<PAGE>
Finacial Statements
Delaware Group Equity V, Inc. - Retirement Income Fund
Statement of Net Assets
May 31, 1997
(Unaudited)
-----------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
-------------------------
COMMON STOCK - 57.00%
AUTOMOBILES & AUTO PARTS - 2.97%
General Motors ..................................... 1,200 $ 68,700
---------
68,700
---------
BANKING, FINANCE & INSURANCE - 7.05%
Mellon Bank ........................................ 1,000 87,500
SunAmerica ......................................... 1,750 75,469
---------
162,969
---------
CHEMICALS - 3.30%
duPont(E.I.)deNemours .............................. 700 76,213
---------
76,213
---------
ENERGY - 2.57%
USX-Marathon Group ................................. 2,000 59,500
---------
59,500
---------
FOOD, BEVERAGE & TOBACCO - 4.57%
Philip Morris ...................................... 2,400 105,600
---------
105,600
---------
REAL ESTATE - 31.65%
* Alexandria Real Estate Equities .................... 3,000 66,000
Apartment Investment & Management .................. 1,800 50,175
Brandywine Realty Trust ............................ 2,000 40,500
Burnham Pacific Properties ......................... 5,000 66,250
Crescent Real Estate Equities ...................... 3,000 81,750
Excel Realty Trust ................................. 1,800 46,575
First Industrial Realty ............................ 1,700 50,150
Glenborough Realty Trust ........................... 2,500 54,375
Parkway Properties ................................. 1,400 35,175
* Patriot American Hospitality ....................... 4,000 86,500
Prentiss Properties Trust .......................... 3,000 70,500
Starwood Lodging Trust ............................. 2,250 83,813
---------
731,763
---------
UTILITIES - 2.46%
Unicom ............................................. 2,500 56,875
---------
56,875
---------
MISCELLANEOUS - 2.43%
Pitney Bowes ....................................... 800 56,200
---------
56,200
---------
Total Common Stock (cost $1,208,818) ............... 1,317,820
---------
CONVERTIBLE PREFERRED STOCK - 2.07%
CABLE, MEDIA & PUBLISHING - 0.46%
* Chancellor Radio Broadcast ......................... 100 10,775
---------
10,775
---------
REAL ESTATE - 1.61%
Insignia Financial conv pfd ........................ 800 37,200
---------
37,200
---------
Total Convertible Preferred Stock (cost $53,348) .. 47,975
---------
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- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------
CORPORATE BONDS - 34.61%
AUTOMOBILE & AUTOMOTIVE PARTS - 4.49%
Key Plastics sr sub nts 10.25% 03/15/07 .............. 25,000 $ 26,094
LDM Technologies sr sub nts
10.75% 01/15/07 ...................................... 25,000 26,375
Ryder Transportation sr sub nts
10.00% 12/01/06 ...................................... 50,000 51,375
----------
103,844
----------
BANKING, FINANCE & INSURANCE - 2.36%
Imperial Credit Industries sr nts
9.875% 01/15/07 ...................................... 25,000 24,813
Olympic Financial units 11.50% 03/15/07 ............ 30,000 29,850
----------
54,663
----------
BUILDING & MATERIALS - 3.37%
Atrium sr sub nts 10.50% 11/15/06 .................... 50,000 51,375
Clark Materials Handling
10.75% 11/15/06 ...................................... 25,000 26,438
----------
77,813
----------
CABLE, MEDIA & PUBLISHING - 2.00%
Hollinger International Publishing sr sub nts ........ 20,000 20,250
Von Hoffman Press sr sub nts
10.375% 05/15/07 ..................................... 25,000 26,000
----------
46,250
----------
CONSUMER PRODUCTS - 3.38%
Consumers International sr nts
10.25% 04/01/05 ...................................... 25,000 26,500
William Carter sr sub nts
10.375% 12/01/06 ..................................... 50,000 51,750
----------
78,250
----------
ELECTRONICS & ELECTRICAL EQUIPMENT - 2.02%
Fairchild Semiconductor sr sub nts
10.125% 03/15/07 ..................................... 20,000 20,700
HCC Industries sr sub nts
10.75% 05/15/07 ...................................... 25,000 26,063
----------
46,763
----------
ENERGY - 1.12%
Pride Petroleum Services sr nts 9.375% 05/01/07 ...... 25,000 25,938
----------
25,938
----------
FOOD, BEVERAGE AND TOBACCO - 1.54%
AFC Enterprises sr sub nts
10.25% 05/15/07 ...................................... 10,000 10,050
CFP Holdings sr nts 11.625% 01/15/04 ................. 25,000 25,563
----------
35,613
----------
<PAGE>
INDUSTRIAL MACHINERY - 4.22%
American Builders & Contractors sr sub nts
10.625% 05/15/07 ..................................... 25,000 25,750
Hawk sr nts 10.25% 12/01/03 ......................... 50,000 51,375
Nortek sr sub nts 9.25% 03/15/07 ..................... 20,000 20,350
----------
97,475
----------
LEISURE, LODGING & ENTERTAINMT - 2.12%
Trump-Atlantic City 1st mtg nts
11.25% 05/01/06 ...................................... 50,000 49,000
----------
49,000
----------
RETAIL - 4.63%
Fleming sr sub nts 10.625% 12/15/01 .................. 50,000 52,313
Ralphs Grocery sr nts 10.45% 06/15/04 ................ 50,000 54,813
----------
107,126
----------
<PAGE>
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------
MISCELLANEOUS - 3.36%
Loomis Fargo & Co sr sub nts
10.00% 01/15/04 .......................................... 25,000 $ 25,813
Motors and Gears sr nts 10.75% 11/15/06 .................. 50,000 51,813
----------
77,626
----------
Total Corporate Bonds(cost $743,006) ..................... 800,361
----------
CONVERTIBLE BONDS - 4.07%
BANKING, FINANCE & INSURANCE - 4.07%
First State Bancorp
7.50% 04/30/17 ........................................... 50,000 52,000
----------
52,000
----------
Total Convertible Bonds(cost $50,000) .................... 52,000
----------
REPURCHASE AGREEMENTS - 4.07%
With Chase Manhattan Bank 5.45% 6/2/97
(collateralized by $9,900 U.S. Treasury
Notes 6.25% due 7/31/98, market value
$10,205) .................................................$10,000 10,000
With J.P. Morgan Securities 5.50% 6/2/97
(collateralized by $28,000 U.S. Treasury Notes
5.125% due 2/28/98, market value
$28,592) ................................................. 28,000 28,000
With PaineWebber 5.50% 6/2/97
(collateralized by $18,000 U.S. Treasury Notes
5.625% due 11/30/98, market value
$18,373 and $10,000 U.S. Treasury Notes
5.625% due 11/30/00, market value
$10,206) ................................................. 28,000 28,000
With Prudential Securities 5.53% 6/2/97
(collateralized by $22,000 U.S. Treasury Notes
8.875% due 11/15/98, market value
$23,497 and $5,000 U.S. Treasury Notes
6.25% due 6/30/98, market value $5,110) .................. 28,000 28,000
----------
Total Repurchase Agreements (cost $94,000) 94,000
----------
TOTAL MARKET VALUE OF SECURITIES-
(cost $2,149,172) .................................... 2,312,156
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES ......................................... 13,255
----------
NET ASSETS APPLICABLE TO 236,564 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% ..................... $2,325,411
==========
NET ASSET VALUE - RETIREMENT INCOME FUND A CLASS
($1,297/ 132 shares) .................................... $ 9.83
==========
NET ASSET VALUE - RETIREMENT INCOME FUND B CLASS
($0/ 0 shares) .......................................... $ 0.00
==========
NET ASSET VALUE - RETIREMENT INCOME FUND C CLASS
($0/ 0 shares) .......................................... $ 0.00
==========
NET ASSET VALUE - RETIREMENT INCOME FUND INSTITUTIONAL CLASS
($2,324,114/ 236,432 shares) ............................ $ 9.83
==========
<PAGE>
COMPONENTS OF NET ASSETS AT MAY 31, 1997
Capital Stock, $ 1 par value, 200,000,000 shares
authorized to the Fund with 100,000,000 shares
allocated to Retirement Income Fund A
Class, 25,000,000 shares allocated to
Retirement Income Fund B Class, 25,000,000
shares allocated to Retirement Income
Fund C Class, 50,000,000
shares allocated to Retirement Income
Fund Institutional Class. .................................... $ 2,011,385
Accumulated undistributed:
Net investment income ........................................ 50,400
Net realized loss on investments ............................. 100,642
Net unrealized appreciation of investments ................... 162,984
------------
Total net assets $ 2,325,411
============
*Non-income producing security
See accompanying notes
<PAGE>
DELAWARE GROUP EQUITY FUNDS V, INC. -
RETIREMENT INCOME FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED MAY 31, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest .......................................... $ 40,166
Dividends ......................................... 28,532 $ 68,698
---------
EXPENSES:
Management fees ................................... 7,449
Professional fees ................................. 4,082
Custodian fees .................................... 3,918
Registration fees ................................. 1,996
Reports and statements to shareholders ............ 1,878
Directors' fees ................................... 975
Dividend disbursing and transfer agent
fees and expenses ................................ 660
Accounting fees and salaries ...................... 407
Taxes (other than taxes on income) ................ 88
Distribution expense .............................. 1
Other ............................................. 346
---------
21,800
Less expenses absorbed by Delaware Management
Company, Inc. .................................... (13,620) 8,180
--------- ---------
NET INVESTMENT INCOME ............................. 60,518
---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain from investment transactions .... 100,642
Net unrealized appreciation of investments
during the period .............................. 162,984
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS ................................. 263,626
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................................ $ 324,144
=========
See accompanying notes
<PAGE>
DELAWARE GROUP EQUITY FUNDS V, INC. -
RETIREMENT INCOME FUND
STAEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
- --------------------------------------------------------------------------------
12/2/96*
to
5/31/97
----------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income ........................................ $ 60,518
Net realized gain on investments ............................. 100,642
Net increase in unrealized appreciation ...................... 162,984
-----------
Net increase in net assets resulting
from operations .............................................. 324,144
-----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
Fund Name A Class ......................................... 0
Fund Name B Class ......................................... 0
Fund Name C Class ......................................... 0
Fund Name Institutional Class ............................. (10,118)
Net realized gain from security transactions:
Fund Name A Class ......................................... 0
Fund Name B Class ......................................... 0
Fund Name C Class ......................................... 0
Fund Name Institutional Class ............................. 0
-----------
(10,118)
-----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Fund Name A Class ......................................... 1,259
Fund Name B Class ......................................... 0
Fund Name C Class ......................................... 0
Fund Name Institutional Class ............................. 2,000,008
Net asset value of shares issued upon reinvestment
of dividends from net investment income and net
realized gain on security transactions:
Fund Name A Class ......................................... 0
Fund Name B Class ......................................... 0
Fund Name C Class ......................................... 0
Fund Name Institutional Class ............................. 10,118
-----------
2,011,385
-----------
Cost of shares repurchased:
Fund Name A Class ......................................... 0
Fund Name B Class ......................................... 0
Fund Name C Class ......................................... 0
Fund Name Institutional Class ............................. 0
-----------
0
-----------
Increase in assets derived from capital
share transactions ........................................ 2,011,385
-----------
NET INCREASE IN NET ASSETS ................................... 2,325,411
NET ASSETS:
Beginning of year ............................................ 0
-----------
End of year .................................................. $ 2,325,411
===========
*Date of commencement of trading
See accompanying notes
<PAGE>
DELAWARE GROUP EQUITY V, INC -
RETIREMENT INCOME FUND
FINANCIAL HIGHLIGHTS
MAY 31, 1997
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout the period was
as follows:
Retirement
Retirement Income Fund
Income Fund Institutional
A Class Class
--------------- -----------
12/2/96(1) 12/2/96(1)
to to
5/31/97 5/31/97
(Unaudited) (Unaudited)
Net asset value, beginning of period ............... $ 8.5000 $ 8.5000
Income from investment operations:
Net investment income (2) ....................... 0.2561 0.2561
Net realized and unrealized gain from investments 1.1169 1.1169
------ ------
Net increase in net assets from
investment operations ......................... 1.3730 1.3730
------ ------
Less dividends and distributions:
Dividends from net investment income ............ (0.0430 (0.0430)
Distributions from net realized gain on
security transactions ......................... -- --
------- -------
Total dividends and distributions ............... (0.0430 (0.0430)
------- -------
Net asset value, end of period ..................... $ 9.8300 $9.8300
======== =======
Total return (3) ................................... 16.21% 16.21%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ........ $ 1 $ 2,324
Ratio of expenses to average net assets ........ 0.75% 0.75%
Ratio of expenses to average net assets
prior to expense limitation .................. 2.01% 2.01%
Ratio of net investment income to average
net assets ................................... 5.58% 5.58%
Ratio of net investment income to average
net assets prior to expense limitation ....... 4.32% 4.32%
Portfolio turnover ............................. 191% 191%
Average commission rate paid (4) ............... $ 0.06 $ 0.06
- ---------------------------------------
(1) Date of commencement of trading; ratios and total return have been
annualized.
(2) The average shares outstanding method has been applied for per share
infomation.
(3) Does not include 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 of A Class shares.
(4) Computed by dividing the total amount of commissions paid by the total
number of shares purchased and sold during the period for which there was a
commission charged.
See accompanying notes
<PAGE>
DELAWARE GROUP EQUITY FUNDS V, INC. -
RETIREMENT INCOME FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
Delaware Group Equity Funds V, Inc. - Retirement Income Fund (The "Fund") is
registered as a diversified open-end investment company under the Investment
Company Act of 1940, as amended. The Fund is organized as a Maryland Corporation
and offers four classes of shares.
The Fund's objective is to seek to provide investors with high current income
and an investment that has the potential for capital appreciation.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund:
Security Valuation- Securities listed on an exchange are valued at the lasted
quoted sales price as of the close of the NYSE 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. Securities listed on a foreign exchange are
valued at the last quoted sales price before the Fund is valued. Long-term debt
securities are valued by an independent pricing service and such prices are
believed to reflect the fair value of such securities. Money market instruments
having less than 60 days to maturity are valued at amortized cost which
approximates market value. Other securities and assets for which market
quotations are not readily available are valued at fair value as determined in
good faith by or under the direction of the Fund's Board of Directors.
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 has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations which may differ from generally
accepted accounting principles.
Class Accounting- Investment income, common expenses and realized and unrealized
gain (loss) on investments 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.
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
<PAGE>
maturity of the respective repurchase agreements. Each repurchase agreement is
at least 100% collateralized. However, in the event of default or bankruptcy by
the counterparty to the agreement, realization of the collateral may be subject
to legal proceedings.
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. Foreign dividends are also recorded on the ex-dividend date or as
soon after the ex-dividend date that the Fund is aware of such dividends, net of
all non-rebatable tax withholdings. Original issue discounts are accreted to
interest income over the lives of the respective securities.
Certain Fund expenses are paid through "soft dollar" arrangements with brokers.
The amount of these expenses is less than 0.01% of the Fund's average daily net
assets.
Use of Estimates- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
3. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company, Inc. (DMC), the Investment Manager of the
Fund, an annual fee which is calculated daily at the annual rate of .65% on the
average daily net assets of the Fund less the fees paid to the unaffiliated
directors.
DMC has elected to waive that portion if any of the management fee and reimburse
the Fund to the extent that annual operating expenses exclusive of taxes,
interest, brokerage commissions and extraordinary expenses, exceed 0.75% of
average daily net assets of the Fund through May 31, 1997. Total expenses
absorbed by DMC for the period ended May 31, 1997 were $13,620.
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 period ended May 31, 1997, the Fund expensed $660 for
dividend disbursing and transfer agent services and $317 for accounting
services. At May 31, 1997, the Fund had a liability for such fees and other
expenses payable to DSC for $907.
<PAGE>
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. (DDLP), the Distributor and an 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 and C Class. DDLP has elected voluntarily to
waive its right to receive the annual fee from the commencement of the public
offering of the Classes through May 31, 1997.
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Fund. These officers, directors and employees are paid no compensation by
the Fund.
3. Investments
During the period ended May 31, 1997, the Fund made purchases of $3,986,933 and
sales of $2,032,403 of investment securities other than U.S. government
securities and temporary cash investments.
At May 31, 1997, the aggregate cost of securities for federal income tax
purposes was $2,149,172.
At May 31, 1997, unrealized appreciation for federal income tax purposes
aggregated $162,984 of which $169,531 related to unrealized appreciation of
securities and $6,547 related to unrealized depreciation of securities.
4. Capital Stock
12/2/96*
to
5/31/97
--------
Shares sold:
Retirement Income Fund A Class ............................... 132
Retirement Income Fund B Class ............................... 0
Retirement Income Fund C Class ............................... 0
Retirement Income Fund Institutional Class ................... 235,295
-------
Shares issued upon reinvestment of
dividends from net investment income
and net realized gains from security
transactions:
Retirement Income Fund A Class ............................... 0
Retirement Income Fund B Class ............................... 0
Retirement Income Fund C Class ............................... 0
<PAGE>
Retirement Income Fund Institutional Class ................... 1,137
-------
236,564
-------
Shares repurchased:
Retirement Income Fund A Class ............................... 0
Retirement Income Fund B Class ............................... 0
Retirement Income Fund C Class ............................... 0
Retirement Income Fund Institutional Class ................... 0
-------
................................................................ 0
-------
Net Increase .................................................... 236,564
=======
5. Concentrations of Credit Risk
Some countries in which the Fund may invest require governmental approval for
the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
temporary restrictions on foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially smaller,
less liquid and more volatile than the major securities markets in the United
States. Consequently, acquisition and disposition of securities by the Fund may
be inhibited. In addition, a significant proportion of the aggregate market
value of equity securities listed on the major securities exchanges in emerging
markets are held by a smaller number of investors. This may limit the number of
shares available for acquisition or disposition of the Fund.
The Fund may invest in high-yield fixed income securities which carry ratings of
BB or lower by S&P and/or Ba or lower by Moody's. Investments in these higher
yielding securities may be accompanied by a greater degree of credit risk than
higher rated securities. Additionally, lower rated securities may be more
susceptible to adverse economic and competitive industry conditions than
investment grade securities.
The Fund may invest in securities whose value is derived from an underlying pool
of mortgages or consumer loans. Prepayment of these loans may shorten the stated
maturity of the respective obligation and may result in a loss of premium, if
any has been paid.
The Fund may invest up to 15% of its total assets in illiquid securities which
may include securities with contractual restrictions on resale, securities
exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, and other securities which may not be readily marketable. The relative
illiquidity of some of these securities may adversely affect the Fund's ability
to dispose of such securities in a timely manner and at a fair price when it is
necessary to liquidate such securities. These securities, if any, have been
denoted in the Statement of Net Assets.
