<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. 19 /X/
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AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 19
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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, 1998
----------------
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
------
on (date) pursuant to paragraph (b)
------
60 days after filing pursuant to paragraph (a)(1)
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X on January 29, 1998 pursuant to paragraph (a)(1)
------
75 days after filing pursuant to paragraph (a)(2)
------
on (date) pursuant to paragraph (a)(2) of Rule 485
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Title of Securities Being Registered
------------------------------------
Small Cap Value Fund A Class, Small Cap Value Fund B Class, Small Cap Value
Fund C Class, Small Cap Value Fund Institutional Class, Retirement Income Fund
A Class, Retirement Income Fund B Class, Retirement Income
Fund C Class, Retirement Income Fund Institutional Class
<PAGE>
--- C O N T E N T S ---
This Post-Effective Amendment No. 19 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
*This Post-Effective Amendment relates to the Registrant's 2 series of shares
and their classes: Small Cap Value Fund (formerly known as Value Fund) - Small
Cap Value Fund A Class, Small Cap Value Fund B Class, Small Cap Value Fund C
Class and Small Cap Value Fund Institutional Class and Retirement Income Fund
- - Retirement Income Fund A Class, Retirement Income Fund B Class, Retirement
Income Fund C Class and Retirement Income Fund Institutional Class. Shares of
each Series are described in separate prospectuses, however, they share a
common Statement of Additional Information and Part C. The Registrant's
Retirement Income Fund A Class, B Class and C Class Prospectus and Retirement
Income Fund Institutional Class Prospectus each dated January 29, 1997 are
incorporated into this filing by reference to the electronic filing of those
Prospectuses made pursuant to Rule 485(b) on January 28, 1997. The Supplement
dated April 30, 1997 (revised September 3, 1997) to the Retirement Income Fund
A Class, B Class and C Class Prospectus is incorporated into this filing by
reference to the electronic filing of the Supplement made pursuant to Rule
497(e) on April 30, 1997.
<PAGE>
CROSS-REFERENCE SHEET
PART A
<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ----------- ------------
Small Cap Value 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 and
Policies; Shares; Policies, Shares;
Other Investment Other Investment
Policies and Risk Policies and Risk
Considerations Considerations
5 Management of the Fund ............................................. Management of Management of
the Fund the Fund
6 Capital Stock and Other Securities ................................. The Delaware Dividends and
Difference; Dividends Distributions;
and Distributions; Taxes; Shares;
Taxes; Shares
7 Purchase of Securities Being Offered................................ Cover Page; Cover Page;
Classes of Shares; Classes of Shares;
How to Buy Shares; How to Buy
Calculation of Shares;
Offering Price Calculation of Net
and Net Asset Asset Value Per
Value Per Share; Share;
Management of Management of
the Fund the Fund
</TABLE>
<PAGE>
CROSS-REFERENCE SHEET
PART A
(Continued)
<TABLE>
<CAPTION>
Location in
Item No. Description Prospectuses
- -------- ----------- ------------
Small Cap Value Fund
A Class/ Institutional
B Class/ Class
C Class
<S> <C> <C> <C>
8 Redemption or Repurchase............................................ Classes of Classes of
Shares; How to Shares; How to
Buy Shares; Buy Shares;
Redemption Redemption
and Exchange 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 and
Policies; Shares; Policies; Shares;
Other Investment Other Investment
Policies and Risk Policies and Risk
Considerations Considerations
5 Management of the Fund ............................................. Management Management
of the Fund of the Fund
6 Capital Stock and Other Securities ................................. The Delaware Dividends
Difference; and
Dividends and Distributions;
Distributions; Taxes; Shares
Taxes; Shares
7 Purchase of Securities Being Offered................................ Cover Page; Cover Page;
How to Buy How to Buy
Shares; Calculation Shares;
of Offering Price Calculation of
and Net Asset Net Asset
Value Per Share; Value Per Share;
Management of Management of
the Fund the Fund
</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>
8 Redemption or Repurchase............................................ How to Buy How to Buy
Shares; Redemption Shares; Redemption
and Exchange and Exchange
9 Legal Proceedings................................................... None None
</TABLE>
* This filing relates to Registrant's Small Cap Value Fund A Class, Small
Cap Value Fund B Class, Small Cap Value Fund C Class and Small Cap Value
Fund Institutional Class of Small Cap 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.
** The Registrant's Retirement Income Fund A Class, B Class and C Class
Prospectus dated January 29, 1997 and Retirement Income Fund
Institutional Class Prospectus dated January 29, 1997, are incorporated
into this filing by reference to the electronic filing of those
Prospectuses made pursuant to Rule 485(b) on January 28, 1997. The
Supplement dated April 30, 1997 (revised September 3, 1997) to the
Retirement Income Fund A Class, B Class and C Class Prospectus is
incorporated into this filing by reference to the electronic filing of
the Supplement made pursuant to Rule 497(e) on April 30, 1997.
<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
<TABLE>
<CAPTION>
Location
Item No. Description in Part C
- -------- ----------- ---------
<S> <C> <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
</TABLE>
<PAGE>
The Registrant's Retirement Income Fund A Class, B Class and C Class
Prospectus and Retirement Income Fund Institutional Class Prospectus each
dated January 29, 1997 are incorporated into this filing by reference to the
electronic filing of those Prospectuses made pursuant to Rule 485(b) on
January 28, 1997. The Supplement dated April 30, 1997 (revised September 3,
1997) to the Retirement Income Fund A Class, B Class and C Class Prospectus is
incorporated into this filing by reference to the electronic filing of the
Supplement made pursuant to Rule 497(e) on April 30, 1997.
<PAGE>
SMALL CAP VALUE FUND PROSPECTUS
JANUARY 29, ^ 1998
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-^ 2265
This Prospectus describes the ^ Small Cap Value Fund series (the
"Fund")(formerly Value Fund series) 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 Small Cap Value Fund A Class ("Class A Shares"),
Small Cap Value Fund B Class ("Class B Shares") and Small Cap 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,
^ 1998, 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 Small Cap Value Fund Institutional Class, which
is available for purchase only by certain investors. A prospectus for Small
Cap 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>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<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 ^ Policies 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 THE PRINCIPAL AMOUNT INVESTED.
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 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 ^ Policies 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 ^ Policies 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 ^ 0.00% 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
(subject to a CDSC of 1% if shares are redeemed within 12 months of purchase
if in connection with such purchase a dealer commission is paid). 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 -- 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.
-3-
<PAGE>
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>
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**
Annual Operating Expenses
(as a percentage of average Class A Class B Class C
daily net assets) Shares Shares Shares
- -------------------------------------------------- ----------- ------------ -----------
Management Fees................................................. ^ 0.00% 0.00% 0.00%
12b-1 Expenses (including service fees)......................... ^ 0.00%+ 0.00%+ 0.00%+
Other Operating Expenses........................................ ^ 0.00% 0.00% 0.00%
------- ----- -----
Total Operating Expenses................................... ^ 0.00% 0.00% 0.00%
======= ===== =====
</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>
+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.
Investors utilizing the Delaware Group Asset Planner asset allocation
service also typically incur an annual maintenance fee of $35 per Strategy.
However, effective November 1, 1996, the annual maintenance fee is waived
until further notice. Investors who utilize the Asset Planner for an
Individual Retirement Account ("IRA") will pay an annual IRA fee of $15 per
Social Security number. See Delaware Group Asset Planner in Part B.
For expense information about Small Value Fund Institutional Class,
see the separate prospectus relating to that class.
-6-
<PAGE>
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 ^ $00(1) $00 $000 $000 $00 $00 $000 $000
Class B Shares ^ $00 $00 $000 $000(2) $00 $00 $000 $000(2)
Class C Shares ^ $00 $00 $000 $000 $00 $00 $000 $000
</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.
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.
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.
-7-
<PAGE>
- -------------------------------------------------------------------------------
^
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements
of Delaware Group Equity Funds V, Inc. - Small Cap 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.
- -------------------------------------------------------------------------------
-8-
<PAGE>
<TABLE>
<CAPTION>
Class A Shares
-----------------------------------------------------------------------------
Year Ended
^ 11/30/97 11/30/96 11/30/95 11/30/94 11/30/93 11/30/92 11/30/91
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................. $00.000 $22.760 $19.320 $20.070 $17.750 $15.320 $11.050
Income From Investment Operations
Net Investment Income................................ 0.000 0.122 0.253 0.142 0.033 0.060 (0.006)
Net Gains (Losses) on Securities
(both realized and unrealized)............ 0.000 4.028 3.597 (0.687) 3.147 3.360 4.681
------- ------- ------- ------- ------- ------- -------
Total From Investment Operations............... 0.000 4.150 3.850 (0.545) 3.180 3.420 4.675
------- ------- ------- ------- ------- ------- -------
Less Distributions
Dividends (from net investment income)............... 0.000 (0.240) (0.160) (0.035) (0.040) none (0.155)
Distributions (from capital gains)................... 0.000 (0.890) (0.250) (0.170) (0.820) (0.990) (0.250)
^ Total Distributions.......................... 0.000 (1.130) (0.410) (0.205) (0.860) (0.990) (0.405)
------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Period....................... $00.000 $25.780 $22.760 $19.320 $20.070 $17.750 $15.320
======= ======= ======= ======= ======= ======= =======
- ------------------------
Total ^ Return(1).................................... 00.00% 19.08% 20.39% (2.78%) 18.59% 22.99% 43.61%
- ------------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)............ $000,000 $192,297 $177,011 $179,498 $151,384 $38,792 $12,041
Ratio of Expenses to Average Daily Net Assets........ 0.00% 1.45% 1.48% 1.46% 1.64% 1.93% 2.26%
Ratio of Net Investment Income to
Average Daily Net Assets....................... 0.00% 0.51% 1.18% 0.75% 0.25% 0.39% (0.07%)
Portfolio Turnover Rate.............................. 00% 87% 65% 14% 32% 68% 99%
Average Commission Rate Paid......................... $0.000 $0.060 ^ N/A N/A N/A N/A N/A
------------------------------------------
^
11/30/90 11/30/89 11/30/88 ^
Net Asset Value, Beginning of Period................. $14.030 $10.440 $7.740 ^
Income From Investment Operations
Net Investment Income................................ 0.149 0.131 0.054 ^
Net Gains (Losses) on Securities
(both realized and unrealized)............ (2.269) 3.529 2.691^
------- ------- -------
Total From Investment Operations............... (2.120) 3.660 2.745^
------- ------- -------
Less Distributions
Dividends (from net investment income)............... (0.140) (0.070) (0.045) ^
Distributions (from capital gains)................... (0.720) none none
^ Total Distributions.......................... (0.860) (0.070) (0.045) ^
------- ------- -------
Net Asset Value, End of Period....................... $11.050 $14.030 $10.440 ^
======= ======= =======
- ------------------------
Total ^ Return(1).................................... (16.14%) 35.28%(2) 35.57%(2) ^
- ------------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)............ $7,746 $11,055 $6,797 ^
Ratio of Expenses to Average Daily Net Assets........ 1.79% ^ 1.98%(3) 2.02%(3)
Ratio of Net Investment Income to
Average Daily Net Assets....................... 1.12% ^ 1.14%(4) 0.35%(4)
Portfolio Turnover Rate.............................. 69% 103% 66% ^
Average Commission Rate Paid......................... N/A N/A N/A
</TABLE>
- ----------------
(1)^ 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.
^(2) Total return reflects the expense limitation referenced in Notes ^ 3
and ^ 4.
^(3) Ratio of expenses to average daily net assets prior to expense
limitation was 2.16% for 1989^ and 2.23% for 1988 ^.
^(4) Ratio of net investment income to average daily net assets prior to
expense limitation was 0.97% for 1989^ and 0.14% for 1988 ^.
<PAGE>
<TABLE>
<CAPTION>
Class B Shares
-------------------------------------
Period
9/6/94(1)
Year Ended through
11/30/97 11/30/96 11/30/95 11/30/94
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................. $00.000 $22.590 $19.300 $20.280
Income From Investment Operations
Net Investment Income................................ 0.000 (0.041) 0.141 0.011
Net Gains (Losses) on Securities
(both realized and unrealized)............ 0.000 4.006 3.549 (0.991)
------- ------- ------- -------
Total From Investment Operations............... 0.000 3.965 3.690 (0.980)
------- ------- ------- -------
Less Distributions
Dividends (from net investment income)............... 0.000 (0.095) (0.150) none
Distributions (from capital gains)................... 0.000 (0.890) (0.250) none
------- ------- ------- -------
^ Total Distributions.......................... 0.000 (0.985) (0.400) none
------- ------- ------- -------
Net Asset Value, End of Period....................... $00.000 $25.570 $22.590 $19.300
======= ======= ======= =======
- --------------------------------
Total Return......................................... 00.00%(3) 18.26%(3) 19.55%(3) (4.83%)(3)
- --------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted) ........... $00,000 $12,730 $5,788 $1,455
Ratio of Expenses to Average Daily Net Assets........ 0.00% 2.15% 2.18% 2.16%
Ratio of Net Investment Income to
Average Daily Net Assets....................... 0.00% (0.19%) 0.48% 0.05%
Portfolio Turnover Rate.............................. 00% 87% 65% 14%
Average Commission Rate Paid......................... $0.000 $0.060 N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class C Shares
--------------------------
Period
Year Ended 11/29/95(2)
^ through
11/30/97 11/30/96 11/30/95
<S> <C> <C> <C>
Net Asset Value, Beginning of Period................. $00.000 $22.760 $22.510
Income From Investment Operations
Net Investment Income................................ 0.000 (0.043) none
Net Gains (Losses) on Securities
(both realized and unrealized)............ 0.000 4.003 0.250
------- ------- -------
Total From Investment Operations............... 0.000 3.960 0.250
------- ------- -------
Less Distributions
Dividends (from net investment income)............... 0.000 (0.280) none
Distributions (from capital gains)................... 0.000 (0.890) none
------- ------- -------
^ Total Distributions.......................... 0.000 (1.170) none
------- ------- -------
Net Asset Value, End of Period....................... $00.000 $25.550 $22.760
======= ======= =======
- --------------------------------
Total Return......................................... 0.00%(3) 18.23%(3) (4)
- --------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted) ........... $0,000 $3,360 $5
Ratio of Expenses to Average Daily Net Assets........ 0.00% 2.15% (4)
Ratio of Net Investment Income to
Average Daily Net Assets....................... 0.00% (0.19%) (4)
Portfolio Turnover Rate.............................. 00% 87% (4)
Average Commission Rate Paid......................... $0.000 $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. ^
(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>
INVESTMENT OBJECTIVE AND ^ POLICIES
The investment 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 ^
cap companies, those currently having a market capitalization generally of
less than ^ $1.5 billion. As a general matter, small ^ cap companies may have
more limited product lines, markets and financial resources than large ^ cap
companies. In addition, securities of small ^ 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.
-9-
<PAGE>
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.
-10-
<PAGE>
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.
-11-
<PAGE>
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.
^
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(SM) Services
-12-
<PAGE>
Delaware Group offers the following services for fast and convenient
transfer of funds between your personal bank account and your Delaware Group
fund account.
1. MoneyLine(SM) 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(SM) 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. ^ This service is not available for
certain retirement plans.
2. MoneyLine(SM) On Demand
You or your investment dealer may request purchases and
redemptions of Fund shares by using MoneyLine(SM) On Demand. When you
authorize the Fund to accept such requests from you or your
investment dealer, funds will be withdrawn from (for share purchases)
or deposited to (for share redemptions) your predesignated bank
account. Your request will be processed the same day if you call
prior to 4 p.m., Eastern time. There is a $25 minimum and a $50,000
maximum limit for MoneyLine(SM) On Demand transactions. This service
is not available for retirement plans, except for purchases of shares
by IRAs.
For each MoneyLine(SM) Service, it may take up to four business days
for the transactions to be completed. You can initiate ^ either service by
completing an ^ Account Services form. If your name and address are not
identical to the name and address on your Fund account, you must have your
signature guaranteed. The ^ Fund does not charge a fee for any MoneyLine(SM)
Service; however, your bank may change a fee. Please call the Shareholder
Service Center for additional information about these services.
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.
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
-13-
<PAGE>
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.
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.
-14-
<PAGE>
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, SIMPLE IRAs, Salary Reduction 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 Small Cap 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. ^ 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")
^ Although new SAR/SEP plans may not be established after December
31, 1996^, existing plans may be maintained by employers ^ having 25 or fewer
eligible employees ^. An employer may elect to make additional contributions^
to such existing 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.
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.
-15-
<PAGE>
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.
SIMPLE IRA
A SIMPLE IRA combines many of the features of an IRA and a 401(k)
Plan but is easier to administer than a typical 401(k) Plan. It requires
employers to make contributions on behalf of their employees and also has a
salary deferral feature that permits employees to defer a portion of their
salary into the plan on a pre-tax basis.
SIMPLE 401(k)
A SIMPLE 401(k) is like a regular 401(k) except that plan sponsors
are limited to 100 employees and, in exchange for mandatory plan sponsor
contributions, discrimination testing is no longer required. Class B Shares are
not available for purchase by such plans.
The Limited CDSC is applicable to any redemptions of net asset value
purchases made on behalf of any group retirement plan on which a dealer's
commission has been paid only if such redemption is made pursuant to a
withdrawal of the entire plan from Delaware Group funds. See Contingent
Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased at
Net Asset Value under Redemption
and Exchange.
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
-16-
<PAGE>
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.
-17-
<PAGE>
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 ^
12b-1 Plan fee of up to 0.30% 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
-18-
<PAGE>
money and the effect of earning a return on such additional money will
diminish over time. 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, 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.
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<PAGE>
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>
Small Cap 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% ^ 0.00% 4.00%
$100,000 but under $250,000 3.75 ^ 0.00 3.00
$250,000 but under $500,000 2.50 ^ 0.00 2.00
$500,000 but under $1,000,000* 2.00 ^ 0.00 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.
- -------------------------------------------------------------------------------
-20-
<PAGE>
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. Assets held by investment advisory clients of the Manager
or its affiliates in a stable value account 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.
-21-
<PAGE>
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. ^ 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.
Purchases of Class A Shares at net asset value may also be made by
the following: financial institutions investing for the account of their trust
customers if they are not eligible to purchase shares of the Institutional
Class of the Fund; any group retirement plan (excluding defined benefit
pension plans), or such plans of the same employer, for which plan participant
records are maintained on the Delaware Investment & Retirement Services, Inc.
("DIRSI") proprietary record keeping system that (i) has in excess of $500,000
of plan assets invested in Class A Shares of Delaware Group funds and any
stable value account available to investment advisory clients of the Manager
or its affiliates, or (ii) is sponsored by an employer that has at any point
after May 1, 1997 had more than 100 employees while such plan has held Class A
Shares of a Delaware Group fund and such employer has properly represented to
DIRSI in writing that it has the requisite number of employees and has
received written confirmation back from DIRSI.
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.
-22-
<PAGE>
Investors in Delaware-Voyageur Unit Investment Trusts may reinvest
monthly dividend checks and/or repayment of invested capital into Class A
Shares of any of the funds in the Delaware Group at net asset value.
The Fund must be notified in advance that an investment qualifies for purchase
at net asset value.
Group Investment Plans
Group Investment Plans (e.g., SEP/IRA, SAR/SEP, ^ SIMPLE IRA, SIMPLE
401(k), Profit Sharing^ and Money Purchase Pension Plans and 401(k) Defined
Contribution Plans and 403(b)(7) and 457 Deferred Compensation Plans) may
benefit from the reduced front-end sales charges available on Class A Shares ^
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 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
-23-
<PAGE>
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, 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.
The following table sets forth the rates of the CDSC for the Class B
Shares of the Fund:
-24-
<PAGE>
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.
Subject to pending amendments to the NASD's Conduct Rules ^, 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 Conduct Rules ^ 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 Conduct Rules ^ as they may be amended.
-25-
<PAGE>
Small Cap Value Fund Institutional Class
In addition to offering Class A, Class B and Class C Shares, the Fund
also offers Small Cap Value Fund Institutional Class, which is described in a
separate prospectus and is available for purchase only by certain investors.
Small Cap 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 Small Cap Value Fund Institutional Class,
contact the Distributor by writing to the address or by calling the telephone
number listed on the back cover of this Prospectus.
-26-
<PAGE>
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 Small Cap Value Fund A
Class, Small Cap Value Fund B Class or Small Cap 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.
-27-
<PAGE>
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.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans^ or 403(b)(7) ^ or 457
Deferred Compensation Plans.
-28-
<PAGE>
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. MoneyLine(SM) On Demand
Through the MoneyLine(SM) On Demand service, you or your investment
dealer may call the Fund to request a transfer of funds from your
predesignated bank account to your Fund account. See MoneyLine(SM) Services
under The Delaware Difference for additional information about this service.
4. 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 account in a Delaware Group ^ mutual fund 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 in Wealth Builder at any
time by giving 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, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans^ or 403(b)(7) ^ or 457
Deferred Compensation Plans.
^ 5. 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
-29-
<PAGE>
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 those funds offering those classes
of shares. For more information about reinvestments, call the Shareholder
Service Center.
^ Capital gains and/or ^ dividend distributions for participants in
the following retirement plans are automatically reinvested into the same
Delaware Group fund in which their investments are held: SAR/SEP, SEP/IRA,
SIMPLE IRA, SIMPLE 401(k), Profit Sharing^ and Money Purchase Pension^ Plans,
401(k) Defined Contribution Plans or 403(b)(7) or 457 Deferred Compensation
Plans.
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, its agent or designee. 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
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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. ^ For example, 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 in which you want to ^
invest 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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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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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 proceeds. 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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MoneyLine(SM) On Demand
Through the MoneyLine(SM) On Demand service, you or your investment
dealer may call the Fund to request a transfer of funds from your Fund account
to your predesignated bank account. See MoneyLine(SM) Services under The
Delaware Difference for additional information about this service.
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(SM) 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 ^(SM) Services 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(SM) 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
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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.
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) periodic
distributions from ^ an IRA, SIMPLE IRA or 403(b)(7) or 457 Deferred
Compensation Plan or due to death, disability, or attainment of age 59 1/2 and
IRA distributions qualifying under Section 72(t) of the Internal Revenue Code;
(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)
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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, SIMPLE
IRA, SEP/IRA or 403(b)(7) or 457 Deferred Compensation Plan; (iii) ^ periodic
distributions from an IRA, SIMPLE IRA, SAR/SEP, SEP/IRA, 403(b)(7) ^ or 457
Deferred Compensation Plan and IRA distributions qualifying under Section
72(t) of the Internal Revenue Code; 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, SIMPLE IRA, 403(b)(7) or 457 Deferred
Compensation Plan, Profit Sharing Plan, Money Purchase Pension Plan or 401(k)
Defined Contribution Plan; (iii) ^ periodic distributions from ^ a 403(b)(7)
or 457 Deferred Compensation Plan^ upon attainment of age 59 1/2, Profit
Sharing Plan, Money Purchase Pension Plan or 401(k) Defined Contribution Plan
upon attainment of age 70 1/2, and IRA distributions qualifying under Section
72(t) of the Internal Revenue Code; (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) periodic distributions
from an IRA or SIMPLE IRA on or after attainment of age 59 ^; 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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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(SM) Direct Deposit Service and have such payments transferred from
your Fund account to your predesignated bank account. The MoneyLine(SM) Direct
Deposit Service is not available for certain retirement plans. See MoneyLine
^(SM) Services under The Delaware Difference for more information about this
service.
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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 and by satisfying certain
other requirements relating to the sources of its income and diversification
of its assets.
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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<PAGE>
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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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 Small Cap Value Fund Institutional Class will not incur
any of the expenses under Equity Funds V, Inc.'s 12b-1 Plans and the 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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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, ^ 1997, the Manager and its
affiliates within the Delaware Group, including Delaware International
Advisers Ltd., were managing in the aggregate more than ^ $00 billion in
assets in the various institutional or separately managed (approximately ^
$00,000,000,000) and investment company (approximately ^ $00,000,000,000)
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, ^ 1997 were ^ 0.00% of average daily net assets. The
directors of Equity Funds V, Inc. annually review fees paid to the Manager.
Christopher S. Beck, Vice President/Senior Portfolio Manager of
Equity Funds V, Inc. assumed ^ primary responsibility for making day-to-day
investment decisions for the Fund ^ in May 1997. Mr. Beck has been in the
investment business for 16 years, starting with Wilmington Trust in 1981.
Later, he became Director of Research at Cypress Capital Management in ^
Wilmington and Chief Investment Officer of the University of Delaware
Endowment Fund. Prior to joining the Delaware Group in ^ May 1997, he managed
the small cap value fund for two years at Pitcairn Trust Company. He holds a
BS from the University of Delaware, an MBA from Lehigh University and is a CFA
charterholder ^.
In making investment decisions for the Fund, Mr. ^ Beck regularly
consults with Wayne A. Stork ^, Richard G. Unruh, Jr. and Andrea Giles. Mr.
Stork, Chairman of ^ Delaware Management Company Inc.'s and Equity Funds V,
Inc.'s ^ Boards 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
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<PAGE>
member of the Board of ^ Delaware Management Company, Inc. and was named an
Executive Vice President of ^ Delaware Management Company, Inc. in 1994.
Andrea Giles, Research Analyst for the Fund, holds a BSAD from the
Massachusetts Institute of Technology and an MBA in Finance from Columbia
University. Prior to joining the Delaware Group in 1996, she was an account
officer in the Leveraged Capital Group with Citibank.
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 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 ^ shares of funds in the Delaware
Group of funds in placing portfolio orders and may place orders with
broker/dealers that have agreed to defray certain ^ expenses of such funds,
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.
-43-
<PAGE>
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 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. The Fund's 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 Small Cap 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 Small Cap
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 ^ fees paid to
the Distributor and 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, ^ 1997, the ratios of expenses to average daily net assets were ^
0.00% for
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<PAGE>
Class A Shares, ^ 0.00% for Class B Shares and ^ 0.00% for Class C Shares. The
expense ratio of each Class reflects 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 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 Small Cap 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 Small Cap 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. Effective as of the close of business on July 31, 1997,
the name Value Fund series changed to Small Cap Value Fund series.
-45-
<PAGE>
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).
-46-
<PAGE>
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.
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<PAGE>
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.
-48-
<PAGE>
APPENDIX A - INVESTMENT ILLUSTRATIONS
Illustrations of Hypothetical Returns on Investments Based on Purchase Option
<TABLE>
<CAPTION>
$10,000 Purchase
Scenario 1 Scenario 2 Scenario 3
No Redemption Redeem 1st Year Redeem 3rd Year
Year Class A Class B Class C Class A Class B Class C Class A Class B Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 9,525 10,000 10,000 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+ 10,478 10,930 10,930
2 11,525 11,946 11,946 11,525 11,946 11,946
3 12,678 13,058 13,058 12,678 12,758 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
Scenario 4
Redeem 5th Year
Year Class A Class B Class C
0 9,525 10,000 10,000
1 10,478 10,930 10,930
2 11,525 11,946 11,946
3 12,678 13,058 13,058
4 13,946 14,272 14,272
5 15,340 15,399 15,599+
6
7
8
9
10
*This assumes that Class B Shares were converted to Class A Shares at the end of the eighth year.
$250,000 Purchase
Scenario 1 Scenario 2 Scenario 3
No Redemption Redeem 1st Year Redeem 3rd Year
Year Class A Class B Class C Class A Class B Class C Class A Class B Class C
0 243,750 250,000 250,000 243,750 250,000 250,000 243,750 250,000 250,000
1 268,125 273,250 273,250 268,125 263,250 270,750+ 268,125 273,250 273,250
2 294,938 298,662 298,662 294,938 298,662 298,662
3 324,431 326,438 326,438 324,431 318,938 326,438+
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
Scenario 4
Redeem 5th Year
Year Class A Class B Class C
0 243,750 250,000 250,000
1 268,125 273,250 273,250
2 294,938 298,662 298,662
3 324,431 326,438 326,438
4 356,874+ 356,797 356,797
5 392,562 384,979 389,979
6
7
8
9
10
*This assumes that Class B Shares were converted to Class A Shares at the end of the eighth year.
</TABLE>
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.
-49-
<PAGE>
APPENDIX B--CLASSES OFFERED
<TABLE>
<CAPTION>
Growth of Capital A Class B Class C Class Consultant Class
<S> <C> <C> <C> <C>
Aggressive Growth Fund x x x -
Trend Fund x x x -
^ DelCap Fund x x x -
Small Cap Value Fund x x x -
U.S. Growth Fund x x x -
Growth Stock Fund x x x -
Tax-Efficient Equity Fund x x x -
Total Return
Blue Chip Fund x x x -
Quantum Fund x x x -
Devon Fund x x x -
Decatur Total Return Fund x x x -
Decatur Income Fund x x x -
Delaware Fund x x x -
REIT Fund x x x -
International ^ Diversification
Emerging Markets Fund x x x -
New Pacific Fund x x x -
World Growth Fund x x x -
International Equity 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 -
^ U.S. Government Fund x x x -
Delaware-Voyageur US Government
Securities Fund x x x -
Limited-Term Government Fund x x x -
</TABLE>
-50-
<PAGE>
<TABLE>
<CAPTION>
^ APPENDIX B--CLASSES OFFERED - (CON'T)
^ Tax Preferred Income A Class B Class C Class Consultant Class
<S> <C> <C> <C> <C>
National High Yield Municipal Bond 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 -
Delaware-Voyageur Tax-Free Arizona Insured Fund x x x -
Delaware-Voyageur Tax-Free Arizona Fund x x x -
Delaware-Voyageur Tax-Free California Insured Fund x x x -
Delaware-Voyageur Tax-Free California Fund x x x -
Delaware-Voyageur Tax-Free Colorado Fund x x x -
Delaware-Voyageur Tax-Free Florida Insured Fund x x x -
Delaware-Voyageur Tax-Free Florida Intermediate Fund x x x -
Delaware-Voyageur Tax-Free Florida Fund x x x -
Delaware-Voyageur Tax-Free Idaho Fund x x x -
Delaware-Voyageur Tax-Free Iowa Fund x x x -
Delaware-Voyageur Tax-Free Kansas Fund x x x -
Delaware-Voyageur Minnesota High Yield Municipal Bond Fund x x x -
Delaware-Voyageur Minnesota Insured Fund x x x -
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund x x x -
Delaware-Voyageur Tax-Free Minnesota Fund x x x -
Delaware-Voyageur Tax-Free Missouri Insured Fund x x x -
Delaware-Voyageur Tax-Free New Mexico Fund x x x -
Tax-Free New Jersey Fund x x x -
Delaware-Voyageur Tax-Free New York Fund x x x -
Delaware-Voyageur Tax-Free North Dakota Fund x x x -
Tax-Free Ohio Fund x x x -
Delaware-Voyageur Tax-Free Oregon Insured Fund x x x -
Tax-Free Pennsylvania Fund x x x -
Delaware-Voyageur Tax-Free Utah Fund x x x -
Delaware-Voyageur Tax-Free Washington Insured Fund x x x -
Delaware-Voyageur Tax-Free Wisconsin 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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<PAGE>
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.
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<PAGE>
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, ^ national and state-specific
tax-exempt funds, money market funds, global and international funds and
closed-end ^ 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>
- ---------------------------------------------------------
SMALL CAP VALUE FUND
- ---------------------------------------------------------
A CLASS
- ---------------------------------------------------------
B CLASS
- ---------------------------------------------------------
C CLASS
- ---------------------------------------------------------
P R O S P E C T U S
- ---------------------------------------------------------
JANUARY 29, ^ 1998
DELAWARE
GROUP
-----
<PAGE>
PROSPECTUS
SMALL CAP VALUE FUND INSTITUTIONAL JANUARY ^ 28, 1998
----------------------------------------------------------------------
1818 Market Street, Philadelphia, PA 19103
For more information about Small Cap Value Fund Institutional Class
call Delaware Group at 800-828-5052.
This Prospectus describes the ^ Small Cap Value Fund series (the
"Fund")(formerly Value Fund series) 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 Small Cap 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, ^ 1998, 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 Small Cap Value Fund A Class, Small Cap Value
Fund B Class and Small Cap 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.
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<PAGE>
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 ^ Policies Taxes
Suitability Calculation of Net Asset Value
Investment Strategy Per Share
Risk Factors Management of the Fund
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 THE PRINCIPAL AMOUNT INVESTED.
SHARES OF THE FUND ARE NOT BANK OR CREDIT UNION DEPOSITS.
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<PAGE>
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 ^Policies 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 ^ Policies 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.
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<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....................................................^ 0.00%
12b-1 Fees......................................................... None
Other Operating Expenses...........................................^ 0.00%
Total Operating Expenses......................................^ 0.00%
*Exchanges are subject to the requirements of each fund and a front-end sales
charge may apply.
For expense information about Small Cap Value Fund Class A Shares,
Small Cap Value Fund Class B Shares and Small Cap 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
------ ------- ------- --------
$00 $00 $00 $000
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. ^
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.
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<PAGE>
- --------------------------------------------------------------------------------
^
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
Delaware Group Equity Funds V, Inc. - Small Cap 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>
<TABLE>
<CAPTION>
Period
11/9/92(3)
Year Ended through
^ 11/30/97(3) 11/30/96(3) 11/30/95(3) 11/30/94(3) 11/30/93(3) 11/30/92
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........... $00.000 $22.860 $19.400 $20.140 $17.750 $17.090
Income From Investment Operations
Net Investment Income ......................... 0.000 0.193 0.297 0.195 0.092 0.004
Net Gains (Losses) on Securities
(both realized and unrealized)..... 0.000 4.047 3.628 (0.685) 3.158 0.656
----- ----- ----- ------- ----- -----
Total From Investment Operations......... 0.000 4.240 3.925 (0.490) 3.250 0.660
----- ----- ----- ------- ----- -----
Less Distributions
Dividends (from net investment income)......... 0.000 (0.300) (0.215) (0.080) (0.040) none
Distributions (from capital gains)............. 0.000 (0.890) (0.250) (0.170) (0.820) none
^ Total Distributions.................... 0.000 (1.190) (0.465) (0.250) (0.860) none
----- ------- ------- ------- ------- ----
Net Asset Value, End of Period................. $00.000 $25.910 $22.860 $19.400 $20.140 $17.750
======= ======= ======= ======= ======= =======
- ---------------------------------------
Total Return................................... 00.00% 19.45% 20.76% (2.51%) 19.00% 3.86%
- ------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)...... $00,000 $16,373 $7,294 $6,385 $5,476 $1,558
Ratio of Expenses to Average Daily Net Assets.. 0.00% 1.15% 1.18% 1.16% 1.34%
Ratio of Net Investment Income
to Average Daily Net Assets.............. 0.00% 0.81% 1.48% 1.05% 0.55% 0.69%
Portfolio Turnover Rate........................ 00% 87% 65% 14% 32% 68%
Average Commission Rate Paid................... $0.000 $0.060 ^ N/A N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
^
^
Year Ended
11/30/92(1) 11/30/91(1) 11/30/90(1) 11/30/89(1) 11/30/88(1) ^
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........... $15.320 $11.050 $14.030 $10.440 $7.740 ^
Income From Investment Operations
Net Investment Income ......................... 0.060 (0.006) 0.149 0.131 0.054 ^
Net Gains (Losses) on Securities
(both realized and unrealized)..... 3.360 4.681 (2.269) 3.529 2.691^
----- ----- ------- ----- -----
Total From Investment Operations......... 3.420 4.675 (2.120) 3.660 2.745^
----- ----- ------- ----- -----
Less Distributions
Dividends (from net investment income)......... none (0.155) (0.140) (0.070) (0.045) ^
Distributions (from capital gains)............. (0.990) (0.250) (0.720) none none
^ Total Distributions.................... (0.990) (0.405) (0.860) (0.070) (0.045) ^
------- ------- ------- ------- -------
Net Asset Value, End of Period................. $17.750 $15.320 $11.050 $14.030 $10.440 ^
======= ======= ======= ======= =======
- ---------------------------------------
Total Return................................... 22.99%(4) 43.61%(4) (16.14%)(4) 35.28%(4)(5) 35.57%(4)(5)^
- ------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (000's omitted)...... $38,792 $12,041 $7,746 $11,055 $6,797 ^
Ratio of Expenses to Average Daily Net Assets.. 1.93% 2.26% 1.79% 1.98%(6) 2.02%(6) ^
Ratio of Net Investment Income
to Average Daily Net Assets.............. 0.39% (0.07%) 1.12% 1.14%(7) 0.35%(7) ^
Portfolio Turnover Rate........................ 68% 99% 69% 103% 66% ^
Average Commission Rate Paid................... N/A N/A N/A N/A N/A
</TABLE>
(1) Data are derived from data of Small Cap 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 Small Cap Value Fund
A Class. Small Cap Value Fund Institutional Class ^(known as Value Fund
Institutional Class September 6, 1994 through July 31, 1997 and 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)^ Per share data are derived from data of Small Cap Value Fund Institutional
Class which commenced operations on November 9, 1992. Ratios have been
annualized but total return has not been annualized.
^(3) Does not reflect any maximum sales charges that are or were in effect for
Small Cap Value Fund A Class.
^(4) Total return reflects the expense limitation referenced in Notes 6 and 7.
^(5) Ratio of expenses to average daily net assets prior to expense limitation
was 2.16% for 1989^ and 2.23% for 1988 ^.
^(6) Ratio of net investment income to average daily net assets prior to
expense limitation was 0.97% for 1989^ and 0.14% for 1988 ^.
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<PAGE>
INVESTMENT OBJECTIVE AND ^ POLICIES
The investment 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 ^ cap
companies, those currently having a market capitalization generally of less than
^ $1.5 billion. As a general matter, small ^ cap companies may have more limited
product lines, markets and financial resources than large cap companies. In
addition, securities of small 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
-7-
<PAGE>
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 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
-8-
<PAGE>
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 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.
-9-
<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.
Small Cap Value Fund A Class, Small Cap Value Fund B Class and Small Cap Value
Fund C Class In addition to offering Small Cap Value Fund
Institutional Class of shares, the Fund also offers Small
Cap Value Fund A Class, Small Cap Value Fund B Class and Small Cap Value Fund
C Class, which are described in a separate prospectus. Shares of Small Cap
Value Fund A Class, Small Cap Value Fund B Class and Small Cap Value Fund C
Class may be purchased through authorized investment dealers or directly by
contacting the Fund or the Distributor. Small Cap 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.
Small Cap Value Fund B Class and Small Cap 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 Small Cap Value Fund B Class and Small Cap Value Fund
C Class and certain shares of Small Cap 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.
-10-
<PAGE>
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 Small Cap 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 Small Cap 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 Small Cap 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 Small Cap Value Fund B Class and Small Cap 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, its agent or designee. 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.
-11-
<PAGE>
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 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.
-12-
<PAGE>
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. ^
For example, 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 in which you want to ^ invest 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
although, in the case of an exchange, a sales charge may apply. 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.
-13-
<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 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(s)
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 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.
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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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<PAGE>
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 Small Cap Value Fund A
Class, Small Cap Value Fund B Class and Small Cap Value Fund C Class.
Both dividends and distributions, if any, are automatically
reinvested in your account at net asset value.
-16-
<PAGE>
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 and by satisfying certain other requirements relating to the sources
of its income and diversification of its assets.
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.
-17-
<PAGE>
^ 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.
-18-
<PAGE>
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 Small Cap 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.
-19-
<PAGE>
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, ^ 1997, the Manager and its
affiliates within the Delaware Group, including Delaware International Advisers
Ltd., were managing in the aggregate more than ^ $00 billion in assets in the
various institutional or separately managed (approximately ^ $00,000,000,000)
and investment company (approximately ^ $00,000,000,000) 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, ^ 1997 were ^ 0.00% of
average daily net assets. The directors of Equity Funds V, Inc. annually review
fees paid to the Manager.
Christopher S. Beck, Vice President/Senior Portfolio Manager of Equity
Funds V, Inc. assumed ^ primary responsibility for making day-to-day investment
decisions for the Fund ^ in May 1997. Mr. Beck has been in the investment
business for 16 years, starting with Wilmington Trust in 1981. Later, he became
Director of Research at Cypress Capital Management in ^ Wilmington and Chief
Investment Officer of the University of Delaware Endowment Fund. Prior to
joining the Delaware Group in ^ May 1997, he managed the small cap value fund
for two years at Pitcairn Trust Company. He holds a BS from the University of
Delaware, an MBA from Lehigh University and is a CFA charterholder ^.
In making investment decisions for the Fund, Mr. ^ Beck regularly
consults with Wayne A. Stork ^, Richard G. Unruh, Jr. and Andrea Giles. Mr.
Stork, Chairman of ^ Delaware Management Company Inc.'s and Equity Funds V,
Inc.'s ^ Boards 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
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<PAGE>
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 ^
Delaware Management Company, Inc. and was named an Executive Vice President of ^
Delaware Management Company, Inc. in 1994. Andrea Giles, Research Analyst for
the Fund, holds a BSAD from the Massachusetts Institute of Technology and an MBA
in Finance from Columbia University. Prior to joining the Delaware Group in
1996, she was an account officer in the Leveraged Capital Group with Citibank.
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. ^
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.
-21-
<PAGE>
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.
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.^ 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 directors annually review service fees paid to the Distributor
and the Transfer Agent. 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, ^ 1997, the ratio of operating expenses to average daily net
assets for the Class was ^ 0.00%.
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 Small Cap Value Fund A
Class, Small Cap Value Fund B Class and Small Cap 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 Small Cap Value
Fund A Class, Small Cap Value Fund B Class and Small Cap 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. Effective as of the close of business on July 31, 1997,
the name Value Fund series changed to Small Cap Value Fund series.
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<PAGE>
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).
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<PAGE>
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.
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<PAGE>
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.
-25-
<PAGE>
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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<PAGE>
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
- ----------------------------------
SMALL CAP VALUE FUND INSTITUTIONAL
- ----------------------------------
- ----------------------------------
P R O S P E C T U S
- ----------------------------------
JANUARY 29, ^ 1998
DELAWARE
GROUP
-------
<PAGE>
<TABLE>
<CAPTION>
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<S> <C>
PART B--STATEMENT OF ADDITIONAL INFORMATION
JANUARY 29, ^ 1998
- -------------------------------------------------------------------------------------------------------------------------------
DELAWARE GROUP EQUITY FUNDS V, INC.
- -------------------------------------------------------------------------------------------------------------------------------
1818 Market Street
Philadelphia, PA 19103
- -------------------------------------------------------------------------------------------------------------------------------
For more information about the Institutional Classes: 800-828-5052
For Prospectus and Performance of the Class A Shares, Class B Shares and Class C Shares:: Nationwide 800-
523-4640
Information on Existing Accounts of the Class A Shares, Class B Shares and Class C Shares:
(SHAREHOLDERS ONLY) Nationwide 800-523-1918
Dealer Services: (BROKER/DEALERS ONLY) Nationwide 800-362-7500
- -------------------------------------------------------------------------------------------------------------------------------
TABLE OF CONTENTS
- -------------------------------------------------------------------------------------------------------------------------------
Cover Page
- -------------------------------------------------------------------------------------------------------------------------------
Investment Policies and Portfolio Techniques
- -------------------------------------------------------------------------------------------------------------------------------
Accounting and Tax Issues
- -------------------------------------------------------------------------------------------------------------------------------
Performance Information
- -------------------------------------------------------------------------------------------------------------------------------
Trading Practices and Brokerage
- -------------------------------------------------------------------------------------------------------------------------------
Purchasing Shares
- -------------------------------------------------------------------------------------------------------------------------------
Investment Plans
- -------------------------------------------------------------------------------------------------------------------------------
Determining Offering Price and
Net Asset Value
- -------------------------------------------------------------------------------------------------------------------------------
Redemption and Repurchase
- -------------------------------------------------------------------------------------------------------------------------------
Distributions and Taxes
- -------------------------------------------------------------------------------------------------------------------------------
Investment Management Agreements
- -------------------------------------------------------------------------------------------------------------------------------
Officers and Directors
- -------------------------------------------------------------------------------------------------------------------------------
Exchange Privilege
- -------------------------------------------------------------------------------------------------------------------------------
General Information
- -------------------------------------------------------------------------------------------------------------------------------
Appendix A--IRA Information
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Appendix B--The Company Life Cycle
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Financial Statements
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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
Small Cap Value Fund series ^("Small Cap Value Fund")(formerly Value Fund
series) 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: Small
Cap Value Fund A Class and Retirement Income Fund A Class (the "Class A
Shares"); Small Cap Value ^ Fund B Class and Retirement Income Fund B^ (the
"Class B Shares"); and Small Cap 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: ^ Small Cap 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, ^ 1998.
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, 1998, 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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INVESTMENT POLICIES AND PORTFOLIO TECHNIQUES
Investment Restrictions--Small Cap 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 Small Cap 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.
9. Purchase securities on margin, make short sales of securities or
maintain a net short position.
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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.
Small Cap 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, Small
Cap 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.
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.
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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 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
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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.
^
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.
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,
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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 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.
* * *
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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
Small Cap 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
Small Cap 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--Small Cap 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.
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
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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.
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.
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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 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
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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,
Small Cap 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 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
-11-
<PAGE>
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.
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
-12-
<PAGE>
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 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.
-13-
<PAGE>
Small Cap 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. Small Cap 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.
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
-14-
<PAGE>
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 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.
-15-
<PAGE>
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 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.
-16-
<PAGE>
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.
-17-
<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.
-18-
<PAGE>
The performance of Class A Shares and the Institutional Class of
Small Cap Value Fund, as shown below, is the average annual total return
through ^ November 30, 1997 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 Small Cap Value Fund Institutional Class for the
periods prior to the commencement of operations of such Class is calculated by
taking the performance of Small Cap 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
<TABLE>
<CAPTION>
Small Cap Value Fund Small Cap Value Fund Small Cap Value Fund
A Class A Class Institutional
(at Offer)(2) (at NAV) Class(3)
<S> <C> <C> <C>
1 year
ended
^ 11/30/97 00.00% 00.00% 00.00%
3 years
ended
^ 11/30/97 00.00% 00.00% 00.00%
5 years
ended
^ 11/30/97 00.00% 00.00% 00.00%
10 years
ended
11/30/97 00.00% 00.00% 00.00%
Period
6/24/87(1)
through
^ 11/30/97 00.00% 00.00% 00.00%
</TABLE>
(1) Date of initial public offering of Small Cap 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 Small Cap Value Fund Institutional
Class was November 9, 1992.
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<PAGE>
The performance of Class B Shares of Small Cap Value Fund, as shown
below, is the average annual total return quotation through ^ November 30,
1997. The average annual total return for Class B Shares and 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, 1997. The
average annual total return for Class B Shares and Class C Shares excluding
deferred sales charge assumes the shares were not redeemed at ^ November 30,
1997 and therefore does not reflect the deduction of a CDSC.
Average Annual Total Return
Small Cap Value Fund B Class Small Cap Value Fund B Class
(Including Deferred (Excluding Deferred
Sales Charge) Sales Charge)
1 year
ended
11/30/97 00.00% 00.00%
3 years
ended
11/30/97 ^ 00.00% 00.00%
Period
9/6/94(1)
through
^ 11/30/97 00.00% 00.00%
(1) Date of initial public offering of Small Cap Value Fund B Class.
^
Average Annual Total Return
Small Cap Value Fund C Class Small Cap Value Fund C Class
(Including Deferred (Excluding Deferred
Sales Charge) Sales Charge)
1 year
ended
^ 11/30/97 00.00% 00.00%
Period
11/29/95(1)
through
^ 11/30/97 00.00% 00.00 %
(1) Date of initial public offering of Small Cap Value Fund C Class.
-20-
<PAGE>
The performance of Class A Shares and the Institutional Class of
Retirement Income Fund, as shown below, is the average annual total return
through November 30, 1997 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.
Average Annual Total Return(1)
Retirement Income Fund Retirement Income Fund Retirement Income Fund
A Class A Class Institutional
(at Offer)(2) (at NAV)(2) Class
Period
12/2/96(1)
through
11/30/97 00.00% 00.00% 00.00%
(1) Delaware Management Company, Inc. 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
does not exceed 0.75% (in each case, exclusive of taxes, interest,
brokerage commissions and extraordinary expenses and applicable 12b-1
expenses) through May 31, 1998. In the absence of such waiver,
performance would have been affected negatively.
(2) Delaware Distributors, L.P. has elected voluntarily to waive its
right to receive 12b-1 Plan fees (including service fees) from the
commencement of the public offering of Class A Shares of the Fund
through May 31, 1997. In the absence of such waiver, performance
would have been affected negatively.
(3) Date of initial public offering; total return for this short of a time
period may not be representative of longer term results.
Securities prices fluctuated during the periods covered and past
results should not be considered as representative of future performance.
Retirement Income Fund may also quote the current yield of each of
its Classes in advertisements and investor communications.
-21-
<PAGE>
The yield computation is determined by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period and annualizing the resulting figure,
according to the following formula.
a-b 6
YIELD = 2[( ---- + 1) - 1]
cd
Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends;
d = the maximum offering price per share on the
last day of the period.
The above formula will be used in calculating quotations of yield,
based on specific 30-day periods identified in advertising by ^ Retirement
Income Fund. Yield assumes the maximum front-end sales charge, if any, and
does not reflect the deduction of any CDSC or Limited CDSC. The yields of the
Class A Shares are Institutional Class shares of Retirement Income Fund as of
^ November 30, 1997 ^ were 0.00% and ^ 0.00%, respectively, reflecting the
waiver of fees by the Manager and the Distributor. Actual yield may be
affected by variations in sales charges on investments.
Past performance, such as reflected in quoted yields, should not be
considered as representative of the results which may be realized from an
investment in a Fund in the future. Investors should note that the income
earned and dividends paid by ^ Retirment Income Fund will vary with the
fluctuation of interest rates and performance of the portfolio to the extent
of a Fund's investments in debt securities. The net asset value of any Fund
may change. Unlike money market funds, the Funds invest in longer-term
securities that fluctuate in value and do so in a manner inversely correlated
with changing interest rates. A Fund's net asset value will tend to rise when
interest rates fall. Conversely, a Fund's net asset value will tend to fall as
interest rates rise. Normally, fluctuations in interest rates have a greater
effect on the prices of longer-term bonds. The value of the securities held in
a Fund will vary from day to day and investors should consider the volatility
of a Fund's net asset value as well as its yield before making a decision to
invest.
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
-22-
<PAGE>
market price fluctuations. The indices do not take into account any sales
charge or other fees. In seeking its investment objective, Small Cap 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, and a direct investment
in an index is not possible.
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.
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.
-23-
<PAGE>
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 Small Cap Value Fund through ^
November 30, 1997. Cumulative total return performance for Class A Shares and
Institutional Class Shares of Retirement Income Fund through ^ November 30,
1997 is also provided below. 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.
-24-
<PAGE>
Cumulative Total Return
<TABLE>
<CAPTION>
Small Cap Standard
Small Cap Value Fund ^ Value Fund & Poor's Dow Jones NASDAQ
A Class(2) ^ Institutional 500 Stock Industrial Composite
(at Offer) Class(3) Index(4) Average(4) Index(4)
<S> <C> <C> <C> <C> <C>
3 months
ended
^ 11/30/97 0.00% 0.00% 00.00% 00.00% 00.00%
6 months
ended
^ 11/30/97 0.00%(5) 0.00% 00.00% 00.00% 0.00%
9 months
ended
^ 11/30/97 0.00% 00.00% 00.00% 00.00% 00.00%
1 year
ended
^ 11/30/97 00.00% 00.00% 00.00% 00.00% 00.00%
3 years
ended
^ 11/30/97 00.00% 00.00% 00.00% 00.00% 00.00%
5 years
ended
^ 11/30/97 00.00% 00.00% 00.00% 00.00% 00.00%
Period
6/24/87(1)
through
^ 11/30/97 00.00% 00.00% 00.00% 00.00% 00.00%
</TABLE>
(1) Date of initial public offering of Small Cap 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 Small Cap 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: ^ Lipper Analytical Services, Inc.
(5) For the six months ended ^ November 30, 1997, cumulative total return for
Small Cap Value Fund A Class at net asset value was 0.00%.
-25-
<PAGE>
Cumulative Total Return
<TABLE>
<CAPTION>
Small Cap Value ^ Small Cap Value
Fund ^ B Class Fund 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
^ 11/30/97 0.00% 0.00% 0.00% 00.00% 00.00%
6 months
ended
^ 11/30/97 0.00% 0.00% 00.00% 00.00% 0.00%
9 months
ended
^ 11/30/97 0.00% 00.00% 00.00% 00.00% 00.00%
1 year
ended
^ 11/30/97 00.00% 00.00% 00.00% 00.00% 00.00%
3 years
ended
11/30/97 00.00% 00.00% 00.00% 00.00% 00.00%
Period
9/6/94(1)
through
^ 11/30/97 00.00% 00.00% 00.00% 00.00% 00.00%
</TABLE>
(1) Date of initial public offering of Small Cap Value Fund B Class.
(2) Source: ^ Lipper Analytical Services, Inc.
-26-
<PAGE>
Cumulative Total Return
<TABLE>
<CAPTION>
Small Cap Value ^ Small Cap Value
Fund ^ C Class Fund 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
^ 11/30/97 0.00% 0.00% 00.00% 00.00% 00.00%
6 months
ended
^ 11/30/97 0.00% 0.00% 00.00% 00.00% 0.00%
9 months
ended
^ 11/30/97 00.00% 00.00% 00.00% 00.00% 00.00%
1 year
ended
^ 11/30/97 00.00% 00.00% 00.00% 00.00% 00.00%
Period
11/29/95(1)
through
^ 11/30/97 00.00% 00.00% 00.00% 00.00% 00.00%
</TABLE>
(1) Date of initial public offering of Small Cap Value Fund C Class.
Cumulative Total Return(1)
<TABLE>
<CAPTION>
Retirement Retirement Standard
Income Fund Income Fund & Poor's Dow Jones NASDAQ
A Class(2) Institutional 500 Stock Industrial Composite
(at Offer) Class Index Average Index
<S> <C> <C> <C> <C> <C>
3 months ended ^ 11/30/97 0.00% 0.00% 0.00% 0.00% 0.00%
6 months ended 11/30/97 0.00% 0.00% 0.00% 0.00% 0.00%
9 months ended 11/30/97 0.00% 0.00% 0.00% 0.00% 0.00%
Period 12/2/96^
through ^ 11/30/97 0.00% 10.89% 00.00% 0.00% 0.00%
</TABLE>
(1) Delaware Management Company, Inc. 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
does not exceed 0.75% (in each case, exclusive of taxes, interest,
brokerage commissions, and extraordinary expenses and applicable 12b-1
expenses) through ^ May 31, 1998. In the absence of such waiver,
performance would have been affected negatively.
-27-
<PAGE>
(2) Delaware Distributors, L.P. has elected voluntarily to waive its right
to receive 12b-1 Plan fees (including service fees) from the
commencement of the public offering of Class A Shares of the Fund
through ^ May 31, 1998. In the absence of such waiver, performance
would have been affected negatively.
^
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 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.
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 ^ high 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.
-28-
<PAGE>
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 ^ any stock or bond fund in the Delaware
Group of funds.
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, ^ 1995 ^, 1996 and 1997,
the aggregate dollar amounts of brokerage commissions paid by Small Cap Value
Fund were ^ $384,243 ^, $515,711 and $000,000, respectively. During the period
December 2, 1996 through November 30, 1997, the aggregate dollar amount of
brokerage commissions paid by Retirement Income Fund was $000.
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, ^ 1997, portfolio
transactions of Small Cap Value Fund in the amount of ^ $00,000,000, resulting
in brokerage commissions of ^ $000,000, were directed to brokers for brokerage
and research services provided. For the period December 2, 1996 through
November 30, 1997, portfolio transactions of Retirement Income Fund in the
amount of $000, resulting in brokerage commissions of $000, 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-
-30-
<PAGE>
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.
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 Conduct Rules ^ 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 ^ expenses such as custodian fees, and may, at the request of
the Distributor, give consideration to sales of ^ shares of such funds 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.
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, Small
Cap Value Fund may hold securities for any period of time.
-31-
<PAGE>
During the past two fiscal years, Small Cap Value Fund's portfolio
turnover rates were ^ 87% for 1996 and 00% for 1997. During the past fiscal
year, Retirement Income Fund's portfolio turnover rate was 00%.
-32-
<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 ^ are responsible 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 ^ certain rules 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.
-33-
<PAGE>
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.
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 November 30, 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 or in the case of any retirement plan
account including self-directed IRAs. 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 full share denominations purchased by sending a letter signed by
each owner of the account to the Transfer Agent requesting the certificate. No
charge is assessed by Equity Funds V, Inc. for any certificate issued. A
shareholder may be subject to fees for replacement of a lost or stolen
certificate under certain conditions, including the cost of obtaining a bond
covering the lost or stolen certificate. Please contact the Funds for further
information. 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.
-34-
<PAGE>
Class A Shares - Small Cap 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.
Small Cap Value Fund
Retirement Income Fund
Class A Shares
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Dealer's
Front-End Sales Charge as a % of Commission***
Amount of Purchase Offering Amount as % of
Price Invested** Offering Price
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
^ Small Cap Retirement ^
Value Fund ^ Income Fund
Less than $100,000 4.75% ^ 0.00% ^ 0.00% 4.00%
$100,000 but under $250,000 3.75% ^ 0.00 0.00% ^ 3.00
$250,000 but under $5000,000 2.50 ^ 0.00 0.00% ^ 2.00
$500,000 but under $1,000,000* 2.00 ^ 0.00 0.00% ^ 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.
** ^ Based on the net asset value per share of the respective 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.
- -------------------------------------------------------------------------------
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 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.
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<PAGE>
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.
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.
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<PAGE>
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, ^ 1997, payments from the
Class A Shares, Class B Shares and Class C Shares of Small Cap Value Fund
amounted to ^ $000,000, $00,000 and ^ $00,000, respectively. Such amounts were
used for the following purposes:
<TABLE>
<CAPTION>
Small Cap Small Cap Small Cap
Value Fund Value Fund Value Fund
A Class B Class C Class
<S> <C> <C> <C>
Advertising ---- ---- ----
Annual/Semi-Annual Reports ^ $00,000 ---- ----
Broker Trails ^ $000,000 $00,000 ----
Broker Sales Charges ---- ^ $00,000 $00,000
Dealer Service Expenses ---- ---- ----
Interest on Broker Sales Charges ---- ^ $00,000 $000
Commissions to Wholesalers ^ $00,000 $0,000 ----
Promotional-Broker Meetings ^ $0,000 $000 ----
Promotional-Other ^ $00,000 ---- ----
Prospectus Printing ^ $00,000 ---- ----
Telephone ^ $0,000 ---- ----
Wholesaler Expenses ^ $0,000 ---- ----
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. The Distributor may
also pay a portion of the expense of preapproved dealer advertisements
promoting the sale of Delaware Group fund shares. 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 Sub-Adviser, including the
Manager, the Manager's affiliates, the Sub-Adviser's affiliates, or any of the
Sub-Adviser'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 of the Funds and any such Class of shares of any of the other 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 Class A Shares at
net asset value. Class A Shares may also be purchased at net asset value by
current and former officers, directors and employees (and members of their
families) of the Dougherty Financial Group LLC.
-39-
<PAGE>
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,
the Sub-Adviser or any of their 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 Global Funds, Inc. may reasonably require to establish
eligibility for purchase at net asset value.
Purchases of Class A Shares at net asset value may also be made by
the following: financial institutions investing for the account of their
customers when they are not eligible to purchase shares of the institutional
class of the fund; and any group retirement plan (excluding defined benefit
pension plans), or such plans of the same employer, for which plan participant
records are maintained on the Delaware Investment & Retirement Services, Inc.
("DIRSI") proprietary record keeping system that (i) has in excess of $500,000
of plan assets invested in Class A Shares of Delaware Group funds and in any
stable value product available through the Delaware Group, or (ii) is
sponsored by an employer that has at any point after May 1, 1997 more than 100
employees while such plan has held Class A Shares of a Delaware Group fund and
such employer has properly represented to DIRSI in writing that it has the
requisite number of employees and has received written confirmation back from
DIRSI.
Investors in Delaware-Voyageur Unit Investment Trusts may reinvest
monthly dividend checks and/or repayment of invested capital into Class A
Shares of any of the funds in the Delaware Group 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.
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
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<PAGE>
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 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). In addition, assets held in any stable value account by
investment advisory clients of the Manager or its affiliates may be combined
with other Delaware Group fund holdings.
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
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<PAGE>
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.
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.
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
-42-
<PAGE>
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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<PAGE>
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 Small Cap 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 ^ Small Cap 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, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, 403(b)(7) Deferred
Compensation Plans or 457 Deferred Compensation Plans.
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
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<PAGE>
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, SIMPLE IRA, SIMPLE 401(k), 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.
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
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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 ^ the Fund from which exchanges are made.
This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), 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, SIMPLE IRAs,
Simplified Employee Pension Plans, Salary Reduction Simplified Employee
Pension Plan, 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.
^ Purchases of Class B Shares ^ are 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 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.
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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.
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
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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.
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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SIMPLE IRA
A SIMPLE IRA combines many of the features of an Individual
Retirement Account (IRA) and a 401(k) Plan but is easier to administer than a
typical 401(k) Plan. It requires employers to make contributions on behalf of
their employees and also has a salary deferral feature that permits employees
to defer a portion of their salary into the plan on a pre-tax basis.
SIMPLE 401(k)
A SIMPLE 401(k) is like a regular 401(k) except that plan sponsors
are limited to 100 employees and, in exchange for mandatory plan sponsor
contributions, discrimination testing is no longer required. Class B Shares
are not available for purchase by such plans.
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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 ^, its agent or designee. 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 ^, its agent or designee. Selling dealers ^ are responsible
for 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, Martin Luther King, Jr.'s
Birthday, 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 ^ each 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 ^ will not incur any of the
expenses under ^ Equity Funds V, 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
Small Cap 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, ^ subject to 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.
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.
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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 Small
Cap Value Fund A Class was increased from $250 to $1,000. Accounts of Small
Cap 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.
* * *
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.
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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.
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.
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Systematic Withdrawal Plans
Shareholders of Class A, Class B and Class C Shares of Small Cap
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 Small Cap Value Fund
does not recommend any specific amount of withdrawal. This $5,000 minimum does
not apply for Small Cap 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 Small Cap 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 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 Small Cap 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. Small Cap 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.
-54-
<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.
Small Cap Value ^ Fund intends to pay out substantially all of their
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 Small Cap 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. Small Cap 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, ^ 1997, 00.00% of Small
Cap Value Fund's dividends from net investment income was eligible for this
deduction. For the period December 2, 1996 through November 30, 1997, 0.00% of
Retirement Income Fund's dividends from net investment income was eligible for
this deduction.
-55-
<PAGE>
Shareholders will be notified annually by Equity Funds V, Inc. as to
the federal income tax status of dividends and distributions.
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.
-56-
<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, 1997, the Manager and its
affiliates within the Delaware Group, including Delaware International
Advisers Ltd., were supervising in the aggregate more than $00 billion in
assets in the various institutional or separately managed (approximately
$00,000,000,000 ) and investment company (approximately $00,000,000,000 )
accounts.
The Investment Management Agreement for Small Cap 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 Small Cap 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, ^ 1997, the total net
assets of Small Cap Value Fund were ^ $000. For the period December 2, 1996
through November 30, 1997, the total net assets of Retirement Income Fund were
$000. Under the general supervision of the Board of Directors, the Manager
makes all investment decisions which are implemented by the Fund. Investment
management fees paid by Small Cap Value Fund for the fiscal years ended
November 30, ^ 1995 ^, 1996 and 1997 amounted to ^ $1,371,155 ^, $1,513,474
and $0,000,000, respectively.
The annual compensation paid by Retirement Income Fund for investment
management services is equal to 0.65% on the first $500 millionof 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. Investment ^ management
fees ^ incurred by the Retirement Income Fund for the fiscal year ended
November 30, 1997 were $000 and $000 was paid and $000 was waived due to the
voluntary waiver of fees by the Manager.
The directors of Equity Funds V, Inc. annually review fees paid to
the Manager^.
The Manager pays the salaries of all directors, officers and
employees who are affiliated with both the Manager and Equity Funds V, Inc.
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 Small Cap
Value Fund A Class, Small Cap Value Fund B Class and Small Cap Value Fund C
Class for the fiscal year ended November 30, ^ 1997 were ^ 0.00%, 0.00% and ^
0.00%, respectively, which reflects the impact of their 12b-1 Plans. The ratio
of expenses to average daily net assets for Small
-57-
<PAGE>
Cap Value Fund Institutional Class for the fiscal year ended November 30, ^
1997 was 0.00%. The ratio of expenses to average daily net assets of
Retirement Income Fund A Class for the fiscal year ended November 30, 1997 was
0.00%, which reflects the voluntary waiver of fees by the Manager and the
Distributor . The ratio of expenses to average daily net assets for Retirement
Income Fund Institutional Class for the fiscal year ended November 30, 1997
was 0.00%, which reflects the voluntary waiver of fees by the Manager.
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 Small Cap 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 Small Cap 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
November 30, 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, 1997. 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.
-58-
<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,
1997, Equity Fund V, Inc.'s officers and directors owned less than 1% of ^
theoutstanding shares of the Class A Shares, Class B Shares, Class C Shares
and Institutional Class of Small Cap Value Fund and Retirement Income Fund,
respectively.
As of ^ December 31, 1997, management believes the following accounts
held 5% or more of the outstanding shares of the Class A Shares, Class B
Shares, Class C Shares and Institutional Class of Small Cap Value Fund and
Retirement Income Fund, respectively.
<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------
<S> <C> <C> <C>
Small Cap Value Fund A Class ^ MLPF&S for the sole benefit of its customers
^ Attn: Fund Administration
4800 Deer Lake Drive East - 3rd Floor
Jacksonville, FL 32246 ^ 690,940 7.69%
= ======= =====
Small Cap Value Fund B Class ^ MLPF&S for the sole benefit of its customers
^ Attn: Fund Administration
4800 Deer Lake Drive East - 3rd Floor
Jacksonville, FL 32246 ^ 193,569 16.09%
= ======= ======
Small Cap Value Fund C Class ^ MLPF&S for the sole benefit of its customers
^ Attn: Fund Administration
4800 Deer Lake Drive East - 3rd Floor
Jacksonville, FL 32246 ^ 192,495 48.29%
= ======= ======
Small Cap Value Fund Amalgamated Bank of New York
Institutional Class Cust. TWU-NYC PVT Bus Lines Pension Fund
Amivest Corp. Discretionary Investment Manager
P.O. Box 370 Cooper Station
New York, NY 10276 ^ 121,818 24.67%
= ======= ======
</TABLE>
-59-
<PAGE>
<TABLE>
<CAPTION>
Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------
<S> <C> <C> <C>
Small Cap Value Fund ^ RS DMC Employee Profit Sharing Plan
Institutional Class Delaware Management Company
Employee Profit Sharing Trust
c/o Rick Seidel
1818 Market Street
Philadelphia, PA 19103 ^ 86,602 17.54%
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 49,325 9.99%
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 7.43% ^
Retirement Income Fund ^ John P. Finnegan
A Class ^ 213 Memorial Ave.
^ Haddon Twp, NJ 08033 244 64.02%
Spencer J. Fleming
65 Winding Way Rd.
Stratford, NJ 08084 105 27.56%
DMTC Custodian for the IRA of
Thomas P. Malone
3123 Magee Ave.
Philadelphia, PA 19149 25 6.71%
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 ^ 236,430 99.99%
</TABLE>
-60-
<PAGE>
DMH Corp., Delvoy, Inc., 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 Small Cap
Value Fund was executed following shareholder 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.
*Wayne A. Stork (60)
Chairman and Director and/or Trustee of Equity Funds V, Inc., each of
the other 32 other investment companies in the Delaware
Group and Delaware Capital Management, Inc.
Chairman, President, Chief Executive Officer, Director and/or Trustee
of ^ DMH Corp., Delaware International Holdings Ltd.,
Delaware Distributors, Inc. and Founders Holdings, 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. and Delaware Management
Holdings, Inc.
President and Chief Executive Officer of Delvoy, Inc. Chairman of
Delaware Distributors, L.P.
Director of Delaware Service Company, Inc. and Delaware Investment &
Retirement Services, Inc.
During the past five years, Mr. Stork has served in various
executive capacities at different times ^ within the
Delaware organization.
* Jeffrey J. Nick (44)
President, Chief Executive Officer and Director and/or Trustee of
Equity Funds V, Inc. and each of the other 32 investment
companies in the Delaware Group.
President and Director of Delaware Management Holdings, Inc.
President, Chief Executive Officer and Director of Lincoln National
Investment Companies, Inc.
President of Lincoln Funds Corporation.
From 1992 to 1996, Mr. Nick was Managing Director of Lincoln
National UK plc and from 1989 to 1992, he was Senior Vice
President responsible for corporate planning and development
for Lincoln National Corporation.
- ----------------------
*Director affiliated with the Fund's investment manager and considered an
"interested person" as defined in the 1940 Act.
-61-
<PAGE>
Richard G. Unruh, Jr. ^(58)
Executive Vice President of ^ Equity Funds V, Inc. ^, each of the
other 32 investment companies in the Delaware Group,
Delaware Management Holdings, Inc. and Delaware Capital
Management, Inc.
Executive Vice President and Director of Delaware Management Company,
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.
^
Paul E. Suckow ^(50)
Executive Vice President/Chief Investment Officer, Fixed Income of ^
Equity Funds V, Inc., each of the other 32 investment
companies in the Delaware Group ^, Delaware Management
Company, Inc. and Delaware Management Holdings, Inc.
Executive Vice ^ President and Director of Founders Holdings, Inc.
^ Executive 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 ^(70)
Director and/or Trustee of ^ Equity Funds V, Inc. and each of the
other 32 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 32 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 ^(57)
Director and/or Trustee of ^ Equity Funds V, Inc. and each of the
other 32 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.
-62-
<PAGE>
W. Thacher Longstreth ^(77)
Director and/or Trustee of ^ Equity Funds V, Inc. and each of the
other 32 investment companies in the Delaware Group.
City Hall, Philadelphia, PA 19107.
Philadelphia City Councilman.
Thomas F. Madison (61)
Director and/or Trustee of ^ Equity Funds V, Inc. and ^ each of the
other 32 investment companies in the Delaware Group.
President and Chief Executive Officer, MLM Partners, Inc.
200 South Fifth Street, Suite 2100, Minneapolis, Minnesota 55402.
Mr. Madison has also been Chairman of the Board of
Communications Holdings, Inc. since 1996. From February to
September 1994, Mr. Madison served as Vice Chairman--Office
of the CEO of The Minnesota Mutual Life Insurance Company
and from 1988 to 1993, he was President of U.S. WEST
Communications--Markets.
^ Charles E. Peck (72)
Director and/or Trustee of ^ Equity Funds V, Inc. and ^ each of the
other 32 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.
-63-
<PAGE>
David K. Downes (57)
Executive Vice President/Chief Operating Officer/Chief Financial
Officer of ^ Equity Funds V, Inc., each of the other 32
investment companies in the Delaware Group, Delaware
Management Holdings, Inc^, Founders CBO Corporation,
Delaware Capital Management, Inc. and Delaware Distributors,
L.P.
Executive Vice President, Chief Operating Officer, Chief Financial
Officer and Director of Delaware Management Company, Inc.,
DMH Corp., Delaware Distributors, Inc., Founders Holdings,
Inc. ^, Delaware International Holdings Ltd. and Delvoy^,
Inc.
President/Chief Executive Officer/Chief Financial Officer and
Director of Delaware Service Company, Inc.
^Chairman, Chief Executive Officer and Director of Delaware
Management Trust Company and Delaware Investment &
Retirement Services, Inc ^.
Director of Delaware International Advisers Ltd. and Delaware
Voyageur Holding, Inc. Vice President of Lincoln Funds
Corporation
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. (50)
Senior Vice President ^, Secretary ^ and General Counsel of Equity
Funds V, Inc., each of the other 32 investment companies in
the Delaware Group, Delaware Distributors, L.P. and Delaware
Management Holdings, Inc.
^ Senior Vice President, Secretary, General Counsel and
Director of DMH Corp., Delaware Management Company, Inc.,
Delaware Distributors, ^ Inc., Delaware Service Company,
Inc., Founders Holdings, Inc., Delaware Investment &
Retirement Services, Inc., Delaware Capital
Management, Inc. and Delvoy, Inc.
Executive Vice President, Secretary, General Counsel and Director of
Delaware Management Trust Company.
^Secretary and Director of Delaware International Holdings Ltd.
Director of Delaware International Advisers Ltd. and Delaware
Voyageur Holding, Inc. Secretary of Lincoln Funds
Corporation
Attorney.
During the past five years, Mr. Chamberlain has served in various
capacities at different times ^ within the Delaware
organization.
^
Gerald T. Nichols ^(39)
Vice President/Senior Portfolio Manager of Equity Funds V, Inc.^
and of ^ 11 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.
-64-
<PAGE>
Babak Zenouzi ^(34)
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.
During the past five years, Mr. Zenouzi has served in various
capacities at different times within the Delaware
organization.
Christopher S. Beck ( )
Vice President/Senior Portfolio Manager of Equity Funds V, Inc.
and 9 other investment companies in the Delaware Group and
of Delaware Management Company, Inc.
Before joining the Delaware Group in 1997, Mr. Beck managed the
small cap value fund for two years at Pitcairn Trust
Company. Prior to 1995, he was Director of Research at
Cypress Capital Management in Wilmington and Chief
Investment Officer of the University of Delaware Endowment
Fund ^.
Joseph H. Hastings (47)
Senior Vice President/Corporate Controller of ^ the Equity Funds V,
Inc., each of the other 32 investment companies in the
Delaware Group and Founders Holdings, Inc.
Senior Vice President/Corporate Controller and Treasurer of
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., Delaware International
Holdings Ltd. and Delvoy^, Inc.
Chief Financial Officer/Treasurer of Delaware Investment &
Retirement Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of
Delaware Management Trust Company.
^Senior Vice President/Assistant Treasurer of Founders CBO
Corporation.
Treasurer of Lincoln Funds 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 ^(35)
Senior Vice President/Treasurer of ^ Equity Funds V, Inc., each of
the other 32 investment companies in the Delaware Group^ and
Founders Holdings, Inc.
Senior Vice ^ President/Investment Accounting of Delaware
Management Company, Inc. and Delaware ^ Service Company,
Inc.
^Senior Vice President and Treasurer/Manager of Investment
Accounting of Delaware Distributors, L.P.
Senior Vice President and 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.
-65-
<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, ^ 1997 and an estimate of
annual benefits to be received upon retirement under the Delaware Group
Retirement Plan for Directors/Trustees as of November 30, ^ 1997.
<TABLE>
<CAPTION>
Pension or
Retirement
Benefits
Accrued Estimated Total
Aggregate as Part of Annual Compensation
Compensation Equity Benefits from all ^ 33
from Equity Funds V, Inc. Upon Delaware Group
Name Funds V, Inc. Expenses Retirement* ^ Investment Companies
<S> <C> <C> <C> <C>
W. Thacher Longstreth ^ $0,000 None ^ $38,000 $00,000
Ann R. Leven ^ $0,000 None ^ $38,000 $00,000
Walter P. Babich ^ $0,000 None ^ $38,000 $00,000
Anthony D. Knerr ^ $0,000 None ^ $38,000 $00,000
Charles E. Peck ^ $0,000 None ^ $38,000 $00,000
Thomas F. Madison** $0,000 None ^ $38,000 $00,000
</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, ^ 1997, he or she
would be entitled to annual payments totaling ^ $38,000, 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.
** Thomas F. Madison joined Equity Funds V, Inc.'s Board of Directors on
April 30, 1997.
-66-
<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
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.
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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:
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 ^ stocks
issued by emerging growth companies exhibiting strong capital appreciation
potential.
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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. Blue Chip Fund seeks to achieve long-term capital appreciation.
Current income is a secondary objective. It seeks to achieve these objectives
by investing primarily in equity securities and any securities that are
convertible into equity securities. Quantum Fund seeks to achieve long-term
capital appreciation. It seeks to achieve this objective by investing
primarily in equity securities of medium- to large-sized companies expected to
grow over time that meet the Fund's "Social Criteria" strategy.
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.
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 ^ New Jersey Fund seeks a high level of current interest
income exempt from federal ^ income tax and New Jersey state and local taxes,
consistent with preservation of capital. Tax-Free Ohio Fund seeks a high level
of current interest income exempt from federal income tax and Ohio state and
local taxes, consistent with preservation of capital. Tax-Free Pennsylvania
Fund seeks a high level of current interest income exempt from federal income
tax and Pennsylvania state and local taxes, consistent with the preservation
of capital.
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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.
^ 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. ^ Overseas Equity 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. ^
Delaware Group Premium Fund, Inc. offers ^ 15 funds available
exclusively as funding vehicles for certain insurance company separate
accounts. Decatur Total Return 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. Delchester
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. Cash Reserve Series ^ seeks the
highest level of income consistent with preservation of capital and liquidity
through investments in short-term money market instruments. DelCap Series ^
seeks long-term capital appreciation by investing its assets in a diversified
portfolio of securities exhibiting the potential for significant growth.
Delaware 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 the market.
Trend 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 market place 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. Strategic Income Series
seeks high current income and total return by using a multi-sector investment
approach, investing primarily 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.
Devon Series seeks current income and capital appreciation by investing
primarily in income-producing common stocks, with a focus on common stocks
that the investment manager believes have the potential for above-average
dividend increases over time. Emerging Markets Series seeks to achieve
long-term capital appreciation by investing primarily in equity securities of
issuers located or operating in emerging countries. Convertible Securities
Series seeks a high level of total return on its assets through a combination
of capital appreciation and current income by investing primarily in
convertible securities. Quantum Series seeks to achieve long-term capital
appreciation by
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investing primarily in equity securities of medium to large-sized companies
expected to grow over time that meet the Series' "Social Criteria" strategy.
Delaware-Voyageur US Government Securities Fund seeks to provide a
high level of current income consistent with the prudent investment risk by
investing in U.S. Treasury bills, notes, bonds, and other obligations issued
or unconditionally guaranteed by the full faith and credit of the U.S.
Treasury, and repurchase agreements fully secured by such obligations.
Delaware-Voyageur Tax-Free Arizona Insured Fund seeks to provide a
high level of current income exempt from federal income tax and the Arizona
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Minnesota Insured Fund seeks to provide a high level of
current income exempt from federal income tax and the Minnesota personal
income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Minnesota Intermediate Fund seeks to
provide a high level of current income exempt from federal income tax and the
Minnesota personal income tax, consistent with preservation of capital. The
Fund seeks to reduce market risk by maintaining an average weighted maturity
from five to ten years.
Delaware-Voyageur Tax-Free California Insured Fund seeks to provide a
high level of current income exempt from federal income tax and the California
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Florida Insured Fund seeks to provide a high level
of current income exempt from federal income tax, consistent with the
preservation of capital. The Fund will seek to select investments that will
enable its shares to be exempt from the Florida intangible personal property
tax. Delaware-Voyageur Tax-Free Florida Fund seeks to provide a high level of
current income exempt from federal income tax, consistent with the
preservation of capital. The Fund will seek to select investments that will
enable its shares to be exempt from the Florida intangible personal property
tax. Delaware-Voyageur Tax-Free Kansas Fund seeks to provide a high level of
current income exempt from federal income tax, the Kansas personal income tax
and the Kansas Intangible personal property tax, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free Missouri Insured Fund
seeks to provide a high level of current income exempt from federal income tax
and the Missouri personal income tax, consistent with the preservation of
capital. Delaware-Voyageur Tax-Free New Mexico Fund seeks to provide a high
level of current income exempt from federal income tax and the New Mexico
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Oregon Insured Fund seeks to provide a high level
of current income exempt from federal income tax and the Oregon personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free Utah Fund seeks to provide a high level of current income exempt from
federal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Washington Insured Fund seeks to provide a high
level of current income exempt from federal income tax, consistent with the
preservation of capital.
Delaware-Voyageur Tax-Free Florida Intermediate Fund seeks to provide
a high level of current income exempt from federal income tax, consistent with
the preservation of capital. The Fund will seek to select investments that
will enable its shares to be exempt from the Florida intangible personal
property tax. The Fund seeks to reduce market risk by maintaining an average
weighted maturity from five to ten years.
Delaware-Voyageur Tax-Free Arizona Fund seeks to provide a high level
of current income exempt from federal income tax and the Arizona personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free California Fund seeks to provide a high level of current income
exempt from federal income tax and the California personal income tax,
consistent with the preservation of capital. Delaware-Voyageur Tax-Free Iowa
Fund seeks to provide a high level of current income exempt from federal
income tax and the Iowa
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personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Idaho Fund seeks to provide a high level of current
income exempt from federal income tax and the Idaho personal income tax,
consistent with the preservation of capital. Delaware-Voyageur Minnesota High
Yield Municipal Bond Fund seeks to provide a high level of current income
exempt from federal income tax and the Minnesota personal income tax primarily
through investment in medium and lower grade municipal obligations. National
High Yield Municipal Fund seeks to provide a high level of income exempt from
federal income tax, primarily through investment in medium and lower grade
municipal obligations. Delaware-Voyageur Tax-Free New York Fund seeks to
provide a high level of current income exempt from federal income tax and the
personal income tax of the state of New York and the city of New York,
consistent with the preservation of capital. Delaware-Voyageur Tax-Free
Wisconsin Fund seeks to provide a high level of current income exempt from
federal income tax and the Wisconsin personal income tax, consistent with the
preservation of capital.
Delaware-Voyageur Tax-Free Colorado Fund seeks to provide a high
level of current income exempt from federal income tax and the Colorado
personal income tax, consistent with the preservation of capital.
Aggressive Growth Fund seeks long-term capital appreciation, which
the Fund attempts to achieve by investing primarily in equity securities
believed to have the potential for high earnings growth. Although the Fund, in
seeking its objective, may receive current income from dividends and interest,
income is only an incidental consideration in the selection of the Fund's
investments. Growth Stock Fund has an objective of long-term capital
appreciation. The Fund seeks to achieve its objective from equity securities
diversified among individual companies and industries. Tax-Efficient Equity
Fund seeks to obtain for taxable investors a high total return on an after-tax
basis. The Fund will attempt to achieve this objective by seeking to provide a
high long-term after-tax total return through managing its portfolio in a
manner that will defer the realization of accrued capital gains and minimize
dividend income.
Delaware-Voyageur Tax-Free Minnesota Fund seeks to provide a high
level of current income exempt from federal income tax and the Minnesota
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free North Dakota Fund seeks to provide a high level of
current income exempt from federal income tax and the North Dakota personal
income tax, consistent with the preservation of capital.
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).
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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 ^ 15 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 Small Cap Value
Fund. The Distributor ("DDLP")(for all periods beginning January 3, 1995) and,
in its capacity as such, DDI (prior to January 3, 1995) received net
commissions from Small Cap Value Fund and Retirement Income Fund on behalf of
Class A Shares, after reallowances to dealers, as follows:
<TABLE>
<CAPTION>
Fiscal Total Amount Amounts Net
Year of Underwriting Reallowed Commission
Ended Commission to Dealers to DDI
------------------- --------------- ---------- ----------
<S> <C> <C> <C>
Small Cap Value Fund
November 30, ^ 1997 $000 $000 $000
November 30, 1996 402,194 335,756 66,438
November 30, 1995 608,374 527,679 80,695
Retirement Income Fund
November 30, ^ 1997 $000 $000 $000
</TABLE>
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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 Small Cap
Value Fund and Retirement Income Fund as follows:
Fiscal Year Ended Limited CDSC Payments
----------------- ---------------------
Small Cap Value Fund
November 30, 1997 $000
November 30, 1996 ^-0-
November 30, 1995 218
Retirement Income Fund
November 30, ^ 1997 $000
The Distributor and, in its capacity as such, DDI received in the
aggregate CDSC payments with respect to Class B Shares of Small Cap Value Fund
as follows:
Fiscal Year Ended CDSC Payments
----------------- -------------
November 30, 1997 $000
November 30, 1996 ^ 30,116
November 30, 1995 14,682
^
The Distributor received CDSC payments with respect to Class C Shares
of Small Cap Value Fund as follows:
Fiscal Year Ended CDSC Payments
----------------- -------------
November 30, 1997 $000
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
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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 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.
^
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 shares to each fund as follows. Of such three hundred
fifty million shares allocated to Small Cap Value Fund, one hundred fifty
million shares have been allocated to Small Cap Value Fund A Class, one
hundred million shares have been allocated to Small Cap Value Fund B Class,
fifty million shares have been allocated to Small Cap Value Fund C Class and
fifty million shares have been allocated to Small Cap 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.
Small Cap Value Fund 350 million
Small Cap Value Fund A Class 150 million
Small Cap Value Fund B Class 100 million
Small Cap Value Fund C Class 50 million
Small Cap Value Fund Institutional Class 50 million
Retirement Income Fund 200 million
Retirement Income Fund A Class 100 million
Retirement Income Fund B Class 25 million
Retirement Income Fund C Class 25 million
Retirement Income Fund Institutional Class 50 million
^
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
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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 on July 31, 1997, the name of the Value Fund series changed to
Small Cap Value Fund series and the names of the Value Fund A Class, Value
Fund B Class, Value Fund C Class and Value Fund Institutional Class changed to
Small Cap Value Fund A Class, Small Cap Value Fund B Class, Small Cap Value
Fund C Class and Small Cap Value Fund Institutional Class, respectively.
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.
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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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.
-77-
<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, ^ your bottom line at retirement could be lower ^ or it could ^
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%]
-78-
<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%]
-79-
<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.
^
-80-
<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.
THE POWER OF TAX-DEFERRED COMPOUNDING
Over time, tax-deferred investing has the potential to double your
investment earnings.
The following examples are ^ based on a ^ $200 invested on January 1^
each year and assumes an 8% fixed rate of return, with no fluctuation in the
value of principal. The figures do not reflect the impact of any fees or sales
charges. These figures are for illustration ^ only and ^ are not intended to
represent any future investment results.
Accumulated Value
Over 10 years Tax Bracket
$26, 403 39.6%
$26,881 36%
$27,516 31%
$27,905 28%
$31,828 Tax-deferred
Over 20 years
$69,544 39.6%
$71, 986 36%
$75,540 31%
$77,767 28%
$102,476 Tax-deferred
Over 40 years
$254,528 39.6%
$274,662 36%
$305,626 31%
$326,046 28%
$607,355 Tax-deferred
-81-
<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.
-82-
<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. ^ Each Fund's Statement of Net Assets,
Statement of Operations, Statements of Changes in Net Assets, Financial
Highlights and Notes to Financial Statements, as well as the report of Ernst &
Young LLP, independent auditors, for the fiscal year ended November 30, ^
1997, are included in Delaware Group Equity Funds V, ^ Inc.'s Annual ^ Reports
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 ^ Reports into this Part B. ^
-83-
<PAGE>
The Delaware Group includes funds with a wide range of investment
objectives. Stock funds, income funds, ^ national and state-specific tax-^
exempt funds, money market funds, global and international funds and
closed-end ^ funds give investors the ability to create a portfolio that fits
their personal financial goals. For more information, shareholders of the Fund
Classes should contact their financial adviser or call Delaware Group at
800-523-4640 and shareholders of the Institutional Class should 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>
- ---------------------------------------------------------
DELAWARE GROUP EQUITY FUNDS V, INC.
- ---------------------------------------------------------
^ SMALL CAP VALUE FUND
- ---------------------------------------------------------
RETIREMENT INCOME FUND
- ---------------------------------------------------------
- ---------------------------------------------------------
A CLASS
- ---------------------------------------------------------
B CLASS
- ---------------------------------------------------------
C CLASS
- ---------------------------------------------------------
INSTITUTIONAL CLASS
- ---------------------------------------------------------
CLASSES OF DELAWARE GROUP
EQUITY FUNDS V, INC.
- ---------------------------------------------------------
PART B
STATEMENT OF
ADDITIONAL INFORMATION
- ---------------------------------------------------------
^ January 29, 1998
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 Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Accountant's Report
* The financial statements and Accountant's Report listed
above for the Registrant's Small Cap Value Fund (formerly
known as Value Fund) and Retirement Income Fund for the
fiscal year ended November 30, 1997 to be filed by
Post-Effective Amendment.
(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 Article Fourth of Articles
Supplementary (November 27, 1996) incorporated
into this filing by reference to Post-Effective
Amendment No. 17 filed January 28, 1997.
(c) Executed Articles of Amendment (November 27,
1996) incorporated into this filing by reference
to Post-Effective Amendment No. 17 filed January
28, 1997.
(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 Article Fourth of Articles
Supplementary (November 27, 1996)
incorporated into this filing by reference
to Post-Effective Amendment No. 17 filed
January 28, 1997.
(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 Small Cap Value
Fund (formerly known as 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 incorporated into this
filing by reference to Post-Effective Amendment
No. 17 filed January 28, 1997.
(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.
<PAGE>
PART C - Other Information
(Continued)
(ii) Executed Distribution Agreement (November
29, 1996) between Delaware Distributors,
L.P. and the Registrant on behalf of
Retirement Income Fund incorporated into
this filing by reference to Post-Effective
Amendment No. 17 filed January 28, 1997.
(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 Small Cap Value Fund
(formerly known as Value Fund) (Module)
incorporated into this filing by reference to
Post-Effective Amendment No. 16 filed September
13, 1996.
(i) Executed Amendment to Custodian Agreement
(November 29, 1996) between The Chase
Manhattan Bank and the Registrant on behalf
of Retirement Income Fund incorporated into
this filing by reference to Post-Effective
Amendment No. 18 filed April 30, 1997.
<PAGE>
PART C - Other Information
(Continued)
(b) Form of Securities Lending Agreement between The
Chase Manhattan Bank and the Registrant on
behalf of Small Cap Value Fund (formerly known
as Value Fund) incorporated into this filing by
reference to Post-Effective Amendment No. 16
filed September 13, 1996.
(c) Form of Securities Lending Agreement (1996)
between The Chase Manhattan Bank and the
Registrant on behalf of Retirement Income Fund
incorporated into this filing by reference to
Post-Effective Amendment No. 17 filed January
28, 1997.
(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 Small Cap Value Fund
(formerly known as Value Fund) and Retirement
Income Fund incorporated into this filing by
reference to Post-Effective Amendment No. 17
filed January 28, 1997.
(i) Schedule A to Shareholders Services
Agreement attached as Exhibit.
(ii) Schedule A to Shareholders Services
Agreement attached as Exhibit
(iii) Schedule A to Shareholders Services
Agreement 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 Small Cap Value Fund (formerly known
as Value Fund)and Retirement Income Fund
incorporated into this filing by reference to
Post-Effective Amendment No. 17 filed January
28, 1997.
(i) Executed Amendment No. 4A (April 14, 1997)
to Schedule A to Delaware Group of Funds
Fund Accounting Agreement attached as
Exhibit.
(ii) Executed Amendment No. 5 (May 1, 1997) to
Schedule A to Delaware Group of Funds Fund
Accounting Agreement attached as Exhibit.
(iii) Executed Amendment No. 6 (July 21, 1997)
to Schedule A to Delaware Group of Funds
Fund Accounting Agreement attached as
Exhibit.
(10) Opinion and Consent of Counsel. Inapplicable.
<PAGE>
PART C - Other Information
(Continued)
(11) Consent of Auditors.To be filed by Post-Effective
Amendment.
(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 Class A (November 29,
1995) on behalf of Small Cap Value Fund
(formerly known as Value Fund) incorporated into
this filing by reference to Post-Effective
Amendment No. 15 filed January 29, 1996.
(b) Plan under Rule 12b-1 for Class B (November 29,
1995) on behalf of Small Cap Value Fund
(formerly known as Value Fund) incorporated into
this filing by reference to Post-Effective
Amendment No. 15 filed January 29, 1996.
(c) Plan under Rule 12b-1 for Class C (November 29,
1995) on behalf of Small Cap Value Fund
(formerly known as Value Fund) incorporated into
this filing by reference to Post-Effective
Amendment No. 15 filed January 29, 1996.
(d) Plan under Rule 12b-1 for Class A (November 29,
1996) on behalf of Retirement Income Fund
incorporated into this filing by reference to
Post-Effective Amendment No. 17 filed January
28, 1997.
(e) Plan under Rule 12b-1 for Class B (November 29,
1996) on behalf of Retirement Income Fund
incorporated into this filing by reference to
Post-Effective Amendment No. 17 filed January
28, 1997.
(f) Plan under Rule 12b-1 for Class C (November 29,
1996) on behalf of Retirement Income Fund
incorporated into this filing by reference to
Post-Effective Amendment No. 17 filed January
28, 1997.
** Relates to Small Cap Value Fund's and Retirement Income Fund's retail
classes of shares only.
<PAGE>
PART C - Other Information
(Continued)
(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, Post-Effective Amendment No.
16 filed September 13, 1996, Post-Effective
Amendment No. 17 filed January 28, 1997 and
Post-Effective Amendment No. 18 filed April 30,
1997.
(17) Financial Data Schedules.
(a) Incorporated into this filing by reference to
Post-Effective Amendment No. 17 filed January
28, 1997 and Post-Effective Amendment No. 18
filed April 30, 1997.
(18) Plan under Rule 18f-3.
(a) Amended Plan under Rule 18f-3 attached as
Exhibit.
(b) Amended Rule 18f-3 Plan attached as Exhibit.
(19) Other: Directors' Power of Attorney.
(a) Incorporated into this filing by reference to
Post-Effective Amendment No. 13 filed September
14, 1995.
(b) Power of Attorney for Thomas F. Madison and
Jeffrey J. Nick attached as Exhibit.
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
Small Cap Value Fund:
Small Cap Value Fund (formerly known
as Value Fund) A Class
Common Stock Par Value 14,819 Accounts as of
$.01 Per Share October 31, 1997
<PAGE>
PART C - Other Information
(Continued)
(1) (2)
Number of
Title of Class Record Holders*
-------------- ---------------
Small Cap Value Fund (formerly known
as Value Fund) B Class
Common Stock Par Value 2,891 Accounts as of
$.01 Per Share October 31, 1997
Small Cap Value Fund (formerly known
as Value Fund) C Class
Common Stock Par Value 474 Accounts as of
$.01 Per Share October 31, 1997
Small Cap Value Fund (formerly known
as) Institutional Class
Common Stock Par Value 44 Accounts as of
$.01 Per Share October 31, 1997
Delaware Group Equity Funds V, Inc.'s
Retirement Income Fund:
Retirement Income Fund A Class
Common Stock Par Value 7 Account as of
$.01 Per Share October 31, 1997
Retirement Income Fund B Class
Common Stock Par Value 0 Accounts as of
$.01 Per Share October 31, 1997
Retirement Income Fund C Class
Common Stock Par Value 0 Accounts as of
$.01 Per Share October 31, 1997
Retirement Income Fund
Institutional Class
Common Stock Par Value 5 Accounts as of
$.01 Per Share October 31, 1997
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.
<PAGE>
PART C - Other Information
(Continued)
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 Equity Funds I, Inc., Delaware Group Equity Funds II, Inc., Delaware
Group Equity Funds III, Inc., Delaware Group Equity Funds IV, Inc., Delaware
Group Government Fund, Inc., Delaware Group Income Funds, Inc., Delaware Group
Limited-Term Government Funds, Inc., Delaware Group Cash Reserve, Inc.,
Delaware Group Tax-Free Fund, Inc., Delaware Group State Tax-Free Income
Trust, 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., Delaware Group Global Dividend and Income Fund, Inc.,
Voyageur Tax-Free Funds, Inc., Voyageur Intermediate Tax-Free Funds, Inc.,
Voyageur Insured Funds, Inc., Voyageur Funds, Inc., Voyageur Investment Trust,
Voyageur Investment Trust II, Voyageur Mutual Funds, Inc., Voyageur Mutual
Funds II, Inc., Voyageur Mutual Funds III, Inc., Voyageur Arizona Municipal
Income Fund, Inc., Voyageur Colorado Insured Municipal Income Fund, Inc.,
Voyageur Florida Insured Municipal Income Fund, Voyageur Minnesota Municipal
Fund, Inc., Voyageur Minnesota Municipal Fund II, Inc. and Voyageur Minnesota
Municipal Fund III, 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 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 services, dividend
disbursing, accounting servicing 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:
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Wayne A. Stork Chairman of the Board, President, Chief Executive
Officer, Chief Investment Officer and Director of
Delaware Management Company, Inc.; Chairman of the
Board, President, Chief Executive Officer and
Director of DMH Corp., Delaware Distributors, Inc.
and Founders Holdings, Inc.; Chairman, Chief
Executive Officer and Director of Delaware
Management Holdings, Inc., Delaware International
Holdings Ltd. and Delaware International Advisers
Ltd.; Chairman of the Board and Director of the
Registrant, each of the other funds in the Delaware
Group and Delaware Capital Management, Inc.;
Chairman of Delaware Distributors, L.P.; President
and Chief Executive Officer of Delvoy, Inc.; and
Director of Delaware Service Company, Inc. and
Delaware Investment & Retirement Services, Inc.
Richard G. Unruh, Jr. Executive Vice President and Director of Delaware
Management Company, Inc.; Executive Vice President
of the Registrant, each of the other funds in the
Delaware Group, 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, AAA Mid Atlantic,
Inc. since 1989, 2040 Market Street, Philadelphia,
PA; Board of Directors, Metron, Inc. since 1995,
11911 Freedom Drive, Reston, VA
Paul E. Suckow Executive Vice President/Chief Investment Officer,
Fixed Income of Delaware Management Company, Inc.,
the Registrant, each of the other funds in the
Delaware Group and Delaware Management Holdings,
Inc.; Executive Vice President and Director of
Founders Holdings, Inc.; Executive Vice President of
Delaware Capital Management, Inc.; and Director of
Founders CBO Corporation
Director, HYPPCO Finance Company Ltd.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
David K. Downes Executive Vice President, Chief Operating Officer,
Chief Financial Officer and Director of Delaware
Management Company, Inc., DMH Corp, Delaware
Distributors, Inc., Founders Holdings, Inc. and
Delvoy, Inc.; Executive Vice President, Chief
Operating Officer and Chief Financial Officer of the
Registrant and each of the other funds in the
Delaware Group, Delaware Management Holdings, Inc.,
Founders CBO Corporation, Delaware Capital
Management, Inc. and Delaware Distributors, L.P.;
President, Chief Executive Officer, Chief Financial
Officer and Director of Delaware Service Company,
Inc.; President, Chief Operating Officer, Chief
Financial Officer and Director of Delaware
International Holdings Ltd.; Chairman, Chief
Executive Officer and Director of Delaware
Investment & Retirement Services, Inc.; Chairman and
Director of Delaware Management Trust Company;
Director of Delaware International Advisers Ltd.;
and Vice President of Lincoln Funds Corporation
Chief Executive Officer and Director of Forewarn,
Inc. since 1993, 8 Clayton Place, Newtown Square, PA
George M. Senior Vice President, General Counsel, Secretary
Chamberlain, Jr. and Director of Delaware Management Company, Inc.,
DMH Corp., Delaware Distributors, Inc., Delaware
Service Company, Inc., Founders Holdings, Inc.,
Delaware Capital Management, Inc., Delaware
Investment & Retirement Services, Inc. and Delvoy,
Inc.; Senior Vice President, Secretary and General
Counsel of the Registrant, each of the other funds
in the Delaware Group, Delaware Distributors, L.P.
and Delaware Management Holdings, Inc.; Senior Vice
President and Director of Delaware International
Holdings Ltd.; Executive Vice President, Secretary,
General Counsel and Director of Delaware Management
Trust Company; Director of Delaware International
Advisers Ltd.; Secretary of Lincoln Funds
Corporation
*Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Richard J. Flannery Senior Vice President/Corporate and International
Affairs of the Registrant, each of the other funds
in the Delaware Group, Delaware Management Holdings,
Inc., DMH Corp., Delaware Management Company, Inc.,
Delaware Distributors, Inc., Delaware Distributors,
L.P., Delaware Management Trust Company, Delaware
Capital Management, Inc., Delaware Service Company,
Inc. and Delaware Investment & Retirement Services,
Inc.; Executive Vice Presidnet/Corporate &
International Affairs and Director of Delaware
International Holdings Ltd.; Senior Vice President/
Corporate and International Affairs and Director of
Founders Holdings, Inc. and Delvoy, Inc.; Senior
Vice President of Founders CBO Corporation; 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 Senior Vice President and Treasurer of the
Registrant, each of the other funds in the Delaware
Group and Founders Holdings, Inc.; Senior Vice
President/Investment Accounting of Delaware
Management Company, Inc. and Delaware Service
Company, Inc.; Senior Vice President and Treasurer/
Manager, Investment Accounting of Delaware
Distributors, L.P.; Assistant Treasurer of Founders
CBO Corporation; and Senior Vice President and
Manager of Investment Accounting of Delaware
International Holdings Ltd.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Joseph H. Hastings Senior Vice President/Corporate Controller and
Treasurer of Delaware Management Holdings, Inc., DMH
Corp., Delaware Management Company, Inc., Delaware
Distributors, Inc., Delaware Capital Management,
Inc., Delaware Distributors, L.P., Delaware Service
Company, Inc., Delaware International Holdings Ltd.
and Delvoy, Inc.; Senior Vice President/Corporate
Controller of the Registrant, each of the other
funds in the Delaware Group and Founders Holdings,
Inc.; Executive Vice President, Chief Financial
Officer and Treasurer of Delaware Management Trust
Company; Chief Financial Officer and Treasurer of
Delaware Investment & Retirement Services, Inc.;
Senior Vice President/Assistant Treasurer of
Founders CBO Corporation; and Treasurer of Lincoln
Funds Corporation.
Michael T. Taggart Senior Vice President/Facilities Management and
Administrative Services of Delaware Management
Company, Inc.
Douglas L. Anderson Senior Vice President/Operations of Delaware
Management Company, Inc., Delaware Investment and
Retirement Services, Inc. and Delaware Service
Company, Inc.; Senior Vice President/ Operations and
Director of Delaware Management Trust Company
James L. Shields Senior Vice President/Chief Information Officer of
Delaware Management Company, Inc., Delaware Service
Company, Inc. and Delaware Investment & Retirement
Services, Inc.
Eric E. Miller Vice President, Assistant Secretary and Deputy
General Counsel of the Registrant and each of the
other funds in the Delaware Group, 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 Holdings, Inc., Delaware Capital
Management, Inc. and Delaware Investment &
Retirement Services, Inc.; and Vice President and
Assistant Secretary of Delvoy, Inc.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
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.
Partner of Tri-R Associates since 1989, 10001
Sandmeyer Lane, Philadelphia, PA
Richard Salus(1) Vice President/Assistant Controller of Delaware
Management Company, Inc. and Delaware Management
Trust Company
Bruce A. Ulmer Vice President/Director of LNC Internal Audit of
Delaware Management Company, Inc., the Registrant,
each of the other funds in the Delaware Group,
Delaware Management Holdings, Inc., DMH Corp.,
Delaware Management Trust Company and Delaware
Investment & Retirement Services, Inc.; Vice
President/Director of Internal Audit of Delvoy, Inc.
Steven T. Lampe(2) 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., Delaware
Investment & Retirement Services, Inc. and Delvoy,
Inc.
Christopher Adams(3) Vice President/Strategic Planning of Delaware
Management Company, Inc. and Delaware Service
Company, Inc.
Susan L. Hanson Vice President/Strategic Planning of Delaware
Management Company, Inc. and Delaware Service
Company, Inc.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Dennis J. Mara(4) Vice President/Acquisitions of Delaware Management
Company, Inc.
Scott Metzger Vice President/Business Development of Delaware
Management Company, Inc. and Delaware Service
Company, 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.;
Vice President of Delvoy, Inc.
Rosemary E. Milner Vice President/Legal Registrations of Delaware
Management Company, Inc., the Registrant, each of
the other funds in the Delaware Group, Delaware
Distributors, L.P. and Delaware Distributors, Inc.
Mary Ellen Carrozza Vice President/Client Services of Delaware
Management Company, Inc. and the Registrant
Gerald T. Nichols 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 Treasurer, Assistant
Secretary and Director of Founders CBO Corporation
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.
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.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
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(5) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc. and each of the tax-exempt
and fixed income funds in the Delaware Group
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 and each of
the equity funds in the Delaware Group and Delaware
Capital Management, Inc.
Gerald S. Frey(6) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant and each of
the equity funds in the Delaware Group
Christopher Beck(7) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant and each of
the equity funds in the Delaware Group
Elizabeth H. Howell(8) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc. and the Delaware-Voyageur
Tax-Free Minnesota Intermediate, Delaware-Voyageur
Minnesota Insured, Delaware-Voyageur Tax-Free
Minnesota, Delaware-Voyageur Tax-Free Idaho,
Delaware-Voyageur Tax-Free Kansas, Delaware-Voyageur
Tax-Free Missouri, Delaware-Voyageur Tax-Free
Oregon, Delaware-Voyageur Tax-Free Washington,
Delaware-Voyageur Tax-Free Iowa and
Delaware-Voyageur Tax-Free Wisconin Funds.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<PAGE>
PART C - Other Information
(Continued)
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
Andrew M. McCullagh(9) Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc. and the Delaware-Voyageur
Tax-Free Arizona Insured, Delaware-Voyageur Tax-Free
Arizona, Delaware-Voyageur Tax-Free California
Insured, Delaware-Voyageur Tax-Free Colorado,
Delaware-Voyageur Tax-Free New Mexico,
Delaware-Voyageur Tax-Free North Dakota and
Delaware-Voyageur Tax-Free Utah Funds.
Babak Zenouzi Vice President/Senior Portfolio Manager of Delaware
Management Company, Inc., the Registrant and each of
the equity funds and the closed-end funds in the
Delaware Group
Paul Grillo Vice President/Portfolio Manager of Delaware
Management Company, Inc., the Registrant and each of
the tax-exempt and fixed income funds in the
Delaware Group
Marshall T. Bassett Vice President/Portfolio Manager of Delaware
Management Company, Inc. and each of the equity
funds in the Delaware Group
John Heffern Vice President/Portfolio Manager of Delaware
Management Company, Inc. and each of the equity
funds in the Delaware Group
(1) SENIOR MANAGER, Ernst & Young LLP prior to December 1996.
(2) TAX MANAGER, Price Waterhouse LLP prior to October 1995.
(3) SENIOR ASSOCIATE, FAS, Coopers & Lybrand LLP prior to October 1995.
(4) CORPORATE CONTROLLER, IIS prior to July 1997 and DIRECTOR, FINANCIAL
PLANNING, Decision One prior to March 1996.
(5) INVESTMENT OFFICER, Travelers Insurance prior to January 1997.
(6) SENIOR DIRECTOR, Morgan Grenfell Capital Management prior to June 1996.
(7) SENIOR PORTFOLIO MANAGER, Pitcairn Trust Company prior to May 1997.
(8) SENIOR PORTFOLIO MANAGER, Voyageur Fund Managers, Inc. prior to May 1997.
(9) SENIOR VICE PRESIDENT, SENIOR PORTFOLIO MANAGER, Voyageur Asset
Management LLC prior to May 1997.
* 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
Wayne A. Stork Chairman Chairman
Bruce D. Barton President and Chief Executive None
Officer
David K. Downes Senior Vice President, Executive Vice
Chief Administrative Officer President/Chief
and Chief Financial Officer Operating Officer/
Chief Financial Officer
George M. Chamberlain, Jr. Senior Vice President/Secretary/ Senior Vice President/
General Counsel Secretary/General Counsel
Terrence P. Cunningham Senior Vice President/ Financial None
Institutions
Thomas E. Sawyer Senior Vice President/ None
National Sales Director
Dana B. Hall Senior Vice President/ None
Key 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>
Mac McAuliffe Senior Vice President/Sales None
Manager, Western Division
William F. Hostler Senior Vice President/ None
Marketing Services
J. Chris Meyer Senior Vice President/ None
Director Product Management
Stephen H. Slack Senior Vice President/Wholesaler None
William M. Kimbrough Senior Vice President/Wholesaler None
Daniel J. Brooks Senior Vice President/Wholesaler None
Richard J. Flannery Senior Vice President/Corporate Senior Vice President/
and International Affairs Corporate and
International Affairs
Bradley L. Kolstoe Senior Vice President/Western None
Division Sales Manager
Henry W. Orvin Senior Vice President/Eastern None
Division Sales Manager - Wire/
Regional Channel
Michael P. Bishof Senior Vice President and Treasurer/ Senior Vice
Manager, Investment Accounting President/Treasurer
Eric E. Miller Vice President/Assistant Secretary/ Vice President/
Deputy General Counsel Assistant Secretary/
Deputy General Counsel
Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary
Steven T. Lampe Vice President/Taxation Vice President/Taxation
</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>
Joseph H. Hastings Vice President/Corporate Senior Vice President/
Controller & Treasurer Corporate Controller
Lisa O. Brinkley Vice President/Compliance Vice President/
Compliance
Rosemary E. Milner Vice President/Legal Registrations Vice President/Legal
Registrations
Daniel H. Carlson Vice President/Strategic Marketing None
Diane M. Anderson Vice President/Plan Record Keeping None
and Administration
Anthony J. Scalia Vice President/Defined Contribution None
Sales, SW Territory
Courtney S. West Vice President/Defined Contribution None
Sales, NE Territory
Denise F. Guerriere Vice President/Client Services None
Gordon E. Searles Vice President/Client Services None
Julia R. Vander Els Vice President/Participant Services None
Jerome J. Alrutz Vice President/Retail Sales None
Joanne A. Mettenheimer Vice President/New Business None
Development
Scott Metzger Vice President/Business Development Vice President/Business
Development
Stephen C. Hall Vice President/Institutional Sales None
Gregory J. McMillan Vice President/ National Accounts 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>
Christopher H. Price Vice President/Manager, None
Insurance
Stephen J. DeAngelis Vice President/Product None
Development
Andrew W. Whitaker Vice President/Financial Institutions None
Jesse Emery Vice President/ Marketing None
Communications
Darryl S. Grayson Vice President, Broker/Dealer None
Internal Sales
Susan T. Friestedt Vice President/Client Service None
Dinah J. Huntoon Vice President/Product None
Manager Equity
Soohee Lee Vice President/Fixed Income None
Product Management
Michael J. Woods Vice President/ UIT Product None
Management
Ellen M. Krott Vice President/Marketing None
Dale L. Kurtz Vice President/Marketing Support None
Holly W. Reimel Vice President/Manager, Key Accounts None
David P. Anderson Vice President/Wholesaler None
Lee D. Beck 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>
Gabriella Bercze Vice President/Wholesaler None
Terrence L. Bussard Vice President/Wholesaler None
William S. Carroll Vice President/Wholesaler None
William L. 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
Ronald A. Haimowitz Vice President/Wholesaler None
Christopher L. Johnston Vice President/Wholesaler None
Michael P. Jordan Vice President/Wholesaler None
Jeffrey A. Keinert Vice President/Wholesaler None
Thomas P. Kennett Vice President/ Wholesaler None
Debbie A. Marler Vice President/Wholesaler None
Nathan W. Medin Vice President/Wholesaler None
Roger J. Miller Vice President/Wholesaler None
Patrick L. Murphy Vice President/Wholesaler None
Stephen C. Nell Vice President/Wholesaler None
Julia A. Nye 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>
Joseph T. Owczarek Vice President/Wholesaler None
Mary Ellen Pernice-Fadden Vice President/Wholesaler None
Mark A. Pletts Vice President/Wholesaler None
Philip G. Rickards Vice President/Wholesaler None
Laura E. Roman Vice President/Wholesaler None
Linda Schulz Vice President/Wholesaler None
Edward B. Sheridan Vice President/Wholesaler None
Robert E. Stansbury Vice President/Wholesaler None
Julia A. Stanton Vice President/Wholesaler None
Larry D. Stone Vice President/Wholesaler None
Edward J. Wagner Vice President/Wholesaler None
Wayne W. Wagner Vice President/Wholesaler None
John A. Wells Vice President/Marketing Technology None
Scott Whitehouse Vice President/Wholesaler None
Frank C. Tonnemaker Vice President None
</TABLE>
(c) Not Applicable.
* Business address of each is 1818 Market Street, Philadelphia, PA 19103.
<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) Not Applicable.
(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 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 25th day of November, 1997.
DELAWARE GROUP EQUITY FUNDS V, INC.
(formerly, Delaware Group Value Fund, Inc.)
By /s/ Wayne A. Stork
---------------------------------
Wayne A. Stork
Chairman
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>
/s/ Wayne A. Stork Chairman and Director November 25, 1997
- --------------------------------------------
Wayne A. Stork
Executive Vice President/Chief Operating
Officer/Chief Financial Officer
/s/ David K. Downes (Principal Financial Officer and Principal
- -------------------------------------------- Accounting Officer) November 25, 1997
David K. Downes
/s/Walter P. Babich Director November 25, 1997
- --------------------------------------------
Walter P. Babich
/s/Anthony D. Knerr Director November 25, 1997
- --------------------------------------------
Anthony D. Knerr
/s/ Ann R. Leven Director November 25, 1997
- --------------------------------------------
Ann R. Leven
/s/ W. Thacher Longstreth Director November 25, 1997
- --------------------------------------------
W. Thacher Longstreth
/s/ Thomas F. Madison Director November 25, 1997
- --------------------------------------------
Thomas F. Madison
/s/ Jeffrey J. Nick Director November 25, 1997
- ---------------------------------------------
Jeffrey J. Nick
/s/ Charles E. Peck Director November 25, 1997
- --------------------------------------------
Charles E. Peck
</TABLE>
<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.B9AI Schedule A to Shareholders Services Agreement
EX-99.B9AII Schedule A to Shareholders Services Agreement
EX-99.B9AIII Schedule A to Shareholders Services Agreement
EX-99.B9BI Executed Amendment No. 4A ( April 14, 1997) to Schedule A to
Delaware Group of Funds Fund Accounting Agreement
EX-99.B9BII Executed Amendment No. 5 (May 1, 1997) to Schedule A to
Delaware Group of Funds Fund Accounting Agreement
EX-99.B9BIII Executed Amendment No. 6 (July 21, 1997) to Schedule A to
Delaware Group of Funds Fund Accounting Agreement
EX-99.B18A Amended 18f-3 Plan
EX-99.B18B Amended Appedix A to 18f-3 Plan
EX-99.B19B Power of Attorney for Thomas F. Madison and Jeffrey J. Nick
<PAGE>
FORM OF SCHEDULE A
SCHEDULE A
DELAWARE GROUP EQUITY FUNDS V, INC.
(THE "FUND")
[_______________] 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 January 1, 1997, the charge will consist
of two charges for all the Funds in the Delaware Group, except the
Delaware Group Premium Fund, Inc. and the Delaware Pooled Trust,
Inc., 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
Daily Dividend Funds $11.00 Per Annum
Other Funds $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
1
<PAGE>
SCHEDULE A
DELAWARE GROUP EQUITY FUNDS V, INC.
(THE "FUND")
[_______________] AMENDED AND RESTATED
SHAREHOLDERS SERVICES AGREEMENT
COMPENSATION SCHEDULE
CONTINUED
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
4. For the period commencing January 1, 1997, DSC's compensation for
providing services to the Delaware Group Premium Fund, Inc. (the
"Premium Fund") will be $50,000 annually. DSC will bill, and the
Premium Fund will pay, such compensation monthly, allocated among the
current Series of the Premium Fund based on the relative percentage
of assets of each Series at the time of billing and adjusted
appropriately to reflect the length of time a particular Series is in
operation during any billing period.
2
<PAGE>
5. For the period commencing January 1, 1997, DSC's compensation for
providing services to the Portfolios of Delaware Pooled Trust, Inc.
(the "Trust") will be $25,000 annually. DSC will bill, and the Trust
will pay, such compensation monthly allocated among the current
Portfolios of the Trust based on the relative percentage of assets of
each Portfolio at the time of billing and adjusted appropriately to
reflect the length of time a particular Portfolio is in operation
during any billing period.
3
<PAGE>
SCHEDULE A
DELAWARE GROUP EQUITY FUNDS V, INC.
(THE "FUND")
[________] 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 January 1, 1997, the charge will consist
of two charges for all the Funds in the Delaware Group, except the
Delaware Group Premium Fund, Inc. and the Delaware Pooled Trust,
Inc., 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:
<TABLE>
<CAPTION>
A. ANNUAL CHARGE
<S> <C> <C>
Daily Dividend Funds $11.00 Per Annum
Other Funds $5.50 Per Annum
Merrill Lynch - Omnibus Accounts*
Regular Accounts $11.00/$16.00 Per Annum
Accounts with a Contingent
Deferred Sales Charge $14.00/$19.00 Per Annum
Networked Accounts $3.00 - 6.00 Per Annum
</TABLE>
*Until January 1, 1998, the annual charge for funds currently added to the
Merrill Lynch systems prior to July 1, 1997 will be $11.00 and $14.00,
respectively. Thereafter, the annual charge for those funds will be $16.00 and
$19.00, respectively. The annual charge for funds added to the Merrill Lynch
system on or after July 1, 1997 will be $16.00/19.00, respectively.
<PAGE>
SCHEDULE A
------------------------------
(THE "FUND")
[__________] AMENDED AND RESTATED
SHAREHOLDERS SERVICES AGREEMENT
COMPENSATION SCHEDULE
CONTINUED
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>
4. For the period commencing January 1, 1997, DSC's compensation for
providing services to the Delaware Group Premium Fund, Inc. (the
"Premium Fund") will be $50,000 annually. DSC will bill, and the
Premium Fund will pay, such compensation monthly, allocated among the
current Series of the Premium Fund based on the relative percentage
of assets of each Series at the time of billing and adjusted
appropriately to reflect the length of time a particular Series is in
operation during any billing period.
5. For the period commencing January 1, 1997, DSC's compensation for
providing services to the Portfolios of Delaware Pooled Trust, Inc.
(the "Trust") will be $25,000 annually. DSC will bill, and the Trust
will pay, such compensation monthly allocated among the current
Portfolios of the Trust based on the relative percentage of assets of
each Portfolio at the time of billing and adjusted appropriately to
reflect the length of time a particular Portfolio is in operation
during any billing period.
<PAGE>
SCHEDULE A
DELAWARE GROUP EQUITY FUNDS V, INC.
(THE "FUND")
[________] 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 January 1, 1997, the charge will consist
of two charges for all the Funds in the Delaware Group, except the
Delaware Group Premium Fund, Inc. and the Delaware Pooled Trust, Inc.
(other than with respect to The Real Estate Investment Trust
Portfolio), 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:
<TABLE>
<CAPTION>
A. ANNUAL CHARGE
<S> <C> <C>
Daily Dividend Funds $11.00 Per Annum
Other Funds $5.50 Per Annum
Merrill Lynch - Omnibus Accounts*
Regular Accounts $11.00/$16.00 Per Annum
Accounts with a Contingent
Deferred Sales Charge $14.00/$19.00 Per Annum
Networked Accounts $3.00 - 6.00 Per Annum
</TABLE>
*Until January 1, 1998, the annual charge for funds currently added to the
Merrill Lynch systems prior to July 1, 1997 will be $11.00 and $14.00,
respectively. Thereafter, the annual charge for those funds will be $16.00 and
$19.00, respectively. The annual charge for funds added to the Merrill Lynch
system on or after July 1, 1997 will be $16.00/19.00, respectively.
<PAGE>
SCHEDULE A
------------------------------
(THE "FUND")
[__________] AMENDED AND RESTATED
SHAREHOLDERS SERVICES AGREEMENT
COMPENSATION SCHEDULE
CONTINUED
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>
4. For the period commencing January 1, 1997, DSC's compensation for
providing services to the Delaware Group Premium Fund, Inc. (the
"Premium Fund") will be $50,000 annually. DSC will bill, and the
Premium Fund will pay, such compensation monthly, allocated among the
current Series of the Premium Fund based on the relative percentage
of assets of each Series at the time of billing and adjusted
appropriately to reflect the length of time a particular Series is in
operation during any billing period.
5. For the period commencing January 1, 1997, DSC's compensation for
providing services to the Portfolios (other than The Real Estate
Investment Trust Portfolio) of Delaware Pooled Trust, Inc. (the
"Trust") will be $25,000 annually. DSC will bill, and the Trust will
pay, such compensation monthly allocated among the current Portfolios
(other than The Real Estate Investment Trust Portfolio) of the Trust
based on the relative percentage of assets of each Portfolio at the
time of billing and adjusted appropriately to reflect the length of
time a particular Portfolio is in operation during any billing
period.
<PAGE>
AMENDMENT NO. 4A
to
SCHEDULE A
of
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 Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Quantum Fund (New)
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Value Fund
Retirement Income Fund (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government 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.
<PAGE>
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U.S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Defensive Equity Portfolio
The Defensive Equity Small/Mid-Cap Portfolio (New) The Emerging
Markets 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
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Decatur Total Return Series
Delaware Series
Delchester Series
DelCap Series
Global Bond Series (New)
International Equity Series
Trend Series
Value Series
2
<PAGE>
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.
DMC Tax-Free Income Trust - Pennsylvania (doing business as Tax-Free
Pennsylvania Fund)
Dated as of: April 14, 1997
3
<PAGE>
DELAWARE SERVICE COMPANY, INC.
By: /s/ David K. Downes
-----------------------
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, 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
President and
Chief Executive Officer
4
<PAGE>
AMENDMENT NO. 5
to
SCHEDULE A
of
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 Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Quantum Fund (New)
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Value Fund
Retirement Income Fund (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government 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.
<PAGE>
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Defensive Equity Portfolio
The Defensive Equity Small/Mid-Cap Portfolio (New)
The Defensive Equity Utility Portfolio (New)
The Emerging Markets 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
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Quantum Series (New)
Strategic Income Series (New)
Trend Series
Value Series
2
<PAGE>
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.
DMC Tax-Free Income Trust-Pennsylvania (doing business as Tax-Free Pennsylvania
Fund)
Voyageur Funds, Inc.
Voyageur U.S. Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
3
<PAGE>
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of May 1, 1997
4
<PAGE>
DELAWARE SERVICE COMPANY, INC.
By: /s/ David K. Downes
-----------------------
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, 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
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
By: /s/ Wayne A. Stork
-----------------------
Wayne A. Stork
Chairman, President and
Chief Executive Officer
5
<PAGE>
AMENDMENT NO. 6
to
SCHEDULE A
of
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 Equity Funds I, Inc. (formerly Delaware)
Delaware Fund
Devon Fund
Delaware Group Equity Funds II, Inc. (formerly Decatur)
Blue Chip Fund (New)
Decatur Income Fund
Decatur Total Return Fund
Quantum Fund (New)
Delaware Group Equity Funds IV, Inc. (formerly DelCap)
Capital Appreciation Fund (New)
DelCap Fund
Delaware Group Equity Funds V, Inc. (formerly Value)
Value Fund
Retirement Income Fund (New)
Delaware Group Government Fund, Inc.
Government Income Series (U.S. Government 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.
<PAGE>
Delaware Group Global & International Funds, Inc.
Emerging Markets Fund (New)
Global Assets Fund
Global Bond Fund
International Equity Fund
Global Equity Fund (New)
International Small Cap Fund (New)
Delaware Group Income Funds, Inc. (formerly Delchester)
Delchester Fund
High-Yield Opportunities Fund (New)
Strategic Income Fund (New)
Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U. S. Government Money Fund
Delaware Pooled Trust, Inc.
The Aggressive Growth Portfolio
The Defensive Equity Portfolio
The Defensive Equity Small/Mid-Cap Portfolio (New)
The Defensive Equity Utility Portfolio (New)
The Emerging Markets 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
Delaware Group Premium Fund, Inc.
Capital Reserves Series
Cash Reserve Series
Convertible Securities Series (New)
Decatur Total Return Series
Delaware Series
Delchester Series
Devon Series (New)
Emerging Markets Series (New)
DelCap Series
Global Bond Series (New)
International Equity Series
Quantum Series (New)
Strategic Income Series (New)
2
<PAGE>
Trend Series
Value Series
Delaware Group State Tax-Free Income Trust
Tax-Free New Jersey Fund (New)
Tax-Free Ohio Fund (New)
Tax-Free Pennsylvania Fund
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.
Voyageur Funds, Inc.
Voyageur U.S. Government Securities Fund (New)
Voyageur Insured Funds, Inc.
Arizona Insured Tax Free Fund (New)
Colorado Insured Fund (New)
Minnesota Insured Fund (New)
National Insured Tax Free Fund (New)
Voyageur Intermediate Tax Free Funds, Inc.
Arizona Limited Term Tax Free Fund (New)
California Limited Term Tax Free Fund (New)
Colorado Limited Term Tax Free Fund (New)
Minnesota Limited Term Tax Free Fund (New)
National Limited Term Tax Free Fund (New)
Voyageur Investment Trust
California Insured Tax Free Fund (New)
Florida Insured Tax Free Fund (New)
Florida Tax Free Fund (New)
Kansas Tax Free Fund (New)
Missouri Insured Tax Free Fund (New)
New Mexico Tax Free Fund (New)
Oregon Insured Tax Free Fund (New)
Utah Tax Free Fund (New)
Washington Insured Tax Free Fund (New)
3
<PAGE>
Voyageur Investment Trust II
Florida Limited Term Tax Free Fund (New)
Voyageur Mutual Funds, Inc.
Arizona Tax Free Fund (New)
California Tax Free Fund (New)
Iowa Tax Free Fund (New)
Idaho Tax Free Fund (New)
Minnesota High Yield Municipal Bond Fund (New)
National High Yield Municipal Bond Fund (New)
National Tax Free Fund (New)
New York Tax Free Fund (New)
Wisconsin Tax Free Fund (New)
Voyageur Mutual Funds II, Inc.
Colorado Tax Free Fund (New)
Voyageur Mutual Funds III, Inc.
Aggressive Growth Fund (New)
Growth Stock Fund (New)
International Equity Fund (New)
Tax Efficient Equity Fund (New)
Voyageur Tax Free Funds, Inc.
Minnesota Tax Free Fund (New)
North Dakota Tax Free Fund (New)
Dated as of July 21, 1997
4
<PAGE>
DELAWARE SERVICE COMPANY, INC.
By: /s/ David K. Downes
----------------------------------------
David K. Downes
President, Chief Executive Officer and Chief Financial Officer
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE POOLED TRUST, 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
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
By: /s/ Wayne A. Stork
-------------------------------
Wayne A. Stork
Chairman, President and
Chief Executive Officer
5
<PAGE>
The Delaware Group of Funds
Multiple Class Plan Pursuant to Rule 18f-3
This Multiple Class Plan (the "Plan") has been adopted by a
majority of the Board of Directors of each of the investment companies listed
on Appendix A as may be amended from time to time (each individually a "Fund,"
and collectively, the "Funds"), including a majority of the Directors who are
not interested persons of each Fund, pursuant to Rule 18f-3 under the
Investment Company Act of 1940, as amended (the "Act"). The Board of each Fund
has determined that the Plan, including the allocation of expenses, is in the
best interests of the Fund as a whole, each series of shares offered by such
Fund (individually and collectively the "Series") where the Fund offers its
shares in multiple series, and each class of shares offered by the Fund or
Series, as relevant. The Plan sets forth the provisions relating to the
establishment of multiple classes of shares for each Fund and, if relevant,
its Series. To the extent that a subject matter set forth in this Plan is
covered by a Fund's Articles of Incorporation or By-Laws, such Articles of
Incorporation or ByLaws will control in the event of any inconsistencies with
descriptions contained in this Plan.
The term "Portfolio," when used in this Plan in the context
of a Fund that offers only a single series of shares, shall be a reference to
the Fund, and when used in the context of a Fund that offers multiple series
of shares, shall be a reference to each series of such Fund.
CLASSES
1. Appendix A to this Plan describes the classes to be issued
by each Portfolio and identifies the names of such classes.
FRONT-END SALES CHARGE
2. Class A shares carry a front-end sales charge as described
in the Funds' relevant prospectuses; and Class B, Class C and Institutional
Class shares are sold without a front-end sales charge.
-1-
<PAGE>
CONTINGENT DEFERRED SALES CHARGE
3. Class A shares are not subject to a contingent deferred
sales charge ("CDSC"), except as described in the Fund's relevant prospectus.
4. Class B shares redeemed within six years of their
purchase shall be assessed a CDSC at the following rate: (i) 4.00% if shares
are redeemed within two years of purchase; (ii) 3.00% if shares are redeemed
during the third or fourth year following purchase; (iii) 2.00% if shares are
redeemed during the fifth year following purchase; (iv) 1.00% if shares are
redeemed during the sixth year following purchase; and (vi) 0% thereafter.
5. Class C shares redeemed within twelve months of their
purchase shall be assessed a CDSC at the rate of 1.00% of the lesser of (i)
the net asset value at the time of redemption, or (ii) the original net asset
value at the time of purchase.
6. The CDSC for each class is waived in certain
circumstances, as described in the Funds' relevant prospectuses. Shares that
are subject to a CDSC age one month at the end of the month in which the
shares were purchased, regardless of the specific date during the month that
the shares were purchased.
7. Institutional Class shares are not subject to a CDSC.
RULE 12b-1 PLANS
8. In accordance with the Rule 12b-1 Plan for the Class A
shares of each Portfolio, the Fund shall pay to Delaware Distributors, L.P.
(the "Distributor") a monthly fee not to exceed 0.30% per annum of such
Portfolio's average daily net assets represented by Class A shares as may be
determined by the Fund's Board of Directors from time to time. The monthly fee
shall be reduced by the aggregate sums paid by or on behalf of such Portfolio
to persons other than broker-dealers (the "Service Providers") pursuant to
servicing agreements.
9. In accordance with the Rule 12b-1 Plan for the Class B
shares of each Portfolio, the Fund shall pay to the Distributor a monthly fee
not to exceed 0.75% per annum of such Portfolio's average daily net assets
represented by Class B shares as may be determined by the Fund's Board of
Directors from time to time. In addition to these amounts, the Fund shall pay
-2-
<PAGE>
(i) to the Distributor for payment to dealers or others, or (ii) directly to
others, an amount not to exceed 0.25% per annum of such Portfolio's average
daily net assets represented by Class B shares, as a service fee pursuant to
dealer or servicing agreements.
10. In accordance with the Rule 12b-1 Plan for the Class C
shares of each Portfolio, the Fund shall pay to the Distributor a monthly fee
not to exceed 0.75% per annum of such Portfolio's average daily net assets
represented by Class C shares as may be determined by the Fund's Board of
Directors from time to time. In addition to these amounts, 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% per annum of such Portfolio's average
daily net assets represented by Class C shares, as a service fee pursuant to
dealer or servicing agreements.
11. A Rule 12b-1 Plan has not been adopted for the
Institutional Class shares of any Portfolio.
ALLOCATION OF EXPENSES
12. The Fund shall allocate to each class of shares of a
Portfolio any fees and expenses incurred by the Fund in connection with the
distribution or servicing of such class of shares under a Rule 12b-1 Plan, if
any, adopted for such class. In addition, the Fund reserves the right, subject
to approval by the Fund's Board of Directors, to allocate fees and expenses of
the following nature to a particular class of shares of a Portfolio (to the
extent that such fees and expenses actually vary among each class of shares or
vary by types of services provided to each class of shares of the Portfolio):
(i) transfer agency and other recordkeeping costs;
(ii) Securities and Exchange Commission and blue sky
registration or qualification fees;
(iii) printing and postage expenses related to printing
and distributing class specific materials, such as
shareholder reports, prospectuses and proxies to
current shareholders of a particular class or to
regulatory authorities with respect to such class
of shares;
(iv) audit or accounting fees or expenses relating
solely to such class;
-3-
<PAGE>
(v) the expenses of administrative personnel and
services as required to support the shareholders of
such class;
(vi) litigation or other legal expenses relating solely
to such class of shares;
(vii) Directors' fees and expenses incurred as a result
of issues relating solely to such class of shares;
and
(viii) other expenses subsequently identified and
determined to be properly allocated to such class
of shares.
13. Except for any expenses that are allocated to a
particular class as described in paragraph 11 above, all expenses incurred by
a Portfolio will be allocated to each class of shares of such Portfolio on the
basis of the net asset value of each such class in relation to the net asset
value of the Portfolio.
ALLOCATION OF INCOME AND GAINS
14. Income and realized and unrealized capital gains and
losses of a Portfolio will be allocated to each class of shares of such
Portfolio on the basis of the net asset value of each such class in relation
to the net asset value of the Portfolio.
CONVERSIONS
15. (a) Except for shares acquired through a reinvestment of
dividends or distributions, Class B shares held for eight years after purchase
are eligible for automatic conversion into Class A shares of the same
Portfolio in accordance with the terms described in the relevant prospectus.
Class B shares acquired through a reinvestment of dividends or distributions
will convert into Class A shares of the same Portfolio pro rata with the Class
B shares that were not acquired through the reinvestment of dividends and
distributions.
(b) The automatic conversion feature of Class B shares
shall be suspended at any time that the Board of Directors of the Fund
determines that there is not available a reasonably satisfactory opinion of
counsel to the effect that (i) the assessment of the higher fee under the Fund's
Rule 12b-1 Plan for Class B does not result in the Fund's dividends or
distributions constituting a preferential dividend under the Internal Revenue
Code of 1986, as amended, and (ii) the conversion of Class B shares into Class A
shares does not constitute a taxable event under federal income tax law. In
addition, the Board of
-4-
<PAGE>
Directors of a Fund may suspend the automatic conversion feature by determining
that any other condition to conversion set forth in the relevant prospectus, as
amended from time to time, is not satisfied.
(c) The Board of Directors of a Fund may also suspend the
automatic conversion of Class B shares if it determines that suspension is
appropriate to comply with the requirements of the Act, or any rule or
regulation issued thereunder, relating to voting by Class B shareholders on the
Fund's Rule 12b-1 Plan for Class A or, in the alternative, the Board of
Directors may provide Class B shareholders with alternative conversion or
exchange rights.
16. Class A, Class C and Institutional Class shares do not
have a conversion feature.
EXCHANGES
17. Exchanges are permitted between Class A Shares and
Institutional Class Shares of a Portfolio or of any other Portfolio in the
Delaware Group funds; Class B shares of a Portfolio may only be exchanged for
Class B shares of any other Portfolio in the Delaware Group; Class C shares of
a Portfolio may only be exchanged for Class C shares of any other Portfolio in
the Delaware Group. All exchanges are subject to the eligibility and minimum
purchase requirements set forth in the Funds' prospectuses. Exchanges cannot
be made between open-end and closed-end funds within the Delaware Group.
18. Each class will vote separately with respect to the Rule
12b-1 Plan related to that class; provided, however, that Class B shares of a
Portfolio may vote on any proposal to materially increase the fees to be paid
by the Fund under the Rule 12b-1 Plan for the Class A shares of the same
Portfolio.
19. On an ongoing basis, the Directors, pursuant to their
fiduciary responsibilities under the Act and otherwise, will monitor the
Portfolio for the existence of any material conflicts between the interests of
all the classes of shares offered by such Portfolio. The Directors, including
a majority of the Directors who are not interested persons of the Fund, shall
take such action as is reasonably necessary to eliminate any such conflict
that may develop. The Manager and the Distributor shall be responsible for
alerting the Board to any material conflicts that arise.
20. As described more fully in the Funds' relevant
prospectuses, broker-dealers that sell shares of a Portfolio will be
compensated differently depending on which class of shares the investor
selects.
-5-
<PAGE>
21. Each Fund reserves the right to increase, decrease or
waive the CDSC imposed on any existing or future class of shares of a Portfolio
within the ranges permissible under applicable rules and regulations of the
Securities and Exchange Commission (the "SEC") and the rules of the National
Association of Securities Dealers, Inc. (the "NASD"), as such rules may be
amended or adopted from time to time. Each Fund may in the future alter the
terms of the existing classes of such Portfolio or create new classes in
compliance with applicable rules and regulations of the SEC and the NASD.
22. All material amendments to this Plan must be approved by
a majority of the Directors of each Fund affected by such amendments,
including a majority of the Directors who are not interested persons of the
Fund.
Effective as of September 18, 1997
-6-
<PAGE>
APPENDIX A
List of Funds and Their Classes
-------------------------------
1. Delaware Group Equity Funds I, 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 Equity Funds II, 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
Blue Chip Fund (Added February 24, 1997)
Blue Chip Fund A Class
Blue Chip Fund B Class
Blue Chip Fund C Class
Blue Chip Fund Institutional Class
<PAGE>
Quantum Fund (Added February 24, 1997)
Quantum Fund A Class
Quantum Fund B Class
Quantum Fund C Class
Quantum Fund Institutional Class
3. Delaware Group Equity Funds III, Inc.
Trend Fund
Trend Fund A Class
Trend Fund B Class
Trend Fund C Class
Trend 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
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 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
6. Delaware Group Global & International Funds, Inc.
<PAGE>
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
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
International Small Cap Series (Added July 21, 1997)
International Small Cap Fund A Class
International Small Cap Fund B Class
International Small Cap Fund C Class
International Small Cap Fund Institutional Class
Global Equity Series (Added July 21, 1997)
Global Equity Fund A Class
Global Equity Fund B Class
Global Equity Fund C Class
Global Equity 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
<PAGE>
8. Delaware Pooled Trust, Inc.
The Real Estate Investment Trust Portfolio
(Added October 14, 1997)
REIT Fund A Class
REIT Fund B Class
REIT Fund C Class
REIT Fund Institutional Class
<PAGE>
POWER OF ATTORNEY
The undersigned, a member of the Boards of Directors/Trustees of the
Delaware Group Funds listed on Exhibit A to this Power of Attorney, hereby
constitutes and appoints Wayne A. Stork, W. Thacher Longstreth and Walter P.
Babich and any one of them acting singly, his true and lawful
attorneys-in-fact, in his name, place, and stead, to execute and cause to be
filed with the Securities and Exchange Commission and other federal or state
government agency or body, such registration statements, and any and all
amendments thereto as either of such designees may deem to be appropriate
under the Securities Act of 1933, as amended, the Investment Company Act of
1940, as amended, and all other applicable federal and state securities laws.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of
this 1st day of May, 1997.
/s/Thomas F. Madison
- ------------------------------
Thomas F. Madison
<PAGE>
POWER OF ATTORNEY
EXHIBIT A
DELAWARE GROUP FUNDS
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP TREND FUND, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DMC TAX-FREE INCOME TRUST-PENNSYLVANIA
DELAWARE GROUP DIVIDEND AND INCOME FUND, INC.
DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
VOYAGEUR TAX FREE FUNDS, INC.
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC.
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC.
VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC.
<PAGE>
POWER OF ATTORNEY
The undersigned, a member of the Boards of Directors/Trustees of the
Delaware Group Funds listed on Exhibit A to this Power of Attorney, hereby
constitutes and appoints Wayne A. Stork, W. Thacher Longstreth and Walter P.
Babich and any one of them acting singly, his true and lawful
attorneys-in-fact, in his name, place, and stead, to execute and cause to be
filed with the Securities and Exchange Commission and other federal or state
government agency or body, such registration statements, and any and all
amendments thereto as either of such designees may deem to be appropriate
under the Securities Act of 1933, as amended, the Investment Company Act of
1940, as amended, and all other applicable federal and state securities laws.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of
this 1st day of May, 1997.
/s/Jeffrey J. Nick
- ----------------------------
Jeffrey J. Nick
<PAGE>
POWER OF ATTORNEY
EXHIBIT A
DELAWARE GROUP FUNDS
DELAWARE GROUP EQUITY FUNDS I, INC.
DELAWARE GROUP EQUITY FUNDS II, INC.
DELAWARE GROUP EQUITY FUNDS IV, INC.
DELAWARE GROUP EQUITY FUNDS V, INC.
DELAWARE GROUP TREND FUND, INC.
DELAWARE GROUP INCOME FUNDS, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS, INC.
DELAWARE GROUP ADVISER FUNDS, INC.
DELAWARE POOLED TRUST, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DMC TAX-FREE INCOME TRUST-PENNSYLVANIA
DELAWARE GROUP DIVIDEND AND INCOME FUND, INC.
DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND, INC.
VOYAGEUR FUNDS, INC.
VOYAGEUR INSURED FUNDS, INC.
VOYAGEUR INTERMEDIATE TAX FREE FUNDS, INC.
VOYAGEUR INVESTMENT TRUST
VOYAGEUR INVESTMENT TRUST II
VOYAGEUR MUTUAL FUNDS, INC.
VOYAGEUR MUTUAL FUNDS II, INC.
VOYAGEUR MUTUAL FUNDS III, INC.
VOYAGEUR TAX FREE FUNDS, INC.
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC.
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC.
VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC.
