<PAGE>
D E L A W A R E G R O U P
Small Cap Value Fund
(Various photos demonstrating service and guidance,
professional management and goals)
service and guidance
professional management
goals
1997
Annual Report
Report
DELAWARE
GROUP
- ---------
<PAGE>
A TRADITION OF SOUND INVESTING
commitment
(photo of keyboard)
(photo of illustration from
Growth of Capital Brochures)
A Commitment
To Our Investors
Delaware Group's investment tradition dates back to 1929. We have a long and
distinguished history of helping individuals and institutions - including
some of America's largest pension funds - reach their financial goals.
Headquartered in Philadelphia, a block from the nation's oldest stock
exchange, Delaware Group's first mutual fund was established in 1938.
Delaware International Advisers Ltd., our international affiliate, was
established in 1990 and is headquartered in London.
Delaware Group offers a full range of mutual funds. We also manage
variable annuity investments, unit investment trusts and closed-end funds,
and offer retirement plan services for individuals and businesses.
Delaware manages more than $40 billion in mutual fund assets and
institutional advisory accounts for more than half-a-million investors. We're
part of a global financial service and investment management business owned
by Lincoln National Corporation, whose subsidiaries manage more than $120
billion in assets.
Small Cap Value Fund's
Objective
To seek capital appreciation by investing primarily in common stocks whose
market values appear low relative to their underlying value or future
potential.
growth
of capital
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December 8, 1997
for growth
of capital
1
Dear Shareholder:
We are delighted to report that Small Cap Value Fund's fiscal 1997 return was
one of the highest since your Fund began operating more than 10 years ago.
The Fund's yearly results were more than double the average of its peers and
higher than both the small and large cap sectors of the U.S. stock market, as
shown below.
Your Fund's A Class shares provided a +36.38% total return with
distributions reinvested (capital change plus distributions based on net
asset value) for the 12 months ended November 30, 1997, and handily beat the
unmanaged Russell 2000 Index, Small Cap Value Fund's benchmark.
We achieved exceptional success despite increased market volatility,
a change in your Fund's portfolio manager and a weak first half performance
by many small company stocks. Small Cap Value Fund's return ranked among the
top 5% of funds within Lipper Analytical Services' capital appreciation
category, a universe of more than 200 funds, for the one-year period ended
November 30, 1997.*
To paraphrase the late journalist Edward R. Murrow, difficulty is an
excuse history does not accept. We are pleased to have met our goals in 1997
and built on the Fund's strong long-term record, as shown on page 8.
Credit sensitive stocks such as those of small banks and real estate
investment trusts contributed to Small Cap Value Fund's returns in fiscal
1997. Many of your Fund's transportation and industrial stock selections also
performed well. We also benefited by having relatively few stocks in the
volatile technology sector.
Small Cap Value Fund provided exceptional results during fiscal 1997 while
maintaining an attractive, lower-than-average risk profile.
Average Annual Total Return
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
12 Months Ended From June 24, 1987**
November 30, 1997 to November 30, 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Small Cap Value Fund A Class +36.38% +16.61%
- ----------------------------------------------------------------------------------------------
Russell 2000 Index +23.16% +11.62%
Russell 2000 Growth Index +14.99% +9.31%
Russell 2000 Value Index +31.50% +13.64%
- ----------------------------------------------------------------------------------------------
Standard & Poor's 500 Index +28.51% +14.92%
Lipper Capital Appreciation Fund Average +18.03% (213 funds) +11.48% (52 funds)
- ----------------------------------------------------------------------------------------------
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
Fund classes can be found on page 8. 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. The
unmanaged Russell 2000 Growth and Value Indexes reflect Frank Russell Co.'s definition
of small company stocks that have growth or value characteristics.
** Fund inception date.
* Within Lipper's Capital Appreciation Fund Average, Small Cap Value Fund ranked 9th out of
213, 41st out of 120, 28th out of 77 and 8th out of 53 funds, respectively, for the one,
three, five and 10-year periods ended November 30, 1997.
</TABLE>
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2
discipline
We attribute Small Cap Value Fund's long-term success to a consistent
effort to select stocks of small companies that appear undervalued. In our
opinion, your Fund management's adherence to this investment discipline has
led to an attractive risk profile that is among the lowest of any similarly
managed fund tracked by Morningstar (see page 4).
As mentioned in your Fund's semi-annual report, Christopher S. Beck
was named portfolio manager on May 12. On the pages that follow, Mr. Beck
explains the Fund's investment strategy and provides an outlook for fiscal
1998.
During 1997, the portfolio turnover rate and operating expense ratio
declined (as shown on page 12) as the Fund benefited from positive cash flow
from several thousand new investors. Most of the $2.10 per share capital gain
paid to shareholders of record as of December 19, 1997 resulted from sales of
stocks that had appreciated to the point where they no longer met the
parameters of the Fund's value discipline.
In the latter half of fiscal 1997, small cap stocks began to enjoy
renewed favor with investors. We believe the market environment remains
positive for smaller companies' shares because:
* Inflation has been subdued while U.S. interest rates have fallen,
providing businesses with an opportunity to obtain attractive financing;
* By lowering the tax rate on long-term capital gains, the 1997 Taxpayer
Relief Act provided incentives for investors to build wealth over time; and,
* Increased overseas market and currency volatility has clouded the earnings
prospects of some large multinational companies.
In our opinion, Small Cap Value Fund can play an important role in
many asset allocation strategies. We thank you for being among the nearly
20,000 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
New President and CEO
On October 13, 1997, Jeffrey J. Nick was named President and Chief Executive
Officer of the Delaware Group of Funds. Mr. Nick has been CEO of Lincoln
National Investment Companies since October 1996. He joined Lincoln National
Corporation, Delaware's indirect parent, in April 1990, and from 1992 to 1996
he managed Lincoln's operations in the United Kingdom. Mr. Nick holds an MBA
from the University of Chicago and a bachelor's degree from Princeton
University.
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3
Portfolio Manager's Review
Sometimes when a new manager assumes leadership of a mutual fund, he or she
will make a lot of changes that either reflect preferences for certain
industry groups or a modification of a fund's strategy. When I became Small
Cap Value Fund's portfolio manager in May, I was pleased with the structure of
the Fund - a diverse portfolio that reflected a consistent commitment to a
value investment discipline. We remain loyal to that approach.
Fiscal 1997 was a banner year for small cap stocks. After three years
of weak performance, the earnings prospects of many smaller companies
appeared more favorable than expected profits at some large multinational
companies. This development, coupled with lower U.S. interest rates,
declining inflation, and a strong domestic economy, helped lift many small
cap stock prices. Increased corporate merger activity also had a significant
positive effect on market returns.
Your Fund successfully rode a wave of investor enthusiasm that
benefited many banking, real estate, insurance, transportation and capital
goods companies. Since relatively few technology stocks met our value
investment criteria, we were significantly underweighted in this volatile
sector. This positioning helped the Fund outperform its value peers as well
as most funds favoring growth style investments.
In the 1990s, the U.S. has enjoyed steady economic growth, the
unemployment rate has fallen to 4.7% and the inflation rate (1.8%) is half
what it was a generation ago. Our federal government's budget deficit has
declined substantially, freeing up capital for productive private
(photo of Christopher S. Beck)
Christopher S. Beck began his investment career at Wilmington Trust Co. in
1981. Later, he was director of research at Cypress Capital Management Co.
and chief investment officer of the University of Delaware Endowment Fund.
Prior to joining Delaware Group, he managed Pitcairn Trust Co.'s small cap
value fund. Mr. Beck holds a bachelor's degree from the University of
Delaware and an MBA from Lehigh University.
<TABLE>
<CAPTION>
Portfolio Highlights
- -----------------------------------------------------------------------------------------------------------
S&P 500 Index
November 30, November 30, as of
1996 1997 Nov. 30, 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Number of Stocks 88 86 500
Median Market Capitalization $484 million $797 million $9.3 billion
Median Stock Price-To-Earnings Ratio 12.5x 13.9x 20.7x
Median Price-To-Book Ratio 1.74x 2.05x 5.25x
Dividend Yield (Before Fund Expenses) 1.70% 1.48% 1.58%
Beta* 0.69 0.60 1.0
- -----------------------------------------------------------------------------------------------------------
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 based on analysts' earnings estimates for
1998 as reported by First Call. Beta is a measure of volatility relative to the unmanaged S&P 500 Index
for the past three years ended Nov. 30. A number less than 1.0 means a security has fluctuated less in
price than the Index. A number more than 1.0 means the security has fluctuated more than the Index.
</TABLE>
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4
Your Fund's Attractive Risk Profile
Latest Morningstar Risk Scores -- 9/30/97
Three Years Five Years Ten Years
128 Funds 67 Funds 31 Funds
Small Cap 0.74 0.67 0.94
Value Fund
A Class
Small 0.94 0.86 1.03
Value Fund
Average
During the past five years, Small Cap Value Fund's risk profile was more than
30% lower than the average of all stock funds evaluated by Morningstar and
more than 20% lower than other small company mutual funds.
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.
investments. We currently see very little on the horizon that would
fundamentally alter these positive long-term trends.
How Stocks Are Selected
Generally, Small Cap Value Fund buys stocks selling near the low end of their
historical relative valuations with a three-to-four-year holding period in
mind. Investor expectations for value stocks are generally low, so these
companies' share prices tend to fluctuate less sharply than growth stocks -
those companies that are expected to grow faster than the overall economy. We
use research parameters such as:
* Examining sales and earnings prospects relative to competitors;
* Measuring value with yardsticks appropriate to each industry; and
* Analyzing free cash flow.
Free cash flow - the amount of money a company generates as revenue
from operations, after capital expenditures and dividends - tells us how much
financial flexibility a business has to expand, meet competitive threats and
deal with unexpected economic or financial events.
Two more characteristics we seek are liquidity and a minimum market
capitalization of at least $250 million (share price times the number of
shares outstanding). We look for stocks with a daily trading volume of at
least 30,000 to 40,000 shares. In our opinion, these traits give your Fund
the flexibility to increase or decrease its position without significantly
impacting the price of the stock. This, in turn, may help limit risk.
Our strict adherence to these criteria in an ebullient market,
coupled with capital appreciation of stock in the portfolio, led
<PAGE>
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5
strategy
to an increase in the average company size in Small Cap Value Fund's portfolio
in fiscal 1997. This is shown in the table on page 3. However, as you can see,
the average price-to-earnings ratio (P/E) of stocks in the Fund as of year's
end was well below that of larger companies. Also, our stock selections'
price-to-book ratio (net worth for accounting purposes) was less than half
that of large companies. This indicates the Fund's value focus, and in our
opinion, our capital appreciation potential.
The positive effect of Small Cap Value Fund's strategy can be seen in
the line chart below. Since November, 1996, the Fund achieved higher returns
with less price volatility than either the Russell 2000 Index or the S&P 500
Index.
Strategic Positioning
The Fund's biggest successes in 1997 were our finance and REIT stocks. For
the 12 months ended November 30, 1997, our selections outperformed the
financial and REIT components of the Russell 2000 Index.
We selected several companies with strong balance sheets that were
acquired or otherwise involved in mergers. These included Union Planters
Corp., a Tennessee banking company, and Starwood Lodging Trust and Patriot
American Hospitality, two REITs that operate hotel chains. In our opinion,
consolidation among financial firms and REITs is likely to continue in the
year ahead, and we have positioned the Fund to benefit accordingly.
Your Fund's largest holding as of year's end was Mesaba Airlines, a
regional airline that operates Northwest Airlines' Airlink service and has
been expanding in the Midwest. Mesaba and your Fund's freight transportation
holdings performed well as business travel and shipping demand rose and jet
fuel prices fell.
Past performance does not guarantee future results.
During fiscal 1997, your Fund provided higher returns with less price
fluctuation than the overall stock market, as measured by unmanaged
benchmarks of the small and large cap sectors.
Small Cap Value Fund's Performance
Amid Short-Term Market Volatility
Percentage Change in Net Asset Value
- -----------------------------------------------------------------------------
November 30, 1996 to November 30, 1997
Sm Cap Value Fund S & P 500 Russell 2000
- -----------------------------------------------------------------------------
11/96 0 % 0 % 0 %
12/96 4.46% -1.98% 2.57%
1/97 7.83% 4.14% 4.60%
2/97 7.78% 4.96% 2.07%
3/97 6.23% 0.65% -2.72%
4/97 7.55% 6.66% -2.48%
5/97 16.18% 13.15% 8.40%
6/97 22.47% 18.21% 13.00%
7/97 28.90% 27.62% 18.28%
8/97 30.18% 20.47% 20.94%
9/97 39.30% 27.07% 29.77%
10/97 35.29% 22.83% 24.01%
11/97 +36.38% +28.51% +23.16%
For fiscal 1997, your Fund provided higher returns with less price fluctuation
than the overall stock market, as measured by unmanaged benchmarks of the small
and large cap sectors.
<PAGE>
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6
outlook
We're confident about our strong position in financial and REIT stocks,
sectors that have historically done well during periods of economic growth
and relatively low interest rates.
In June, in the consumer area, our value discipline led us to
purchase shares of King World Productions, the television syndicator whose
programs include The Oprah Winfrey Show and Wheel of Fortune. Formerly a
growth stock, the company's share price had suffered during the summer
because of uncertainty about whether Winfrey would sign a new contract. When
she did in September, investors looked at the company with a fresh face, and
the stock rose more than 50% from our average purchase price.
One of the few disappointments we had in 1997 was Heileg Myers Co., a
furniture company that failed to meet our sales and earnings expectations. As
of November 30, we had sold most of our position at a loss. This helped
reduce the capital gain distribution the Fund made in December, reducing the
potential income tax liability for shareholders investing outside of a
tax-deferred program.
In our letter to shareholders in May, we indicated that we expected
to modestly increase your Fund's portfolio concentration by reducing the
number of portfolio holdings to between 60 and 75 stocks. Given the stock
market's increased volatility, strong positive cash flows into the Fund from
new investors, and our desire to reduce risk, this goal proved unrealistic.
We revised our target number of holdings to between 70 and 90 stocks, a
number we feel we can efficiently monitor, yet which provides ample
diversification.
Generally, we let our value discipline dictate our sector
positioning. However, we carefully monitor our weightings so the Fund does
not become overweighted into any one area of the economy.
Outlook
During market corrections in April and October 1997, many investors turned to
value stocks to help cushion portfolio volatility. With prices relative to
earnings and other fundamental measures of value near historic highs, strong
businesses whose stocks had temporarily fallen in price were highly prized.
In our opinion, as long as inflation remains low and economic
(Photo of family on beach)
Results by Sector
Small Cap Value Fund vs. Russell 2000 Index
- ------------------------------------------------------------------------------
December 1, 1996, to November 30, 1997
Industry Group Small Cap Value Fund Russell 2000 Index
- ------------------------------------------------------------------------------
Transportation +62.8% +33.2%
Consumer Services +57.5% +21.2%
Business Services +55.8% +16.1%
Technology +47.4% +11.5%
Financial Services +47.4% +42.0%
REITs +42.8% +26.0%
Consumer Cyclicals* +32.7% +33.4%
Utilities +30.7% +24.7%
Energy +23.9% +18.7%
Health Care +20.5% +16.1%
Basic Industry +11.9% +14.0%
- ------------------------------------------------------------------------------
Performance is based on prices of stock holdings and index components and
does not include expenses. The eleven sectors shown here represent 96% of
Small Cap Value Fund's equity holdings and 97% of the unmanaged Russell 2000
Index as of November 30, 1997. *Companies sensitive to changes in the
economy. For complete Fund performance, see page 8.
<PAGE>
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7
growth is maintained, savvy investors will use any small-cap market weakness
in 1998 as a bargain-hunting opportunity.
For the year ahead, we're confident about our strong position in
financial and REIT stocks, sectors that have historically done well during
periods of economic growth and relatively low interest rates. We have also
modestly increased our position in consumer and industrial businesses that
appear undervalued.
In early December, an important gauge of future U.S. economic
activity - the Conference Board's Index of Leading Economic Indicators - rose
for the sixth month in a row. The Board, a business trade group, said it
believes the economic expansion that began in 1991 will continue in 1998,
marking its seventh anniversary this coming spring. Only two periods of
prosperity since World War II have lasted so long, and this time, unlike the
others, rising consumer prices are not a problem.
That suggests to us that the Federal Reserve Board is unlikely to
have to tighten monetary policy any time soon, and that many stocks will
remain attractive compared to fixed-income securities. In our opinion, the
small-cap value segment of the stock market remains a sensible way to
diversify an equity portfolio, reduce risk and participate in the market's
long-term capital appreciation potential.
Christopher B. Beck
Vice President and
Senior Portfolio Manager
December 8, 1997
(photo of keyboard)
Broad Sector Diversification
Small Cap Value Fund vs. Russell 2000 Index
- --------------------------------------------------------------------------------
November 30, 1997
Allocation
Share of Fund's Change From Share of
Broad Sector Net Assets November 30, 1996 Index
- --------------------------------------------------------------------------------
Basic Industry 7.9% -2% 6.6%
Business Services 4.4 No change 5.7
Capital Goods 9.3 -3 5.5
Consumer Services 11.9 -5 13.4
Energy 5.3 -3 5.7
Financial Services 22.2 +5 15.9
Health Care 3.5 -1 9.8
Technology 3.8 -4 16.3
REITs 13.4 +4 8.0
Utilities 3.3 No change 4.5
Transportation 5.5 +1 1.8
Cash 7.0 +2 0
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8
<TABLE>
<CAPTION>
Small Cap Value Fund's Ten-Year Performance
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Growth of a $10,000 Investment
December 1, 1987 Through November 30, 1997
Sm Cap Value S & P 500 Russell 2000 Index
------------ --------- ------------------
<S> <C> <C> <C>
Nov. '87 $ 9,520 $10,000 $10,000
Nov. '88 $12,907 $12,333 $12,985
Nov. '89 $17,398 $16,136 $15,622
Nov. '90 $14,643 $15,577 $12,148
Nov. '91 $21,028 $18,745 $17,072
Nov. '92 $25,861 $22,208 $21,135
Nov. '93 $30,669 $24,450 $25,146
Nov. '94 $29,817 $24,707 $24,866
Nov. '95 $35,896 $33,843 $31,949
Nov. '96 $42,743 $43,272 $37,225
Nov. '97 $58,322 $55,485 $45,932
Small Cap Value Fund A Class -- $58,322
S & P -- $55,485
Russell 2000 Index -- $45,932
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.
</TABLE>
<TABLE>
<CAPTION>
Small Cap Value Fund Performance
- -------------------------------------------------------------------------------------------------------
Average Annual Return Through November 30, 1997
Lifetime Ten Years Five Years One Year
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (Est.6/24/87)
Excluding Sales Charge +16.61% +19.87% +17.65% +36.38%
Including Sales Charge +16.06% +19.28% +16.50% +29.88%
- -------------------------------------------------------------------------------------------------------
Class B (Est.9/6/94)
Excluding Sales Charge +20.36% +35.36%
Including Sales Charge +19.74% +31.36%
- -------------------------------------------------------------------------------------------------------
Class C (Est.11/29/95)
Excluding Sales Charge +27.14% +35.40%
Including Sales Charge +27.14% +34.40%
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 does not guarantee 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.
The average annual total returns for the lifetime, 10-year, five-year and one-year periods ended
11/30/97 for Small Cap Value Fund's Institutional Class were +16.71%, +20.18%, +18.00% and +36.73%,
respectively. The Institutional 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.
</TABLE>
<PAGE>
for growth of capital 9
Financial Statements
Delaware Group Equity Funds V, Inc. -
Small Cap Value Fund
Statement of Net Assets
November 30, 1997
- ---------------------------------------------------------------------------
Number of Market
Shares Value
--------------------------------------------
COMMON STOCK - 91.76%
Aerospace & Defense - 0.99%
Thiokol ............................. 40,300 $ 3,329,788
-----------
3,329,788
-----------
Automobiles & Automotive Parts - 2.26%
Arvin Industries .................... 122,400 4,222,800
CLARCOR ............................. 113,700 3,368,363
-----------
7,591,163
-----------
Banking, Finance & Insurance - 20.57%
CapMAC Holdings ..................... 149,700 5,071,088
CMAC Investment ..................... 48,000 2,493,000
Enhance Financial Services Group+.... 94,800 5,296,950
Everest Reinsurance Holdings ........ 105,470 4,001,268
*Farm Family Holdings ................ 119,200 3,531,300
*Financial Federal ................... 232,450 4,954,091
Horace Mann Educators ............... 90,400 5,051,100
Keystone Financial .................. 95,550 3,571,181
NAC RE Group ........................ 64,800 2,891,700
North Fork Bancorporation+........... 140,700 4,273,763
ONBANCorp ........................... 50,500 3,405,594
PMI Group ........................... 77,400 5,031,000
Penncorp Financial Group+............ 71,700 2,424,356
SCPIE Holdings ...................... 61,500 1,714,313
TIG Holdings ........................ 126,000 4,055,625
Titan Holdings ...................... 70,204 1,483,059
Union Planters ...................... 88,100 5,440,175
Westamerica Bancorporation+.......... 46,900 4,303,075
-----------
68,992,638
-----------
Buildings & Materials - 3.45%
Chicago Bridge & Iron N.V ........... 184,900 2,981,513
D.R.Horton .......................... 299,800 5,340,188
*Jacobs Engineering Group ............ 123,700 3,270,319
-----------
11,592,020
-----------
Cable, Media & Publishing - 1.80%
Cadmus Communications ............... 117,600 2,513,700
*Devon Group ......................... 86,500 3,535,688
-----------
6,049,388
-----------
Chemicals - 4.17%
A. Schulman ......................... 138,200 3,109,500
Ferro ............................... 79,000 3,026,688
Lawter International ................ 311,300 3,579,950
*Scotts+.............................. 146,000 4,270,500
-----------
13,986,638
-----------
Computers & Technology - 0.42%
*Hutchinson Technology+............... 59,300 1,412,081
-----------
1,412,081
-----------
- -------------
Top 10 common stock holdings, representing 16.29% of net assets,
are in boldface.
<PAGE>
- ---------------------------------------------------------------------------
Number of Market
Shares Value
--------------------------------------------
COMMON STOCK (Continued)
Electronics & Electrical Equipment - 3.87%
*KEMET ............................... 167,600 $ 3,980,500
Kuhlman ............................. 169,100 5,971,344
*Read-Rite ........................... 158,700 3,030,178
-----------
12,982,022
-----------
Energy - 5.26%
*Belco Oil & Gas+..................... 197,600 4,063,150
*Offshore Logistics+.................. 131,400 3,013,988
*Pool Energy Services ................ 146,300 3,776,369
*SEACOR SMIT+......................... 58,400 3,252,150
*Swift Energy ........................ 162,090 3,525,458
-----------
17,631,115
-----------
Food, Beverage & Tobacco - 3.14%
DiMon ............................... 121,200 3,030,000
Schweitzer-Mauduit International .... 141,200 5,012,600
Universal Foods ..................... 59,600 2,473,400
-----------
10,516,000
-----------
Healthcare & Pharmaceuticals - 3.48%
*Lincare Holdings+.................... 61,900 3,481,875
*Marquette Medical Systems ........... 155,000 3,506,875
*Trigon Healthcare ................... 182,200 4,668,875
-----------
11,657,625
-----------
Industrial Machinery - 5.81%
Columbus McKinnon ................... 149,600 3,478,200
*Global Industries Technology ........ 158,800 2,838,550
IDEX ................................ 122,600 4,084,112
Regal-Beloit ........................ 127,700 3,471,844
TriMas .............................. 94,700 2,935,700
Watts Industries Class A ............ 105,900 2,693,831
-----------
19,502,237
-----------
Leisure, Lodging & Entertainment - 3.76%
*Hollywood Park+...................... 160,800 3,105,450
King World Productions+.............. 104,900 5,703,938
Viad ................................ 199,600 3,804,875
-----------
12,614,263
-----------
Paper & Forest Products - 3.59%
Caraustar Industries ................ 77,800 2,506,619
Chesapeake+.......................... 69,000 2,363,250
Glatfelter (P.H.) ................... 193,500 3,700,688
Rayonier ............................ 71,100 3,475,013
-----------
12,045,570
-----------
Real Estate - 13.40%
AMB Property+........................ 43,300 995,900
Brandywine Realty Trust ............. 179,700 4,346,494
Cali Realty+......................... 115,300 4,575,969
Chateau Communities+................. 93,307 2,845,864
<PAGE>
10 for growth of capital
Statement of Net Assets (Continued)
- --------------------------------------------------------------------------------
Number of Market
Shares Value
-------------------------------------------------
COMMON STOCK (Continued)
Real Estate (Continued)
Duke Realty Investments .............. 140,100 $ 3,222,300
Excel Realty Trust ................... 131,600 4,013,800
Pan Pacific Retail Properties ........ 203,200 4,165,600
Patriot American Hospitality+......... 189,803 5,931,345
Prentiss Properties Trust ............ 151,200 3,912,300
Public Storage+....................... 112,100 3,096,763
Reckson Associates Realty ............ 168,400 4,473,125
Starwood Lodging Trust ............... 62,500 3,351,563
------------
44,931,023
------------
Retail - 2.78%
*BJ's Wholesale Club .................. 121,200 3,529,950
Heilig-Meyers+........................ 58,700 759,431
*Homebase+............................. 116,300 974,013
*Sports Authority ..................... 206,200 4,046,675
------------
9,310,069
------------
Textiles, Apparel & Furniture - 3.79%
Kellwood ............................. 128,400 4,405,725
*Quaker Fabric+........................ 182,500 3,615,781
*Synthetic Industries ................. 167,600 4,692,800
------------
12,714,306
------------
Transportation & Shipping - 5.49%
Airborne Freight ..................... 50,100 3,190,744
*Mesaba Holdings ...................... 308,200 6,780,400
*M.S. Carriers ........................ 141,000 3,401,625
USFreightways ........................ 164,300 5,047,091
------------
18,419,860
------------
Utilities - 3.25%
American Water Works+................. 201,700 5,786,269
Public Service Company of New Mexico+. 112,100 2,291,044
Sierra Pacific Resources+............. 82,900 2,808,238
------------
10,885,551
------------
Miscellaneous - 0.48%
*Rural/Metro+.......................... 47,500 1,620,938
------------
1,620,938
------------
Total Common Stock (cost $220,188,652) 307,784,295
------------
Principal
Amount
REPURCHASE AGREEMENTS - 6.99%
With Chase Manhattan 5.68% 12/1/97
(dated 11/28/97, collateralized by
$7,795,000 U.S. Treasury Notes 8.25% due
7/15/98, market value $8,154,949) ... $7,987,000 7,987,000
With J.P. Morgan Securities 5.70% 12/1/97
(dated 11/28/97, collateralized by
$4,896,000 U.S.Treasury Notes 5.125% due
2/28/98, market value $4,953,590 and
$2,936,000 U.S. Treasury Notes 5.125% due
4/30/98, market value $2,942,168) ... 7,735,000 7,735,000
<PAGE>
Principal Market
Amount Value
REPURCHASE AGREEMENTS (Continued)
With PaineWebber 5.68% 12/1/97
(dated 11/28/97, collateralized by
$7,674,000 U.S. Treasury Notes 6.25% due
6/30/98, market value $7,899,636) ... $7,735,000 $ 7,735,000
------------
Total Repurchase Agreements
(cost $23,457,000) 23,457,000
------------
TOTAL MARKET VALUE OF SECURITIES - 98.75%
(cost $243,645,652) ............................................ $331,241,295
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.25% ......... 4,182,612
------------
NET ASSETS APPLICABLE TO 11,277,532
SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00% ................. $335,423,907
============
NET ASSET VALUE - SMALL CAP VALUE FUND A CLASS
($268,266,109 / 9,006,178 shares) .............................. $29.79
======
NET ASSET VALUE - SMALL CAP VALUE FUND B CLASS
($39,732,713 / 1,348,488 shares) ............................... $29.46
======
NET ASSET VALUE - SMALL CAP VALUE FUND C CLASS
($12,547,494 / 426,136 shares) ................................. $29.44
======
NET ASSET VALUE - SMALL CAP VALUE FUND INSTITUTIONAL CLASS
($14,877,591 / 496,730 shares) ................................. $29.95
======
COMPONENTS OF NET ASSETS AT NOVEMBER 30, 1997:
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 and 50,000,000 shares allocated to
Small Cap Value Fund Institutional Class ....................... $222,620,598
Undistributed net investment income ............................ 1,119,661
Accumulated net realized gain on investments ................... 24,090,528
Net unrealized appreciation of investments
and foreign currencies ........................................ 87,593,120
------------
Total Net Assets ............................................... $335,423,907
============
- ------------
*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) .......................................... $29.79
Sales Charge (4.75% of offering price or 5.00%, of the amount invested
per share) (B) ...................................................... 1.49
------
Offering price ....................................................... $31.28
======
- ------------
(A) Net asset value per share, as illustrated, is the estimated amount
which would be paid upon redemption or repurchase of shares.
(B) See Buying Shares in the current Prospectus for purchases of $100,000
or more.
See accompanying notes
<PAGE>
for growth of capital 11
Delaware Group Equity Funds V, Inc.-
Small Cap Value Fund
Statement oF Operations
For the Year Ended November 30, 1997
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest .......................................... $ 1,164,249
Dividends ......................................... 3,956,731 $ 5,120,980
-----------
EXPENSES:
Management fees ................................... 2,012,899
Distribution expense .............................. 940,968
Dividend disbursing and transfer agent fees
and expenses ..................................... 597,398
Accounting fees and salaries ...................... 136,464
Reports and statements to shareholders ............ 86,481
Registration fees ................................. 46,476
Professional fees ................................. 25,860
Directors' fees ................................... 8,862
Taxes (other than taxes on income) ................ 8,323
Custodian fees .................................... 4,705
Other ............................................. 46,103 3,914,539
----------- -----------
NET INVESTMENT INCOME ............................. 1,206,441
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENT TRANSACTIONS AND FOREIGN CURRENCIES:
Net realized gain on investment transactions ...... 24,175,591
Net change in unrealized appreciation of
investments and foreign currencies ............... 55,330,834
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENT TRANSACTIONS AND FOREIGN CURRENCIES: 79,506,425
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS .................................. $80,712,866
===========
See accompanying notes
<PAGE>
Delaware Group Equity Funds V, Inc.-
Small Cap Value Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Year Ended
11/30/97 11/30/96
--------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS:
Net investment income ............................ $ 1,206,441 $ 1,017,699
Net realized gain on investment transactions
and foreign currencies .......................... 24,175,591 34,101,818
Net change in unrealized appreciation of
investments and foreign currencies .............. 55,330,834 1,003,831
------------- -------------
Net increase in net assets resulting from
operations ...................................... 80,712,866 36,123,348
------------- -------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
Small Cap Value Fund A Class .................... (1,008,137) (1,863,298)
Small Cap Value Fund B Class .................... -- (25,338)
Small Cap Value Fund C Class .................... -- (67)
Small Cap Value Fund Institutional Class ........ (125,855) (98,850)
Net realized gain on investment transactions:
Small Cap Value Fund A Class .................... (29,123,966) (6,909,728)
Small Cap Value Fund B Class .................... (1,956,018) (237,377)
Small Cap Value Fund C Class .................... (557,182) (214)
Small Cap Value Fund Institutional Class ........ (2,394,311) (293,254)
------------- -------------
(35,165,469) (9,428,126)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Small Cap Value Fund A Class .................... 105,481,776 30,362,508
Small Cap Value Fund B Class .................... 24,023,390 7,098,090
Small Cap Value Fund C Class .................... 8,692,513 3,631,712
Small Cap Value Fund Institutional Class ........ 7,836,675 14,113,802
Net asset value of shares issued upon reinvestment
of dividends from net investment income and
net realized gain on investment transactions:
Small Cap Value Fund A Class .................... 28,758,320 8,292,572
Small Cap Value Fund B Class .................... 1,884,985 252,413
Small Cap Value Fund C Class .................... 536,064 282
Small Cap Value Fund Institutional Class ........ 2,518,772 392,342
------------- -------------
179,732,495 64,143,721
------------- -------------
Cost of shares repurchased:
Small Cap Value Fund A Class .................... (96,745,306) (46,585,878)
Small Cap Value Fund B Class .................... (2,525,867) (1,736,866)
Small Cap Value Fund C Class .................... (1,235,880) (564,409)
Small Cap Value Fund Institutional Class ........ (14,109,396) (7,288,901)
------------- -------------
(114,616,449) (56,176,054)
------------- -------------
Increase in net assets derived from capital
share transactions .............................. 65,116,046 7,967,667
------------- -------------
NET INCREASE IN NET ASSETS ....................... 110,663,443 34,662,889
NET ASSETS:
Beginning of year ................................ 224,760,464 190,097,575
------------- -------------
End of year ...................................... $ 335,423,907 $ 224,760,464
============= =============
See accompanying notes
</TABLE>
<PAGE>
12 for growth of capital
Delaware Group Equity Funds V, Inc. -
Small Cap Value Fund
Financial Highlights
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding throughout each
period were as follows:
Small Cap Value Fund A Class
Year Ended
----------------------------------------------------
11/30/97 11/30/96 11/30/95 11/30/94 11/30/93
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......................$ 25.780 $ 22.760 $ 19.320 $ 20.070 $ 17.750
Income from investment operations:
Net investment income(1)................................ 0.131 0.122 0.253 0.142 0.033
Net realized and unrealized gain (loss)
on investment transactions and foreign currencies ... 7.914 4.028 3.597 (0.687) 3.147
-------- -------- -------- -------- --------
Total from investment operations ....................... 8.045 4.150 3.850 (0.545) 3.180
-------- -------- -------- -------- --------
Less dividends and distributions:
Dividends from net investment income ................... (0.135) (0.240) (0.160) (0.035) (0.040)
Distributions from net realized gain on
investment transactions ............................. (3.900) (0.890) (0.250) (0.170) (0.820)
-------- -------- -------- -------- --------
Total dividends and distributions ...................... (4.035) (1.130) (0.410) (0.205) (0.860)
-------- -------- -------- -------- --------
Net asset value, end of period .............................$ 29.790 $ 25.780 $ 22.760 $ 19.320 $ 20.070
======== ======== ======== ======== ========
Total Return(2) ............................................ 36.38% 19.08% 20.39% (2.78%) 18.59%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................$268,266 $192,297 $177,011 $179,498 $151,384
Ratio of expenses to average net assets ................ 1.39% 1.45% 1.48% 1.46% 1.64%
Ratio of net investment income to average net assets ... 0.51% 0.51% 1.18% 0.75% 0.25%
Portfolio turnover ..................................... 53% 87% 65% 14% 32%
Average commission rate paid(3) ........................$ 0.0599 $ 0.0600 N/A N/A N/A
- -----------
(1) Per share information for the years ended November 30, 1996, and 1997 was based on the average shares outstanding
method.
(2) 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.
(3) Computed by dividing the total amount of commissions paid by the total number of shares purchased and sold during the
period for which there was a commission charged.
</TABLE>
See accompanying notes
<PAGE>
for growth of capital 13
Financial Highlights (Continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding throughout each period were as follows:
Small Cap Value Fund B Class Small Cap Value Fund C Class
--------------------------------------- -----------------------------------
Period
Year Year Year 9/6/94(4) Year Year 11/29/95(5)
Ended Ended Ended to Ended Ended to
11/30/97 11/30/96 11/30/95 11/30/94 11/30/97 11/30/96 11/30/95
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period. . . . . $25.570 $22.590 $19.300 $20.280 $25.550 $22.760 $22.510
Income from investment operations:
Net investment income (loss)(1). . . . . . . (0.042) (0.041) 0.141 0.011 (0.033) (0.043) --
Net realized and unrealized gain (loss) on
investment transactions and foreign
currencies . . . . . . . . . . . . . . . . 7.832 4.006 3.549 (0.991) 7.823 4.003 0.250
------- ------- ------- ------- ------- ------- -------
Total from investment operations . . . 7.790 3.965 3.690 (0.980) 7.790 3.960 0.250
------- ------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income . . . . -- (0.095) (0.150) -- -- (0.280) --
Distributions from net realized gain on
investment transactions. . . . . . . . . . (3.900) (0.890) (0.250) -- (3.900) (0.890) --
------- ------- ------- ------- ------- ------- -------
Total dividends and distributions. . . . . . (3.900) (0.985) (0.400) -- (3.900) (1.170) --
------- ------- ------- ------- ------- ------- -------
Net asset value, end of period . . . . . . . . $29.460 $25.570 22.590 19.300 $29.440 $25.550 $22.760
======= ======= ======= ======= ======= ======= =======
Total Return(2). . . . . . . . . . . . . . . . 35.36% 18.26% 19.55% (4.83%) 35.40% 18.23% 6
Ratios and supplemental data:
Net assets, end of period (000 omitted). . . $39,733 $12,730 $5,788 $1,455 $12,547 $3,360 $5
Ratio of expenses to average net assets . . 2.09% 2.15% 2.18% 2.16% 2.09% 2.15% 6
Ratio of net investment income (loss)
to average net assets . . . . . . . . . . (0.19%) (0.19%) 0.48% 0.05% (0.19%) (0.19%) 6
Portfolio turnover . . . . . . . . . . . . . 53% 87% 65% 14% 53% 87% 6
Average commission rate paid(3). . . . . . . $0.0599 $0.0600 N/A N/A $0.0599 $0.0600 N/A
__________________
(1) Per share information for the years ended November 30, 1996 and 1997 was based on the average shares outstanding
method.
(2) Does not include contingent deferred sales charge which varies from 1-4% depending upon the holding period for B Class
and C Class shares.
(3) Computed by dividing the total amount of commissions paid by the total number of shares purchased and sold during the
period for which there was a commission charged.
(4) Date of initial public offering; ratios have been annualized and total return has not been annualized.
(5) Date of initial public offering.
(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.
</TABLE>
See accompanying notes
<PAGE>
14 for growth of capital
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
----------------------------------------------------
Year Ended
11/30/97 11/30/96 11/30/95 11/30/94 11/30/93
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . $25.910 $22.860 $19.400 $20.140 $17.750
Income from investment operations:
Net investment income(1) . . . . . . . . . . . . . . . 0.209 0.193 0.297 0.195 0.092
Net realized and unrealized gain (loss) on investment
transactions and foreign currencies. . . . . . . . . 7.936 4.047 3.628 (0.685) 3.158
----- ----- ----- ------ -----
Total from investment operations . . . . . . . . . . . 8.145 4.240 3.925 (0.490) 3.250
----- ----- ----- ------ -----
Less dividends and distributions:
Dividends from net investment income . . . . . . . . . (0.205) (0.300) (0.215) (0.080) (0.040)
Distributions from net realized gain on security
transactions . . . . . . . . . . . . . . . . . . . . (3.900) (0.890) (0.250) (0.170) (0.820)
------ ------ ------ ------ ------
Total dividends and distributions. . . . . . . . . . . (4.105) (1.190) (0.465) (0.250) (0.860)
------ ------ ------ ------ ------
Net asset value, end of period . . . . . . . . . . . . . $29.950 $25.910 $22.860 $19.400 $20.140
======= ======= ======= ======= =======
Total Return . . . . . . . . . . . . . . . . . . . . . . 36.73% 19.45% 20.76% (2.51%) 19.00%
Ratios and supplemental data:
Net assets, end of period (000 omitted). . . . . . . . $14,878 $16,373 $7,294 $6,385 $ 5,476
Ratio of expenses to average net assets. . . . . . . . 1.09% 1.15% 1.18% 1.16% 1.34%
Ratio of net investment income to average net assets . 0.81% 0.81% 1.48% 1.05% 0.55%
Portfolio turnover . . . . . . . . . . . . . . . . . . 53% 87% 65% 14% 32%
Average commission rate paid(2). . . . . . . . . . . . $0.0599 $0.0600 N/A N/A N/A
- ---------
(1) Per share information for the years ended November 30, 1996, and 1997 was based on the average shares outstanding
method.
(2) Computed by dividing the total amount of commissions paid by the total number of shares purchased and sold during the
period for which there was a commission charged.
</TABLE>
See accompanying notes
<PAGE>
for growth of capital 15
Delaware Group Equity Funds V, Inc. -
Small Cap Value Fund
Notes to Financial Statements
November 30, 1997
- --------------------------------------------------------------------------------
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 Group of Funds. The aggregate daily balance of the
pooled cash account is invested in repurchase agreements secured by obligations
of the U.S. government. The respective collateral is held by the Fund's
custodian bank until the maturity of the respective repurchase agreements. Each
repurchase agreement is at least 100% collateralized. However, in the event of
default or bankruptcy by the counterparty to the agreement, realization of the
collateral may be subject to legal proceedings.
Other - Expenses common to all funds within the Delaware Group of Funds
are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased
or sold (trade date). Costs used in calculating realized gains and losses
on the sale of investment securities are those of the specific securities
sold. Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. The Fund declares and pays
dividends from net investment income and capital gains annually.
<PAGE>
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, Inc. (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 November 30, 1997, the Fund had a liability for investment
management fees and other expenses payable to DMC of $147,008.
The Fund has engaged Delaware Service Company, Inc. (DSC) and Delaware
Investment Retirement Services, Inc. (DIRSI), affiliates of DMC, to provide
dividend disbursing and transfer agent services. The Fund has also engaged DSC
to provide accounting services. For the year ended November 30, 1997, the Fund
expensed $597,398 for dividend disbursing and transfer agent services and
$93,654 for accounting services. At November 30, 1997, the Fund had a liability
for such fees and other expenses payable to DSC and DIRSI of $50,576.
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 year ended November 30, 1997, DDLP earned $132,826 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 year ended November 30, 1997, the Fund made purchases of $148,104,134
and sales of $132,770,424 of investment securities other than U.S. government
securities and temporary cash investments.
At November 30, 1997, the aggregate cost of securities for federal income
tax purposes was $243,645,652.
At November 30, 1997, net unrealized appreciation for federal income tax
purposes aggregated $87,595,643 of which $90,448,555 related to unrealized
appreciation of securities and $2,852,912 related to unrealized depreciation of
securities.
<PAGE>
16 for growth of capital
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
4. Capital Stock
Transactions in capital stock shares were as follows:
Year Ended Year Ended
11/30/97 11/30/96
---------- ----------
Shares sold:
Small Cap Value Fund A Class ................. 3,803,359 1,300,538
Small Cap Value Fund B Class ................. 863,518 304,900
Small Cap Value Fund C Class ................. 319,094 154,695
Small Cap Value Fund Institutional Class ..... 300,180 607,791
Shares issued upon reinvestment of
dividends from net investment income
and net realized gains on investment
transactions:
Small Cap Value Fund A Class ................. 1,284,427 376,091
Small Cap Value Fund B Class ................. 84,528 11,473
Small Cap Value Fund C Class ................. 24,071 13
Small Cap Value Fund Institutional Class ..... 112,195 17,762
--------- ----------
6,791,372 2,773,263
--------- ----------
Shares repurchased:
Small Cap Value Fund A Class ................. (3,540,085) (1,994,881)
Small Cap Value Fund B Class ................. (97,467) (74,607)
Small Cap Value Fund C Class ................. (48,531) (23,427)
Small Cap Value Fund Institutional Class ..... (547,644) (312,634)
---------- ----------
(4,233,727) (2,405,549)
---------- ----------
Net Increase ................................... 2,557,645 367,714
========== ==========
5. Lines of Credit
The Fund has a committed line of credit for $8,200,000. No amount was
outstanding at November 30, 1997, or at any time during the fiscal year.
6. Credit and Market Risks
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
Securities on loan 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 colla teral 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 November 30, 1997 was $39,689,526
and $40,575,400, respectively.
8. Subsequent Event
The Fund declared distributions of $2.10 per share for all classes from net
realized gain on investment transactions and $0.14 and $0.22 per share for Small
Cap Value Fund A Class and Small Cap Value Fund Institutional Class,
respectively, from net investment income, payable on December 30, 1997 to
shareholders of record December 19, 1997. The ex-dividend date was December 22,
1997.
<PAGE>
Delaware Group Equity Funds V, Inc. -
Small Cap Value Fund
Report of Independent Auditors
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors
Delaware Group Equity Funds V, Inc. - Small Cap Value Fund
We have audited the accompanying statement of net assets of Delaware Group
Equity Funds V, Inc. - Small Cap Value Fund as of November 30, 1997, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of November 30, 1997, by corres pondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Group Equity Funds V, Inc. - Small Cap Value Fund at November 30, 1997,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated therein, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Philadelphia, Pennsylvania
January 5, 1998
<PAGE>
This 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.
Board of Directors
Wayne A. Stork
Chairman
Delaware Group of Funds
Philadelphia, PA
Jeffrey J. Nick
President and Chief Executive Officer
Delaware Group of Funds
Philadelphia, PA
Walter P. Babich
Board Chairman, Citadel Constructors, Inc.
King of Prussia, PA
Anthony D. Knerr
Consultant, Anthony Knerr & Associates
New York, NY
Ann R. Leven
Treasurer, National Gallery of Art
Washington, DC
W. Thacher Longstreth
City Councilman
Philadelphia, PA
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
Charles E. Peck
Secretary/Treasurer, Enterprise Homes, Inc.
Fredericksburg, VA
Affiliated Officers
David K. Downes
Executive Vice President, Chief Financial Officer and Chief Operating Officer
Delaware Group of Funds
Philadelphia, PA
George M. Chamberlain, Jr.
Senior Vice President, Secretary
and General Counsel
Delaware Group of Funds
Philadelphia, PA
Bruce D. Barton
President and Chief Executive Officer
Delaware Distributors, L.P.
Philadelphia, PA
(photo of globes)
<PAGE>
directors
& officers
Investment Manager
Delaware Management Company, Inc.
Philadelphia, Pennsylvania
International Affiliate
Delaware International Advisers Ltd.
London, England
National Distributor
Delaware Distributors, L.P.
Philadelphia, Pennsylvania
Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
Philadelphia, Pennsylvania
1818 Market Street
Philadelphia, PA 19103-3682
<PAGE>
(photo of globes)
This report must be preceded or accompanied by a current Small Cap Value Fund
prospectus and the Delaware Group Fund Performance Update for the most recently
completed calendar quarter. For a prospectus of any other Delaware Group fund,
contact your financial adviser or Delaware Group.
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
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 amount
invested. Shares of the Fund are not bank or credit union deposits.
DELAWARE
GROUP
- --------
Philadelphia o London
Printed in the USA
on recycled paper
(410)
AR-021(11/97)TKO1/98
(C)Delaware Distributors, L.P.
