<PAGE>
For Growth of Capital
DELAWARE GROUP
Value Fund
(Various photos demonstrating service and guidance, professional
management and goals)
service and guidance
professional management
1996
Annual
Report
goals
DELAWARE
GROUP
============
<PAGE>
(Various photos demonstrating service and guidance, professional management and
goals inserted here)
professional management
professional management
MORE THAN 68 YEARS OF INVESTMENT EXPERIENCE
has taught us that disciplined strategies and prudent risk management are a
sound approach to any market environment.
goals
goals
WHATEVER YOUR GOALS, the years ahead will be shaped by choices you make today.
Delaware offers many options that can be an appropriate part of a sound
investment plan.
service and
guidance
service and guidance
DELAWARE BELIEVES THAT THE GUIDANCE of a professional financial adviser is vital
to your long-term success. We are committed to providing you and your adviser
with the highest quality information and service.
<PAGE>
(Photo of glasses, pen and keyboard inserted here)
A Commitment To Our Investors
The Delaware Group investing tradition dates back to 1929. We have a long and
distinguished history of helping individuals and institutions - including some
of America's largest pension funds - reach their financial goals.
Headquartered in Philadelphia a block from the nation's oldest stock
exchange, Delaware Group's first mutual fund was established in 1938. Delaware
International Advisers Ltd., our international affiliate, was established in
1990 and is headquartered in London.
Delaware Group offers a full range of mutual funds. We also manage annuity
investments and closed-end funds, and offer retirement plan services for
individuals and businesses.
Delaware manages more than $32 billion in mutual fund assets and
institutional advisory accounts for nearly half-a-million investors. We're part
of a global financial services and investment management business owned by
Lincoln National Corp., whose subsidiaries manage more than $100 billion in
assets.
growth of capital
A TRADITION OF SOUND INVESTING
(Photo of illustrations from growth of capital brochure inserted here)
Value Fund Objective
VALUE FUND
To seek capital appreciation by investing primarily in common stocks whose
market values appear low relative to their underlying value or future potential.
commitment
<PAGE>
- --------------------------------------------------------------------------------
D E C E M B E R 9 , 1 9 9 6
Dear Shareholder:
[Photo of Wayne A. Stork, Chairman]
VALUE FUND'S DISCIPLINED
INVESTMENT HELPED IT OUTPACE
COMPARABLE MUTUAL FUNDS AND THE
RUSSELL 2000 INDEX DURING THE
FUND'S FISCAL YEAR.
THE 1996 FISCAL YEAR WAS BOTH REWARDING AND VOLATILE for the stocks of small
companies. It was a time that tested the stock selection skills of portfolio
managers and highlighted the need for a disciplined investment strategy.
Delaware Group's Value Fund, which focuses on small companies we believe
are undervalued, provided a +19.08% total return for the 12 months ended
November 30, 1996, (capital change plus income based on net asset value for A
Class shares).
Your Fund outpaced the unmanaged Russell 2000 Index by more than 290 basis
points (2.9%) for the fiscal year and did so with less short-term price
fluctuation than the Index, as shown on page 5.
We are also pleased to report that for its lifetime period, Value Fund has
outdistanced both the Russell 2000 and the Lipper Capital Appreciation Fund
Average. As you'll see on page 2, this includes funds whose managers use both
growth and value styles of investing.
Several factors played a role in this year's strong market results.
Earnings at many U.S. companies were better than expected. Inflation remained
low. Regulatory and political threats that could have negatively affected some
industries never materialized.
After a robust advance in the spring, small company growth stocks those
businesses for which the market has high expectations - withered amid July's
blistering market correction. Value stocks - the shares of companies from which
the market expects less - delivered superior results by year's end. It was a
classic story of tortoises beating hares.
Early in the year, many investors were attracted to initial public
offerings of small and medium-size technology companies. The stocks of smaller
companies in less glamorous, more cyclical businesses generally did not attract
as much attention. In some instances, however, they provided greater price
appreciation.
1996 annual report
1
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
- ------------------------------------------------------------------------------------------------------------------
12 Months ended From June 24, 1987+
November 30, 1996 To November 30, 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Value Fund A Class +19.08% +14.69%
- ------------------------------------------------------------------------------------------------------------------
Russell 2000 Index +16.11% +10.44%
- ------------------------------------------------------------------------------------------------------------------
Lipper Capital Appreciation Fund Average +18.05% (185 Funds) +10.99% (61 Funds)
</TABLE>
Value Fund performance and the Lipper Capital Appreciation Fund Average are
based on net asset value without effect of sales charges and assume reinvestment
of dividends and capital gains. Past performance does not guarantee future
results. Performance information for all Value Fund classes can be found on page
8. The Russell 2000 Index consists of 2000 small to mid-size companies and is
unmanaged. +Inception date
Most small technology companies did not meet Value Fund's investment criteria
in 1996, and your Fund benefited from being underweighted in this volatile area.
David C. Dalrymple, your Fund's portfolio manager, positioned the portfolio in a
diverse range of industrial, financial and service businesses that he considered
attractively priced.
Inside, Mr. Dalrymple reviews what contributed to the Fund's strong relative
returns and shares his outlook for the coming months. Generally, we believe we
are entering a time of more subdued U.S. economic growth, a period when stock
"value" relative to historical norms will become more important than "growth"
expectations.
Five years into the current bull market, some investors may wonder whether
there's any "value" left to be found in stocks. Let me assure you that there is,
especially among certain smaller companies.
In recent months, we've seen a narrowing of market leadership in favor of
large cap stocks, a situation which our experience suggests cannot be sustained.
In the months ahead, we believe more investors will realize that a small cap
value approach makes sense as a component of a well-balanced investment plan.
We believe Value Fund can play an important role in many asset allocation
strategies you develop with the help of your financial adviser. We thank you for
the confidence you have expressed in Delaware Group.
Sincerely,
/s/ Wayne A. Stork
- ------------------
Wayne A. Stork
Chairman, President and Chief Executive Officer
dicipline
1996 annual report
2
<PAGE>
Portfolio Manager's Review
[Photo of David C. Dalrymple]
FISCAL 1996 WILL BE REMEMBERED as a year of contrasts. The first half was marked
by concerns about accelerating U.S. economic growth, rising interest rates, and
strong performance by many small cap growth stocks.
Beginning in the summer, the market turned on its head. Fear of rising
consumer prices was replaced with confidence that the Federal Reserve Board's
monetary policy had created the best of all possible worlds - a climate of
steady, moderate growth and tame inflation.
OUR GOAL IS TO DISTINGUISH BETWEEN COMPANIES THAT ARE "CHEAP" AND THOSE WHOSE
MANAGEMENT IS IMPROVING SHAREHOLDER VALUE IN WAYS LIKELY TO PROMPT MARKET
ATTENTION.
In this environment, small cap value stocks began to do well, while many
small cap growth stocks failed to recover from July's market setback. The strong
relative showing of small cap value companies was overshadowed by the ebullient
performance of large cap stocks - as measured by the unmanaged Standard & Poor's
500 Index.
This advance in larger company stock prices reflected post-election
expectations of a better federal regulatory climate, lower interest rates and
more government fiscal restraint. We believe the S&P 500 Index's march could
prompt more investors to seek opportunities in small cap stocks that are
undervalued.
VALUE VS. GROWTH STOCKS
Generally, a "value" stock is one whose price is at a historical discount
relative to some financial measure - profits, book value, cash flow or other
indicators. Earnings expectations for a "value" company are typically more
modest than expectations for its industry or the overall stock market.
<TABLE>
<CAPTION>
Portfolio Highlights
- -----------------------------------------------------------------------------------------------------------------------
November 30, 1995 November 30, 1996
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Number of Stocks 114 88
Median Market Capitalization $432 million $484 million
Median Stock
Price-to-Earnings Ratio 15.9x 12.5x
Weighted Average Price-to-Book Ratio 191% 174%
Dividend Yield (before Fund expenses) 1.23% 1.70%
Beta* 0.65 0.69
</TABLE>
The above yield represents the weighted average dividend yield of the Fund's
holdings exclusive of transaction costs. Value Fund does not pay a regular
dividend, but may distribute income generated by the Fund's holdings, typically
at year's end. P/E based on analysts' earnings estimates for 1997 as reported by
I/B/E/S. *A measure of volatility relative to the S&P 500 Index for the past
three years ended November 30. A number less than 1.0 means a security has
fluctuated less in price than the Index. A number more than 1.0 means the
security has fluctuated more than the Index.
3
1996 annual report
<PAGE>
GLOSSARY
- ---------
[Photo of keyboard inserted here]
P/E RATIO
The current price of a stock
divided by either past or
forecasted earnings per share.
MARKET CAPITALIZATION
The price of a stock times the
number of shares outstanding. It
represents what investors think the
company is worth at a given point
in time.
SMALL CAP STOCKS
Stocks with a market capitalization
of $750 million or less.
PRICE-TO-BOOK RATIO
A stock's price relative to its book
value or net worth per share.
CASH FLOW
How much money a company takes in
running its business.
TURNOVER
Indicates trading activity over the
past year.
Investors hope a "value" company's stock price will rise as the company's
earnings improve and as more investors recognize the company's long-term
potential.
Investors generally expect a "growth" company's earnings and revenue
prospects to be better than the U.S. economy as a whole. A "growth" stock, thus,
is one whose price relative to some financial measure may be higher than the
market overall.
Value Fund's portfolio contains many stocks whose price relative to the
company's book value - that is, the company's net worth for accounting purposes
- - is much lower than the price-to-book ratio of stocks in the S&P 500 Index. We
believe this difference is an indicator of price appreciation potential.
INVESTMENT STRATEGY
The market capitalization of Value Fund's holdings at the fiscal year's end
ranged from $77 million to $1.9 billion, putting us well within the small to
mid-cap stock universe. Generally, we're attracted to companies whose stocks are
trading near the low end of their historical valuations. Our goal is to
distinguish between companies that are "cheap" and those whose management is
improving shareholder returns in
YOUR FUND'S DIVERSE HOLDINGS
(November 30, 1996)
Value Chart Data
Capital Goods 11.4%
Basic Industry 13.7%
Business Services 4.1%
Consumer Goods 7.2%
Consumer Services 7.0%
Energy 8.8%
Financial Services 16.2%
Health Care 5.5%
Technology 7.5%
Utilities 3.6%
REITS 9.7%
Cash 5.3%
strategy
At year's end, shares in financial, basic industry and capital goods companies
represented a little more than 40% of net assets, a much higher percentage than
many small cap funds.
4
1996 annual report
<PAGE>
ways we believe are likely to prompt market attention. Our research efforts
include:
* Examining sales and earnings prospects relative to competitors. We
tend to avoid businesses likely to face prolonged operating challenges.
* Measuring value with yardsticks appropriate to each industry. For example, a
stock's price relative to book value is a tool that's often used to evaluate an
insurance company because of the industry's relatively slow growth rate. Our
largest holding in this industry was ENHANCE FINANCIAL SERVICES.
For consumer service companies such as WABAN INC., price relative to
earnings or cash flow may be a better indicator of value. That's because other
than real estate and inventory, a retailer generally has few "hard" assets.
*Using dividend yield to evaluate banks, Real Estate Investment Trusts (REITs)
and utilities.
* Finding at least one performance catalyst, preferably more,
that will both attract investor attention to a company and drive future
earnings.
One of your Fund's largest holdings - MESABA HOLDINGS - is an example of
a company that we believe has several catalysts at work. Mesaba is a commuter
airline that profitably operates Northwest Airlines' Airlink service. As of this
writing, it was adding new planes, cutting costs and improving service to small
cities in Midwestern states.
Catalysts we look for include:
1. new management or products;
2. a possible spin-off of assets; and,
3. an external development such as a change in government policy.
VALUE FUND'S PERFORMANCE
AMID SHORT-TERM MARKET VOLATILITY
Value Fund's Performance Amid Short-Term Market Volatility
Percentage Change in Net Asset Value
December 1, 1995 to November 30, 1996
Value Fund
A Russell 2000 Index
NASDAQ Industrial Index
<PAGE>
Delaware Value Fund Russell 2000 Index NASDAQ Industrial Index
Dec. 1 '95 0 % 0 % 0 %
Dec. 8 '95 1.01 % 0.62 % -0.52%
Dec. 15 ' 95 0.53 % 0.31 % -2.77%
Dec. 22 '95 1.05 % 0.94 % -1.79%
Dec. 29 ' 95 2.15 % 2.17 % -0.31%
Jan. 5 '96 1.09 % 0.95 % -1.83%
Jan. 12 '96 -0.89% -1.3 % -4.5 %
Jan. 19 '96 -1.08% -1.25% -4.18%
Jan. 26 '96 0.77 % 0.68 % -1.41%
Feb. 2 '96 3.67 % 2.82 % 1.65 %
Feb. 9 '96 4.27 % 3.95 % 3.06 %
Feb. 16 '96 4.18 % 4.15 % 3.2 %
Feb. 23 '96 4.96 % 5.51 % 5.08 %
Mar. 1 '96 4.73 % 5.01 % 3.47 %
Mar. 8 '96 3.44 % 3.49 % 1.76 %
Mar. 15 '96 4.41 % 5.45 % 4.81 %
Mar. 22 '96 5.83 % 6.89 % 5.84 %
Mar. 29 '96 6.39 % 7.37 % 6.04 %
Apr. 5 '96 7.68 % 8.69 % 7.87 %
Apr. 12 '96 6.76 % 7.54 % 7.21 %
Apr. 19 '96 8.23 % 9.94 % 10.23%
Apr. 26 '96 9.2 % 12.98% 15.41%
May 3 '96 8.6 % 12.7 % 15.75%
May 10 '96 9.57 % 14.12% 17.84%
May 17 '96 11.73% 17.25% 21.89%
May 24 '96 12.47% 18.55% 23.33%
May 31 '96 11.69% 17.69% 22.58%
Jun. 7 '96 11.59% 16.74% 20.28%
Jun. 14 '96 10.72% 15.57% 18.79%
Jun. 21 '96 9.8 % 12.37% 13.99%
Jun. 28 '96 10.76% 12.89% 15.02%
Jul. 5 '96 9.52 % 10.68% 12.53%
Jul. 12 '96 7.31 % 5.48 % 6.21 %
Jul. 19 '96 6.57 % 4.79 % 5.21 %
Jul. 26 '96 4.59 % 2.54 % 2.64 %
Aug. 2 '96 6.71 % 5.8 % 6.08 %
Aug. 9 '96 7.72 % 6.82 % 6.83 %
Aug. 16 '96 8.05 % 7.34 % 6.92 %
Aug. 23 '96 9.01 % 8.29 % 8.05 %
Aug. 30 '96 9.84 % 9.02 % 8.94 %
Sep. 6 '96 9.8 % 9.11 % 8.44 %
Sep. 13 '96 11.59% 11.36% 11.99%
Sep. 20 '96 10.72% 12.05% 13.59%
Sep. 27 '96 11.13% 12.99% 14.86%
Oct. 4 '96 12.52% 14.25% 15.53%
Oct. 11 '96 11.78% 13.84% 14.87%
Oct. 18 '96 12.15% 13.84% 14.4 %
Oct. 25 '96 11.59% 12.26% 12.71%
Nov. 1 '96 11.82% 11.26% 11.27%
Nov. 8 '96 13.48% 12.86% 13.5 %
Nov. 15 '96 14.82% 13.55% 14.37%
Nov. 22 '96 16.57% 14.68% 14.55%
Nov. 29 '96 18.78% 16.09% 15.8 %
During the year, a period of increased market volatility, your Fund provided
higher returns with generally less price fluctuation than two unmanaged
benchmarks of the small cap market.
Past performance does not guarantee future results. The NASDAQ Industrial Index
is an unmanaged benchmark that tracks the performance of industrial companies
traded on the NASDAQ market.
5
1996 annual report
<PAGE>
HOW WE REPOSITIONED
THE PORTFOLIO
During the year, we made some substantial changes in your Fund's portfolio that
we believe have positioned it to benefit from the more value-oriented stock
market that we see emerging in the late 1990s. We significantly reduced the
number of our holdings, strictly adhered to a discipline based on fundamental
measures of value, and sold many "winners" that no longer met our investment
parameters.
We did have a few disappointments in the health maintenance organization
area. For example, we sold our position in MidAtlantic Medical Services, a
Baltimore-area HMO that had been one of last year's top 10 holdings, at a modest
loss after it became clear that fundamental changes were negatively affecting
the company's profits.
Though we maintain a long-term investment philosophy, in fiscal 1996, we
"cashed in" stocks whose price risk had increased as the market rose to
unparalleled heights. That included financial, capital goods and energy stocks.
Thus your Fund's portfolio turnover and capital gain payouts in December 1996
were larger than in recent years.
We used the proceeds of our sales to move into areas we believe offer
superior long-term capital appreciation potential. At the same time, we reduced
the Fund's cash position to 5.3% as of November 30, 1996, half what it was a
year earlier.
The positive effect of our strategy can be seen in the chart on page 5.
By year's end, we were able to achieve higher returns with less
- -------------------------------------------------------------------------------
Value Fund's Buy/Sell Discipline at Work
LINCARE AND THE MEDICARE SCARE
Knowing when to sell a stock is as important as knowing when to buy. Sometimes
avoiding "falling in love" with a stock can be tough because value stocks can
turn into hard-to-resist growth stocks, as investor interest rises and the
company's share price relative to earnings or other measures rises. Value Fund
begins to sell when:
* A company's share price exceeds our objective;
* Investor confidence is exceedingly high; and,
* A stock's price relative to technical indicators no longer defines it as a
value stock.
Let's look at an example. In the summer of 1995, we purchased shares of
Lincare Holdings Inc., a Florida-based company whose main business is to deliver
oxygen at home to people with chronic ailments.
In our opinion, Lincare's share price was temporarily depressed. The Clinton
Administration had proposed reducing benefits for this service as part of a
bipartisan effort to cut ballooning Medicare costs. Since oxygen services
provide nearly half of Lincare's revenues, this proposal, taken at face value,
threatened the company's business.
Upon closer examination, we concluded that the market had overreacted. We
believed that the proposal would either meet the same fate as the
Administration's other health initiatives - be defeated in Congress - or at
worst, be enacted in a less Draconian reform. Lincare
- -------------------------------------------------------------------------------
6
1996 annual report
<PAGE>
price volatility than either the Russell 2000 Index or the NASDAQ Industrial
Index, two measures of the small cap market.
Generally, our willingness to sell stocks that reached our price targets
in 1996 reflected our belief that prices of individual securities move in
cycles. As Will Rogers once observed, "Even if you're on the right track, you'll
get run over if you just sit there."
INVESTMENT OUTLOOK
Over the years, Value Fund's small cap style has allowed the Fund to
achieve a relatively lower level of price volatility than many comparable equity
funds (as measured by Beta on page 3). It's one reason why we believe our
approach may be especially effective in the current market environment.
Although owning fewer stocks can lead to higher portfolio volatility, we
remain well-diversified and we believe our value focus leaves us well-positioned
for the year ahead.
We do not anticipate major changes in the Fund's industry sector
weightings in 1997. Value Fund continues to find well-managed companies whose
stocks are trading at what we believe are discount prices.
As mentioned earlier, we believe the market will broaden its focus as
investors realize that smaller, underfollowed companies may offer greater
capital appreciation potential than the stocks of larger, widely watched
companies. In investing as in life, the road less traveled can be a more
interesting and even more rewarding path.
DAVID C. DALRYMPLE
Vice President
and Senior Portfolio Manager
December 9, 1996
- -------------------------------------------------------------------------------
also appeared to be diversifying into other businesses.
The measure of value we used to evaluate Lincare was the stock's price
relative to earnings (P/E). As shown in the chart to the right, Lincare's P/E
fell from about 21x to less than 14x in 1995, when we made our purchase. We then
sold a substantial portion of our holdings in 1996 as the company's stock price
rebounded.
Lincare Holdings Inc.
Stock Price and P/E 1995-96
<TABLE>
<CAPTION>
Lincare Stock Price
P/E High Low
<S> <C> <C> <C>
Jan. 6 '95 $20.278 $29.25 $27.25
Jan. 13 '95 $19.537 $27.75 $25.75
Jan. 20 '95 $19.12 $27.75 $24.75
Jan. 27 '95 $19.444 $26.75 $24.5
Feb. 3 '95 $21.481 $29.5 $25.5
Feb. 10 '95 $22.037 $30.5 $27.75
Feb. 17 '95 $19.259 $30.25 $26
Feb. 24 '95 $20.185 $27.5 $24.25
Mar. 3 '95 $20.185 $28.25 $26.75
Mar. 10 '95 $20.37 $28.25 $26.75
Mar. 17 '95 $20.556 $28.25 $27.25
Mar. 24 '95 $20.926 $28.25 $27.75
Mar. 31 '95 $20.017 $31.25 $27.25
Apr. 7 '95 $20.101 $30.5 $28.75
Apr. 14 '95 $19.51 $30.25 $28
Apr. 21 '95 $21.537 $35.25 $28.75
Apr. 28 '95 $20.861 $33 $27.5
May 5 '95 $18.919 $31.5 $28
May 12 '95 $17.399 $30.375 $25.25
May 19 '95 $19.51 $29 $25.25
May 26 '95 $18.412 $29 $27.125
Jun. 2 '95 $18.412 $27.25 $26.25
Jun. 9 '95 $18.412 $28.625 $26.5
Jun. 16 '95 $18.581 $28.75 $26.5
Jun. 23 '95 $18.37 $29.75 $26.25
Jun. 30 '95 $16.498 $28 $26.25
Jul. 7 '95 $15.839 $26.875 $25.125
Jul. 14 '95 $17.857 $29 $23.75
Jul. 21 '95 $17.857 $29.25 $28
Jul. 28 '95 $20.031 $32.75 $28.75
Aug. 4 '95 $21.661 $35.25 $32.5
Aug. 11 '95 $21.273 $35.25 $34.25
Aug. 18 '95 $21.118 $35 $32.5
Aug. 25 '95 $18.012 $33 $28.5
<PAGE>
Sep. 1 '95 $17.547 $30.25 $26.5
Sep. 8 '95 $18.012 $29.25 $27.5
Sep. 15 '95 $17.43 $29 $27.75
Sep. 22 '95 $16.693 $28.25 $25.5
Sep. 29 '95 $15.327 $28 $25.25
Oct. 6 '95 $15.402 $27.25 $21
Oct. 13 '95 $15.179 $26.5 $24
Oct. 20 '95 $14.955 $26.25 $23.5
Oct. 27 '95 $14.583 $26 $24.25
Nov. 3 '95 $16.592 $28.25 $24.5
Nov. 10 '95 $14.137 $28 $22.5
Nov. 17 '95 $15.03 $25.5 $22.25
Nov. 24 '95 $14.546 $25.25 $24.125
Dec. 1 '95 $16.815 $28.5 $24.25
Dec. 8 '95 $16.295 $28.5 $27.25
Dec. 15 '95 $15.03 $27.875 $24.5
Dec. 22 '95 $14.732 $25.5 $24.25
Dec. 29 '95 $13.966 $25.25 $24.75
Jan. 5 '96 $14.595 $26.375 $24.75
Jan. 12 '96 $14.665 $26.75 $25.25
Jan. 19 '96 $14.944 $27 $24.5
Jan. 26 '96 $14.106 $27 $24
Feb. 2 '96 $15.782 $28.75 $24.75
Feb. 9 '96 $17.039 $30.75 $27.25
Feb. 16 '96 $17.336 $32.5 $30
Feb. 23 '96 $17.318 $32.25 $30.5
Mar. 1 '96 $17.877 $32.5 $30.5
Mar. 8 '96 $17.598 $34 $31.25
Mar. 15 '96 $17.467 $32.25 $31.25
Mar. 22 '96 $17.947 $32.5 $31.25
Mar. 29 '96 $17.016 $32.75 $31.75
Apr. 5 '96 $18.325 $35.25 $32.25
Apr. 12 '96 $19.961 $38.5 $33.5
Apr. 19 '96 $19.241 $38.75 $36.5
Apr. 26 '96 $20.615 $40.25 $36.5
May 3 '96 $19.11 $39.75 $36.5
May 10 '96 $20.419 $40.5 $36.5
May 17 '96 $21.335 $41.5 $39
May 24 '96 $21.073 $41.25 $39.375
May 31 '96 $19.764 $40.5 $37
Jun. 7 '96 $22.775 $43.5 $37.75
Jun. 14 '96 $21.204 $42.75 $39.25
Jun. 21 '96 $20.942 $41 $38.25
Jun. 28 '96 $19.146 $40.25 $37.5
Jul. 5 '96 $17.927 $39.25 $36.25
Jul. 12 '96 $17.439 $37.75 $34
Jul. 19 '96 $18.78 $39.75 $34.25
Jul. 26 '96 $18.415 $40.75 $37.25
Aug. 2 '96 $19.634 $40.75 $37.25
Aug. 9 '96 $19.878 $43.75 $39.5
Aug. 16 '96 $20.366 $42 $39.75
Aug. 23 '96 $18.049 $41.75 $36.25
Aug. 30 '96 $18.201 $39.5 $36.25
Sep. 6 '96 $18.415 $37.75 $34.75
Sep. 13 '96 $20 $41.5 $37.375
Sep. 20 '96 $20.61 $42.25 $41
Sep. 27 '96 $19.39 $42.25 $39.5
Oct. 4 '96 $18.049 $40.25 $37.5
Oct. 11 '96 $16.928 $40.25 $37.75
Oct. 18 '96 $16.928 $38.25 $36.75
Oct. 25 '96 $16.48 $38.75 $36
Nov. 1 '96 $16.48 $38 $36.75
Nov. 8 '96 $15.387 $37 $34.25
Nov. 15 '96 $15.919 $36.5 $34.25
Nov. 22 '96 $16.48 $37.5 $35.5
Nov. 29 '96 $17.825 $40 $35.75
Source: Bloomberg Business News.
</TABLE>
P/E is Low Signals Buy Opportunity
P/E Rises Signals Sell
7
1996 annual report
<PAGE>
Value Fund:
A History of Superior Results
VALUE FUND'S
LIFETIME PERFORMANCE
Growth of a $10,000 Investment
June 24, 1987 through November 30, 1996
Lipper Capital
Delaware Value A Appreciation Fund Average Russell
2000
Jun. '87 $10,000 $10,000 $10,000
Nov. '87 $8,121 $7,617 $6,844
Nov. '88 $11,010 $9,130 $8,895
Nov. '89 $14,892 $11,776 $10,707
Nov. '90 $12,487 $10,460 $8,323
Nov. '91 $17,932 $13,551 $11,699
Nov. '92 $22,056 $15,954 $14,461
Nov. '93 $26,153 $18,656 $17,198
Nov. '94 $25,424 $18,660 $17,005
Nov. '95 $30,602 $24,423 $21,855
Nov. '96 $36,440 $28,820 $25,469
Value Fund A (with reinvestment of distributions)
Russell 2000 Index
Lipper Capital Appreciation Fund Average (xx funds)
Since it began operating on June 24, 1987, Value Fund has outpaced both the
Russell 2000 Index, a broad unmanaged portfolio of small and mid-cap stocks, and
the Lipper Capital Appreciation Fund Average, a group of mutual funds that use
both growth and value investment styles.
Chart assumes $10,000 invested on June 24, 1987, and includes the effect of
the 4.75% sales charge and the reinvestment of all dividends and capital
gains. Performance of other classes of Value Fund will vary due to differing
charges and expenses.
VALUE FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURN THROUGH NOVEMBER 30, 1996
Lifetime Five Years One Year
Class A (Est.1987) +14.10% +14.13% +13.40%
Class B (Est.1994)
Excluding sales charge +14.20% +18.26%
Including sales charge +13.05% +14.26%
Class C (Est.1995)
Excluding sales charge +19.43% +18.23%
Including sales charge +19.43% +17.23%
- --------------------------------------------------------------------------------
Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share value will fluctuate so that shares when
redeemed may be worth more or less than the original cost. Past performance is
not a guarantee of future results. B and C Class results "excluding sales
charge" assume investment was not redeemed.
Class A shares, initially offered June 24, 1987, reflect the effect of a 4.75%
maximum sales charge and a 12b-1 fee.
Class B shares, initially offered May 2, 1994, do not carry a front-end sales
charge, but are subject to a 1% annual distribution and service fee. They are
also subject to a deferred sales charge of up to 4%.
Class C shares, initially offered November 29, 1995, have a 1% annual
distribution and service fee. If redeemed within 12 months, a 1% contingent
deferred sales charge applies.
The average annual total returns for Value Fund's Institutional Class, which is
available without sales or asset-based distribution charges only to certain
eligible institutional accounts, were +14.84%, +15.53% and +19.45%,
respectively, for the lifetime, five-year and one-year periods ended November
30, 1996. The Institutional Class was initially made available on November 9,
1992. Performance of this class prior to this date is based on A Class
performance, adjusted to eliminate the sale charges, but not the asset-based
distribution charge.
8
1996 annual report
<PAGE>
Financial Statements
DELAWARE GROUP EQUITY FUNDS V, INC. -
VALUE FUND
STATEMENT OF NET ASSETS/NOVEMBER 30, 1996
- --------------------------------------------------------------------------------
Number Market
of shares value
COMMON STOCK -- 94.75%
Aerospace & Defense -- 1.17%
Thiokol ........................................ 57,300 $ 2,635,800
-----------
2,635,800
-----------
AUTOMOBILES & AUTO PARTS -- 3.98%
Arvin Industries ............................... 117,400 2,788,250
Clarcor ........................................ 109,100 2,400,200
Exide .......................................... 83,300 2,124,150
Titan Wheel International ...................... 123,300 1,633,725
-----------
8,946,325
-----------
BANKING, FINANCE & INSURANCE -- 16.18%
*Americredit .................................... 120,900 2,402,888
Enhance Financial Services Group ............... 86,200 2,952,350
Everest Reinsurance Holdings ................... 87,470 2,460,094
*Farm Family Holdings ........................... 93,400 1,832,975
*Financial Federal .............................. 148,700 2,249,088
First American (Tennessee) ..................... 46,300 2,644,888
Horace Mann Educators .......................... 68,600 2,589,650
Keystone Financial ............................. 91,650 2,468,822
ONBANCorp ...................................... 67,000 2,579,500
PMI Group ...................................... 38,500 2,233,000
PartnerRe Limited .............................. 66,900 2,174,250
Penncorp Financial Group ....................... 70,200 2,413,125
Roosevelt Financial Group ...................... 122,500 2,350,469
Titan Holdings ................................. 150,290 2,254,350
Union Planters ................................. 66,500 2,751,438
-----------
36,356,887
-----------
BUILDINGS & MATERIALS -- 0.91%
Continental Homes Holdings ..................... 100,100 2,052,050
-----------
2,052,050
-----------
CABLE, MEDIA & PUBLISHING -- 4.47%
Cadmus Communications .......................... 139,800 2,315,438
*Carmike Cinemas-Class A ........................ 111,300 3,032,925
*Devon Group .................................... 83,000 2,064,625
Standard Register .............................. 93,000 2,627,250
-----------
10,040,238
-----------
CHEMICALS-- 2.87%
Ferro .......................................... 75,800 2,188,725
*Scotts ......................................... 112,600 2,040,875
*Synthetic Industries ........................... 160,800 2,231,100
-----------
6,460,700
-----------
ELECTRONICS & ELECTRICAL -- 7.47%
*BURR-BROWN ..................................... 127,200 3,291,300
*HUTCHINSON TECHNOLOGY .......................... 61,200 3,258,900
*KEMET .......................................... 142,700 3,273,181
- ----------
Top 10 holdings, representing 14.99% of net assets, are printed in blue.
<PAGE>
Number Market
of shares value
COMMON STOCK (Continued)
ELECTRONICS & ELECTRICAL (Continued)
Kuhlman ......................................... 139,200 $ 2,453,400
*Micro Linear .................................... 348,500 2,232,578
*Rexel ........................................... 163,800 2,272,725
-----------
16,782,084
-----------
ENERGY -- 8.77%
*Belco Oil & Gas ................................. 94,600 2,696,100
*Belden & Blake .................................. 57,750 1,465,406
Cross Timbers Oil ............................... 106,700 2,560,800
*OFFSHORE LOGISTICS .............................. 192,500 3,874,063
*Pool Energy Services ............................ 208,200 3,083,963
*Seacor Holdings ................................. 20,500 1,296,625
*TransTexas Gas .................................. 182,600 2,510,750
Valero Energy ................................... 74,000 2,220,000
-----------
19,707,707
-----------
FOOD, BEVERAGE & TOBACCO -- 2.37%
DiMon ........................................... 116,300 2,413,225
Schweitzer-Mauduit International ................ 88,400 2,917,200
-----------
5,330,425
-----------
HEALTHCARE & PHARMACEUTICALS -- 5.47%
*Lincare Holdings ................................ 59,400 2,353,725
*Marquette Medical Systems Class A ............... 104,100 1,938,863
*Maxicare Health Plans ........................... 99,700 2,068,775
Owens & Minor ................................... 187,400 1,944,275
*Regency Health Services ......................... 247,200 2,595,600
*Sunrise Medical ................................. 96,400 1,385,750
-----------
12,286,988
-----------
INDUSTRIAL MACHINERY -- 10.97%
*ABC Rail Products ............................... 120,300 2,360,888
*Central Sprinkler ............................... 67,700 1,260,913
Columbus McKinnon ............................... 117,100 1,807,731
*Global Industries Technology .................... 116,400 2,386,200
GREENFIELD INDUSTRIES ........................... 112,700 3,268,300
IDEX ............................................ 59,000 2,323,125
Keystone International .......................... 120,100 2,341,950
Regal-Beloit .................................... 122,500 2,373,438
TriMas .......................................... 90,900 2,306,588
Varlen .......................................... 99,185 1,996,098
Watts Industries ................................ 101,600 2,222,500
-----------
24,647,731
-----------
LEISURE, LODGING & ENTERTAINMENT -- 2.19%
*Ascent Entertainment Group ...................... 137,600 2,253,200
*Hollywood Park .................................. 231,300 2,674,406
-----------
4,927,606
-----------
9
1996 annual report
<PAGE>
STATEMENT OF NET ASSETS (CONTINUED)
Number of Market
Shares Value
COMMON STOCK (Continued)
METALS & MINING -- 0.70%
Century Aluminum .............................. 102,800 $ 1,580,550
-----------
1,580,550
-----------
PAPER & FOREST PRODUCTS -- 3.90%
Caraustar Industries .......................... 74,600 2,536,400
Chesapeake .................................... 66,200 2,019,100
Glatfelter (P.H.) ............................ 124,700 2,275,775
Rayonier ...................................... 49,900 1,933,625
-----------
8,764,900
-----------
REAL ESTATE -- 9.71%
CALI REALTY ................................... 110,600 3,124,450
Developers Diversified Realty ................. 75,700 2,545,413
Duke Realty Investments ....................... 67,200 2,410,800
*Prentiss Properties Trust ..................... 106,200 2,376,225
Public Storage ................................ 107,600 2,730,350
Reckson Associates Realty ..................... 80,800 3,060,300
ROC Communities ............................... 85,900 2,126,025
STARWOOD LODGING TRUST ........................ 72,100 3,442,775
-----------
21,816,338
-----------
RETAIL -- 1.37%
*Waban ......................................... 116,300 3,067,413
-----------
3,067,413
-----------
TEXTILES, APPAREL & FURNITURE -- 2.63%
Kellwood ...................................... 148,800 2,678,400
PILLOWTEX ..................................... 186,700 3,243,913
-----------
5,922,313
-----------
TRANSPORT & SHIPPING -- 6.04%
Airborne Freight .............................. 94,600 2,033,900
*Landstar Systems .............................. 91,600 2,089,625
*M.S. Carriers ................................. 135,300 2,536,875
*MESABA HOLDINGS ............................... 286,500 3,796,125
USFREIGHTWAYS ................................. 120,500 3,125,469
-----------
13,581,994
-----------
UTILITIES -- 3.58%
Central Hudson Gas & Electric ................. 70,200 2,123,550
Mid American Energy ........................... 107,600 1,600,550
Public Service Company of New Mexico .......... 107,600 2,057,850
Sierra Pacific Resources ...................... 79,500 2,275,688
-----------
8,057,638
-----------
Total Common Stock (cost $180,702,268) ........ 212,965,687
-----------
<PAGE>
Number of Market
Shares Value
REPURCHASE AGREEMENTS -- 5.30%
With Chase Manhattan 5.60% 12/2/96
(dated 11/29/96, collaterized by
$4,047,000 U.S. Treasury Notes 6.125%
due 8/31/98 market value $4,141,352) ............ 4,047,000 $4,047,000
With PaineWebber 5.60% 12/2/96
(dated 11/29/96, collaterized by
$3,955,000 U.S. Treasury Notes 6.125%
due 8/31/98 market value $4,046,775) ............ 3,964,000 3,964,000
With J.P. Morgan Securities 5.60% 12/2/96
(dated 11/29/96, collaterized by
$3,249,000 U.S. Treasury Notes 6.375%
due 3/31/01 market value $3,347,806
and $634,000 U.S. Treasury Notes 5.75%
due 10/31/00 market value $635,714) ............. 3,899,000 3,899,000
----------
Total Repurchase Agreements
(cost $11,910,000) ............................. 11,910,000
----------
TOTAL MARKET VALUE OF SECURITIES -- 100.05%
(cost $192,612,268)................................ 224,875,687
LIABILITIES NET OF RECEIVABLES AND OTHER
ASSETS -- (0.05%) ................................. (115,223)
-------------
NET ASSETS APPLICABLE TO 8,719,887 SHARES
($.01 par value) OUTSTANDING 100% ................ $224,760,464
=============
NET ASSET VALUE VALUE FUND A CLASS
($192,297,391/ 7,458,477 shares)................... $25.78
=======
NET ASSET VALUE VALUE FUND B CLASS
($12,730,350/ 497,909 shares)...................... $25.57
=======
NET ASSET VALUE VALUE FUND C CLASS
($3,359,552/ 131,502 shares) ...................... $25.55
=======
NET ASSET VALUE VALUE FUND INSTITUTIONAL CLASS
($16,373,171/631,999 shares) ...................... $25.91
=======
COMPONENTS OF NET ASSETS AT NOVEMBER 30, 1996:
Common stock, $.01 par value, 500,000,000 shares
authorized to the Fund with 150,000,000 shares
allocated to Value Fund A Class, 100,000,000
shares allocated to Value Fund B Class,
50,000,000 shares allocated to Value Fund
C Class, and 50,000,000 shares allocated
to Value Fund Institutional Class ................. 157,504,552
Accumulated undistributed:
Net investment income. . . ........................ 1,047,212
Net realized gain on investments. 33,946,414
Net unrealized appreciation of investments and
foreign currencies ............................... 32,262,286
------------
Total net assets................................... $224,760,464
============
- ------------
*Non-income producing security for the year ended November 30, 1996
See accompanying notes.
10
1996 annual report
<PAGE>
Delaware Group Equity Funds V, Inc.-
Value Fund
Statement of Operations
Year Ended November 30, 1996
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Dividends.............................................. $3,148,204
Interest............................................... 850,063 $3,998,267
------------
EXPENSES:
Management fees ($1,513,474)
and directors' fees ($10,936)......................... 1,524,410
Distribution expenses.................................. 651,336
Dividend disbursing and transfer
agent fees and expenses............................... 495,752
Reports and statements to shareholders................. 80,794
Registration fees...................................... 69,537
Accounting fees and salaries........................... 58,136
Professional fees...................................... 29,913
Taxes, other than taxes on income...................... 29,811
Custodian fees......................................... 11,974
Other.................................................. 28,905 2,980,568
------------ -----------
NET INVESTMENT INCOME.................................. 1,017,699
-----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain from security transactions and
foreign currencies.................................... 34,101,818
Net unrealized appreciation of investments and
foreign currency during the period ................... 1,003,831
------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS........................................ 35,105,649
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................................... $36,123,348
============
NET ASSET VALUE AND OFFERING PRICE PER SHARE VALUE
FUND A CLASS:
Net asset value per share (A).......................... $25.78
Sales charge (4.75% of offering price, or 5.01%
of amount invested per share) (B)..................... 1.29
------
Offering price......................................... $27.07
======
</TABLE>
------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See Purchasing Shares in the current Prospectus for purchases of $100,000
or more.
See accompanying notes
<PAGE>
Delaware Group Equity Funds V, Inc.-
Value Fund
Statement of Changes in Net Assets
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
11/30/96 11/30/95
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income..................................... $1,017,699 $2,250,870
Net realized gain from security transactions and
foreign currencies....................................... 34,101,818 7,254,850
Net unrealized appreciation of investments
during the period........................................ 1,003,831 24,932,006
----------- -----------
Net increase in net assets resulting from operations...... 36,123,348 34,437,726
----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income:
Value Fund A Class....................................... (1,863,298) (1,473,989)
Value Fund B Class....................................... (25,338) (13,005)
Value Fund C Class....................................... (67) _
Value Fund Institutional Class........................... (98,850) (74,067)
Net realized gain from security transactions:
Value Fund A Class....................................... (6,909,728) (2,306,541)
Value Fund B Class....................................... (237,377) (21,675)
Value Fund C Class....................................... (214) _
Value Fund Institutional Class........................... (293,254) (86,125)
----------- -----------
(9,428,126) (3,975,402)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Value Fund A Class....................................... 30,362,508 53,057,497
Value Fund B Class....................................... 7,098,090 4,607,799
Value Fund C Class....................................... 3,631,712 5,030
Value Fund Institutional Class........................... 14,113,802 4,893,677
Net asset value of shares issued upon reinvestment of
dividends from net investment income and net realized
gain from security transactions:
Value Fund A Class....................................... 8,292,572 3,572,237
Value Fund B Class....................................... 252,413 32,715
Value Fund C Class....................................... 282 _
Value Fund Institutional Class........................... 392,342 160,192
----------- -----------
64,143,721 6,329,147
----------- -----------
Cost of shares repurchased:
Value Fund A Class....................................... (46,585,878) (87,750,505)
Value Fund B Class....................................... (1,736,866) (998,195)
Value Fund C Class....................................... (564,409) _
Value Fund Institutional Class........................... (7,288,901) (5,283,529)
----------- -----------
(56,176,054) (94,032,229)
----------- -----------
Increase (Decrease) in net assets derived
from capital share transactions ......................... 7,967,667 (27,703,082)
----------- -----------
NET INCREASE IN NET ASSETS 34,662,889 2,759,242
NET ASSETS:
Beginning of period....................................... 190,097,575 187,338,333
----------- -----------
End of period (including undistributed
net investment income of $1,047,212 and
$2,017,066, respectively)................................ $224,760,464 $190,097,575
============ ============
</TABLE>
11
See accompanying notes
1996 annual report
<PAGE>
Delaware Group Equity Funds V, Inc.
Value Fund
Notes to Financial Statements
November 30, 1996
- -------------------------------------------------------------------------------
Delaware Group Equity Funds V, Inc. - Value Fund, formerly known as Delaware
Group Value Fund, Inc. ("the Fund") is registered as a diversified open-end
investment company under the Investment Company Act of 1940. The Fund is
organized as a Maryland corporation and offers four classes of shares.
The investment objective of the Value Fund is to seek capital appreciation. The
Fund's strategy is to invest primarily in equities with market values that, in
the manager's opinion, appear low relative to their underlying value or future
earnings and growth potential.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund:
Security Valuation - Securities listed on an exchange are valued at the last
quoted sales price as of 4:00 pm EST on the valuation date. Securities not
traded or securities not listed on an exchange are valued at the mean of the
last quoted bid and asked prices. Long-term debt securities are valued by an
independent pricing service when such prices are believed by the Board of
Directors to reflect the fair value of such securities. Money market instruments
having less than 60 days to maturity are valued at amortized cost which
approximates market value.
Federal Income Taxes - The Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes is required in the financial
statements.
Repurchase Agreements - The Fund may invest in a pooled cash account along with
other members of the Delaware Group of Funds. The aggregate daily balance of the
pooled cash account is invested in repurchase agreements secured by obligations
of the U.S. government. The respective collateral is held by the Fund's
custodian bank until the maturity of the respective repurchase agreements. Each
repurchase agreement is 100% collateralized. However, in the event of default or
bankruptcy by the counterparty to the agreement, realization of the collateral
may be subject to legal proceedings.
Class Accounting - Investment income, common expenses, and gain (loss) are
allocated to the various classes of the Fund on the basis of daily net assets of
each class. Distribution expenses relating to a specific class are charged
directly to that class.
Foreign Currencies - The value of all assets and liabilities denominated in
foreign currencies are translated into U.S. dollars at the exchange rate of such
currencies against the U.S. dollar as of 3:00 pm EST. Forward foreign currency
contracts are valued at the mean between the bid and asked prices of the
contracts. Interpolated values are derived when the settlement date of the
contract is an interim date for which quotations are not available.
Other - Expenses common to all Funds within the Delaware Group of Funds are
allocated amongst the funds on the basis of average net assets. Security
transactions are recorded on the date the securities are purchased or sold
(trade date). Costs used in calculating realized gains and losses on the sale of
investment securities are those of the specific securities sold. Dividend income
is recorded on the ex-dividend date and interest income is recorded on the
accrual basis. Original issue discounts are accreted to interest income over the
lives of the respective securities.
<PAGE>
Certain fund expenses are paid directly by brokers. The amount of these expenses
is less than 0.01% of the Fund's average net assets.
The Fund declared distributions of $3.90 per share for all classes from net
realized gain from security transactions and $0.135 and $0.205 per share for
Value Fund A Class and Value Fund Institutional Class, respectively, from net
investment income, payable on December 27, 1996, to shareholder of record
December 19, 1996. The ex-dividend date was December 20, 1996.
2. Investment Management and Distribution Agreements
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company, Inc. (DMC), the Investment Manager of the
Fund, an annual fee which is calculated daily at the annual rate of 0.75% of the
average daily net assets of the Fund less fees paid to the independent
directors. At November 30, 1996, the Fund had a liability for Investment
Management fees and other expenses payable to DMC for $48,828.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. (DDLP), the Distributor and affiliate of DMC an annual fee not to exceed
0.30% of the average daily net assets of the A Class and 1.00% of the average
daily net assets of the B Class and the C Class. No distribution expenses are
paid by the Institutional Class. At November 30, 1996, the Fund had a liability
for distributions fees and other expenses payable to DDLP for $11,952. For the
year ended November 30, 1996, the Fund paid DDLP $66,438 for commissions earned
on sales of Value Fund A Class shares.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to serve as dividend disbursing and transfer agent for the Fund. Effective
August 19, 1996, the Fund also engaged DSC to provide accounting services for
the Fund. Previously, Fund personnel provided this service and the related costs
were recorded in salaries and other expense categories in the Statement of
Operations. For the year ended November 30, 1996, the Fund expensed $495,752 for
dividend disbursing and transfer agent services and $16,025 for accounting
services. At November 30, 1996, the Fund had a liability for such fees and other
expenses payable to DSC for $7,786.
Certain officers of DMC are officers, directors, and/or employees of the Fund.
These officers, directors and employees are paid no compensation by the Fund.
3. Investments
During the year ended November 30, 1996, the Fund made purchases of $168,609,606
and sales of $130,317,159 of investment securities other than U.S. government
securities and temporary cash investments.
At November 30, 1996, the federal income tax cost basis of the Fund's
investments were $192,612,268 and, accordingly, net unrealized appreciation for
federal income tax purposes aggregated $32,263,419 of which $36,950,804 related
to unrealized appreciation of securities and $4,687,385 related to unrealized
depreciation of securities.
The realized gain for federal income tax purposes was $34,102,608 for the year
ended November 30, 1996.
12
1996 annual report
<PAGE>
4. Capital Stock
Transactions in capital stock shares of the Fund were as follows:
Year Year
Ended Ended
11/30/96 11/30/95
---------- ----------
Shares sold:
Value Fund A Class..................... 1,300,538 2,698,238
Value Fund B Class..................... 304,900 227,700
Value Fund C Class..................... 154,695 221
Value Fund Institutional Class......... 607,791 232,840
Shares issued upon reinvestment
of dividends from net investment
income and distributions of net realized
gain from security transactions:
Value Fund A Class..................... 376,091 190,919
Value Fund B Class..................... 11,473 1,750
Value Fund C Class..................... 13 _
Value Fund Institutional Class......... 17,762 8,548
---------- ----------
2,773,263 3,360,216
---------- ----------
Share repurchased:
Value Fund A Class..................... (1,994,881) (4,401,949)
Value Fund B Class..................... (74,607) (48,686)
Value Fund C Class..................... (23,427) _
Value Fund Institutional Class......... (312,634) (251,372)
---------- ----------
(2,405,549) (4,702,007)
---------- ----------
Net Increase (decrease)................. 367,714 (1,341,791)
========== =========
5. Lines of Credit
The Fund has a committed line of credit for $2.55 million. No amount was
outstanding at November 30, 1996, or at any time during the last fiscal year.
13
1996 annual report
<PAGE>
Notes to Financial Statements (Continued)
------------------------------------------------------------------------------
6. Financial Highlights
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Value Fund
A Class
---------------------------------------------------------------------------------
Year Ended November 30,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................ $22.760 $19.320 $20.070 $17.750 $15.320
Income (loss) from investment operations:
Net investment income(1)........................... 0.122 0.253 0.142 0.033 0.060
Net realized and unrealized gain (loss)
from security transactions........................ 4.028 3.597 (0.687) 3.147 3.360
------- ------- ------ ------- -------
Total from investment operations.................... 4.150 3.850 (0.545) 3.180 3.420
------- ------- ------ ------- -------
Less distributions:
Dividends from net investment income............... (0.240) (0.160) (0.035) (0.040) none
Distributions from net realized gain on
security transactions............................. (0.890) (0.250) (0.170) (0.820) (0.990)
------- ------- ------ ------- -------
Total distributions................................. (1.130) (0.410) (0.205) (0.860) (0.990)
------- ------- ------ ------- -------
Net asset value, end of period...................... $25.780 $22.760 $19.320 $20.070 $17.750
======= ======= ======= ======= =======
Total return(2)..................................... 19.08% 20.39% (2.78%) 18.59% 22.99%
Ratios/supplemental data:
Net assets, end of period (000 omitted)............ $192,297 $177,011 $179,498 $151,384 $38,792
Ratio of expenses to average net assets............ 1.45% 1.48% 1.46% 1.64% 1.93%
Ratio of net investment income to average
net assets........................................ 0.51% 1.18% 0.75% 0.25% 0.39%
Portfolio turnover................................. 87% 65% 14% 32% 68%
Average commission rate paid....................... $0.06 N/A N/A N/A N/A
</TABLE>
------------------
(1) The year-ended November 30, 1996, per share information was based on the
average shares outstanding method.
(2) Does not include current maximum sales charge of 4.75% nor the 1% limited
contingent deferred sales charge that would apply in the event of certain
redemptions within 12 months of purchase.
14
1996 annual report
<PAGE>
Notes to Financial Statements (Continued)
6. Financial Highlights (Continued)
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Value Fund Value Fund
B Class C Class
- --------------------------------------------------------------------------------------------------------------
Year Year 9/6/94(1) Year 11/29/95(2)
Ended Ended to Ended to
11/30/96 1/30/95 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 (loss) income(3)........ (0.041) 0.141 0.011 (0.043) none
Net realized and unrealized gain (loss)
from security transactions ........... 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 net realized gain
on security transactions............. (0.890) (0.250) none (0.890) 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(4)......................... 18.26% 19.55% (4.83%) 18.23% 5
Ratios/supplemental data:
Net assets, end of period
(000 omitted)....................... $12,730 $5,788 $1,455 $3,360 $ 5
Ratio of expenses to
average net assets.................. 2.15% 2.18% 2.16% 2.15% 5
Ratio of net investment
income to average net assets........ (0.19%) 0.48% 0.05% (0.19%) 5
Portfolio turnover................... 87% 65% 14% 87% 5
Average commission rate paid............ $0.06 N/A N/A $0.06 N/A
<PAGE>
Value Fund
Institutional Class
------------------------------------------------------------------
Year Year Year Year 11/9/92(1)
Ended Ended Ended Ended to
11/30/96 11/30/95 11/30/94 11/30/93 11/30/92
Net asset value, beginning of period.... $22.860 $19.400 $20.140 $17.750 $17.090
Income from investment operations:
Net investment (loss) income(3)........ 0.193 0.297 0.195 0.092 0.004
Net realized and unrealized gain (loss)
from security transactions ........... 4.047 3.628 (0.685) 3.158 0.656
------- ------- ------- ------- -------
Total from investment operations....... 4.240 3.925 (0.490) 3.250 0.660
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income.. (0.300) (0.215) (0.080) (0.040) none
Distributions from net realized gain
on security transactions............. (0.890) (0.250) (0.170) (0.820) none
------- ------- ------- ------- -------
Total distributions................... (1.190) (0.465) (0.250) (0.860) none
------- ------- ------- ------- -------
Net asset value, end of period.......... $25.910 $22.860 $19.400 $20.140 $17.750
======= ======= ======= ======= =======
Total return(4)......................... 19.45% 20.76% (2.51%) 19.00% 3.86%
Ratios/supplemental data:
Net assets, end of period
(000 omitted)....................... $16,373 $7,294 $ 6,385 $ 5,476 $ 1,558
Ratio of expenses to
average net assets.................. 1.15% 1.18% 1.16% 1.34% 1.63%
Ratio of net investment
income to average net assets........ 0.81% 1.48% 1.05% 0.55% 0.69%
Portfolio turnover................... 87% 65% 14% 32% 68%
Average commission rate paid............ $0.06 N/A N/A N/A N/A
</TABLE>
- ------------------
(1) Date of initial public offering; ratios have been annualized total return
has not been annualized.
(2) Date of initial public offering.
(3) The year-ended November 30, 1996, per share information was based on the
average shares outstanding method.
(4) Does not include the contingent deferred sales charge which varies from 1% -
4% depending upon the holding period for Value Fund B Class and 1% for Value
Fund C Class depending upon the holding period.
(5) The ratios of expenses and net investment income to average net assets,
portfolio turnover and total return have been omitted as management believes
that such ratios and returns for this relatively short period are not
meaningful.
15
1996 annual report
<PAGE>
Delaware Group Equity Funds V, Inc.-
Value Fund
Report of Independent Auditors
- -------------------------------------------------------------------------------
To the Shareholders and Board of Directors
Delaware Group Equity Funds V, Inc. -- Value Fund
We have audited the accompanying statement of net assets of Delaware Group
Equity Funds V, Inc. -- Value Fund (the "Fund"), as of November 30, 1996, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Group Equity Funds V, Inc. -- Value Fund at November 30, 1996, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated therein, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Philadelphia, Pennsylvania
January 13, 1997
16
1996 annual report
<PAGE>
DELAWARE GROUP OF FUNDS
For Growth of Capital
Trend Fund
Enterprise Fund
DelCap Fund
Value Fund
U.S. Growth Fund
For Total Return
Devon Fund
Decatur Total Return Fund
Decatur Income Fund
Delaware Fund
For International Diversification
Emerging Markets Fund
New Pacific Fund
World Growth Fund
International Equity Fund
Global Assets Fund
Global Bond Fund
For Current Income
Delchester Fund
Strategic Income Fund
Corporate Income Fund
Federal Bond Fund
U.S. Government Fund
Limited-Term Government Fund
For Tax-Free Current Income
Tax-Free Pennsylvania Fund
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
Money Market Funds
Delaware Cash Reserve
U.S. Government Money Fund
Tax-Free Money Fund
Closed-End Income*
Dividend and Income Fund
Global Dividend and Income Fund
*Listed on the New York Stock Exchange
funds
(Picture of keyboard here)
<PAGE>
This report must be preceded or accompanied by a current Value Fund prospectus
and the Delaware Group Fund Performance Update for the most recently completed
calendar quarter. For a prospectus of any other Delaware Group fund, contact
your financial adviser or Delaware Group.
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions Representatives Only
1.800.659.2265
[Photo of globe here]
DELAWARE
GROUP
=====================
Philadelphia o London
Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan; however, shares of the Fund are
not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union,
and involve investment risk, including the possible loss of principal. Shares of
the Fund are not bank or credit union deposits.
Copy Rights Delaware Distributors, L.P.
Printed in the USA on recycled paper
AR-021[11/96]TKO1/97
(Z-59)
<PAGE>
This annual report is for the information of Value Fund shareholders, but it may
be used with prospective investors when preceded or accompanied by a current
Prospectus for Value Fund, which sets forth details about charges, expenses,
investment objectives and operating policies of the Fund. You should read the
prospectus carefully before you invest. Summary investment results are
documented in the Fund's current Statement of Additional Information. The
figures in this report represent past results which are not a guarantee of
future results. The return and principal value of an investment in the Fund will
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
Board of Directors
Wayne A. Stork
Chairman, President and Chief Executive Officer
Delaware Group of Funds
Philadelphia, PA
Walter P. Babich
Board Chairman, Citadel Constructors, Inc.
King of Prussia, PA
Anthony D. Knerr
Consultant, Anthony Knerr & Associates
New York, NY
Ann R. Leven
Treasurer, National Gallery of Art
Washington, DC
W. Thacher Longstreth
City Councilman
Philadelphia, PA
Charles E. Peck
Secretary/Treasurer, Enterprise Homes, Inc.
Fredericksburg, VA
Affiliated Officers
George M. Chamberlain, Jr.
Senior Vice President and Secretary,
Delaware Group of Funds
Philadelphia, PA
David K. Downes
Senior Vice President, Chief Financial Officer
and Chief Administrative Officer
Delaware Group of Funds
Philadelphia, PA
Bruce D. Barton
President and CEO,
Delaware Distributors, L.P.
Philadelphia, PA
[Photo of globe here]
directors & officers
<PAGE>
- -------------------------------------------------------------------------------
Investment Manager
Delaware Management Company, Inc.
Philadelphia, Pennsylvania
International Affiliate
Delaware International Advisers Ltd.
London, England
National Distributor
Delaware Distributors, L.P.
Philadelphia, Pennsylvania
Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
Philadelphia, Pennsylvania
1818 Market Street
Philadelphia, PA 19103-3682
