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 - ------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 ------------- 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 ------------- 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 ------------- 2 Statement Delaware Small Cap Value Fund OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- 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