UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-4997
Exact name of registrant as specified in charter: Delaware Group Equity Funds V
Address of principal executive offices: 2005 Market Street
Philadelphia, PA 19103
Name and address of agent for service: Richelle S. Maestro, Esq.
2005 Market Street
Philadelphia, PA 19103
Registrant's telephone number,
including area code: (800) 523-1918
Date of fiscal year end: November 30
Date of reporting period: May 31, 2003
Item 1. Reports to Stockholders
Delaware
Investments (SM)
---------------------------------------
VALUE-EQUITY A member of Lincoln Financial Group(R)
Semiannual Report 2003
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DELAWARE SMALL CAP VALUE FUND
[Logo] POWERED BY RESEARCH.(SM)
Table
OF CONTENTS
- -----------------------------------------------------------------
FINANCIAL STATEMENTS:
Statement of Net Assets 1
Statement of Operations 4
Statements of Changes in Net Assets 5
Financial Highlights 6
Notes to Financial Statements 10
- -----------------------------------------------------------------
Funds are not FDIC insured and are not guaranteed. It is possible to lose the
principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a series
of Delaware Management Business Trust, which is a registered investment advisor.
(C) 2003 Delaware Distributors, L.P.
Statement Delaware Small Cap Value Fund
OF NET ASSETS May 31, 2003 (Unaudited)
Number of Market
Shares Value
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Common Stock - 97.27%
- --------------------------------------------------------------------------------
Aerospace & Defense - 1.79%
*+Armor Holdings 70,400 $ 958,144
*+DRS Technologies 117,300 2,932,500
*+Herley Industries 140,000 2,198,000
-----------
6,088,644
-----------
Banking & Finance - 7.61%
*Associated Bancorp 124,405 4,652,747
Colonial BancGroup 333,300 4,502,883
*Commercial Federal 128,300 2,882,901
Compass Bancshares 168,800 6,220,280
*Greater Bay Bancorp 174,700 3,511,470
Riggs National 175,700 2,609,145
+Sterling Financial 65,076 1,550,110
-----------
25,929,536
-----------
Basic Industry/Capital Goods - 20.59%
*A.O. Smith 93,700 2,977,786
+Agco 109,700 1,961,436
Crane 129,600 2,706,048
+Crown Cork & Seal 297,400 1,971,762
*Federal Signal 225,400 4,075,232
*Florida Rock Industries 85,100 3,619,303
*Freeport McMoRan Copper & Gold Class B 142,500 3,127,875
*Gibraltar Steel 108,000 2,088,720
*Granite Construction 108,700 2,008,776
+Griffon 344,160 5,293,181
H.B. Fuller 105,600 2,515,392
Harsco 88,400 3,127,592
+Jacobs Engineering Group 96,300 3,759,552
*Kaydon 150,900 3,199,080
+Louisiana-Pacific 287,400 2,770,536
*MacDermid 148,100 3,702,500
*+Mueller Industries 76,300 1,998,297
+Pactiv 306,000 5,982,299
Polyone 320,500 1,596,090
*Spartech 90,900 1,808,910
*+Terex 147,702 2,621,711
*+Tetra Tech 141,500 2,398,425
*Texas Industries 74,800 1,653,828
Universal Forest Products 45,100 869,077
Wausau-Mosinee Paper 207,300 2,332,125
-----------
70,165,533
-----------
Business Services - 3.21%
*+Handleman 198,400 3,618,816
*+Right Management Consultants 141,800 1,841,982
The Brinks Company 175,500 2,778,165
*+United Stationers 88,300 2,691,384
-----------
10,930,347
-----------
Number of Market
Shares Value
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Common Stock (continued)
- --------------------------------------------------------------------------------
Consumer Durables - 5.19%
*+Furniture Brands International 142,400 $ 3,742,272
KB Home 111,300 6,956,250
*La-Z-Boy 106,300 2,329,033
+Lear 76,900 3,059,082
*+WCI Communities 82,800 1,614,600
-----------
17,701,237
-----------
Consumer Services - 3.57%
Belo Class A 94,200 2,204,280
+CEC Entertainment 9,500 326,040
*+Movie Gallery 105,400 1,964,656
+Rare Hospitality International 124,000 3,543,920
+Rent-A-Center 62,100 4,125,924
-----------
12,164,820
-----------
Energy - 6.70%
*+Cal Dive International 148,800 3,307,824
Chesapeake Energy 403,500 4,119,735
+Comstock Resources 295,100 4,045,821
*+Grey Wolf 528,000 2,365,440
*+Magnum Hunter Resources 336,300 2,421,360
+Newfield Exploration 92,100 3,450,066
Southwest Gas 147,200 3,128,000
-----------
22,838,246
-----------
Food, Beverage & Tobacco - 4.15%
*Bunge Limited 112,700 3,257,030
+Constellation Brands 181,600 5,006,712
+International Multifoods 129,900 2,623,980
+Jack in the Box 154,600 3,249,692
-----------
14,137,414
-----------
Healthcare & Pharmaceuticals - 6.26%
*+Abgenix 151,500 1,628,625
*+Celgene 76,800 2,417,664
*+Community Health Systems 80,900 1,685,147
*Cooper Companies 67,300 2,323,196
+Humana 318,300 4,134,717
*Owens & Minor 146,200 3,106,750
+Pharmaceutical Resources 68,500 2,811,240
+Protein Design Labs 224,400 3,211,164
-----------
21,318,503
-----------
Insurance - 6.54%
AmerUs Group 120,700 3,248,037
Arthur J. Gallagher 110,600 3,013,850
Harleysville Group 125,700 3,074,622
Platinum Underwriters Holdings 65,300 1,803,586
RenaissanceRe Holdings 145,400 6,499,380
W.R. Berkley 94,400 4,649,200
-----------
22,288,675
-----------
1
Statement Delaware Small Cap Value Fund
OF NET ASSETS (CONTINUED)
Number of Market
Shares Value
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Common Stock (continued)
- --------------------------------------------------------------------------------
Real Estate - 0.83%
*The St. Joe Company 93,000 $ 2,829,060
-----------
2,829,060
-----------
REITs - 5.36%
*Chelsea Property Group 65,800 2,734,648
Keystone Property Trust 129,300 2,346,795
*Mack-Cali Realty 87,100 2,993,627
Pan Pacific Retail Properties 121,000 4,754,090
Prentiss Properties Trust 103,500 2,987,010
Reckson Associates Realty 120,500 2,440,125
-----------
18,256,295
-----------
Retail - 8.13%
+AnnTaylor Stores 120,600 3,083,742
+Barnes & Noble 116,700 2,777,460
*+Bebe Stores 114,800 2,091,656
+Big 5 Sporting Goods 70,100 893,775
+Department 56 91,700 1,104,068
*+Genesco 114,300 1,731,645
*+Goody's Family Clothing 217,200 1,485,648
*+Jo-Ann Stores Class A 71,900 1,633,568
+Kirkland's 54,600 819,000
+Oakley 186,100 2,065,710
Phillips-Van Heusen 165,800 2,339,438
+Shoe Carnival 84,900 1,315,101
+Sports Authority 128,800 1,272,544
+Take-Two Interactive Software 81,700 2,062,925
*+Whitehall Jewellers 65,200 624,616
*Wolverine World Wide 130,000 2,388,100
-----------
27,688,996
-----------
Technology - 10.44%
*+Actel 151,700 3,366,223
+Amdocs Limited 277,100 5,406,221
*+ASM International N.V 208,800 3,228,048
+Bell Microproducts 192,500 789,250
+Comverse Technology 294,000 4,471,740
*+Freemarkets 264,100 1,983,391
*+Insight Enterprises 207,800 1,816,172
*+International Rectifier 96,500 2,526,370
*+Lawson Software 347,400 1,768,266
*+Photronics 96,900 1,631,796
+Storage Technology 111,800 3,018,600
Symbol Technologies 175,400 2,350,360
*+Veeco Instruments 166,700 3,215,643
-----------
35,572,080
-----------
Number of Market
Shares Value
- --------------------------------------------------------------------------------
Common Stock (continued)
- --------------------------------------------------------------------------------
Transportation - 4.95%
Alexander & Baldwin 175,200 $ 4,761,936
Arkansas Best 96,600 2,559,900
*+Continental Airlines Class B 112,300 1,237,546
*+Kirby 104,600 2,876,500
*+Northwest Airlines Class A 129,200 1,153,756
*+SCS Transportation 59,800 773,812
Skywest 82,600 1,129,968
*+Yellow 90,600 2,380,968
-------------
16,874,386
-------------
Utilities - 1.95%
Black Hills 50,200 1,508,510
*+El Paso Electric Company 181,900 2,164,610
*PNM Resources 112,600 2,989,530
-------------
6,662,650
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Total Common Stock (cost $270,645,009) 331,446,422
-------------
Warrants - 0.01%
+Magnum Hunter Resources 49,500 17,573
-------------
Total Warrants (cost $0) 17,573
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Principal
Amount
- --------------------------------------------------------------------------------
Repurchase Agreements - 3.03%
- --------------------------------------------------------------------------------
With BNP Paribas 1.24%
6/2/03 (dated 5/30/03,
collateralized by $3,542,000
U.S. Treasury Bills due 8/28/03,
market value $3,533,231) $3,464,000 3,464,000
With Cantor Fitzgerald 1.24%
6/2/03 (dated 5/30/03,
collateralized by $1,155,000
U.S. Treasury Notes 5.25% due
5/15/04, market value $1,202,262
and $532,000 U.S. Treasury Notes
7.25% due 5/15/04,
market value $564,504) 1,731,000 1,731,000
With J. P. Morgan Securities 1.18%
6/2/03 (dated 5/30/03,
collateralized by $879,000
U.S. Treasury Notes 2.125%
due 8/31/04, market value $891,250) 873,000 873,000
With UBS Warburg 1.24%
6/2/03 (dated 5/30/03,
collateralized by $3,965,566
U.S. Treasury Notes 7.875% due
11/15/04, market value $4,358,122) 4,272,000 4,272,000
-------------
Total Repurchase Agreements
(cost $10,340,000) 10,340,000
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2
Statement Delaware Small Cap Value Fund
OF NET ASSETS (CONTINUED)
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Total Market Value of Securities - 100.31%
(cost $280,985,009) $ 341,803,995
Short Term Investments Held as Collateral for
Loaned Securities- 21.23% (cost $72,331,535)++ 72,331,535
Obligation to Return Securities Lending
Collateral - (21.23%)++ (72,331,535)
Liabilities Net of Receivables and
Other Assets - (0.31%) (1,072,614)
-------------
Net Assets Applicable to 11,989,149 Shares
Outstanding - 100.00% $ 340,731,381
-------------
Net Asset Value - Delaware Small Cap Value Fund
Class A ($193,690,628 / 6,728,497 Shares) $28.79
------
Net Asset Value - Delaware Small Cap Value Fund
Class B ($87,380,343 / 3,149,478 Shares) $27.74
------
Net Asset Value - Delaware Small Cap Value Fund
Class C ($36,645,880 / 1,321,362 Shares) $27.73
------
Net Asset Value - Delaware Small Cap Value Fund
Class R ($28.79 / 1 Share) $28.79
------
Net Asset Value - Delaware Small Cap Value Fund
Institutional Class ($23,014,501 / 789,811 Shares) $29.14
------
Components of Net Assets at May 31, 2003:
Shares of beneficial interest
(unlimited authorization-- no par) $ 273,903,723
Accumulated net investment loss (705,051)
Accumulated net realized gain on investments 6,713,723
Net unrealized appreciation of investments 60,818,986
-------------
Total net assets $ 340,731,381
-------------
* Fully or partially on loan.
+ Non-income producing security for the period ended May 31, 2003.
++ See Note 7 in "Notes to Financial Statements".
Summary of Abbreviation:
REITs -- Real Estate Investment Trusts
Net Asset Value and Offering Price per Share -
Delaware Small Cap Value Fund
Net asset value Class A (A) $28.79
Sales charge (5.75% of offering price, or 6.11%
of amount invested per share) (B) 1.76
------
Offering price $30.55
------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $50,000 or more.
See accompanying notes
3
Statement Delaware Small Cap Value Fund
OF OPERATIONS Six Months Ended May 31, 2003 (Unaudited)
Investment Income:
Dividends $ 1,967,872
Interest 83,580
Securities lending income 34,555 $ 2,086,007
------------ ------------
Expenses:
Management fees 1,145,289
Distribution expenses - Class A 259,176
Distribution expenses - Class B 402,630
Distribution expenses - Class C 163,296
Dividend disbursing and transfer agent fees and expenses 593,800
Accounting and administration expenses 69,300
Reports and statements to shareholders 58,200
Registration fees 26,000
Professional fees 25,733
Trustees' fees 6,670
Custodian fees 5,824
Other 38,967 2,794,885
------------
Less expenses paid indirectly (3,827)
------------
Total expenses 2,791,058
------------
Net Investment Loss (705,051)
------------
Net Realized and Unrealized Gain on Investments:
Net realized gain on investments 7,103,080
Net change in unrealized appreciation/depreciation of investments 22,710,203
------------
Net Realized and Unrealized Gain on Investments 29,813,283
------------
Net Increase in Net Assets Resulting from Operations $ 29,108,232
============
See accompanying notes
4
Statements
OF CHANGES IN NET ASSETS Delaware Small Cap Value Fund
Six Months Year
Ended Ended
5/31/03 11/30/02
(Unaudited)
Increase (Decrease) in Net Assets from Operations:
Net investment loss $ (705,051) $ (1,575,259)
Net realized gain on investments 7,103,080 10,377,973
Net change in unrealized appreciation/depreciation of investments 22,710,203 (8,631,264)
------------- -------------
Net increase in net assets resulting from operations 29,108,232 171,450
------------- -------------
Dividends and Distributions to Shareholders:
From net realized gain on investments:
Class A (599,160) (17,247,310)
Class B (5,630,292) (8,097,635)
Class C (2,772,312) (3,057,305)
Institutional Class (1,095,652) (1,580,182)
------------- -------------
(10,097,416) (29,982,432)
------------- -------------
Capital Share Transactions:
Proceeds from shares sold:
Class A 15,555,802 70,648,350
Class B 4,574,041 32,584,526
Class C 4,375,771 13,692,546
Class R 29 --
Institutional Class 3,113,497 9,590,718
Net asset value of shares issued upon reinvestment of dividends and
distributions:
Class A 5,300,415 16,160,406
Class B 2,552,230 7,394,694
Class C 1,028,701 2,807,911
Institutional Class 599,160 1,580,182
------------- -------------
37,099,646 154,459,333
------------- -------------
Cost of shares repurchased:
Class A (19,057,742) (73,037,419)
Class B (10,684,448) (27,817,580)
Class C (4,881,874) (10,835,304)
Institutional Class (1,690,698) (8,642,412)
------------- -------------
(36,314,762) (120,332,715)
------------- -------------
Increase in net assets derived from capital share transactions 784,884 34,126,618
------------- -------------
Net Increase in Net Assets 19,795,700 4,315,636
Net Assets:
Beginning of period 320,935,681 316,620,045
------------- -------------
End of period $ 340,731,381 $ 320,935,681
============= =============
See accompanying notes
5
Financial
HIGHLIGHTS
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ---------------------------------------------------------------------------------------------------------------------------------
Delaware Small Cap Value Fund Class A
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended
5/31/03(1) Year Ended
(Unaudited) 11/30/02 11/30/01 11/30/00 11/30/99 11/30/98
Net asset value, beginning of period $27.120 $29.350 $25.980 $24.680 $25.480 $29.790
Income (loss) from investment operations:
Net investment income (loss)(2) (0.028) (0.060) 0.059 0.091 0.098 0.215
Net realized and unrealized gain (loss) on investments 2.541 0.574 4.429 1.594 (0.735) (2.285)
------- ------- ------- ------- ------- -------
Total from investment operations 2.513 0.514 4.488 1.685 (0.637) (2.070)
------- ------- ------- ------- ------- -------
Less dividends and distributions:
From net investment income -- -- (0.026) (0.080) (0.163) (0.140)
In excess of net investment income -- -- (0.045) -- -- --
From net realized gain on investments (0.843) (2.744) (1.047) (0.305) -- (2.100)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.843) (2.744) (1.118) (0.385) (0.163) (2.240)
------- ------- ------- ------- ------- -------
Net asset value, end of period $28.790 $27.120 $29.350 $25.980 $24.680 $25.480
======= ======= ======= ======= ======= =======
Total return(3) 9.64% 1.60% 17.66% 7.04% (2.51%) (7.47%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) $193,691 $180,696 $182,925 $151,044 $209,886 $271,192
Ratio of expenses to average net assets 1.59% 1.63% 1.58% 1.68% 1.60% 1.39%
Ratio of net investment income (loss) to average net assets (0.22%) (0.21%) 0.21% 0.37% 0.38% 0.81%
Portfolio turnover 30% 47% 72% 56% 37% 38%
(1) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(2) The average shares outstanding method has been applied for per share
information for the six months ended May 31, 2003, and the years ended
November 30, 2002, 2001, 2000 and 1999.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge.
See accompanying notes
6
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ---------------------------------------------------------------------------------------------------------------------------------
Delaware Small Cap Value Fund Class B
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended
5/31/03(1) Year Ended
(Unaudited) 11/30/02 11/30/01 11/30/00 11/30/99 11/30/98
Net asset value, beginning of period $26.260 $28.680 $25.520 $24.340 $25.140 $29.460
Income (loss) from investment operations:
Net investment income (loss)(2) (0.113) (0.252) (0.138) (0.079) (0.081) 0.052
Net realized and unrealized gain (loss) on investments 2.436 0.576 4.345 1.564 (0.719) (2.272)
------- ------- ------- ------- ------- -------
Total from investment operations 2.323 0.324 4.207 1.485 (0.800) (2.220)
------- ------- ------- ------- ------- -------
Less dividends and distributions:
From net realized gain on investments (0.843) (2.744) (1.047) (0.305) -- (2.100)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.843) (2.744) (1.047) (0.305) -- (2.100)
------- ------- ------- ------- ------- -------
Net asset value, end of period $27.740 $26.260 $28.680 $25.520 $24.340 $25.140
======= ======= ======= ======= ======= =======
Total return(3) 9.26% 0.91% 16.83% 6.27% (3.18%) (8.08%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) $87,380 $86,641 $83,648 $58,156 $76,894 $83,899
Ratio of expenses to average net assets 2.29% 2.33% 2.28% 2.38% 2.30% 2.09%
Ratio of net investment income (loss) to average net assets (0.92%) (0.91%) (0.49%) (0.33%) (0.32%) 0.11%
Portfolio turnover 30% 47% 72% 56% 37% 38%
(1) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(2) The average shares outstanding method has been applied for per share
information for the six months ended May 31, 2003, and the years ended
November 30, 2002, 2001, 2000 and 1999.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge.
See accompanying notes
7
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ---------------------------------------------------------------------------------------------------------------------------------
Delaware Small Cap Value Fund Class C
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended
5/31/03(1) Year Ended
(Unaudited) 11/30/02 11/30/01 11/30/00 11/30/99 11/30/98
Net asset value, beginning of period $26.250 $28.670 $25.510 $24.320 $25.120 $29.440
Income (loss) from investment operations:
Net investment income (loss)(2) (0.113) (0.251) (0.135) (0.079) (0.081) 0.036
Net realized and unrealized gain (loss) on investments 2.436 0.575 4.342 1.574 (0.719) (2.256)
------- ------- ------- ------- ------- -------
Total from investment operations 2.323 0.324 4.207 1.495 (0.800) (2.220)
------- ------- ------- ------- ------- -------
Less dividends and distributions:
From net realized gain on investments (0.843) (2.744) (1.047) (0.305) -- (2.100)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.843) (2.744) (1.047) (0.305) -- (2.100)
------- ------- ------- ------- ------- -------
Net asset value, end of period $27.730 $26.250 $28.670 $25.510 $24.320 $25.120
======= ======= ======= ======= ======= =======
Total return(3) 9.26% 0.91% 16.88% 6.27% (3.19%) (8.08%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) $36,646 $34,140 $31,823 $20,822 $25,818 $31,041
Ratio of expenses to average net assets 2.29% 2.33% 2.28% 2.38% 2.30% 2.09%
Ratio of net investment income (loss) to average net assets (0.92%) (0.91%) (0.49%) (0.33%) (0.32%) 0.11%
Portfolio turnover 30% 47% 72% 56% 37% 38%
(1) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(2) The average shares outstanding method has been applied for per share
information for the six months ended May 31, 2003, and the years ended
November 30, 2002, 2001, 2000 and 1999.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge.
** As of May 31, 2003, Delaware Small Cap Value Fund Class R had one share
outstanding, representing the initial share purchase. Shareholder data for
this class is not disclosed because management does not believe it to be
meaningful.
See accompanying notes
8
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ---------------------------------------------------------------------------------------------------------------------------------
Delaware Small Cap Value Fund Institutional Class
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended
5/31/03(1) Year Ended
(Unaudited) 11/30/02 11/30/01 11/30/00 11/30/99 11/30/98
Net asset value, beginning of period $27.400 $29.540 $26.130 $24.830 $25.640 $29.950
Income (loss) from investment operations:
Net investment income(2) 0.010 0.026 0.144 0.165 0.174 0.160
Net realized and unrealized gain (loss) on investments 2.573 0.578 4.458 1.600 (0.741) (2.150)
------- ------- ------- ------- ------- -------
Total from investment operations 2.583 0.604 4.602 1.765 (0.567) (1.990)
------- ------- ------- ------- ------- -------
Less dividends and distributions:
From net investment income -- -- (0.100) (0.160) (0.243) (0.220)
In excess of net investment income -- -- (0.045) -- -- --
From net realized gain on investments (0.843) (2.744) (1.047) (0.305) -- (2.100)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.843) (2.744) (1.192) (0.465) (0.243) (2.320)
------- ------- ------- ------- ------- -------
Net asset value, end of period $29.140 $27.400 $29.540 $26.130 $24.830 $25.640
======= ======= ======= ======= ======= =======
Total return(3) 9.84% 1.88% 18.09% 7.35% (2.23%) (7.16%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) $23,014 $19,459 $18,224 $10,992 $10,936 $113,930
Ratio of expenses to average net assets 1.29% 1.33% 1.28% 1.38% 1.30% 1.09%
Ratio of net investment income to average net assets 0.08% 0.09% 0.51% 0.67% 0.68% 1.11%
Portfolio turnover 30% 47% 72% 56% 37% 38%
(1) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(2) The average shares outstanding method has been applied for per share
information for the six months ended May 31, 2003, and the years ended
November 30, 2002, 2001, 2000 and 1999.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value.
See accompanying notes
9
Notes Delaware Small Cap Value Fund
TO FINANCIAL STATEMENTS May 31, 2003 (Unaudited)
Delaware Group Equity Funds V (the "Trust") is organized as a Delaware business
trust and offers three series: Delaware Retirement Income Fund, Delaware
Small-Cap Contrarian Fund, and Delaware Small Cap Value Fund. These financial
statements and the related notes pertain to Delaware Small Cap Value Fund (the
"Fund"). The Trust is an open-end investment company. The Fund is considered
diversified under the Investment Company Act of 1940, as amended and offers
Class A, Class B, Class C, Class R, and Institutional Class shares. Class A
shares are sold with a front-end sales charge of up to 5.75%. Class B shares are
sold with a contingent deferred sales charge that declines from 4% to zero
depending upon the period of time the shares are held. Class B shares will
automatically convert to Class A shares on a quarterly basis approximately eight
years after purchase. Class C shares are sold with a contingent deferred sales
charge of 1%, if redeemed during the first twelve months. Class R and
Institutional Class shares are not subject to a sales charge and are offered for
sale exclusively to a limited group of investors.
The investment objective of the Fund is to seek capital appreciation.
1. Significant Accounting Policies
The following accounting policies are in accordance with accounting principles
generally accepted in the United States and are consistently followed by the
Fund.
Security Valuation - All equity securities are valued at the last quoted sales
price as of the time of the regular close of the New York Stock Exchange (NYSE)
on the valuation date. If on a particular day an equity security does not trade,
then the mean between the bid and asked prices will normally be used. Short-term
debt securities 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 under the direction of the Fund's Board of Trustees. In
determining whether market quotations are readily available or fair valuation
will be used, various factors will be taken into consideration, such as market
closures, aftermarket trading, or significant events after local market trading
(e.g., government actions or pronouncements, trading volume or volatility on
markets, exchanges among dealers, or news events).
Federal Income Taxes - The Fund intends to continue to qualify for federal
income tax purposes 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.
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 102% 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.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States 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.
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.
Certain expenses of the Fund are paid through commission arrangements with
brokers. These transactions are done subject to best execution. The amount of
these expenses was approximately $3,668 for the period ended May 31, 2003. In
addition, the Fund may receive earnings credits from its custodian when positive
cash balances are maintained, which are used to offset custody fees. The
earnings credits for the period ended May 31, 2003 were approximately $159. The
expenses paid under the above arrangements are included in their respective
expense captions on the Statement of Operations with the corresponding expense
offset shown as "expenses paid indirectly".
2. Investment Management, Administration Agreements and Other Transactions with
Affiliates
In accordance with the terms of its investment management agreement, the Fund
pays Delaware Management Company (DMC), a series of Delaware Management Business
Trust and the investment manager, an annual fee which is calculated daily at the
rate of 0.75% on the first $500 million of average daily net assets of the Fund,
0.70% on the next $500 million, 0.65% on the next $1.5 billion, and 0.60% on
average daily net assets in excess of $2.5 billion.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to provide dividend disbursing, transfer agent, accounting and administration
services. The Fund pays DSC a monthly fee based on the number of shareholder
accounts, shareholder transactions and average net assets, subject to certain
minimums.
Pursuant to a distribution agreement and distribution plan, 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 Class A
shares and 1.00% of the average daily net assets of the Class B and C shares and
0.60% of the average daily net assets of the Class R shares. No distribution
expenses are paid by the Institutional Class shares.
At May 31, 2003, the Fund had liabilities payable to affiliates as follows:
Investment management fee payable to DMC $32,841
Dividend disbursing, transfer agent fees,
accounting and other expenses payable to DSC 103,656
Other expenses payable to DMC and affiliates 9,587
For the period ended May 31, 2003, DDLP earned $12,214 for
commissions on sales of the Fund's Class A shares.
Certain officers of DMC, DSC and DDLP are officers and/or trustees of the Trust.
These officers and trustees are paid no compensation by the Fund.
10
Notes Delaware Small Cap Value Fund
TO FINANCIAL STATEMENTS (CONTINUED)
3. Investments
For the period ended May 31, 2003, the Fund made purchases of $43,864,236 and
sales of $49,129,943 of investment securities other than U.S. government
securities and short-term investments.
At May 31, 2003, the cost of investments for federal income tax purposes has
been estimated since the final tax characteristics cannot be determined until
fiscal year end. At May 31, 2003, the cost of investments was $281,107,926. At
May 31, 2003, the net unrealized appreciation was $60,696,069 of which
$75,007,252 related to unrealized appreciation of investments and $14,311,183
related to unrealized depreciation of investments.
4. Dividend and Distribution Information
Income and long-term capital gain distributions are determined in accordance
with federal income tax regulations, which may differ from accounting principles
generally accepted in the United States. The tax character of dividends and
distributions paid during the period ended May 31, 2003 and year ended November
30, 2002, were as follows:
Six Months Year
Ended Ended
5/31/03* 11/30/02
-------- --------
Long-term capital gains $10,097,416 $29,982,432
* Tax information for the period ended May 31, 2003 is an estimate and the tax
character of dividends and distributions may be redesignated at fiscal year
end.
The components of net assets are estimated since final tax characteristics
cannot be determined until fiscal year end. As of May 31, 2003, the estimated
components of net assets on a tax basis were as follows:
Shares of beneficial interest $273,903,723
Net investment loss (705,051)
Undistributed net realized gain on investments 6,836,640
Net unrealized appreciation of investments 60,696,069
------------
Net assets $340,731,381
============
5. Capital Shares
Transactions in capital shares were as follows:
Six Months Year
Ended Ended
5/31/03 11/30/02
Shares sold:
Class A 605,106 2,374,998
Class B 183,773 1,133,854
Class C 177,573 482,202
Class R 1 --
Institutional Class 120,929 329,019
Shares issued upon reinvestment of
dividends and distributions:
Class A 208,596 585,947
Class B 103,918 275,100
Class C 41,902 104,496
Institutional Class 23,322 56,861
---------- ----------
1,465,120 5,342,477
---------- ----------
Shares repurchased:
Class A (748,348) (2,530,736)
Class B (437,889) (1,025,600)
Class C (198,840) (395,887)
Institutional Class (64,631) (292,537)
---------- ----------
(1,449,708) (4,244,760)
---------- ----------
Net increase 15,412 1,097,717
========== ==========
For the period ended May 31, 2003, and the year ended November 30, 2002, 33,772
Class B shares were converted to 32,636 Class A shares valued at $835,566 and
4,059 Class B shares were converted to 3,937 Class A shares valued at $105,307,
respectively. The respective amounts are included in Class B redemptions and
Class A subscriptions in the table above and the Statements of Changes in Net
Assets.
11
Notes Delaware Small Cap Value Fund
TO FINANCIAL STATEMENTS (CONTINUED)
6. Line of Credit
The Fund, along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participates in a $202,300,000 revolving line of
credit facility to be used for temporary or emergency purposes as an additional
source of liquidity to fund redemptions of investor shares. The Participants are
charged an annual commitment fee, which is allocated across the Participants on
the basis of each fund's allocation of the entire facility. The Participants may
borrow up to a maximum of one third of their net assets under the agreement. The
Fund had no amounts outstanding as of May 31, 2003, or at any time during the
period.
7. Securities Lending
The Fund, along with other funds in the Delaware Investments Family of Funds,
may lend its securities pursuant to a security lending agreement (Lending
Agreement) with J.P. Morgan Chase. Initial security loans made pursuant to
the Lending Agreement are required to be secured by U.S. Treasury obligations
and/or cash collateral not less than 102% of the market value of the
securities issued in the United States and 105% of the market value of
securities held outside the United States. With respect to each loan, if the
aggregate market value of the collateral held on any business day is less
than the aggregate market value of the securities which are the subject of
such loan, the borrower will be notified to provide additional collateral not
less than the applicable collateral requirements. Cash collateral received is
invested in fixed-income securities, with a weighted average maturity not to
exceed 90 days, rated in one of the top two tiers by Standard & Poor's
Ratings Group or Moody's Investors Service, Inc. or repurchase agreements
collateralized by such securities. However, in the event of default or
bankruptcy by the lending agent, realization and/or retention of the
collateral may be subject to legal proceedings. In the event the borrower
fails to return loaned securities and the collateral received is insufficient
to cover the value of the loaned securities and provided such collateral
shortfall 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 discretion
of the lending agent, replace the loaned securities. At May 31, 2003, the
market value of securities on loan was $72,898,776.
The securities on loan were collateralized by the following:
Description Market Value
- ----------- ------------
Canadian Imperial Bank NY 1.4095% 10/9/03 $ 409,795
Morgan Stanley Dean Witter Discover 1.41% 6/30/04 819,786
Racers Series 2002-35-C 1.6091% 4/15/04 2,041,200
Merrill Lynch Mortgage Capital 1.475% 6/6/03 2,049,465
Wilmington Trust Company 1.2599% 7/21/03 2,055,784
Goldman Sachs Group LP 1.515% 7/14/03 2,869,250
Barclays London 1.27% 6/17/03 3,283,524
Fannie Mae 1.315% 1/29/04 20,493,881
UBS Warburg LLC 1.375% 6/2/03 38,308,850
-----------
$72,331,535
-----------
8. Credit and Market Risk
The Fund invests a significant portion of its assets in small- and
medium-sized companies and may be subject to certain risks associated with
ownership of securities of small- and medium-sized companies. Investments in
small- or mid-sized companies may be more volatile than investments in larger
companies for a number of reasons, which include more limited financial
resources or a dependence on narrow product lines.
12
Delaware
Investments(SM)
- --------------------------------------
A member of Lincoln Financial Group(R)
This semiannual report is for the information of Delaware Small Cap Value
Fund shareholders, but it may be used with prospective investors when
preceded or accompanied by a current prospectus for Delaware Small Cap Value
Fund and the Delaware Investments Performance Update for the most recently
completed calendar quarter. The prospectus sets forth details about charges,
expenses, investment objectives, and operating policies of the Fund. You
should read the prospectus carefully before you invest. 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 Trustees Affiliated Officers Contact Information
Jude T. Driscoll Michael P. Bishof Investment Manager
Chairman Senior Vice President and Treasurer Delaware Management Company
Delaware Investments Family of Funds Delaware Investments Family of Funds Philadelphia, PA
Philadelphia, PA Philadelphia, PA
International Affiliate
Walter P. Babich Richelle S. Maestro Delaware International Advisers Ltd.
Board Chairman Senior Vice President, London, England
Citadel Construction Corporation General Counsel and Secretary
King of Prussia, PA Delaware Investments Family of Funds National Distributor
Philadelphia, PA Delaware Distributors, L.P.
David K. Downes Philadelphia, PA
President and Chief Executive Officer
Delaware Investments Family of Funds Shareholder Servicing, Dividend
Philadelphia, PA Disbursing and Transfer Agent
Delaware Service Company, Inc.
John H. Durham 2005 Market Street
Private Investor Philadelphia, PA 19103-7094
Gwynedd Valley, PA
For Shareholders
John A. Fry 800 523-1918
President
Franklin & Marshall College For Securities Dealers and Financial
Lancaster, PA Institutions Representatives Only
800 362-7500
Anthony D. Knerr
Managing Director Web site
Anthony Knerr & Associates www.delawareinvestments.com
New York, NY
Ann R. Leven
Former Treasurer/Chief Fiscal Officer
National Gallery of Art
Washington, DC
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
Janet L. Yeomans
Vice President/Mergers & Acquisitions
3M Corporation
St. Paul, MN
(7909) Printed in the USA
SA-021 [5/03] IVES 7/03 J9273
Delaware
Investments(SM)
--------------------------------------
A member of Lincoln Financial Group(R)
2003 Semiannual Shareholder Report
- ----------------------------------
- - Delaware Retirement Income Fund
- - Delaware Small Cap Contrarian Fund
Statement of Net Assets
DELAWARE RETIREMENT INCOME FUND
- ------------------------------
May 31, 2003 (Unaudited)
Number of Market
Shares Value
Common Stock- 39.58%
Banking, Finance & Insurance - 6.56%
Bank of America 818 $ 60,696
JP Morgan Chase & Co. 900 29,574
Mellon Financial 2,100 57,057
Morgan Stanley & Co. 1,900 86,925
--------
234,252
--------
Chemicals - 2.89%
Air Products & Chemicals 1,100 47,949
Rohm & Haas 1,700 55,131
--------
103,080
--------
Computers & Technology - 1.62%
Pitney Bowes 1,500 57,615
--------
57,615
--------
Consumer Products - 1.46%
Kimberly-Clark 1,000 51,930
--------
51,930
--------
Electronics & Electrical Equipment - 3.47%
Emerson Electric 1,200 62,760
Raytheon 1,900 60,876
--------
123,636
--------
Energy - 2.42%
ChevronTexaco 600 42,564
Exxon Mobil 1,200 43,680
--------
86,244
--------
Food, Beverage & Tobacco - 7.01%
General Mills 1,500 70,170
Heinz (H.J.) 1,500 49,605
Kellogg Company 1,700 59,840
PepsiCo 1,600 70,719
--------
250,334
--------
Healthcare & Pharmaceuticals - 1.84%
Wyeth 1,500 65,775
--------
65,775
--------
Investment Company - 1.61%
Gladstone Capital 3,000 57,570
--------
57,570
--------
Paper & Forest Products - 0.56%
Georgia-Pacific 1,160 20,068
--------
20,068
--------
REITs - 8.19%
Apartment Investment & Management 2,000 70,460
Crescent Real Estate Equities 2,900 47,125
Friedman Billings Ramsey Group Class A 5,925 78,802
Ramco-Gershenon Properties 4,100 95,899
--------
292,286
--------
Telecommunications - 0.86%
SBC Communications 1,200 30,552
--------
30,552
--------
Statement of Net Assets (Continued)
Delaware Retirement Income Fund
Number of Market
Shares Value
Common Stock (Continued)
Utilities - 1.09%
Duke Energy 2,000 $ 38,760
----------
38,760
----------
Total Common Stock (cost $1,356,500) 1,412,102
----------
Principal
Amount
Corporate Bonds- 20.48%
Automobiles & Automotive Parts - 0.49%
#Advanced Accessory Systems 144A 10.75% 6/15/11 $ 4,000 4,100
CSK Auto 12.00% 6/15/06 12,000 13,260
----------
17,360
----------
Banking, Finance & Insurance - 0.99%
#Crum & Forster 144A 10.375% 6/15/13 4,000 3,910
#Farmers Exchange Capital 144A 7.20% 7/15/48 5,000 4,047
Finova Group 7.50% 11/15/09 9,000 3,713
Forest City Enterprises 7.625% 6/1/15 9,000 9,293
Technical Olympic USA 10.375% 7/1/12 5,000 5,250
TIG Holdings 8.125% 4/15/05 5,000 4,725
#Zurich Capital Trust 144A 8.376% 6/1/37 4,000 4,385
----------
35,323
----------
Building & Materials - 0.47%
#K Hovnanian Enterprises 144A 7.75% 5/15/13 5,000 5,113
#Lone Star Industries 144A 8.85% 6/15/05 6,000 5,910
Schuler Homes 10.50% 7/15/11 5,000 5,625
----------
16,648
----------
Cable, Media & Publishing - 3.15%
American Media Operation 10.25% 5/1/09 5,000 5,438
CSC Holdings 10.50% 5/15/16 12,000 13,409
Dex Media East 12.125% 11/15/12 8,000 9,400
#DirecTV Holdings 144A 8.375% 3/15/13 2,000 2,225
Echostar DBS 10.375% 10/1/07 8,000 8,870
Insight Midwest
9.75% 10/1/09 2,000 2,100
10.50% 11/1/10 4,000 4,340
#Lamar Media 144A 7.25% 1/1/13 20,000 20,731
Lodgenet Entertainment 10.25% 12/15/06 8,000 8,160
Mediacom Broadband 11.00% 7/15/13 6,000 6,630
Nextmedia Operating 10.75% 7/1/11 4,000 4,400
#PEI Holdings 144A 11.00% 3/15/10 5,000 5,475
#RH Donnelley Finance 144A 10.875% 12/15/12 3,000 3,413
Vertis 10.875% 6/15/09-00 5,000 4,850
#Vertis 144A
9.75% 4/1/09 4,000 4,110
10.875% 6/15/09 2,000 1,940
++XM Satellite Radio 14.00% 12/31/09 9,377 6,822
----------
112,313
----------
Chemicals - 1.29%
+#HMP Equity Holdings 144A 15.433% 5/15/08 3,000 1,440
Huntsman International 9.875% 3/1/09 9,000 9,225
IMC Global
6.55% 1/15/05 2,000 2,000
7.625% 11/1/05 6,000 6,090
Lyondell Chemical 9.50% 12/15/08 4,000 3,850
MacDermid 9.125% 7/15/11 4,000 4,460
#Omnova Solutions 144A 11.25% 6/1/10 9,000 9,405
#PolyOne 144A 10.625% 5/15/10 4,000 3,820
Solutia
6.72% 10/15/37 2,000 1,470
11.25% 7/15/09 5,000 4,125
----------
45,885
----------
2
Statement of Net Assets (Continued)
Delaware Retirement Income Fund
Principal Market
Amount Value
Corporate Bonds (Continued)
Computers & Technology - 0.62%
Amkor Technology 9.25% 2/15/08 $ 5,000 $ 5,225
#Amkor Technology 144A 7.75% 5/15/13 2,000 1,908
Asat Finance 12.50% 11/1/06 1,950 1,570
#Sanmina 144A 10.375% 1/15/10 12,000 13,379
-------
22,082
-------
Consumer Products - 1.56%
Alderwoods Group 12.25% 1/2/09 7,000 7,315
American Greetings 11.75% 7/15/08 12,000 13,964
#Brickman Group 144A 11.75% 12/15/09 3,000 3,353
Corrections of America 7.50% 5/1/11 5,000 5,138
#Jafra Cosmetics 144A 10.75% 5/15/11 10,000 10,250
Petco Animal Supplies 10.75% 11/1/11 7,000 7,893
Salton 12.25% 4/15/08 8,000 7,560
-------
55,473
-------
Energy - 2.46%
#Citgo Petroleum 144A 11.375% 2/1/11 10,000 11,199
El Paso Natural Gas 6.75% 11/15/03 4,000 4,025
#El Paso Natural Gas 144A 8.375% 6/15/32 5,000 5,125
#El Paso Production Holdings 144A 7.75% 6/1/13 9,000 8,978
#Frontier Escrow 144A 8.00% 4/15/13 7,000 7,228
Hanover Equipment Trust 8.50% 9/1/08 4,000 4,100
Key Energy Services 6.375% 5/1/13 5,000 5,088
#Southern Natural Gas 144A 8.875% 3/15/10 3,000 3,270
Tennessee Gas Pipeline 8.375% 6/15/32 9,000 9,225
#Tesoro Petroleum 144A 8.00% 4/15/08 9,000 9,045
Transcontinental Gas Pipeline
6.125% 1/15/05 2,000 2,020
6.25% 1/15/08 13,000 12,934
8.875% 7/15/12 5,000 5,550
-------
87,787
-------
Food, Beverage & Tobacco - 0.51%
B&G Foods 9.625% 8/1/07 10,000 10,288
DiGiorgio 10.00% 6/15/07 8,000 7,960
-------
18,248
-------
Healthcare & Pharmaceuticals - 0.35%
#Ameripath 144A 10.50% 4/1/13 5,000 5,225
Team Health 12.00% 3/15/09 7,000 7,175
-------
12,400
-------
Home Builders - 0.15%
Standard-Pacific 9.25% 4/15/12 5,000 5,400
-------
5,400
-------
Industrial Machinery - 0.38%
#Casella Waste Systems 144A 9.75% 2/1/13 4,000 4,220
IESI 10.25% 6/15/12 9,000 9,450
-------
13,670
-------
Leisure, Lodging & Entertainment - 1.62%
Alliance Gaming 10.00% 8/1/07 7,000 7,297
Extended Stay America 9.875% 6/15/11 5,000 5,238
#Hard Rock Hotel 144A 8.875% 6/1/13 5,000 5,163
Herbst Gaming 10.75% 9/1/08 7,000 7,682
Penn National 11.125% 3/1/08 6,000 6,600
Premier Parks 9.75% 6/15/07 6,000 6,045
Regal Cinemas 9.375% 2/1/12 10,000 10,924
#Town Sports International 144A 9.625% 4/15/11 2,000 2,090
#Turning Stone 144A 9.125% 12/15/10 6,000 6,353
-------
57,392
-------
3
Statement of Net Assets (Continued)
Delaware Retirement Income Fund
Principal Market
Amount Value
Corporate Bonds (Continued)
Metals & Mining - 0.31%
Jorgensen (Earle M.) 9.75% 6/1/12 $ 2,000 $ 2,090
US Steel 9.75% 5/15/10 9,000 8,954
--------
11,044
--------
Packaging & Containers - 0.53%
AEP Industries 9.875% 11/15/07 7,000 6,825
Portola Packaging 10.75% 10/1/05 4,000 4,100
#Radnor Holdings 144A 11.00% 3/15/10 8,000 8,120
--------
19,045
--------
Paper & Forest Products - 0.58%
Georgia-Pacific 9.875% 11/1/21 19,000 18,715
#Georgia-Pacific 144A 7.375% 7/15/08 2,000 1,990
--------
20,705
--------
REITs - 0.31%
MeriStar Hospitality Operating Partnership
10.50% 6/15/09 5,000 4,888
Tanger Properties 9.125% 2/15/08 6,000 6,225
--------
11,113
--------
Retail - 0.72%
Office Depot 10.00% 7/15/08 7,000 8,225
#Remington Arms 144A 10.50% 2/1/11 11,000 11,083
Saks 7.25% 12/1/04 6,000 6,255
--------
25,563
--------
Telecommunications - 0.47%
Nextel Communications 9.375% 11/15/09 5,000 5,388
Northern Telecom Capital 7.40% 6/15/06 4,000 3,940
PanAmSat 8.50% 2/1/12 4,000 4,300
Qwest 7.20% 11/1/04 3,000 3,079
--------
16,707
--------
Textiles, Apparel & Furniture - 0.63%
#Levi Strauss 144A 12.25% 12/15/12 5,000 4,200
#Oxford Industry 144A 8.875% 6/1/11 8,000 8,080
#Phillips Van-Heusen 144A 8.125% 5/1/13 10,000 10,300
--------
22,580
--------
Transportation & Shipping - 0.62%
Hornbeck-Leevac 10.625% 8/1/08 4,000 4,360
Kansas City Southern Railway 9.50% 10/1/08 8,000 8,600
#Overseas Shipholding Group 144A 8.25% 3/15/13 9,000 9,270
--------
22,230
--------
Utilities - 2.29%
Avista 9.75% 6/1/08 8,000 8,880
Calpine 10.50% 5/15/06 8,000 6,600
Homer City Fund 8.137% 10/1/19 3,000 3,113
#Illinois Power 144A 11.50% 12/15/10 2,000 2,205
Midland Funding II 11.75% 7/23/05 13,000 14,072
Midwest Generation 8.30% 7/2/09 6,000 5,891
Mirant Americas
7.625% 5/1/06 4,000 2,970
8.30% 5/1/11 4,000 2,520
#Nevada Power 144A 10.875% 10/15/09 11,000 12,182
#PSEG Energy Holdings 144A 7.75% 4/16/07 5,000 5,318
#Semco Energy 144A 7.75% 5/15/13 9,000 9,540
#Williams Gas Pipelines 144A 7.375% 11/15/06 8,000 8,440
--------
81,731
--------
Total Corporate Bonds (cost $713,596) 730,699
--------
4
Statement of Net Assets (Continued)
Delaware Retirement Income Fund
Principal Market
Amount Value
Foreign Bonds - 3.15%
Australia - 0.14%
Great Central Mining 8.875% 4/1/08 $ 9,000 $ 5,130
--------
5,130
--------
Canada - 1.72%
Ainsworth Lumber 12.50% 7/15/07 7,000 7,805
CP Ships Limited 10.375% 7/15/12 5,000 5,600
Fairfax Financial Holdings 7.75% 12/15/03 10,000 10,000
#Hollinger 144A 11.875% 3/1/11 4,000 4,220
Rogers Cablesystems 10.00% 3/15/05 5,000 5,375
Star Choice Communications 13.00% 12/15/05 4,000 4,240
Tembec Industries 8.50% 2/1/11 14,000 13,930
Western Oil Sands 8.375% 5/1/12 9,000 9,765
--------
60,935
--------
France - 0.30%
#Rhodia 144A 8.875% 6/1/11 6,000 6,060
#Vivendi Universal 144A 9.25% 4/15/10 4,000 4,565
--------
10,625
--------
Ireland - 0.36%
MDP Acquisitions 9.625% 10/1/12 2,000 2,163
#MDP Acquistitions 144A 9.625% 10/1/12 10,000 10,812
--------
12,975
--------
British Virgin Islands - 0.19%
Chippac International 12.75% 8/1/09 6,000 6,765
--------
6,765
--------
Liberia - 0.14%
Royal Caribbean 8.75% 2/2/11 5,000 5,050
--------
5,050
--------
Netherlands - 0.06%
#Bluewater Finance 144A 10.25% 2/15/12 2,000 2,030
--------
2,030
--------
Sweden - 0.24%
Stena AB 9.625% 12/1/12 8,000 8,730
--------
8,730
--------
Total Foreign Bonds (cost $112,828) 112,240
--------
Convertible Bonds- 18.40%
Cable, Media & Publishing - 1.45%
World Color Press 6.00% 10/1/07 50,000 51,875
--------
51,875
--------
Computers & Technology - 1.27%
#Siebel Systems 144A 5.50% 9/15/06 45,000 45,338
--------
45,338
--------
Energy - 2.05%
Duke Energy 1.75% 5/15/23 70,000 73,150
--------
73,150
--------
Industrial Machinery - 2.43%
MascoTech 4.50% 12/15/03 90,000 86,850
--------
86,850
--------
Leisure, Lodging & Entertainment - 1.47%
#Regal Entertainment 144A 3.75% 5/15/08 50,000 52,375
--------
52,375
--------
Miscellaneous - 2.26%
#Tyco International Group 144A 2.75% 1/15/18 75,000 80,531
--------
80,531
--------
Retail - 3.73%
#Gap 144A 5.75% 3/15/09 100,000 133,000
--------
133,000
--------
5
Statement of Net Assets (Continued)
Delaware Retirement Income Fund
Principal Market
Amount Value
Convertible Bonds (Continued)
Transportation & Shipping - 1.51%
Continental Airlines 4.50% 2/1/07 $75,000 $ 53,719
--------
53,719
--------
Utilities - 2.23%
#Centerpoint Energy 144A 3.75% 5/15/23 70,000 79,450
--------
79,450
--------
Total Convertible Bonds (cost $609,088) 656,288
--------
Number of
Shares
Preferred Stock- 8.40%
REITs - 5.16%
LaSalle Hotel Properties 10.25% 3,300 90,750
Ramco-Gershenson Properties 9.50% 3,500 93,590
--------
184,340
--------
Utilities - 3.24%
Public Service Enterprise Group 10.25% 1,900 115,425
--------
115,425
--------
Total Preferred Stock (cost $267,267) 299,765
--------
Convertible Preferred Stock- 3.89%
Aerospace & Defense - 1.95%
Northrop Grumman 7.25% 700 69,964
--------
69,964
--------
Environmental Services - 0.50%
Allied Waste Industries Convertible 6.25% 300 17,700
--------
17,700
--------
Telecommunications - 0.00%
**Intermedia Communications Preferred PIK 13.50% 1 31
--------
31
--------
Transportation - 1.44%
Union Pacific Capital Trust 6.25% 267 13,817
#Union Pacific Capital Trust TIDES 144A 6.25% 723 37,416
--------
51,233
--------
Total Convertible Preferred Stock (cost $133,577) 138,928
--------
Warrants - 0.06%
+#Solutia 12 -
+XM Satellite Radio 3 2,108
--------
Total Warrant (cost $1,636) 2,108
--------
6
Statement of Net Assets (Continued)
Delaware Retirement Income Fund
Principal Market
Amount Value
Repurchase Agreements- 6.00%
With BNP Paribas 1.24% 6/2/03
(dated 5/30/03, collateralized by $73,325
U.S. Treasury Bills due 8/28/03, market
value $73,125) $71,675 $ 71,675
With Cantor Fitzgerald 1.24% 6/2/03
(dated 5/30/03, collateralized by $23,875
U.S. Treasury Notes 5.25% due 5/15/04,
market value $24,882 and $11,025 U.S Treasury Notes
7.25% due 5/15/04, market value $11,683) 35,825 35,825
With J. P. Morgan Securities 1.18% 6/2/03
(dated 5/30/03, collateralized by $18,150
U.S. Treasury Notes 2.125% due 8/31/04, market
value $18,446) 18,075 18,075
With UBS Warburg 1.24% 6/2/03
(dated 5/30/03, collateralized by $82,075
U.S. Treasury Notes 7.875% due 11/15/04, market
value $90,197) 88,425 88,425
----------
Total Repurchase Agreements (cost $214,000) 214,000
----------
Total Market Value of Securities - 99.96%
(cost $3,408,492) 3,566,130
Receivables and Other Assets Net of Liabilities - 0.04% 1,270
----------
Net Assets Applicable to 378,547 Shares Outstanding - 100.00% $3,567,400
----------
Net Asset Value - Delaware Retirement Income Fund Class A
($3,751 / 398 Shares) $9.42
=====
Net Asset Value - Delaware Retirement Income Fund Institutional Class
($3,563,649 / 378,149 Shares) $9.42
=====
- -------------------
+Non-income producing security for the period ended May 31, 2003.
# Securities exempt from registration under 144A of the Securities Act of 1933.
See Note 7 in "Notes to Financial Statements".
**Non-income producing security. Security is currently in default.
+ Zero coupon bond. The interest rate shown is the yield at the time of
purchase.
++ Step coupon bond.
Summary of Abbreviations:
PIK - Pay in Kind
REITs - Real Estate Investment Trust
TIDES - Term Income Deferred Equity Securities
Components of Net Assets at May 31, 2003:
Shares of beneficial interest (unlimited authorization - no par) $3,325,036
Undistributed net investment income 60,129
Accumulated net realized gain on investments 24,597
Net unrealized appreciation of investments 157,638
----------
Total net assets $3,567,400
==========
Net Asset Value and Offering Price per Share -
Delaware Retirement Income Fund
Net asset value Class A (A) $9.42
Sales charge (5.75% of offering price, or 6.05% of the
amount invested per share) (B) 0.57
-----
Offering price $9.99
-----
- -------------------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See the current prospectus for purchases of $50,000 or more.
See accompanying notes
7
Statement of Net Assets (continued)
DELAWARE SMALL CAP CONTRARIAN FUND
- ----------------------------------
May 31, 2003 (Unaudited)
Number of Market
Shares Value
Common Stock- 95.90%
Aerospace & Defense - 1.75%
+Armor Holdings 600 $ 8,166
+DRS Technologies 1,100 27,500
+Herley Industries 1,300 20,410
--------
56,076
--------
Banking & Finance - 7.44%
Associated Banc-Corp 1,108 41,439
Colonial BancGroup 3,200 43,232
Commercial Federal 1,300 29,211
Compass Bancshares 1,500 55,275
Greater Bay Bancorp 1,600 32,160
Riggs National 1,600 23,760
+Sterling Financial 583 13,887
--------
238,964
--------
Basic Industry/Capital Goods - 20.54%
+AGCO 1,000 17,880
Crane 1,200 25,056
+Crown Holdings 2,700 17,901
Federal Signal 2,100 37,968
Florida Rock Industries 800 34,024
Freeport McMoRan Copper & Gold Class B 1,300 28,535
Fuller (H.B.) 1,000 23,820
Gibraltar Steel 1,000 19,340
Granite Construction 1,150 21,252
+Griffon 3,100 47,678
Harsco 800 28,304
+Jacobs Engineering Group 900 35,136
Kaydon 1,400 29,680
+Louisiana-Pacific 2,700 26,028
MacDermid 1,400 35,000
+Mueller Industries 700 18,333
+Pactiv 2,800 54,740
PolyOne 3,000 14,940
Smith (A.O.) 900 28,602
Spartech 1,300 25,870
+Terex 1,300 23,075
+Tetra Tech 1,300 22,035
Texas Industries 700 15,477
Universal Forest Products 400 7,708
Wausau-Mosinee Paper 1,900 21,375
--------
659,757
--------
Business Services - 3.96%
+Handleman 1,800 32,832
Owens & Minor 1,300 27,625
+Right Management Consultants 1,300 16,887
The Brinks Company 1,600 25,328
+United Stationers 800 24,384
--------
127,056
--------
Consumer Durables - 5.24%
+Furniture Brands International 1,300 34,164
KB Home 1,100 68,750
La-Z-Boy 1,000 21,910
+Lear 700 27,846
+WCI Communities 800 15,600
--------
168,270
--------
8
Statement of Net Assets (Continued)
Delaware Small Cap Contrarian Fund
Number of Market
Shares Value
Common Stock (Continued)
Consumer Services - 3.56%
Belo Class A 900 $ 21,060
+CEC Entertainment 100 3,432
+Movie Gallery 1,000 18,640
+Rare Hospitality International 1,100 31,438
+Rent-A-Center 600 39,864
--------
114,434
--------
Energy - 5.71%
+Cal Dive International 1,400 31,122
Chesapeake Energy 3,700 37,777
+Comstock Resources 2,700 37,017
+Grey Wolf 4,800 21,504
+Magnum Hunter Resources 3,100 22,320
+Newfield Exploration 900 33,714
--------
183,454
--------
Food, Beverage & Tobacco - 4.03%
Bunge 1,000 28,900
+Constellation Brands 1,700 46,869
+International Multifoods 1,200 24,240
+Jack in the Box 1,400 29,428
--------
129,437
--------
Healthcare & Pharmaceuticals - 5.23%
+Abgenix 1,400 15,050
+Celgene 700 22,036
+Community Health Systems 800 16,664
Cooper Companies 600 20,712
+Humana 3,000 38,970
+Pharmaceutical Resources 600 24,624
+Protein Design Labs 2,100 30,051
--------
168,107
--------
Insurance - 6.31%
AmerUs Group 1,100 29,601
Arthur J. Gallagher 1,000 27,250
Berkley (W.R) 900 44,325
Harleysville Group 1,100 26,906
Platinum Underwriters Holdings 600 16,572
RenaissanceRe Holdings 1,300 58,110
--------
202,764
--------
Real Estate - 0.85%
The St. Joe Company 900 27,378
--------
27,378
--------
REITs - 5.16%
Chelsea Property Group 600 24,936
Keystone Property Trust 1,200 21,780
Mack-Cali Realty 800 27,496
Pan Pacific Retail Properties 1,100 43,219
Prentiss Properties Trust 900 25,974
Reckson Associates Realty 1,100 22,275
--------
165,680
--------
9
Statement of Net Assets (Continued)
Delaware Small Cap Contrarian Fund
Number of Market
Shares Value
Common Stock (Continued)
Retail - 7.49%
+AnnTaylor Stores 1,100 $ 28,127
+Barnes & Noble 1,100 26,180
+Bebe Stores 1,100 20,042
+Big 5 Sporting Goods 700 8,925
+Department 56 800 9,632
+Genesco 1,100 16,665
+Goody's Family Clothing 2,000 13,680
+Insight Enterprises 1,900 16,606
+Jo-Ann Stores Class A 900 20,448
+Kirkland's 500 7,500
+Oakley 1,700 18,870
+Shoe Carnival 800 12,392
+Sports Authority 1,200 11,856
+Whitehall Jewellers 600 5,748
Wolverine World Wide 1,300 23,881
----------
240,552
----------
Technology - 7.51%
+Actel 1,400 31,066
+ASM International 1,900 29,374
+Bell Microproducts 1,800 7,380
+Freemarkets 2,400 18,024
+International Rectifier 900 23,562
+Lawson Software 3,100 15,779
+Photronics 1,100 18,524
+Storage Technology 1,000 27,000
Symbol Technologies 1,600 21,440
+Take-Two Interactive Software 800 20,200
+Veeco Instruments 1,500 28,935
----------
241,284
----------
Textiles, Apparel & Furniture - 0.66%
Phillips-Van Heusen 1,500 21,165
----------
21,165
----------
Telecommunications - 2.80%
+Amdocs Limited 2,500 48,775
+Comverse Technology 2,700 41,067
----------
89,842
----------
Transportation - 4.88%
Alexander & Baldwin 1,600 43,488
Arkansas Best 900 23,850
+Continental Airlines Class B 1,100 12,122
+Kirby 1,000 27,500
+Northwest Airlines Class A 1,200 10,716
+SCS Transportation 550 7,117
Skywest 800 10,944
+Yellow 800 21,024
----------
156,761
----------
Utilities - 2.78%
Black Hills 500 15,025
+El Paso Electric 1,700 20,230
PNM Resources 1,000 26,550
Southwest Gas 1,300 27,625
----------
89,430
----------
Total Common Stock (cost $2,586,355) 3,080,411
----------
10
Statement of Net Assets (Continued)
Delaware Small Cap Contrarian Fund
Principal Market
Amount Value
Repurchase Agreements- 4.27%
With BNP Paribas 1.24% 6/2/03
(dated 5/30/03, collateralized by $46,975
U.S. Treasury Bills due 8/28/03, market value $46,814) $45,875 $ 45,875
With Cantor Fitzgerald 1.24% 6/2/03
(dated 5/30/03, collateralized by $15,250
U.S. Treasury Notes 5.25% due 5/15/04,
market value $15,929 and $7,050 U.S Treasury Notes
7.25% due 5/15/04, market value $7,479) 22,950 22,950
With J. P. Morgan Securities 1.18% 6/2/03
(dated 5/30/03, collateralized by $11,575
U.S. Treasury Notes 2.125% due 8/31/04, market
value $11,809) 11,575 11,575
With UBS Warburg 1.24% 6/2/03
(dated 5/30/03, collateralized by $52,500
U.S. Treasury Notes 7.875% due 11/15/04, market
value $57,743) 56,600 56,600
--------
Total Repurchase Agreements (cost $137,000) 137,000
--------
Total Market Value of Securities - 100.17%
(cost $2,723,355) 3,217,411
Liabilities Net of Receivables and Other Assets - (0.17%) (5,379)
----------
Net Assets Applicable to 301,944 Shares Outstanding - 100.00% $3,212,032
----------
Net Asset Value - Delaware Small Cap Contrarian Fund Class A
($16.62 / 1.562 Shares) $10.64
======
Net Asset Value - Delaware Small Cap Contrarian Fund Institutional Class
($3,212,015 / 301,942 Shares) $10.64
======
- -------------------
+Non-income producing security for the period ended May 31, 2003.
Summary of Abbreviation:
REITs - Real Estate Investment Trust
Components of Net Assets at May 31, 2003:
Shares of beneficial interest (unlimited authorization - no par) $2,634,069
Undistributed net investment income 4,240
Accumulated net realized gain on investments 79,667
Net unrealized appreciation of investments 494,056
----------
Total net assets $3,212,032
==========
Net Asset Value and Offering Price per Share -
Delaware Small Cap Contrarian Fund
Net asset value Class A (A) $10.64
Sales charge (5.75% of offering price, or 6.11%
of the amount invested per share) (B) 0.65
------
Offering price $11.29
------
- -------------------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See the current prospectus for purchases of $50,000 or more.
See accompanying notes
11
Statements of Operations
Delaware Delaware
Retirement Small Cap
Income Contrarian
Six Months Ended May 31, 2003 (Unaudited) Fund Fund
- --------------------------------------------------------------------------------------------------------------------------
Investment Income:
Dividends $ 39,524 $ 13,935
Interest 53,983 1,003
-------- --------
93,507 14,938
-------- --------
Expenses:
Management fees 10,636 10,635
Custodian fees 1,637 232
Trustees' fees 1,260 1,296
Reports and statements to shareholders 1,004 664
Dividend disbursing, transfer agent fees and expenses 693 519
Registration fees 598 1,012
Accounting and administration expenses 565 534
Professional fees 302 189
Distribution expense - Class A 3 -
Other 341 309
-------- --------
17,039 15,390
Less expenses absorbed or waived by investment manager (4,698) (4,718)
Less waiver of distribution expenses - Class A (3) -
Less expenses paid indirectly (71) (39)
-------- --------
Total expenses 12,267 10,633
-------- --------
Net Investment Income 81,240 4,305
-------- --------
Net Realized and Unrealized Gain on Investments:
Net realized gain on investments 46,082 81,855
Net change in unrealized appreciation/depreciation of investments 204,000 205,102
-------- --------
Net Realized and Unrealized Gain on Investments 250,082 286,957
-------- --------
Net Increase in Net Assets Resulting from Operations $331,322 $291,262
-------- --------
See accompanying notes
12
Delaware Retirement Delaware Small Cap
Income Fund Contrarian Fund
------------------------------------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
5/31/03 11/30/02 5/31/03 11/30/02
(Unaudited) (Unaudited)
Increase (Decrease) in Net Assets from Operations:
Net investment income $ 81,240 $ 154,220 $ 4,305 $ 22,348
Net realized gain on investments 46,082 80,901 81,855 149,177
Net change in unrealized appreciation/depreciation of investments 204,000 (147,989) 205,102 (140,890)
-----------------------------------------------------------
Net increase in net assets resulting from operations 331,322 87,132 291,262 30,635
-----------------------------------------------------------
Dividends and Distributions to Shareholders from:
Net investment income:
Class A (83) (1) - -
Institutional Class (172,891) (153,263) (21,293) (28,045)
Net realized gain on investments:
Class A - - (1) (2)
Institutional Class - - (147,913) (228,515)
-----------------------------------------------------------
(172,974) (153,264) (169,207) (256,562)
-----------------------------------------------------------
Capital Share Transactions:
Proceeds from shares sold:
Class A 2,165 1,218 - -
Institutional Class - 3,250,000 - -
Net asset value of shares issued upon reinvestment of dividends and
distributions:
Class A 83 1 1 3
Institutional Class 172,891 153,263 169,206 256,560
-----------------------------------------------------------
175,139 3,404,482 169,207 256,563
-----------------------------------------------------------
Cost of shares repurchased:
Class A (30) - (2) (15)
Institutional Class (15) (3,369,860) - -
-----------------------------------------------------------
(45) (3,369,860) (2) (15)
-----------------------------------------------------------
Increase in net assets derived from capital share transactions 175,094 34,622 169,205 256,548
-----------------------------------------------------------
Net Increase (Decrease) in Net Assets 333,442 (31,510) 291,260 30,621
Net Assets:
Beginning of period 3,233,958 3,265,468 2,920,772 2,890,151
-----------------------------------------------------------
End of period $3,567,400 $ 3,233,958 $3,212,032 $2,920,772
-----------------------------------------------------------
See accompanying notes
13
Financial Highlights
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Retirement Income Fund Class A
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended
5/31/03(1) Year Ended
(Unaudited) 11/30/02(2) 11/30/01 11/30/00 11/30/99 11/30/98
---------- ----------- -------- -------- -------- --------
Net asset value, beginning of period $ 9.030 $ 9.230 $ 9.600 $ 9.430 $10.160 $11.700
Income (loss) from investment operations:
Net investment income(3) 0.216 0.429 0.405 0.403 0.431 0.632
Net realized and unrealized gain (loss) on investments 0.657 (0.196) (0.041) 0.285 (0.156) (0.402)
------- ------- ------- ------- ------- -------
Total from investment operations 0.873 0.233 0.364 0.688 0.275 0.230
------- ------- ------- ------- ------- -------
Less dividends and distributions from:
Net investment income (0.483) (0.433) (0.400) (0.420) (0.620) (0.570)
Net realized gain on investments - - (0.334) (0.098) (0.385) (1.200)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.483) (0.433) (0.734) (0.518) (1.005) (1.770)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 9.420 $ 9.030 $ 9.230 $ 9.600 $ 9.430 $10.160
======= ======= ======= ======= ======= =======
Total return(4) 10.21% 2.58% 3.87% 7.66% 3.14% 2.22%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 4 $ 1 $ - $ 24 $ 22 $ 23
Ratio of expenses to average net assets 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.34% 1.30% 1.05% 1.24% 1.17% 1.62%
Ratio of net investment income to average net assets 4.97% 4.71% 4.38% 4.22% 4.46% 6.01%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 4.38% 4.16% 4.08% 3.73% 4.03% 5.14%
Portfolio turnover 205% 188% 89% 41% 42% 91%
- ---------------------
(1) Ratios and portfolio tunover have been annualized and total return has not
been annualized.
(2) As required, effective December 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
requires amortization of all premium and discounts on debt securities. The
effect of this change for the year ended November 30, 2002 was a decrease in
net investment income per share of $0.048, an increase in net realized and
unrealized gain (loss) per share of $0.048, and a decrease in the ratio of
net investment income to average net assets of 0.53%. Per share data and
ratios for periods prior to December 1, 2001 have not been restated to
reflect this change in accounting.
(3) The average shares outstanding method has been applied for per share
information.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects a waiver and payment of fees by the manager and
the distributor, as applicable. Performance would have been lower had the
expense limitation not been in effect.
See accompanying notes
14
Financial Highlights (continued)
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Retirement Income Fund Institutional Class
- ------------------------------------------------------------------------------------------------------------------------------------
Months Ended
5/31/03(1) Year Ended
(Unaudited) 11/30/02(2) 11/30/01 11/30/00 11/30/99 11/30/98
--------- ----------- -------- -------- -------- --------
Net asset value, beginning of period $ 9.030 $ 9.230 $ 9.600 $ 9.420 $10.150 $11.690
Income (loss) from investment operations:
Net investment income(3) 0.216 0.429 0.405 0.403 0.431 0.632
Net realized and unrealized gain (loss) on investments 0.657 (0.196) (0.041) 0.295 (0.156) (0.402)
------- ------- ------- ------- ------- -------
Total from investment operations 0.873 0.233 0.364 0.698 0.275 0.230
------- ------- ------- ------- ------- -------
Less dividends and distributions from:
Net investment income (0.483) (0.433) (0.400) (0.420) (0.620) (0.570)
Net realized gain on investments - - (0.334) (0.098) (0.385) (1.200)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.483) (0.433) (0.734) (0.518) (1.005) (1.770)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 9.420 $ 9.030 $ 9.230 $ 9.600 $ 9.420 $10.150
======= ======= ======= ======= ======= =======
Total return(4) 10.21% 2.58% 3.87% 7.78% 3.15% 2.22%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 3,563 $ 3,233 $ 3,265 $ 3,145 $ 2,924 $ 2,840
Ratio of expenses to average net assets 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.04% 1.00% 0.75% 0.94% 0.87% 1.32%
Ratio of net investment income to average net assets 4.97% 4.71% 4.38% 4.22% 4.46% 6.01%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 4.68% 4.46% 4.38% 4.03% 4.33% 5.44%
Portfolio turnover 205% 188% 89% 41% 42% 91%
- ----------------------------
(1) Ratios and portfolio tunover have been annualized and total return has not
been annualized.
(2) As required, effective December 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
requires amortization of all premium and discounts on debt securities. The
effect of this change for the year ended November 30, 2002 was a decrease in
net investment income per share of $0.048, an increase in net realized and
unrealized gain (loss) per share of $0.048, and a decrease in the ratio of
net investment income to average net assets of 0.53%. Per share data and
ratios for periods prior to December 1, 2001 have not been restated to
reflect this change in accounting.
(3) The average shares outstanding method has been applied for per share
information.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value. Total investment return reflects a waiver and payment of
fees by the manager. Performance would have been lower had the expense
limitation not been in effect.
See accompanying notes
15
Financial Highlights (continued)
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Small Cap Contrarian Fund Class A
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended 12/29/98(2)
5/31/03(1) Year Ended To
(Unaudited) 11/30/02 11/30/01 11/30/00 11/30/99
---------- -------- -------- -------- --------
Net asset value, beginning of period $10.290 $ 11.130 $ 9.090 $ 8.930 $ 8.500
Income from investment operations:
Net investment income(3) 0.014 0.079 0.111 0.159 0.104
Net realized and unrealized gain on investments 0.932 0.069 2.082 0.720 0.326
------- ------- ------- ------- -------
Total from investment operations 0.946 0.148 2.193 0.879 0.430
------- ------- ------- ------- -------
Less dividends and distributions from:
Net investment income (0.075) (0.108) (0.153) (0.135) -
Net realized gain on investments (0.521) (0.880) - (0.584) -
------- ------- ------- ------- -------
Total dividends and distributions (0.596) (0.988) (0.153) (0.719) -
------- ------- ------- ------- -------
Net asset value, end of period $10.640 $10.290 $11.130 $ 9.090 $ 8.930
======= ======= ======= ======= =======
Total return(4) 9.97% 1.08% 24.42% 10.56% 5.06%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ - $ - $ - $ - $ -
Ratio of expenses to average net assets 0.75% 0.75% 0.75% 0.75% 0.80%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.38% 1.34% 1.18% 1.24% 2.14%
Ratio of net investment income to average net assets 0.30% 0.74% 1.07% 1.81% 1.27%
Ratio of net investment income (loss) to average net assets
prior to expense limitation and expenses paid indirectly (0.33%) 0.15% 0.63% 1.32% (0.12%)
Portfolio turnover 37% 76% 82% 125% 63%
- ----------------------------
(1) Ratios and portfolio tunover have been annualized and total return has not
been annualized.
(2) Date of commencement of operations; ratios and portfolio turnover have been
annualized and total return has not been annualized.
(3) The average shares outstanding method has been applied for per share
information.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects a waiver and payment of fees by the manager and
the distributor, as applicable. Performance would have been lower had the
expense limitation not been in effect.
See accompanying notes
16
Financial Highlights (continued)
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Small Cap Contrarian Fund Institutional Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended 12/29/98(2)
5/31/031 Year Ended To
(Unaudited) 11/30/02 11/30/01 11/30/00 11/30/99
----------- -------- -------- -------- --------
Net asset value, beginning of period $10.290 $11.130 $ 9.090 $ 8.930 $ 8.500
Income from investment operations:
Net investment income3 0.014 0.079 0.111 0.159 0.104
Net realized and unrealized gain on investments 0.932 0.069 2.082 0.720 0.326
------- ------- ------- ------- -------
Total from investment operations 0.946 0.148 2.193 0.879 0.430
------- ------- ------- ------- -------
Less dividends and distributions from:
Net investment income (0.075) (0.108) (0.153) (0.135) -
Net realized gain on investments (0.521) (0.880) - (0.584) -
------- ------- ------- ------- -------
Total dividends and distributions (0.596) (0.988) (0.153) (0.719) -
------- ------- ------- ------- -------
Net asset value, end of period $10.640 $10.290 $11.130 $ 9.090 $ 8.930
======= ======= ======= ======= =======
Total return4 9.97% 1.08% 24.42% 10.56% 5.06%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 3,212 $ 2,921 $ 2,890 $ 2,322 $ 2,101
Ratio of expenses to average net assets 0.75% 0.75% 0.75% 0.75% 0.80%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.08% 1.04% 0.88% 0.94% 1.84%
Ratio of net investment income to average net assets 0.30% 0.74% 1.07% 1.81% 1.27%
Ratio of net investment income (loss) to average net assets
prior to expense limitation and expenses paid indirectly (0.03%) 0.45% 0.93% 1.62% 0.18%
Portfolio turnover 37% 76% 82% 125% 63%
- --------------------------------
(1) Ratios and portfolio tunover have been annualized and total return has not
been annualized.
(2) Date of commencement of operations; ratios and portfolio turnover have been
annualized and total return has not been annualized.
(3) The average shares outstanding method has been applied for per share
information.
(4) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value. Total investment return reflects a waiver and payment of
fees by the manager. Performance would have been lower had the expense
limitation not been in effect.
See accompanying notes
17
Notes to Financial Statements
May 31, 2003 (Unaudited)
Delaware Group Equity Funds V (the "Trust") is organized as a Delaware business
trust and offers three series: Delaware Retirement Income Fund, Delaware Small
Cap Contrarian Fund and Delaware Small Cap Value Fund. These financial
statements and the related notes pertain to Delaware Retirement Income Fund and
Delaware Small Cap Contrarian Fund (each referred to as a "Fund" or collectively
as the "Funds"). The Trust is an open-end investment company. The Funds are
considered diversified under the Investment Company Act of 1940, as amended, and
offer Class A, Class B, Class C, Class R and Institutional Class shares. Class A
shares are sold with a front-end sales charge of up to 5.75%. Class B shares are
sold with a contingent deferred sales charge that declines from 4% to zero
depending upon the period of time the shares were held. Class B shares will
automatically convert to Class A shares on a quarterly basis approximately eight
years after purchase. Class C shares are sold with a contingent deferred sales
charge of 1%, if redeemed during the first 12 months. Class R and Institutional
Class shares are not subject to a sales charge and are offered for sale
exclusively to a limited group of investors. As of May 31, 2003, only Class A
and Institutional Class have commenced operations.
The investment objective of the Delaware Retirement Income Fund is to seek to
provide high current income and the potential for capital appreciation. The
investment objective of Delaware Small Cap Contrarian Fund is to seek long-term
capital appreciation.
1. Significant Accounting Policies
The following accounting policies are in accordance with accounting principles
generally accepted in the United States and are consistently followed by the
Funds.
Security Valuation - All equity securities are valued at the last quoted sales
price as of the time of the regular close of the New York Stock Exchange (NYSE)
on the valuation date. If on a particular day an equity security does not trade,
then the mean between bid and asked prices will be used. Long-term debt
securities are valued by an independent pricing service and such prices are
believed to reflect the fair value of such securities. Short-term debt
securities 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 under the direction of the Funds' Board of Trustees. In determining
whether market quotations are readily available or fair valuation will be used,
various factors will be taken into consideration, such as market closures, or
with respect to foreign securities, aftermarket trading or significant events
after local market trading (e.g., government actions or pronouncements, trading
volume or volatility on markets, exchanges among dealers, or news events).
18
Notes to Financial Statements (continued)
Federal Income Taxes - Each Fund intends to continue to qualify for federal
income tax purposes 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.
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
each 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 - Each 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 each
Fund's custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is 102% 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.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States 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.
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. Interest income is recorded on the accrual basis.
Discounts and premiums are amortized to interest income over the lives of the
respective securities. The Funds declare and pay dividends from net investment
income and distributions from net realized gain on investments, if any,
annually.
Certain expenses of the Funds are paid through commission arrangements with
brokers. These transactions are done subject to best execution. In addition, the
Funds may receive earnings credits from their custodian when positive cash
balances are maintained, which are used to offset custody fees. The expenses
paid under the above arrangements are included in their respective expense
captions on the Statement of Operations with the corresponding expense offset
shown as "expenses paid indirectly". The amount of these expenses and credits
for the six months ended May 31, 2003 were as follows:
19
Notes to Financial Statements (continued)
Delaware Delaware
Retirement Small Cap
Income Fund Contrarian Fund
----------------------- -------------------
Commission reimbursements $38 $33
Earnings credits 33 6
2. Investment Management, Administration Agreements and Other Transactions
with Affiliates
In accordance with the terms of its respective investment management agreement,
each Fund pays Delaware Management Company (DMC), a series of Delaware
Management Business Trust and the investment manager, an annual fee based on
each Fund's average daily net assets as follows:
Delaware Delaware
Retirement Small Cap
Income Fund Contrarian Fund
----------------------------------------
On the first $500 million 0.65% 0.75%
On the next $500 million 0.60% 0.70%
On the next $1.5 billion 0.55% 0.65%
Over $2.5 billion 0.50% 0.60%
DMC has contracted to waive that portion, if any, of the management fee and
reimburse each Fund to the extent necessary to ensure that annual operating
expenses, exclusive of taxes, interest, brokerage commissions, distribution fees
and extraordinary expenses, do not exceed 0.75% of average daily net assets
through November 30, 2003.
The Funds have engaged Delaware Service Company, Inc. (DSC), an affiliate of
DMC, to provide dividend disbursing, transfer agent, accounting and
administrative services. Each Fund pays DSC a monthly fee based on the number of
shareholder accounts, shareholder transactions and average net assets, subject
to certain minimums.
Pursuant to a distribution agreement and distribution plan, the Funds pay
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 Class A
shares, 1.00% of the average daily net assets of the Class B and C shares and
0.60% of the average daily net assets of Class R shares. DDLP has elected
voluntarily to waive such fees at this time. No distribution expenses are paid
by Institutional Class shares.
20
Notes to Financial Statements (continued)
At May 31, 2003, the Funds had liabilities payable to DMC and affiliates as
follows:
Delaware Delaware
Retirement Small Cap
Income Fund Contrarian Fund
---------------------------------------
Investment management fee
payable to DMC $879 $1,087
Dividend disbursing, transfer agent,
accounting fees and other expenses
payable to DSC 501 559
Other expenses payable to DMC
and affiliates 510 504
Certain officers of DMC, DSC and DDLP are officers and/or trustees of the Trust.
These officers and trustees are paid no compensation by the Funds.
3. Investments
For the period ended May 31, 2003, the Funds made purchases and sales of
investment securities other than short-term investments as follows:
Delaware Delaware
Retirement Small Cap
Income Fund Contrarian Fund
----------------------------------------
Purchases $3,105,430 $597,896
Sales 3,064,603 508,494
At May 31, 2003, the cost of investments for federal income tax purposes has
been estimated since the final tax characteristics cannot be determined until
fiscal year end. At May 31, 2003, the cost of investments and unrealized
appreciation (depreciation) for each Fund were as follows:
Delaware Delaware
Retirement Small Cap
Income Fund Contrarian Fund
-------------------------------------
Cost of investments $3,403,498 $2,723,355
=====================================
Aggregate unrealized appreciation $315,524 $584,796
Aggregate unrealized depreciation (152,892) (90,740)
-------------------------------------
Net unrealized appreciation $162,632 $494,056
=====================================
21
Notes to Financial Statements (continued)
4. Dividend and Distribution Information
Income and long-term capital gain distributions are determined in accordance
with federal income tax regulations, which may differ from accounting principles
generally accepted in the United States. The tax character of dividends and
distributions paid during the six months ended May 31, 2003 and the year ended
November 30, 2002 were as follows:
Six months ended May 31, 2003* Delaware Delaware
- ------------------------------ Retirement Small Cap
Income Fund Contrarian Fund
------------------------------------
Ordinary income $172,974 $19,145
Long-term capital gain - 150,062
------------------------------------
Total dividends and distributions $172,974 $169,207
------------------------------------
Year ended November 30, 2002 Delaware Delaware
- ---------------------------- Retirement Income Small Cap
Fund Contrarian Fund
----------------------------------------
Ordinary income $153,264 $115,240
Long-term capital gain - 141,323
----------------------------------------
Total dividends and distributions $153,264 $256,563
----------------------------------------
*Tax information for the period ended May 31, 2003 is an estimate and the tax
character of dividends and distributions may be redesignated at fiscal year end.
The components of net assets are estimated since final tax characteristics
cannot be determined until fiscal year end. As of May 31, 2003, the components
of net assets on a tax basis were as follows:
Delaware Retirement Income Fund
- -------------------------------
Shares of beneficial interest $3,325,036
Undistributed ordinary income 60,129
Undistributed long-term capital gains 41,177
Capital loss carryforwards (21,574)
Unrealized appreciation of investments 162,632
----------
Net assets $3,567,400
----------
Delaware Small Cap Contrarian Fund
- ----------------------------------
Shares of beneficial interest $2,634,069
Undistributed ordinary income 4,240
Undistributed long-term capital gains 79,667
Unrealized appreciation of investments 494,056
----------
Net assets $3,212,032
----------
22
For federal income tax purposes, capital loss carryforwards may be carried
forward and applied against future capital gains. Such capital loss
carryforwards expire as follows:
Delaware
Retirement
Income Fund
-----------
Expires 2009 $21,574
5. Capital Shares
Transactions in capital shares were as follows:
Delaware Retirement Delaware Small Cap
Income Fund Contrarian Fund
Six Months Year Six Months Year
Ended Ended Ended Ended
5/31/03 11/30/02 5/31/03 11/30/02
----------------------------------------------------------
Shares sold:
Class A 248 142 - -
Institutional Class 1 357,536 - -
Shares issued upon
reinvestment of
dividends and
distributions:
Class A 9 - - -
Institutional Class 20,198 17,182 18,039 24,227
----------------------------------------------------------
20,456 374,860 18,039 24,227
----------------------------------------------------------
Shares repurchased:
Class A (3) - - (1)
Institutional Class (2) (370,722) - -
----------------------------------------------------------
(5) (370,722) - (1)
----------------------------------------------------------
Net increase 20,451 4,138 18,039 24,226
==========================================================
23
6. Line of Credit
Delaware Retirement Income Fund, along with certain other funds in the Delaware
Investments Family of Funds (the "Participants"), participates in a $202,300,000
revolving line of credit facility to be used for temporary or emergency purposes
as an additional source of liquidity to fund redemptions of investor shares. The
Participants are charged an annual commitment fee, which is allocated across the
Participants on the basis of each fund's allocation of the entire facility. The
Participants may borrow up to a maximum of one-third of their net assets under
the agreement. The Fund had no amount outstanding at May 31, 2003, or at any
time during the period.
7. Credit and Market Risk
Each Fund may invest 15% of its 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 these securities may impair each Fund from disposing of them in a timely
manner and at a fair price when it is necessary or desirable to do so.
Delaware Small Cap Contrarian Fund invests a significant portion of its assets
in small and medium-sized companies and may be subject to certain risks
associated with ownership of securities of small and medium-sized companies.
Investments in small or mid-sized companies may be more volatile than
investments in larger companies for a number of reasons, which include more
limited financial resources or a dependence of narrow product lines.
24
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable.
Item 8. [Reserved]
Item 9. Controls and Procedures
The registrant's principal executive officer and principal financial
officer have evaluated the registrant's disclosure controls and procedures
within 90 days of the filing of this report and have concluded that they are
effective in ensuring that the information required to be disclosed by the
registrant in its reports or statements filed under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the Securities and Exchange Commission.
There were no significant changes in the registrant's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their last evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
Exhibits
(a) Code of Ethics
Not applicable.
(b) (1) Certifications of Principal Executive Officer and Principal Financial
Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are
attached hereto as Exhibit 99.CERT.
(2) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 are attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf, by the undersigned, thereunto duly authorized.
Name of Registrant: Delaware Group Equity Funds V
Jude T. Driscoll
- -------------------------------
By: Jude T. Driscoll
Title: Chairman
Date: August 1, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Jude T. Driscoll Michael P. Bishof
- ------------------------------- ----------------------------------
By: Jude T. Driscoll By: Michael P. Bishof
Title: Chairman Title: Treasurer
Date: August 1, 2003 Date: July 31, 2003