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: | | 811-00750 |
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| Exact name of registrant as specified in charter: | | Delaware Group® Equity Funds II |
| | | |
| Address of principal executive offices: | | 610 Market Street |
| | Philadelphia, PA 19106 |
| | | |
| Name and address of agent for service: | | David F. Connor, Esq. |
| | 610 Market Street |
| | Philadelphia, PA 19106 |
| | | |
| Registrant’s telephone number, including area code: | | (800) 523-1918 |
| | | |
| Date of fiscal year end: | | November 30 |
| | | |
| Date of reporting period: | | November 30, 2021 |
Item 1. Reports to Stockholders
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US equity mutual fund
Delaware Value® Fund
November 30, 2021
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and its summary prospectus, which may be obtained by visiting delawarefunds.com/literature or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.
You can obtain shareholder reports and prospectuses online instead of in the mail.
Visit delawarefunds.com/edelivery.
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Experience Delaware Funds by Macquarie®
Macquarie Investment Management (MIM) is a global asset manager with offices in the United States, Europe, Asia, and Australia. As active managers, we prioritize autonomy and accountability at the investment team level in pursuit of opportunities that matter for clients. Delaware Funds is one of the longest-standing mutual fund families, with more than 80 years in existence.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Funds or obtain a prospectus for Delaware Value® Fund at delawarefunds.com/literature.
Manage your account online
| ● | Check your account balance and transactions |
| ● | View statements and tax forms |
| ● | Make purchases and redemptions |
Visit delawarefunds.com/account-access.
Macquarie Asset Management (MAM) offers a diverse range of products including securities investment management, infrastructure and real asset management, and fund and equity-based structured products. MIM is the marketing name for certain companies comprising the asset management division of Macquarie Group. This includes the following investment advisers: Macquarie Investment Management Business Trust (MIMBT), Macquarie Funds Management Hong Kong Limited, Macquarie Investment Management Austria Kapitalanlage AG, Macquarie Investment Management Global Limited, Macquarie Investment Management Europe Limited, and Macquarie Investment Management Europe S.A.
The Fund is distributed by Delaware Distributors, L.P. (DDLP), an affiliate of MIMBT and Macquarie Group Limited.
None of the entities noted in this document is an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia) and the obligations of these entities do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (Macquarie Bank). Macquarie Bank does not guarantee or otherwise provide assurance in respect of the obligations of these entities. In addition, if this document relates to an investment, (a) each investor is subject to investment risk including possible delays in repayment and loss of income and principal invested and (b) none of Macquarie Bank or any other Macquarie Group company guarantees any particular rate of return on or the performance of the investment, nor do they guarantee repayment of capital in respect of the investment.
The Fund is governed by US laws and regulations.
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Unless otherwise noted, views expressed herein are current as of November 30, 2021, and subject to change for events occurring after such date.
The Fund is not FDIC insured and is not guaranteed. It is possible to lose the principal amount invested.
Advisory services provided by Delaware Management Company, a series of MIMBT, a US registered investment advisor.
All third-party marks cited are the property of their respective owners.
© 2022 Macquarie Management Holdings, Inc.
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| Portfolio management review | |
| Delaware Value® Fund | December 7, 2021 (Unaudited) |
Performance preview (for the year ended November 30, 2021)
| Delaware Value Fund (Institutional Class shares) | | 1-year return | | +18.19% |
| Delaware Value Fund (Class A shares) | | 1-year return | | +17.94% |
| Russell 1000® Value Index (benchmark) | | 1-year return | | +22.25% |
Past performance does not guarantee future results.
For complete, annualized performance for Delaware Value Fund, please see the table on page 4. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.
The performance of Class A shares excludes the applicable sales charge. The performance of both Institutional Class shares and Class A shares reflects the reinvestment of all distributions.
Please see page 6 for a description of the index. Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.
Investment objective
The Fund seeks long-term capital appreciation.
Market review
Aided by rising COVID-19 vaccination rates, the Federal Reserve’s highly accommodative monetary policy, and unprecedented amounts of fiscal stimulus, the US economy staged a rebound and stocks posted strong gains during the Fund’s fiscal year. The period was marked by a move toward economic normalization as employment strengthened, spending on travel and leisure activities resumed, and offices reopened.
On the stimulus front, the federal government authorized approximately $4 trillion of new spending in the past 12 months through the $900 billion pandemic relief package passed in December 2020, the $1.9 trillion American Rescue Plan in March 2021, and the recent $1.2 trillion Infrastructure Investment and Jobs Act in November 2021.
For its part, the Fed kept short-term interest rates near zero percent and continued making monthly purchases of $120 billion in Treasury and agency mortgage-backed securities.
Overall, these developments fueled bullish sentiment and outsized stock market gains. The broad market S&P 500® Index continued setting
| ● | Monetary and fiscal stimulus fueled bullish sentiment and outsized stock market gains.
|
| ● | Supply-chain disruptions and new COVID-19 variants posed ongoing challenges along with rising inflation.
|
| ● | With stock market valuations at historically high levels, the Fund is focused on high-quality stocks and downside protection. |
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Portfolio management review
Delaware Value® Fund
new highs (66 between December 2020 and November 2021), margin debt topped $900 billion for the first time ever, and as of November 30, 2021, the volume of initial public offerings (IPOs) hit a new calendar year record. (Sources: FactSet Research Systems, Rosenberg Research.)
Amid the high level of investor enthusiasm, several notable challenges surfaced during the fiscal year. The lingering effects of COVID-19 (including the emergence of new variants), and persistently low vaccination rates in some parts of the world led to worker shortages, manufacturing delays, and supply chain bottlenecks. The result has been longer delivery times, higher freight costs, and rising prices for a broad array of goods, including food. Additionally, energy prices climbed higher as OPEC kept supplies in check and US oil and gas producers maintained a conservative approach to domestic production.
According to the most recent inflation data, the Personal Consumption Expenditures Price Index (PCE) was up 5.0% in October from a year earlier. The Core Personal Consumption Expenditures Price Index (Core PCE), the Fed’s preferred inflation gauge, which excludes food and energy prices, increased 4.1%. (Source: Bureau of Economic Analysis.)
Within the Fund
For the fiscal year ended November 30, 2021, Delaware Value Fund advanced, although it underperformed its benchmark, the Russell 1000 Value Index. The Fund’s Institutional Class shares rose 18.19%. The Fund’s Class A shares were up 17.94% at net asset value (NAV) and 11.16% at maximum offer price. These figures reflect reinvestment of all distributions. During the same period, the Fund’s benchmark gained 22.25%. For complete, annualized performance of Delaware Value Fund, please see the table on page 4.
Investments in the healthcare sector caused the largest drag on the Fund’s relative returns. Pharmaceutical maker Viatris Inc. was a significant detractor. Its shares remained under pressure since the company’s announcement in the first quarter of 2021 that its full-year results would come in below expectations, in large part because of higher-than-anticipated expenses related to its merger with Mylan N.V. (Viatris was formed in November 2020 by the merger of Pfizer Inc.’s Upjohn business and Mylan.) While management’s 2021 guidance was disappointing, we believe the stock could move higher over the longer term if the company can execute well.
Medical products distributor Cardinal Health Inc. was another notable healthcare laggard. The company experienced execution problems, primarily in the medical segment of its business, which put pressure on the stock and contributed to an erosion in investor confidence. More broadly, Cardinal’s strategic decision to prioritize growing its medical business over its specialty pharmaceutical business ended up being disadvantageous for the company. While the stock still traded at a low multiple (although not at a significant discount to peers, in our view), we sold the position as we no longer had strong conviction in Cardinal’s long-term business prospects.
The Fund’s holding in packaged food maker Conagra Brands Inc. was another noteworthy detractor. After benefiting from strong growth in packaged food sales during the early stages of the pandemic, Conagra’s year-over-year sales growth fell as the recovery got underway. Additionally, margins have been under pressure because of commodity price inflation, which the company expects to see for several more quarters. On a positive note, Conagra boosted its longer-term organic sales growth target and raised its quarterly dividend per share by 14% during the year. Conagra continues to trade at a discount to its peers and we believe investors are underestimating its long-term earnings power.
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Investments in the information technology sector were the largest contributors to the Fund’s relative returns. Oracle Corp., a provider of cloud software and services, led the group. Oracle benefited from increasing demand for cloud-based software in response to hybrid working and the ongoing migration of workloads to the cloud. It has been actively buying back its shares, and, over the past decade, has reduced its total shares outstanding by nearly half. With the shares trading above their five-year average price-to-earnings (P/E) ratio, we continue to assess the stock’s risk-reward profile in the context of other potential investment opportunities.
The Fund’s single energy holding, exploration, and production company ConocoPhillips, was a strong contributor. In the third quarter of 2021, Conoco announced its all-cash acquisition of Royal Dutch Shell’s Permian Basin assets and provided an update to its long-term financial and capital return outlook. In our opinion, the acquisition improves upon Conoco’s already-solid acreage position and production assets in the region and should enhance long-term shareholder returns while maintaining balance sheet strength.
The Fund’s holding in home improvement retailer Lowe’s Companies Inc. was another notable contributor. The stock continued to benefit from ongoing strength in the housing market and further progress on the reopening of the economy, as well as the transformation initiatives Lowe’s had implemented. Given the stock’s strong performance in recent years, we continue to assess its potential risk-reward profile relative to other opportunities in the consumer discretionary sector.
US stock market valuations are at the high end of their historical ranges, and some measures are near all-time highs. In our view, investors are extrapolating the outsized economic growth and strong market returns of the past several quarters while remaining complacent about the possible fallout from waning fiscal stimulus, less accommodative Fed policy, and slower corporate earnings growth. In this environment, where we think stock market returns will likely be lower, we’re placing an even greater emphasis on quality and downside protection. These attributes have served our investors well over our long history managing the Fund and, in our view, now is not the time to abandon our approach’s basic principles. The Fund trades at a discount to the Russell 1000 Value Index across a range of valuation measures. In our opinion, this discount, coupled with the higher-quality profile of our holdings, positions the Fund well for the next three to five years. (Source: FactSet.)
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| Performance summary | |
| Delaware Value® Fund | November 30, 2021 (Unaudited) |
The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 800 523-1918 or visiting delawarefunds.com/performance.
| Fund and benchmark performance1,2 | | Average annual total returns through November 30, 2021 |
| | 1 year | | 5 year | | 10 year | | Lifetime |
| Class A (Est. September 15, 1998) | | | | | | | | |
| Excluding sales charge | | +17.94% | | +8.67% | | +11.57% | | +7.76% |
| Including sales charge | | +11.16% | | +7.39% | | +10.92% | | +7.49% |
| Class C (Est. May 1, 2002) | | | | | | | | |
| Excluding sales charge | | +17.04% | | +7.85% | | +10.73% | | +6.99% |
| Including sales charge | | +16.04% | | +7.85% | | +10.73% | | +6.99% |
| Class R (Est. September 1, 2005) | | | | | | | | |
| Excluding sales charge | | +17.61% | | +8.40% | | +11.28% | | +7.78% |
| Including sales charge | | +17.61% | | +8.40% | | +11.28% | | +7.78% |
| Institutional Class (Est. September 15, 1998) | | | | | | | | |
| Excluding sales charge | | +18.19% | | +8.94% | | +11.85% | | +7.99% |
| Including sales charge | | +18.19% | | +8.94% | | +11.85% | | +7.99% |
| Class R6 (Est. May 2, 2016) | | | | | | | | |
| Excluding sales charge | | +18.36% | | +9.05% | | — | | +9.36% |
| Including sales charge | | +18.36% | | +9.05% | | — | | +9.36% |
| Russell 1000 Value Index | | +22.25% | | +10.36% | | +12.50% | | +7.96%* |
| * | The benchmark lifetime return is for Institutional Class share comparison only and is calculated using the last business day in the month of the Fund’s Institutional Class inception date. |
| 1 | Returns reflect the reinvestment of all distributions and are presented both with and without the applicable sales charges described below. Returns do not reflect the deduction of taxes the shareholder would pay on Fund distributions or redemptions of Fund shares. |
Expense limitations were in effect for certain classes during some or all of the periods shown in the “Fund and benchmark performance” table. Expenses for each class are listed in the “Fund expense ratios” table on page 5. Performance would have been lower had expense limitations not been in effect.
Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service (12b-1) fee.
Class A shares are sold with a maximum front-end sales charge of 5.75%, and have an annual 12b-1 fee of 0.25% of average daily net assets. The Board has adopted a formula for calculating 12b-1 plan fees for the Fund’s Class A shares. The Fund’s Class A shares are currently subject to a blended 12b-1 fee equal to the sum of: (i) 0.10% of average daily net assets representing shares
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acquired prior to May 2, 1994, and (ii) 0.25% of average daily net assets representing shares acquired on or after May 2, 1994. All Class A shares currently bear 12b-1 fees at the same rate, the blended rate, currently 0.25% of average daily net assets, based on the formula described above. This method of calculating Class A 12b-1 fees may be discontinued at the sole discretion of the Board. Performance for Class A shares, excluding sales charges, assumes that no front-end sales charge applied.
Class C shares are sold with a contingent deferred sales charge (CDSC) of 1.00% if redeemed during the first 12 months. They are also subject to an annual 12b-1 fee of 1.00% of average daily net assets. Performance for Class C shares, excluding sales charges, assumes either that CDSCs did not apply or that the investment was not redeemed.
Class R shares are available only for certain retirement plan products. They are sold without a sales charge and have an annual 12b-1 fee of 0.50% of average daily net assets.
Class R6 shares are available only to certain investors. In addition, Class R6 shares do not pay any service fees, sub-accounting fees, and/or sub-transfer agency fees to any brokers, dealers, or other financial intermediaries. Class R6 shares pay no 12b-1 fee.
Risk is increased in a concentrated portfolio since it holds a limited number of securities with each investment having a greater effect on the overall performance.
Diversification may not protect against market risk.
The disruptions caused by natural disasters, pandemics, or similar events could prevent the Fund from executing advantageous investment decisions in a timely manner and could negatively impact the Fund’s ability to achieve its investment objective and the value of the Fund’s investments.
| 2 | The Fund’s expense ratios, as described in the most recent prospectus, are disclosed in the following “Fund expense ratios” table. Please see the “Financial highlights” section in this report for the most recent expense ratios. |
| | | | | | | | | | | Institutional | | | |
| Fund expense ratios | | Class A | | Class C | | Class R | | Class | | Class R6 |
Total annual operating expenses
(without fee waivers) | | 0.93 | % | | 1.68 | % | | 1.18 | % | | 0.68 | % | | 0.58 | % |
Net expenses (including fee
waivers, if any) | | 0.93 | % | | 1.68 | % | | 1.18 | % | | 0.68 | % | | 0.58 | % |
| | | | | | | | | | | | | | | | |
| Type of waiver | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | |
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Performance summary
Delaware Value® Fund
Performance of a $10,000 investment1
Average annual total returns from November 30, 2011 through November 30, 2021
| For period beginning November 30, 2011 through November 30, 2021 | | Starting value | | Ending value |
 | Russell 1000 Value Index | | | $10,000 | | | | $32,479 | |
 | Delaware Value Fund — Institutional Class shares | | | $10,000 | | | | $30,635 | |
 | Delaware Value Fund — Class A shares | | | $9,425 | | | | $28,178 | |
| 1 | The “Performance of a $10,000 investment” graph assumes $10,000 invested in Institutional Class and Class A shares of the Fund on November 30, 2011, and includes the effect of a 5.75% front-end sales charge (for Class A shares) and the reinvestment of all distributions. The graph does not reflect the deduction of taxes the shareholders would pay on Fund distributions or redemptions of Fund shares. Expense limitations were in effect for some or all of the periods shown. Performance would have been lower had expense limitations not been in effect. Expenses are listed in the “Fund expense ratios” table on page 5. Please note additional details on pages 4 through 7. |
The graph also assumes $10,000 invested in the Russell 1000 Value Index as of November 30, 2011. The Russell 1000 Value Index measures the performance of the large-cap value segment of the US equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
The S&P 500 Index measures the performance of 500 mostly large-cap stocks weighted by market value, and is often used to represent performance of the US stock market.
The Personal Consumption Expenditures Price Index (PCE) is a measure of inflation that is calculated by the Bureau of Economic Analysis, representing changes in consumer spending on goods and services. It accounts for about two-thirds of domestic final spending.
The Core Personal Consumption Expenditures Price Index (Core PCE) measures the prices paid by consumers for goods and services excluding food and energy prices, because of the volatility caused by movements in food and energy prices, to reveal underlying inflation trends.
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Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company.
Index performance returns do not reflect any management fees, transaction costs, or expenses.
Indices are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.
Performance of other Fund classes will vary due to different charges and expenses.
| | Nasdaq symbols | | CUSIPs |
| Class A | | | DDVAX | | | 24610C881 |
| Class C | | | DDVCX | | | 24610C865 |
| Class R | | | DDVRX | | | 245907860 |
| Institutional Class | | | DDVIX | | | 24610C857 |
| Class R6 | | | DDZRX | | | 24610C840 |
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Disclosure of Fund expenses
For the six-month period from June 1, 2021 to November 30, 2021 (Unaudited)
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 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 six-month period from June 1, 2021 to November 30, 2021.
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 expenses shown in the table assume reinvestment of all dividends and distributions.
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Delaware Value® Fund
Expense analysis of an investment of $1,000
| | Beginning | | Ending | | | | | | | Expenses |
| | Account Value | | Account Value | | Annualized | | Paid During Period |
| | 6/1/21 | | 11/30/21 | | Expense Ratio | | 6/1/21 to 11/30/21* |
| Actual Fund return† | | | | | | | | | | | | | | | | | | | | |
| Class A | | | $ | 1,000.00 | | | | $ | 985.70 | | | | 0.92 | % | | | | $ | 4.58 | |
| Class C | | | | 1,000.00 | | | | | 982.20 | | | | 1.67 | % | | | | | 8.30 | |
| Class R | | | | 1,000.00 | | | | | 984.40 | | | | 1.17 | % | | | | | 5.82 | |
| Institutional Class | | | | 1,000.00 | | | | | 987.00 | | | | 0.67 | % | | | | | 3.34 | |
| Class R6 | | | | 1,000.00 | | | | | 987.50 | | | | 0.58 | % | | | | | 2.89 | |
| Hypothetical 5% return (5% return before expenses) | | | | | | | | | | | |
| Class A | | | $ | 1,000.00 | | | | $ | 1,020.46 | | | | 0.92 | % | | | | $ | 4.66 | |
| Class C | | | | 1,000.00 | | | | | 1,016.70 | | | | 1.67 | % | | | | | 8.44 | |
| Class R | | | | 1,000.00 | | | | | 1,019.20 | | | | 1.17 | % | | | | | 5.92 | |
| Institutional Class | | | | 1,000.00 | | | | | 1,021.71 | | | | 0.67 | % | | | | | 3.40 | |
| Class R6 | | | | 1,000.00 | | | | | 1,022.16 | | | | 0.58 | % | | | | | 2.94 | |
| * | “Expenses Paid During Period” are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). |
| † | Because actual returns reflect only the most recent six-month period, the returns shown may differ significantly from fiscal year returns. |
In addition to the Fund’s expenses reflected above, the Fund also indirectly bears its portion of the fees and expenses of the investment companies (Underlying Funds) in which it invests. The table above does not reflect the expenses of the Underlying Funds.
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| Security type / sector allocation and top 10 |
| equity holdings | |
| Delaware Value® Fund | As of November 30, 2021 (Unaudited) |
Sector designations may be different from the sector designations presented in other Fund materials. The sector designations may represent the investment manager’s internal sector classifications.
| Security type / sector | | Percentage of net assets |
| Common Stock | | | 99.28 | % | |
| Communication Services | | | 8.33 | % | |
| Consumer Discretionary | | | 9.75 | % | |
| Consumer Staples | | | 5.96 | % | |
| Energy | | | 3.03 | % | |
| Financials | | | 14.61 | % | |
| Healthcare | | | 17.70 | % | |
| Industrials | | | 11.89 | % | |
| Information Technology | | | 18.38 | % | |
| Materials | | | 3.05 | % | |
| Real Estate | | | 3.25 | % | |
| Utilities | | | 3.33 | % | |
| Short-Term Investments | | | 0.80 | % | |
| Total Value of Securities | | | 100.08 | % | |
| Liabilities Net of Receivables and Other Assets | | | (0.08 | %) | |
| Total Net Assets | | | 100.00 | % | |
Holdings are for informational purposes only and are subject to change at any time. They are not a recommendation to buy, sell, or hold any security.
| Top 10 equity holdings | | Percentage of net assets |
| Edison International | | | 3.33 | % | |
| Lowe’s | | | 3.27 | % | |
| Equity Residential | | | 3.25 | % | |
| Motorola Solutions | | | 3.20 | % | |
| Broadcom | | | 3.19 | % | |
| Cognizant Technology Solutions Class A | | | 3.17 | % | |
| Dollar General | | | 3.16 | % | |
| Cisco Systems | | | 3.14 | % | |
| CVS Health | | | 3.13 | % | |
| Johnson & Johnson | | | 3.11 | % | |
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| Schedule of investments | |
| Delaware Value® Fund | November 30, 2021 |
| | | | Number of | | | |
| | | shares | | Value (US $) |
| Common Stock – 99.28% | | | | | |
| Communication Services – 8.33% | | | | | |
| Comcast Class A | | 5,260,863 | | $ | 262,937,932 |
| Verizon Communications | | 4,958,833 | | | 249,280,535 |
| Walt Disney † | | 1,689,382 | | | 244,791,452 |
| | | | | | 757,009,919 |
| Consumer Discretionary – 9.75% | | | | | |
| Dollar General | | 1,296,590 | | | 286,935,367 |
| Dollar Tree † | | 2,038,158 | | | 272,766,685 |
| Lowe’s | | 1,215,366 | | | 297,266,370 |
| TJX | | 425,000 | | | 29,495,000 |
| | | | | | 886,463,422 |
| Consumer Staples – 5.96% | | | | | |
| Archer-Daniels-Midland | | 4,536,837 | | | 282,236,630 |
| Conagra Brands | | 8,505,720 | | | 259,849,746 |
| | | | | | 542,086,376 |
| Energy – 3.03% | | | | | |
| ConocoPhillips | | 3,928,901 | | | 275,533,827 |
| | | | | | 275,533,827 |
| Financials – 14.61% | | | | | |
| American International Group | | 4,942,900 | | | 259,996,540 |
| Discover Financial Services | | 2,300,700 | | | 248,130,495 |
| MetLife | | 4,655,644 | | | 273,100,077 |
| Truist Financial | | 4,690,823 | | | 278,212,712 |
| US Bancorp | | 4,851,900 | | | 268,504,146 |
| | | | | | 1,327,943,970 |
| Healthcare – 17.70% | | | | | |
| Baxter International | | 3,716,600 | | | 277,146,862 |
| Cigna | | 1,363,617 | | | 261,678,103 |
| CVS Health | | 3,198,102 | | | 284,822,964 |
| Johnson & Johnson | | 1,811,912 | | | 282,531,438 |
| Merck & Co. | | 3,229,842 | | | 241,947,464 |
| Viatris | | 21,207,103 | | | 261,059,438 |
| | | | | | 1,609,186,269 |
| Industrials – 11.89% | | | | | |
| Dover | | 1,701,275 | | | 278,753,909 |
| Honeywell International | | 1,337,090 | | | 270,413,081 |
| Northrop Grumman | | 751,562 | | | 262,144,826 |
| Raytheon Technologies | | 3,332,684 | | | 269,680,789 |
| | | | | | 1,080,992,605 |
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Schedule of investments
Delaware Value® Fund
| | | | Number of | | | |
| | | shares | | Value (US $) |
| Common Stock (continued) | | | | | |
| Information Technology – 18.38% | | | | | |
| Broadcom | | 523,900 | | $ | 290,072,952 |
| Cisco Systems | | 5,210,847 | | | 285,762,849 |
| Cognizant Technology Solutions Class A | | 3,695,666 | | | 288,188,035 |
| Fidelity National Information Services | | 2,263,221 | | | 236,506,595 |
| Motorola Solutions | | 1,148,100 | | | 290,675,958 |
| Oracle | | 3,074,800 | | | 279,007,352 |
| | | | | | 1,670,213,741 |
| Materials – 3.05% | | | | | |
| DuPont de Nemours | | 3,743,616 | | | 276,877,839 |
| | | | | | 276,877,839 |
| Real Estate – 3.25% | | | | | |
| Equity Residential | | 3,461,350 | | | 295,287,769 |
| | | | | | 295,287,769 |
| Utilities – 3.33% | | | | | |
| Edison International | | 4,629,500 | | | 302,213,760 |
| | | | | | 302,213,760 |
| Total Common Stock (cost $6,145,862,627) | | | | | 9,023,809,497 |
| | | | | | |
| Short-Term Investments – 0.80% | | | | | |
| Money Market Mutual Funds – 0.80% | | | | | |
| BlackRock FedFund – Institutional Shares (seven-day effective | | | | | |
| yield 0.03%) | | 18,227,997 | | | 18,227,997 |
| Fidelity Investments Money Market Government Portfolio – | | | | | |
| Class I (seven-day effective yield 0.01%) | | 18,227,997 | | | 18,227,997 |
| GS Financial Square Government Fund – Institutional Shares | | | | | |
| (seven-day effective yield 0.03%) | | 18,227,997 | | | 18,227,997 |
| Morgan Stanley Government Portfolio – Institutional Share Class | | | | | |
| (seven-day effective yield 0.03%) | | 18,227,996 | | | 18,227,996 |
| Total Short-Term Investments (cost $72,911,987) | | | | | 72,911,987 |
| Total Value of Securities—100.08% | | | | | |
| (cost $6,218,774,614) | | | | $ | 9,096,721,484 |
| † | Non-income producing security. |
Summary of abbreviations:
GS – Goldman Sachs
See accompanying notes, which are an integral part of the financial statements.
12
Table of Contents
| Statement of assets and liabilities | |
| Delaware Value® Fund | November 30, 2021 |
| Assets: | | | |
| | Investments, at value* | | $ | 9,096,721,484 |
| Dividends receivable | | | 22,241,328 |
| Receivable for fund shares sold | | | 7,410,886 |
| Receivable for securities sold | | | 503,613 |
| Total Assets | | | 9,126,877,311 |
| Liabilities: | | | |
| Due to custodian | | | 168 |
| Payable for fund shares redeemed | | | 28,309,107 |
| Investment management fees payable to affiliates | | | 4,124,064 |
| Payable for securities purchased | | | 2,137,983 |
| Dividend disbursing and transfer agent fees and expenses payable to | | | |
| non-affiliates | | | 1,699,139 |
| Other accrued expenses | | | 642,454 |
| Distribution fees payable to affiliates | | | 571,662 |
| Dividend disbursing and transfer agent fees and expenses payable to affiliates | | | 67,460 |
| Trustees’ fees and expenses payable to affiliates | | | 29,383 |
| Accounting and administration expenses payable to affiliates | | | 28,757 |
| Legal fees payable to affiliates | | | 21,104 |
| Reports and statements to shareholders expenses payable to affiliates | | | 10,288 |
| Total Liabilities | | | 37,641,569 |
| Total Net Assets | | $ | 9,089,235,742 |
| | | | |
| Net Assets Consist of: | | | |
| Paid-in capital | | $ | 4,407,272,724 |
| Total distributable earnings (loss) | | | 4,681,963,018 |
| Total Net Assets | | $ | 9,089,235,742 |
13
Table of Contents
Statement of assets and liabilities
Delaware Value® Fund
| Net Asset Value | | | | |
| | | | | |
| Class A: | | | | |
| Net assets | | $ | 1,542,370,384 | |
| Shares of beneficial interest outstanding, unlimited authorization, no par | | | 63,194,914 | |
| Net asset value per share | | $ | 24.41 | |
| Sales charge | | | 5.75 | % |
| Offering price per share, equal to net asset value per share / (1 - sales charge) | | $ | 25.90 | |
| | | | | |
| Class C: | | | | |
| Net assets | | $ | 253,333,307 | |
| Shares of beneficial interest outstanding, unlimited authorization, no par | | | 10,395,929 | |
| Net asset value per share | | $ | 24.37 | |
| | | | | |
| Class R: | | | | |
| Net assets | | $ | 48,382,005 | |
| Shares of beneficial interest outstanding, unlimited authorization, no par | | | 1,983,746 | |
| Net asset value per share | | $ | 24.39 | |
| | | | | |
| Institutional Class: | | | | |
| Net assets | | $ | 6,216,725,834 | |
| Shares of beneficial interest outstanding, unlimited authorization, no par | | | 254,740,972 | |
| Net asset value per share | | $ | 24.40 | |
| | | | | |
| Class R6: | | | | |
| Net assets | | $ | 1,028,424,212 | |
| Shares of beneficial interest outstanding, unlimited authorization, no par | | | 42,137,641 | |
| Net asset value per share | | $ | 24.41 | |
____________________ | | | | |
| * Investments, at cost | | $ | 6,218,774,614 | |
See accompanying notes, which are an integral part of the financial statements.
14
Table of Contents
| Statement of operations | |
| Delaware Value® Fund | Year ended November 30, 2021 |
| Investment Income: | | | | |
| | Dividends | | $ | 239,006,380 | |
| | | | | |
| Expenses: | | | | |
| Management fees | | | 55,194,691 | |
| Distribution expenses — Class A | | | 3,977,495 | |
| Distribution expenses — Class C | | | 2,980,437 | |
| Distribution expenses — Class R | | | 272,299 | |
| Dividend disbursing and transfer agent fees and expenses | | | 12,062,895 | |
| Accounting and administration expenses | | | 1,741,938 | |
| Reports and statements to shareholders expenses | | | 769,849 | |
| Legal fees | | | 533,263 | |
| Trustees’ fees and expenses | | | 392,708 | |
| Custodian fees | | | 312,187 | |
| Registration fees | | | 163,031 | |
| Audit and tax fees | | | 48,851 | |
| Other | | | 249,701 | |
| | | | 78,699,345 | |
| Less expenses paid indirectly | | | (2,593 | ) |
| Total operating expenses | | | 78,696,752 | |
| Net Investment Income | | | 160,309,628 | |
| Net Realized and Unrealized Gain: | | | | |
| Net realized gain on investments | | | 1,810,769,510 | |
| Net change in unrealized appreciation (depreciation) of investments | | | (138,117,511 | ) |
| Net Realized and Unrealized Gain | | | 1,672,651,999 | |
| Net Increase in Net Assets Resulting from Operations | | $ | 1,832,961,627 | |
See accompanying notes, which are an integral part of the financial statements.
15
Table of Contents
Statements of changes in net assets
Delaware Value® Fund
| | Year ended | |
| | 11/30/21 | | | 11/30/20 | |
| Increase (Decrease) in Net Assets from Operations: | | | | | | | | |
| Net investment income | | $ | 160,309,628 | | | $ | 238,111,611 | |
| Net realized gain | | | 1,810,769,510 | | | | 69,465,897 | |
| Net change in unrealized appreciation (depreciation) | | | (138,117,511 | ) | | | (872,158,900 | ) |
Net increase (decrease) in net assets resulting from
operations | | | 1,832,961,627 | | | | (564,581,392 | ) |
| |
| Dividends and Distributions to Shareholders from: | | | | | | | | |
| Distributable earnings: | | | | | | | | |
| Class A | | | (33,168,344 | ) | | | (90,690,637 | ) |
| Class C | | | (4,150,542 | ) | | | (20,807,776 | ) |
| Class R | | | (1,009,043 | ) | | | (3,428,708 | ) |
| Institutional Class | | | (177,342,718 | ) | | | (509,251,688 | ) |
| Class R6 | | | (29,662,577 | ) | | | (57,620,740 | ) |
| | | (245,333,224 | ) | | | (681,799,549 | ) |
| |
| Capital Share Transactions: | | | | | | | | |
| Proceeds from shares sold: | | | | | | | | |
| Class A | | | 195,383,220 | | | | 270,232,035 | |
| Class C | | | 19,111,692 | | | | 23,000,041 | |
| Class R | | | 7,449,574 | | | | 7,301,395 | |
| Institutional Class | | | 1,061,514,599 | | | | 2,051,438,936 | |
| Class R6 | | | 253,482,522 | | | | 324,407,162 | |
| Net assets from merger:1 | | | | | | | | |
| Class R6 | | | 43,751,148 | | | | — | |
| | | | | | | | | |
Net asset value of shares issued upon reinvestment of
dividends and distributions: | | | | | | | | |
| Class A | | | 31,405,053 | | | | 87,274,794 | |
| Class C | | | 4,025,931 | | | | 19,761,795 | |
| Class R | | | 1,007,951 | | | | 3,424,905 | |
| Institutional Class | | | 165,129,807 | | | | 473,598,323 | |
| Class R6 | | | 24,134,858 | | | | 46,874,376 | |
| | | 1,806,396,355 | | | | 3,307,313,762 | |
16
Table of Contents
| | Year ended | |
| | 11/30/21 | | | 11/30/20 | |
| Capital Share Transactions (continued): | | | | | | | | |
| Cost of shares redeemed: | | | | | | | | |
| Class A | | $ | (420,896,868 | ) | | $ | (708,156,064 | ) |
| Class C | | | (135,104,349 | ) | | | (215,256,245 | ) |
| Class R | | | (20,949,076 | ) | | | (32,973,642 | ) |
| Institutional Class | | | (3,557,512,193 | ) | | | (5,146,040,267 | ) |
| Class R6 | | | (595,998,781 | ) | | | (349,030,222 | ) |
| | | (4,730,461,267 | ) | | | (6,451,456,440 | ) |
Decrease in net assets derived from capital share
transactions | | | (2,924,064,912 | ) | | | (3,144,142,678 | ) |
| Net Decrease in Net Assets | | | (1,336,436,509 | ) | | | (4,390,523,619 | ) |
| Net Assets: | | | | | | | | |
| Beginning of year | | | 10,425,672,251 | | | | 14,816,195,870 | |
| End of year | | $ | 9,089,235,742 | | | $ | 10,425,672,251 | |
| 1 | See Note 7 in “Notes to financial statements.” |
See accompanying notes, which are an integral part of the financial statements.
17
Table of Contents
Financial highlights
Delaware Value® Fund Class A
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| |
| Income (loss) from investment operations: |
| Net investment income1 |
| Net realized and unrealized gain (loss) |
| Total from investment operations |
| |
| Less dividends and distributions from: |
| Net investment income |
| Net realized gain |
| Total dividends and distributions |
| |
| Net asset value, end of period |
| |
| Total return2 |
| |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets3 |
| Ratio of net investment income to average net assets |
| Portfolio turnover |
| 1 | Calculated using average shares outstanding. |
| 2 | Total 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. |
| 3 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
See accompanying notes, which are an integral part of the financial statements.
18
Table of Contents
| | Year ended | |
| | 11/30/21 | | | | 11/30/20 | | | | 11/30/19 | | | | 11/30/18 | | | | 11/30/17 | | |
| $ | 21.14 | | | $ | 22.44 | | | $ | 22.29 | | | $ | 21.63 | | | $ | 19.56 | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | 0.31 | | | | 0.38 | | | | 0.36 | | | | 0.32 | | | | 0.29 | | |
| | 3.45 | | | | (0.63 | ) | | | 1.02 | | | | 1.19 | | | | 2.23 | | |
| | 3.76 | | | | (0.25 | ) | | | 1.38 | | | | 1.51 | | | | 2.52 | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | (0.35 | ) | | | (0.38 | ) | | | (0.36 | ) | | | (0.33 | ) | | | (0.29 | ) | |
| | (0.14 | ) | | | (0.67 | ) | | | (0.87 | ) | | | (0.52 | ) | | | (0.16 | ) | |
| | (0.49 | ) | | | (1.05 | ) | | | (1.23 | ) | | | (0.85 | ) | | | (0.45 | ) | |
| | | | | | | | | | | | | | | | | | | | |
| $ | 24.41 | | | $ | 21.14 | | | $ | 22.44 | | | $ | 22.29 | | | $ | 21.63 | | |
| | | | | | | | | | | | | | | | | | | | |
| | 17.94% | | | | (0.90% | ) | | | 7.09% | | | | 7.10% | | | | 13.05% | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| $ | 1,542,371 | | | $ | 1,505,191 | | | $ | 1,992,320 | | | $ | 2,135,717 | | | $ | 2,392,927 | | |
| | 0.93% | | | | 0.93% | | | | 0.93% | | | | 0.93% | | | | 0.95% | | |
| | 1.32% | | | | 1.93% | | | | 1.68% | | | | 1.44% | | | | 1.43% | | |
| | 22% | | | | 25% | | | | 16% | | | | 20% | | | | 16% | | |
19
Table of Contents
Financial highlights
Delaware Value® Fund Class C
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| |
| Income (loss) from investment operations: |
| Net investment income1 |
| Net realized and unrealized gain (loss) |
| Total from investment operations |
| |
| Less dividends and distributions from: |
| Net investment income |
| Net realized gain |
| Total dividends and distributions |
| |
| Net asset value, end of period |
| |
| Total return2 |
| |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets3 |
| Ratio of net investment income to average net assets |
| Portfolio turnover |
| 1 | Calculated using average shares outstanding. |
| 2 | Total 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. |
| 3 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
See accompanying notes, which are an integral part of the financial statements.
20
Table of Contents
| | Year ended | |
| | 11/30/21 | | | | 11/30/20 | | | | 11/30/19 | | | | 11/30/18 | | | | 11/30/17 | | |
| $ | 21.10 | | | $ | 22.38 | | | $ | 22.23 | | | $ | 21.57 | | | $ | 19.50 | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | 0.13 | | | | 0.23 | | | | 0.20 | | | | 0.15 | | | | 0.14 | | |
| | 3.44 | | | | (0.62 | ) | | | 1.01 | | | | 1.18 | | | | 2.23 | | |
| | 3.57 | | | | (0.39 | ) | | | 1.21 | | | | 1.33 | | | | 2.37 | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | (0.16 | ) | | | (0.22 | ) | | | (0.19 | ) | | | (0.15 | ) | | | (0.14 | ) | |
| | (0.14 | ) | | | (0.67 | ) | | | (0.87 | ) | | | (0.52 | ) | | | (0.16 | ) | |
| | (0.30 | ) | | | (0.89 | ) | | | (1.06 | ) | | | (0.67 | ) | | | (0.30 | ) | |
| | | | | | | | | | | | | | | | | | | | | |
| $ | 24.37 | | | $ | 21.10 | | | $ | 22.38 | | | $ | 22.23 | | | $ | 21.57 | | |
| | | | | | | | | | | | | | | | | | | | | |
| | 17.04% | | | | (1.68% | ) | | | 6.29% | | | | 6.29% | | | | 12.26% | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| $ | 253,333 | | | $ | 319,180 | | | $ | 542,875 | | | $ | 545,157 | | | $ | 607,974 | | |
| | 1.68% | | | | 1.68% | | | | 1.68% | | | | 1.68% | | | | 1.70% | | |
| | 0.57% | | | | 1.18% | | | | 0.93% | | | | 0.69% | | | | 0.68% | | |
| | 22% | | | | 25% | | | | 16% | | | | 20% | | | | 16% | | |
21
Table of Contents
Financial highlights
Delaware Value® Fund Class R
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| |
| Income (loss) from investment operations: |
| Net investment income1 |
| Net realized and unrealized gain (loss) |
| Total from investment operations |
| |
| Less dividends and distributions from: |
| Net investment income |
| Net realized gain |
| Total dividends and distributions |
| |
| Net asset value, end of period |
| |
| Total return2 |
| |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets3 |
| Ratio of net investment income to average net assets |
| Portfolio turnover |
| 1 | Calculated using average shares outstanding. |
| 2 | Total 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. |
| 3 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
See accompanying notes, which are an integral part of the financial statements.
22
Table of Contents
| | Year ended | |
| 11/30/21 | | 11/30/20 | | 11/30/19 | | 11/30/18 | | 11/30/17 | |
| $ | 21.13 | | | $ | 22.43 | | | $ | 22.27 | | | $ | 21.61 | | | $ | 19.54 | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | 0.25 | | | | 0.33 | | | | 0.30 | | | | 0.26 | | | | 0.24 | | |
| | 3.44 | | | | (0.62 | ) | | | 1.03 | | | | 1.19 | | | | 2.23 | | |
| | 3.69 | | | | (0.29 | ) | | | 1.33 | | | | 1.45 | | | | 2.47 | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | (0.29 | ) | | | (0.34 | ) | | | (0.30 | ) | | | (0.27 | ) | | | (0.24 | ) | |
| | (0.14 | ) | | | (0.67 | ) | | | (0.87 | ) | | | (0.52 | ) | | | (0.16 | ) | |
| | (0.43 | ) | | | (1.01 | ) | | | (1.17 | ) | | | (0.79 | ) | | | (0.40 | ) | |
| | | | | | | | | | | | | | | | | | | | |
| $ | 24.39 | | | $ | 21.13 | | | $ | 22.43 | | | $ | 22.27 | | | $ | 21.61 | | |
| | | | | | | | | | | | | | | | | | | | |
| | 17.61% | | | | (1.16% | ) | | | 6.85% | | | | 6.82% | | | | 12.78% | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| $ | 48,382 | | | $ | 52,840 | | | $ | 81,159 | | | $ | 116,330 | | | $ | 170,221 | | |
| | 1.18% | | | | 1.18% | | | | 1.18% | | | | 1.18% | | | | 1.20% | | |
| | 1.07% | | | | 1.68% | | | | 1.43% | | | | 1.19% | | | | 1.18% | | |
| | 22% | | | | 25% | | | | 16% | | | | 20% | | | | 16% | | |
23
Table of Contents
Financial highlights
Delaware Value® Fund Institutional Class
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| |
| Income (loss) from investment operations: |
| Net investment income1 |
| Net realized and unrealized gain (loss) |
| Total from investment operations |
| |
| Less dividends and distributions from: |
| Net investment income |
| Net realized gain |
| Total dividends and distributions |
| |
| Net asset value, end of period |
| |
| Total return2 |
| |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets3 |
| Ratio of net investment income to average net assets |
| Portfolio turnover |
| 1 | Calculated using average shares outstanding. |
| 2 | Total 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. |
| 3 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
See accompanying notes, which are an integral part of the financial statements.
24
Table of Contents
| Year ended | |
| 11/30/21 | | | 11/30/20 | | | 11/30/19 | | | 11/30/18 | | | 11/30/17 | | |
| $ | 21.14 | | | $ | 22.45 | | | $ | 22.30 | | | $ | 21.64 | | | $ | 19.56 | | |
| | |
| | |
| | 0.37 | | | | 0.43 | | | | 0.41 | | | | 0.37 | | | | 0.34 | | |
| | 3.43 | | | | (0.64 | ) | | | 1.02 | | | | 1.19 | | | | 2.23 | | |
| | 3.80 | | | | (0.21 | ) | | | 1.43 | | | | 1.56 | | | | 2.57 | | |
| | |
| | |
| | (0.40 | ) | | | (0.43 | ) | | | (0.41 | ) | | | (0.38 | ) | | | (0.33 | ) | |
| | (0.14 | ) | | | (0.67 | ) | | | (0.87 | ) | | | (0.52 | ) | | | (0.16 | ) | |
| | (0.54 | ) | | | (1.10 | ) | | | (1.28 | ) | | | (0.90 | ) | | | (0.49 | ) | |
| | |
| $ | 24.40 | | | $ | 21.14 | | | $ | 22.45 | | | $ | 22.30 | | | $ | 21.64 | | |
| | |
| | 18.19% | | | | (0.68% | ) | | | 7.36% | | | | 7.36% | | | | 13.38% | | |
| | |
| | | |
| $ | 6,216,726 | | | $ | 7,427,159 | | | $ | 11,037,713 | | | $ | 10,406,840 | | | $ | 9,242,253 | | |
| | 0.68% | | | | 0.68% | | | | 0.68% | | | | 0.68% | | | | 0.70% | | |
| | 1.57% | | | | 2.18% | | | | 1.93% | | | | 1.69% | | | | 1.68% | | |
| | 22% | | | | 25% | | | | 16% | | | | 20% | | | | 16% | | |
25
Table of Contents
Financial highlights
Delaware Value® Fund Class R6
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| |
| Income (loss) from investment operations: |
| Net investment income1 |
| Net realized and unrealized gain (loss) |
| Total from investment operations |
| |
| Less dividends and distributions from: |
| Net investment income |
| Net realized gain |
| Total dividends and distributions |
| |
| Net asset value, end of period |
| |
| Total return2 |
| |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets3 |
| Ratio of net investment income to average net assets |
| Portfolio turnover |
| 1 | Calculated using average shares outstanding. |
| 2 | Total 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. |
| 3 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
See accompanying notes, which are an integral part of the financial statements.
26
Table of Contents
| Year ended | |
| | 11/30/21 | | | 11/30/20 | | | 11/30/19 | | | 11/30/18 | | | 11/30/17 | | |
| $ | 21.14 | | | $ | 22.45 | | | $ | 22.30 | | | $ | 21.64 | | | $ | 19.57 | | |
| | |
| | |
| | 0.40 | | | | 0.45 | | | | 0.44 | | | | 0.39 | | | | 0.36 | | |
| | 3.44 | | | | (0.64 | ) | | | 1.01 | | | | 1.19 | | | | 2.23 | | |
| | 3.84 | | | | (0.19 | ) | | | 1.45 | | | | 1.58 | | | | 2.59 | | |
| | |
| | |
| | (0.43 | ) | | | (0.45 | ) | | | (0.43 | ) | | | (0.40 | ) | | | (0.36 | ) | |
| | (0.14 | ) | | | (0.67 | ) | | | (0.87 | ) | | | (0.52 | ) | | | (0.16 | ) | |
| | (0.57 | ) | | | (1.12 | ) | | | (1.30 | ) | | | (0.92 | ) | | | (0.52 | ) | |
| | |
| $ | 24.41 | | | $ | 21.14 | | | $ | 22.45 | | | $ | 22.30 | | | $ | 21.64 | | |
| | |
| | 18.36% | | | | (0.57% | ) | | | 7.48% | | | | 7.46% | | | | 13.45% | | |
| | |
| | | |
| $ | 1,028,424 | | | $ | 1,121,302 | | | $ | 1,162,129 | | | $ | 582,092 | | | $ | 276,328 | | |
| | 0.58% | | | | 0.58% | | | | 0.58% | | | | 0.58% | | | | 0.60% | | |
| | 1.67% | | | | 2.28% | | | | 2.03% | | | | 1.79% | | | | 1.78% | | |
| | 22% | | | | 25% | | | | 16% | | | | 20% | | | | 16% | | |
27
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| Notes to financial statements | |
| Delaware Value® Fund | November 30, 2021 |
Delaware Group® Equity Funds II (Trust) is organized as a Delaware statutory trust and offers one series: Delaware Value Fund (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, Institutional Class, and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 5.75%. There is no front-end sales charge when you purchase $1,000,000 or more of Class A shares. However, if Delaware Distributors, L.P. (DDLP) paid your financial intermediary a commission on your purchase of $1,000,000 or more of Class A shares, for shares purchased prior to July 1, 2020, you will have to pay a limited contingent deferred sales charge (Limited CDSC) of 1.00% if you redeem these shares within the first year after your purchase and 0.50% if you redeem these shares within the second year; and for shares purchased on or after July 1, 2020, you will have to pay a Limited CDSC of 1.00% if you redeem these shares within the first 18 months after your purchase; unless a specific waiver of the Limited CDSC applies. Class C shares are sold with a contingent deferred sales charge (CDSC) of 1.00%, which will be incurred if redeemed during the first 12 months. Class R, Institutional Class, and Class R6 shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Class R6 shares do not pay any service fees, sub-accounting fees, and/or sub-transfer agency fees to any brokers, dealers, or other financial intermediaries.
1. Significant Accounting Policies
The Fund follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services — Investment Companies. The following accounting policies are in accordance with US generally accepted accounting principles (US GAAP) and are consistently followed by the Fund.
Security Valuation — Equity securities, except those traded on the Nasdaq Stock Market LLC (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange on the valuation date. Equity 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, the mean between the bid and ask prices will be used, which approximates fair value. Open-end investment companies are valued at their published net asset value (NAV). Generally, 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 Trust’s Board of Trustees (Board). 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 suspension of trading in a security. Restricted securities are valued at fair value using methods approved by the Board.
Federal Income Taxes — No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. Management has
28
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analyzed the Fund’s tax positions taken or expected to be taken on the Fund’s federal income tax returns through the year ended November 30, 2021 and for all open tax years (years ended November 30, 2018–November 30, 2020), and has concluded that no provision for federal income tax is required in the Fund’s financial statements. If applicable, the Fund recognizes interest accrued on unrecognized tax benefits in interest expense and penalties in “Other” on the “Statement of operations.” During the year ended November 30, 2021, the Fund did not incur any interest or tax penalties.
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. Class R6 shares will not be allocated any expenses related to service fees, sub-accounting fees, and/or sub-transfer agency fees paid to brokers, dealers, or other financial intermediaries.
Use of Estimates — The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent 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 and the differences could be material.
Other — Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Funds by Macquarie® (Delaware Funds) are generally allocated among such funds on the basis of average net assets. Management fees and certain 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. The Fund declares and pays dividends from net investment income quarterly and distributions from net realized gain on investments, if any, annually. The Fund may distribute more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.
The Fund receives earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. There were no such earnings credits for the year ended November 30, 2021.
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. If the amount earned is greater than $1, the expenses paid under this arrangement are included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses” with the corresponding expenses offset included under “Less expenses paid indirectly.” For the year ended November 30, 2021, the Fund earned $2,593 under this arrangement.
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 Macquarie Investment Management Business Trust and the investment manager, an annual fee which is calculated daily and paid monthly at the rates of 0.65% on
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Notes to financial statements
Delaware Value® Fund
2. Investment Management, Administration Agreements, and Other Transactions with Affiliates (continued)
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 average daily net assets in excess of $2.5 billion.
DMC may permit its affiliates, Macquarie Investment Management Global Limited (MIMGL) and Macquarie Funds Management Hong Kong Limited (together, the “Affiliated Sub-Advisors”), to execute Fund equity security trades on its behalf. DMC may also seek quantitative support from MIMGL. Although the Affiliated Sub-Advisors serve as sub-advisors, DMC has ultimate responsibility for all investment advisory services. For these services, DMC, not the Fund, may pay each Affiliated Sub-Advisor a portion of its investment management fee.
Delaware Investments Fund Services Company (DIFSC), an affiliate of DMC, provides fund accounting and financial administrative oversight services to the Fund. For these services, DIFSC’s fees are calculated daily and paid monthly, based on the aggregate daily net assets of all funds within the Delaware Funds at the following annual rates: 0.00475% of the first $35 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $45 billion (Total Fee). Each fund in the Delaware Funds pays a minimum of $4,000, which, in aggregate, is subtracted from the Total Fee. Each fund then pays its portion of the remainder of the Total Fee on a relative NAV basis. This amount is included on the “Statement of operations” under “Accounting and administration expenses.” For the year ended November 30, 2021, the Fund was charged $371,946 for these services.
DIFSC is also the transfer agent and dividend disbursing agent of the Fund. For these services, DIFSC’s fees are calculated daily and paid monthly, based on the aggregate daily net assets of the retail funds within the Delaware Funds at the following annual rates: 0.014% of the first $20 billion; 0.011% of the next $5 billion; 0.007% of the next $5 billion; 0.005% of the next $20 billion; and 0.0025% of average daily net assets in excess of $50 billion. The fees payable to DIFSC under the shareholder services agreement described above are allocated among all retail funds in the Delaware Funds on a relative NAV basis. This amount is included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses.” For the year ended November 30, 2021, the Fund was charged $899,901 for these services. Pursuant to a sub-transfer agency agreement between DIFSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to the Fund. Sub-transfer agency fees are paid by the Fund and are also included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses.” The fees that are calculated daily and paid as invoices are received on a monthly or quarterly basis.
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and affiliate of DMC, an annual 12b-1 fee of 0.25%, 1.00% and 0.50% of the average daily net assets of the Class A, Class C, and Class R shares, respectively. The Board has adopted a formula for calculating 12b-1 fees for the Fund’s Class A shares. The total 12b-1 fees to be paid by Class A shareholders of the Fund will be the sum of (1) 0.10% of the average daily net assets representing shares that were acquired prior to May 2, 1994 and (2) 0.25% of the average daily net assets representing shares that were acquired on or after May 2, 1994. All Class A shareholders will bear 12b-1 fees at the same blended rate, currently 0.25% of average daily net assets, based upon the allocation of the rates described above. This
30
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method of calculating Class A 12b-1 fees may be discontinued at the sole discretion of the Board. The fees are calculated daily and paid monthly. Institutional Class and Class R6 shares do not pay 12b-1 fees.
As provided in the investment management agreement, the Fund bears a portion of the cost of certain resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal and regulatory reporting services to the Fund. For the year ended November 30, 2021, the Fund was charged $377,859 for internal legal and regulatory reporting services provided by DMC and/or its affiliates’ employees. This amount is included on the “Statement of operations” under “Legal fees.”
For the year ended November 30, 2021, DDLP earned $54,630 for commissions on sales of the Fund’s Class A shares. For the year ended November 30, 2021, DDLP received gross CDSC commissions of $16,167 and $9,909 on redemptions of the Fund’s Class A and Class C shares, respectively, and these commissions were entirely used to offset upfront commissions previously paid by DDLP to broker/dealers on sales of those shares.
Trustees’ fees include expenses accrued by the Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, DIFSC, and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Fund.
In addition to the management fees and other expenses of the Fund, the Fund indirectly bears the investment management fees and other expenses of the investment companies (Underlying Funds) in which it invests. The amount of these fees and expenses incurred indirectly by the Fund will vary based upon the expense and fee levels of the Underlying Funds and the number of shares that are owned of the Underlying Funds at different times.
3. Investments
For the year ended November 30, 2021, the Fund made purchases and sales of investment securities other than short-term investments as follows:
| Purchases | | $ | 2,266,922,773 |
| Sales | | | 5,223,213,817 |
The tax cost of investments includes adjustments to net unrealized appreciation (depreciation), which may not necessarily be the final tax cost basis adjustments but which approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. At November 30, 2021, the cost and unrealized appreciation (depreciation) of investments for federal income tax purposes for the Fund were as follows:
| Cost of investments | | $ | 6,240,704,292 | |
| Aggregate unrealized appreciation of investments | | $ | 3,062,356,566 | |
| Aggregate unrealized depreciation of investments | | | (206,339,374 | ) |
| Net unrealized appreciation of investments | | $ | 2,856,017,192 | |
US GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current
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Notes to financial statements
Delaware Value® Fund
3. Investments (continued)
market conditions. A three-level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances. The Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-level hierarchy of inputs is summarized as follows:
| Level 1 – | Inputs are quoted prices in active markets for identical investments. (Examples: equity securities, open-end investment companies, futures contracts, and exchange-traded options contracts) |
| | |
| Level 2 – | Other observable inputs, including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, and default rates) or other market-corroborated inputs. (Examples: debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, and fair valued securities) |
| | |
| Level 3 – | Significant unobservable inputs, including the Fund’s own assumptions used to determine the fair value of investments. (Examples: broker-quoted securities and fair valued securities) |
Level 3 investments are valued using significant unobservable inputs. The Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity, and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.
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The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of November 30, 2021:
| | | Level 1 |
| Securities | | | |
| Assets: | | | |
| Common Stock | | $ | 9,023,809,497 |
| Short-Term Investments | | | 72,911,987 |
| Total Value of Securities | | $ | 9,096,721,484 |
During the year ended November 30, 2021, there were no transfers into or out of Level 3 investments. The Fund’s policy is to recognize transfers into or out of Level 3 investments based on fair value at the beginning of the reporting period.
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning or end of the year in relation to the Fund’s net assets. During the year ended November 30, 2021, there were no Level 3 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 US GAAP. Additionally, distributions from 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 years ended November 30, 2021 and 2020 were as follows:
| | Year ended |
| | 11/30/21 | | 11/30/20 |
| Ordinary income | | $ | 177,988,962 | | $ | 271,849,602 |
| Long-term capital gains | | | 67,344,262 | | | 409,949,947 |
| Total | | $ | 245,333,224 | | $ | 681,799,549 |
5. Components of Net Assets on a Tax Basis
As of November 30, 2021, the components of net assets on a tax basis were as follows:
| Shares of beneficial interest | | $ | 4,407,272,724 |
| Undistributed ordinary income | | | 251,212,669 |
| Undistributed long-term capital gains | | | 1,574,733,157 |
| Unrealized appreciation (depreciation) of investments | | | 2,856,017,192 |
| Net assets | | $ | 9,089,235,742 |
The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales.
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Notes to financial statements
Delaware Value® Fund
5. Components of Net Assets on a Tax Basis (continued)
For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to the tax treatment of wash sales from the merger. Results of operations and net assets were not affected by these reclassifications. For the year ended November 30, 2021, the Fund recorded the following reclassifications:
| Paid-in capital | | $ | 599,008 | |
| Total distributable earnings (loss) | | | (599,008 | ) |
6. Capital Shares
Transactions in capital shares were as follows:
| | | Year ended |
| | | 11/30/21 | | 11/30/20 |
| Shares sold: | | | | | | |
| | Class A | | 8,235,972 | | | 14,074,024 | |
| Class C | | 808,623 | | | 1,160,200 | |
| Class R | | 317,650 | | | 377,038 | |
| Institutional Class | | 45,317,186 | | | 106,416,654 | |
| Class R6 | | 10,776,072 | | | 17,018,763 | |
| | | | | | | | |
| Shares from merger:1 | | | | | | |
| Class R6 | | 1,796,762 | | | — | |
| | | | | | | | |
| Shares issued upon reinvestment of dividends and distributions: | | | | | | |
| Class A | | 1,386,747 | | | 4,230,831 | |
| Class C | | 181,602 | | | 937,235 | |
| Class R | | 44,746 | | | 164,612 | |
| Institutional Class | | 7,285,266 | | | 22,972,530 | |
| Class R6 | | 1,060,804 | | | 2,296,394 | |
| | | 77,211,430 | | | 169,648,281 | |
| | | | | | | |
| Shares redeemed: | | | | | | |
| Class A | | (17,616,020 | ) | | (35,881,362 | ) |
| Class C | | (5,718,362 | ) | | (11,231,247 | ) |
| Class R | | (879,309 | ) | | (1,659,236 | ) |
| Institutional Class | | (149,140,259 | ) | | (269,777,829 | ) |
| Class R6 | | (24,530,602 | ) | | (18,046,940 | ) |
| | | (197,884,552 | ) | | (336,596,614 | ) |
| Net decrease | | (120,673,122 | ) | | (166,948,333 | ) |
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Certain shareholders may exchange shares of one class for shares of another class in the same Fund. These exchange transactions are included as subscriptions and redemptions in the table above and on the “Statements of changes in net assets.” For the years ended November 30, 2021 and 2020, the Fund had the following exchange transactions:
| | Exchange Redemptions | | Exchange Subscriptions | | |
| | | | | | Institutional | | | | Institutional | | | | |
| | Class A | | Class C | | Class | | Class R6 | | Class A | | Class | | Class R6 | | |
| | Shares | | Shares | | Shares | | Shares | | Shares | | Shares | | Shares | | Value |
| Year ended | | | | | | | | | | | | | | |
| 11/30/21 | | 223,997 | | 104,303 | | 314,995 | | — | | 87,926 | | 222,376 | | 333,060 | | $14,888,608 |
| 11/30/20 | | 208,406 | | 126,105 | | 234,341 | | 15,157 | | 68,124 | | 281,354 | | 234,341 | | 11,666,097 |
7. Reorganization
On September 17, 2021, the Board approved a proposal to reorganize Macquarie Large-Cap Value Equity Portfolio, a series of Delaware Pooled® Trust (the “Acquired Fund”) with and into Delaware Value® Fund (the “Acquiring Fund”), (the “Reorganization”). Pursuant to an Agreement and Plan of Reorganization (the “Plan”): (i) all of the property, assets, and goodwill of the Acquired Fund were acquired by the Acquiring Fund, and (ii) the Trust, on behalf of the Acquiring Fund, assumed the liabilities of the Acquired Fund, in exchange for shares of the Acquiring Fund. In accordance with the Plan, the Acquired Fund liquidated and dissolved following the Reorganization. The purpose of the transaction was to allow shareholders of the Acquired Fund to own shares of a Fund with a similar investment objective and style as, and potentially lower net expenses than the Acquired Fund. The Reorganization was accomplished by a tax-free exchange of shares on September 17, 2021. For financial reporting purposes, assets received and shares issued by the Acquiring Fund were recorded at fair value; however, the cost basis of the investments received from the Acquired Fund was carried forward to align ongoing reporting of the Acquiring Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.
The share transactions associated with the Reorganization are as follows:
| | | | Shares | | | | | |
| Acquired | | Acquired | | Converted | | Acquiring | | | |
| Funds | | Fund Shares | | to Acquiring | | Fund | | Conversion |
| Net Assets | | Outstanding | | Fund | | Net Assets | | Ratio |
| Macquarie Large-Cap Value Equity | | Delaware Value | | | |
| Portfolio - Portfolio Class | | Fund - Class R6 | | | |
| $43,751,148 | | 2,362,341 | | 1,796,762 | | $1,176,634,622 | | 0.7610 | |
The net assets of the Acquiring Fund before the Reorganization were $10,052,624,470. The net assets of the Acquiring Fund immediately following the Reorganization were $10,096,375,618.
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Notes to financial statements
Delaware Value® Fund
7. Reorganization (continued)
Assuming the Reorganization had been completed on December 1, 2020, the Acquiring Fund’s pro forma results of operations for the year ended November 30, 2021, would have been as follows:
| Net investment income | | $ | 160,972,298 | |
| Net realized gain on investments | | | 1,815,308,686 | |
| Net change in unrealized appreciation (depreciation) | | | (130,436,353 | ) |
| Net increase in net assets resulting from operations | | $ | 1,845,844,631 | |
Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practical to separate the amounts of revenue and earnings of the Acquired Fund that have been included in the Acquiring Fund’s Statement of Operations since the Reorganization was consummated on September 17, 2021.
8. Line of Credit
The Fund, along with certain other funds in the Delaware Funds (Participants), is a participant in a $225,000,000 revolving line of credit (Agreement) intended to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the Agreement, the Participants are charged an annual commitment fee of 0.15% with the addition of an upfront fee of 0.05%, which is allocated across the Participants based on a weighted average of the respective net assets of each Participant. The Participants are permitted to borrow up to a maximum of one-third of their net assets under the Agreement. Each Participant is individually, and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit available under the Agreement expired on November 1, 2021.
On November 1, 2021, the Fund, along with the other Participants, entered into an amendment to the agreement for a $355,000,000 revolving line of credit to be used as described above and operates in substantially the same manner as the original Agreement. Under the amendment to the agreement, the Participants are charged an annual commitment fee of 0.15%, with the addition of an upfront fee of 0.05%, which is allocated across the Participants based on a weighted average of the respective net assets of each Participant. The line of credit available under the agreement expires on October 31, 2022.
The Fund had no amounts outstanding as of November 30, 2021, or at any time during the year then ended.
9. Securities Lending
The Fund, along with other funds in the Delaware Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (1) 102% with respect to US securities and foreign securities that are denominated and payable in US dollars; and (2) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the
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securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day, which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon the request of the borrower, BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security on any particular day, may be more or less than the value of the security on loan. The collateral percentage with respect to the market value of the loaned security is determined by the security lending agent.
Cash collateral received by each fund of the Trust is generally invested in a series of individual separate accounts, each corresponding to a fund. The investment guidelines permit each separate account to hold certain securities that would be considered eligible securities for a money market fund. Cash collateral received is generally invested in government securities; certain obligations issued by government sponsored enterprises; repurchase agreements collateralized by US Treasury securities; obligations issued by the central government of any Organization for Economic Cooperation and Development (OECD) country or its agencies, instrumentalities, or establishments; obligations of supranational organizations; commercial paper, notes, bonds, and other debt obligations; certificates of deposit, time deposits, and other bank obligations; certain money market funds; and asset-backed securities. The Fund can also accept US government securities and letters of credit (non-cash collateral) in connection with securities loans.
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 or interest, as applicable, 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. With respect to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent, and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.
The Fund may incur investment losses as a result of investing securities lending collateral. This could occur if an investment in the collateral investment account defaulted or became impaired. Under those circumstances, the value of the Fund’s cash collateral account may be less than the amount the Fund would be required to return to the borrowers of the securities and the Fund would be required to make up for this shortfall.
During the year ended November 30, 2021, the Fund had no securities out on loan.
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Notes to financial statements
Delaware Value® Fund
10. Credit and Market Risk
Beginning in January 2020, global financial markets have experienced and may continue to experience significant volatility resulting from the spread of a novel coronavirus known as COVID-19. The outbreak of COVID-19 has resulted in travel and border restrictions, quarantines, supply chain disruptions, lower consumer demand, and general market uncertainty. The effects of COVID-19 have and may continue to adversely affect the global economy, the economies of certain nations, and individual issuers, all of which may negatively impact the Fund’s performance.
Investments in equity securities in general are subject to market risks that may cause their prices to fluctuate over time. Fluctuations in the value of equity securities in which the Fund invests will cause the NAV of the Fund to fluctuate.
The Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A promulgated under 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 Board 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 securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s 15% limit on investments in illiquid securities. As of November 30, 2021, there were no Rule 144A securities held by the Fund.
11. 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.
12. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to November 30, 2021, that would require recognition or disclosure in the Fund’s financial statements.
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Report of independent
registered public accounting firm
To the Board of Trustees of Delaware Group® Equity Funds II and Shareholders of Delaware Value® Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Delaware Value® Fund (constituting Delaware Group® Equity Funds II, referred to hereafter as the “Fund”) as of November 30, 2021, the related statement of operations for the year ended November 30, 2021, the statements of changes in net assets for each of the two years in the period ended November 30, 2021, including the related notes, and the financial highlights for each of the five years in the period ended November 30, 2021 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of November 30, 2021, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended November 30, 2021 and the financial highlights for each of the five years in the period ended November 30, 2021, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of November 30, 2021 by correspondence with the custodian, transfer agents and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
January 21, 2022
We have served as the auditor of one or more investment companies in Delaware Funds by Macquarie® since 2010.
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Other Fund information (Unaudited)
Delaware Value® Fund
Tax Information
The information set forth below is for the Fund’s fiscal year as required by federal income tax laws. Shareholders, however, must report distributions on a calendar year basis for income tax purposes, which may include distributions for portions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in January of each year. Please consult your tax advisor for proper treatment of this information.
All disclosures are based on financial information available as of the date of this annual report and, accordingly are subject to change. For any and all items requiring reporting, it is the intention of the Fund to report the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.
For the fiscal year ended November 30, 2021, the Fund reports distributions paid during the year as follows:
| (A) Long-Term Capital Gain Distributions (Tax Basis) | | 27.45 | % |
| (B) Ordinary Income Distributions (Tax Basis)* | | 72.55 | % |
| Total Distributions (Tax Basis) | | 100.00 | % |
| (C) Qualified Dividends1 | | 100.00 | % |
____________________
(A) and (B) are based on a percentage of the Fund’s total distributions. |
(C) is based on the Fund’s ordinary income distributions. |
| 1 | Qualified dividends represent dividends which qualify for the corporate dividends received deduction. |
| * | For the fiscal year ended November 30, 2021, certain dividends paid by the Fund may be subject to a maximum tax rate of 20%. The percentage of dividends paid by the Fund from ordinary income reported as qualified income is 100%. Complete information will be computed and reported in conjunction with your 2021 Form 1099-DIV. |
For the fiscal year ended November 30, 2021, certain dividends paid by the Fund, determined to be Qualified Short-Term Capital Gains may be subject to relief from US withholding for foreign shareholders, as provided by the American Jobs Creation Act of 2004; the Tax Relief Unemployment Insurance Reauthorization, and Job Creations Act of 2010; and as extended by the American Taxpayer Relief Act of 2012. For the year ended November 30, 2021, the Fund has reported maximum distributions of Qualified Short-Term Capital Gain of $229,816,568.
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Board consideration of Investment Advisory and Sub-Advisory Agreements for Delaware Value Fund at a meeting held August 10-12, 2021
At a meeting held on August 10-12, 2021 (the “Annual Meeting”), the Board of Trustees (the “Board”), including a majority of disinterested or independent Trustees, approved the renewal of the Investment Advisory and Sub-Advisory Agreements for Delaware Value Fund (the “Fund”). In making its decision, the Board considered information furnished at regular quarterly Board meetings, including reports detailing Fund performance, investment strategies, and expenses, as well as information prepared specifically in connection with the renewal of the investment advisory and sub-advisory contracts. Information furnished specifically in connection with the renewal of the Investment Management Agreement with Delaware Management Company (“DMC”), a series of Macquarie Investment Management Business Trust (“MIMBT”), and the Sub-Advisory Agreements with Macquarie Funds Management Hong Kong Limited (“MFMHK”) and Macquarie Investment Management Global Limited (“MIMGL”) (the “Sub-Advisers”), included materials provided by DMC and its affiliates (collectively, “Macquarie Asset Management”) concerning, among other things, the nature, extent, and quality of services provided to the Fund; the costs of such services to the Fund, economies of scale; and the investment manager’s financial condition and profitability. In addition, in connection with the Annual Meeting, materials were provided to the Trustees in May 2021, including reports provided by Broadridge Financial Solutions (“Broadridge”). The Broadridge reports compared the Fund’s investment performance and expenses with those of other comparable mutual funds. The Independent Trustees reviewed and discussed the Broadridge reports with independent legal counsel to the Independent Trustees. In addition to the information noted above, the Board also requested and received information regarding DMC’s policy with respect to advisory fee levels and its breakpoint philosophy; the structure of portfolio manager compensation; comparative client fee information; and any constraints or limitations on the availability of securities for certain investment styles, which had in the past year inhibited, or which were likely in the future to inhibit, the investment manager’s ability to invest fully in accordance with Fund policies.
In considering information relating to the approval of the Fund’s advisory and sub-advisory agreements, as applicable, the Independent Trustees received assistance and advice from and met separately with independent legal counsel to the Independent Trustees and also received assistance and advice from an experienced and knowledgeable independent fund consultant, JDL Consultants, LLC (“JDL”). Although the Board gave attention to all information furnished, the following discussion identifies, under separate headings, the primary factors taken into account by the Board during its contract renewal considerations.
Nature, extent, and quality of services. The Board considered the services provided by DMC to the Fund and its shareholders. In reviewing the nature, extent, and quality of services, the Board considered reports furnished to it throughout the year, which covered matters such as the relative performance of the Fund; compliance of portfolio managers with the investment policies, strategies, and restrictions for the Fund; compliance by DMC and Delaware Distributors, L.P. (together, “Management”) personnel with the Code of Ethics adopted throughout the Delaware Funds by Macquarie® (“Delaware Funds”); and adherence to fair value pricing procedures as established by the Board. The Board was pleased with the current staffing of DMC and the emphasis placed on research in the investment process. The Board recognized DMC’s receipt of certain favorable industry distinctions during the past several years. The Board gave favorable consideration to DMC’s efforts to control expenses while maintaining service levels
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Other Fund information (Unaudited)
Delaware Value® Fund
Board consideration of Investment Advisory and Sub-Advisory Agreements for Delaware Value Fund at a meeting held August 10-12, 2021 (continued)
committed to Fund matters. The Board also noted the benefits provided to Fund shareholders through (a) each shareholder’s ability to: (i) exchange an investment in one Delaware Fund for the same class of shares in another Delaware Fund without a sales charge, or (ii) reinvest Fund dividends into additional shares of the Fund or into additional shares of other Delaware Funds, and (b) the privilege to combine holdings in other Delaware Funds to obtain a reduced sales charge. The Board was satisfied with the nature, extent, and quality of the overall services provided by DMC.
Nature, extent, and quality of services. The Board considered the services provided by each Sub-Adviser to the Fund. In reviewing the nature, extent, and quality of services, the Board considered reports furnished to it throughout the year at regular Board Meetings covering matters such as relative performance of the Fund; compliance of portfolio managers with the investment policies, strategies, and restrictions for the Fund; the compliance of Sub-Adviser personnel with its Code of Ethics; and adherence to fair value pricing procedures as established by the Board. The Board was pleased with the current staffing of the Sub-Advisers and the emphasis placed on research in the investment process. The Board was satisfied with the nature, extent, and quality of the overall services provided by the Sub-Advisers.
Investment performance. The Board placed significant emphasis on the investment performance of the Fund in view of the importance of investment performance to shareholders. Although the Board considered performance reports and discussions with portfolio managers at Investment Committee meetings throughout the year, the Board gave particular weight to the Broadridge reports furnished for the Annual Meeting. The Broadridge reports prepared for the Fund showed the Fund’s investment performance in comparison to a group of similar funds (the “Performance Universe”). A fund with the best performance ranked first, and a fund with the poorest performance 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 1-, 3-, 5-, and 10-year periods, to the extent applicable, ended December 31, 2020. The Board’s objective is that the Fund’s performance for the 1-, 3-, and 5-year periods be at or above the median of its Performance Universe.
The Performance Universe for the Fund consisted of the Fund and all retail and institutional large-cap value funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1-year period was in the fourth quartile of its Performance Universe. The report further showed that the Fund’s total return for the 3- and 5-year periods was in the third quartile of its Performance Universe and the Fund’s total return for the 10-year period was in the first quartile of its Performance Universe. The Board observed that the Fund’s performance results were mixed. In evaluating the Fund’s performance, the Board considered the numerous investment and performance reports delivered by Management personnel to the Board’s Investments Committee. The Board was satisfied that Management was taking action to improve Fund performance and meet the Board’s performance objective.
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Comparative expenses. The Board considered expense data for the Delaware Funds. Management provided the Board with information on pricing levels and fee structures for the Fund as of its most recently completed fiscal year. The Board also focused on the comparative analysis of effective management fees and total expense ratios of the Fund versus effective management fees and total expense ratios of a group of similar funds (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) within the Expense Group, taking into account any applicable breakpoints and fee waivers. The Fund’s total expenses were also compared with those of its Expense Group and, for comparative consistency, included 12b-1 and non-12b-1 service fees. The Board’s objective is for each Fund’s total expense ratio to be competitive with those of the peer funds within its Expense Group.
The expense comparisons for the Fund showed that its actual management fee and total expenses were in the quartile with the second lowest expenses of its Expense Group. The Board was satisfied with the management fee and total expenses of the Fund in comparison to those of its Expense Group as shown in the Broadridge report.
Management profitability. The Board considered the level of profits realized by DMC 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 DMC’s business in providing management and other services to each of the individual funds and the Delaware Funds as a whole. Specific attention was given to the methodology used by DMC in allocating costs for the purpose of determining profitability. Management stated that the level of profits of DMC, to a certain extent, reflects recent operational cost savings and efficiencies initiated by DMC. The Board considered DMC’s efforts to improve services provided to Fund shareholders and to meet additional regulatory and compliance requirements resulting from recent industry-wide Securities and Exchange Commission initiatives. The Board also considered the extent to which DMC 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 Funds and the benefits from allocation of fund brokerage to improve trading efficiencies. As part of its work, the Board also reviewed a report prepared by JDL regarding MIMBT profitability as compared to certain peer fund complexes and the Independent Trustees discussed with JDL personnel regarding DMC’s profitability in such context. The Board found that the management fees were reasonable in light of the services rendered and the level of profitability of DMC.
Management profitability. Trustees were also given available information on profits being realized by each of the Sub-Advisers in relation to the services being provided to the Fund and in relation to each Sub-Adviser’s overall investment advisory business, but believed such information to be of limited relevance because the sub-advisory fees are paid by DMC out of its management fee, and changes in the level of sub-advisory fees have no impact on Fund expenses. The Board was also provided information on potential fall-out benefits derived or to be derived by the Sub-Advisers in connection with their relationship to the Fund, such as reputational enhancement, soft dollar arrangements, or commissions paid to affiliated broker/dealers, as applicable.
Economies of scale. The Trustees considered whether economies of scale are realized by DMC as the Fund’s assets increase and the extent to which any economies of scale are reflected in the level of
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Other Fund information (Unaudited)
Delaware Value® Fund
Board consideration of Investment Advisory and Sub-Advisory Agreements for Delaware Value Fund at a meeting held August 10-12, 2021 (continued)
management fees charged. The Trustees reviewed the Fund’s advisory fee pricing and structure, approved by the Board and shareholders, which includes breakpoints, and which applies to most funds in the Delaware Funds complex. Breakpoints in the advisory fee occur when the advisory fee rate is reduced on assets in excess of specified levels. Breakpoints result in a lower advisory fee than would otherwise be the case in the absence of breakpoints, when the asset levels specified in the breakpoints are exceeded. The Board noted that, as of March 31, 2021, the Fund’s net assets exceeded the final breakpoint level. The Board believed that, given the extent to which economies of scale might be realized by DMC and its affiliates, the schedule of fees under the Investment Management Agreement provides a sharing of benefits with the Fund and its shareholders.
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Board of trustees / directors and officers addendum
Delaware Funds by Macquarie®
A mutual fund is governed by a Board of Trustees/Directors (“Trustees”), which has oversight responsibility for the management of a fund’s business affairs. Trustees establish procedures and oversee and review the performance of the investment manager, the distributor, and others who perform services for the fund. The independent fund trustees, in particular, are advocates for shareholder interests. Each trustee has served in that capacity since he or she was elected to or appointed to the Board of Trustees, and will continue to serve until his or her retirement or the election of a new trustee in his or her place. The following is a list of the Trustees and Officers with certain background and related information.
| | | | | | | | Number of | | Other |
| | | | | | Principal | | Portfolios in Fund | | Directorships |
| Name, | | Position(s) | | | | Occupation(s) | | Complex Overseen | | Held by |
| Address, | | Held with | | Length of Time | | During the | | by Trustee | | Trustee |
| and Birth Date | | Fund(s) | | Served | | Past Five Years | | or Officer | | or Officer |
| Interested Trustee | | | | | | | | | | |
| | | | | | | | | | |
| Shawn K. Lytle1 | | President, | | President and | | Global Head of Macquarie | | 150 | | Trustee — UBS Relationship |
| 610 Market Street | | Chief Executive | | Chief Executive | | Investment Management2 | | | | Funds, SMA Relationship Trust, |
| Philadelphia, PA | | Officer, | | Officer | | (January 2019–Present) | | | | and UBS Funds |
| 19106-2354 | | and Trustee | | since August 2015 | | Head of Americas of | | | | (May 2010–April 2015) |
| February 1970 | | | | Trustee since | | Macquarie Group | | | | |
| | | | September 2015 | | (December 2017–Present) | | | | |
| | | | | | Deputy Global Head of | | | | |
| | | | | | Macquarie Investment | | | | |
| | | | | | Management | | | | |
| | | | | | (2017–2019) | | | | |
| | | | | | Head of Macquarie Investment | | | | |
| | | | | | Management Americas | | | | |
| | | | | | (2015–2017) | | | | |
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Board of trustees / directors and officers addendum
Delaware Funds by Macquarie®
| | | | | | | | Number of | | Other |
| | | | | | Principal | | Portfolios in Fund | | Directorships |
| Name, | | Position(s) | | | | Occupation(s) | | Complex Overseen | | Held by |
| Address, | | Held with | | Length of Time | | During the | | by Trustee | | Trustee |
| and Birth Date | | Fund(s) | | Served | | Past Five Years | | or Officer | | or Officer |
| Independent Trustees | | | | | | | | | | |
| | | | | | | | | | |
| Jerome D. | | Trustee | | Since January 2019 | | Managing Member, Stonebrook | | 150 | | None |
| Abernathy | | | | | | Capital Management, LLC | | | | |
| 610 Market Street | | | | | | (financial technology: macro | | | | |
| Philadelphia, PA | | | | | | factors and databases) | | | | |
| 19106-2354 | | | | | | (January 1993-Present) | | | | |
| July 1959 | | | | | | | | | | |
| | | | | | | | | | |
| Thomas L. Bennett | | Chair and Trustee | | Trustee since March | | Private Investor | | 150 | | None |
| 610 Market Street | | | | 2005 | | (March 2004–Present) | | | | |
| Philadelphia, PA | | | | Chair since March | | | | | | |
| 19106-2354 | | | | 2015 | | | | | | |
| October 1947 | | | | | | | | | | |
| | | | | | | | | | |
| Ann D. Borowiec | | Trustee | | Since March 2015 | | Chief Executive Officer, Private | | 150 | | Director — Banco Santander |
| 610 Market Street | | | | | | Wealth Management | | | | International |
| Philadelphia, PA | | | | | | (2011–2013) and Market | | | | (October 2016–December 2019) |
| 19106-2354 | | | | | | Manager, New Jersey Private | | | | Director — Santander Bank, N.A. |
| November 1958 | | | | | | Bank (2005–2011) — J.P. | | | | (December 2016–December |
| | | | | | Morgan Chase & Co. | | | | 2019) |
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| | | | | | | | Number of | | Other |
| | | | | | Principal | | Portfolios in Fund | | Directorships |
| Name, | | Position(s) | | | | Occupation(s) | | Complex Overseen | | Held by |
| Address, | | Held with | | Length of Time | | During the | | by Trustee | | Trustee |
| and Birth Date | | Fund(s) | | Served | | Past Five Years | | or Officer | | or Officer |
| | | | | | | | | | |
| Joseph W. Chow | | Trustee | | Since January 2013 | | Private Investor | | 150 | | Director and Audit Committee |
| 610 Market Street | | | | | | (April 2011–Present) | | | | Member — Hercules Technology |
| Philadelphia, PA | | | | | | | | | | Growth Capital, Inc. |
| 19106-2354 | | | | | | | | | | (July 2004–July 2014) |
| January 1953 | | | | | | | | | | |
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Board of trustees / directors and officers addendum
Delaware Funds by Macquarie®
| | | | | | | | Number of | | Other |
| | | | | | Principal | | Portfolios in Fund | | Directorships |
| Name, | | Position(s) | | | | Occupation(s) | | Complex Overseen | | Held by |
| Address, | | Held with | | Length of Time | | During the | | by Trustee | | Trustee |
| and Birth Date | | Fund(s) | | Served | | Past Five Years | | or Officer | | or Officer |
| | | | | | | | | | |
| H. Jeffrey Dobbs3 | | Trustee | | Since December 2021 | | Global Sector Chairman, | | 150 | | Director, Valparaiso University |
| 610 Market Street | | | | | | Industrial Manufacturing, | | | | (2012–Present) |
| Philadelphia, PA | | | | | | KPMG LLP | | | | Director, TechAccel LLC |
| 19106-2354 | | | | | | (2010-2015) | | | | (2015–Present) (Tech R&D) |
| May 1955 | | | | | | | | | | Board Member, Kansas City |
| | | | | | | | | | Repertory Theatre |
| | | | | | | | | | (2015–Present) |
| | | | | | | | | | Board Member, Patients |
| | | | | | | | | | Voices, Inc. (healthcare) |
| | | | | | | | | | (2018–Present) |
| | | | | | | | | | Kansas City Campus for Animal |
| | | | | | | | | | Care (2018–Present) |
| | | | | | | | | | Director, National Association of |
| | | | | | | | | | Manufacturers (2010–2015) |
| | | | | | | | | | Director, The Children’s Center |
| | | | | | | | | | (2003–2015) |
| | | | | | | | | | Director, Metropolitan Affairs |
| | | | | | | | | | Coalition (2003–2015) |
| | | | | | | | | | Director, Michigan Roundtable |
| | | | | | | | | | for Diversity and Inclusion |
| | | | | | | | | | (2003–2015) |
| | | | | | | | | | Trustee, Ivy Funds Complex |
| | | | | | | | | | (2019–2021) |
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| | | | | | | | Number of | | Other |
| | | | | | Principal | | Portfolios in Fund | | Directorships |
| Name, | | Position(s) | | | | Occupation(s) | | Complex Overseen | | Held by |
| Address, | | Held with | | Length of Time | | During the | | by Trustee | | Trustee |
| and Birth Date | | Fund(s) | | Served | | Past Five Years | | or Officer | | or Officer |
| | | | | | | | | | | |
| John A. Fry | | Trustee | | Since January 2001 | | Drexel University | | 150 | | Director; Compensation |
| 610 Market Street | | | | | | (August 2010–Present) | | | | Committee and Governance |
| Philadelphia, PA | | | | | | President — Franklin & Marshall | | | | Committee Member — |
| 19106-2354 | | | | | | College | | | | Community Health Systems |
| May 1960 | | | | | | (July 2002–June 2010) | | | | (May 2004–Present) |
| | | | | | | | | | Director — Drexel Morgan & Co. |
| | | | | | | | | | (2015–2019) |
| | | | | | | | | | Director, Audit and |
| | | | | | | | | | Compensation Committee |
| | | | | | | | | | Member — vTv Therapeutics Inc. |
| | | | | | | | | | (2017–Present) |
| | | | | | | | | | Director and Audit Committee |
| | | | | | | | | | Member — FS Credit Real Estate |
| | | | | | | | | | Income Trust, Inc. |
| | | | | | | | | | (2018–Present) |
| | | | | | | | | | Director — Federal Reserve |
| | | | | | | | | | Bank of Philadelphia |
| | | | | | | | | | (January 2020–Present) |
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Board of trustees / directors and officers addendum
Delaware Funds by Macquarie®
| | | | | | | | Number of | | Other |
| | | | | | Principal | | Portfolios in Fund | | Directorships |
| Name, | | Position(s) | | | | Occupation(s) | | Complex Overseen | | Held by |
| Address, | | Held with | | Length of Time | | During the | | by Trustee | | Trustee |
| and Birth Date | | Fund(s) | | Served | | Past Five Years | | or Officer | | or Officer |
| | | | | | | | | | | |
| Joseph Harroz, Jr.3 | | Trustee | | Since December 2021 | | President (2020–Present), Interim | | 150 | | Director, OU Medicine, Inc. |
| 610 Market Street | | | | | | President (2019–2020), Vice | | | | (2020–Present) |
| Philadelphia, PA | | | | | | President (2010–2019) and Dean | | | | Director and Shareholder, |
| 19106-2354 | | | | | | (2010–2019), College of Law, | | | | Valliance Bank |
| January 1967 | | | | | | University of Oklahoma; | | | | (2007–Present) |
| | | | | | Managing Member, Harroz | | | | Director, Foundation Healthcare |
| | | | | | Investments, LLC, (commercial | | | | (formerly Graymark HealthCare) |
| | | | | | enterprises) (1998–2019); | | | | (2008–2017) |
| | | | | | Managing Member, St. Clair, | | | | Trustee, the Mewbourne Family |
| | | | | | LLC (commercial enterprises) | | | | Support Organization |
| | | | | | (2019–Present) | | | | (2006–Present) (non-profit) |
| | | | | | | | | | Independent Director, LSQ |
| | | | | | | | | | Manager, Inc. (real estate) |
| | | | | | | | | | (2007–2016) |
| | | | | | | | | | Director, Oklahoma Foundation |
| | | | | | | | | | for Excellence (non-profit) |
| | | | | | | | | | (2008–Present) |
| | | | | | | | | | Trustee, Ivy Funds Complex |
| | | | | | | | | | (1998–2021) |
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| | | | | | | | Number of | | Other |
| | | | | | Principal | | Portfolios in Fund | | Directorships |
| Name, | | Position(s) | | | | Occupation(s) | | Complex Overseen | | Held by |
| Address, | | Held with | | Length of Time | | During the | | by Trustee | | Trustee |
| and Birth Date | | Fund(s) | | Served | | Past Five Years | | or Officer | | or Officer |
| | | | | | | | | | | |
| Sandra A.J. | | Trustee | | Since December 2021 | | Chief Administrative Officer, | | 150 | | Director, Hall Family Foundation |
| Lawrence3 | | | | | | Children’s Mercy Hospitals and | | | | (1993–Present) |
| 610 Market Street | | | | | | Clinics | | | | Director, Westar Energy (utility) |
| Philadelphia, PA | | | | | | (2016–2019); | | | | (2004–2018) |
| 19106-2354 | | | | | | CFO, Children’s Mercy Hospitals | | | | Trustee, Nelson-Atkins Museum |
| September 1957 | | | | | | and Clinics | | | | of Art (non-profit) (2021–Present) |
| | | | | | (2005–2016) | | | | (2007–2020) |
| | | | | | | | | | Director, Turn the Page KC |
| | | | | | | | | | (non-profit) (2012–2016) |
| | | | | | | | | | Director, Kansas Metropolitan |
| | | | | | | | | | Business and Healthcare |
| | | | | | | | | | Coalition (non-profit) (2017–2019) |
| | | | | | | | | | Director, National Association of |
| | | | | | | | | | Corporate Directors (non-profit) |
| | | | | | | | | | National Board (2022–Present); |
| | | | | | | | | | Regional Board (2017–2021) |
| | | | | | | | | | Director, American Shared |
| | | | | | | | | | Hospital Services (medical |
| | | | | | | | | | device) (2017–2021) |
| | | | | | | | | | Director, Evergy, Inc., Kansas |
| | | | | | | | | | City Power & Light Company, |
| | | | | | | | | | KCP&L Greater Missouri |
| | | | | | | | | | Operations Company, Westar |
| | | | | | | | | | Energy, Inc. and Kansas Gas and |
| | | | | | | | | | Electric Company (related utility |
| | | | | | | | | | companies) (2018–Present) |
51
Table of Contents
Board of trustees / directors and officers addendum
Delaware Funds by Macquarie®
| | | | | | | | Number of | | Other |
| | | | | | Principal | | Portfolios in Fund | | Directorships |
| Name, | | Position(s) | | | | Occupation(s) | | Complex Overseen | | Held by |
| Address, | | Held with | | Length of Time | | During the | | by Trustee | | Trustee |
| and Birth Date | | Fund(s) | | Served | | Past Five Years | | or Officer | | or Officer |
| | | | | | | | | | | |
| Sandra A.J. | | Trustee | | Since December 2021 | | Chief Administrative Officer, | | 150 | | Director, Stowers (research) |
| Lawrence3 | | | | | | Children’s Mercy Hospitals and | | | | (2018) |
| (continued) | | | | | | Clinics | | | | Co-Chair, Women Corporate |
| 610 Market Street | | | | | | (2016–2019); | | | | Directors (director education) |
| Philadelphia, PA | | | | | | CFO, Children’s Mercy Hospitals | | | | (2018–2020) |
| 19106-2354 | | | | | | and Clinics | | | | Trustee, Ivy Funds Complex |
| September 1957 | | | | | | (2005–2016) | | | | (2019-2021) |
| | | | | | | | | | Director, Brixmor Property |
| | | | | | | | | | Group Inc. |
| | | | | | | | | | (2021–Present) |
| | | | | | | | | | Director, Sera Prognostics Inc. |
| | | | | | | | | | (biotechnology) |
| | | | | | | | | | (2021–Present) |
| | | | | | | | | | Director, Recology (resource |
| | | | | | | | | | recovery) |
| | | | | | | | | | (2021–Present) |
52
Table of Contents
| | | | | | | | Number of | | Other |
| | | | | | Principal | | Portfolios in Fund | | Directorships |
| Name, | | Position(s) | | | | Occupation(s) | | Complex Overseen | | Held by |
| Address, | | Held with | | Length of Time | | During the | | by Trustee | | Trustee |
| and Birth Date | | Fund(s) | | Served | | Past Five Years | | or Officer | | or Officer |
| | | | | | | | | | | |
| Frances A. | | Trustee | | Since September | | Private Investor | | 150 | | Trust Manager and Audit |
| Sevilla-Sacasa | | | | 2011 | | (January 2017–Present) | | | | Committee Chair — Camden |
| 610 Market Street | | | | | | Chief Executive Officer — Banco | | | | Property Trust |
| Philadelphia, PA | | | | | | Itaú International | | | | (August 2011–Present) |
| 19106-2354 | | | | | | (April 2012–December 2016) | | | | Director; Audit |
| January 1956 | | | | | | Executive Advisor to Dean | | | | and Compensation |
| | | | | | (August 2011–March 2012) and | | | | Committee Member — |
| | | | | | Interim Dean | | | | Callon Petroleum Company |
| | | | | | (January 2011–July 2011) — | | | | (December 2019–Present) |
| | | | | | University of Miami School of | | | | Director — New Senior |
| | | | | | Business Administration | | | | Investment Group Inc. |
| | | | | | President — U.S. Trust, Bank of | | | | (January 2021–September 2021) |
| | | | | | America Private Wealth | | | | Director; Audit Committee |
| | | | | | Management (Private Banking) | | | | Member — Carrizo Oil & Gas, |
| | | | | | (July 2007-December 2008) | | | | Inc. (March 2018–December |
| | | | | | | | | | 2019) |
53
Table of Contents
Board of trustees / directors and officers addendum
Delaware Funds by Macquarie®
| | | | | | | | Number of | | Other |
| | | | | | Principal | | Portfolios in Fund | | Directorships |
| Name, | | Position(s) | | | | Occupation(s) | | Complex Overseen | | Held by |
| Address, | | Held with | | Length of Time | | During the | | by Trustee | | Trustee |
| and Birth Date | | Fund(s) | | Served | | Past Five Years | | or Officer | | or Officer |
| | | | | | | | | | |
| Thomas K. Whitford | | Trustee | | Since January 2013 | | Vice Chairman — PNC Financial | | 150 | | Director — HSBC North America |
| 610 Market Street | | | | | | Services Group | | | | Holdings Inc. |
| Philadelphia, PA | | | | | | (2010–April 2013) | | | | (December 2013–Present) |
| 19106-2354 | | | | | | | | | | Director — HSBC USA Inc. |
| March 1956 | | | | | | | | | | (July 2014–Present) |
| | | | | | | | | | Director — HSBC Bank USA, |
| | | | | | | | | | National Association |
| | | | | | | | | | (July 2014–March 2017) |
| | | | | | | | | | Director — HSBC Finance |
| | | | | | | | | | Corporation |
| | | | | | | | | | (December 2013–April 2018) |
54
Table of Contents
| | | | | | | | Number of | | Other |
| | | | | | Principal | | Portfolios in Fund | | Directorships |
| Name, | | Position(s) | | | | Occupation(s) | | Complex Overseen | | Held by |
| Address, | | Held with | | Length of Time | | During the | | by Trustee | | Trustee |
| and Birth Date | | Fund(s) | | Served | | Past Five Years | | or Officer | | or Officer |
| | | | | | | | | | |
| Christianna Wood | | Trustee | | Since January 2019 | | Chief Executive Officer and | | 150 | | Director; Finance Committee and |
| 610 Market Street | | | | | | President — Gore Creek Capital, | | | | Audit Committee Member — |
| Philadelphia, PA | | | | | | Ltd. (August 2009–Present) | | | | H&R Block Corporation |
| 19106-2354 | | | | | | | | | | (July 2008–Present) |
| August 1959 | | | | | | | | | | Director; Investments |
| | | | | | | | | | Committee, Capital and Finance |
| | | | | | | | | | Committee, and Audit |
| | | | | | | | | | Committee Member — Grange |
| | | | | | | | | | Insurance (2013–Present) |
| | | | | | | | | | Trustee; Chair of Nominating and |
| | | | | | | | | | Governance Committee and |
| | | | | | | | | | Audit Committee Member — |
| | | | | | | | | | The Merger Fund |
| | | | | | | | | | (2013–October 2021), |
| | | | | | | | | | The Merger Fund VL |
| | | | | | | | | | (2013–October 2021); WCM |
| | | | | | | | | | Alternatives: Event-Driven Fund |
| | | | | | | | | | (2013–October 2021), and WCM |
| | | | | | | | | | Alternatives: Credit Event Fund |
| | | | | | | | | | (December 2017–October 2021) |
| | | | | | | | | | Director; Chair of Governance |
| | | | | | | | | | Committee and Audit Committee |
| | | | | | | | | | Member — International |
| | | | | | | | | | Securities Exchange (2010–2016) |
55
Table of Contents
Board of trustees / directors and officers addendum
Delaware Funds by Macquarie®
| | | | | | | | Number of | | Other |
| | | | | | Principal | | Portfolios in Fund | | Directorships |
| Name, | | Position(s) | | | | Occupation(s) | | Complex Overseen | | Held by |
| Address, | | Held with | | Length of Time | | During the | | by Trustee | | Trustee |
| and Birth Date | | Fund(s) | | Served | | Past Five Years | | or Officer | | or Officer |
| | | | | | | | | | |
| Janet L. Yeomans | | Trustee | | Since April 1999 | | Vice President and Treasurer | | 150 | | Director; Personnel and |
| 610 Market Street | | | | | | (January 2006–July 2012), Vice | | | | Compensation Committee Chair; |
| Philadelphia, PA | | | | | | President — Mergers & | | | | Member of Nominating, |
| 19106-2354 | | | | | | Acquisitions | | | | Investments, and Audit |
| July 1948 | | | | | | (January 2003–January 2006), | | | | Committees for various periods |
| | | | | | and Vice President and Treasurer | | | | throughout directorship — |
| | | | | | (July 1995–January 2003) — 3M | | | | Okabena Company (2009–2017) |
| | | | | | Company | | | | |
| | | | | | | | | | | |
| Officers | | | | | | | | | | |
| | | | | | | | | | | |
| David F. Connor | | Senior Vice President, | | Senior Vice President, | | David F. Connor has served in | | 150 | | None4 |
| 610 Market Street | | General Counsel, and | | since May 2013; | | various capacities at different | | | | |
| Philadelphia, PA | | Secretary | | General Counsel | | times at Macquarie Investment | | | | |
| 19106-2354 | | | | since May 2015; | | Management. | | | | |
| December 1963 | | | | Secretary since | | | | | | |
| | | | October 2005 | | | | | | |
| | | | | | | | | | | |
| Daniel V. Geatens | | Senior Vice President | | Senior Vice President | | Daniel V. Geatens has served in | | 150 | | None4 |
| 610 Market Street | | and Treasurer | | and Treasurer since | | various capacities at different | | | | |
| Philadelphia, PA | | | | October 2007 | | times at Macquarie Investment | | | | |
| 19106-2354 | | | | | | Management. | | | | |
| October 1972 | | | | | | | | | | |
56
Table of Contents
| | | | | | | | Number of | | Other |
| | | | | | Principal | | Portfolios in Fund | | Directorships |
| Name, | | Position(s) | | | | Occupation(s) | | Complex Overseen | | Held by |
| Address, | | Held with | | Length of Time | | During the | | by Trustee | | Trustee |
| and Birth Date | | Fund(s) | | Served | | Past Five Years | | or Officer | | or Officer |
| | | | | | | | | | |
| Richard Salus | | Senior Vice President | | Senior Vice President | | Richard Salus has served in | | 150 | | None |
| 610 Market Street | | and Chief Financial | | and Chief Financial | | various capacities at different | | | | |
| Philadelphia, PA | | Officer | | Officer since | | times at Macquarie Investment | | | | |
| 19106-2354 | | | | November 2006 | | Management. | | | | |
| October 1963 | | | | | | | | | | |
1 | Shawn K. Lytle is considered to be an “Interested Trustee” because he is an executive officer of the Fund’s(s’) investment advisor. |
2 | Macquarie Investment Management is the marketing name for Macquarie Management Holdings, Inc. and its subsidiaries, including the Fund’s(s’) investment advisor, principal underwriter, and its transfer agent. |
3 | Messrs. Dobbs and Harroz and Ms. Lawrence were elected as Trustees of the Trust effective December 17, 2021. |
4 | David F. Connor serves as Senior Vice President and Secretary, and Daniel V. Geatens serves as Senior Vice President, Treasurer, and Chief Financial Officer, for the six portfolios of the Optimum Fund Trust, which have the same investment advisor, principal underwriter, and transfer agent as the registrant. Mr. Geatens also serves as the Chief Financial Officer and Treasurer for Macquarie Global Infrastructure Total Return Fund Inc. |
The Statement of Additional Information for the Fund(s) includes additional information about the Trustees and Officers and is available, without charge, upon request by calling 800 523-1918.
57
Table of Contents
About the organization
Board of trustees
Shawn K. Lytle
President and
Chief Executive Officer
Delaware Funds
by Macquarie®
Philadelphia, PA Jerome D. Abernathy
Managing Member,
Stonebrook Capital
Management, LLC
Jersey City, NJ Thomas L. Bennett
Chairman of the Board
Delaware Funds
by Macquarie
Private Investor
Rosemont, PA | Ann D. Borowiec
Former Chief Executive
Officer
Private Wealth Management
J.P. Morgan Chase & Co.
New York, NY Joseph W. Chow
Former Executive Vice
President
State Street Corporation
Boston, MA H. Jeffrey Dobbs
Former Global Sector
Chairman
Industrial Manufacturing,
KPMG, LLP
Detroit, MI | John A. Fry
President
Drexel University
Philadelphia, PA Joseph Harroz, Jr.
President
University of Oklahoma
Norman, OK Sandra A.J. Lawrence
Former Chief Administrative
Officer
Children’s Mercy Hospitals
and Clinics
Kansas City, MO | Frances A.
Sevilla-Sacasa
Former Chief Executive
Officer
Banco Itaú International
Miami, FL Thomas K. Whitford
Former Vice Chairman
PNC Financial Services
Group
Pittsburgh, PA Christianna Wood
Chief Executive Officer
and President
Gore Creek Capital, Ltd.
Golden, CO Janet L. Yeomans
Former Vice President and
Treasurer
3M Company
St. Paul, MN |
Affiliated officers
| David F. Connor | Daniel V. Geatens | Richard Salus | |
| Senior Vice President, | Senior Vice President and | Senior Vice President and | |
| General Counsel, | Treasurer | Chief Financial Officer | |
| and Secretary | Delaware Funds | Delaware Funds | |
| Delaware Funds | by Macquarie | by Macquarie | |
| by Macquarie | Philadelphia, PA | Philadelphia, PA | |
| Philadelphia, PA | | | |
This annual report is for the information of Delaware Value® Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware Fund fact sheet for the most recently completed calendar quarter. These documents are available at delawarefunds.com/literature. |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT. The Fund’s Forms N-PORT, 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; and (ii) on the SEC’s website at sec.gov. In addition, a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities and the Schedule of Investments included in the Fund’s most recent Form N-PORT are available without charge on the Fund’s website at delawarefunds.com/literature. The Fund’s Forms N-PORT may be reviewed and copied at the SEC’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 website at delawarefunds.com/proxy; and (ii) on the SEC’s website at sec.gov.
58
Item 2. Code of Ethics
The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. A copy of the registrant’s Code of Business Ethics has been posted on the Delaware Funds by Macquarie® Internet Web site at www.delawarefunds.com. Any amendments to the Code of Business Ethics, and information on any waiver from its provisions granted by the registrant, will also be posted on this Web site within five business days of such amendment or waiver and will remain on the Web site for at least 12 months.
Item 3. Audit Committee Financial Expert
The registrant’s Board of Trustees has determined that certain members of the registrant’s Audit Committee are audit committee financial experts, as defined below. For purposes of this item, an “audit committee financial expert” is a person who has the following attributes:
a. An understanding of generally accepted accounting principles and financial statements;
b. The ability to assess the general application of such principles in connection with the accounting for estimates, accruals, and reserves;
c. Experience preparing, auditing, analyzing, or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrant’s financial statements, or experience actively supervising one or more persons engaged in such activities;
d. An understanding of internal controls and procedures for financial reporting; and
e. An understanding of audit committee functions.
An “audit committee financial expert” shall have acquired such attributes through:
a. Education and experience as a principal financial officer, principal accounting officer, controller, public accountant, or auditor or experience in one or more positions that involve the performance of similar functions;
b. Experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor, or person performing similar functions;
c. Experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing, or evaluation of financial statements; or
d. Other relevant experience.
The registrant’s Board of Trustees has also determined that each member of the registrant’s Audit Committee is independent. In order to be “independent” for purposes of this item, the Audit Committee member may not: (i) other than in his or her capacity as a member of the Board of Trustees or any committee thereof, accept directly or indirectly any consulting, advisory or other compensatory fee from the issuer; or (ii) be an “interested person” of the registrant as defined in Section 2(a)(19) of the Investment Company Act of 1940.
The names of the audit committee financial experts on the registrant’s Audit Committee are set forth below:
John A. Fry
Thomas K. Whitford, Chair
Item 4. Principal Accountant Fees and Services
(a) Audit fees.
The aggregate fees billed for services provided to the registrant by its independent auditors for the audit of the registrant’s annual financial statements and for services normally provided by the independent auditors in connection with statutory and regulatory filings or engagements were $27,819 for the fiscal year ended November 30, 2021.
The aggregate fees billed for services provided to the registrant by its independent auditors for the audit of the registrant’s annual financial statements and for services normally provided by the independent auditors in connection with statutory and regulatory filings or engagements were $30,910 for the fiscal year ended November 30, 2020.
(b) Audit-related fees.
The aggregate fees billed by the registrant’s independent auditors for services relating to the performance of the audit of the registrant’s financial statements and not reported under paragraph (a) of this Item were $0 for the fiscal year ended November 30, 2021.
The aggregate fees billed by the registrant’s independent auditors for services relating to the performance of the audit of the financial statements of the registrant’s investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $1,134,001 for the registrant’s fiscal year ended November 30, 2020. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These audit-related services were as follows: year-end audit procedures; group reporting and subsidiary statutory audits.
The aggregate fees billed by the registrant’s independent auditors for services relating to the performance of the audit of the registrant’s financial statements and not reported under paragraph (a) of this Item were $0 for the fiscal year ended November 30, 2020.
The aggregate fees billed by the registrant’s independent auditors for services relating to the performance of the audit of the financial statements of the registrant’s investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $903,282 for the registrant’s fiscal year ended November 30, 2020. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These audit-related services were as follows: year-end audit procedures; group reporting and subsidiary statutory audits.
(c) Tax fees.
The aggregate fees billed by the registrant’s independent auditors for tax-related services provided to the registrant were $4,365 for the fiscal year ended November 30, 2021. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These tax-related services were as follows: review of income tax returns and review of annual excise distribution calculations.
The aggregate fees billed by the registrant’s independent auditors for tax-related services provided to the registrant’s investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $0 for the registrant’s fiscal year ended November 30, 2021. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed by the registrant’s independent auditors for tax-related services provided to the registrant were $4,850 for the fiscal year ended November 30, 2020. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These tax-related services were as follows: review of income tax returns and review of annual excise distribution calculations.
The aggregate fees billed by the registrant’s independent auditors for tax-related services provided to the registrant’s investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $0 for the registrant’s fiscal year ended November 30, 2020. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
(d) All other fees.
The aggregate fees billed for all services provided by the independent auditors to the registrant other than those set forth in paragraphs (a), (b) and (c) of this Item were $0 for the fiscal year ended November 30, 2021.
The aggregate fees billed for all services other than those set forth in paragraphs (b) and (c) of this Item provided by the registrant’s independent auditors to the registrant’s adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $0 for the registrant’s fiscal year ended November 30, 2021. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed for all services provided by the independent auditors to the registrant other than those set forth in paragraphs (a), (b) and (c) of this Item were $0 for the fiscal year ended November 30, 2020.
The aggregate fees billed for all services other than those set forth in paragraphs (b) and (c) of this Item provided by the registrant’s independent auditors to the registrant’s adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $0 for the registrant’s fiscal year ended November 30, 2020. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
(e) The registrant’s Audit Committee has established pre-approval policies and procedures as permitted by Rule 2-01(c)(7)(i)(B) of Regulation S-X (the “Pre-Approval Policy”) with respect to services provided by the registrant’s independent auditors. Pursuant to the Pre-Approval Policy, the Audit Committee has pre-approved the services set forth in the table below with respect to the registrant up to the specified fee limits. Certain fee limits are based on aggregate fees to the registrant and other registrants within the Delaware Funds by Macquarie®.
| Service | Range of Fees |
| Audit Services | |
| Statutory audits or financial audits for new Funds | up to $50,000 per Fund |
| Services associated with SEC registration statements (e.g., Form N-1A, Form N-14, etc.), periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings (e.g., comfort letters for closed-end Fund offerings, consents), and assistance in responding to SEC comment letters | up to $10,000 per Fund |
| Consultations by Fund management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard-setting bodies (Note: Under SEC rules, some consultations may be considered “audit-related services” rather than “audit services”) | up to $25,000 in the aggregate |
| Audit-Related Services | |
| Consultations by Fund management as to the accounting or disclosure treatment of transactions or events and /or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard-setting bodies (Note: Under SEC rules, some consultations may be considered “audit services” rather than “audit-related services”) | up to $25,000 in the aggregate |
| Tax Services | |
| U.S. federal, state and local and international tax planning and advice (e.g., consulting on statutory, regulatory or administrative developments, evaluation of Funds’ tax compliance function, etc.) | up to $25,000 in the aggregate |
| U.S. federal, state and local tax compliance (e.g., excise distribution reviews, etc.) | up to $5,000 per Fund |
| Review of federal, state, local and international income, franchise and other tax returns | up to $5,000 per Fund |
Under the Pre-Approval Policy, the Audit Committee has also pre-approved the services set forth in the table below with respect to the registrant’s investment adviser and other entities controlling, controlled by or under common control with the investment adviser that provide ongoing services to the registrant (the “Control Affiliates”) up to the specified fee limit. This fee limit is based on aggregate fees to the investment adviser and its Control Affiliates.
| Service | Range of Fees |
| Non-Audit Services | |
| Services associated with periodic reports and other documents filed with the SEC and assistance in responding to SEC comment letters | up to $10,000 in the aggregate |
The Pre-Approval Policy requires the registrant’s independent auditors to report to the Audit Committee at each of its regular meetings regarding all services initiated since the last such report was rendered, including those services authorized by the Pre-Approval Policy.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the registrant’s independent auditors for services rendered to the registrant and to its investment adviser and other service providers under common control with the adviser were $9,044,000 and $8,455,000 for the registrant’s fiscal years ended November 30, 2021 and November 30, 2020, respectively.
(h) In connection with its selection of the independent auditors, the registrant’s Audit Committee has considered the independent auditors’ provision of non-audit services to the registrant’s investment adviser and other service providers under common control with the adviser that were not required to be pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X. The Audit Committee has determined that the independent auditors’ provision of these services is compatible with maintaining the auditors’ independence.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Included as part of report to shareholders filed under Item 1 of this Form N-CSR.
(b) Divestment of securities in accordance with Section 13(c) of the Investment Company Act of 1940.
Not applicable.
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 officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing of this report, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the Investment Company Act of 1940 (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)) and provide 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 (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 (17 CFR 270.30a-3(d)) that occurred during the period covered by the report to stockholders included herein that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies
Not applicable.
Item 13. 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.
DELAWARE GROUP® EQUITY FUNDS II
| /s/SHAWN K. LYTLE |
| By: | Shawn K. Lytle |
| Title: | President and Chief Executive Officer |
| Date: | February 4, 2022 |
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.
| /s/SHAWN K. LYTLE |
| By: | Shawn K. Lytle |
| Title: | President and Chief Executive Officer |
| Date: | February 4, 2022 |
| |
| /s/RICHARD SALUS |
| By: | Richard Salus |
| Title: | Chief Financial Officer |
| Date: | February 4, 2022 |
