John M. Zerr Wayne A. Stork
Vice President and Chairman, President and
Assistant Secretary Chief Executive Officer
12
<PAGE>
SCHEDULE A
DELAWARE GROUP VALUE FUND, INC.
FIRST AMENDED AND RESTATED
SHAREHOLDERS SERVICES AGREEMENT
COMPENSATION SCHEDULE
1. Delaware Service Company, Inc. ("DSC") will determine and
report to the Fund, at least annually, the compensation for
services to be provided to the Fund for DSC's forthcoming
fiscal year or period.
2. In determining such compensation, DSC will fix and report a
fee to be charged per account and/or transaction, as may be
applicable, for services provided. DSC will bill, and the Fund
will pay, such compensation monthly.
3. For the period commencing on November 29, 1996, the charge
will consist of two charges for each Series, an annual charge
and a per transaction charge for each account on the transfer
agent's records and each account on an automated retirement
processing system. These charges are as follows:
A. ANNUAL CHARGE
Value Fund $5.50 Per Annum
Retirement Income Fund $5.50 Per Annum
Merrill Lynch - Omnibus Accounts
Regular Accounts $11.00 Per Annum
Accounts with a Contingent
Deferred Sales Charge $14.00 Per Annum
Networked Accounts $3.00 - 6.00 Per Annum
<PAGE>
SCHEDULE A
DELAWARE GROUP VALUE FUND, INC.
FIRST AMENDED AND RESTATED
SHAREHOLDERS SERVICES AGREEMENT
COMPENSATION SCHEDULE
B. TRANSACTION CHARGE
Transaction Charge
------------- ---------
1. Dividend Payment $ 0.25
2. New Account $ 6.00
3. Purchase:
a. Wire $ 8.00
b. Automated $ 1.50
c. Other $ 2.60
4. Transfer $ 8.00
5. Certificate Issuance $ 4.00
6. Liquidations
a. Wires $12.25
b. Drafts $ 0.75
c. Money Market Regular $ 4.50
d. Other Regular $ 4.50
7. Exchanges
a. Dividend Exchanges $ 3.00
b. Other $10.00
<PAGE>
DELAWARE GROUP OF FUNDS
FUND ACCOUNTING AGREEMENT
THIS AGREEMENT, made as of this 19th day of August, 1996 by and between
the registered investment companies in the Delaware Group listed on Schedule A,
which Schedule may be amended from time to time as provided in Section 8 hereof
(each corporation or common law or business trust, hereinafter referred to as a
"Company," and all such entities collectively hereinafter referred to as, the
"Companies"), on behalf of the portfolio(s) of securities of such Companies
listed on Schedule A, which Schedule may be amended from time to time (when used
in this Agreement in the context of a Company that offers only a single
portfolio/series of shares, the term "Portfolio" shall be a reference to such
Company, and when used in the context of a Company that offers multiple
portfolios/series of shares, shall be a reference to each portfolio/series of
such Company) and DELAWARE SERVICE COMPANY, INC. ("DSC"), a Delaware
corporation, having its principal office and place of business at 1818 Market
Street, Philadelphia, Pennsylvania 19103.
W I T N E S S E T H:
WHEREAS, the Investment Management Agreements between the Companies
with respect to each Portfolio and either Delaware Management Company, Inc. or
its U.K. affiliate, Delaware
<PAGE>
International Advisers Ltd., provide, in part, that each Portfolio shall conduct
its business and affairs and shall bear the expenses necessary and incidental
thereto including, but not in limitation of the foregoing, the costs incurred
with respect to accounting services; and
WHEREAS, the services to be provided under this agreement previously
were provided by employees of the Companies; and
WHEREAS, the Companies and DSC desire to have a written agreement
concerning the performance of accounting services for each Portfolio and
providing compensation therefor;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, and intending legally to be bound, it is agreed:
I. APPOINTMENT AS AGENT
Section 11 The Companies hereby appoint DSC the accounting
agent ("Accounting Agent") for all of the classes of each Portfolio, to provide
such accounting services as are set forth herein and DSC hereby accepts such
appointment and agrees to provide the Companies, as their agent, the services
described herein.
Section 12 The Companies shall pay DSC and DSC shall accept,
for the services provided hereunder, the compensation provided for in Section VI
hereof. The Companies
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<PAGE>
also shall reimburse DSC for expenses incurred or advanced by it for the
Companies in connection with its services hereunder.
II. DOCUMENTATION
Section 21 Each Company represents that it has provided or
made available to DSC (or has given DSC an opportunity to examine) copies of,
and, DSC represents that it has received from the Companies (or is otherwise
familiar with), the following documents:
A. The Articles of Incorporation or Agreement and Declaration
of Trust or other document, as relevant, evidencing each Company's form of
organization and any current amendments thereto;
B. The By-Laws or Procedural Guidelines of each Company;
C. Any resolution or other action of each Company or the Board
of Directors or Trustees of each Company establishing or affecting the rights,
privileges or other status of any class of shares of a Portfolio, or altering or
abolishing any such class;
D. A certified copy of a resolution of the Board of Directors
or Trustees of each Company appointing DSC as Accounting Agent for each
Portfolio and authorizing the execution of this Agreement or an amendment to
Schedule A of this Agreement;
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<PAGE>
E. A copy of each Company's currently effective prospectus[es]
and Statement[s] of Additional Information under the Securities Act of 1933, if
effective;
F. A certified copy of any resolution of the Board of
Directors or Trustees of each Company authorizing any person to give
instructions to DSC under this Agreement (with a specimen signature of such
person if not already provided), setting forth the scope of such authority; and
G. Any amendment, revocation or other document altering,
adding, qualifying or repealing any document or authority called for under this
Section 2.1.
Section 22 Each Company and DSC may consult as to forms or
documents that may be required in performing services hereunder.
Section 23 Each Company warrants the following:
A. The Company is, or will be, a properly registered
investment company under the Investment Company Act of 1940 (the "1940 Act") and
any and all shares of a Portfolio which it issues will be properly registered
and lawfully issued under applicable federal and state laws.
B. The provisions of this contract do not violate the terms of
any instrument by which the Company or the Company on behalf of a Portfolio is
bound; nor do they violate any law or regulation of any body having jurisdiction
over the Company or its property.
Section 24 DSC warrants the following:
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<PAGE>
A. The provisions of this contract do not violate the terms of
any instrument by which DSC is bound; nor do they violate any law or regulation
of any body having jurisdiction over DSC or its property.
III. SERVICES TO BE PROVIDED BY DSC
Section 31 Daily Net Asset Value ("NAV") Calculation. As
Accounting Agent for each Portfolio of the Companies, DSC will perform all
functions necessary to provide daily Portfolio NAV calculations, including:
A. Maintaining each Portfolio's securities portfolio history
by:
1. recording portfolio purchases and sales;
2. recording corporate actions and capital changes
relating to portfolio securities;
3. accruing interest, dividends and expenses; and
4. maintaining the income history for securities
purchased by a Portfolio.
B. Determining distributions to Portfolio shareholders;
C. Recording and reconciling shareholder activity including:
1. recording subscription, liquidations and dividend
reinvestments;
-5-
<PAGE>
2. recording settlements of shareholder activity; and
3. reconciling Portfolio shares outstanding to the
records maintained by DSC, as transfer agent of the Portfolio.
D. Valuing a Portfolio's securities portfolio which includes
determining the NAVs for all classes of the Portfolio;
E. Disseminating Portfolio NAVs and dividends to interested
parties (including the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), the Investment Company Institute ("ICI"),
Morningstar, and Lipper Analytical Services, Inc. ("Lipper")); and
F. Resolving pricing and/or custody discrepancies.
Section 32 Financial Reporting. As Accounting Agent, DSC shall
perform financial reporting services for each Portfolio, which shall include:
A. The preparation of semi-annual and annual reports for
shareholders which involves the performance of the following functions:
1. preparing all statements of net assets, statements of
operations and statements of changes in net assets for the Portfolio;
-6-
<PAGE>
2. preparing footnotes to financial statements for the
Portfolio;
3. preparing workpapers for each Company's annual audit
by its independent public accountants; and
4. coordinating the annual audit by each Company's
independent public accountants.
B. Reporting to the ICI in response to requests for monthly
and other periodic information;
C. Performing statistical reporting, which includes daily,
monthly, quarterly and annual reports for Lipper, Weisenberger and other third
party reporting agencies; and
D. Furnishing financial information for any additional
required SEC reporting, such as the preparation of financial information for
each Company's reporting on Form N-SAR, the furnishing of financial information
for each Company's prospectus[es] and statement[s] of additional information,
and the financial information required for each Company's annual Rule 24f-2
notice filing;
Section 33 Compliance Testing. DSC will monitor, test and
prepare and maintain supporting schedules which evidence compliance with the
definitional and distribution requirements under the Internal Revenue Code of
1986, as amended ("IRC"), including the following:
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<PAGE>
A. The requirement to be registered at all times during the
taxable year under the 1940 Act (IRC Section 851(a));
B. The annual ninety percent gross income test (IRC Section
851(b)(2));
C. The short/short (thirty percent) gross income test (IRC
Section 851(b)(3));
D. The quarterly IRC industry diversification tests (IRC
Sections 851(b)(4) and 817(h)); and
E. The 90% distribution requirements (IRC Section 852(a)).
Section 34 Other Services. In addition to the above, DSC, in
its capacity as Accounting Agent for the Company, will perform the following
services:
A. The calculation of required Portfolio monthly yields and
total return calculations in accordance with the prescribed rules of the U.S.
Securities and Exchange Commission;
B. Providing the financial information necessary for the
preparation of all federal and state tax returns and ancillary schedules,
including:
1. year-end excise tax distributions; and
2. compliance with Subchapter M and Section 4982 of the
IRC;
-8-
<PAGE>
C. Performing special tax reporting to shareholders, including
the preparation of reports which reflect income earned by each Portfolio by
state, exempt income and distributions that qualify for the corporate dividends
received deduction;
D. The preparation of expense and budget figures for each
Portfolio, including the maintenance of detailed records pertaining to expense
accruals and payments and adjusting reports to reflect accrual adjustments;
E. The preparation of reports for Board of Directors' or
Trustees' meetings;
F. Coordination of the custody relationships;
G. Facilitating security settlements;
H. Performance of required foreign security accounting
functions;
I. Performance of daily cash reconciliations for each
Portfolio;
J. Providing identified reports to portfolio managers
including:
1. providing portfolio holdings and security valuation
reports;
2. preparing cash forecasts and reconciliations as
mutually agreed upon; and
3. preparing income projections.
-9-
<PAGE>
IV. PERFORMANCE OF DUTIES
Section 41 DSC may request or receive instructions from a
Company and may, at a Portfolio's expense, consult with counsel for the Company
or its own counsel, with respect to any matter arising in connection with the
performance of its duties hereunder, and shall not be liable for any action
taken or omitted by it in good faith in accordance with such instructions or
opinions of counsel.
Section 42 DSC shall maintain reasonable insurance coverage
for errors and omissions and reasonable bond coverage for fraud.
Section 43 Upon notice thereof to a Company, DSC may employ
others to provide services to DSC in its performance of this Agreement.
Section 44 Personnel and facilities of DSC used to perform
services hereunder may be used to perform similar services to all Companies of
the Delaware Group and their Portfolios and to others, and may be used to
perform other services for all of the Companies of the Delaware Group and
others.
Section 45 The Companies and DSC may, from time to time, set
forth in writing at the Companies' expense certain guidelines to be applicable
to the services hereunder.
-10-
<PAGE>
V. ACCOUNTS AND RECORDS
Section 51 The parties hereto agree and acknowledge that the
accounts and records maintained by DSC with respect to a Portfolio shall be the
property of such Portfolio, and shall be made available to the relevant Company
promptly upon request and shall be maintained for the periods prescribed in Rule
31a-2 under the Investment Company Act of 1940 or such longer period as shall be
agreed to by the parties hereto, at such Portfolio's expense.
VI. COMPENSATION
Section 61 The Companies and DSC acknowledge that the
compensation to be paid hereunder to DSC is intended to induce DSC to provide
services under this Agreement of a nature and quality which the Boards of
Directors or Trustees of the Companies, including a majority who are not parties
to this Agreement or interested person of the parties hereto, have determined
after due consideration to be necessary for the conduct of the business of a
Portfolio in the best interests of a Portfolio and its shareholders.
Section 62 Compensation by a Portfolio hereunder shall be
determined in accordance with Schedule B hereto as it shall be amended from time
to time as provided for herein and which is incorporated herein as a part
hereof.
Section 63 Compensation as provided in Schedule B shall be
reviewed and approved for each Portfolio in the manner
-11-
<PAGE>
set forth in Section 8.1 hereof by the Boards of Directors or Trustees of the
Companies at least annually and may be reviewed and approved more frequently at
the request of either party. The Boards may request and DSC shall provide such
information as the Boards may reasonably require to evaluate the basis of and
approve the compensation.
VII. STANDARD OF CARE
Section 71 The Companies on behalf of each Portfolio
acknowledge that DSC shall not be liable for, and in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
performance of its duties under this contract, agree to indemnify DSC against,
any claim or deficiency arising from the performance of DSC's duties hereunder,
including DSC's costs, counsel fees and expenses incurred in investigating or
defending any such claim or any administrative or other proceeding, and
acknowledge that any risk of loss or damage arising from the conduct of a
Portfolio's affairs in accordance herewith or in accordance with guidelines or
instructions given hereunder, shall be borne by the Portfolio. The
indemnification provided for in this Section 7.1 shall be made Portfolio by
Portfolio so that DSC is only entitled to indemnification from a Company on
behalf of a Portfolio for actions arising from the performance of DSC's duties
as to that Portfolio.
-12-
<PAGE>
VIII. CONTRACTUAL STATUS
Section 81 This Agreement shall be executed and become
effective as to a Company with regard to a Portfolio listed on Schedule A as of
the date first written above if approved by a vote of such Company's Board of
Directors or Trustees, including an affirmative vote of a majority of the non-
interested members of the Board of such Company, cast in person at a meeting
called for the purpose of voting on such approval. It shall continue in effect
for an indeterminate period, and is subject to termination as to a Company on
behalf of a Portfolio or DSC, as the case may be, on sixty (60) days notice by
either that Company or DSC, unless earlier terminated or amended by agreement
among the parties. A Company shall be permitted to terminate this Agreement as
to a Portfolio on sixty (60) days notice to DSC. Compensation under this
Agreement by a Portfolio shall require approval by a majority vote of the Board
of Directors or Trustees of such Portfolio's Company, including an affirmative
vote of the majority of the non-interested members of such Board cast in person
at a meeting called for the purpose of voting such approval.
Section 82 This Agreement shall become effective as to any
Company or Portfolio not included on Schedule A as of the date first written
above, but desiring to participate in this Agreement, on such date as an amended
Schedule A adding such new Company or Portfolio to such Schedule is executed by
DSC and such new Company or a Company on behalf of a new Portfolio following
-13-
<PAGE>
approval by the Company or by the Company on behalf of a new Portfolio desiring
to be included in this Agreement in accordance with the method specified in
Section 8.1. Any such amended Schedule A shall not affect the validity of this
Agreement as between DSC and the other Companies which have executed this
Agreement or any subsequent amendment to Schedule A of this Agreement.
Section 83 This Agreement may not be assigned by DSC without
the approval of all of the Companies.
Section 84 This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania.
DELAWARE SERVICE COMPANY, INC.
By: /s/ David K. Downes
-------------------------------
David K. Downes
Senior Vice President/Chief
Administrative Officer/Chief
Financial Officer
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP DECATUR FUND, INC.
DELAWARE GROUP DELAWARE FUND, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT
FUNDS, INC.
DELAWARE GROUP TREND FUND, INC.
DELAWARE GROUP DELCHESTER HIGH-YIELD
BOND FUND, INC.
DMC TAX-FREE INCOME TRUST - PENNSYLVANIA
DELAWARE GROUP VALUE FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL
FUNDS, INC.
-14-
<PAGE>
DELAWARE GROUP DELCAP FUND, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP ADVISER FUNDS, INC.
By: /s/ Wayne A. Stork
--------------------------------
Wayne A. Stork
Chairman, President and
Chief Executive Officer
DELAWARE POOLED TRUST, INC.
By: /s/ Wayne A. Stork
--------------------------------
Wayne A. Stork, Chairman
-15-
<PAGE>
SCHEDULE A
COMPANIES AND PORTFOLIOS COMPRISING THE DELAWARE GROUP*
Delaware Group Cash Reserve, Inc.
Delaware Group Decatur Fund, Inc.
Decatur Income Fund
Decatur Total Return Fund
Delaware Group Delaware Fund, Inc.
Delaware Fund
Devon Fund
Delaware Group Tax-Free Fund, Inc.
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U.S. Government Money Fund
Delaware Group Trend Fund, Inc.
Delaware Group Delchester High-Yield Bond Fund, Inc.
- --------
* Except as otherwise noted, all Portfolios included on this Schedule A are
Existing Portfolios for purposes of the compensation described on Schedule B to
that Fund Accounting Agreement between Delaware Service Company, Inc. and the
Delaware Group of Funds dated as of August 19, 1996 ("Agreement"). All
Portfolios added to this Schedule A by amendment executed by a Company on behalf
of such Portfolio hereof shall be a New Portfolio for purposes of Schedule B to
the Agreement.
-16-
<PAGE>
DMC Tax-Free Income Trust - Pennsylvania
Delaware Group Value Fund, Inc.
Delaware Group Global & International Funds, Inc.
International Equity Fund
Global Bond Fund
Global Assets Fund
Emerging Markets Fund (New)
Delaware Group DelCap Fund, Inc.
Delaware Pooled Trust, Inc.
The Defensive Equity Portfolio
The Aggressive Growth Portfolio
The International Equity Portfolio
The Defensive Equity Small/Mid-Cap Portfolio (New)
The Defensive Equity Utility Portfolio (New)
The Labor Select International Equity Portfolio
The Real Estate Investment Trust Portfolio
The Fixed Income Portfolio
The Limited-Term Maturity Portfolio (New)
The Global Fixed Income Portfolio
The International Fixed Income Portfolio (New)
The High-Yield Bond Portfolio (New)
Delaware Group Premium Fund, Inc.
Equity/Income Series
High Yield Series
Capital Reserves Series
Money Market Series
Growth Series
Multiple Strategy Series
International Equity Series
Value Series
Emerging Growth Series
Global Bond Series (New)
Delaware Group Government Fund, Inc.
-17-
<PAGE>
Delaware Group Adviser Funds, Inc.
Enterprise Fund
U.S. Growth Fund
World Growth Fund
New Pacific Fund
Federal Bond Fund
Corporate Income Fund
Dated as of: August 19, 1996
-18-
<PAGE>
SCHEDULE B
COMPENSATION
Fee Schedule for The Delaware Group of Funds
Part 1 -- Fees for Existing Portfolios
Existing Portfolios are those so designated on Schedule A to the Fund Accounting
Agreement between Delaware Service Company, Inc. and the Delaware Group of Funds
dated as of August 19, 1996 ("Agreement").
Annual Asset Based Fees
First $10 Billion of Aggregate
Complex Net Assets 2.5 Basis Points
Aggregate Complex Net Assets
over $10 Billion 2.0 Basis Points
Annual asset based fees will be charged at a rate of 2.5 basis points for the
first $10 Billion of Aggregate Complex Net Assets. Aggregate Complex Net Assets
over $10 Billion will be charged at a rate of 2.0 basis points. These fees will
be charged to a Portfolio on an aggregated pro rated basis.
Annual Minimum Fees
Domestic Equity Portfolio $35,000
Domestic Fixed Income Portfolio $45,000
International Series Portfolio $70,000
Per Class of Share Fee $ 4,000
There is an annual minimum fee that will be charged only if the annual asset
based fee is less than the calculation for the minimum fee. This fee is based on
the type and the number of classes per Portfolio. For an equity Portfolio
$35,000 will be charged; for a fixed income Portfolio $45,000 will be charged,
and for an international Portfolio $70,000 will be charged. For each class of
shares, $4,000 will be charged, such amount to be prorated over a period of less
than a year for any classes added after April 30, 1996. A total of all minimum
fees will be compared to the total asset based fee to determine which fee is
higher and, subsequently, will be used to bill the Companies.
Part 2 -- Fees for New Portfolios
For each Portfolio designated as a New Portfolio on Schedule A to the Agreement,
there will be a fee of 2.0 basis points, providing that the Delaware complex net
assets are above $10 Billion (the
<PAGE>
rate would be 2.5 basis points if under $10 Billion and then 2.0 basis points
once the net assets cross $10 Billion), or an annual minimum fee calculated in
the manner described above, whichever is higher. This new fee would be added to
the total of Existing Portfolio fees and then pro rated. Fees shall not be
charged for New Portfolios included on Schedule A until such Portfolios shall
have commenced operations.
Dated as of: August 19, 1996
-20-
<PAGE>
AMENDMENT NO. 1 TO
SCHEDULE A
TO DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Cash Reserve, Inc.
Delaware Group Decatur Fund, Inc.
Decatur Income Fund
Decatur Total Return Fund
Delaware Group Delaware Fund, Inc.
Delaware Fund
Devon Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group Tax-Free Fund, Inc.
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U.S. Government Money Fund
Delaware Group Trend Fund, Inc.
Delaware Group Income Funds, Inc.
Delchester Fund
Strategic Income Fund (New)
DMC Tax-Free Income Trust - Pennsylvania
*Except as otherwise noted, all Portfolios included on this Schedule A are
Existing Portfolios for purposes of the compensation described on Schedule B to
that Fund Accounting Agreement between Delaware Service Company, Inc. and the
Delaware Group of Funds dated as of August 19, 1996 ("Agreement"). All
portfolios added to this Schedule A by amendment executed by a Company on behalf
of such Portfolio hereof shall be a New Portfolio for purposes of Schedule B to
the Agreement.
<PAGE>
Delaware Group Value Fund, Inc.
Delaware Group Global & International Funds, Inc.
International Equity Fund
Global Bond Fund
Global Assets Fund
Emerging Markets Fund (New)
Delaware Group DelCap Fund, Inc.
Delaware Pooled Trust, Inc.
The Defensive Equity Portfolio
The Aggressive Growth Portfolio
The International Equity Portfolio
The Defensive Equity Small/Mid-Cap Portfolio (New)
The Defensive Equity Utility Portfolio (New)
The Labor Select International Equity Portfolio
The Real Estate Investment Trust Portfolio
The Fixed Income Portfolio
The Limited-Term Maturity Portfolio (New)
The Global Fixed Income Portfolio
The International Fixed Income Portfolio (New)
The High-Yield Bond Portfolio (New)
Delaware Group Premium Fund, Inc.
Equity/Income Series
High Yield Series
Capital Reserves Series
Money Market Series
Growth Series
Multiple Strategy Series
International Equity Series
Value Series
Emerging Growth Series
Global Bond Series (New)
Delaware Group Government Fund, Inc.
<PAGE>
Delaware Group Adviser Funds, Inc.
Enterprise Fund
U.S. Growth Fund
World Growth Fund
New Pacific Fund
Federal Bond Fund
Corporate Income Fund
Dated as of: September 30, 1996
--------------------
DELAWARE SERVICE COMPANY, INC.
By: /s/ David K. Downes
--------------------
David K. Downes
Senior Vice President/Chief
Administrative Officer/Chief
Financial Officer
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP DECATUR FUND, INC.
DELAWARE GROUP DELAWARE FUND, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND,INC.
DELAWARE GROUP LIMITED-TERM
GOVERNMENT FUNDS, INC.
DELAWARE GROUP TREND FUND, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DMC TAX-FREE INCOME TRUST -
PENNSYLVANIA
DELAWARE GROUP VALUE FUND, INC.
DELAWARE GROUP GLOBAL &
INTERNATIONAL FUNDS, INC.
DELAWARE GROUP DELCAP FUND, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP ADVISER FUNDS, INC.
By: /s/ Wayne A. Stork
----------------------------
Wayne A. Stork
Chairman, President and
Chief Executive Officer
DELAWARE POOLED TRUST, INC.
By: /s/Wayne A. Stork
----------------------------
Wayne A. Stork
Chairman
-3-
<PAGE>
AMENDMENT NO. 2 TO
SCHEDULE A
TO DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Adviser Funds, Inc.
Corporate Income Fund
Enterprise Fund
Federal Bond Fund
New Pacific Fund
U.S. Growth Fund
World Growth Fund
Delaware Group Cash Reserve, Inc.
Delaware Group Decatur Fund, Inc.
Decatur Income Fund
Decatur Total Return Fund
Delaware Group Delaware Fund, Inc.
Delaware Fund
Devon Fund
Delaware Group Equity Funds IV, Inc.
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc.
Retirement Income Fund (New)
Value Fund
*Except as otherwise noted, all Portfolios included on this Schedule A
are Existing Portfolios for purposes of the compensation described on Schedule B
to that Fund Accounting Agreement between Delaware Service Company, Inc. and the
Delaware Group of Funds dated as of August 19, 1996 ("Agreement"). All
portfolios added to this Schedule A by amendment executed by a Company on behalf
of such Portfolio hereof shall be a New Portfolio for purposes of Schedule B to
the Agreement.
1
<PAGE>
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Delaware Group Government Fund, Inc.
Delaware Group Income Funds, Inc.
Delchester Fund
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U.S. Government Money Fund
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Emerging Growth Series
Equity/Income Series
Global Bond Series (New)
Growth Series
High Yield Series
International Equity Series
Money Market Series
Multiple Strategy Series
Value Series
Delaware Group Tax-Free Fund, Inc.
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group Trend Fund, Inc.
2
<PAGE>
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Defensive Equity Portfolio
The Defensive Equity Small/Mid-Cap Portfolio (New)
The Fixed Income Portfolio
The Global Fixed Income Portfolio
The High-Yield Bond Portfolio (New)
The International Equity Portfolio
The International Fixed Income Portfolio (New)
The Labor Select International Equity Portfolio
The Limited-Term Maturity Portfolio (New)
The Real Estate Investment Trust Portfolio
DMC Tax-Free Income Trust - Pennsylvania
3
<PAGE>
Dated as of: November 29, 1996
DELAWARE SERVICE COMPANY, INC.
By: /s/David K. Downes
-----------------------------------
David K. Downes
Senior Vice President/
Chief Administrative Officer/
Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP DECATUR FUND, INC.
DELAWARE GROUP DELAWARE FUND, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL
FUNDS, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT
FUNDS, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
DELAWARE GROUP TREND FUND, INC.
DMC TAX-FREE INCOME TRUST-PENNSYLVANIA
By: /s/Wayne A. Stork
---------------------------
Wayne A. Stork
Chairman, President and
Chief Executive Officer
DELAWARE POOLED TRUST, INC.
By: /s/Wayne A. Stork
---------------------------
Wayne A. Stork
Chairman
4
<PAGE>
AMENDMENT NO.3 TO
SCHEDULE A
TO DELAWARE GROUP OF FUNDS*
FUND ACCOUNTING AGREEMENT
Delaware Group Cash Reserve, Inc.
Delaware Group Decatur Fund, Inc.
Decatur Income Fund
Decatur Total Return Fund
Delaware Group Delaware Fund, Inc.
Delaware Fund
Devon Fund
Delaware Group Tax-Free Money Fund, Inc.
Delaware Group Tax-Free Fund, Inc.
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U.S. Government Money Fund
Delaware Group Trend Fund, Inc.
Delaware Group Income Funds, Inc.
Delchester Fund
Strategic Income Fund (New)
*Except as otherwise noted, all Portfolios included on this Schedule A
are Existing Portfolios for purposes of the compensation described on Schedule B
to that Fund Accounting Agreement between Delaware Service Company, Inc. and the
Delaware Group of Funds dated as of August 19, 1996 ("Agreement"). All
portfolios added to this Schedule A by amendment executed by a Company on behalf
of such Portfolio hereof shall be a New Portfolio for purposes of Schedule B to
the Agreement.
2
<PAGE>
DMC Tax-Free Income Trust - Pennsylvania
Delaware Group Value Fund, Inc.
Value Fund
Retirement Income Fund (New)
Delaware Group Global & International Funds, Inc.
International Equity Fund
Global Bond Fund
Global Assets Fund
Emerging Markets Fund (New)
Delaware Group Equity Funds IV, Inc.
DelCap Fund
Multi-Cap Equity Fund (New)
Delaware Pooled Trust, Inc.
The Defensive Equity Portfolio
The Aggressive Growth Portfolio
The International Equity Portfolio
The Defensive Equity Small/Mid-Cap Portfolio (New)
The Defensive Equity Utility Portfolio (New)
The Labor Select International Equity Portfolio
The Real Estate Investment Trust Portfolio
The Fixed Income Portfolio
The Limited-Term Maturity Portfolio (New)
The Global Fixed Income Portfolio
The International Fixed Income Portfolio (New)
The High-Yield Bond Portfolio (New)
Delaware Group Premium Fund, Inc.
Equity/Income Series
High Yield Series
Capital Reserves Series
Money Market Series
Growth Series
Multiple Strategy Series
International Equity Series
Value Series
Emerging Growth Series
Global Bond Series (New)
Delaware Group Government Fund, Inc.
3
<PAGE>
Delaware Group Adviser Funds, Inc.
Enterprise Fund
U.S. Growth Fund
World Growth Fund
New Pacific Fund
Federal Bond Fund
Corporate Income Fund
Dated as of: December 27, 1996
DELAWARE SERVICE COMPANY, INC.
By: /s/David K. Downes
------------------
David K. Downes
Senior Vice President/Chief
Administrative Officer/Chief
Financial Officer
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP DECATUR FUND, INC.
DELAWARE GROUP DELAWARE FUND, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND,INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT
FUNDS, INC.
DELAWARE GROUP TREND FUND, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DMC TAX-FREE INCOME TRUST - PENNSYLVANIA
DELAWARE GROUP VALUE FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL
FUNDS, INC.
DELAWARE GROUP DELCAP FUND, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP ADVISER FUNDS, INC.
By: /s/ Wayne A. Stork
------------------------------------
Wayne A. Stork
Chairman, President and
Chief Executive Officer
DELAWARE POOLED TRUST, INC.
By: /s/ Wayne A. Stork
------------------------------------
Wayne A. Stork
Chairman
4
<PAGE>
Consent of Independent Auditors
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectuses and "Financial Statements" in the Statement of
Additional Information and to the incorporation by reference in this
Post-Effective Amendment No. 17 to the Registration Statement (Form N-1A) (No.
33-11419) of Delaware Group Equity Funds V, Inc. of our report dated
January 13, 1997, included in the 1996 Annual Report to Shareholders of
Delaware Group Equity Funds V, Inc. - Value Fund.
/s/ Ernst & Young LLP
---------------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
January 24, 1997
<PAGE>
EXHIBIT A
DISTRIBUTION PLAN
DELAWARE GROUP VALUE FUND, INC.
RETIREMENT INCOME FUND
RETIREMENT INCOME FUND A CLASS
The following Distribution Plan (the "Plan") has been adopted
pursuant to Rule l2b-l under the Investment Company Act of l940 (the "Act") by
Delaware Group Value Fund, Inc. (the "Fund"), for the Retirement Income Fund
series (the "Series") on behalf of the Retirement Income Fund A Class ("Class"),
which Fund, Series and Class may do business under these or such other names as
the Board of Directors of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Series and shareholders of the Class. The Plan has been
approved by a majority of the outstanding voting securities of the Class, as
defined in the Act.
The Fund is a corporation organized under the laws of the
State of Maryland, is authorized to issue different series and
<PAGE>
classes of securities and is an open-end management investment company
registered under the Act. Delaware Management Company, Inc. serves as the
Series' investment adviser and manager pursuant to an Investment Management
Agreement. Delaware Service Company, Inc. serves as the Series' shareholder
servicing, dividend disbursing and transfer agent. Delaware Distributors, L.P.
(the "Distributor") is the principal underwriter and national distributor for
the Series' shares, including shares of the Class, pursuant to the Distribution
Agreement between the Distributor and the Fund on behalf of the Series
("Distribution Agreement").
The Plan provides that:
l. The Fund shall pay to the Distributor a monthly fee not to
exceed 0.3% (3/10 of l%) per annum of the Series' average daily net assets
represented by shares of the Class (the "Maximum Amount") as may be determined
by the Fund's Board of Directors from time to time. Such monthly fee shall be
reduced by the aggregate sums paid by the Fund on behalf of the Series to
persons other than broker-dealers (the "Service Providers") who may, pursuant to
servicing agreements, provide to the Series services in the Series' marketing of
shares of the Class.
2. (a) The Distributor shall use the monies paid to it
pursuant to paragraph l above to furnish, or cause or encourage others to
furnish, services and incentives in connection with the promotion, offering and
sale of Class shares and, where suitable and appropriate, the retention of Class
shares by shareholders.
(b) The Service Providers shall use the monies paid
respectively to them to reimburse themselves for the actual costs
<PAGE>
they have incurred in confirming that their customers have received the
Prospectus and Statement of Additional Information, if applicable, and as a fee
for (l) assisting such customers in maintaining proper records with the Fund,
(2) answering questions relating to their respective accounts, and (3) aiding in
maintaining the investment of their respective customers in the Class.
3. The Distributor shall report to the Fund at least monthly
on the amount and the use of the monies paid to it under the Plan. The Service
Providers shall inform the Fund monthly and in writing of the amounts each
claims under the Plan; both the Distributor and the Service Providers shall
furnish the Board of Directors of the Fund with such other information as the
Board may reasonably request in connection with the payments made under the Plan
and the use thereof by the Distributor and the Service Providers, respectively,
in order to enable the Board to make an informed determination of the amount of
the Fund's payments and whether the Plan should be continued.
4. The officers of the Fund shall furnish to the Board of
Directors of the Fund, for their review, on a quarterly basis, a written report
of the amounts expended under the Plan and the purposes for which such
expenditures were made.
5. This Plan shall take effect at such time as the Distributor
shall notify the Fund in writing of the commencement of the Plan (the
"Commencement Date"); thereafter, the Plan shall continue in effect for a period
of more than one year from the Commencement Date only so long as such
continuance is specifically
<PAGE>
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a
majority of the non-interested Directors or by vote of a majority of the
outstanding voting securities of the Class.
(b) The Plan may not be amended to increase materially the
amount to be spent for distribution pursuant to paragraph l thereof without
approval by the shareholders of the Class.
7. All material amendments to this Plan shall be approved by
the non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested Directors shall be committed to the
discretion of such non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42)
of the Act shall govern the meaning of "interested person(s)" and "vote of a
majority of the outstanding voting securities," respectively, for the purposes
of this Plan.
This Plan shall take effect on the Commencement Date, as
previously defined.
November 29, 1996
<PAGE>
EXHIBIT B
DISTRIBUTION PLAN
DELAWARE GROUP VALUE FUND, INC.
RETIREMENT INCOME FUND
RETIREMENT INCOME FUND B CLASS
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Value Fund, Inc. (the "Fund"), for the Retirement Income Fund series (the
"Series") on behalf of the Retirement Income Fund B Class (the "Class"), which
Fund, Series and Class may do business under these or such other names as the
Board of Directors of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Series and shareholders of the Class. The Plan has been
approved by a vote of the holders of a majority of the outstanding voting
securities of the Class, as defined in the Act.
<PAGE>
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and classes of securities and
is an open-end management investment company registered under the Act. Delaware
Management Company, Inc. serves as the Series' investment adviser and manager
pursuant to an Investment Management Agreement. Delaware Service Company, Inc.
serves as the Series' shareholder servicing, dividend disbursing and transfer
agent. Delaware Distributors, L.P. (the "Distributor") is the principal
underwriter and national distributor for the Series' shares, including shares of
the Class, pursuant to the Distribution Agreement between the Distributor and
the Fund on behalf of the Series ("Distribution Agreement").
The Plan provides that:
1. (a) The Fund shall pay to the Distributor a monthly fee not to
exceed 0.75% (3/4 of 1%) per annum of the Series' average daily net assets
represented by shares of the Class as may be determined by the Fund's Board of
Directors from time to time.
(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to the Distributor for payment to dealers or others, or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.
2. (a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses
<PAGE>
and reports used for sales purposes, as well as compensation related to sales
and marketing personnel, and holding special promotions. In addition, such fees
may be used to pay for advancing the commission costs to dealers with respect to
the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above
shall be used to pay dealers or others for, among other things, furnishing
personal services and maintaining shareholder accounts, which services include
confirming that customers have received the Prospectus and Statement of
Additional Information, if applicable; assisting such customers in maintaining
proper records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a
<PAGE>
written report of the amounts expended under the Plan and the purposes for which
such expenditures were made.
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6. (a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1996
<PAGE>
EXHIBIT C
DISTIBUTION PLAN
DELAWARE GROUP VALUE FUND, INC.
RETIREMENT INCOME FUND
RETIREMENT INCOME FUND C CLASS
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by Delaware
Group Value Fund, Inc. (the "Fund"), for the Retirement Income Fund series (the
"Series) on behalf of the Retirement Income Fund C Class (the "Class"), which
Fund, Series and Class may do business under these or such other names as the
Board of Directors of the Fund may designate from time to time. The Plan has
been approved by a majority of the Board of Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan or in any agreements
related thereto ("non-interested Directors"), cast in person at a meeting called
for the purpose of voting on such Plan. Such approval by the Directors included
a determination that in the exercise of reasonable business judgment and in
light of their fiduciary duties, there is a reasonable likelihood that the Plan
will benefit the Series and shareholders of the Class. The Plan has been
approved by a vote of the holders of a majority of the outstanding voting
securities of the Class, as defined in the Act.
The Fund is a corporation organized under the laws of the State of
Maryland, is authorized to issue different series and
<PAGE>
classes of securities and is an open-end management investment company
registered under the Act. Delaware Management Company, Inc. serves as the
Series' investment adviser and manager pursuant to an Investment Management
Agreement. Delaware Service Company, Inc. serves as the Series' shareholder
servicing, dividend disbursing and transfer agent. Delaware Distributors, L.P.
(the "Distributor") is the principal underwriter and national distributor for
the Series' shares, including shares of the Class, pursuant to the Distribution
Agreement between the Distributor and the Fund on behalf of the Series
("Distribution Agreement").
The Plan provides that:
1.(a) The Fund shall pay to the Distributor a monthly fee not to exceed
0.75% (3/4 of 1%) per annum of the Series' average daily net assets represented
by shares of the Class as may be determined by the Fund's Board of Directors
from time to time.
(b) In addition to the amounts described in paragraph 1(a) above, the
Fund shall pay: (i) to the Distributor for payment to dealers or others or (ii)
directly to others, an amount not to exceed 0.25% (1/4 of 1%) per annum of the
Series' average daily net assets represented by shares of the Class, as a
service fee pursuant to dealer or servicing agreements.
2.(a) The Distributor shall use the monies paid to it pursuant to
paragraph 1(a) above to assist in the distribution and promotion of shares of
the Class. Payments made to the Distributor under the Plan may be used for,
among other things, preparation and distribution of advertisements, sales
literature and prospectuses and reports used for sales purposes, as well as
compensation
<PAGE>
related to sales and marketing personnel, and holding special promotions. In
addition, such fees may be used to pay for advancing the commission costs to
dealers with respect to the sale of Class shares.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include confirming
that customers have received the Prospectus and Statement of Additional
Information, if applicable; assisting such customers in maintaining proper
records with the Fund; answering questions relating to their respective
accounts; and aiding in maintaining the investment of their respective customers
in the Class.
3. The Distributor shall report to the Fund at least monthly on the
amount and the use of the monies paid to it under paragraph 1(a) above. In
addition, the Distributor and others shall inform the Fund monthly and in
writing of the amounts paid under paragraph 1(b) above; both the Distributor and
any others receiving fees under the Plan shall furnish the Board of Directors of
the Fund with such other information as the Board may reasonably request in
connection with the payments made under the Plan and the use thereof by the
Distributor and others in order to enable the Board to make an informed
determination of the amount of the Fund's payments and whether the Plan should
be continued.
4. The officers of the Fund shall furnish to the Board of Directors of
the Fund, for their review, on a quarterly basis, a written report of the
amounts expended under the Plan and the purposes for which such expenditures
were made.
<PAGE>
5. This Plan shall take effect at such time as the Distributor shall
notify the Fund of the commencement of the Plan (the "Commencement Date");
thereafter, the Plan shall continue in effect for a period of more than one year
from the Commencement Date only so long as such continuance is specifically
approved at least annually by a vote of the Board of Directors of the Fund, and
of the non-interested Directors, cast in person at a meeting called for the
purpose of voting on such Plan.
6.(a) The Plan may be terminated at any time by vote of a majority of
the non-interested Directors or by vote of a majority of the outstanding voting
securities of the Class.
(b) The Plan may not be amended to increase materially the amount to
be spent for distribution pursuant to paragraph 1 thereof without approval by
the shareholders of the Class.
7. All material amendments to this Plan shall be approved by the
non-interested Directors in the manner described in paragraph 5 above.
8. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Directors shall be committed to the discretion of such
non-interested Directors.
9. The definitions contained in Sections 2(a)(19) and 2(a)(42) of the
Act shall govern the meaning of "interested person(s)" and "vote of a majority
of the outstanding voting securities," respectively, for the purposes of this
Plan.
This Plan shall take effect on the Commencement Date, as previously
defined.
November 29, 1996
<PAGE>
DELAWARE GROUP VALUE FUND C
TOTAL RETURN PERFORMANCE
THREE MONTHS (INCLUDING CDSC)
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $23.66
Initial Shares 42.265
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1996 42.265 $0.000 0.000 42.265
- --------------------------------------------------------------------------------
Ending Shares 42.265
Ending NAV x $25.55
---------
$1,079.87
Less: CDSC $10.00
---------
Investment Return: $1,069.87
Total Return Performance
- ------------------------
Investment Return $1,069.87
Less Initial Investment $1,000.00
---------
$69.87 / $1,000.00 x 100
Total Return: 6.99%
<PAGE>
DELAWARE GROUP VALUE FUND C
TOTAL RETURN PERFORMANCE
THREE MONTHS (EXCLUDING CDSC)
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $23.66
Initial Shares 42.265
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1996 42.265 $0.000 0.000 42.265
- --------------------------------------------------------------------------------
Ending Shares 42.265
Ending NAV x $25.55
---------
Investment Return $1,079.87
Total Return Performance
- ------------------------
Investment Return $1,079.87
Less Initial Investment $1,000.00
---------
$79.87 / $1,000.00 x 100
Total Return: 7.99%
<PAGE>
DELAWARE GROUP VALUE FUND C
TOTAL RETURN PERFORMANCE
SIX MONTHS (INCLUDING CDSC)
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $24.11
Initial Shares 41.477
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1996 41.477 $0.000 0.000 41.477
- --------------------------------------------------------------------------------
Ending Shares 41.477
Ending NAV x $25.55
---------
$1,059.74
Less: CDSC $10.00
---------
Investment Return: $1,049.74
Total Return Performance
- ------------------------
Investment Return $1,049.74
Less Initial Investment $1,000.00
---------
$49.74 / $1,000.00 x 100
Total Return: 4.97%
<PAGE>
DELAWARE GROUP VALUE FUND C
TOTAL RETURN PERFORMANCE
SIX MONTHS (EXCLUDING CDSC)
Initial Investment $1,000.00
Beginning OFFER $24.11
Initial Shares 41.477
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1996 41.477 $0.000 0.000 41.477
- --------------------------------------------------------------------------------
Ending Shares 41.477
Ending NAV x $25.55
---------
Investment Return $1,059.74
Total Return Performance
- ------------------------
Investment Return $1,059.74
Less Initial Investment $1,000.00
---------
$59.74 / $1,000.00 x 100
Total Return: 5.97%
<PAGE>
DELAWARE GROUP VALUE FUND C
TOTAL RETURN PERFORMANCE
NINE MONTHS (INCLUDING CDSC)
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $22.62
Initial Shares 44.209
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1996 44.209 $0.000 0.000 44.209
- --------------------------------------------------------------------------------
Ending Shares 44.209
Ending NAV x $25.55
---------
$1,129.54
Less: CDSC $10.00
---------
Investment Return: $1,119.54
Total Return Performance
- ------------------------
Investment Return $1,119.54
Less Initial Investment $1,000.00
---------
$119.54 / $1,000.00 x 100
Total Return: 11.95%
<PAGE>
DELAWARE GROUP VALUE FUND C
TOTAL RETURN PERFORMANCE
NINE MONTHS (EXCLUDING CDSC)
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $22.62
Initial Shares 44.209
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1996 44.209 $0.000 0.000 44.209
- --------------------------------------------------------------------------------
Ending Shares 44.209
Ending NAV x $25.55
---------
Investment Return $1,129.54
Total Return Performance
- ------------------------
Investment Return $1,129.54
Less Initial Investment $1,000.00
---------
$129.54 / $1,000.00 x 100
Total Return: 12.95%
<PAGE>
DELAWARE GROUP VALUE FUND C
TOTAL RETURN PERFORMANCE
ONE YEAR (INCLUDING CDSC)
- -------------------------------------------------------------------------------
- -
Initial Investment $1,000.00
Beginning OFFER $22.76
Initial Shares 43.937
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1996 43.937 $1.170 2.338 46.275
- --------------------------------------------------------------------------------
Ending Shares 46.275
Ending NAV x $25.55
---------
$1,182.33
Less: CDSC $10.00
---------
Investment Return: $1,172.33
Total Return Performance
- ------------------------
Investment Return $1,172.33
Less Initial Investment $1,000.00
---------
$172.33 / $1,000.00 x 100
Total Return: 17.23%
<PAGE>
DELAWARE GROUP VALUE FUND C
TOTAL RETURN PERFORMANCE
ONE YEAR (EXCLUDING CDSC)
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $22.76
Initial Shares 43.937
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1996 43.937 $1.170 2.338 46.275
- --------------------------------------------------------------------------------
Ending Shares 46.275
Ending NAV x $25.55
---------
Investment Return $1,182.33
Total Return Performance
- ------------------------
Investment Return $1,182.33
Less Initial Investment $1,000.00
---------
$182.33 / $1,000.00 x 100
Total Return: 18.23%
<PAGE>
DELAWARE GROUP VALUE FUND C
TOTAL RETURN PERFORMANCE
LIFE OF FUND (INCLUDING CDSC)
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $22.51
Initial Shares 44.425
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1996 44.425 $1.170 2.364 46.789
- --------------------------------------------------------------------------------
Ending Shares 46.789
Ending NAV x $25.55
---------
$1,195.46
Less: CDSC $0.00
---------
Investment Return: $1,195.46
Total Return Performance
- ------------------------
Investment Return $1,195.46
Less Initial Investment $1,000.00
---------
$195.46 / $1,000.00 x 100
Total Return: 19.55%
<PAGE>
DELAWARE GROUP VALUE FUND C
TOTAL RETURN PERFORMANCE
LIFE OF FUND (EXCLUDING CDSC)
- --------------------------------------------------------------------------------
Initial Investment $1,000.00
Beginning OFFER $22.51
Initial Shares 44.425
Fiscal Beginning Dividends Reinvested Cumulative
Year Shares for Period Shares Shares
- --------------------------------------------------------------------------------
1996 44.425 $1.170 2.364 46.789
- --------------------------------------------------------------------------------
Ending Shares 46.789
Ending NAV x $25.55
---------
Investment Return $1,195.46
Total Return Performance
- ------------------------
Investment Return $1,195.46
Less Initial Investment $1,000.00
---------
$195.46 / $1,000.00 x 100
Total Return: 19.55%
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000809821
<NAME> DELAWARE GROUP EQUITY FUNDS V, INC.
<SERIES>
<NUMBER> 001
<NAME> VALUE FUND A CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 180,702,268
<INVESTMENTS-AT-VALUE> 212,965,687
<RECEIVABLES> 281,570
<ASSETS-OTHER> 133
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28,703
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 394,998
<TOTAL-LIABILITIES> 394,998
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 7,458,477
<SHARES-COMMON-PRIOR> 7,776,729
<ACCUMULATED-NII-CURRENT> 1,047,212
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 33,946,414
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 32,262,286
<NET-ASSETS> 192,297,391
<DIVIDEND-INCOME> 3,148,204
<INTEREST-INCOME> 850,063
<OTHER-INCOME> 0
<EXPENSES-NET> 2,980,568
<NET-INVESTMENT-INCOME> 1,017,699
<REALIZED-GAINS-CURRENT> 34,101,818
<APPREC-INCREASE-CURRENT> 1,003,831
<NET-CHANGE-FROM-OPS> 36,123,348
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,863,298
<DISTRIBUTIONS-OF-GAINS> 6,909,728
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,300,538
<NUMBER-OF-SHARES-REDEEMED> 1,994,881
<SHARES-REINVESTED> 376,091
<NET-CHANGE-IN-ASSETS> 367,714
<ACCUMULATED-NII-PRIOR> 2,017,066
<ACCUMULATED-GAINS-PRIOR> 7,285,169
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,513,474
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 181,878,412
<PER-SHARE-NAV-BEGIN> 22.760
<PER-SHARE-NII> 0.122
<PER-SHARE-GAIN-APPREC> 4.028
<PER-SHARE-DIVIDEND> 0.240
<PER-SHARE-DISTRIBUTIONS> 0.890
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 25.780
<EXPENSE-RATIO> 1.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000809821
<NAME> DELAWARE GROUP EQUITY FUNDS V, INC.
<SERIES>
<NUMBER> 002
<NAME> VALUE FUND B CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 180,702,268
<INVESTMENTS-AT-VALUE> 212,965,687
<RECEIVABLES> 281,570
<ASSETS-OTHER> 133
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28,703
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 394,998
<TOTAL-LIABILITIES> 394,998
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 497,909
<SHARES-COMMON-PRIOR> 256,143
<ACCUMULATED-NII-CURRENT> 1,047,212
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 33,946,414
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 32,262,286
<NET-ASSETS> 12,730,350
<DIVIDEND-INCOME> 3,148,204
<INTEREST-INCOME> 850,063
<OTHER-INCOME> 0
<EXPENSES-NET> 2,980,568
<NET-INVESTMENT-INCOME> 1,017,699
<REALIZED-GAINS-CURRENT> 34,101,818
<APPREC-INCREASE-CURRENT> 1,003,831
<NET-CHANGE-FROM-OPS> 36,123,348
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 25,338
<DISTRIBUTIONS-OF-GAINS> 237,377
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 304,900
<NUMBER-OF-SHARES-REDEEMED> 74,607
<SHARES-REINVESTED> 11,473
<NET-CHANGE-IN-ASSETS> 367,714
<ACCUMULATED-NII-PRIOR> 2,017,066
<ACCUMULATED-GAINS-PRIOR> 7,285,169
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,513,474
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 8,999,453
<PER-SHARE-NAV-BEGIN> 22.590
<PER-SHARE-NII> (0.041)
<PER-SHARE-GAIN-APPREC> 4.006
<PER-SHARE-DIVIDEND> 0.095
<PER-SHARE-DISTRIBUTIONS> 0.890
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 25.780
<EXPENSE-RATIO> 2.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000809821
<NAME> DELAWARE GROUP EQUITY FUNDS V, INC.
<SERIES>
<NUMBER> 003
<NAME> VALUE FUND C CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 180,702,268
<INVESTMENTS-AT-VALUE> 212,965,687
<RECEIVABLES> 281,570
<ASSETS-OTHER> 133
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28,703
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 394,998
<TOTAL-LIABILITIES> 394,998
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 131,502
<SHARES-COMMON-PRIOR> 221
<ACCUMULATED-NII-CURRENT> 1,047,212
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 33,946,414
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 32,262,286
<NET-ASSETS> 3,359,552
<DIVIDEND-INCOME> 3,148,204
<INTEREST-INCOME> 850,063
<OTHER-INCOME> 0
<EXPENSES-NET> 2,980,568
<NET-INVESTMENT-INCOME> 1,017,699
<REALIZED-GAINS-CURRENT> 34,101,818
<APPREC-INCREASE-CURRENT> 1,003,831
<NET-CHANGE-FROM-OPS> 36,123,348
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 67
<DISTRIBUTIONS-OF-GAINS> 214
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 154,695
<NUMBER-OF-SHARES-REDEEMED> 23,427
<SHARES-REINVESTED> 13
<NET-CHANGE-IN-ASSETS> 367,714
<ACCUMULATED-NII-PRIOR> 2,017,066
<ACCUMULATED-GAINS-PRIOR> 7,285,169
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,513,474
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 1,540,409
<PER-SHARE-NAV-BEGIN> 22.760
<PER-SHARE-NII> (0.043)
<PER-SHARE-GAIN-APPREC> 4.003
<PER-SHARE-DIVIDEND> 0.280
<PER-SHARE-DISTRIBUTIONS> 0.890
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 25.550
<EXPENSE-RATIO> 2.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000809821
<NAME> DELAWARE GROUP EQUITY FUNDS V, INC.
<SERIES>
<NUMBER> 004
<NAME> VALUE FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 180,702,268
<INVESTMENTS-AT-VALUE> 212,965,687
<RECEIVABLES> 281,570
<ASSETS-OTHER> 133
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28,703
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 394,998
<TOTAL-LIABILITIES> 394,998
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 631,999
<SHARES-COMMON-PRIOR> 319,080
<ACCUMULATED-NII-CURRENT> 1,047,212
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 33,946,414
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 32,262,286
<NET-ASSETS> 16,373,171
<DIVIDEND-INCOME> 3,148,204
<INTEREST-INCOME> 850,063
<OTHER-INCOME> 0
<EXPENSES-NET> 2,980,568
<NET-INVESTMENT-INCOME> 1,017,699
<REALIZED-GAINS-CURRENT> 34,101,818
<APPREC-INCREASE-CURRENT> 1,003,831
<NET-CHANGE-FROM-OPS> 36,123,348
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 98,850
<DISTRIBUTIONS-OF-GAINS> 293,254
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 607,791
<NUMBER-OF-SHARES-REDEEMED> 312,634
<SHARES-REINVESTED> 17,762
<NET-CHANGE-IN-ASSETS> 367,714
<ACCUMULATED-NII-PRIOR> 2,017,066
<ACCUMULATED-GAINS-PRIOR> 7,285,169
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,513,474
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 10,808,117
<PER-SHARE-NAV-BEGIN> 22.860
<PER-SHARE-NII> 0.193
<PER-SHARE-GAIN-APPREC> 4.047
<PER-SHARE-DIVIDEND> 0.300
<PER-SHARE-DISTRIBUTIONS> 0.890
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 25.910
<EXPENSE-RATIO> 1.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
APPENDIX A
List of Funds and Their Classes
1. Delaware Group Delaware Fund, Inc.
Delaware Fund
Delaware Fund A Class
Delaware Fund B Class
Delaware Fund C Class
Delaware Fund Institutional Class
Devon Fund
Devon Fund A Class
Devon Fund B Class
Devon Fund C Class
Devon Fund Institutional Class
2. Delaware Group Trend Fund, Inc.
Trend Fund A Class
Trend Fund B Class
Trend Fund C Class
Trend Fund Institutional Class
3. Delaware Group Value Fund, Inc.
Value Fund A Class
Value Fund B Class
Value Fund C Class
Value Fund Institutional Class
4. Delaware Group DelCap Fund, Inc.
DelCap Fund A Class
DelCap Fund B Class
DelCap Fund C Class
DelCap Fund Institutional Class
5. Delaware Group Decatur Fund, Inc.
Decatur Income Fund
Decatur Income Fund A Class
Decatur Income Fund B Class
Decatur Income Fund C Class
<PAGE>
Decatur Income Fund Institutional Class
Decatur Total Return Fund
Decatur Total Return Fund A Class
Decatur Total Return Fund B Class
Decatur Total Return Fund C Class
Decatur Total Return Fund Institutional Class
6. Delaware Group Global & International Funds, Inc.
International Equity Series
International Equity Fund A Class
International Equity Fund B Class
International Equity Fund C Class
International Equity Fund Institutional Class
Global Bond Series
Global Bond Fund A Class
Global Bond Fund B Class
Global Bond Fund C Class
Global Bond Fund Institutional Class
Global Assets Series
Global Assets Fund A Class
Global Assets Fund B Class
Global Assets Fund C Class
Global Assets Fund Institutional Class
-2-
<PAGE>
Emerging Markets Series (Added May 1, 1996)
Emerging Markets Fund A Class
Emerging Markets Fund B Class
Emerging Markets Fund C Class
Emerging Markets Fund Institutional Class
7. Delaware Group Income Funds, Inc.
Strategic Income Fund (Added September 30, 1996)
Strategic Income Fund A Class
Strategic Income Fund B Class
Strategic Income Fund C Class
Strategic Income Fund Institutional Class
-3-
<PAGE>
APPENDIX A
List of Funds and Their Classes
1. Delaware Group Delaware Fund, Inc.
Delaware Fund
Delaware Fund A Class
Delaware Fund B Class
Delaware Fund C Class
Delaware Fund Institutional Class
Devon Fund
Devon Fund A Class
Devon Fund B Class
Devon Fund C Class
Devon Fund Institutional Class
2. Delaware Group Trend Fund, Inc.
Trend Fund A Class
Trend Fund B Class
Trend Fund C Class
Trend Fund Institutional Class
3. Delaware Group Equity Funds IV, Inc.
DelCap Fund
DelCap Fund A Class
DelCap Fund B Class
DelCap Fund C Class
DelCap Fund Institutional Class
Capital Appreciation Fund (Added November 29, 1996)
Capital Appreciation Fund A Class
Capital Appreciation Fund B Class
Capital Appreciation Fund C Class
Capital Appreciation Fund Institutional Class
4. Delaware Group Equity Funds V, Inc.
Value Fund
Value Fund A Class
Value Fund B Class
Value Fund C Class
Value Fund Institutional Class
<PAGE>
Retirement Income Fund (Added November 29, 1996)
Retirement Income Fund A Class
Retirement Income Fund B Class
Retirement Income Fund C Class
Retirement Income Fund Institutional Class
5. Delaware Group Decatur Fund, Inc.
Decatur Income Fund
Decatur Income Fund A Class
Decatur Income Fund B Class
Decatur Income Fund C Class
Decatur Income Fund Institutional Class
Decatur Total Return Fund
Decatur Total Return Fund A Class
Decatur Total Return Fund B Class
Decatur Total Return Fund C Class
Decatur Total Return Fund Institutional Class
6. Delaware Group Global & International Funds, Inc.
International Equity Series
International Equity Fund A Class
International Equity Fund B Class
International Equity Fund C Class
International Equity Fund Institutional Class
Global Bond Series
Global Bond Fund A Class
Global Bond Fund B Class
Global Bond Fund C Class
Global Bond Fund Institutional Class
Global Assets Series
Global Assets Fund A Class
Global Assets Fund B Class
Global Assets Fund C Class
Global Assets Fund Institutional Class
<PAGE>
Emerging Markets Series (Added May 1, 1996)
Emerging Markets Fund A Class
Emerging Markets Fund B Class
Emerging Markets Fund C Class
Emerging Markets Fund Institutional Class
7. Delaware Group Income Funds, Inc.
Strategic Income Fund (Added September 30, 1996)
Strategic Income Fund A Class
Strategic Income Fund B Class
Strategic Income Fund C Class
Strategic Income Fund Institutional Class