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: David F. Connor, 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, 2006 Item 1. Reports to Stockholders Semiannual Report Delaware Dividend Income Fund May 31, 2006 Value equity [DELAWARE LOGO] [LOGO] POWERED BY RESEARCH (R) <page> Table of contents > Disclosure of Fund expenses .............................................. 1 > Sector allocation. ....................................................... 2 > Statement of net assets .................................................. 3 > Statement of operations .................................................. 11 > Statements of changes in net assets ...................................... 12 > Financial highlights ..................................................... 13 > Notes to financial statements ............................................ 18 > Other Fund information ................................................... 22 > About the organization ................................................... 24 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) 2006 Delaware Distributors, L.P. <page> Disclosure of Fund expenses For the period December 1, 2005 to May 31, 2006. As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period December 1, 2005 to May 31, 2006. Actual Expenses The first section of the table shown, "Actual Fund Return," provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The second section of the table shown, "Hypothetical 5% Return," provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund's actual expenses shown in the table reflect fee waivers in effect. The expenses shown in the table assume reinvestment of all dividends and distributions. Delaware Dividend Income Fund Expense Analysis of an Investment of $1,000 Expenses Beginning Ending Paid During Account Account Annualized Period Value Value Expense 12/1/05 to 12/1/05 5/31/06 Ratios 5/31/06* ______________________________________________________________________________ Actual Fund return Class A $1,000.00 $1,051.70 1.00% $5.12 Class B 1,000.00 1,047.80 1.75% 8.93 Class C 1,000.00 1,048.70 1.75% 8.94 Class R 1,000.00 1,050.50 1.25% 6.39 Institutional Class 1,000.00 1,053.00 0.75% 3.84 ________________________________________________________________________________ With hypothetical 5% return (5% return before expenses) Class A $1,000.00 $1,019.95 1.00% $5.04 Class B 1,000.00 1,016.21 1.75% 8.80 Class C 1,000.00 1,016.21 1.75% 8.80 Class R 1,000.00 1,018.70 1.25% 6.29 Institutional Class 1,000.00 1,021.19 0.75% 3.78 ________________________________________________________________________________ *"Expenses Paid During Period" are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). 1 <page> Sector allocation Delaware Dividend Income Fund As of May 31, 2006 Percentage Sector of Net Assets ________________________________________________________________________________ Common Stock 54.33% Consumer Discretionary 4.00% Consumer Staples 4.98% Diversified REITs 1.07% Energy 2.39% Financials 9.53% Health Care 7.26% Health Care REITs 0.31% Industrial REITs 1.29% Industrials 3.03% Information Technology 4.59% Lodging/Resort REITs 1.61% Mall REITs 1.48% Manufactured Housing REITs 0.31% Materials 1.14% Mortgage REITs 2.72% Multifamily REITs 0.50% Office/Industrial REITs 0.50% Office REITs 1.86% Shopping Centers REITs 1.94% Speciality REITs 0.46% Telecommunications 2.23% Utilities 1.13% ________________________________________________________________________________ Corporate Bonds 22.55% Banking 0.21% Basic Industries 2.81% Brokerage 0.68% Capital Goods 1.45% Consumer Cyclical 1.68% Consumer Non-Cyclical 2.65% Energy 1.27% Finance Companies 0.20% Media 3.06% Real Estate 0.43% Services Cyclical 2.85% Services Non-Cyclical 1.36% Technology & Electronics 0.51% Telecommunications 2.02% Utilities 1.37% ________________________________________________________________________________ Convertible Bonds 10.34% Aerospace & Defense 0.63% Banking, Finance & Insurance 0.14% Cable, Media & Publishing 1.41% Computers & Technology 2.22% Consumer Services 0.34% Electronics & Electrical Equipment 0.44% Energy 1.14% Healthcare & Pharmaceuticals 1.98% Leisure, Lodging & Entertainment 0.08% Real Estate 0.11% Retail 1.27% Telecommunications 0.18% Transportation 0.12% Utilities 0.28% ________________________________________________________________________________ Convertible Preferred Stock 5.36% Automobiles & Automotive Parts 0.10% Banking, Finance & Insurance 2.21% Basic Materials 0.38% Cable, Media & Publishing 0.25% Consumer Products 0.40% Energy 0.50% Food, Beverage & Tobacco 0.38% Telecommunications 0.18% Utilities 0.96% ________________________________________________________________________________ Preferred Stock 0.89% Leisure, Lodging & Entertainment 0.11% Real Estate 0.78% ________________________________________________________________________________ Exchange Traded Funds 0.35% ________________________________________________________________________________ Warrants 0.00% ________________________________________________________________________________ Commercial Mortgage-Backed Securities 0.13% ________________________________________________________________________________ Repurchase Agreements 5.43% ________________________________________________________________________________ Total Market Value of Securities 99.38% ________________________________________________________________________________ Receivables and Other Assets Net of Liabilities 0.62% ________________________________________________________________________________ Total Net Assets 100.00% 2 <page> Statement of net assets Delaware Dividend Income Fund May 31, 2006 (Unaudited) Number of Market Shares Value ________________________________________________________________________________ Common Stock - 54.33% ________________________________________________________________________________ Consumer Discretionary - 4.00% Gap 381,600 $ 6,945,120 + Great Wolf Resorts 141,900 1,677,258 Limited Brands 287,100 7,797,636 Mattel 381,700 6,416,377 ___________ 22,836,391 ___________ Consumer Staples - 4.98% B&G Foods 16,250 250,250 ConAgra Foods 327,000 7,390,200 Heinz (H.J.) 178,000 7,538,300 Kimberly-Clark 118,000 7,159,060 Safeway 258,500 6,095,430 ___________ 28,433,240 ___________ Diversified REITs - 1.07% Vornado Realty Trust 68,300 6,139,487 ___________ 6,139,487 ___________ Energy - 2.39% Chevron 116,400 6,959,556 ConocoPhillips 105,300 6,664,437 ___________ 13,623,993 ___________ Financials - 9.53% Allstate 130,300 7,167,804 AON 164,800 5,875,120 Chubb 141,200 7,134,836 Hartford Financial Services Group 80,200 7,052,788 Huntington Bancshares 287,600 6,764,352 Morgan Stanley 115,800 6,903,996 Wachovia 120,700 6,457,450 Washington Mutual 153,400 7,042,594 ___________ 54,398,940 ___________ Health Care - 7.26% Abbott Laboratories 164,400 7,019,880 Baxter International 180,500 6,804,850 Bristol-Myers Squibb 286,100 7,023,755 Merck 211,900 7,054,151 Pfizer 294,500 6,967,870 Wyeth 144,700 6,618,578 ___________ 41,489,084 ___________ Health Care REITs - 0.31% # Medical Properties Trust 144A 19,700 238,567 Ventas 47,300 1,534,412 ___________ 1,772,979 ___________ Industrial REITs - 1.29% First Potomac Realty Trust 87,000 2,324,640 ProLogis 102,300 5,058,735 ___________ 7,383,375 ___________ Industrials - 3.03% Donnelley (R.R.) & Sons 213,500 6,870,430 + Foster Wheeler 3,656 161,778 Macquarie Infrastructure 92,600 2,574,280 Waste Management 209,800 7,682,876 ___________ 17,289,364 ___________ Information Technology - 4.59% Hewlett-Packard 209,300 6,777,134 Intel 365,400 6,584,508 International Business Machines 83,700 6,687,630 + Xerox 447,000 6,137,310 ___________ 26,186,582 ___________ Lodging/Resort REITs - 1.61% FelCor Lodging Trust 94,800 1,972,788 Hersha Hospitality Trust 245,100 2,289,234 Highland Hospitality 128,000 1,548,800 Strategic Hotel Capital 165,800 3,402,216 ___________ 9,213,038 ___________ Mall REITs - 1.48% Macerich 29,200 2,012,172 Simon Property Group 81,200 6,465,956 ___________ 8,478,128 ___________ Manufactured Housing REITs - 0.31% Equity Lifestyle Properties 40,900 1,764,835 ___________ 1,764,835 ___________ Materials - 1.14% duPont (E.I.) deNemours 152,500 6,485,825 ___________ 6,485,825 ___________ Mortgage REITs - 2.72% American Home Mortgage Investment 84,200 2,809,754 Gramercy Capital 189,600 4,959,936 JER Investors Trust 126,500 1,977,195 II KKR Financial 79,300 1,708,915 II Peoples Choice 174,600 960,300 Saxon Capital 278,700 3,107,505 ___________ 15,523,605 ___________ Multifamily REITs - 0.50% AvalonBay Communities 16,500 1,753,950 United Dominion Realty Trust 40,000 1,080,400 ___________ 2,834,350 ___________ Office/Industrial REITs - 0.50% Duke Realty 84,200 2,857,748 ___________ 2,857,748 ___________ Office REITs - 1.86% Brandywine Realty Trust 105,156 3,051,627 (continues) 3 <page> Statement of net assets Delaware Dividend Income Fund Number of Market Shares Value ________________________________________________________________________________ Common Stock (continued) ________________________________________________________________________________ Office REITs (continued) Equity Office Properties Trust 121,500 $ 4,088,475 Reckson Associates Realty 90,600 3,482,664 ___________ 10,622,766 ___________ Shopping Centers REITs - 1.94% Cedar Shopping Centers 70,700 1,027,978 Developers Diversified Realty 100,900 5,161,035 Federal Realty Investment Trust 71,700 4,902,846 ___________ 11,091,859 ___________ Specialty REITs - 0.46% Entertainment Properties Trust 63,500 2,606,675 ___________ 2,606,675 ___________ Telecommunications - 2.23% AT&T 253,900 6,616,634 Verizon Communications 196,600 6,135,886 ___________ 12,752,520 ___________ Utilities - 1.13% + Mirant 19,417 483,095 Progress Energy 141,400 5,944,456 ___________ 6,427,551 ___________ Total Common Stock (cost $294,046,133) 310,212,335 ___________ Principal Amount (U.S. $) ________________________________________________________________________________ Corporate Bonds - 22.55% ________________________________________________________________________________ Banking - 0.21% Western Financial 9.625% 5/15/12 $1,050,000 1,165,500 ___________ 1,165,500 ___________ Basic Industries - 2.81% Abitibi-Consolidated 6.95% 12/15/06 50,000 50,500 7.875% 8/1/09 525,000 518,438 AK Steel 7.875% 2/15/09 865,000 862,838 # Apex Silver Mines 144A 2.875% 3/15/24 1,000,000 738,750 Bowater 9.50% 10/15/12 1,680,000 1,721,999 Chemtura 6.875% 6/1/16 650,000 633,750 Donohue Forest Products 7.625% 5/15/07 740,000 749,250 Georgia-Pacific 8.875% 5/15/31 190,000 195,700 9.50% 12/1/11 905,000 972,875 Gold Kist 10.25% 3/15/14 525,000 556,500 Huntsman International 9.875% 3/1/09 240,000 251,400 10.125% 7/1/09 235,000 240,288 Lyondell Chemical 10.50% 6/1/13 100,000 112,500 # Nell AF Sarl 144A 8.375% 8/15/15 840,000 833,700 NewPage 10.00% 5/1/12 565,000 600,313 Norske Skog 8.625% 6/15/11 1,100,000 1,100,000 # Port Townsend Paper 144A 12.00% 4/15/11 955,000 792,650 Potlatch 13.00% 12/1/09 635,000 749,556 Rhodia 8.875% 6/1/11 899,000 912,485 Smurfit Capital Funding 7.50% 11/20/25 610,000 567,300 ++ Solutia 6.72% 10/15/37 1,215,000 1,136,025 Tembec Industries 8.625% 6/30/09 2,270,000 1,282,549 Witco 6.875% 2/1/26 500,000 452,500 ___________ 16,031,866 ___________ Brokerage - 0.68% E Trade Financial 8.00% 6/15/11 1,435,000 1,492,399 FINOVA Group 7.50% 11/15/09 2,318,750 759,391 LaBranche & Company 9.50% 5/15/09 695,000 741,913 11.00% 5/15/12 805,000 887,513 ___________ 3,881,216 ___________ Capital Goods - 1.45% Armor Holdings 8.25% 8/15/13 820,000 867,150 Building Materials 8.00% 10/15/07 1,050,000 1,063,125 # Compression Polymer 144A 10.50% 7/1/13 330,000 344,850 Graham Packaging 9.875% 10/15/14 675,000 691,875 Interface 10.375% 2/1/10 735,000 811,256 Interline Brands 11.50% 5/15/11 972,000 1,081,350 Intertape Polymer 8.50% 8/1/14 960,000 907,200 { Mueller Holdings 14.75% 4/15/14 1,115,000 942,175 # Panolam Industrial 144A 10.75% 10/1/13 590,000 584,100 Trimas 9.875% 6/15/12 995,000 955,200 ___________ 8,248,281 ___________ Consumer Cyclical - 1.68% Accuride 8.50% 2/1/15 655,000 643,538 Carrols 9.00% 1/15/13 405,000 411,075 Ford Motor Credit 7.375% 10/28/09 775,000 714,360 General Motors 8.375% 7/15/33 325,000 248,219 General Motors Acceptance Corporation 6.875% 9/15/11 995,000 935,731 8.00% 11/1/31 630,000 593,296 Landry's Restaurant 7.50% 12/15/14 835,000 786,988 Metaldyne 10.00% 11/1/13 970,000 936,050 4 <page> Principal Market Amount Value (U.S. $) ________________________________________________________________________________ Corporate Bonds (continued) ________________________________________________________________________________ Consumer Cyclical (continued) # Neiman Marcus 144A 9.00% 10/15/15 $ 625,000 $ 653,906 # NPC International 144A 9.50% 5/1/14 950,000 954,750 O'Charleys 9.00% 11/1/13 965,000 991,537 # Uno Restaurant 144A 10.00% 2/15/11 475,000 384,750 Visteon 7.00% 3/10/14 175,000 145,688 8.25% 8/1/10 595,000 556,325 Warnaco 8.875% 6/15/13 630,000 652,050 ___________ 9,608,263 ___________ Consumer Non-Cyclical - 2.65% # Angiotech Pharmaceuticals 144A 7.75% 4/1/14 855,000 857,138 Biovail 7.875% 4/1/10 1,830,000 1,862,024 Brickman Group 11.75% 12/15/09 315,000 342,563 Constellation Brands 8.125% 1/15/12 850,000 877,625 Cott Beverages 8.00% 12/15/11 1,145,000 1,153,588 DEL Laboratories 8.00% 2/1/12 375,000 309,375 Doane Pet Care 10.625% 11/15/15 595,000 742,756 10.75% 3/1/10 230,000 251,344 Dole Foods 8.875% 3/15/11 775,000 762,406 # iPayment 144A 9.75% 5/15/14 525,000 528,938 # Le-Natures 144A 10.00% 6/15/13 680,000 716,550 Marsh Supermarket 8.875% 8/1/07 110,000 109,175 National Beef Packing 10.50% 8/1/11 800,000 808,000 Pilgrim's Pride 9.625% 9/15/11 745,000 784,113 Pinnacle Foods 8.25% 12/1/13 775,000 765,313 Playtex Products 9.375% 6/1/11 980,000 1,026,550 RJ Reynolds Tobacco Holdings 7.875% 5/15/09 345,000 357,075 True Temper Sports 8.375% 9/15/11 1,065,000 1,001,100 Warner Chilcott 8.75% 2/1/15 1,485,000 1,488,712 # Williams Scotsman 144A 8.50% 10/1/15 400,000 405,000 ___________ 15,149,345 ___________ Energy - 1.27% # Basic Energy Service 144A 7.125% 4/15/16 250,000 243,750 Bluewater Finance 10.25% 2/15/12 438,000 455,520 # Brigham Exploration 144A 9.625% 5/1/14 245,000 244,081 Compton Petroleum 7.625% 12/1/13 335,000 328,300 # Copano Energy 144A 8.125% 3/1/16 250,000 255,000 El Paso Natural Gas 7.625% 8/1/10 340,000 352,750 El Paso Production Holding 7.75% 6/1/13 835,000 855,874 # Hilcorp Energy I 144A 7.75% 11/1/15 265,000 262,350 10.50% 9/1/10 584,000 638,020 Inergy Finance 6.875% 12/15/14 250,000 236,875 8.25% 3/1/16 200,000 206,000 # Mariner Energy 144A 7.50% 4/15/13 250,000 243,125 Plains Exploration & Production 7.125% 6/15/14 335,000 332,488 Pride International 7.375% 7/15/14 345,000 354,488 Quicksilver Resources 7.125% 4/1/16 500,000 480,000 ~ Secunda International 13.068% 9/1/12 430,000 453,650 Tennessee Gas Pipeline 8.375% 6/15/32 355,000 390,304 # VeraSun Energy 144A 9.875% 12/15/12 575,000 621,000 Whiting Petroleum 7.25% 5/1/13 325,000 318,500 ___________ 7,272,075 ___________ Finance Companies - 0.20% # Hughes Network Systems/Finance 144A 9.50% 4/15/14 1,150,000 1,167,250 ___________ 1,167,250 ___________ Media - 3.06% } Adelphia Communications 8.125% 7/15/06 615,000 285,975 # Affinion Group 144A 11.50% 10/15/15 350,000 357,875 CCH I 11.00% 10/1/15 1,030,000 890,950 ++ Century Communications 9.50% 9/1/06 1,120,000 1,036,000 Cenveo 9.625% 3/15/12 580,000 620,963 # Charter Communications 144A 5.875% 11/16/09 500,000 364,375 Charter Communications Holdings 11.125% 1/15/11 625,000 396,875 13.50% 1/15/11 1,880,000 1,231,400 # Charter Communications Operating 144A 8.375% 4/30/14 65,000 65,163 ~# Cleveland Unlimited 144A 13.16% 12/15/10 350,000 372,750 CSC Holdings 10.50% 5/15/16 1,275,000 1,345,125 (continues) 5 <page> Statement of net assets Delaware Dividend Income Fund Principal Market Amount Value (U.S. $) ________________________________________________________________________________ Corporate Bonds (continued) ________________________________________________________________________________ Media (continued) Dex Media East 12.125% 11/15/12 $ 505,000 $ 571,913 # EchoStar Communications 144A 5.75% 5/15/08 500,000 494,375 Insight Midwest 10.50% 11/1/10 1,935,000 2,039,005 Lodgenet Entertainment 9.50% 6/15/13 1,215,000 1,306,125 Mediacom Capital 9.50% 1/15/13 1,670,000 1,686,699 # RH Donnelley 144A 8.875% 1/15/16 655,000 661,550 Sheridan Acquisition 10.25% 8/15/11 415,000 425,375 Sirius Satellite 9.625% 8/1/13 225,000 213,750 Vertis 10.875% 6/15/09 445,000 436,100 Warner Music Group 7.375% 4/15/14 1,025,000 1,019,875 # XM Satellite Radio 144A 9.75% 5/1/14 1,750,000 1,636,250 ___________ 17,458,468 ___________ Real Estate - 0.43% American Real Estate Partners 8.125% 6/1/12 905,000 927,625 BF Saul REIT 7.50% 3/1/14 975,000 999,375 # Rouse 144A 6.75% 5/1/13 325,000 323,375 Tanger Properties 9.125% 2/15/08 218,000 228,555 ___________ 2,478,930 ___________ Services Cyclical - 2.85% Adesa 7.625% 6/15/12 748,000 755,480 American Airlines 7.379% 5/23/16 290,712 265,798 # CCM Merger 144A 8.00% 8/1/13 925,000 892,625 Corrections Corporation of America 7.50% 5/1/11 1,210,000 1,228,150 FTI Consulting 7.625% 6/15/13 940,000 970,550 # Galaxy Entertainment Finance 144A 9.875% 12/15/12 1,330,000 1,396,500 Gaylord Entertainment 8.00% 11/15/13 800,000 820,000 { H-Lines Finance Holdings 11.00% 4/1/13 1,301,000 1,112,355 # Hertz 144A 8.875% 1/1/14 475,000 496,375 10.50% 1/1/16 200,000 217,500 Horizon Lines 9.00% 11/1/12 457,000 479,850 Kansas City Southern Railway 9.50% 10/1/08 765,000 807,075 # Knowledge Learning 144A 7.75% 2/1/15 860,000 820,225 Mandalay Resort Group 9.50% 8/1/08 980,000 1,048,599 OMI 7.625% 12/1/13 1,075,000 1,075,000 Royal Caribbean Cruises 7.25% 3/15/18 325,000 326,192 Seabulk International 9.50% 8/15/13 469,000 522,935 Stena 9.625% 12/1/12 700,000 754,250 { Town Sports International 11.00% 2/1/14 1,050,000 840,000 Wheeling Island Gaming 10.125% 12/15/09 1,365,000 1,426,425 ___________ 16,255,884 ___________ Services Non-Cyclical - 1.36% Aleris International 9.00% 11/15/14 850,000 886,125 Allied Waste North America 9.25% 9/1/12 610,000 653,463 Casella Waste Systems 9.75% 2/1/13 1,310,000 1,390,237 # CRC Health 144A 10.75% 2/1/16 1,125,000 1,164,375 Geo Subordinate 11.00% 5/15/12 1,050,000 1,065,750 US Oncology 10.75% 8/15/14 1,120,000 1,244,600 { Vanguard Health 11.25% 10/1/15 1,865,000 1,380,100 ___________ 7,784,650 ___________ Technology & Electronics - 0.51% Magnachip Semiconductor 8.00% 12/15/14 1,575,000 1,378,125 # Sensata Technologies BV 144A 8.00% 5/1/14 125,000 123,750 # SunGard Data Systems 144A 10.25% 8/15/15 1,325,000 1,391,250 ___________ 2,893,125 ___________ Telecommunications - 2.02% ++ Allegiance Telecom 11.75% 2/15/08 10,000 4,750 American Cellular 10.00% 8/1/11 480,000 517,800 American Tower 7.125% 10/15/12 865,000 888,788 Cincinnati Bell 8.375% 1/15/14 1,190,000 1,207,850 # Digicel Limited 144A 9.25% 9/1/12 580,000 611,900 { Inmarsat Finance 10.375% 11/15/12 1,555,000 1,333,412 iPCS 11.50% 5/1/12 10,000 11,450 ~ Iwo Escrow Company 8.818% 1/15/12 100,000 104,250 # Nordic Telephone Company Holdings 144A 8.875% 5/1/16 400,000 415,000 PanAmSat 9.00% 8/15/14 680,000 708,900 ~ Qwest 8.16% 6/15/13 485,000 525,619 Rural Cellular 9.875% 2/1/10 640,000 676,800 6 <page> Principal Market Amount Value (U.S. $) ________________________________________________________________________________ Corporate Bonds (continued) ________________________________________________________________________________ Telecommunications (continued) ~# Rural Cellular 144A 10.899% 11/1/12 $ 425,000 $ 445,188 # Telcordia Technologies 144A 10.00% 3/15/13 1,525,000 1,444,937 Triton Communications 9.375% 2/1/11 915,000 677,100 ~ US LEC 13.62% 10/1/09 435,000 467,625 # Wind Acquisition 144A 10.75% 12/1/15 1,375,000 1,488,437 ___________ 11,529,806 ___________ Utilities - 1.37% Avista 9.75% 6/1/08 753,000 808,422 ++# Calpine 144A 9.90% 7/15/07 503,413 492,086 Elwood Energy 8.159% 7/5/26 994,539 1,072,701 Midwest Generation 8.30% 7/2/09 945,000 968,625 8.75% 5/1/34 495,000 532,125 Mirant Americas 8.30% 5/1/11 1,245,000 1,251,224 NRG Energy 7.25% 2/1/14 1,200,000 1,202,999 Orion Power Holdings 12.00% 5/1/10 626,000 708,945 # Tenaska Alabama Partners 144A 7.00% 6/30/21 788,208 780,917 ___________ 7,818,044 ___________ Total Corporate Bonds (cost $130,421,162) 128,742,703 ___________ ________________________________________________________________________________ Convertible Bonds - 10.34% ________________________________________________________________________________ Aerospace & Defense - 0.63% # AAR 144A 1.75% 2/1/26 exercise price $29.43, expiration date 2/1/26 1,150,000 1,160,063 EDO 4.00% 11/15/25 exercise price $34.19, expiration date 11/15/25 975,000 988,406 # L-3 Communications 144A 3.00% 8/1/35 exercise price $102.31, expiration date 8/1/35 1,500,000 1,462,500 ___________ 3,610,969 ___________ Banking, Finance & Insurance - 0.14% PMI Group 2.50% 7/15/21 exercise price $44.16, expiration date 7/15/21 750,000 799,688 ___________ 799,688 ___________ Cable, Media & Publishing - 1.41% EchoStar 5.75% 5/15/08 exercise price $43.29, expiration date 5/15/08 500,000 494,375 Liberty Media 3.25% 3/15/31 exercise price $53.86, expiration date 3/8/31 3,000,000 2,246,250 Cable, Media & Publishing (continued) Mediacom Communications 5.25% 7/1/06 exercise price $18.72, expiration date 7/1/06 2,500,000 2,509,375 # Playboy Enterprises 144A 3.00% 3/15/25 exercise price $17.02, expiration date 3/15/25 3,240,000 2,822,849 ___________ 8,072,849 ___________ Computers & Technology - 2.22% Fairchild Semiconductor International 5.00% 11/1/08 exercise price $30.00, expiration date 11/1/08 2,500,000 2,475,000 Hutchinson Technology 3.25% 1/15/26 exercise price $36.43, expiration date 1/15/26 1,540,000 1,401,400 # Informatica 144A 3.00% 3/15/26 exercise price $20.00, expiration date 3/15/26 2,315,000 2,346,831 # Intel 144A 2.95% 12/15/35 exercise price $31.53, expiration date 12/15/35 1,140,000 943,350 ^# ON Semiconductor 144A 0.36% 4/15/24 exercise price $9.82, expiration date 4/15/24 3,500,000 2,957,499 SanDisk 1.00% 5/15/13 exercise price $82.36, expiration date 5/15/13 775,000 737,219 # Sybase 144A 1.75% 2/22/25 exercise price $25.22, expiration date 2/22/25 1,875,000 1,842,188 ___________ 12,703,487 ___________ Consumer Services - 0.34% Fluor 1.50% 2/15/24 exercise price $55.94, expiration date 2/15/24 1,200,000 1,921,500 ___________ 1,921,500 ___________ Electronics & Electrical Equipment - 0.44% Fisher Scientific 3.25% 3/1/24 exercise price $80.40, expiration date 3/1/24 1,500,000 1,698,750 Solectron 0.50% 2/15/34 exercise price $9.67, expiration date 2/15/34 1,100,000 825,000 ___________ 2,523,750 ___________ Energy - 1.14% Halliburton 3.125% 7/15/23 exercise price $37.65, expiration date 7/15/23 1,250,000 2,526,563 Pride International 3.25% 5/1/33 exercise price $25.70, expiration date 5/1/33 1,080,000 1,486,350 Schlumberger 2.125% 6/1/23 exercise price $40.00, expiration date 6/1/23 1,500,000 2,505,000 ___________ 6,517,913 ___________ (continues) 7 <page> Statement of net assets Delaware Dividend Income Fund Principal Market Amount Value (U.S. $) ________________________________________________________________________________ Convertible Bonds (continued) ________________________________________________________________________________ Healthcare & Pharmaceuticals - 1.98% # Allergan 144A 1.50% 4/1/26 exercise price $126.66, expiration date 4/1/26 $1,935,000 $ 1,840,668 # Amgen 144A 0.375% 2/1/13 exercise price $79.48, expiration date 2/1/13 775,000 744,000 CV Therapeutics 3.25% 8/16/13 exercise price $27.00, expiration date 8/16/13 530,000 487,600 Encysive Pharmaceuticals 2.50% 3/15/12 exercise price $13.95, expiration date 3/15/12 625,000 442,188 # Encysive Pharmaceuticals 144A 2.50% 3/15/12 exercise price $13.95, expiration date 3/15/12 2,000,000 1,415,000 # Nektar Therapeutics 144A 3.25% 9/28/12 exercise price $21.52, expiration date 9/28/12 1,525,000 1,725,156 Teva Pharmaceutical Finance 0.25% 2/1/26 exercise price $47.16, expiration date 2/1/26 1,535,000 1,500,463 ~ Wyeth 4.239% 1/15/24 exercise price $60.39, expiration date 1/15/24 3,000,000 3,138,899 ___________ 11,293,974 ___________ Leisure, Lodging & Entertainment - 0.08% # Regal Entertainment Group 144A 3.75% 5/15/08 exercise price $14.97, expiration date 5/15/08 350,000 453,250 ___________ 453,250 ___________ Real Estate - 0.11% MeriStar Hospitality 9.50% 4/1/10 exercise price $10.18, expiration date 4/1/10 600,000 639,750 ___________ 639,750 ___________ Retail - 1.27% { Dick's Sporting Goods 1.606% 2/18/24 exercise price $58.13, expiration date 2/18/24 1,480,000 1,117,400 ~ Lowe's 0.861% 10/19/21 exercise price $50.03, expiration date 10/19/21 1,250,000 1,362,500 # Saks 144A 2.00% 3/15/24 exercise price $14.92, expiration date 3/15/24 2,200,000 2,538,250 Sonic Automotive 5.25% 5/7/09 exercise price $46.87, expiration date 5/7/09 1,000,000 980,000 # United Auto Group 144A 3.50% 4/1/26 exercise price $23.69, expiration date 4/1/26 1,150,000 1,236,250 ___________ 7,234,400 ___________ Telecommunications - 0.18% Qwest Communications International 3.50% 11/15/25 exercise price $5.90, expiration date 11/15/25 750,000 1,020,938 ___________ 1,020,938 ___________ Transportation - 0.12% # ExpressJet Holdings 144A 4.25% 8/1/23 exercise price $18.20, expiration date 8/1/23 750,000 677,813 ___________ 677,813 ___________ Utilities - 0.28% CenterPoint Energy 3.75% 5/15/23 exercise price $11.44, expiration date 5/15/23 400,000 448,000 # CenterPoint Energy 144A 3.75% 5/15/23 exercise price $11.44, expiration date 5/15/23 1,030,000 1,153,600 ___________ 1,601,600 ___________ Total Convertible Bonds (cost $57,337,527) 59,071,881 ___________ Number of Shares ________________________________________________________________________________ Convertible Preferred Stock - 5.36% ________________________________________________________________________________ Automobiles & Automotive Parts - 0.10% Ford Motor Capital Trust II 6.50% exercise price $17.70, expiration date 1/15/32 20,500 594,910 ___________ 594,910 ___________ Banking, Finance & Insurance - 2.21% Aspen Insurance 5.625% exercise price $29.28, expiration date 12/31/49 37,800 1,823,850 Chubb 7.00% exercise price $35.70, expiration date 8/16/06 80,000 2,840,799 ~ Citigroup Funding 5.02% exercise price $29.50, expiration date 9/27/08 69,000 2,212,140 E Trade Group 6.125% exercise price $21.82, expiration date 11/18/08 37,500 1,181,250 Lehman Brothers Holdings 6.25% exercise price $54.24, expiration date 10/15/07 66,750 1,810,594 Merrill Lynch 6.75% exercise price $40.80, expiration date 10/15/07 70,000 2,780,750 ___________ 12,649,383 ___________ 8 <page> Number of Market Shares Value ________________________________________________________________________________ Convertible Preferred Stock (continued) ________________________________________________________________________________ Basic Materials - 0.38% Huntsman 5.00% exercise price $28.29, expiration date 2/16/08 52,500 $ 2,198,438 ___________ 2,198,438 ___________ Cable, Media & Publishing - 0.25% # Interpublic 5.25% 144A exercise price $13.66, expiration date 12/31/49 1,500 1,408,125 ___________ 1,408,125 ___________ Consumer Products - 0.40% Newell Financial Trust I 5.25% exercise price $50.69, expiration date 12/1/27 51,940 2,265,883 ___________ 2,265,883 ___________ Energy - 0.50% Chesapeake 4.50% exercise price $44.17, expiration date 12/31/49 17,075 1,592,244 El Paso Energy Capital Trust 4.75% exercise price $41.59, expiration date 3/31/28 34,600 1,259,440 ___________ 2,851,684 ___________ Food, Beverage & Tobacco - 0.38% Constellation Brands 5.75% exercise price $17.08, expiration date 9/1/06 59,200 2,146,000 ___________ 2,146,000 ___________ Telecommunications - 0.18% Lucent Technologies Capital Trust I 7.75% exercise price $4.84, expiration date 3/15/17 1,000 1,010,875 ___________ 1,010,875 ___________ Utilities - 0.96% ~ CenterPoint Energy 2.00% exercise price $17.09, expiration date 9/15/29 26,000 874,016 Entergy 7.625% exercise price $87.64, expiration date 2/17/09 37,500 1,889,063 NRG Energy 5.75% exercise price $60.45, expiration date 3/16/09 10,675 2,691,433 ___________ 5,454,512 ___________ Total Convertible Preferred Stock (cost $31,494,992) 30,579,810 ___________ ________________________________________________________________________________ Preferred Stock - 0.89% ________________________________________________________________________________ Leisure, Lodging & Entertainment - 0.11% Red Lion Hotels 9.50% 24,000 633,120 ___________ 633,120 ___________ Real Estate - 0.78% Equity Inns Series B 8.75% 18,300 474,885 LaSalle Hotel Properties 10.25% 36,500 945,533 Ramco-Gershenson Properties 9.50% 15,700 402,705 SL Green Realty 7.625% 103,000 2,623,286 ___________ 4,446,409 ___________ Total Preferred Stock (cost $5,107,104) 5,079,529 ___________ ________________________________________________________________________________ Exchange Traded Funds - 0.35% ________________________________________________________________________________ iShares Dow Jones U.S. Real Estate Index Fund 29,200 $2,006,332 ___________ Total Exchange Traded Funds (cost $1,550,582) 2,006,332 ___________ ________________________________________________________________________________ Warrants - 0.00% ________________________________________________________________________________ +# Solutia 144A, exercise price $7.59, expiration date 7/15/09 12 0 ___________ Total Warrants (cost $1,021) 0 ___________ Principal Amount (U.S. $) ________________________________________________________________________________ Commercial Mortgage-Backed Securities - 0.13% ________________________________________________________________________________ # First Union National Bank Commercial Mortgage Series 2001-C2 L 144A 6.46% 1/12/43 $750,000 745,343 Total Commercial Mortgage- Backed Securities (cost $761,221) 745,343 ________________________________________________________________________________ Repurchase Agreements - 5.43% ________________________________________________________________________________ With BNP Paribas 4.88% 6/1/06 (dated 5/31/06, to be repurchased at $19,518,646, collateralized by $7,290,000 U.S. Treasury Notes 2.375% due 8/31/06, market value $7,287,329, $5,650,000 U.S. Treasury Notes 2.75% due 7/31/06, market value $5,681,724, $4,325,000 U.S. Treasury Notes 2.875% due 11/30/06, market value $4,278,669 and $2,496,000 U.S. Treasury Notes 6.50% due 2/15/10, market value $2,670,800) 19,516,000 19,516,000 (continues) 9 <page> Statement of net assets Delaware Dividend Income Fund Principal Market Amount Value (U.S. $) ________________________________________________________________________________ Repurchase Agreements (continued) ________________________________________________________________________________ With Cantor Fitzgerald 4.88% 6/1/06 (dated 5/31/06, to be repurchased at $11,519,561, collateralized by $5,008,000 U.S. Treasury Notes 2.50% due 9/30/06, market value $4,989,967, $5,008,000 U.S. Treasury Notes 3.50% due 11/15/06, market value $4,983,898 and $1,696,000 U.S. Treasury Notes 6.00% due 8/15/09, market value $1,776,855) $11,518,000 $11,518,000 ___________ Total Repurchase Agreements (cost $31,034,000) 31,034,000 ___________ Total Market Value of Securities - 99.38% (cost $551,753,742) 567,471,933 Receivables and Other Assets Net of Liabilities - 0.62% 3,562,299 ___________ Net Assets Applicable to 50,194,765 Shares Outstanding - 100.00% 571,034,232 ___________ Net Asset Value - Delaware Dividend Income Fund Class A ($312,021,017 / 27,423,299 Shares) $11.38 _______ Net Asset Value - Delaware Dividend Income Fund Class B ($63,104,400 / 5,548,973 Shares) $11.37 _______ Net Asset Value - Delaware Dividend Income Fund Class C ($191,225,579 / 16,810,840 Shares) $11.38 _______ Net Asset Value - Delaware Dividend Income Fund Class R ($3,312,153 / 291,221 Shares) $11.37 _______ Net Asset Value - Delaware Dividend Income Fund Institutional Class ($1,371,083 / 120,432 Shares) $11.38 _______ ________________________________________________________________________________ Components of Net Assets at May 31, 2006: ________________________________________________________________________________ Shares of beneficial interest (unlimited authorization - no par) $566,535,857 Undistributed net investment income 2,270,316 Accumulated net realized loss on investments (13,490,132) Net unrealized appreciation of investments 15,718,191 __________ Total net assets $571,034,232 __________ } Security is currently in default. The issue has missed the maturity date. Bankruptcy proceedings are in process to determine distribution of assets. The date listed is the estimate of when proceedings will be finalized. + Non-income producing security for the period ended May 31, 2006. ++ Non-income producing security. Security is currently in default. ~ Variable rate security. The interest rate shown is the rate as of May 31, 2006. ^ Zero coupon security. The interest rate shown is the yield at the time of purchase. { Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective. # Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At May 31, 2006, the aggregate amount of Rule 144A securities equaled $55,637,738, which represented 9.74% of the Fund's net assets. See Note 8 in "Notes to Financial Statements." II Restricted Security. Investment in a security not registered under the Securities Act of 1933, as amended. This security has certain restrictions on resale which may limit its liquidity. At May 31, 2006, the aggregate amount of the restricted securities equals $2,669,215 or 0.47% of the Fund's net assets. See Note 8 in "Notes to Financial Statements." REIT - Real Estate Investment Trust Net Asset Value and Offering Price per Share - Delaware Dividend Income Fund Net asset value Class A (A) $11.38 Sales charge (5.75% of offering price) (B) 0.69 ______ Offering price $12.07 ______ (A) Net asset value per share, as illustrated, is the 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 10 <page> Statement of operations Delaware Dividend Income Fund Six Months Ended May 31, 2006 (Unaudited) Investment Income: Dividends $ 5,364,012 Interest 6,880,270 $ 12,244,282 ___________ ____________ Expenses: Management fees 1,752,052 Distribution expenses - Class A 447,487 Distribution expenses - Class B 302,769 Distribution expenses - Class C 890,303 Distribution expenses - Class R 8,913 Dividend disbursing and transfer agent fees and expenses 456,093 Accounting and administration expenses 108,494 Registration fees 61,623 Legal and professional fees 42,489 Reports and statements to shareholders 39,469 Trustees' fees 16,794 Custodian fees 9,356 Insurance fees 5,177 Pricing fees 3,521 Taxes (other than taxes on income) 3,451 Other 13,004 4,160,995 ___________ Less expenses absorbed or waived (476,839) Less waiver of distribution expenses - Class A (74,581) Less waiver of distribution expenses - Class R (1,485) Less expense paid indirectly (2,931) ____________ Total expenses 3,605,159 ____________ 8,639,123 ____________ Net Investment Income Net Realized and Unrealized Gain on Investments: Net realized gain on investments 6,382,994 ____________ Net change in unrealized appreciation/depreciation of investments 10,695,192 ____________ Net Realized and Unrealized Gain on Investments 17,078,186 ____________ Net Increase in Net Assets Resulting from Operations $ 25,717,309 ____________ See accompanying notes 11 <page> Statements of changes in net assets Delaware Dividend Income Fund Six Months Ended Year 11/30/05 Ended (Unaudited) 11/30/05 Increase (Decrease) in Net Assets from Operations: Net investment income $ 8,639,123 $ 13,476,249 Net realized gain on investments and foreign currencies 6,382,994 4,692,803 Net change in unrealized appreciation/depreciation of investments 10,695,192 (2,561,963) Cost of shares repurchased: _____________ ______________ Net increase in net assets resulting from operations 25,717,309 15,607,089 Cost of shares repurchased: _____________ ______________ Dividends and Distributions to Shareholders from: Net investment income: Class A (6,756,898) (6,111,307) Class B (1,148,073) (1,112,078) Class C (3,337,660) (3,064,142) Class R (45,856) (21,534) Institutional Class (23,768) (12,391) Net realized gain on investments: Class A (1,682,444) (829,375) Class B (342,773) (249,797) Class C (981,242) (644,998) Class R (8,517) (2,737) Institutional Class (5,576) (1,641) Cost of shares repurchased: _____________ ______________ (14,332,807) (12,050,000) Cost of shares repurchased: _____________ ______________ Capital Share Transactions: Proceeds from shares sold: Class A 54,265,369 155,512,307 Class B 9,440,356 30,360,760 Class C 38,404,881 95,529,471 Class R 1,936,632 1,064,376 Institutional Class 470,956 919,948 Net asset value of shares issued upon reinvestment of dividends and distributions: Class A 6,168,929 5,175,642 Class B 1,233,465 1,092,408 Class C 3,569,836 2,975,103 Class R 54,372 24,272 Institutional Class 27,539 11,878 Net assets from reorganization (1): - 85,145,873 Cost of shares repurchased: _____________ ______________ Class A 115,572,335 377,812,038 Cost of shares repurchased: _____________ ______________ Class A (39,858,214) (68,079,584) Class B (6,759,833) (6,143,372) Class C (20,109,840) (15,879,276) Class R (200,685) (49,450) Institutional Class (89,709) (98,155) Cost of shares repurchased: _____________ ______________ (67,018,281) (90,249,837) Cost of shares repurchased: _____________ ______________ Increase in net assets derived from capital share transactions 48,554,054 287,562,201 Cost of shares repurchased: _____________ ______________ Net Increase in Net Assets 59,938,556 291,119,290 Net Assets: Beginning of period 511,095,676 219,976,386 Cost of shares repurchased: _____________ ______________ End of period (including undistributed net investment income of $2,270,316 and 4,815,839, respectively) $ 571,034,232 $ 511,095,676 Cost of shares repurchased: _____________ ______________ (1)See Note 6 in "Notes to Financial Statements." See accompanying notes 12 <page> Financial highlights Delaware Dividend Income Fund Class A Selected data for each share of the Fund outstanding throughout each period were as follows: Six Months Year Ended Ended ____________________________________________________________ 5/31/06(1) 11/30/05 11/30/04 11/30/03 11/30/02 11/30/01(2) (Unaudited) ____________________________________________________________________________________________________________________________________ Net asset value, beginning of period $ 11.140 $ 11.050 $ 10.210 $ 9.030 $ 9.230 $ 9.600 Income (loss) from investment operations: Net investment income (3) 0.199 0.450 0.345 0.450 0.429 0.405 Net realized and unrealized gain (loss) on investments and foreign currencies 0.368 0.081 0.891 1.213 (0.196) (0.041) ________ ________ ________ _______ _______ ________ Total from investment operations 0.567 0.531 1.236 1.663 0.233 0.364 ________ ________ ________ _______ _______ ________ Less dividends and distributions from: Net investment income (0.261) (0.360) (0.362) (0.483) (10.433) (0.400) Net realized gain on investments (0.066) (0.081) (0.034) - - (0.334) ________ ________ ________ _______ _______ ________ Total dividends and distributions (0.327) (0.441) (0.396 (0.483) (0.433) (0.734) ________ ________ ________ _______ _______ ________ Net asset value, end of period $ 11.380 $ 11.140 $ 11.050 $ 0.210 $ 9.030 $ 9.230 ________ ________ ________ _______ _______ ________ Total return (4) 5.17% 4.89% 12.38% 19.45% 2.58% 3.87% Ratios and supplemental data: Net assets, end of period (000 omitted) $312,021 $285,159 $105,253 $ 5,821 $ 1 $ - Ratio of expenses to average net assets 1.00% 1.00% 1.00% 0.79% 0.75% 0.75% Ratio of expenses to average net assets prior to expense limitation and expense paid indirectly 1.22% 1.27% 1.32% 2.05% 1.30% 1.05% Ratio of net investment income to average net assets 3.52% 4.05% 3.26% 4.69% 4.71% 4.38% Ratio of net investment income to average net assets prior to expense limitation and expense paid indirectly 3.30% 3.78% 2.94% 3.43% 4.16% 4.08% Portfolio turnover 53% 85% 95% 212% 188% 89% ____________________________________________________________________________________________________________________________________ (1) Ratios and portfolio turnover have been annualized and total return has not been annualized. (2) As required, effective December 1, 2001, the Portfolio adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies that require 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 distributor. Performance would have been lower had the expense limitation not been in effect. See accompanying notes (continues) 13 <page> Financial highlights Delaware Dividend Income Fund Class B Selected data for each share of the Fund outstanding throughout each period were as follows: Six Months Year Ended 11/1/03(2) Ended _____________________ to 5/31/06(1) 11/30/05 11/30/04 11/30/03 (Unaudited) _________________________________________________________________________________________________________________________________ Net asset value, beginning of period $ 11.130 $ 11.040 $ 10.200 $ 9.950 Income from investment operations: Net investment income (3) 0.156 0.367 0.267 0.051 Net realized and unrealized gain on investments and foreign currencies 0.369 0.079 0.889 0.199 ________ ________ ________ _______ Total from investment operations 0.525 0.446 1.156 0.250 ________ ________ ________ _______ Less dividends and distributions from: Net investment income (0.219) (0.275) (0.282) - Net realized gain on investments (0.066) (0.081) (0.034) - ________ ________ ________ _______ Total dividends and distributions (0.285) (0.356) (0.316) - ________ ________ ________ _______ Net asset value, end of period $ 11.370 $ 11.130 $ 11.040 $10.200 ________ ________ ________ _______ Total return (4) 4.78% 4.09% 11.54% 2.51% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 63,104 $ 57,904 $ 32,165 $ 2,125 Ratio of expenses to average net assets 1.75% 1.75% 1.75% 1.75% Ratio of expenses to average net assets prior to expense limitation and expense paid indirectly 1.92% 1.97% 2.02% 4.10% Ratio of net investment income to average net assets 2.77% 3.30% 2.51% 3.65% Ratio of net investment income to average net assets prior to expense limitation and expense paid indirectly 2.60% 3.08% 2.25% 1.30% Portfolio turnover 53% 85% 95% 212% _________________________________________________________________________________________________________________________________ (1) Ratios and portfolio turnover have been annualized and total return has not been annualized. (2) Date of commencement of operations; ratios 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. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 14 <page> Delaware Dividend Income Fund Class C Selected data for each share of the Fund outstanding throughout each period were as follows: Six Months Year Ended 11/1/03(2) Ended _____________________ to 5/31/06(1) 11/30/05 11/30/04 11/30/03 (Unaudited) _________________________________________________________________________________________________________________________________ Net asset value, beginning of period $ 11.130 $ 11.040 $ 10.200 $ 9.950 Income from investment operations: Net investment income (3) 0.156 0.367 0.267 0.051 Net realized and unrealized gain on investments and foreign currencies 0.379 0.079 0.889 0.199 ________ ________ ________ _______ Total from investment operations 0.535 0.446 1.156 0.250 ________ ________ ________ _______ Less dividends and distributions from: Net investment income (0.219) (0.275) (0.282) - Net realized gain on investments (0.066) (0.081) (0.034) - ________ ________ ________ _______ Total dividends and distributions (0.285) (0.356) (0.316) - ________ ________ ________ _______ Net asset value, end of period $ 11.380 $ 11.130 $ 11.040 $10.200 ________ ________ ________ _______ Total return (4) 4.87% 4.09% 11.53% 2.51% Ratios and supplemental data: Net assets, end of period (000 omitted) $191,226 $165,663 $ 82,083 $ 4,341 Ratio of expenses to average net assets 1.75% 1.75% 1.75% 1.75% Ratio of expenses to average net assets prior to expense limitation and expense paid indirectly 1.92% 1.97% 2.02% 4.10% Ratio of net investment income to average net assets 2.77% 3.30% 2.52% 3.65% Ratio of net investment income to average net assets prior to expense limitation and expense paid indirectly 2.60% 3.08% 2.25% 1.30% Portfolio turnover 53% 85% 95% 212% _________________________________________________________________________________________________________________________________ (1) Ratios and portfolio turnover have been annualized and total return has not been annualized. (2) Date of commencement of operations; ratios 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. Performance would have been lower had the expense limitation not been in effect. See accompanying notes (continues) 15 <page> Financial Highlights Delaware Dividend Income Fund Class R Selected data for each share of the Fund outstanding throughout each period were as follows: Six Months Year Ended 11/1/03(2) Ended _____________________ to 5/31/06(1) 11/30/05 11/30/04 11/30/03 (Unaudited) _________________________________________________________________________________________________________________________________ Net asset value, beginning of period $ 11.130 $ 11.040 $ 10.220 $ 9.950 Income from investment operations: Net investment income (3) 0.185 0.416 0.308 0.056 Net realized and unrealized gain on investments and foreign currencies 0.369 0.078 0.879 0.214 ________ ________ ________ _______ Total from investment operations 0.554 0.494 1.187 0.270 ________ ________ ________ _______ Less dividends and distributions from: Net investment income (0.248) (0.323) (0.333) - Net realized gain on investments (0.066) (0.081) (0.034) - ________ ________ ________ _______ Total dividends and distributions (0.314) (0.404) (0.367) - ________ ________ ________ _______ Net asset value, end of period $ 11.370 $ 11.130 $ 11.040 $10.220 ________ ________ ________ _______ Total return (4) 5.05% 4.55% 11.86% 2.71% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 3,312 $ 1,429 $ 373 $ 3 Ratio of expenses to average net assets 1.25% 1.30% 1.35% 1.35% Ratio of expenses to average net assets prior to expense limitation and expense paid indirectly 1.52% 1.57% 1.62% 3.70% Ratio of net investment income to average net assets 3.27% 3.75% 2.89% 4.05% Ratio of net investment income to average net assets prior to expense limitation and expense paid indirectly 3.00% 3.48% 2.62% 1.70% Portfolio turnover 53% 85% 95% 212% _________________________________________________________________________________________________________________________________ (1) Ratios and portfolio turnover have been annualized and total return has not been annualized. (2) Date of commencement of operations; ratios 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 and distributor. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 16 <page> Delaware Dividend Income Fund Institutional Class Selected data for each share of the Fund outstanding throughout each period were as follows: Six Months Year Ended Ended ____________________________________________________________ 5/31/06(1) 11/30/05 11/30/04 11/30/03 11/30/02 11/30/01(2) (Unaudited) ____________________________________________________________________________________________________________________________________ Net asset value, beginning of period $ 11.140 $ 11.050 $ 10.220 $ 9.030 $ 9.230 $ 9.600 Income (loss) from investment operations: Net investment income (3) 0.213 0.477 0.371 0.453 0.429 0.405 Net realized and unrealized gain (loss) on investments and foreign currencies 0.368 0.082 0.882 1.220 (0.196) (0.041) _______ _______ _______ _______ _______ ________ Total from investment operations 0.581 0.559 1.253 1.673 0.233 0.364 _______ _______ _______ _______ _______ ________ Less dividends and distributions from: Net investment income (0.275) (0.388) (0.389) (0.483) (0.433) (0.400) Net realized gain on investments (0.066) (0.081) (0.034) - - (0.334) _______ _______ _______ _______ _______ ________ Total dividends and distributions (0.341) (0.469) (0.423) (0.483) (0.433) (0.734) _______ _______ _______ _______ _______ ________ Net asset value, end of period $ 11.380 $ 11.140 $ 11.050 $ 10.220 $ 9.030 $ 9.230 _______ _______ _______ _______ _______ ________ Total return (4) 5.30% 5.16% 12.55% 19.56% 2.58% 3.87% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 1,371 $ 941 $ 102 $ 3,879 $ 3,233 $ 3,265 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 expense paid indirectly 0.92% 0.97% 1.02% 1.75% 1.00% 0.75% Ratio of net investment income to average net assets 3.77% 4.30% 3.49% 4.73% 4.71% 4.38% Ratio of net investment income to average net assets prior to expense limitation and expense paid indirectly 3.60% 4.08% 3.22% 3.73% 4.46% 4.38% Portfolio turnover 53% 85% 95% 212% 188% 89% ____________________________________________________________________________________________________________________________________ (1) Ratios and portfolio turnover have been annualized and total return has not been annualized. (2) As required, effective December 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies that require 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, as applicable. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 17 <page> Notes to financial statements Delaware Dividend Income Fund May 31, 2006 (Unaudited) Delaware Group Equity Funds V (the "Trust") is organized as a Delaware statutory trust and offers three series: Delaware Dividend Income Fund, Delaware Small Cap Core Fund, and Delaware Small Cap Value Fund. These financial statements and the related notes pertain to Delaware Dividend Income 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 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. The investment objective of the Fund is to seek to provide high current income and the potential for capital appreciation. 1. Significant Accounting Policies The following accounting policies are in accordance with U.S. generally accepted accounting principles and are consistently followed by the Fund. Security Valuation - Equity securities, except those traded on the Nasdaq Stock Market, Inc. (Nasdaq), 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. Securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If on a particular day an equity security does not trade, then the mean between the 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). 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 investin a pooled cash account along with other members of the Delaware Investments (R) Family of Funds pursuant to an exemptive order issued by the Securities and Exchange Commission. 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 U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 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. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. 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. Distributions received from investments in Real Estate Investment Trusts are recorded as dividend income on ex-dividend date, subject to reclassification upon notice of character of such distributions by the issuer. Discounts and premiums are amortized to interest income over the lives of the respective securities. The Fund declares and pays dividends from net investment income quarterly and distributions from net realized gain on investments, if any, annually. Subject to seeking best execution, the Fund may direct certain security trades to brokers who have agreed to rebate a portion of the related brokerage commission to the Fund in cash. Such commission rebates are included in realized gain on securities in the accompanying financial statements and totaled $11,142 for the six months ended May 31, 2006. In general, best execution refers to many factors, including the price paid or received for a security, the commission charged, the promptness and reliability of execution, the confidentiality and placement accorded the order, and other factors affecting the overall benefit obtained by the Fund on the transaction. The Fund receives earnings credits from its custodian when positive cash balances are maintained, which are used to offset custody fees. The expense paid under the above arrangement is included in custodian fees on the Statement of Operations with the corresponding expense offset shown as "expense 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), 18 <page> a series of Delaware Management Business Trust and the investment manager, an annual fee which is calculated daily at a rate of 0.65% on the first $500 million of average daily net assets of the Fund, 0.60% on the next $500 million, 0.55% on the next $1.5 billion, and 0.50% on daily average net assets in excess of $2.5 billion. DMC has contractually agreed to waive that portion, if any, of its management fee and reimburse the Fund to the extent necessary to ensure that annual operating expenses, exclusive of taxes, interest, brokerage commissions, distribution fees, certain insurance costs and extraordinary expenses, do not exceed 0.75% of average daily net assets through March 31, 2007. Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting, administration, dividend disbursing and transfer agent services. The Fund pays DSC a monthly fee computed at the annual rate of 0.04% of the Fund's average daily net assets for accounting and administration services. The Fund pays DSC a monthly fee based on the number of shareholder accounts for dividend disbursing and transfer agent services. 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 distribution and service 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 contracted to waive distribution and service fees through March 31, 2007 in order to prevent distribution and service fees of Class A and class R shares from exceeding 0.25% and 0.50%, repectively, of average daily net assets. Institutional Class shares pay no distribution and service expenses. At May 31, 2006, the Fund had liabilities payable to affiliates as follows: Investment management fee payable to DMC $224,844 Dividend disbursing, transfer agent fees, accounting and administration fees and other expenses payable to DSC 98,474 Distribution fee payable to DDLP 283,413 Other expenses payable to DMC and affiliates* 38,471 * DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, fees for audit, legal and tax services, registration fees and trustees' fees. As provided in the investment management agreement, the Fund bears the cost of certain legal services expenses, including in-house legal services provided to the Fund by DMC employees. For the six months ended May 31, 2006, the Fund was charged $9,409 for internal legal services provided by DMC. For the six months ended May 31, 2006, DDLP earned $165,319 for commissions on sales of the Fund's Class A shares. For the six months ended May 31, 2006, DDLP received gross contingent deferred sales charge commissions of $90, $61,838, and $13,186 on redemption of the Fund's Class A, Class B, and Class C shares, respectively, and these commissions were entirely used to offset up-front commissions previously paid by DDLP to broker-dealers on sales of those 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. 3. Investments For the six months ended May 31, 2006, the Fund made purchases of $173,348,755 and sales of $135,814,981 of investment securities other than short-term investments. At May 31, 2006, 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, 2006, the cost of investments was $553,053,658. At May 31, 2006, the net unrealized appreciation was $14,418,275 of which $33,344,897 related to unrealized appreciation of investments and $18,926,622 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 U.S. generally accepted accounting principles. Additionally, gains (losses) on foreign currency transactions and net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the six months ended May 31, 2006 and the year ended November 30, 2005 was as follows: Six Months Year Ended Ended 5/31/06* 11/30/05 ___________ ___________ Ordinary income $12,517,917 $11,900,620 Long-term capital gain 1,814,890 149,380 ___________ ___________ Total $14,332,807 $12,050,000 ___________ ___________ *Tax information for the period ended May 31, 2006 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, 2006, the estimated components of net assets on a tax basis were as follows: Shares of beneficial interest $566,535,857 Undistributed ordinary income 3,003,161 Capital loss carryforwards (18,732,090) Six month period realized gains 5,809,029 Unrealized appreciation of investments 14,418,275 ____________ Net assets $571,034,232 ____________ The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales, tax treatment of market discount and premium on debt instruments, tax treatment of contingent payment debt instruments, and estimates of tax character of distributions from Real Estate Investment Trusts. The undistributed earnings for Delaware Dividend Income Fund may be subject to reclassification upon notice of the character of distributions received from investments in Real Estate Investment Trusts. (continues) 19 <page> Notes to financial statements Delaware Dividend Income Fund May 31, 2006 (Unaudited) 4. Dividend and Distribution Information (continued) For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of market discount and premium on certain debt instruments and contingent payment debt instruments, gain (loss) on foreign currency transactions and limitations on capital loss carryforwards due to the reorganization. Results of operations and net assets were not affected by these reclassifications. For the six months ended May 31, 2006, the Fund recorded an estimate of these differences since the final tax characteristics cannot be determined until fiscal year end. Undistributed net investment income $(419,736) Accumulated net realized gain 419,736 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: $10,667,646 expires in 2009 and $8,064,444 expires in 2010. The use of these losses are subject to an annual limitation in accordance with the Internal Revenue Code. 5. Capital Shares Transactions in capital shares were as follows: Six Months Year Ended Ended 5/31/06 11/30/05 ___________ ___________ Shares sold: Class A 4,786,446 14,033,811 Class B 832,679 2,744,286 Class C 3,384,302 8,613,965 Class R 175,724 96,885 Institutional Class 41,433 83,093 Shares issued upon reinvestment of dividends and distributions: Class A 553,632 467,873 Class B 110,755 98,641 Class C 320,366 268,682 Class R 4,850 2,197 Institutional Class 2,471 1,076 Shares issued from reorganization (1): - 7,705,509 ___________ ___________ 10,212,658 34,116,018 ___________ ___________ Shares repurchased: Class A (3,524,210) (6,128,075) Class B (596,688) (554,170) Class C (1,774,120) (1,436,755) Class R (17,733) (4,499) Institutional Class (7,960) (8,958) ___________ ___________ (5,920,711) (8,132,457) ___________ ___________ Net increase 4,291,947 25,983,561 ___________ ___________ (1)See Note 6. For the six months ended May 31, 2006 and the year ended November 30, 2005, 50,487 Class B shares were converted to 50,443 Class A shares valued at $575,838 and 69,809 Class B shares were converted to 69,746 Class A shares valued at $779,637, respectively. The respective amounts are included in Class B redemptions and Class A subscriptions in the table above and in the Statements of Changes in Net Assets. 6. Fund Reorganization On June 24, 2005, the Fund completed the acquisition of the net assets of Lincoln National Convertible Securities Fund, Inc. ("LNV Fund") pursuant to a plan of reorganization approved by the shareholders of LNV Fund at a reconvened Special Meeting of Shareholders held on June 16, 2005. The transaction, which is structured as a tax-free reorganization, entailed (i) the acquisition of all of the assets of LNV Fund by Delaware Dividend Income Fund in exchange for Class A shares of Delaware Dividend Income Fund and (ii) the pro rata distribution of such shares to LNV Fund's shareholders in exchange for their shares of LNV Fund. LNV Fund was a closed-end, diversified investment management company managed by Delaware Management Company. Delaware Management Company is a series of Delaware Management Business Trust, a subsidiary of Lincoln National Corporation. The net assets, net unrealized depreciation and accumulated realized losses of LNV Fund as of the close of business on June 24, 2005 were as follows: Net Unrealized Accumulated Net Assets Depreciation Net Realized Loss ____________ _______________ _________________ Lincoln National Convertible Securities Fund $85,145,873 $(100,624) $(25,487,586) The net assets of the Fund prior to the reorganization were $369,303,593. 7. Line of Credit The Fund, along with certain other funds in the Delaware Investments (R) Family of Funds (the "Participants"), participates in a $225,000,000 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, 2006, or at any time during the period. 8. Credit and Market Risks The Fund may invest up to 15% of its total 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 the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Fund's Board of Trustees has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund's limitation on investments in 20 <page> illiquid assets. At May 31, 2006, no securities have been determined to be illiquid under the Fund's Liquidity Procedures. Rule 144A securities have been identified on the Statement of Net Assets. The Fund invests a portion of its assets in high yield fixed income securities, which carry ratings of BBB or lower by Standard & Poor's Ratings Group and/or Baa or lower by Moody's Investor Services, Inc. Investments in these higher-yielding securities are generally accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment grade securities. The Fund invests in real estate investment trusts (REITs) and is subject to some of the risks associated with that industry. If the Fund holds real estate directly as a result of defaults or receives rental income directly from real estate holdings, its tax status as a regulated investment company may be jeopardized. There were no direct holdings during the six months ended May 31, 2006. The Fund's REIT holdings are also affected by interest rate changes, particularly if the REITs it holds use floating rate debt to finance ongoing operations. 9. Contractual Obligations The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund's existing contracts and expects the risk of loss to be remote. 21 <page> Other Fund information Delaware Dividend Income Fund Board Consideration of Delaware Dividend Income Fund Investment Advisory Agreement At a meeting held on May 17-18, 2006 (the "Annual Meeting"), the Board of Trustees, including a majority of disinterested or independent Trustees, approved the renewal of the Investment Advisory Agreement for the Delaware Dividend Income Fund (the "Fund"). In making its decision, the Board considered information furnished throughout the year at regular Board meetings, as well as information prepared specifically in connection with the Annual Meeting. Information furnished and discussed throughout the year included reports detailing Fund performance, investment strategies, expenses, compliance matters and other services provided by Delaware Management Company ("DMC"), the investment advisor. Information furnished specifically in connection with the Annual Meeting included materials provided by DMC and its affiliates ("Delaware Investments") concerning, among other things, the level of services provided to the Fund, the costs of such services to the Fund, economies of scale and the financial condition and profitability of Delaware Investments. In addition, in connection with the Annual Meeting, the Board considered independent historical and comparative reports prepared by Lipper Inc. ("Lipper"), an independent statistical compilation organization. The Board also considered industry comparative information presented by representatives from Lipper. The Lipper reports compared the Fund's investment performance and expenses with those of other comparable mutual funds. The Board also received certain supplemental information regarding management's policy with respect to advisory fee levels and its philosophy with respect to breakpoints; the structure of portfolio manager compensation; and any constraints or limitations on the availability of securities in certain investment styles which might inhibit DMC's ability to fully invest in accordance with Fund policies. In considering such materials, the independent Trustees received assistance and advice from and met separately with independent counsel and representatives from Lipper. At the meeting with representatives from Lipper, Mr. Driscoll, Chairman of the Delaware Investments (R) Family of Funds, and Chairman and Chief Executive Officer of the investment advisor, was present to respond to questions by Lipper and the independent Trustees. While the Board considered the Investment Advisory Agreements for all of the funds in the Delaware Investments Family of Funds at the same Board meeting, information was provided and considered by the Board for each fund individually. In approving the continuance of the Investment Advisory Agreement for the Fund, the Board, including a majority of independent Trustees, determined that the existing advisory fee structure was fair and reasonable and that the continuance of the Investment Advisory Agreement was in the best interests of the Fund and its shareholders. While attention was given to all information furnished, the following discusses the primary factors relevant to the Board's deliberations and determination, including those relating to the selection of the investment advisor and the approval of the advisory fee. Nature, Extent And Quality of Service. Consideration was given to the services provided by Delaware Investments to the Fund and its shareholders. In reviewing the nature, extent and quality of services, the Board emphasized reports furnished to it throughout the year at regular Board meetings covering matters such as the relative performance of the Fund, compliance of portfolio managers with the investment policies, strategies and restrictions for the Fund, the compliance of management personnel with the Code of Ethics adopted throughout the Delaware Investments Family of Funds complex, the adherence to fair value pricing procedures as established by the Board, and the accuracy of net asset value calculations. The Board noted that it was pleased with the current staffing of the Fund's investment advisor and management's efforts to strengthen and deepen portfolio management teams during the past year, the emphasis on research and the compensation system for advisory personnel. Favorable consideration was given to DMC's efforts to maintain, and in some instances increase, financial and human resources committed to fund matters. Other factors taken into account by the Board were Delaware Investments' preparedness for, and response to, legal and regulatory matters. The Board also considered the transfer agent and shareholder services provided to Fund shareholders by Delaware Investments' affiliate, Delaware Service Company, Inc., noting DSC's commitment to maintain a high level of service in keeping with its past receipt of the DALBAR Pyramid Award, and the continuing expenditures by Delaware Investments to improve the delivery of shareholder services. Additionally, the Board noted the extent of benefits provided to Fund shareholders for being part of the Delaware Investments Family of Funds, including the privilege to exchange investments between the same class of shares of funds without a sales charge, the ability to reinvest Fund dividends into other funds and the privilege to combine holdings in other funds to obtain a reduced sales charge. The Board was satisfied with the nature, extent and quality of the overall services provided by Delaware Investments. Investment Performance. The Board considered the investment performance of DMC and the Fund. The Board was pleased with DMC's investment performance. The Board placed significant emphasis on the investment performance of the Fund in view of its importance to shareholders. While consideration was given to performance reports and discussions with portfolio managers at Board meetings throughout the year, particular weight was given to the Lipper reports furnished for the Annual Meeting. The Lipper reports prepared for the Fund showed the investment performance of its Class A shares in comparison to a group of similar funds as selected by Lipper (the "Performance Universe"). A fund with the best performance is ranked first, and a fund with the poorest performance is ranked last. The highest/best performing 25% of funds in the Performance Universe make up the first quartile; the next 25% - the second quartile; the next 25% - the third quartile; and the poorest/worst performing 25% of funds in the Performance Universe make up the fourth quartile. Comparative annualized performance for the Fund was shown for the past one, three and five year periods ended January 31, 2006. The Board noted its objective that the Fund's performance be at or above the median of its Performance Universe. The following paragraph summarizes the performance results for the Fund and the Board's view of such performance. The Performance Universe for the Fund consisted of the Fund and all retail and institutional income funds as selected by Lipper. The Lipper report comparison showed that the Fund's total return for the one and five year periods was in the first quartile of such Performance Universe. The report further showed that the Fund's total return for the three year period was in the second quartile. The Board was satisfied with such performance. 22 <page> Board Consideration of Delaware Dividend Income Fund Investment Advisory Agreement (continued) Comparative Expenses. The Board considered expense data for the Delaware Investments (R) Family of Funds. Management provided the Board with information on pricing levels and fee structures for the Funds. The Board focused particularly on the comparative analysis of the management fees and total expense ratios of the Fund and the management fees and expense ratios of a group of similar funds as selected by Lipper (the "Expense Group"). In reviewing comparative costs, the Fund's contractual management fee and the actual management fee incurred by the Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund) of other funds within the Expense Group, taking into effect any applicable breakpoints and fee waivers. The Fund's total expenses were also compared with those of its Expense Group. The Lipper total expenses, for comparative consistency, were shown by Lipper for Class A shares and compared total expenses including 12b-1 and non-12b-1 service fees. The Board also considered fees paid to Delaware Investments for non-management services. The Board noted its objective to limit the Fund's total expense ratio to an acceptable range as compared to the median of the Expense Group. The following paragraph summarizes the expense results for the Fund and the Board's view of such expenses. The expense comparisons for the Fund showed that its actual management fee and total expenses were in the quartile with the lowest expenses of its Expense Group. The Board was satisfied with the management fees and total expenses of the Fund in comparison to its Expense Group as shown in the Lipper report. Management Profitability. The Board considered the level of profits, if any, realized by Delaware Investments in connection with the operation of the Fund. In this respect, the Board reviewed the Investment Management Profitability Analysis that addressed the overall profitability of Delaware Investments' business in providing management and other services to each of the individual funds and the Delaware Investments (R) Family of Funds as a whole. Specific attention was given to the methodology followed in allocating costs for the purpose of determining profitability. Management stated that the level of profits of Delaware Investments, to a certain extent, reflected operational cost savings and efficiencies initiated by Delaware Investments. The Board considered Delaware Investments' expenditures to improve services provided to fund shareholders and to meet additional regulatory and compliance requirements resulting from recent SEC initiatives. The Board also considered the extent to which Delaware Investments might derive ancillary benefits from fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its role as service provider to the Delaware Investments Family of Funds, the benefits from allocation of fund brokerage to improve trading efficiencies and the use of "soft" commission dollars to pay for proprietary and non-proprietary research. The Board did not find that the level of profits realized by Delaware Investments from the relationships with the Fund and the Delaware Investments Family of Funds required negotiation of reduction of fees. Economies of Scale. The Trustees considered whether economies of scale are realized by Delaware Investments as the Fund's assets increase and the extent to which any economies of scale are reflected in the level of management fees charged. The Trustees took into account the standardized advisory fee pricing and structure approved by the Board and shareholders as part of a complex-wide shareholder meeting conducted in 1998/1999. At that time, Delaware Investments introduced breakpoints to account for management economies of scale. The Board noted that the fee under the Fund's management contract fell within the standard structure. The Board also noted that the Fund's assets exceeded the first breakpoint level. The Board believed that, given the extent to which economies of scale might be realized by the advisor and its affiliates, the schedule of fees under the Investment Advisory Agreement provides a sharing of benefits with the Fund and its shareholders. 23 <page> About the organization This semiannual report is for the information of Delaware Dividend Income Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Dividend Income Fund and the Delaware Investments (R) 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 that 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 Jude T. Driscoll Chairman Delaware Investments Family of Funds Philadelphia, PA Thomas L. Bennett Private Investor Rosemont, PA John A. Fry President Franklin & Marshall College Lancaster, PA Anthony D. Knerr Founder and Managing Director Anthony Knerr & Associates New York, NY Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. Philadelphia, PA Ann R. Leven Owner - ARL Associates, Financial and Strategic Consultants Washington, DC Thomas F. Madison President and Chief Executive Officer MLM Partners, Inc. Minneapolis, MN Janet L. Yeomans Vice President and Treasurer 3M Corporation St. Paul, MN J. Richard Zecher Founder Investor Analytics Scottsdale, AZ Affiliated Officers Michael P. Bishof Senior Vice President and Chief Financial Officer Delaware Investments Family of Funds Philadelphia, PA David F. Connor Vice President, Deputy General Counsel, and Secretary Delaware Investments Family of Funds Philadelphia, PA David P. O'Connor Senior Vice President, General Counsel, and Chief Legal Officer Delaware Investments Family of Funds Philadelphia, PA John J. O'Connor Senior Vice President and Treasurer Delaware Investments Family of Funds Philadelphia, PA Contact Information Investment Manager Delaware Management Company, a series of Delaware Management Business Trust Philadelphia, PA National Distributor Delaware Distributors, L.P. Philadelphia, PA Shareholder Servicing, Dividend Disbursing, and Transfer Agent Delaware Service Company, Inc. 2005 Market Street Philadelphia, PA 19103-7094 For Shareholders 800 523-1918 For Securities Dealers and Financial Institutions Representatives Only 800 362-7500 Web Site www.delawareinvestments.com Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q, as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 800 523-1918; (ii) on the Fund's Web site at http://www.delawareinvestments.com; and (iii) on the Commission's Web site at http://www.sec.gov. The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330. Information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Fund's Web site at http://www.delawareinvestments.com; and (ii) on the Commission's Web site at http://www.sec.gov. 24 <page> Get shareholder reports and prospectuses online instead of in the mail. > Visit www.delawareinvestments.com/edelivery <page> Simplify your life. Manage your investments online! Get Account Access, the Delaware Investments (R) secure Web site that allows you to conduct your business online. Gain 24-hour access to your account and one of the highest levels of Web security available. You also get: o Hassle-free investing - Make online purchases and redemptions at any time. o Simplified tax processing - Automatically retrieve your Delaware Investments accounts' 1099 information and import it directly into your 1040 tax return. Available only with Turbo Tax (R) Online (SM) and Desktop software - www.turbotax.com. o Less mail clutter - Get instant access to your fund materials online with Delaware eDelivery. Register for Account Access today! Visit www.delawareinvestments.com, select Individual Investors, and click Account Access. Please call our shareholder service center at 800 523-1918 Monday through Friday from 8:00 a.m. to 7:00 p.m., Eastern Time, for assistance with any questions. [DELAWARE LOGO] (571) Printed in the USA SA-129 [5/06] CGI 7/06 MF-06-06-042 P011110 <page> Semiannual Report Delaware Small Cap Core Fund May 31, 2006 Core equity mutual funds [Delaware Logo] [LOGO] POWERED BY RESEARCH (R) <page> Table of contents > Disclosure of Fund expenses.............................................1 > Sector allocation.......................................................2 > Statement of net assets.................................................3 > Statement of operations.................................................6 > Statements of changes in net assets.....................................7 > Financial highlights....................................................8 > Notes to financial statements..........................................12 > Other Fund information.................................................15 > About the organization.................................................17 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)2006 Delaware Distributors, L.P. <page> Disclosure of Fund expenses For the period December 1, 2005 to May 31, 2006 As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period December 1, 2005 to May 31, 2006. Actual Expenses The first section of the table shown, "Actual Fund Return," provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The second section of the table shown, "Hypothetical 5% Return," provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund's actual expenses shown in the table reflect fee waivers in effect. The expenses shown in the table assume reinvestment of all dividends and distributions. Delaware Small Cap Core Fund Expense Analysis of an Investment of $1,000 Expenses Beginning Ending Paid During Account Account Annualized Period* Value Value Expense 12/1/05 to 12/1/05 5/31/06 Ratio 5/31/06 ________________________________________________________________________________ Actual Fund Return Class A $1,000.00 $1,087.60 1.25% $ 6.51 Class C 1,000.00 1,083.30 2.00% 10.39 Class R 1,000.00 1,088.70 1.50% 7.81 Institutional Class 1,000.00 1,089.50 1.00% 5.21 ________________________________________________________________________________ Hypothetical 5% Return (5% return before expenses) Class A $1,000.00 $1,018.70 1.25% $ 6.29 Class C 1,000.00 1,014.96 2.00% 10.05 Class R 1,000.00 1,017.45 1.50% 7.54 Institutional Class 1,000.00 1,019.95 1.00% 5.04 ________________________________________________________________________________ *"Expenses Paid During Period" are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). 1 <page> Sector allocation Delaware Small Cap Core Fund As of May 31, 2006 Sector designations may be different than the sector designations presented in other Fund materials. Percentage Sector of Net Assets ________________________________________________________________________________ Common Stock 96.40% Basic Materials 6.30% Business Services 4.39% Capital Goods 9.30% Consumer Discretionary 5.02% Consumer Services 2.34% Consumer Staples 1.74% Credit Cyclicals 2.25% Energy 7.15% Finance 16.96% Health Care 11.92% Media 0.89% Real Estate 4.77% Technology 19.86% Transportation 2.29% Utilities 1.22% ________________________________________________________________________________ Repurchase Agreements 2.11% ________________________________________________________________________________ Total Market Value of Securities 98.51% ________________________________________________________________________________ Receivables and Other Assets Net of Liabilities 1.49% ________________________________________________________________________________ Total Net Assets 100.00% ________________________________________________________________________________ 2 <page> Statement of net assets Delaware Small Cap Core Fund May 31, 2006 (Unaudited) Number of Market Shares Value ________________________________________________________________________________ Common Stock - 96.40% ________________________________________________________________________________ Basic Materials - 6.30% +AK Steel Holding 12,300 $ 165,435 +Century Aluminum 4,250 177,013 Chesapeake 5,600 76,608 Cytec Industries 3,150 181,377 Ferro 5,400 95,040 FMC 2,400 154,968 Georgia Gulf 3,850 124,086 +NS Group 4,200 209,663 +PolyOne 17,400 164,430 Steel Dynamics 3,400 197,506 Wausau Paper 7,350 98,270 Worthington Industries 5,100 86,853 ___________ 1,731,249 ___________ Business Services - 4.39% Administaff 2,950 113,369 +Armor Holdings 3,200 182,783 Healthcare Services Group 6,100 123,891 +Kforce 9,400 143,632 +Labor Ready 6,250 144,688 McGrath RentCorp 5,050 134,078 +TeleTech Holdings 10,550 127,022 UniFirst 3,400 108,970 +United Stationers 2,750 127,655 ___________ 1,206,088 ___________ Capital Goods - 9.30% Acuity Brands 4,900 195,510 +AGCO 7,650 187,119 Applied Industrial Technologies 2,700 104,085 Barnes Group 3,800 156,902 Briggs & Stratton 2,700 87,480 Crane 3,450 138,621 DRS Technologies 2,750 146,465 +Genlyte Group 3,350 233,762 +Innovative Solutions & Support 7,600 102,296 +Kadant 4,900 114,856 Lawson Products 2,950 108,531 Lincoln Electric Holdings 2,700 148,392 Lufkin Industries 2,850 172,397 Manitowoc 4,650 213,853 +Orbital Sciences 11,500 172,385 +Rofin-Sinar Technologies 2,450 133,672 +URS 3,350 142,007 ___________ 2,558,333 ___________ Consumer Discretionary - 5.02% +Charming Shoppes 15,250 169,885 +Children's Place Retail Stores 2,650 154,151 +Guitar Center 3,250 156,488 +Jos A Bank Clothiers 4,000 145,280 +Pacific Sunwear Of California 7,000 153,650 Phillips-Van Heusen 4,100 145,345 +Quiksilver 11,400 142,044 Stage Stores 5,800 188,789 Stride Rite 9,850 124,012 ___________ 1,379,644 ___________ Consumer Services - 2.34% CKE Restaurants 7,950 133,322 IHOP 3,200 153,663 Lone Star Steakhouse & Saloon 3,350 87,201 +Papa John's International 3,850 121,121 +Shuffle Master 4,100 149,486 ___________ 644,793 ___________ Consumer Staples - 1.74% Casey's General Stores 8,100 181,359 Chiquita Brands International 5,900 84,429 Longs Drug Stores 2,450 112,798 Nu Skin Enterprises Class A 5,800 99,528 ___________ 478,114 ___________ Credit Cyclicals - 2.25% +Jacuzzi Brands 12,150 113,846 M/I Homes 2,700 97,200 +Meritage Homes 1,950 104,501 Thor Industries 3,850 185,107 +Williams Scotsman International 4,500 117,000 ___________ 617,654 ___________ Energy - 7.15% +Dresser-Rand Group 2,400 57,984 +Grey Wolf 18,200 139,230 +Hercules Offshore 4,500 164,565 +James River Coal 2,950 93,604 +Oceaneering International 3,350 251,249 +Oil States International 5,400 187,596 Penn Virginia 2,050 139,195 +Petroquest Energy 13,150 136,892 St. Mary Land & Exploration 3,800 148,542 +Universal Compression Holdings 4,000 232,480 +Veritas DGC 4,900 231,427 World Fuel Services 3,700 184,815 ___________ 1,967,579 ___________ Finance - 16.96% ADVANTA 4,000 146,400 American Home Mortgage Investment 4,650 155,171 AmerUs Group 1,850 107,559 Bancfirst 3,100 138,725 BankUnited Financial Class A 5,550 172,161 Center Financial 6,000 139,980 City Holding 4,750 171,760 Commercial Capital Bancorp 10,450 164,065 +CompuCredit 3,200 122,432 Dime Community Bancshares 6,400 90,496 Direct General 8,750 154,963 FBL Financial Group Class A 3,700 132,386 First Marblehead 2,050 93,009 First Midwest Bancorp 2,750 96,690 First Place Financial - Ohio 4,900 111,965 +FirstFed Financial 2,550 147,492 Frontier Financial 5,800 198,243 Greater Bay Bancorp 7,050 210,160 (continues) 3 <page> Statement of net assets Delaware Small Cap Core Fund Number of Market Shares Value ________________________________________________________________________________ Common Stock (continued) ________________________________________________________________________________ Finance (continued) Hanover Insurance Group 2,700 $ 127,845 Kansas City Life Insurance 1,950 89,271 MainSource Financial Group 4,940 83,980 +MarketAxess Holdings 10,500 114,975 Ohio Casualty 7,050 210,583 PFF Bancorp 4,900 166,600 Presidential Life 5,800 145,058 Republic Bancorp 10,000 108,700 RLI 3,150 148,995 +Sierra Health Services 4,500 185,399 TierOne 5,550 182,040 +Triad Guaranty 2,400 129,912 Trustmark 3,950 118,540 +United America Indemnity 5,900 134,107 West Coast Bancorp Oregon 6,000 163,140 ___________ 4,662,802 ___________ Health Care - 11.92% +Adolor 7,050 164,758 +Alkermes 6,650 131,803 +Applera-Celera Genomics 10,000 112,000 +Bio-Rad Laboratories Class A 1,950 129,519 +Candela 7,900 136,038 +Digene 4,300 160,734 +First Horizon Pharmaceutical 7,350 155,159 +Gen-Probe 2,400 129,600 +Geron 12,300 85,608 +Healthways 3,700 196,617 +LifePoint Hospitals 3,150 111,290 +Medarex 11,400 116,964 Mentor 2,950 119,151 +MGI PHARMA 6,900 124,269 +Myogen 4,100 127,715 +Noven Pharmaceuticals 7,450 130,524 Owens & Minor 3,900 115,830 +Pharmion 6,200 121,582 PolyMedica 2,700 103,653 +Res-Care 9,750 193,537 +Techne 2,200 120,296 +Telik 6,300 100,674 +United Therapeutics 2,700 130,032 Vital Signs 2,200 110,044 West Pharmaceutical Services 4,400 149,688 ___________ 3,277,085 ___________ Media - 0.89% +infoUSA 11,350 117,927 Journal Communications Class A 5,400 62,208 +Scholastic 2,450 64,484 ___________ 244,619 ___________ Real Estate - 4.77% Brandywine Realty Trust 6,550 190,080 Equity Inns 10,000 154,499 First Industrial Realty Trust 3,100 114,700 Glimcher Realty Trust 4,950 124,988 Home Properties 2,950 146,733 Maguire Properties 3,350 106,061 Nationwide Health Properties 6,050 126,990 Pennsylvania Real Estate Investment Trust 3,150 117,495 Senior Housing Properties Trust 6,650 114,447 Sovran Self Storage 2,450 115,567 ___________ 1,311,560 ___________ Technology - 19.86% +AMIS Holdings 9,450 92,705 +Anixter International 3,100 151,063 +Axcelis Technologies 24,300 154,791 +BEA Systems 650 8,814 +Blackboard 4,100 108,568 +CACI International 2,400 146,208 +Cymer 3,950 183,240 +Digital River 3,050 134,078 +Digitas 7,400 96,274 +Dionex 2,250 121,185 +Dobson Communications Class A 17,000 146,030 +EarthLink 10,450 87,049 +FileNet 5,250 136,763 +Internet Security Systems 4,900 100,352 +j2 Global Communications 5,900 156,704 +Kulicke & Soffa Industries 11,000 88,770 +Mercury Computer Systems 9,500 155,990 +MIPS Technologies 19,250 111,073 +MTC Technologies 3,900 108,108 +Multi-Fineline Electronix 2,400 79,848 +Netgear 7,300 170,893 +OmniVision Technologies 6,250 183,124 +ON Semiconductor 23,200 140,128 +Palm 10,200 168,096 +Photronics 7,800 131,586 Plantronics 3,050 65,728 +Progress Software 4,900 114,072 +Quality Systems 3,250 107,965 +RadiSys 8,100 168,075 +Secure Computing 10,850 96,348 +SI International 3,800 120,422 +Skyworks Solutions 24,100 136,406 +Synaptics 5,100 120,768 +Tekelec 11,900 171,717 +Tessera Technologies 6,400 180,735 +UbiquiTel 11,400 118,674 United Online 7,150 85,228 +Universal Electronics 4,100 72,939 +Varian Semiconductor Equipment 6,450 199,627 +Verint Systems 3,450 111,987 +Viasat 6,000 153,000 +WebEx Communications 6,250 205,312 +Wind River Systems 7,350 69,458 ___________ 5,459,901 ___________ 4 <page> Number of Market Shares Value ________________________________________________________________________________ Common Stock (continued) ________________________________________________________________________________ Transportation - 2.29% Arkansas Best 2,550 $ 105,086 +Bristow Group 3,200 115,232 +HUB Group 4,500 212,939 Pacer International 6,650 196,242 ___________ 629,499 ___________ Utilities - 1.22% Black Hills 3,450 116,713 Cascade Natural Gas 5,400 113,400 Otter Tail 4,050 105,665 ___________ 335,778 ___________ Total Common Stock (cost $25,335,747) 26,504,698 ___________ Principal Amount ________________________________________________________________________________ Repurchase Agreements - 2.11% ________________________________________________________________________________ With BNP Paribas 4.88% 6/1/06 (dated 5/31/06, to be repurchased at $364,749, collateralized by $136,200 U.S. Treasury Notes 2.375% due 8/31/06, market value $136,194, $105,600 U.S. Treasury Notes 2.75% due 7/31/06, market value $106,187, $80,800 U.S. Treasury Notes 2.875% due 11/30/06, market value $79,965 and $46,600 U.S. Treasury Notes 6.50% due 2/15/10, market value $49,915) $364,700 364,700 With Cantor Fitzgerald 4.88% 6/1/06 (dated 5/31/06, to be repurchased at $215,329, collateralized by $93,600 U.S. Treasury Notes 2.50% due 9/30/06, market value $93,258, $93,600 U.S. Treasury Notes 3.50% due 11/15/06, market value $93,145 and $31,700 U.S. Treasury Notes 6.00% due 8/15/09, market value $33,208) 215,300 215,300 ___________ Total Repurchase Agreements (cost $580,000) 580,000 ___________ Total Market Value of Securities - 98.51% (cost $25,915,747) 27,084,698 Receivables and Other Assets Net of Liabilities - 1.49% 408,839 ___________ Net Assets Applicable to 2,268,432 Shares Outstanding - 100.00% $27,493,537 ___________ Net Asset Value - Delaware Small Cap Core Fund Class A ($12,247,195 / 1,009,303 Shares) $12.13 ___________ Net Asset Value - Delaware Small Cap Core Fund Class C ($4,735,223 / 392,498 Shares) $12.06 ___________ Net Asset Value - Delaware Small Cap Core Fund Class R ($80,961 / 6,680 Shares) $12.12 ___________ Net Asset Value - Delaware Small Cap Core Fund Institutional Class ($10,430,158 / 859,951 Shares) $12.13 ___________ Components of Net Assets at May 31, 2006: Shares of beneficial interest (unlimited authorization - no par) $25,744,014 Accumulated net realized gain on investments 580,572 Net unrealized appreciation of investments 1,168,951 ___________ Total net assets $27,493,537 ___________ +Non-income producing security for the period ended May 31, 2006. Net Asset Value and Offering Price per Share - Delaware Small Cap Core Fund Net asset value Class A (A) $12.13 Sales charge (5.75% of offering price) (B) 0.74 ___________ Offering price $12.87 ___________ (A) Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares. (B) See the current prospectus for purchase of $50,000 or more. See accompanying notes 5 <page> Statement of operations Delaware Small Cap Core Fund Six Months Ended May 31, 2006 (Unaudited) Investment Income: Dividends $ 82,449 Interest 10,414 $ 92,863 _______ ___________ Expenses: Management fees 69,644 Distribution expenses - Class A 11,747 Distribution expenses - Class C 12,925 Distribution expenses - Class R 107 Registration fees 31,369 Dividend disbursing and transfer agent fees and expenses 13,983 Reports and statements to shareholders 11,392 Legal and professional fees 5,788 Custodian fees 4,525 Accounting and administration expenses 3,714 Pricing fees 764 Trustees' fees 507 Insurance fees 367 Other 7,147 173,979 _______ Less expenses absorbed or waived (56,785) Less waived distribution expenses - Class A (1,895) Less waived distribution expenses - Class R (18) Less expense paid indirectly (192) ___________ Total operating expenses 115,089 ___________ Net Investment Loss (22,226) ___________ Net Realized and Unrealized Gain on Investments: Net realized gain on investments 606,615 Net change in unrealized appreciation/depreciation of investments 449,580 ___________ Net Realized and Unrealized Gain on Investments 1,056,195 ___________ Net Increase in Net Assets Resulting from Operations $ 1,033,969 ___________ See accompanying notes 6 <page> Statements of changes in net assets Delaware Small Cap Core Fund Six Months Year Ended Ended 5/31/06 11/30/05 (Unaudited) Increase (Decrease) in Net Assets from Operations: Net investment income (loss) $ (22,226) $ 14,447 Net realized gain on investments 606,615 244,228 Net change in unrealized appreciation/depreciation of investments 449,580 282,499 ____________ ___________ Net increase in net assets resulting from operations 1,033,969 541,174 ____________ ___________ Dividends and Distributions to Shareholders from: Net investment income: Class A - (34) Institutional Class (17,577) (8,157) Net realized gain on investments: Class A (87,278) (5,845) Class C (26,712) - Institutional Class (134,760) (1,387,384) ____________ ___________ (266,327) (1,401,420) ____________ ___________ Capital Share Transactions: Proceeds from shares sold: Class A 8,555,095 3,781,560 Class C 3,900,152 844,303 Class R 83,224 12 Institutional Class 3,294,748 1,440,217 Net asset value of shares issued upon reinvestment of dividends and distributions: Class A 70,540 5,879 Class C 24,266 - Institutional Class 152,337 1,395,541 ____________ ___________ 16,080,362 7,467,512 ____________ ___________ Cost of shares repurchased: Class A (508,252) (9,325) Class C (98,474) - Class R (1,670) - Institutional Class (120,234) (9,039) ____________ ___________ (728,630) (18,364) ____________ ___________ Increase in net assets derived from capital share transactions 15,351,732 7,449,148 ____________ ___________ Net Increase in Net Assets 16,119,374 6,588,902 Net Assets: Beginning of period 11,374,163 4,785,261 ____________ ___________ End of period (including undistributed net investment income of $- and $17,534, respectively) $ 27,493,537 $11,374,163 ____________ ___________ See accompanying notes 7 <page> Financial highlights Delaware Small Cap Core Fund Class A Selected data for each share of the Fund outstanding throughout each period were as follows: Six Months Year Ended Ended ________________________________________________________ 5/31/06 (1) 11/30/05 11/30/04 11/30/03 11/30/02 11/30/01 (Unaudited) ____________________________________________________________________________________________________________________________________ Net asset value, beginning of period $11.380 $14.600 $13.080 $10.290 $11.130 $ 9.090 Income (loss) from investment operations: Net investment income (loss) (2) (0.015) 0.022 0.026 0.036 0.079 0.111 Net realized and unrealized gain on investments 0.995 1.035 2.481 3.350 0.069 2.082 ______ ______ ______ ______ ______ _______ Total from investment operations 0.980 1.057 2.507 3.386 0.148 2.193 ______ ______ ______ ______ ______ _______ Less dividends and distributions from: Net investment income - (0.025) (0.044) (0.075) (0.108) 0.153) Net realized gain on investments (0.230) (4.252) (0.943) (0.521) (0.880) - ______ ______ ______ ______ ______ _______ Total dividends and distributions (0.230) (4.277) (0.987) (0.596) (0.988) (0.153) ______ ______ ______ ______ ______ _______ Net asset value, end of period $12.130 $11.380 $14.600 $13.080 $10.290 $11.130 _______ _______ _______ _______ _______ _______ Total return (3) 8.76% 9.04% 20.62% 35.19% 1.08% 24.42% Ratios and supplemental data: Net assets, end of period (000 omitted) $12,247 $3,863 $20 $13 $- $- Ratio of expenses to average net assets 1.25% 1.02% 0.75% 0.75% 0.75% 0.75% Ratio of expenses to average net assets prior to expense limitation and expense paid indirectly 1.90% 2.53% 1.30% 1.34% 1.34% 1.18% Ratio of net investment income (loss) to average net assets (0.25%) 0.20% 0.20% 0.33% 0.74% 1.07% Ratio of net investment income (loss) to average net assets prior to expense limitation and expense paid indirectly (0.90%) (1.31%) (0.35%) (0.26%) 0.15% 0.63% Portfolio turnover 152% 104% 136% 44% 76% 82% ____________________________________________________________________________________________________________________________________ (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. (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. Total investment return reflects waivers and payment of fees by the manager and distributor. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 8 <page> Delaware Small Cap Core Fund Class C Selected data for each share of the Fund outstanding throughout each period were as follows: Six Months 8/1/05 (2) Ended to 5/31/06 (1) 11/30/05 (Unaudited) ____________________________________________________________________________________________________________________________________ Net asset value, beginning of period $11.360 $11.640 Income (loss) from investment operations: Net investment loss (3) (0.060) (0.021) Net realized and unrealized gain (loss) on investments 0.990 (0.259) _______ _______ Total from investment operations 0.930 (0.280) _______ _______ Less dividends and distributions from: Net realized gain on investments (0.230) - _______ _______ Total dividends and distributions (0.230) - _______ _______ Net asset value, end of period $12.060 $11.360 _______ _______ Total return (4) 8.33% (2.41%) Ratios and supplemental data: Net assets, end of period (000 omitted) $4,736 $866 Ratio of expenses to average net assets 2.00% 2.00% Ratio of expenses to average net assets prior to expense limitation and expense paid indirectly 2.60% 5.14% Ratio of net investment loss to average net assets (1.00%) (0.56%) Ratio of net investment loss to average net assets prior to expense limitation and expense paid indirectly (1.60%) (3.71%) Portfolio turnover 152% 104% ____________________________________________________________________________________________________________________________________ (1) Ratios and portfolio turnover have been annualized and total return has not been annualized. (2) Date of commencement of operations; ratios 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. Performance would have been lower had the expense limitation not been in effect. See accompanying notes (continues) 9 <page> Financial highlights Delaware Small Cap Core Fund Class R Selected data for each share of the Fund outstanding throughout each period were as follows: Six Months Ended 5/31/06 (1) (Unaudited) ____________________________________________________________________________________________________________________________________ Net asset value, beginning of period $11.360 Income (loss) from investment operations: Net investment loss(2) (0.030) Net realized and unrealized gain on investments 1.020 ______ Total from investment operations 0.990 ______ Less dividends and distributions from: Net realized gain on investments (0.230) ______ Total dividends and distributions (0.230) ______ Net asset value, end of period $12.120 ______ Total return(3) 8.87% Ratios and supplemental data: Net assets, end of period (000 omitted) $81 Ratio of expenses to average net assets 1.50% Ratio of expenses to average net assets prior to expense limitation and expense paid indirectly 2.20% Ratio of net investment loss to average net assets (0.50%) Ratio of net investment loss to average net assets prior to expense limitation and expense paid indirectly (1.20%) Portfolio turnover 152% ____________________________________________________________________________________________________________________________________ (1) Ratios have been annualized and total return has not been annualized. (2) The average shares outstanding method has been applied for per share information. (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. Total investment return reflects waivers and payment of fees by the manager and distributor. Performance would have been lower had the expense limitation not been in effect. As of November 30, 2005, the Delaware Small Cap Core Fund Class R had one share outstanding, representing the initial seed purchase. Shareholder data for this class is not disclosed because management does not believe it to be meaningful. See accompanying notes 10 <page> Delaware Small Cap Core Fund Institutional Class Selected data for each share of the Fund outstanding throughout each period were as follows: Six Months Year Ended Ended ________________________________________________________ 5/31/06 (1) 11/30/05 11/30/04 11/30/03 11/30/02 11/30/01 (Unaudited) ____________________________________________________________________________________________________________________________________ Net asset value, beginning of period $11.390 $14.600 $13.080 $10.290 $11.130 $ 9.090 Income from investment operations: Net investment income(2) - 0.031 0.026 0.036 0.079 0.111 Net realized and unrealized gain on investments 1.000 1.036 2.481 3.350 0.069 2.082 ______ ______ ______ ______ ______ _______ Total from investment operations 1.000 1.067 2.507 3.386 0.148 2.193 ______ ______ ______ ______ ______ _______ Less dividends and distributions from: Net investment income (0.030) (0.025) (0.044) (0.075) (0.108) (0.153) Net realized gain on investments (0.230) (4.252) (0.943) (0.521) (0.880) - ______ ______ ______ ______ ______ _______ Total dividends and distributions (0.260) (4.277) (0.987) (0.596) (0.988) (0.153) ______ ______ ______ ______ ______ _______ Net asset value, end of period $12.130 $11.390 $14.600 $13.080 $10.290 $11.130 _______ _______ _______ _______ _______ _______ Total return(3) 8.95% 9.14% 20.62% 35.19% 1.08% 24.42% Ratios and supplemental data: Net assets, end of period (000 omitted) $10,430 $6,645 $4,765 $3,948 $2,921 $2,890 Ratio of expenses to average net assets 1.00% 0.94% 0.75% 0.75% 0.75% 0.75% Ratio of expenses to average net assets prior to expense limitation and expense paid indirectly 1.60% 2.23% 1.00% 1.04% 1.04% 0.88% Ratio of net investment income to average net assets 0.00% 0.28% 0.20% 0.33% 0.74% 1.07% Ratio of net investment income (loss) to average net assets prior to expense limitation and expense paid indirectly (0.60%) (1.01%) (0.05%) 0.04% 0.45% 0.93% Portfolio turnover 152% 104% 136% 44% 76% 82% ____________________________________________________________________________________________________________________________________ (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. (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. Total investment return reflects waivers and payment of fees by the manager. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 11 <page> Notes to financial statements Delaware Small Cap Core Fund May 31, 2006 (Unaudited) Delaware Group Equity Funds V (the "Trust") is organized as a Delaware statutory trust and offers three series: Delaware Dividend Income Fund, Delaware Small Cap Core Fund and Delaware Small Cap Value Fund. These financial statements and the related notes pertain to Delaware Small Cap Core 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 C, Class R and Institutional Class shares. Class A shares are sold with a front-end sales charge of up to 5.75%. 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. The investment objective of the Fund is to seek long-term capital appreciation. 1. Significant Accounting Policies The following accounting policies are in accordance with U.S. generally accepted accounting principles and are consistently followed by the Fund. Security Valuation - Equity securities, except those traded on the Nasdaq Stock Market, Inc. (Nasdaq), 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. Securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If on a particular day an equity security does not trade, then the mean between the bid and asked prices will 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, 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). 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(R) Family of Funds pursuant to an exemptive order issued by the Securities and Exchange Commission. 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 U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Other - Expenses common to all funds within the Delaware Investments(R) Family of Funds are allocated amongst the funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. 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. Distributions received from investments in Real Estate Investment Trusts are recorded as dividend income on ex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer. The Fund declares and pays dividends from net investment income and distributions from net realized gain on investment, if any, annually. Subject to seeking best execution, the Fund may direct certain security trades to brokers who have agreed to rebate a portion of the related brokerage commission to the Fund in cash. Such commission rebates are included in realized gain on securities in the accompanying financial statements and totaled $305 for the six months ended May 31, 2006. In general, best execution refers to many factors, including the price paid or received for a security, the commission charged, the promptness and reliability of execution, the confidentiality and placement accorded the order, and other factors affecting the overall benefit obtained by the Fund on the transaction. The Fund receives earnings credits from its custodian when positive cash balances are maintained, which are used to offset custody fees. The expense paid under the above arrangement is included in the custodian fees and on the Statement of Operations with the corresponding expense offset shown as "expense 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. DMC has contractually agreed to waive that portion, if any, of its management fee and reimburse the Fund to the extent necessary to ensure that annual operating expenses, exclusive of taxes, interest, brokerage commissions, distribution fees, certain insurance costs and extraordinary expenses, do not exceed 1.00% of average daily net assets of the Fund through March 31, 2007. 12 <page> 2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued) Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting, administration, dividend disbursing and transfer agent services. The Fund pays DSC a monthly fee computed at the annual rate of 0.04% of the Fund's average daily net assets for accounting and administration services. The Fund pays DSC a monthly fee based on the number of shareholder accounts for dividend disbursing and transfer agent services. 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 distribution and service 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 C shares and 0.60% of the average daily net assets of the Class R shares. DDLP has contracted to waive distribution and service fees through March 31, 2007 in order to prevent distribution and services fees of Class A shares and Class R shares from exceeding 0.25% and 0.50%, respectively, of average daily net assets. Institutional Class shares pay no distribution and services expenses. At May 31, 2006, the Fund had liabilities payable to affiliates as follows: Investment management fee payable to DMC $ 3,878 Dividend disbursing, transfer agent, accounting and administration fees and other expenses payable to DSC 4,335 Distribution fees payable to DDLP 6,338 Other expenses payable to DMC and affiliates* 21,120 *DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, fees for audit, legal and tax services, registration fees and trustees' fees. As provided in the investment management agreement, the Fund bears the cost of certain legal services, including internal legal services provided to the Fund by DMC employees. For the six months ended May 31, 2006, the Fund was charged $408 for internal legal services provided by DMC. For the six months ended May 31, 2006, DDLP earned $21,099 for commissions on sales of the Fund's Class A shares. For the six months ended May 31, 2006, DDLP received gross contingent deferred sales charge commissions of $181 on redemption of the Fund's Class C shares. These commissions were entirely used to offset up-front commissions previously paid by DDLP to broker-dealers on sales of those shares. Class A shares received no gross contingent deferred sales charge commissions during the period. 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. 3. Investments For the six months ended May 31, 2006, the Fund made purchases of $28,405,226 and sales of $13,934,302 of investment securities other than short-term investments. At May 31, 2006, 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, 2006, the cost of investments was $25,973,011. At May 31, 2006, net unrealized appreciation was $1,111,687 of which $1,863,454 related to unrealized appreciation of investments and $751,767 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 U.S. generally accepted accounting principles. Additionally, net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the six months ended May 31, 2006 and year ended November 30, 2005 was as follows: Six Months Year Ended Ended 5/31/06* 11/30/05 __________ __________ Ordinary income $204,444 $ 246,155 Long-term capital gain 61,883 1,155,265 __________ __________ Total $266,327 $1,401,420 _________ __________ *Tax information for the six months ended May 31, 2006 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 the final tax characteristics cannot be determined until fiscal year end. As of May 31, 2006, the estimated components of net assets on a tax basis were as follows: Shares of beneficial interest $25,744,014 Undistributed ordinary income 366,862 Undistributed long-term capital gain 270,974 Unrealized appreciation of investments 1,111,687 ___________ Net assets $27,493,537 ___________ The difference between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales. For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of dividends and distributions. Results of operations and net assets were not affected by these reclassifications. For the six months ended May 31, 2006, the Fund recorded an estimate of these differences since the final tax characteristics cannot be determined until fiscal year end. Paid - in capital $(5,876) Undistributed net investment income 22,269 Accumulated net realized gain (loss) (16,393) (continues) 13 <page> Notes to financial statements Delaware Small Cap Core Fund 5. Capital Shares Transactions in capital shares were as follows: Six Months Year Ended Ended 5/31/06 11/30/05 Shares sold: Class A 704,899 338,367 Class C 322,043 76,257 Class R 6,812 1 Institutional Class 273,297 127,717 Shares issued upon reinvestment of dividends and distributions: Class A 6,254 548 Class C 2,157 - Institutional Class 13,517 130,181 _________ _______ 1,328,979 673,071 _________ _______ Shares repurchased: Class A (41,292) (848) Class C (7,959) - Class R (133) - Institutional Class (10,253) (797) _________ _______ (59,637) (1,645) _________ _______ Net increase 1,269,342 671,426 _________ _______ 6. Line of Credit The Fund, along with certain other funds in the Delaware Investments(R) Family of Funds (the "Participants"), participates in a $225,000,000 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, 2006, or at any time during the period. 7. Credit and Market Risk The Fund invests a significant portion of its assets in small companies and may be subject to certain risks associated with ownership of securities of small companies. Investments in small-sized companies may be more volatile than investments in larger companies for a number of reasons, which include limited financial resources or a dependence on narrow product lines. The Fund invests in real estate investment trusts (REITs) and is subject to some of the risks associated with that industry. If the Fund holds real estate directly as a result of defaults or receives rental income directly from real estate holdings, its tax status as a regulated investment company may be jeopardized. There were no direct holdings during the six months ended May 31, 2006. The Fund's REIT holdings are also affected by interest rate changes, particularly if the REITs it holds use floating rate debt to finance their ongoing operations. The Fund may invest up to 15% of its total 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 the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Fund's Board of Trustees has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund's limitation on investments in illiquid assets. At May 31, 2006, there were no Rule 144A securities and no securities have been determined to be illiquid under the Fund's Liquidity Procedures. 8. Contractual Obligations The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund's existing contracts and expects the risk of loss to be remote. 14 <page> Other Fund information Delaware Small Cap Core Fund Board Consideration of Delaware Small Cap Core Fund Investment Advisory Agreement At a meeting held on May 17-18, 2006 (the "Annual Meeting"), the Board of Trustees, including a majority of disinterested or independent Trustees, approved the renewal of the Investment Advisory Agreement for the Delaware Small Cap Core Fund (the "Fund"). In making its decision, the Board considered information furnished throughout the year at regular Board meetings, as well as information prepared specifically in connection with the Annual Meeting. Information furnished and discussed throughout the year included reports detailing Fund performance, investment strategies, expenses, compliance matters and other services provided by Delaware Management Company ("DMC"), the investment advisor. Information furnished specifically in connection with the Annual Meeting included materials provided by DMC and its affiliates ("Delaware Investments") concerning, among other things, the level of services provided to the Fund, the costs of such services to the Fund, economies of scale and the financial condition and profitability of Delaware Investments. In addition, in connection with the Annual Meeting, the Board considered independent historical and comparative reports prepared by Lipper Inc. ("Lipper"), an independent statistical compilation organization. The Board also considered industry comparative information presented by representatives from Lipper. The Lipper reports compared the Fund's investment performance and expenses with those of other comparable mutual funds. The Board also received certain supplemental information regarding management's policy with respect to advisory fee levels and its philosophy with respect to breakpoints; the structure of portfolio manager compensation; and any constraints or limitations on the availability of securities in certain investment styles which might inhibit DMC's ability to fully invest in accordance with Fund policies. In considering such materials, the independent Trustees received assistance and advice from and met separately with independent counsel and representatives from Lipper. At the meeting with representatives from Lipper, Mr. Driscoll, Chairman of the Delaware Investments(R) Family of Funds, and Chairman and Chief Executive Officer of the investment advisor, was present to respond to questions by Lipper and the independent Trustees. While the Board considered the Investment Advisory Agreements for all of the funds in the Delaware Investments Family of Funds at the same Board meeting, information was provided and considered by the Board for each fund individually. In approving the continuance of the Investment Advisory Agreement for the Fund, the Board, including a majority of independent Trustees, determined that the existing advisory fee structure was fair and reasonable and that the continuance of the Investment Advisory Agreement was in the best interests of the Fund and its shareholders. While attention was given to all information furnished, the following discusses the primary factors relevant to the Board's deliberations and determination, including those relating to the selection of the investment advisor and the approval of the advisory fee. Nature, extent and quality of service. Consideration was given to the services provided by Delaware Investments to the Fund and its shareholders. In reviewing the nature, extent and quality of services, the Board emphasized reports furnished to it throughout the year at regular Board meetings covering matters such as the relative performance of the Fund, compliance of portfolio managers with the investment policies, strategies and restrictions for the Fund, the compliance of management personnel with the Code of Ethics adopted throughout the Delaware Investments Family of Funds complex, the adherence to fair value pricing procedures as established by the Board, and the accuracy of net asset value calculations. The Board noted that it was pleased with the current staffing of the Fund's investment advisor and management's efforts to strengthen and deepen portfolio management teams during the past year, the emphasis on research and the compensation system for advisory personnel. Favorable consideration was given to DMC's efforts to maintain, and in some instances increase, financial and human resources committed to fund matters. Other factors taken into account by the Board were Delaware Investments' preparedness for, and response to, legal and regulatory matters. The Board also considered the transfer agent and shareholder services provided to Fund shareholders by Delaware Investments' affiliate, Delaware Service Company, Inc., noting DSC's commitment to maintain a high level of service in keeping with its past receipt of the DALBAR Pyramid Award, and the continuing expenditures by Delaware Investments to improve the delivery of shareholder services. Additionally, the Board noted the extent of benefits provided to Fund shareholders for being part of the Delaware Investments Family of Funds, including the privilege to exchange investments between the same class of shares of funds without a sales charge, the ability to reinvest Fund dividends into other funds and the privilege to combine holdings in other funds to obtain a reduced sales charge. The Board was satisfied with the nature, extent and quality of the overall services provided by Delaware Investments. Investment performance. The Board considered the investment performance of DMC and the Fund. The Board was pleased with DMC's investment performance. The Board placed significant emphasis on the investment performance of the Fund in view of its importance to shareholders. While consideration was given to performance reports and discussions with portfolio managers at Board meetings throughout the year, particular weight was given to the Lipper reports furnished for the Annual Meeting. The Lipper reports prepared for the Fund showed the investment performance of its Class A shares in comparison to a group of similar funds as selected by Lipper (the "Performance Universe"). A fund with the best performance is ranked first, and a fund with the poorest performance is ranked last. The highest/best performing 25% of funds in the Performance Universe make up the first quartile; the next 25% - the second quartile; the next 25% - the third quartile; and the poorest/worst performing 25% of funds in the Performance Universe make up the fourth quartile. Comparative annualized performance for the Fund was shown for the past one, three and five periods ended January 31, 2006. The Board noted its objective that the Fund's performance be at or above the median of its Performance Universe. The following paragraph summarizes the performance results for the Fund and the Board's view of such performance. The Performance Universe for the Fund consisted of the Fund and all retail and institutional small-cap core funds as selected by Lipper. The Lipper report comparison showed that the Fund's total return for the one and three year periods was in the second quartile of such Performance Universe. The report further showed that the Fund's total return for the five year period was in the first quartile. The Board was satisfied with such performance. (continues) 15 <page> Other Fund information Delaware Small Cap Core Fund Comparative expenses. The Board considered expense data for the Delaware Investments Family of Funds. Management provided the Board with information on pricing levels and fee structures for the Funds. The Board focused particularly on the comparative analysis of the management fees and total expense ratios of the Fund and the management fees and expense ratios of a group of similar funds as selected by Lipper (the "Expense Group"). In reviewing comparative costs, the Fund's contractual management fee and the actual management fee incurred by the Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund) of other funds within the Expense Group, taking into effect any applicable breakpoints and fee waivers. The Fund's total expenses were also compared with those of its Expense Group. The Lipper total expenses, for comparative consistency, were shown by Lipper for Class A shares and compared total expenses including 12b-1 and non-12b-1 service fees. The Board noted its objective to limit the Fund's total expense ratio to an acceptable range as compared to the median of the Expense Group. The following paragraph summarizes the expense results for the Fund and the Board's view of such expenses. The expense comparisons for the Fund showed that its actual management fee and total expenses were in the quartile with the lowest expenses of its Expense Group. The Board was satisfied with the management fees and total expenses of the Fund in comparison to its Expense Group as shown in the Lipper report. Management profitability. The Board considered the level of profits, if any, realized by Delaware Investments in connection with the operation of the Fund. In this respect, the Board reviewed the Investment Management Profitability Analysis that addressed the overall profitability of Delaware Investments' business in providing management and other services to each of the individual funds and the Delaware Investments(R) Family of Funds as a whole. Specific attention was given to the methodology followed in allocating costs for the purpose of determining profitability. Management stated that the level of profits of Delaware Investments, to a certain extent, reflected operational cost savings and efficiencies initiated by Delaware Investments. The Board considered Delaware Investments' expenditures to improve services provided to fund shareholders and to meet additional regulatory and compliance requirements resulting from recent SEC initiatives. The Board also considered the extent to which Delaware Investments might derive ancillary benefits from fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its role as service provider to the Delaware Investments Family of Funds, the benefits from allocation of fund brokerage to improve trading efficiencies and the use of "soft" commission dollars to pay for proprietary and non-proprietary research. The Board did not find that the level of profits realized by Delaware Investments from the relationships with the Fund and the Delaware Investments Family of Funds required negotiation of reduction of fees. Economies of scale. The Trustees considered whether economies of scale are realized by Delaware Investments as the Fund's assets increase and the extent to which any economies of scale are reflected in the level of management fees charged. The Trustees took into account the standardized advisory fee pricing and structure approved by the Board and shareholders as part of a complex-wide shareholder meeting conducted in 1998/1999. At that time, Delaware Investments introduced breakpoints to account for management economies of scale. The Board noted that the fee under the Fund's management contract fell within the standard structure. Although the Fund has not reached a size at which it can take advantage of breakpoints, the Board recognized that the fee was structured so that when the Fund grows, economies of scale may be shared. 16 <page> About the organization This semiannual report is for the information of Delaware Small Cap Core Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Small Cap Core Fund and the Delaware Investments(R) 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 that 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 Jude T. Driscoll Chairman Delaware Investments Family of Funds Philadelphia, PA Thomas L. Bennett Private Investor Rosemont, PA John A. Fry President Franklin & Marshall College Lancaster, PA Anthony D. Knerr Founder and Managing Director Anthony Knerr & Associates New York, NY Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. Philadelphia, PA Ann R. Leven Owner - ARL Associates, Financial and Strategic Consultants Washington, DC Thomas F. Madison President and Chief Executive Officer MLM Partners, Inc. Minneapolis, MN Janet L. Yeomans Vice President and Treasurer 3M Corporation St. Paul, MN J. Richard Zecher Founder Investor Analytics Scottsdale, AZ Affiliated officers Michael P. Bishof Senior Vice President and Chief Financial Officer Delaware Investments Family of Funds Philadelphia, PA David F. Connor Vice President, Deputy General Counsel, and Secretary Delaware Investments Family of Funds Philadelphia, PA David P. O'Connor Senior Vice President, General Counsel, and Chief Legal Officer Delaware Investments Family of Funds Philadelphia, PA John J. O'Connor Senior Vice President and Treasurer Delaware Investments Family of Funds Philadelphia, PA Contact information Investment manager Delaware Management Company, a series of Delaware Management Business Trust Philadelphia, PA National distributor Delaware Distributors, L.P. Philadelphia, PA Shareholder servicing, dividend disbursing, and transfer agent Delaware Service Company, Inc. 2005 Market Street Philadelphia, PA 19103-7094 For shareholders 800 523-1918 For securities dealers and financial institutions representatives only 800 362-7500 Web site www.delawareinvestments.com Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q, as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 800 523-1918; (ii) on the Fund's Web site at http://www.delawareinvestments.com; and (iii) on the Commission's Web site at http://www.sec.gov. The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330. Information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Fund's Web site at http://www.delawareinvestments.com; and (ii) on the Commission's Web site at http://www.sec.gov. 17 <page> Simplify your life. Manage your investments online! Get Account Access, the Delaware Investments(R) secure Web site that allows you to conduct your business online. Gain 24-hour access to your account and one of the highest levels of Web security available. You also get: o Hassle-free investing - Make online purchases and redemptions at any time. o Simplified tax processing - Automatically retrieve your Delaware Investments accounts' 1099 information and import it directly into your 1040 tax return. Available only with Turbo Tax(R) Online(SM) and Desktop software - www.turbotax.com. o Less mail clutter - Get instant access to your fund materials online with Delaware eDelivery. Register for Account Access today! Visit www.delawareinvestments.com, select Individual Investors, and click Account Access. Please call our shareholder service center at 800 523-1918 Monday through Friday from 8:00 a.m. to 7:00 p.m., Eastern Time, for assistance with any questions. [Delaware Logo] (567) Printed in the USA SA-480 [5/06] CGI 7/06 SEMI-0606 SM CAP CORE PO11113 Semiannual Report Delaware Small Cap Value Fund May 31, 2006 Value equity mutual funds [DELAWARE LOGO] [LOGO] POWERED BY RESEARCH (R) Table of contents > Disclosure of Fund expenses .............................................1 > Sector allocation .......................................................2 > Statement of net assets .................................................3 > Statement of operations .................................................6 > Statements of changes in net assets .....................................7 > Financial highlights ....................................................8 > Notes to financial statements ..........................................13 > Other Fund information .................................................17 > About the organization .................................................19 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) 2006 Delaware Distributors, L.P. Disclosure of Fund expenses For the period December 1, 2005 to May 31, 2006 As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period December 1, 2005 to May 31, 2006. Actual Expenses The first section of the table shown, "Actual Fund Return," provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The second section of the table shown, "Hypothetical 5% Return," provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund's actual expenses shown in the table reflect fee waivers in effect for certain classes. The expenses shown in the table assume reinvestment of all dividends and distributions. Delaware Small Cap Value Fund Expense Analysis of an Investment of $1,000 Expenses Beginning Ending Paid During Account Account Annualized Period Value Value Expense 12/1/05 to 12/1/05 5/31/06 Ratio 5/31/06* _________________________________________________________________________________ Actual Fund Return Class A $1,000.00 $1,089.80 1.38% $ 7.19 Class B 1,000.00 1,085.50 2.10% 10.92 Class C 1,000.00 1,085.90 2.10% 10.92 Class R 1,000.00 1,088.50 1.60% 8.33 Institutional Class 1,000.00 1,091.30 1.10% 5.74 _________________________________________________________________________________ Hypothetical 5% Return (5% return before expenses) Class A $1,000.00 $1,018.15 1.38% $ 6.94 Class B 1,000.00 1,014.56 2.10% 10.55 Class C 1,000.00 1,014.56 2.10% 10.55 Class R 1,000.00 1,017.05 1.60% 8.05 Institutional Class 1,000.00 1,019.55 1.10% 5.54 _________________________________________________________________________________ *Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). 1 Sector allocation Delaware Small Cap Value Fund As of May 31, 2006 Sector designations may be different than the sector designations presented in other Fund materials. Percentage Sector of Net Assets _________________________________________________________________________________ Common Stock 96.26% Basic Industry 13.76% Business Services 2.00% Capital Spending 7.35% Consumer Cyclical 1.34% Consumer Services 11.57% Consumer Staples 3.12% Energy 7.31% Financial Services 18.14% Health Care 7.06% Real Estate 4.67% Technology 13.17% Transportation 3.81% Utilities 2.96% _________________________________________________________________________________ Repurchase Agreements 4.40% _________________________________________________________________________________ Securities Lending Collateral 20.05% Fixed Rate Notes 5.41% Variable Rate Notes 14.64% _________________________________________________________________________________ Total Market Value of Securities 120.71% _________________________________________________________________________________ Obligation to Return Securities Lending Collateral (20.05%) _________________________________________________________________________________ Liabilities Net of Receivables and Other Assets (0.66%) _________________________________________________________________________________ Total Net Assets 100.00% _________________________________________________________________________________ 2 Statement of net assets Delaware Small Cap Value Fund May 31, 2006 (Unaudited) Number of Market Shares Value ________________________________________________________________________________ Common Stock - 96.26% ________________________________________________________________________________ Basic Industry - 13.76% Albemarle 129,000 $ 6,192,000 *+ Alpha Natural Resources 250,500 5,400,780 Arch Coal 115,200 5,569,920 * Bowater 215,800 4,993,612 + Chaparral Steel 85,100 5,227,693 * Crane 167,600 6,734,168 + Crown Holdings 390,100 6,292,313 FMC 104,500 6,747,565 * Fuller (H.B.) 126,300 6,093,975 * Georgia Gulf 249,600 8,044,608 + Griffon 216,360 5,872,010 IPSCO 63,100 5,967,998 * MacDermid 235,900 7,341,208 + Pactiv 166,500 4,107,555 *+ PolyOne 470,900 4,450,005 Spartech 212,700 4,883,592 * Texas Industries 86,700 4,245,699 Valspar 162,100 4,460,992 * Westlake Chemical 155,100 4,842,222 ____________ 107,467,915 ____________ Business Services - 2.00% Brink's 185,700 10,204,215 *+ United Stationers 115,859 5,378,175 ____________ 15,582,390 ____________ Capital Spending - 7.35% *+ Casella Waste Systems 345,700 5,392,920 * Gibraltar Industries 223,014 6,210,940 Harsco 111,800 9,058,036 + Insituform Technologies Class A 124,400 3,184,640 * Kaydon 198,000 8,262,540 Mueller Industries 187,900 6,134,935 + Mueller Water Products Class A 174,200 3,010,176 Wabtec 289,900 10,137,803 Walter Industries 103,900 6,042,824 ____________ 57,434,814 ____________ Consumer Cyclical - 1.34% Furniture Brands International 153,800 3,309,776 KB HOME 72,800 3,727,360 *+ WCI Communities 163,600 3,466,684 ____________ 10,503,820 ____________ Consumer Services - 11.57% + AnnTaylor Stores 244,550 9,405,393 Applebee's International 189,300 3,827,646 Belo Class A 274,800 4,748,544 Borders Group 236,500 4,909,740 * Cato Class A 326,300 7,697,417 *+ CEC Entertainment 167,600 5,591,136 + Dollar Tree Stores 245,000 6,475,350 * K Swiss 169,100 4,460,858 Kellwood 142,500 4,444,575 * Kenneth Cole Productions Class A 126,900 3,117,933 *+ Lenox Group 92,600 940,816 Meredith 105,000 5,255,250 * Stage Stores 156,700 5,100,585 * Thor Industries 152,500 7,332,200 * Tuesday Morning 233,900 3,758,773 * Wolverine World Wide 276,150 6,334,881 *+ Zale 298,300 7,004,084 ____________ 90,405,181 ____________ Consumer Staples - 3.12% American Greetings Class A 286,900 6,452,381 Bunge Limited 83,000 4,697,800 + Constellation Brands 244,200 6,031,740 Del Monte Foods 607,200 7,189,248 ____________ 24,371,169 ____________ Energy - 7.31% *+ Energy Partners 308,300 6,535,960 + Grey Wolf 832,600 6,369,390 + Newfield Exploration 115,100 4,918,223 * Southwest Gas 195,600 5,693,916 Tesoro 54,800 3,732,428 TODCO 118,800 5,247,396 + W-H Energy Services 287,900 16,220,286 *+ Whiting Petroleum 220,800 8,357,280 ____________ 57,074,879 ____________ Financial Services - 18.14% * AmerUs Group 151,800 8,825,652 Bank of Hawaii 182,800 9,273,444 * BankUnited Financial Class A 291,600 9,045,432 Berkley (W.R.) 304,500 10,465,665 * Boston Private Financial Holdings 258,200 7,746,000 Colonial BancGroup 479,100 12,772,806 Compass Bancshares 75,700 4,212,705 * First Midwest Bancorp 121,400 4,268,424 * First Republic Bank 230,400 9,681,408 * Greater Bay Bancorp 274,000 8,167,940 * Harleysville Group 153,800 4,258,722 * Independent Bank 87,300 2,778,759 * Infinity Property & Casualty 143,500 6,115,970 * MAF Bancorp 150,000 6,493,500 * NBT Bancorp 135,200 2,981,160 Platinum Underwriters Holdings 237,100 6,387,474 * Provident Bankshares 233,000 8,220,240 * Republic Bancorp 404,836 4,400,567 * Sterling Financial 229,868 6,905,235 *+ Triad Guaranty 160,900 8,709,517 ____________ 141,710,620 ____________ Health Care - 7.06% * Arrow International 188,700 6,083,688 + Community Health Systems 164,500 6,201,650 * Owens & Minor 223,600 6,640,920 + Par Pharmaceuticals 142,000 3,258,900 + Pediatrix Medical Group 168,400 7,778,396 *+ PRA International 204,900 5,136,843 Service Corp International 753,900 6,023,661 * STERIS 267,100 6,076,525 Universal Health Services Class B 156,700 7,954,092 ____________ 55,154,675 ____________ (continues) 3 Statement of net assets Delaware Small Cap Value Fund Number of Market Shares Value ________________________________________________________________________________ Common Stock (continued) ________________________________________________________________________________ Real Estate - 4.67% * Ashford Hospitality Trust 375,000 $ 4,481,250 Brandywine Realty Trust 318,937 9,255,552 Camden Property Trust 108,600 7,754,040 * Education Realty Trust 184,900 2,607,090 * Highland Hospitality 413,400 5,002,140 * Reckson Associates Realty 192,000 7,380,480 ____________ 36,480,552 ____________ Technology - 13.17% Acxiom 321,400 7,578,612 + BEA Systems 796,200 10,796,472 *+ Bell Microproducts 387,000 2,337,480 + Brocade Communications Systems 1,777,600 10,861,136 *+ Checkpoint Systems 265,600 5,999,904 *+ CommScope 291,200 8,511,776 *+ Emulex 423,200 7,499,104 *+ Entegris 454,800 4,402,464 + Ingram Micro Class A 397,800 6,866,028 + Insight Enterprises 322,500 5,850,150 + International Rectifier 123,400 5,497,470 + NETGEAR 158,800 3,717,508 * QAD 209,400 1,474,176 Symbol Technologies 321,400 3,815,018 *+ Synnex 210,800 3,781,752 + Synopsys 310,100 6,335,343 * Technitrol 329,700 7,523,754 ____________ 102,848,147 ____________ Transportation - 3.81% * Alexander & Baldwin 192,200 8,697,050 *+ Kirby 139,800 10,503,174 *+ SCS Transportation 88,000 2,153,360 SkyWest 197,400 4,585,602 *+ YRC Worldwide 97,800 3,857,232 ____________ 29,796,418 ____________ Utilities - 2.96% Black Hills 110,100 3,724,683 + El Paso Electric 275,600 5,313,568 * FairPoint Communications 227,200 3,062,656 * Otter Tail 181,700 4,740,553 * PNM Resources 247,000 6,241,690 ____________ 23,083,150 ____________ Total Common Stock (cost $569,631,749) 751,913,730 ____________ Principal Amount ________________________________________________________________________________ Repurchase Agreements - 4.40% ________________________________________________________________________________ With BNP Paribas 4.88% 6/1/06 (dated 5/31/06, to be repurchased at $21,613,929, collateralized by $8,073,000 U.S. Treasury Notes 2.375% due 8/31/06, market value $8,069,506, $6,257,000 U.S. Treasury Notes 2.75% due 7/31/06, market value $6,291,566, $4,789,000 U.S. Treasury Notes 2.875% due 11/30/06, market value $4,737,915 and $2,764,000 U.S. Treasury Notes 6.50% due 2/15/10, market value $2,957,467) $21,611,000 21,611,000 With Cantor Fitzgerald 4.88% 6/1/06 (dated 5/31/06, to be repurchased at $12,755,729, collateralized by $5,545,000 U.S. Treasury Notes 2.50% due 9/30/06, market value $5,525,560, $5,545,000 U.S. Treasury Notes 3.50% due 11/15/06, market value $5,518,839 and $1,878,000 U.S. Treasury Notes 6.00% due 8/15/09, market value $1,967,572) 12,754,000 12,754,000 ____________ Total Repurchase Agreements (cost $34,365,000) 34,365,000 ____________ Total Market Value of Securities Before Securities Lending Collateral - 100.66% (cost $603,996,749) 786,278,730 ____________ 4 Principal Market Amount Value ________________________________________________________________________________ Securities Lending Collateral** - 20.05% ________________________________________________________________________________ Short-Term Investments Fixed Rate Notes - 5.41% Calyon 5.05% 6/19/06 $ 5,240,883 $ 5,240,883 Citigroup Global Markets 5.10% 6/1/06 24,540,991 24,540,991 Deutsche Bank London 5.00% 6/29/06 6,047,172 6,047,172 Washington Mutual Grand 5.00% 6/30/06 6,450,317 6,450,317 ____________ 42,279,363 ____________ ~ Variable Rate Notes - 14.64% American Honda Finance 5.07% 2/21/07 3,628,303 3,628,303 ANZ National 5.05% 7/2/07 806,290 806,290 Australia New Zealand 5.06% 7/2/07 4,031,448 4,031,448 Bank of America 5.07% 2/23/07 5,240,883 5,240,883 Bank of New York 5.07% 7/2/07 3,225,159 3,225,159 Barclays 5.06% 5/18/07 5,240,883 5,240,883 Bayerische Landesbank 5.10% 8/25/06 4,031,448 4,031,448 Bear Stearns 5.13% 11/30/06 4,837,738 4,837,738 BNP Paribas 5.14% 7/2/07 4,031,448 4,031,448 Canadian Imperial Bank 5.06% 7/2/07 2,015,724 2,015,724 Canadian Imperial Bank 5.07% 11/22/06 4,031,448 4,031,448 CDC Financial Products 5.16% 6/30/06 5,240,883 5,240,883 Citigroup Global Markets 5.13% 6/7/06 5,240,883 5,240,883 Commonwealth Bank 5.05% 7/2/07 4,031,448 4,031,448 Goldman Sachs 5.20% 5/31/07 5,240,883 5,240,883 Manufacturers & Traders 5.07% 9/26/06 4,031,432 4,031,115 Marshall & Ilsley Bank 5.06% 7/2/07 4,434,593 4,434,593 Merrill Lynch Mortgage Capital 5.16% 6/7/06 3,628,303 3,628,303 Morgan Stanley 5.24% 5/31/07 4,998,996 4,998,996 National Australia Bank 5.04% 3/7/07 4,998,996 4,998,996 National City Bank 5.07% 3/2/07 4,838,188 4,839,545 National Rural Utilities 5.07% 7/2/07 6,369,688 6,369,688 Nordea Bank New York 5.06% 5/16/07 2,015,720 2,015,623 Nordea Bank Norge 5.06% 7/2/07 4,031,448 4,031,448 Royal Bank of Scotland 5.07% 7/2/07 4,031,448 4,031,448 Societe Generale 4.99% 7/2/07 2,015,724 2,015,724 Toyota Motor Credit 5.05% 6/23/06 4,031,457 4,031,478 Wells Fargo 5.07% 7/2/07 4,031,448 4,031,448 ____________ 114,333,274 ____________ Total Securities Lending Collateral (cost $156,612,637) 156,612,637 ____________ Total Market Value of Securities - 120.71% (cost $760,609,386) $942,891,367! Obligation to Return Securities Lending Collateral - (20.05%)** (156,612,637) Liabilities Net of Receivables and Other Assets - (0.66%) (5,163,932) ____________ Net Assets Applicable to 20,326,115 Shares Outstanding - 100.00% $781,114,798 ____________ Net Asset Value - Delaware Small Cap Value Fund Class A ($476,421,932 / 12,111,883 Shares) $39.34 ______ Net Asset Value - Delaware Small Cap Value Fund Class B ($105,867,203 / 2,895,743 Shares) $36.56 ______ Net Asset Value - Delaware Small Cap Value Fund Class C ($146,112,289 / 3,998,154 Shares) $36.54 ______ Net Asset Value - Delaware Small Cap Value Fund Class R ($17,022,636 / 436,549 Shares) $38.99 ______ Net Asset Value - Delaware Small Cap Value Fund Institutional Class ($35,690,738 / 883,786 Shares) $40.38 ______ Components of Net Assets at May 31, 2006: Shares of beneficial interest (unlimited authorization - no par) $572,345,016 Accumulated net realized gain on investments 26,487,801 Net unrealized appreciation of investments 182,281,981 ____________ Total net assets $781,114,798 ____________ + Non-income producing security for the period ended May 31, 2006. * Fully or partially on loan. ~ Variable rate security. The interest rate shown is the rate at the time of purchase. ** See Note 7 in "Notes to Financial Statements." ! Includes $154,770,586 of securities loaned. Net Asset Value and Offering Price per Share - Delaware Small Cap Value Fund Net asset value Class A (A) $39.34 Sales charge (5.75% of offering price) (B) 2.40 ______ Offering price $41.74 ______ (A) Net asset value per share, as illustrated, is the 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 5 Statement of operations Delaware Small Cap Value Fund Six Months Ended May 31, 2006 (Unaudited) Investment Income: Dividends $3,025,032 Interest 874,547 Securities lending income 103,595 Foreign tax withheld (2,685) $4,000,489 __________ ___________ Expenses: Management fees 2,779,498 Distribution expenses - Class A 690,472 Distribution expenses - Class B 553,763 Distribution expenses - Class C 697,621 Distribution expenses - Class R 42,412 Dividend disbursing and transfer agent fees and expenses 1,038,320 Accounting and administration expenses 151,705 Reports and statements to shareholders 52,087 Registration fees 60,046 Legal and professional fees 43,147 Insurance fees 12,559 Trustees' fees 21,937 Custodian fees 12,537 Pricing fees 463 Other 9,610 6,166,177 __________ Less waiver of distribution expenses - Class A (43,610) Less waiver of distribution expenses - Class R (7,069) Less expense paid indirectly (2,309) ___________ Total expenses 6,113,189 ___________ Net Investment Loss (2,112,700) ___________ Net Realized and Unrealized Gain on Investments and Foreign Currencies: Net realized gain (loss) on: Investments 28,697,245 Foreign currencies (185) ___________ Net realized gain 28,697,060 Net change in unrealized appreciation/depreciation of investments 35,170,134 ___________ Net Realized and Unrealized Gain on Investments 63,867,194 ___________ Net Increase in Net Assets Resulting from Operations $61,754,494 ___________ See accompanying notes 6 Statements of changes in net assets Delaware Small Cap Value Fund Six Months Year Ended Ended 5/31/06 11/30/05 (Unaudited) Increase (Decrease) in Net Assets from Operations: Net investment loss $(2,112,700) $(2,407,279) Net realized gain on investments 28,697,060 57,318,859 Net change in unrealized appreciation/depreciation of investments 35,170,134 5,620,978 ___________ ___________ Net increase in net assets resulting from operations 61,754,494 60,532,558 ___________ ___________ Dividends and Distributions to Shareholders from: Net realized gain on investments: Class A (32,435,486) (31,763,824) Class B (8,947,128) (13,514,764) Class C (10,292,652) (8,240,031) Class R (868,000) (548,342) Institutional Class (2,443,227) (2,698,187) ___________ ___________ (54,986,493) (56,765,148) ___________ ___________ Capital Share Transactions: Proceeds from shares sold: Class A 87,374,986 169,715,275 Class B 4,982,660 14,236,482 Class C 28,942,526 63,480,297 Class R 7,262,230 8,843,862 Institutional Class 5,683,929 14,240,093 Net asset value of shares issued upon reinvestment of dividends and distributions: Class A 30,498,053 29,903,497 Class B 8,309,204 12,427,282 Class C 9,675,322 7,549,508 Class R 865,472 548,342 Institutional Class 2,425,287 2,698,187 ___________ ___________ 186,019,669 323,642,825 ___________ ___________ Cost of shares repurchased: Class A (56,367,566) (65,214,888) Class B (18,350,663) (24,899,314) Class C (13,111,521) (18,127,279) Class R (1,838,970) (3,578,256) Institutional Class (3,714,858) (10,142,609) ___________ ___________ (93,383,578) (121,962,346) ___________ ___________ Increase in net assets derived from capital share transactions 92,636,091 201,680,479 ___________ ___________ Net Increase in Net Assets 99,404,092 205,447,889 Net Assets: Beginning of period 681,710,706 476,262,817 ____________ ____________ End of period (there was no undistributed net investment income at either period end) $781,114,798 $681,710,706 ____________ ____________ See accompanying notes 7 Financial highlights Delaware Small Cap Value Fund Class A Selected data for each share of the Fund outstanding throughout each period were as follows: Six Months Year Ended Ended ________________________________________________________ 5/31/06(1) 11/30/05 11/30/04 11/30/03 11/30/02 11/30/01 (Unaudited) ____________________________________________________________________________________________________________________________________ Net asset value, beginning of period $ 39.110 $ 39.640 $ 35.220 $ 27.120 $ 29.350 $ 25.980 Income (loss) from investment operations: Net investment income (loss)(2) (0.064) (0.075) (0.105) (0.136) (0.060) 0.059 Net realized and unrealized gain on investments 3.347 4.170 6.879 9.079 0.574 4.429 _______ _______ _______ _______ _______ _______ Total from investment operations 3.283 4.095 6.774 8.943 0.514 4.488 _______ _______ _______ _______ _______ _______ Less dividends and distributions: From net investment income - - - - - (0.026) From net realized gain on investments (3.053) (4.625) (2.354) (0.843) (2.744) (1.047) In excess of net realized gain on investments - - - - - (0.045) _______ _______ _______ _______ _______ _______ Total dividends and distributions (3.053) (4.625) (2.354) (0.843) (2.744) (1.118) _______ _______ _______ _______ _______ _______ Net asset value, end of period $ 39.340 $ 39.110 $ 39.640 $ 35.220 $ 27.120 $ 29.350 _______ _______ _______ _______ _______ _______ Total return(3) 8.98% 11.42% 20.52% 34.17% 1.60% 17.66% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 476,422 $409,567 $270,332 $ 240,322 $180,696 $182,925 Ratio of expenses to average net assets 1.38% 1.44% 1.54% 1.63% 1.63% 1.58% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.40% 1.44% 1.54% 1.63% 1.63% 1.58% Ratio of net investment income (loss) to average net assets (0.33%) (0.20%) (0.30%) (0.47%) (0.21%) 0.21% Ratio of net investment income (loss) to average net assets prior to expense limitation and expenses paid indirectly (0.35%) (0.20%) (0.30%) (0.47%) (0.21%) 0.21% Portfolio turnover 31% 33% 35% 42% 47% 72% ____________________________________________________________________________________________________________________________________ (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. (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. Total investment return reflects waivers and payment of fees by the distributor, as applicable. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 8 Delaware Small Cap Value Fund Class B Selected data for each share of the Fund outstanding throughout each period were as follows: Six Months Year Ended Ended ________________________________________________________ 5/31/06(1) 11/30/05 11/30/04 11/30/03 11/30/02 11/30/01 (Unaudited) ____________________________________________________________________________________________________________________________________ Net asset value, beginning of period $36.690 $37.690 $33.820 $ 26.260 $28.680 $ 25.520 Income (loss) from investment operations: Net investment loss(2) (0.191) (0.311) (0.334) (0.327) (0.252) (0.138) Net realized and unrealized gain on investments 3.114 3.936 6.558 8.730 0.576 4.345 _______ _______ _______ _______ _______ _______ Total from investment operations 2.923 3.625 6.224 8.403 0.324 4.207 _______ _______ _______ _______ _______ _______ Less dividends and distributions from: Net realized gain on investments (3.053) (4.625) (2.354) (0.843) (2.744) (1.047) _______ _______ _______ _______ _______ _______ Total dividends and distributions (3.053) (4.625) (2.354) (0.843) (2.744) (1.047) _______ _______ _______ _______ _______ _______ Net asset value, end of period $36.560 $36.690 $37.690 $ 33.820 $26.260 $ 28.680 _______ _______ _______ _______ _______ _______ Total return(3) 8.55% 10.68% 19.69% 33.21% 0.91% 16.83% Ratios and supplemental data: Net assets, end of period (000 omitted) $105,867 $110,684 $111,348 $107,136 $86,641 $ 83,648 Ratio of expenses to average net assets 2.10% 2.14% 2.24% 2.33% 2.33% 2.28% Ratio of net investment loss to average net assets (1.05%) (0.90%) (1.00%) (1.17%) (0.91%) (0.49%) Portfolio turnover 31% 33% 35% 42% 47% 72% ____________________________________________________________________________________________________________________________________ (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. (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 (continues) 9 Financial highlights Delaware Small Cap Value Fund Class C Selected data for each share of the Fund outstanding throughout each period were as follows: Six Months Year Ended Ended ________________________________________________________ 5/31/06(1) 11/30/05 11/30/04 11/30/03 11/30/02 11/30/01 (Unaudited) ____________________________________________________________________________________________________________________________________ Net asset value, beginning of period $36.670 $37.680 $33.810 $26.250 $28.670 $25.510 Income (loss) from investment operations: Net investment loss(2) (0.190) (0.313) (0.333) (0.326) (0.251) (0.135) Net realized and unrealized gain on investments 3.113 3.928 6.557 8.729 0.575 4.342 _______ _______ _______ _______ _______ _______ Total from investment operations 2.923 3.615 6.224 8.403 0.324 4.207 _______ _______ _______ _______ _______ _______ Less dividends and distributions from: Net realized gain on investments (3.053) (4.625) (2.354) (0.843) (2.744) (1.047) _______ _______ _______ _______ _______ _______ Total dividends and distributions (3.053) (4.625) (2.354) (0.843) (2.744) (1.047) _______ _______ _______ _______ _______ _______ Net asset value, end of period $36.540 $ 36.670 $37.680 $33.810 $26.250 $28.670 _______ _______ _______ _______ _______ _______ Total return(3) 8.59% 10.65% 19.69% 33.22% 0.91% 16.88% Ratios and supplemental data: Net assets, end of period (000 omitted) $146,112 $119,968 $66,313 $48,453 $34,140 $31,823 Ratio of expenses to average net assets 2.10% 2.14% 2.24% 2.33% 2.33% 2.28% Ratio of net investment loss to average net assets (1.05%) (0.90%) (1.00%) (1.17%) (0.91%) (0.49%) Portfolio turnover 31% 33% 35% 42% 47% 72% ____________________________________________________________________________________________________________________________________ (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. (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 10 Delaware Small Cap Value Fund Class R Selected data for each share of the Fund outstanding throughout each period were as follows: Six Months Ended Year Ended 6/2/03(2) 5/31/06(1) ___________________ to (Unaudited) 11/30/05 11/30/04 11/30/03 _______________________________________________________________________________________________________________________ Net asset value, beginning of period $38.840 $39.480 $35.190 $29.000 Income (loss) from investment operations: Net investment loss(3) (0.106) (0.169) (0.209) (0.160) Net realized and unrealized gain on investments 3.309 4.154 6.853 6.350 _______ _______ _______ _______ Total from investment operations 3.203 3.985 6.644 6.190 _______ _______ _______ _______ Less dividends and distributions from: Net realized gain on investments (3.053) (4.625) (2.354) - _______ _______ _______ _______ Total dividends and distributions (3.053) (4.625) (2.354) - _______ _______ _______ _______ Net asset value, end of period $38.990 $38.840 $39.480 $35.190 _______ _______ _______ _______ Total return(4) 8.85% 11.15% 20.15% 21.35% Ratios and supplemental data: Net assets, end of period (000 omitted) $17,023 $10,574 $4,539 $1,740 Ratio of expenses to average net assets 1.60% 1.70% 1.84% 1.97% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.70% 1.74% 1.84% 1.97% Ratio of net investment loss to average net assets (0.55%) (0.46%) (0.60%) (0.97%) Ratio of net investment loss to average net assets prior to expense limitation and expenses paid indirectly (0.65%) (0.50%) (0.60%) (0.97%) Portfolio turnover 31% 33% 35% 42% _______________________________________________________________________________________________________________________ (1) Ratios and portfolio turnover have been annualized and total return has not been annualized. (2) Date of commencement of operations, ratios 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 waivers and payment of fees by the distributor, as applicable. Performance would have been lower had the expense limitation not been in effect. See accompanying notes (continues) 11 Financial highlights Delaware Small Cap Value Fund Institutional Class Selected data for each share of the Fund outstanding throughout each period were as follows: Six Months Year Ended Ended ________________________________________________________ 5/31/06(1) 11/30/05 11/30/04 11/30/03 11/30/02 11/30/01 (Unaudited) ____________________________________________________________________________________________________________________________________ Net asset value, beginning of period $40.020 $40.350 $35.700 $27.400 $29.540 $26.130 Income (loss) from investment operations: Net investment income (loss)(2) (0.001) 0.036 - (0.050) 0.026 0.144 Net realized and unrealized gain on investments 3.414 4.259 7.004 9.193 0.578 4.458 _______ _______ _______ _______ _______ _______ Total from investment operations 3.413 4.295 7.004 9.143 0.604 4.602 _______ _______ _______ _______ _______ _______ Less dividends and distributions: From net investment income - - - - - (0.100) From net realized gain on investments (3.053) (4.625) (2.354) (0.843) (2.744) (1.047) In excess of net realized gain on investments - - - - - (0.045) _______ _______ _______ _______ _______ _______ Total dividends and distributions (3.053) (4.625) (2.354) (0.843) (2.744) (1.192) _______ _______ _______ _______ _______ _______ Net asset value, end of period $40.380 $40.020 $40.350 $35.700 $27.400 $29.540 _______ _______ _______ _______ _______ _______ Total return(3) 9.13% 11.77% 20.88% 34.57% 1.88% 18.09% Ratios and supplemental data: Net assets, end of period (000 omitted) $35,691 $30,918 $23,731 $33,387 $19,459 $18,224 Ratio of expenses to average net assets 1.10% 1.14% 1.24% 1.33% 1.33% 1.28% Ratio of net investment income (loss) to average net assets (0.05%) 0.10% - (0.17%) 0.09% 0.51% Portfolio turnover 31% 33% 35% 42% 47% 72% ____________________________________________________________________________________________________________________________________ (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. (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 12 Notes to financial statements Delaware Smalll Cap Value Fund May 31, 2006 (Unaudited) Delaware Group Equity Funds V (the "Trust") is organized as a Delaware statutory trust and offers three series: Delaware Dividend Income Fund, Delaware Small-Cap Core 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 U.S. generally accepted accounting principles and are consistently followed by the Fund. Security Valuation - Equity securities, except those traded on the Nasdaq Stock Market, Inc. (Nasdaq), 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. Securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If on a particular day an equity security does not trade, then the mean between the bid and the asked prices will be used. Short-term debt securities having less than 60 days to maturity are valued at amortized cost, which approximates market value. Securities Lending collateral is 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, 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). 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 pursuant to an exemptive order issued by the Securities and Exchange Commission. 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 U.S. generally accepted accounting principles requires management to make estimates and assumptions that may 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. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. 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. Distributions received from investments in Real Estate Investment Trusts (REITs) are recorded as dividend income on the ex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer. The Fund declares and pays dividends from net investment income and distributions from net realized gains on investments, if any, annually. Subject to seeking best execution, the Fund may direct certain security trades to brokers who have agreed to rebate a portion of the related brokerage commission to the Fund in cash. Such commission rebates are included in realized gain on investments in the accompanying financial statements and totaled $21,794 for the six months ended May 31, 2006. In general, best execution refers to many factors, including the price paid or received for a security, the commission charged, the promptness and reliability of execution, the confidentiality and placement accorded the order, and other factors affecting the overall benefit obtained by the Fund on the transaction. The Fund receives earnings credits from its custodian when positive cash balances are maintained, which are used to offset custody fees. The expense paid under the above arrangement is included in custodian fees on the Statement of Operations with the corresponding expense offset shown as "expense paid indirectly." (continues) 13 Notes to financial statements Delaware Small Cap Value Fund 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. Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting, administration, dividend disbursing and transfer agent services. The Fund pays DSC a monthly fee computed at the annual rate of 0.04% of the Fund's average daily net assets for accounting and administration services. The Fund pays DSC a monthly fee based on the number of shareholder accounts for dividend and disbursing and transfer agent services. 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 distribution and service 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. Institutional Class shares pay no distribution and service expenses. Effective March 27, 2006, DDLP has contracted to limit distribution and service fees through March 31, 2007 for Class A shares from exceeding 0.25% of average daily net assets. DDLP has contracted to waive distribution and service fees through March 31, 2007, in order to prevent distribution and service fees of Class R shares from exceeding 0.50% of average daily net assets. At May 31, 2006, the Fund had liabilities payable to affiliates as follows: Investment management fee payable to DMC $495,813 Dividend disbursing, transfer agent, accounting and administration fees and other expenses payable to DSC 204,008 Distribution fee payable to DDLP 329,843 Other expenses payable to DMC and affiliates* 57,718 *DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, fees for audit, legal, and tax services, registration fees and trustees' fees. As provided in the investment management agreement, the Fund bears the cost of certain legal services, including internal legal services provided to the Fund by DMC employees. For the six months ended May 31, 2006, the Fund was charged $16,012 for internal legal services provided by DMC. For the six months ended May 31, 2006, DDLP earned $57,382 for commissions on sales of the Fund's Class A shares. For the six months ended May 31, 2006, DDLP received gross contingent deferred sales charge commissions of $337, $45,835 and $12,579 on redemption of the Fund's Class A, Class B, and Class C shares, respectively, and these commissions were entirely used to offset up-front commissions previously paid by DDLP to broker-dealers on sales of those 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. 3. Investments For the six months ended May 31, 2006, the Fund made purchases of $152,027,508 and sales of $112,580,608 of investment securities other than short-term investments. At May 31, 2006, 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, 2006, the cost of investments was $760,700,537. At May 31, 2006, the net unrealized appreciation was $182,190,830 of which $197,007,060 related to unrealized appreciation of investments and $14,816,230 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 U.S. generally accepted accounting principles. Additionally, net short term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the six months ended May 31, 2006 and the year ended November 30, 2005 were as follows: Six Months Year Ended Ended 5/31/06* 11/30/05 __________ ________ Ordinary Income $ 5,982,465 $12,396,508 Long-term capital gain 49,004,028 44,368,640 ___________ ___________ Total $54,986,493 $56,765,148 ___________ ___________ *Tax information for the period ended May 31, 2006 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, 2006, the estimated components of net assets on a tax basis were as follows: Shares of beneficial interest $572,345,016 Undistributed ordinary income 7,205,209 Undistributed long-term capital gains 19,373,743 Unrealized appreciation/depreciation of investments and foreign currencies 182,190,830 ____________ Net assets $781,114,798 ____________ The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales. The undistributed earnings for Delaware Small Cap Value Fund are estimated pending final notification of the tax character of distributions received from investments in REITs. For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of net operating losses. Results of operations and net assets were not affected by these reclassifications. For the six months ended May 31, 2006, the Fund recorded an estimate of these differences since the final tax characteristics cannot be determined until fiscal year end. Accumulated net investment loss $ 2,112,700 Accumulated net realized gain (2,112,700) 5. Capital Shares Transactions in capital shares were as follows: Six Months Year Ended Ended 5/31/06 11/30/05 Shares sold: Class A 2,252,079 4,580,248 Class B 138,164 410,074 Class C 804,757 1,810,137 Class R 188,269 238,720 Institutional Class 142,243 375,009 Shares issued upon reinvestment of dividends and distributions: Class A 832,528 835,591 Class B 243,243 367,867 Class C 283,381 223,532 Class R 23,806 15,416 Institutional Class 64,569 73,902 _________ _________ 4,973,039 8,930,496 _________ _________ Shares repurchased: Class A (1,444,061) (1,764,729) Class B (502,669) (715,069) Class C (361,343) (522,361) Class R (47,784) (96,840) Institutional Class (95,533) (264,582) _________ _________ (2,451,390) (3,363,581) _________ _________ Net increase (decrease) 2,521,649 5,566,915 _________ _________ For the six months ended May 31, 2006, and the year ended November 30, 2005, 177,173 Class B shares were converted to 165,378 Class A shares valued at $6,499,780 and 116,955 Class B shares were converted to 110,188 Class A shares valued at $4,191,667, 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. 6. Line of Credit The Fund, along with certain other funds in the Delaware Investments Family of Funds (the "Participants"), participates in a $225,000,000 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, 2006, 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. government obligations and/or cash collateral not less than 102% of the market value of the securities issued in 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. The Fund continues to record dividends on the securities loaned and is subject to changes in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to recover the securities from the borrower on demand. The security lending agent and the borrower retain a portion of the earnings from the collateral investments. The Fund records security lending income net of such allocation. At May 31, 2006, the market value of the securities on loan was $154,770,586, for which cash collateral was received and invested in accordance with the Lending Agreement. Such investments are presented on the Statement of Net Assets under the caption "Securities Lending Collateral." (continues) 15 Notes to financial statements Delaware Small Cap Value Fund 8. Credit and Market Risk The Fund invests a significant portion of its assets in small companies and may be subject to certain risks associated with ownership of securities of small companies. Investments in small-sized companies may be more volatile than investments in larger companies for a number of reasons, which include limited financial resources or a dependence on narrow product lines. The Fund invests in REITs and is subject to some of the risks associated with that industry. If the Fund holds real estate directly as a result of defaults or receives rental income directly from real estate holdings, its tax status as a regulated investment company may be jeopardized. The Fund's REIT holdings are also affected by interest rate changes, particularly if the REITs it holds use floating rate debt to finance their ongoing operations. There were no direct holdings during the six months ended May 31, 2006. The Fund may invest up to 10% of its total 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 the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Fund's Board of Trustees has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund's limitation on investments in illiquid assets. At May 31, 2006, there were no Rule 144A securities and no securities have been determined to be illiquid under the Fund's Liquidity Procedures. 9. Contractual Obligations The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund's existing contracts and expects the risk of loss to be remote. 16 Other Fund information Delaware Small Cap Value Fund Board Consideration of Delaware Small Cap Value Investment Advisory Agreement At a meeting held on May 17-18, 2006 (the "Annual Meeting"), the Board of Trustees, including a majority of disinterested or independent Trustees, approved the renewal of the Investment Advisory Agreement for the Delaware Small Cap Value Fund (the "Fund"). In making its decision, the Board considered information furnished throughout the year at regular Board meetings, as well as information prepared specifically in connection with the Annual Meeting. Information furnished and discussed throughout the year included reports detailing Fund performance, investment strategies, expenses, compliance matters and other services provided by Delaware Management Company ("DMC"), the investment advisor. Information furnished specifically in connection with the Annual Meeting included materials provided by DMC and its affiliates ("Delaware Investments") concerning, among other things, the level of services provided to the Fund, the costs of such services to the Fund, economies of scale and the financial condition and profitability of Delaware Investments. In addition, in connection with the Annual Meeting, the Board considered independent historical and comparative reports prepared by Lipper Inc. ("Lipper"), an independent statistical compilation organization. The Board also considered industry comparative information presented by representatives from Lipper. The Lipper reports compared the Fund's investment performance and expenses with those of other comparable mutual funds. The Board also received certain supplemental information regarding management's policy with respect to advisory fee levels and its philosophy with respect to breakpoints; the structure of portfolio manager compensation; and any constraints or limitations on the availability of securities in certain investment styles which might inhibit DMC's ability to fully invest in accordance with Fund policies. In considering such materials, the independent Trustees received assistance and advice from and met separately with independent counsel and representatives from Lipper. At the meeting with representatives from Lipper, Mr. Driscoll, Chairman of the Delaware Investments(R) Family of Funds, and Chairman and Chief Executive Officer of the investment advisor, was present to respond to questions by Lipper and the independent Trustees. While the Board considered the Investment Advisory Agreements for all of the funds in the Delaware Investments Family of Funds at the same Board meeting, information was provided and considered by the Board for each fund individually. In approving the continuance of the Investment Advisory Agreement for the Fund, the Board, including a majority of independent Trustees, determined that the existing advisory fee structure was fair and reasonable and that the continuance of the Investment Advisory Agreement was in the best interests of the Fund and its shareholders. While attention was given to all information furnished, the following discusses the primary factors relevant to the Board's deliberations and determination, including those relating to the selection of the investment advisor and the approval of the advisory fee. Nature, Extent And Quality Of Service. Consideration was given to the services provided by Delaware Investments to the Fund and its shareholders. In reviewing the nature, extent and quality of services, the Board emphasized reports furnished to it throughout the year at regular Board meetings covering matters such as the relative performance of the Fund, compliance of portfolio managers with the investment policies, strategies and restrictions for the Fund, the compliance of management personnel with the Code of Ethics adopted throughout the Delaware Investments Family of Funds complex, the adherence to fair value pricing procedures as established by the Board, and the accuracy of net asset value calculations. The Board noted that it was pleased with the current staffing of the Fund's investment advisor and management's efforts to strengthen and deepen portfolio management teams during the past year, the emphasis on research and the compensation system for advisory personnel. Favorable consideration was given to DMC's efforts to maintain, and in some instances increase, financial and human resources committed to fund matters. Other factors taken into account by the Board were Delaware Investments' preparedness for, and response to, legal and regulatory matters. The Board also considered the transfer agent and shareholder services provided to Fund shareholders by Delaware Investments' affiliate, Delaware Service Company, Inc., noting DSC's commitment to maintain a high level of service in keeping with its past receipt of the DALBAR Pyramid Award, and the continuing expenditures by Delaware Investments to improve the delivery of shareholder services. Additionally, the Board noted the extent of benefits provided to Fund shareholders for being part of the Delaware Investments Family of Funds, including the privilege to exchange investments between the same class of shares of funds without a sales charge, the ability to reinvest Fund dividends into other funds and the privilege to combine holdings in other funds to obtain a reduced sales charge. The Board was satisfied with the nature, extent and quality of the overall services provided by Delaware Investments. Investment Performance. The Board considered the investment performance of DMC and the Fund. The Board was pleased with DMC's investment performance. The Board placed significant emphasis on the investment performance of the Fund in view of its importance to shareholders. While consideration was given to performance reports and discussions with portfolio managers at Board meetings throughout the year, particular weight was given to the Lipper reports furnished for the Annual Meeting. The Lipper reports prepared for the Fund showed the investment performance of its Class A shares in comparison to a group of similar funds as selected by Lipper (the "Performance Universe"). A fund with the best performance is ranked first, and a fund with the poorest performance is ranked last. The highest/best performing 25% of funds in the Performance Universe make up the first quartile; the next 25% - the second quartile; the next 25% - the third quartile; and the poorest/worst performing 25% of funds in the Performance Universe make up the fourth quartile. Comparative annualized performance for the Fund was shown for the past one, three, five and 10-year periods ended January 31, 2006. The Board noted its objective that the Fund's performance be at or above the median of its Performance Universe. The following paragraph summarizes the performance results for the Fund and the Board's view of such performance. The Performance Universe for the Fund consisted of the Fund and all retail and institutional small cap value funds as selected by Lipper. The Lipper report comparison showed that the Fund's total return for the one year period was in the first quartile of such Performance Universe. The report further showed that the Fund's total return for the three, five and 10 year periods was in the second quartile. The Board was satisfied with such performance. (continues) 17 Other Fund information Delaware Small Cap Value Fund Board Consideration of Delaware Small Cap Value Fund Investment Advisory Agreement (continued) Comparative Expenses. The Board considered expense data for the Delaware Investments Family of Funds. Management provided the Board with information on pricing levels and fee structures for the Funds. The Board focused particularly on the comparative analysis of the management fees and total expense ratios of the Fund and the management fees and expense ratios of a group of similar funds as selected by Lipper (the "Expense Group"). In reviewing comparative costs, the Fund's contractual management fee and the actual management fee incurred by the Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund) of other funds within the Expense Group, taking into effect any applicable breakpoints and fee waivers. The Fund's total expenses were also compared with those of its Expense Group. The Lipper total expenses, for comparative consistency, were shown by Lipper for Class A shares and compared total expenses including 12b-1 and non-12b-1 service fees. The Board also considered fees paid to Delaware Investments for non-management services. The Board noted its objective to limit the Fund's total expense ratio to an acceptable range as compared to the median of the Expense Group. The following paragraph summarizes the expense results for the Fund and the Board's view of such expenses. The expense comparisons for the Fund showed that its actual management fee was in the quartile with the lowest expenses of its Expense Group and its total expenses were in the quartile with the highest expenses of its Expense Group. The Board gave favorable consideration to the Fund's management fee, but noted that the Fund's total expenses were not in line with the Board's stated objective. In evaluating the total expenses, the Board considered recent initiatives implemented by management, such as the outsourcing of certain transfer agency services, creating an opportunity for a reduction in expenses. The Board was satisfied with management's efforts to improve the Fund's total expense ratio and bring it in line with the Board's objective. Management Profitability. The Board considered the level of profits, if any, realized by Delaware Investments in connection with the operation of the Fund. In this respect, the Board reviewed the Investment Management Profitability Analysis that addressed the overall profitability of Delaware Investments' business in providing management and other services to each of the individual funds and the Delaware Investments(R) Family of Funds as a whole. Specific attention was given to the methodology followed in allocating costs for the purpose of determining profitability. Management stated that the level of profits of Delaware Investments, to a certain extent, reflected operational cost savings and efficiencies initiated by Delaware Investments. The Board considered Delaware Investments' expenditures to improve services provided to fund shareholders and to meet additional regulatory and compliance requirements resulting from recent SEC initiatives. The Board also considered the extent to which Delaware Investments might derive ancillary benefits from fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its role as service provider to the Delaware Investments Family of Funds, the benefits from allocation of fund brokerage to improve trading efficiencies and the use of "soft" commission dollars to pay for proprietary and non-proprietary research. The Board did not find that the level of profits realized by Delaware Investments from the relationships with the Fund and the Delaware Investments Family of Funds required negotiation of reduction of fees. Economies Of Scale. The Trustees considered whether economies of scale are realized by Delaware Investments as the Fund's assets increase and the extent to which any economies of scale are reflected in the level of management fees charged. The Trustees took into account the standardized advisory fee pricing and structure approved by the Board and shareholders as part of a complex-wide shareholder meeting conducted in 1998/1999. At that time, Delaware Investments introduced breakpoints to account for management economies of scale. The Board noted that the fee under the Fund's management contract fell within the standard structure. The Board also noted that the Fund's assets exceeded the first breakpoint level. The Board believed that, given the extent to which economies of scale might be realized by the advisor and its affiliates, the schedule of fees under the Investment Advisory Agreement provides a sharing of benefits with the Fund and its shareholders. 18 About the organization 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(R) 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 that 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 Jude T. Driscoll Chairman Delaware Investments Family of Funds Philadelphia, PA Thomas L. Bennett Private Investor Rosemont, PA John A. Fry President Franklin & Marshall College Lancaster, PA Anthony D. Knerr Founder and Managing Director Anthony Knerr & Associates New York, NY Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. Philadelphia, PA Ann R. Leven Owner - ARL Associates, Financial and Strategic Consultants Washington, DC Thomas F. Madison President and Chief Executive Officer MLM Partners, Inc. Minneapolis, MN Janet L. Yeomans Vice President and Treasurer 3M Corporation St. Paul, MN J. Richard Zecher Founder Investor Analytics Scottsdale, AZ Affiliated officers Michael P. Bishof Senior Vice President and Chief Financial Officer Delaware Investments Family of Funds Philadelphia, PA David F. Connor Vice President, Deputy General Counsel, and Secretary Delaware Investments Family of Funds Philadelphia, PA David P. O'Connor Senior Vice President, General Counsel, and Chief Legal Officer Delaware Investments Family of Funds Philadelphia, PA John J. O'Connor Senior Vice President and Treasurer Delaware Investments Family of Funds Philadelphia, PA Contact information Investment manager Delaware Management Company, a series of Delaware Management Business Trust Philadelphia, PA National distributor Delaware Distributors, L.P. Philadelphia, PA Shareholder servicing, dividend disbursing, and transfer agent Delaware Service Company, Inc. 2005 Market Street Philadelphia, PA 19103-7094 For shareholders 800 523-1918 For securities dealers and financial institutions representatives only 800 362-7500 Web site www.delawareinvestments.com Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q, as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 800 523-1918; (ii) on the Fund's Web site at http://www.delawareinvestments.com; and (iii) on the Commission's Web site at http://www.sec.gov. The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330. Information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Fund's Web site at http://www.delawareinvestments.com; and (ii) on the Commission's Web site at http://www.sec.gov. 19 Simplify your life. Manage your investments online! Get Account Access, the Delaware Investments(R) secure Web site that allows you to conduct your business online. Gain 24-hour access to your account and one of the highest levels of Web security available. You also get: o Hassle-free investing - Make online purchases and redemptions at any time. o Simplified tax processing - Automatically retrieve your Delaware Investments accounts' 1099 information and import it directly into your 1040 tax return. Available only with Turbo Tax(R) Online(SM) and Desktop software - www.turbotax.com. o Less mail clutter - Get instant access to your fund materials online with Delaware eDelivery. Register for Account Access today! Visit www.delawareinvestments.com, select Individual Investors, and click Account Access. Please call our shareholder service center at 800 523-1918 Monday through Friday from 8:00 a.m. to 7:00 p.m., Eastern Time, for assistance with any questions. [Delaware Logo] (564) Printed in the USA SA-021 [5/-06] CGI 7/06 SEMI-0606 SM CAP VALUE PO11112 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. Schedule of Investments Included as part of report to shareholders filed under Item 1 of this Form N-CSR. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies Not applicable. Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers Not applicable. Item 10. Submission of Matters to a Vote of Security Holders Not applicable. Item 11. 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 providing reasonable assurance 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 control over financial reporting that occurred during the second fiscal quarter of the period covered by the report to stockholders included herein (i.e., the registrant's second fiscal quarter) that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits (a) (1) Code of Ethics Not applicable. (2) 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. (3) Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934. Not applicable. (b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith 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 PATRICK P. COYNE ________________________________ By: Patrick P. Coyne Title: President and Chief Executive Officer Date: August 3, 2006 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. PATRICK P. COYNE ________________________________ By: Patrick P. Coyne Title: President and Chief Executive Officer Date: August 3, 2006 MICHAEL P. BISHOF ________________________________ By: Michael P. Bishof Title: Chief Financial Officer Date: August 3, 2006