<PAGE>
For Growth of Capital
Small Cap Value Fund
(Photo of illustration from Growth of Capital Brochure)
service and guidance
professional management
goals
1998
Semi-Annual
Report
DELAWARE
INVESTMENTS
- -----------
Philadelphia o London
<PAGE>
(Various photos demonstrating service and guidance,
professional management and goals)
professional management
More Than 69 Years
of investment experience has taught us that disciplined strategies and prudent
risk management are a sound approach to any market environment.
goals
Whatever Your Goals,
the years ahead will be shaped by choices you make today. Delaware offers many
options that can be an appropriate part of a sound investment plan.
service and guidance
Delaware Believes That The Guidance
of a professional financial adviser is vital to your long-term success. We are
committed to providing you and your adviser with the highest quality information
and service.
<PAGE>
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1
June 5, 1998
Dear Shareholder:
The first half of fiscal 1998 was a rough period for small cap stocks and
value-oriented investors. While stock prices of large companies soared to new
heights between November and May, stocks within our benchmark, the unmanaged
Russell 2000 Index, provided more modest returns.
Since Thanksgiving, small company shares in real estate, energy and finance
have been weak, affected by tax issues, commodity prices and interest rate
concerns. In addition, growth style investing rather than a value approach has
been in vogue.
Small Cap Value Fund provided a total return of +4.58% (capital change plus
income based on net asset value for A Class shares) for the six months ended May
31, 1998. These results, while positive, were less than the average of our
peers, as shown below.
Aggressive investors have been rewarded for short-term bets on stocks with
high risk profiles so far this year. Small Cap Value Fund pursues a steadier
course for investors seeking growth of capital. While future results can't be
guaranteed, the Fund has provided highly attractive long-term returns using a
tempered, low turnover, lower risk approach (see page 5).
Since November, our fundamental analysis led us to companies such as real
estate investment trusts, small retailers, insurance firms and selected niche
business and consumer service providers. We also increased our position in
technology in January.
Over the long term, small cap value investing has proven an effective,
rewarding investment style. We think investors may eventually forego the current
obsession with large-cap growth
Small company shares in real estate, energy and finance have been weak, affected
by tax issues, commodity prices and interest rate concerns.
<TABLE>
<CAPTION>
CUMULATIVE/AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------------------------------------
Six Months Ended From June 24, 1987**
May 31, 1998 to May 31, 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Small Cap Value Fund A Class +4.58% +16.27%
- --------------------------------------------------------------------------------------------------------------
Russell 2000 Index +6.54% +11.71%
- --------------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Index +15.07% +15.67%
- --------------------------------------------------------------------------------------------------------------
Lipper Capital Appreciation Fund Average +9.06% (247 funds) +11.84% (53 funds)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
All performance shown above assumes reinvestment of dividends and capital gains.
Fund and Lipper performance is at net asset value without effect of sales
charges. Performance for all Small Cap Value Fund classes can be found on page
9. The unmanaged Russell 2000 Index is a measure of small company stocks while
the unmanaged S&P 500 Index is a measure of large company stocks.
**Fund inception date.
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2
companies, and the merits of your Fund's approach will become clear.
We attribute Small Cap Value Fund's long-term success since 1987 to a
consistent focus on small, undervalued companies. Christopher S. Beck, your
Fund's portfolio manager, explains the Fund's strategy and provides an outlook
for the second half of 1998 on the pages that follow.
An encouraging development is that investor interest in the Fund has
accelerated since autumn. Between November and May, Small Cap Value Fund's net
assets grew by $84 million to $420 million as we added thousands of new
shareholders.
Positive cash flow has provided the Fund's portfolio manager with additional
resources to invest. At the same time, the Fund's relatively modest size gives
us ample flexibility to capitalize on changing market conditions.
We thank you for being among the more than 26,000 investors who have chosen
to make Small Cap Value Fund a component of your investment plan.
Sincerely,
/s/ Wayne A. Stork
- ---------------------------------------
Wayne A. Stork
Chairman
/s/ Jeffrey J. Nick
- ---------------------------------------
Jeffrey J. Nick
President and Chief Executive Officer
PORTFOLIO HIGHLIGHTS
<TABLE>
<CAPTION>
S&P 500 Index
May 31, 1998 November 30, 1997 as of May 31, 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Number of Stocks 89 86 500
Median Market Capitalization $805 million $797 million $7.7 billion
Median Stock
Price-To-Earnings Ratio 16.2x 13.9x 24.5x
Median Price-To-Book Ratio 240% 205% 600%
Dividend Yield
(Before Fund Expenses) 1.49% 1.48% 1.42%
Beta 0.59 0.60 1.0
</TABLE>
The above yield represents the weighted average dividend yield of the Fund's
holdings exclusive of transaction costs. Small Cap Value Fund does not pay a
regular dividend, but may distribute income generated by the Fund's holdings,
typically at year's end. P/E is based on analysts' earnings estimates for 1998
as reported by First Call. Beta is a measure of volatility relative to the S&P
500 Index for the past three years ended May 31. A number less than 1.0 means a
security has fluctuated less in price than the Index. A number more than 1.0
means the security has fluctuated more than the Index.
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3
Portfolio Manager's Review
After a terrific 1997, small cap value investing fell out of favor in January,
and Small Cap Value Fund has been experiencing the effects of a strenuous market
environment. We are finding it more difficult to uncover value in some sectors
of the market, such as financials, a sector that has provided superior
performance for most of the 1990s.
The level of risk in the stock market has increased, in our opinion. Profit
growth is slowing and some investors are concerned the Federal Reserve Board may
raise interest rates modestly later this year. We think the Fed is in a box.
Although consumer spending is high and the nation's unemployment rate near
record lows, we don't see how the Fed can raise interest rates. To do so would
risk triggering more currency devaluations in Asia, where many countries face a
recession. Many companies around the world borrow in U.S. dollars, so an
increase in U.S. interest rates can make their debt obligations more burdensome.
Investment Strategy
When we buy stocks, we prefer companies with a market capitalization of $400
million to $1.4 billion. From among some 2,500 small company stocks in the U.S.,
we seek businesses with strong positive cash flows that are out-of-favor,
undervalued or undiscovered.
Our initial value screens narrow the field to about 1,000 companies. From
there we distill some 100 businesses that become candidates for intense
fundamental research, including company visits. We generally:
o Examine sales and earnings prospects relative to competitors;
Small Cap Value Fund's Stock Selection Process
-----------------------------------------------------------------
2,500 Stocks - Universe of Small Companies
-----------------------------------------------------------------
\/
-----------------------------------------------------------------
Quantitative Analysis of
1,000 Stocks - Stocks Exhibiting Value Characteristics
-----------------------------------------------------------------
\/
-----------------------------------------------------------------
300-400 Stocks - Qualitative & Additional
Quantitative Analysis Comparisons by Industry
-----------------------------------------------------------------
\/
-----------------------------------------------------------------
100 Stocks - Top Candidates for Company Visits
Value Compared to Russell 2000 Stocks
and Company History
-----------------------------------------------------------------
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for growth
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4
o Seek companies whose stocks trade actively (which provides liquidity);
o Measure value with appropriate industry yardsticks; and
o Analyze free cash flow.
Free cash flow - the amount of money a company generates as revenue from
operations - tells us how much financial flexibility a business has to expand,
meet competitive threats and deal with unexpected events.
Strategic Positioning
One way the Fund has sought to reduce portfolio risk this year is by holding
shares of real estate investment trusts (REITs), a sector that appears
undervalued. We believe fundamental factors affecting the nation's real estate
markets - rents, property prices and tenant demand - are healthy. Demand for
space continues to outstrip supply in cities and suburbs along the Atlantic and
Pacific seaboards.
REITs performed well for most of calendar 1997 but then hit a roadblock this
past winter when the Clinton Administration proposed reducing tax breaks for
certain REITs. We think investors have overreacted, because the proposed
legislation's long-term effect is likely to be minimal. In our view, the real
estate sector can provide attractive total returns over the long term.
As of May 31, REITs represented 12% of your Fund's net assets. This was
slightly lower than the 13% weighting of REITs in the Russell 2000 Value Index,
which includes stocks from the Russell 2000
Your Fund's Lower Risk Approach
- -------------------------------------------------------------
Latest Morningstar Risk Scores (2/28/98)
Small Cap Value Small Value Fund
Fund A Class Category Average
------------ ----------------
3 Years 0.63 0.96
5 Years 0.73 0.92
10 Years 0.88 1.01
The average P/E of stocks in the Fund's portfolio as of May 31 was less than
that of stocks in the S&P 500 Index. Meanwhile, the portfolio's dividend yield
(before expenses) was higher than that of the S&P 500, an indicator of the
Fund's value focus.
The average risk factor for all equity funds equals 1.00. Numbers greater than
1.00 indicate more relative risk, less than 1.00 indicates lower relative risk.
Past performance does not guarantee future results. To calculate risk,
Morningstar concentrates on those months during which a fund underperformed the
average return of a three-month U.S. Treasury bill. It adds up the amounts by
which a fund fell short of a Treasury bill's return and divides the result by
the total number of months in the rating period.
<PAGE>
for growth
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5
Index that exhibit value characteristics. Our holdings as of mid-year included
several REITS involved in hotels, office buildings and retail space.
Overall, the core holdings in your Fund's portfolio exhibit strong value
traits. Many stocks are selling at P/Es (price/earnings ratios) in the 16 or 17
range. That's a 30% to 40% discount to the rest of the stock market. As you can
see on page 2, the average P/E of stocks in the Fund's portfolio as of May 31
was less than that of stocks in the S&P 500 Index. Meanwhile, the portfolio's
dividend yield (before expenses) was higher than that of the S&P 500, an
indicator of the Fund's value focus.
Also, our stock selections' price-to-book ratio (net worth for accounting
purposes) was less than half that of large companies. In our opinion, this
suggests capital appreciation potential.
For much of the 1990s, technology stocks, which typically sell at very high
price-to-book ratios, have not been value stocks. However, when technology share
prices tumbled in autumn because of concerns about weakening product demand
overseas, some stocks emerged on our radar screen as attractive opportunities.
We tripled our technology weighting to 6% during the first quarter of 1998,
adding companies such as Scientific-Atlanta, which makes equipment for cable
companies. This helped your Fund's performance in the spring, but we were still
underweighted in this sector relative to our peers and our benchmark. Generally,
we let our value discipline dictate sector positioning. However, we monitor our
weightings so the Fund does not become overweighted or underweighted in any one
area of the economy.
The financial sector remains our largest industry weighting. In fiscal
1998, we have focused on banking and insurance companies such as North Fork
Bancorporation and Horace Mann Educators, which provides property-casualty
insurance to teachers. Both companies were among the top 15 holdings as of May
31. We believe the insurance sector is adding value for shareholders through
consolidation and effective risk management.
Broad Sector Diversification
Small Cap Value Fund vs. Russell 2000 Index
May 31, 1998
<TABLE>
<CAPTION>
Allocation
Share of Fund's Change From Share of
Broad Sector Net Assets November 30, 1997 Index
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic Industry 7.3% No change 10.1%
Business Services 2.4 -1.7% 4.2
Capital Goods 8.0 -0.5 5.8
Consumer Cyclicals & Staples 6.9 -1.0 7.1
Consumer Services 10.7 -0.3 13.0
Energy 9.1 +4.0 6.3
Financial Services 19.1 -1.5 17.2
Health Care 3.7 No change 9.2
Technology 5.6 +2.0 14.8
REITs 12.0 -1.0 8.8
Utilities 3.2 No change 3.2
Transportation 4.9 -0.4 1.8
Cash 7.1 +0.8 0
</TABLE>
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6
Outlook
For the balance of the year, we think businesses' debt ratios will become a more
critical factor affecting earnings and stock performance. In evaluating stocks,
we will look for companies with relatively low levels of debt that appear to
have the potential to weather interest rate increases or a downturn in their
business.
While there are some signs of slowing in American exports, U.S. consumer
spending has remained strong. The domestic economy is being propelled by
relatively low interest rates, mortgage refinancing, the lowest unemployment
rate in a generation and inexpensive fuel prices. In a climate of increased
stock market volatility and exuberance for some large growth-style stocks, we
believe prudent investors are likely to allocate more assets to smaller cap
names and a value investment approach.
One industry that may hold potential for value investors in the coming
months is the rental car business. This sector is consolidating and could
benefit from high levels of consumer spending this summer. We are currently
evaluating opportunities in this area.
In 1998, some portfolio managers have been rewarded for "swinging for the
fences" with aggressive investment strategies. We think a more sensible
long-term approach is to attempt to hit singles and doubles. That is, we select
stocks that appear well-positioned to provide consistent returns over several
years.
Some of the best long-term players in baseball such as Rod Carew were not
home run hitters yet talented, consistent professionals. As a small company
value fund, we prefer to miss the glory of a few home runs, if it means fewer
financial strikeouts and a higher long-term batting average.
We are pleased to say that the mission of your Fund's management team has
remained constant over the years. Over time, we think our game plan can provide
results that will not only be competitive with the Fund's small cap peers and
its benchmark, but the "big league" returns provided by the S&P 500 Index as
well.
Christopher B. Beck
Vice President and Senior Portfolio Manager
June 5, 1998
<TABLE>
<CAPTION>
Top 10 Holdings
May 31, 1998
Company Price/Earnings Ratio Price/Book Value Percent of Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mesaba Holdings 18.8x 6.0x 2.3%
Zale Corp. 19.0 1.7 1.8%
Trigon Healthcare 20.5 1.5 1.8%
Enhance Financial Services 15.5 2.0 1.8%
Oceaneering International 19.0 3.2 1.7%
Viad Corp. 22.0 5.1 1.7%
Horace Mann Educators 16.0 2.9 1.7%
American Water Works 19.2 2.0 1.7%
Scientific-Atlanta 25.7 2.9 1.6%
PMI Group 13.6 2.3 1.6%
- ------------------------------------------------------------------------------------------------------------------------------
Total 13.0%
</TABLE>
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7
A Diamond in the Rough
Small Cap Value Fund's Buy Discipline At Work
Smart shoppers know better bargains are generally found around Christmas. In a
tough market for small-cap stocks during the first half of fiscal 1998, we
discovered a gem - Zale Corp.
Zale's is a jewelry retailer that operates the Zale's, Gordon's Jewelers and
Bailey, Banks & Biddle chains in shopping malls. Like many retailers in the late
1980s, the company struggled to overcome high debts. The mid-1990s ushered in a
new period of prosperity. But last autumn some analysts saw signs of tarnish on
the horizon.
Industry competition appeared to be rising, threatening Zale's profit
margins. Analysts were also concerned that some consumers using the jeweler's
credit cards to make 1997 Christmas purchases would be unable to make payments
this year. The jeweler's stock price faded from $26 a share in mid-September to
about $22 in the last week of December, reflecting this uncertainty.
When we examined Zale's finances in December, we discovered a company with a
relatively strong balance sheet. Moreover, management was polishing its
operations in ways that were going unnoticed on Wall Street.
Zale's was implementing a new merchandising program that had improved
inventory turnover and comparable store sales. Sales growth and cash flow
appeared strong while the retailer's fixed costs were falling. We also found
that Zale's had significant tax losses from prior years that it can use to
reduce its future corporate income tax bills.
From the beginning of January through the end of May, Zale's stock rose 34%,
more than twice as much as the overall stock market during the same period. As
of May 31, 1998, the company's shares were your Fund's second largest holding
because we believe it has further capital appreciation potential.
As with all stocks in the Fund's portfolio, we can't guarantee that this
diamond will last forever. We are prepared to sell if the company's shares no
longer exhibit value characteristics. In our view, shareholders are best served
by a strict investment discipline that keeps us from falling in love with any of
the Fund's holdings.
Zale Corp. P/E Ratio and Stock Price
May 31, 1997 to May 31, 1998
Stock Price
May'98 $32.500 $29.375
Apr'98 $30.750 $27.875
Mar'98 $31.125 $27.625
Feb'98 $28.838 $24.125
Jan'98 $25.250 $22.000
Dec'97 $24.500 $21.500 Small Cap Value Fund Buys
Nov'97 $26.875 $21.500
Oct'97 $26.688 $22.750
Sep'97 $28.188 $21.500
Aug'97 $22.875 $21.000
Jul'97 $22.125 $19.875
Jun'97 $21.750 $19.125
May'97 $20.125 $18.375
P/E Ratio
May-98 17.479x
Apr-98 17.02
Mar-98 17.086
Feb-98 16.457
Jan-98 14.497
Dec-97 15.232
Nov-97 14.735
Oct-97 16.722
Sep-97 18.012
Aug-97 14.931
Jul-97 15.104
Jun-97 14.152
May-97 14.375
Source: Bloomberg Business News.
<PAGE>
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8
SMALL CAP VALUE FUND'S LIFETIME PERFORMANCE
- ---------------------------------------------------------------
Growth of a $10,000 Investment
June 24, 1987 Through May 31, 1998
Small Cap Value Russell Standard & Poor's 500
Fund A Class 2000 Index Index
------------ ---------- --------------------
6/24/87 $ 9,520 $10,000 $10,000
5/31/88 $ 9,680 $ 8,756 $ 8,902
5/31/89 $13,777 $10,822 $11,287
5/31/90 $14,056 $10,869 $13,163
5/31/91 $15,618 $11,708 $14,715
5/31/92 $19,194 $13,281 $16,164
5/31/93 $23,531 $15,843 $18,041
5/31/94 $25,333 $17,225 $18,810
5/31/95 $25,849 $18,998 $22,607
5/31/96 $32,642 $25,817 $29,036
5/31/97 $40,479 $27,616 $37,577
5/31/98 $49,539 $33,490 $49,001
Chart assumes $10,000 invested on June 24, 1987 and includes the effect of the
4.75% sales charge and the reinvestment of all dividends and capital gains.
Performance of other Fund classes will vary due to differing charges and
expenses. Past performance does not guarantee future results.
Small Cap Value Fund Performance
Average Annual Returns Through May 31, 1998
<TABLE>
<CAPTION>
Lifetime Ten Years Five Years One Year
- --------------------------------------------------------------------------------------------------
Class A (Est.6/24/87)
<S> <C> <C> <C> <C>
Excluding Sales Charge +16.27% +17.73% +16.04% +22.32%
Including Sales Charge +15.75% +17.16% +14.91% +16.51%
- --------------------------------------------------------------------------------------------------
Class B (Est.9/6/94)
Excluding Sales Charge +18.73% +21.48%
Including Sales Charge +18.23% +17.48%
- --------------------------------------------------------------------------------------------------
Class C (Est.11/29/95)
Excluding Sales Charge +23.22% +21.50%
Including Sales Charge +23.22% +20.50%
</TABLE>
Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share value will fluctuate so that shares when
redeemed may be worth more or less than the original cost. Past performance is
not a guarantee of future results. Performance excluding sales charges for B and
C Classes assumes contingent sales charges did not apply or the investment was
not redeemed.
Class A shares have a front-end maximum sales charge of 4.75% and a 12b-1 fee.
Class B shares do not carry a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a deferred sales
charge of up to 4% if redeemed before the end of the sixth year. Class C shares
have a 1% annual distribution and service fee. If redeemed within 12 months, a
1% contingent deferred sales charge applies.
Average annual total returns for the Institutional class for the lifetime,
10-year, five-year and one-year periods and cumulative six-month returns for the
period ended 5/31/98 were +16.45%, +17.93%, +16.40%, +22.74% and +4.79%,
respectively. This class (Est. 11/9/92) is available without sales charge only
to certain eligible institutional accounts. Performance prior to 11/9/92 is
based on Class A performance, adjusted to eliminate the sale charges, but not
the asset-based distribution charge.
<PAGE>
Financial Statements
Delaware Group Equity Funds V, Inc. -
Small Cap Value Fund
Statement of Net Assets
May 31, 1998 (Unaudited)
Number Market
of Shares Value
Common Stock - 94.75%
Aerospace & Defense - 0.84%
Cordant Technologies ................. 70,600 $ 3,521,175
-----------
3,521,175
-----------
Automobiles & Automotive Parts - 2.41%
Arvin Industries ..................... 146,200 5,418,538
CLARCOR .............................. 203,600 4,682,800
-----------
10,101,338
-----------
Banking, Finance & Insurance - 19.08%
*Avis Rent-A-Car ...................... 206,900 5,017,325
CMAC Investment ...................... 57,400 3,472,700
Enhance Financial Services Group+ .... 113,300 7,378,663
Everest Reinsurance Holdings ......... 125,870 4,893,196
*Farm Family Holdings ................. 137,400 5,624,813
*Financial Federal+ ................... 232,450 5,448,047
*First Empire State ................... 6,862 3,485,696
Horace Mann Educators ................ 215,800 7,121,400
Keystone Financial ................... 110,150 4,323,388
NAC RE Group ......................... 77,400 3,613,613
North Fork Bancorporation ............ 252,050 6,064,953
PMI Group ............................ 89,200 6,706,725
SCPIE Holdings ....................... 73,300 2,657,125
TIG Holdings ......................... 120,900 2,992,275
Union Planters ....................... 105,100 6,148,350
Westamerica Bancorporation ........... 168,100 5,200,594
-----------
80,148,863
-----------
Buildings & Materials - 3.52%
Chicago Bridge & Iron N.V ............ 177,400 3,026,888
*Jacobs Engineering Group ............. 197,800 6,354,325
D.R. Horton+ ......................... 299,800 5,396,400
-----------
14,777,613
-----------
Cable, Media & Publishing - 1.30%
*Applied Graphics Technologies ........ 51,900 2,491,200
Cadmus Communications ................ 117,600 2,984,100
-----------
5,475,300
-----------
Chemicals - 3.85%
A. Schulman .......................... 157,100 3,142,000
Ferro ................................ 141,500 4,050,438
Lawter International ................. 298,700 2,874,988
*Scotts ............................... 174,300 6,078,713
-----------
16,146,139
-----------
Computers & Technology - 4.20%
*Novellus Systems+ .................... 70,100 2,650,656
*Quantum .............................. 115,600 2,532,362
Scientific-Atlanta ................... 309,300 6,823,931
*SpeedFam International ............... 92,200 1,806,535
*Synopsys+ ............................ 88,700 3,811,328
-----------
17,624,812
-----------
- ---------------
Top 10 common stock holdings, representing 13.00% of net assets, are in
boldface.
<PAGE>
for growth of capital 9
Number Market
of Shares Value
Common Stock (Continued)
Electronics & Electrical Equipment - 1.97%
*KEMET .................................... 156,700 $ 2,521,891
Kuhlman+ ................................. 136,000 5,746,000
-----------
8,267,891
-----------
Energy - 9.11%
*Belco Oil & Gas+ ......................... 163,100 1,610,613
*Oceaneering International ................ 333,700 7,174,550
*Offshore Logistics+ ...................... 94,400 1,929,300
*Pool Energy Services ..................... 174,700 3,564,972
*SEACOR SMIT+ ............................. 69,800 4,083,300
*Seagull Energy ........................... 276,200 4,574,563
*Seitel ................................... 281,500 4,785,500
*Swift Energy+ ............................ 270,190 4,880,307
Vintage Petroleum+ ....................... 312,700 5,667,688
-----------
38,270,793
-----------
Food, Beverage & Tobacco - 3.20%
*Corn Products ............................ 162,800 5,575,900
Schweitzer-Mauduit International ......... 135,500 4,479,969
Universal Foods .......................... 142,300 3,388,519
-----------
13,444,388
-----------
Healthcare & Pharmaceuticals - 3.70%
Arrow International+ ..................... 86,200 2,987,369
*Marquette Medical Systems ................ 185,000 5,174,219
*Trigon Healthcare ........................ 217,500 7,395,000
-----------
15,556,588
-----------
Hotels/Diversified Reits - 1.99%
Patriot American Hospitality+ ............ 226,603 5,424,310
Starwood Lodging Trust ................... 62,500 2,949,219
-----------
8,373,529
-----------
Industrial Machinery - 5.15%
Columbus McKinnon ........................ 178,500 5,193,234
*Global Industries Technology ............. 183,000 3,099,563
IDEX+ .................................... 146,400 5,416,800
Regal-Beloit ............................. 152,400 4,972,050
Watts Industries ......................... 126,400 2,946,700
-----------
21,628,347
-----------
Leisure, Lodging & Entertainment - 4.82%
American General Hospitality+ ............ 197,200 4,683,500
*Hollywood Park ........................... 154,300 1,996,256
King World Productions ................... 250,400 6,385,200
Viad ..................................... 265,000 7,155,000
-----------
20,219,956
-----------
Manufactured Housing Reits - 0.79%
Chateau Communities ...................... 111,307 3,297,470
-----------
3,297,470
-----------
Metals & Mining - 0.96%
*Lone Star Technologies ................... 212,900 4,045,100
-----------
4,045,100
-----------
<PAGE>
for growth of capital 10
Small Cap Value Fund
Statement of Net Assets (Continued)
Number Market
of Shares Value
Common Stock (Continued)
Office/Industrial Reits - 6.03%
Cabot Industrial Trust+ ............. 244,100 $ 5,354,944
Duke Realty Investments ............. 167,200 3,782,900
Mack-Cali Realty .................... 137,600 4,953,600
Prentiss Properties Trust ........... 216,400 5,531,725
Reckson Associates Realty+ .......... 228,300 5,678,963
-----------
25,302,132
-----------
Paper & Forest Products - 3.22%
Caraustar Industries ................ 92,900 2,853,772
Chesapeake .......................... 82,400 2,925,200
Glatfelter (P.H.) ................... 230,900 3,766,556
Rayonier ............................ 84,900 3,984,994
-----------
13,530,522
-----------
Retail - 3.97%
*BJ's Wholesale Club ................. 144,800 5,719,600
*Sports Authority .................... 224,600 3,383,038
*Zale ................................ 244,000 7,548,806
-----------
16,651,444
-----------
Retail Strip Center Reits - 2.42%
*Excel Legacy ........................ 144,400 739,328
Excel Realty Trust .................. 157,200 4,283,700
Pan Pacific Retail Properties+ ...... 242,500 5,137,969
-----------
10,160,997
-----------
Self-Storage Reits - 0.96%
Public Storage+ ..................... 133,900 4,017,000
-----------
4,017,000
-----------
Textiles, Apparel & Furniture - 2.92%
Kellwood ............................ 153,300 5,068,481
*Quaker Fabric ....................... 146,300 3,913,525
*Synthetic Industries ................ 160,800 3,281,325
-----------
12,263,331
-----------
Transportation & Shipping - 4.85%
*Mesaba Holdings ..................... 443,550 9,619,491
*M.S. Carriers ....................... 168,400 5,020,425
USFreightways ....................... 182,100 5,724,769
-----------
20,364,685
-----------
Utilities - 3.18%
American Water Works+ ............... 240,800 7,073,500
Public Service Company of New Mexico 133,900 2,903,956
Sierra Pacific Resources ............ 98,900 3,393,506
-----------
13,370,962
-----------
Miscellaneous - 0.31%
*Rural/Metro ......................... 54,700 1,297,416
-----------
1,297,416
-----------
Total Common Stock
(cost $307,141,581) ................. 397,857,791
-----------
Principal
Amount
Repurchase Agreements - 8.93%
With Chase Manhattan 5.53% 6/01/98 (dated
5/29/98, collateralized by $6,173,747
U.S. Treasury Notes 6.625% due
4/30/02, market value $6,424,954 and
collateralized by $6,932,121 U.S.
Treasury Notes 6.625% due
4/30/02, market value $7,214,186) $13,362,000 13,362,000
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
Repurchase Agreements (Continued)
With JP Morgan Securities 5.55% 6/01/98
(dated 5/29/98, collateralized by $5,439,774
U.S. Treasury Notes 6.00% due 6/30/99,
market value $5,599,614 and collateralized by
$6,932,121 U.S. Treasury Notes 6.00% due
6/30/99, market value $7,135,812) .............................. $ 12,478,000 $ 12,478,000
With Paine Weber 5.55% 6/01/98
(dated 5/29/98, collateralized by $5,773,071
U.S. Treasury Notes 5.75% due 11/15/00,
market value $5,809,152 and collateralized by
$5,725,932 U.S. Treasury Notes 7.50% due
11/15/01, market value $6,080,458) ............................. 11,646,000 11,646,000
-------------
Total Repurchase Agreements
(cost $37,486,000) ............................................. 37,486,000
-------------
Total market value of securities - 103.68%
(cost $344,627,581) ............................................ $ 435,343,791
Liabilities net of receivables
and other assets - (3.68)% ..................................... (15,435,932)
-------------
Net assets applicable to 14,615,661 shares
($0.01 par value) Outstanding - 100.00% ........................ $ 419,907,859
=============
Net asset value - Small Cap Value Fund A class
($304,102,327 / 10,559,067 SHARES).............................. $28.80
======
Net asset value - Small Cap Value Fund B class
($76,274,309 / 2,675,329 SHARES) ............................... $28.51
======
Net asset value - Small Cap Value Fund C class
($27,824,133 / 976,629 SHARES) ................................. $28.49
======
Net asset value - Small Cap Value Fund Institutional class
($11,707,090 / 404,636 SHARES) ................................. $28.93
======
Components of net assets at May 31, 1998:
Common Stock, $0.01 par value, 500,000,000 shares authorized
to the Fund with 150,000,000 shares allocated to Small Cap
Value Fund A Class, 100,000,000 shares allocated to
Small Cap Value Fund B Class, 50,000,000 shares allocated
to Small Cap Value Fund C Class, 50,000,000 shares
allocated to Small Cap Value Fund Institutional Class .......... $ 317,942,338
Undistributed net investment income ............................. 1,279,457
Accumulated net realized gain on investments .................... 9,971,147
Net unrealized appreciation of investments and foreign currencies 90,714,917
-------------
Total Net Assets ................................................ $ 419,907,859
=============
- ---------------
* Non-income producing security.
+ Security is partially or fully on loan.
Net asset value and offering price per share
Small Cap Value Fund A Class
Net asset value A Class (A) $28.80
Sales Charge (4.75% of offering price or 5.00%,
of the amount invested per share) (B) 1.44
------
Offering Price $30.24
======
</TABLE>
- ---------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See How to Buy Shares in the current Prospectus for purchases of $100,000 or
more.
<PAGE>
Delaware Group Equity Funds V, Inc. -
Small Cap Value Fund
Statement of Operations
Six Months Ended May 31, 1998
(Unaudited)
Investment Income:
Interest ................................ $ 949,817
Dividends ............................... 3,554,023 $ 4,503,840
-----------
Expenses:
Management fees ......................... 1,427,330
Distribution expense .................... 823,417
Dividend disbursing, transfer agent fees,
and other expenses .................. 380,398
Accounting and administration ........... 91,937
Registration fees ....................... 34,905
Reports and statements to shareholders .. 14,975
Professional fees ....................... 11,715
Directors' fees ......................... 4,185
Taxes (other than taxes on income) ...... 1,300
Custodian fees .......................... 350 2,790,512
----------- -----------
Net Investment Income ................... 1,713,328
-----------
Net Realized and Unrealized Gain on
investment transactions and
foreign currencies:
Net realized gain on investment ......... 10,030,566
Net change in unrealized appreciation
of investments and foreign currencies 3,121,798
-----------
Net Realized and Unrealized
Gain on investments and
foreign currencies .................. 13,152,364
-----------
Net Increase in Net Assets Resulting
from Operations ..................... $14,865,692
===========
See accompanying notes
<PAGE>
for growth of capital 11
Delaware Group Equity Funds V, Inc. -
Small Cap Value Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/98 11/30/97
(Unaudited)
<S> <C> <C>
Increase in Net Assets from Operations:
Net investment income ............................ $ 1,713,328 $ 1,206,441
Net realized gain on investments ................. 10,030,566 24,175,591
Net change in unrealized appreciation of
investments and foreign currencies ........... 3,121,798 55,330,834
------------- -------------
Net increase in net assets resulting
from operations .............................. 14,865,692 80,712,866
------------- -------------
Distributions to Shareholders from
Net investment income:
A Class ...................................... (1,285,317) (1,008,137)
B Class ...................................... -- --
C Class ...................................... -- --
Institutional Class .......................... (110,446) (125,855)
Net realized gain on investment transactions:
A Class ...................................... (19,279,760) (29,123,966)
B Class ...................................... (3,029,492) (1,956,018)
C Class ...................................... (944,203) (557,182)
Institutional Class .......................... (1,054,260) (2,394,311)
------------- -------------
(25,703,478) (35,165,469)
------------- -------------
Capital Share Transactions:
Proceeds from shares sold:
A Class ...................................... 145,684,624 105,481,776
B Class ...................................... 38,545,373 24,023,390
C Class ...................................... 16,012,718 8,692,513
Institutional Class .......................... 5,079,103 7,836,675
Net asset value of shares issued upon reinvestment
of dividends from net investment income and
net realized gain on investment transactions:
A Class ...................................... 19,744,263 28,758,320
B Class ...................................... 2,863,324 1,884,985
C Class ...................................... 899,118 536,064
Institutional Class .......................... 1,160,155 2,518,772
------------- -------------
229,988,678 179,732,495
------------- -------------
Cost of shares repurchased:
A Class ...................................... (121,544,056) (96,745,306)
B Class ...................................... (3,315,492) (2,525,867)
C Class ...................................... (1,106,515) (1,235,880)
Institutional Class .......................... (8,700,877) (14,109,396)
------------- -------------
(134,666,940) (114,616,449)
------------- -------------
Increase in net assets derived from capital
share transactions ........................... 95,321,738 65,116,046
------------- -------------
Net Increase in Net Assets ....................... 84,483,952 110,663,443
Net Assets:
Beginning of period .............................. 335,423,907 224,760,464
------------- -------------
End of period .................................... $ 419,907,859 $ 335,423,907
============= =============
</TABLE>
See accompanying notes
<PAGE>
for growth of capital 12
Delaware Group Equity Funds V, Inc. - Small Cap Value Fund
Financial Highlights
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Small Cap Value Fund A Class
----------------------------------------------------------
Six Months
Ended Year Ended
5/31/98(1) 11/30/97 11/30/96 11/30/95 11/30/94
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................................ $29.790 $25.780 $22.760 $19.320 $20.070
Income from investment operations:
Net investment income(2) ........................................ 0.144 0.131 0.122 0.253 0.142
Net realized and unrealized gain (loss) on investments .......... 1.106 7.914 4.028 3.597 (0.687)
------- ------- ------- ------- -------
Total from investment operations ................................ 1.250 8.045 4.150 3.850 (0.545)
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ............................ (0.140) (0.135) (0.240) (0.160) (0.035)
Distributions from net realized gains on investment transactions (2.100) (3.900) (0.890) (0.250) (0.170)
------- ------- ------- ------- -------
Total dividends and distributions ............................... (2.240) (4.035) (1.130) (0.410) (0.205)
------- ------- ------- ------- -------
Net asset value, end of period ...................................... $28.800 $29.790 $25.780 $22.760 $19.320
======= ======= ======= ======= =======
Total Return(3) ..................................................... 4.58% 36.38% 19.08% 20.39% (2.78%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ......................... $304,103 $268,266 $192,297 $177,011 $179,498
Ratio of expenses to average net assets ......................... 1.33% 1.39% 1.45% 1.48% 1.46%
Ratio of net investment income to average net assets ............ 1.03% 0.51% 0.51% 1.18% 0.75%
Portfolio turnover .............................................. 34% 53% 87% 65% 14%
</TABLE>
- ----------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Per share information for the years ended November 30, 1996, and 1997 was
based on the average shares outstanding method.
(3) Does not include maximum sales charge of 4.75% nor the 1% limited contingent
deferred sales charge that would apply in the event of certain redemptions
within 12 months of purchase of A Class shares.
See accompanying notes
<PAGE>
Financial Highlights (Continued)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Small Cap Value Fund B Class
----------------------------
Six Months Period
Ended Year Ended 9/6/94(2)
5/31/98(1) 11/30/97 11/30/96 11/30/95 to 11/30/94
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....... $29.460 $25.570 $22.590 $19.300 $20.280
Income from investment operations:
Net investment income(4) ................... 0.075 (0.042) (0.041) 0.141 0.011
Net realized and unrealized gain
(loss) on investments .................. 1.075 7.832 4.006 3.549 (0.991)
------- ------- ------- ------- -------
Total from investment operations ........... 1.150 7.790 3.965 3.690 (0.980)
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ... - - (0.095) (0.150) -
Distributions from net realized gains
on investment transactions ............. (2.100) (3.900) (0.890) (0.250) -
------- ------- ------- ------- -------
Total dividends and distributions ...... (2.100) (3.900) (0.985) (0.400) -
------- ------- ------- ------- -------
Net asset value, end of period ............. $28.510 $29.460 $25.570 $22.590 $19.300
======= ======= ======= ======= =======
Total Return(5) ............................ 4.25% 35.36% 18.26% 19.55% (4.83%)
Ratios and supplemental data:
Net assets, end of period
(000 omitted) .......................... $76,274 $39,733 $12,730 $5,788 $1,455
Ratio of expenses to
average net assets ..................... 2.03% 2.09% 2.15% 2.18% 2.16%
Ratio of net investment income to
average net assets ..................... 0.33% (0.19%) (0.19%) 0.48% 0.05%
Portfolio turnover ..................... 34% 53% 87% 65% 14%
</TABLE>
<PAGE>
for growth of capital 13
<TABLE>
<CAPTION>
Small Cap Value Fund C Class
----------------------------
Six Months Period
Ended Year Ended 11/29/95(3)
5/31/98(1) 11/30/97 11/30/96 to 11/30/95
(Unaudited)
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............ $29.440 $25.550 $22.760 $22.510
Income from investment operations:
Net investment income(4) ........................ 0.062 (0.033) (0.043) -
Net realized and unrealized gain
------- ------- ------- -------
(loss) on investments ....................... 1.088 7.823 4.003 0.250
------- ------- ------- -------
Total from investment operations ................ 1.150 7.790 3.960 0.250
Less dividends and distributions:
Dividends from net investment income ........ - - (0.280) -
Distributions from net realized gains
on investment transactions .................. (2.100) (3.900) (0.890) -
------- ------- ------- -------
Total dividends and distributions ........... (2.100) (3.900) (1.170) -
------- ------- ------- -------
Net asset value, end of period .................. $28.490 $29.440 $25.550 $22.760
======= ======= ======= =======
Total Return(5) ................................. 4.25% 35.40% 18.23% (6)
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ............................... $27,824 $12,547 $3,360 $5
Ratio of expenses to
average net assets .......................... 2.03% 2.09% 2.15% (6)
Ratio of net investment income to
average net assets .......................... 0.33% (0.19%) (0.19%) (6)
Portfolio turnover .......................... 34% 53% 87% (6)
</TABLE>
- ------------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of initial public offering; ratios have been annualized and total
return has not been annualized.
(3) Date of initial public offering.
(4) Per share information for the years ended November 30, 1996, and 1997 was
based on the average shares outstanding method.
(5) Does not include contingent deferred sales charge which varies from 1-4%
depending upon the holding period for Class B and Class C shares.
(6) The ratios of expenses and net investment income to average net assets,
portfolio turnover and total return have been omitted as management believes
that such ratios and returns for this relatively short period are not
meaningful.
See accompanying notes
<PAGE>
for growth of capital 14
Financial Highlights (Continued)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Small Cap Value Fund Institutional Class
---------------------------------------------------------
Six Months
Ended Year Ended
5/31/98(1) 11/30/97 11/30/96 11/30/95 11/30/94
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................................ $29.950 $25.910 $22.860 $19.400 $20.140
Income from investment operations:
Net investment income(2) ........................................ 0.178 0.209 0.193 0.297 0.195
Net realized and unrealized gain (loss) on investments .......... 1.122 7.936 4.047 3.628 (0.685)
------- ------- ------- ------- -------
Total from investment operations ................................ 1.300 8.145 4.240 3.925 (0.490)
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ............................ (0.220) (0.205) (0.300) (0.215) (0.080)
Distributions from net realized gains on investment transactions (2.100) (3.900) (0.890) (0.250) (0.170)
------- ------- ------- ------- -------
Total dividends and distributions ............................... (2.320) (4.105) (1.190) (0.465) (0.250)
------- ------- ------- ------- -------
Net asset value, end of period ...................................... $28.930 $29.950 $25.910 $22.860 $19.400
======= ======= ======= ======= =======
Total Return ........................................................ 4.79% 36.73% 19.45% 20.76% (2.51%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ......................... $11,707 $14,878 $16,373 $7,294 $6,385
Ratio of expenses to average net assets ......................... 1.03% 1.09% 1.15% 1.18% 1.16%
Ratio of net investment income to average net assets ............ 1.33% 0.81% 0.81% 1.48% 1.05%
Portfolio turnover .............................................. 34% 53% 87% 65% 14%
</TABLE>
- ----------
(1) Ratios have been annualized and total return has not been annualized.
(2) Per share information for the years ended November 30, 1996, and 1997 was
based on the average shares outstanding method.
See accompanying notes
<PAGE>
Delaware Group Equity Funds V, Inc. - Small Cap Value Fund
Notes to Financial Statements
May 31, 1998
(Unaudited)
Delaware Group Equity Funds V, Inc.- Small Cap Value Fund, (The "Fund") formerly
known as Delaware Group Value Fund, Inc. is registered as a diversified open-end
investment company under the Investment Company Act of 1940, as amended. The
Fund is organized as a Maryland Corporation and offers four classes of shares.
The Small Cap Value Fund A Class carries a front-end sales charge of 4.75%. The
Small Cap Value Fund B Class carries a back-end deferred sales charge. The Small
Cap Value Fund C Class carries a level load deferred sales charge and the Small
Cap Value Institutional Class has no sales charge. The Fund's objective is to
seek capital appreciation by investing primarily in common stocks whose market
values appear low relative to their underlying value or future potential.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund.
Security Valuation - Securities listed on an exchange are valued at the last
quoted sales price as of the close of the NYSE on the valuation date. Securities
not traded or securities not listed on an exchange are valued at the mean of the
last quoted bid and asked prices. Money market instruments having less than 60
days to maturity are valued at amortized cost which approximates market value.
Other securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Fund's Board of Directors.
Federal Income Taxes - The Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations which may differ from generally
accepted accounting principles.
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
the Fund on the basis of daily net assets of each class. Distribution expenses
relating to a specific class are charged directly to that class.
Repurchase Agreements - The Fund may invest in a pooled cash account along with
other members of the Delaware Investments Family of Funds. The aggregate daily
balance of the pooled cash account is invested in repurchase agreements secured
by obligations of the U.S. Government. The respective collateral is held by the
Fund's custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is at least 100% collateralized. However,
in the event of default or bankruptcy by the counterparty to the agreement,
realization of the collateral may be subject to legal proceedings.
Other - Expenses common to all Funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. The Fund declares and pays dividends from net
investment income and capital gains annually.
<PAGE>
for growth of capital 15
Certain Fund expenses are paid through "soft dollar" arrangements with brokers.
The amount of these expenses is less than 0.01% of the Fund's average daily net
assets.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company (DMC), the Investment Manager of the Fund, an
annual fee which is calculated daily at the rate of 0.75% of the average daily
net assets of the Fund less the fees paid to the unaffiliated directors. At May
31, 1998, the Fund had a liability for Investment Management fees and other
expenses payable to DMC for $139,920.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to provide dividend disbursing, transfer agency and accounting services for the
Fund. For the six-month period ended May 31, 1998, the Fund expensed $380,398
for dividend disbursing and transfer agency services and $91,937 for accounting
services. At May 31, 1998, the Fund had a liability for such fees and other
expenses payable to DSC for $75,429.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. (DDLP), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.30% of the average daily net assets of the A Class and 1.00% of the
average daily net assets of the B and C Class.
For the six-month period ended May 31, 1998, DDLP earned $163,291 for
commissions on sales of the Fund A Class shares.
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Fund. These officers, directors and employees are paid no compensation by
the Fund.
3. Investments
During the period ended May 31, 1998, the Fund made purchases of $126,572,397
and sales of $49,604,328 of investment securities other than U.S. government
securities and temporary cash investments.
At May 31, 1998, the aggregate cost of securities for federal income tax
purposes was $344,627,581
At May 31, 1998, unrealized appreciation for federal income tax purposes
aggregated $90,716,210 of which $99,585,909 related to unrealized appreciation
of securities and $8,869,699 related to unrealized depreciation of securities.
<PAGE>
for growth of capital 16
Notes to Financial Statements (Continued)
4. Capital Stock
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
5/31/98 11/30/97
(Unaudited)
---------- ----------
<S> <C> <C>
Shares sold:
A Class 5,034,472 3,803,359
B Class 1,336,735 863,518
C Class 555,506 319,094
Institutional Class 172,618 300,180
Shares issued upon reinvestment of dividends from
net investment income and net realized gains
from security transactions:
A Class 720,643 1,284,427
B Class 105,269 84,528
C Class 33,080 24,071
Institutional Class 42,218 112,195
----------- ----------
8,000,541 6,791,372
----------- ----------
Shares repurchased:
A Class (4,202,226) (3,540,085)
B Class (115,163) (97,467)
C Class (38,093) (48,531)
Institutional Class (306,930) (547,644)
----------- ----------
(4,662,412) (4,233,727)
----------- ----------
Net Increase 3,338,129 2,557,645
=========== ==========
</TABLE>
5. Lines of Credit
The Fund has a committed line of credit for $10,000,000. No amount was
outstanding at May 31, 1998, or at any time during the fiscal year.
6. Credit and Market Risk
The Fund may invest up to 10% of its total net assets in illiquid securities
which may include securities with contractual restrictions on resale, securities
exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, and other securities which may not be readily marketable. The relative
illiquidity of some of these securities may adversely affect the Fund's ability
to dispose of such securities in a timely manner and at a fair price when it is
necessary to liquidate such securities.
7. Securities Lending
Security loans are required at all times to be secured by collateral at least
equal to 102% of the market value of the securities on loan. However, in the
event of default or bankruptcy by the other party to the agreement, realization
and/or retention of the collateral may be subject to legal proceedings. In the
event that the borrower fails to return loaned securities, and cash collateral
being maintained by the borrower is insufficient to cover the value of loaned
securities and provided such collateral insufficiency is not the result of
investment losses, the lending agent has agreed to pay the amount of the
shortfall to the Fund or, at the option of the lending agent, replace the loaned
securities. The market value of securities on loan to brokers and the related
cash collateral received at May 31, 1998 was $22,391,486 and $22,839,316,
respectively.
<PAGE>
DELAWARE INVESTMENTS FAMILY OF FUNDS
For Growth of Capital
Aggressive Growth Fund
Trend Fund
DelCap Fund
Small Cap Value Fund
U.S. Growth Fund
Growth Stock Fund
Tax-Efficient Equity Fund
For Total Return
Social Awareness Fund
Blue Chip Fund
Devon Fund
Decatur Total Return Fund
Decatur Income Fund
REIT Fund
Delaware Fund
For International Diversification
Emerging Markets Fund
New Pacific Fund
Overseas Equity Fund
International Equity Fund
Global Equity Fund
Global Bond Fund
For Current Income
Delchester Fund
High-Yield Opportunities Fund
Strategic Income Fund
U.S. Government Fund
Delaware-Voyageur
U.S. Government Securities Fund
Limited-Term Government Fund
For Tax-Exempt Income
National High Yield Municipal Bond Fund
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
State Tax-Free Funds*
Money Market Funds
Delaware Cash Reserve
Tax-Free Money Fund
Asset Allocation Funds
Growth Portfolio
Balanced Portfolio
Income Portfolio
* Available for the following states: Arizona, California, Colorado, Florida,
Idaho, Iowa, Kansas, Minnesota, Missouri, North Dakota, New Jersey, New Mexico,
New York, Ohio, Oregon, Pennsylvania, Utah, Washington, Wisconsin. Insured and
intermediate bond funds are available in selected states.
funds
Complete information on any fund offered by Delaware Investments can be found in
each fund's current prospectus. Prospectuses for all funds offered by Delaware
Investments are available from your financial adviser. Please read the
prospectus carefully before you invest or send money.
<PAGE>
This Semi-annual report is for the information of Small Cap Value Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current Prospectus for Small Cap Value Fund, which sets forth
details about charges, expenses, investment objectives and operating policies of
the Fund. You should read the prospectus carefully before you invest. Summary
investment results are documented in the Fund's current Statement of Additional
Information. The figures in this report represent past results which are not a
guarantee of future results. The return and principal value of an investment in
the Fund will fluctuate so that shares, when redeemed, may be worth more or less
than their original cost.
- --------------------------------------------------------------------------------
Investment Manager
Delaware Management Company
Philadelphia
International Affiliate
Delaware International Advisers Ltd.
London, England
National Distributor
Delaware Distributors, L.P.
Philadelphia
Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
Philadelphia
1818 Market Street
Philadelphia, PA 19103-3682
(Photo of globes)
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawarefunds.com
DELAWARE
INVESTMENTS
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Philadelphia o London
Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan; however, shares of the Fund are
not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union,
and involve investment risk, including the possible loss of the principal.
Shares of the Fund are not bank or credit union deposits.
(C) Delaware Distributors, L.P.
Printed in the USA
on recycled paper
SA-021 [5/98] PP7/98
(825)
