UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
COMPANIES
Investment Company Act file number: 811-04997
Exact name of registrant as specified in charter:
Delaware Group® Equity Funds V
Delaware Group® Equity Funds V
Address of principal executive offices:
2005 Market Street
Philadelphia, PA 19103
2005 Market Street
Philadelphia, PA 19103
Name and address of agent for service:
David F. Connor, Esq.
2005 Market Street
Philadelphia, PA 19103
David F. Connor, Esq.
2005 Market Street
Philadelphia, PA 19103
Registrant’s telephone number, including area code: (800) 523-1918
Date of fiscal year end: | November 30 |
Date of reporting period: | May 31, 2010 |
Item 1. Reports to Stockholders
![](https://capedge.com/proxy/N-CSR/0001206774-10-001807/del_topimg02.jpg)
Semiannual report Delaware Small Cap Core Fund May 31, 2010 Core equity mutual fund |
This semiannual report is for the information of Delaware Small Cap Core Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Small Cap Core Fund. The figures in the semiannual report for Delaware Small Cap Core Fund represent past results, which are not a guarantee of future results. The return and principal value of an investment in the Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. You should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The Delaware Small Cap Core Fund prospectus contains this and other important information about the Fund. Prospectuses for all open-end funds in the Delaware Investments® Family of Funds are available from your financial advisor, online at www.delawareinvestments.com, or by phone at 800 523-1918. Please read the prospectus carefully before you invest or send money. |
You can obtain shareholder reports and prospectuses online instead of in the mail. Visit www.delawareinvestments.com/edelivery. |
Experience Delaware Investments
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Investments or obtain a prospectus for Delaware Small Cap Core Fund at www.delawareinvestments.com.
Manage your investments online
- 24-hour access to your account information
- Obtain share prices
- Check your account balance and recent transactions
- Request statements or literature
- Make purchases and redemptions
On January 4, 2010, Delaware Management Holdings, Inc., and its subsidiaries (collectively known by the marketing name of Delaware Investments) were sold by a subsidiary of Lincoln National Corporation to Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services. Please see your Fund’s prospectus and any supplements thereto for more complete information.
Investments in Delaware Small Cap Core Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Table of contents | |
Disclosure of Fund expenses | 1 |
Sector allocation and top 10 holdings | 3 |
Statement of net assets | 4 |
Statement of operations | 12 |
Statements of changes in net assets | 14 |
Financial highlights | 16 |
Notes to financial statements | 24 |
Other Fund information | 34 |
About the organization | 36 |
Unless otherwise noted, views expressed herein are current as of May 31, 2010, and are subject to change.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Fund’s distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
© 2010 Delaware Management Holdings, Inc.
All third-party trademarks cited are the property of their respective owners.
Disclosure of Fund expenses
For the period December 1, 2009 to May 31, 2010
For the period December 1, 2009 to May 31, 2010
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from December 1, 2009 to May 31, 2010.
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 reflect fee waivers in effect. The expenses shown in the table assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
Delaware Small Cap Core Fund
Expense analysis of an investment of $1,000
Expense analysis of an investment of $1,000
Beginning | Ending | Expenses | |||||||||
Account Value | Account Value | Annualized | Paid During Period | ||||||||
12/1/09 | 5/31/10 | Expense Ratio | 12/1/09 to 5/31/10* | ||||||||
Actual Fund return | |||||||||||
Class A | $1,000.00 | $1,155.60 | 1.40% | $ | 7.52 | ||||||
Class C | 1,000.00 | 1,151.10 | 2.15% | 11.53 | |||||||
Class R | 1,000.00 | 1,154.70 | 1.65% | 8.86 | |||||||
Institutional Class | 1,000.00 | 1,156.50 | 1.15% | 6.18 | |||||||
Hypothetical 5% return (5% return before expenses) | |||||||||||
Class A | $1,000.00 | $1,017.95 | 1.40% | $ | 7.04 | ||||||
Class C | 1,000.00 | 1,014.21 | 2.15% | 10.80 | |||||||
Class R | 1,000.00 | 1,016.70 | 1.65% | 8.30 | |||||||
Institutional Class | 1,000.00 | 1,019.20 | 1.15% | 5.79 |
*“Expenses Paid During Period” are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
2
Sector allocation and top 10 holdings | |
Delaware Small Cap Core Fund | As of May 31, 2010 |
Sector designations may be different than the sector designations presented in other Fund materials. The sector designations may represent the investment manager’s internal sector classifications, which may result in the sector designations for one fund being different than another fund’s designations.
Sector | Percentage of net assets | |
Common Stock | 98.37 | % |
Basic Materials | 3.87 | % |
Business Services | 5.71 | % |
Capital Goods | 10.96 | % |
Communication Services | 1.71 | % |
Consumer Discretionary | 10.89 | % |
Consumer Services | 4.53 | % |
Consumer Staples | 1.84 | % |
Energy | 4.43 | % |
Financials | 13.67 | % |
Health Care | 11.72 | % |
Media | 1.60 | % |
Real Estate | 4.93 | % |
Technology | 19.61 | % |
Transportation | 1.62 | % |
Utilities | 1.28 | % |
Discount Note | 1.66 | % |
Securities Lending Collateral | 14.24 | % |
Total Value of Securities | 114.27 | % |
Obligation to Return Securities Lending Collateral | (14.54 | %) |
Receivables and Other Assets Net of Liabilities | 0.27 | % |
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 holdings | Percentage of net assets | |
ULTA Salon Cosmetics & Fragrance | 1.02 | % |
Tractor Supply | 0.98 | % |
G-III Apparel Group | 0.89 | % |
CKE Restaurants | 0.88 | % |
HUB Group | 0.87 | % |
Informatica | 0.86 | % |
United Stationers | 0.85 | % |
Anixter International | 0.83 | % |
Progress Software | 0.83 | % |
Rock-Tenn Class A | 0.83 | % |
3
Statement of net assets | |
Delaware Small Cap Core Fund | May 31, 2010 (Unaudited) |
Number of shares | Value | |||||
Common Stock – 98.37% | ||||||
Basic Materials – 3.87% | ||||||
† | Kapstone Paper & Packaging | 37,400 | $ | 413,270 | ||
* | Rock-Tenn Class A | 11,690 | 601,567 | |||
† | Rockwood Holdings | 20,180 | 523,469 | |||
Schulman (A.) | 18,400 | 408,940 | ||||
Silgan Holdings | 14,060 | 401,132 | ||||
† | Spartech | 34,900 | 464,519 | |||
2,812,897 | ||||||
Business Services – 5.71% | ||||||
†* | AMN Healthcare Services | 37,730 | 313,914 | |||
†* | CRA International | 11,620 | 258,196 | |||
Diamond Management & Technology Consultants | 23,200 | 230,376 | ||||
† | Kforce | 29,250 | 395,460 | |||
† | Lincoln Educational Services | 19,930 | 474,932 | |||
* | McGrath RentCorp | 10,280 | 240,141 | |||
†* | Metalico | 79,600 | 394,816 | |||
† | TeleTech Holdings | 24,700 | 319,371 | |||
† | Tetra Tech | 15,100 | 342,242 | |||
†* | Titan Machinery | 20,250 | 262,440 | |||
U.S. Ecology | 21,180 | 299,697 | ||||
† | United Stationers | 10,550 | 616,330 | |||
4,147,915 | ||||||
Capital Goods – 10.96% | ||||||
* | AAON | 16,450 | 405,986 | |||
Acuity Brands | 12,820 | 527,287 | ||||
Applied Industrial Technologies | 19,440 | 536,155 | ||||
* | Barnes Group | 22,600 | 423,072 | |||
† | Chart Industries | 22,340 | 411,503 | |||
† | Columbus McKinnon | 26,220 | 429,484 | |||
* | Cooper Tire & Rubber | 14,600 | 276,086 | |||
Ducommun | 11,800 | 233,286 | ||||
ESCO Technologies | 6,500 | 170,105 | ||||
†* | Esterline Technologies | 10,500 | 563,430 | |||
† | Gibraltar Industries | 31,400 | 411,968 | |||
* | Granite Construction | 7,100 | 210,515 | |||
† | Kadant | 16,800 | 328,104 | |||
Koppers Holdings | 15,720 | 425,855 | ||||
Lufkin Industries | 6,790 | 541,367 | ||||
† | MYR Group/Delaware | 14,300 | 235,807 | |||
†* | Rofin-Sinar Technologies | 12,000 | 286,440 |
4
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Capital Goods (continued) | ||||||
†* | Tenneco | 19,200 | $ | 425,472 | ||
* | Triumph Group | 8,320 | 577,490 | |||
†* | Tutor Perini | 11,780 | 262,694 | |||
†* | Willbros Group | 29,870 | 277,492 | |||
7,959,598 | ||||||
Communication Services – 1.71% | ||||||
* | Alaska Communications Systems Group | 42,900 | 354,783 | |||
Atlantic Tele-Network | 4,200 | 175,602 | ||||
† | IPG Photonics | 17,700 | 297,714 | |||
NTELOS Holdings | 23,190 | 416,261 | ||||
1,244,360 | ||||||
Consumer Discretionary – 10.89% | ||||||
Big 5 Sporting Goods | 20,400 | 301,716 | ||||
† | Citi Trends | 15,300 | 521,424 | |||
†* | Coldwater Creek | 37,900 | 236,496 | |||
† | Collective Brands | 23,400 | 523,692 | |||
†* | DSW Class A | 17,500 | 505,400 | |||
†* | G-III Apparel Group | 22,500 | 645,075 | |||
†* | Gymboree | 11,200 | 499,296 | |||
†* | Iconix Brand Group | 31,100 | 505,375 | |||
†* | Jo-Ann Stores | 12,950 | 591,556 | |||
* | Jones Apparel Group | 25,300 | 496,892 | |||
†* | Jos. A. Bank Clothiers | 6,000 | 364,080 | |||
† | Perry Ellis International | 16,900 | 406,614 | |||
†* | Steven Madden | 13,000 | 438,490 | |||
† | Susser Holdings | 41,650 | 417,750 | |||
* | Tractor Supply | 10,500 | 711,480 | |||
†* | ULTA Salon Cosmetics & Fragrance | 29,000 | 741,820 | |||
7,907,156 | ||||||
Consumer Services – 4.53% | ||||||
† | AFC Enterprises | 41,200 | 430,952 | |||
†* | Bally Technologies | 12,940 | 549,950 | |||
†* | Buffalo Wild Wings | 9,420 | 347,598 | |||
†* | CEC Entertainment | 9,010 | 364,364 | |||
CKE Restaurants | 51,480 | 636,293 | ||||
†* | Jack in the Box | 26,080 | 585,235 | |||
† | Shuffle Master | 45,500 | 377,650 | |||
3,292,042 |
5
Statement of net assets
Delaware Small Cap Core Fund
Delaware Small Cap Core Fund
Number of shares | Value | |||||||
Common Stock (continued) | ||||||||
Consumer Staples – 1.84% | ||||||||
* | Casey’s General Stores | 16,300 | $ | 600,981 | ||||
J&J Snack Foods | 9,000 | 399,870 | ||||||
† | Prestige Brands Holdings | 43,700 | 337,364 | |||||
1,338,215 | ||||||||
Energy – 4.43% | ||||||||
* | Berry Petroleum Class A | 17,700 | 544,098 | |||||
†* | Bristow Group | 13,150 | 427,375 | |||||
†* | Carrizo Oil & Gas | 20,100 | 356,574 | |||||
†* | Key Energy Group | 46,500 | 444,540 | |||||
* | Penn Virginia | 13,820 | 302,520 | |||||
†* | Pioneer Drilling | 40,600 | 240,758 | |||||
† | Rosetta Resources | 22,100 | 484,653 | |||||
†* | Swift Energy | 15,000 | 414,750 | |||||
3,215,268 | ||||||||
Financials – 13.67% | ||||||||
Alterra Capital Holdings | 20,250 | 378,878 | ||||||
American Equity Investment Life Holding | 42,700 | 401,807 | ||||||
Amtrust Financial Services | 23,900 | 314,763 | ||||||
Apollo Investment | 49,050 | 511,592 | ||||||
Ares Capital | 39,200 | 530,768 | ||||||
Assured Guaranty | 24,300 | 408,240 | ||||||
Boston Private Financial Holdings | 55,200 | 404,064 | ||||||
City Holding | 13,050 | 418,775 | ||||||
Delphi Financial Group Class A | 18,500 | 480,445 | ||||||
Dime Community Bancshares | 42,300 | 539,747 | ||||||
First Mercury Financial | 22,800 | 279,528 | ||||||
Flushing Financial | 31,100 | 421,094 | ||||||
@ | Harleysville Group | 13,170 | 429,737 | |||||
@ | Independent Bank (MA) | 13,800 | 334,236 | |||||
† | optionsXpress Holdings | 31,400 | 503,970 | |||||
Park National | 5,500 | 355,850 | ||||||
† | ProAssurance | 8,530 | 502,076 | |||||
Prosperity Bancshares | 12,500 | 450,500 | ||||||
Protective Life | 15,160 | 326,243 | ||||||
Provident Financial Services | 33,840 | 418,262 | ||||||
† | Texas Capital Bancshares | 22,600 | 412,902 |
6
Number of shares | Value | |||||||
Common Stock (continued) | ||||||||
Financials (continued) | ||||||||
Trustmark | 21,500 | $ | 480,955 | |||||
Univest Corporation of Pennsylvania | 9,800 | 188,748 | ||||||
Webster Financial | 22,900 | 438,535 | ||||||
9,931,715 | ||||||||
Health Care – 11.72% | ||||||||
† | Acorda Therapeutics | 10,000 | 343,800 | |||||
†* | Affymetrix | 41,000 | 268,550 | |||||
†* | Air Methods | 8,100 | 266,733 | |||||
† | Align Technology | 29,170 | 435,216 | |||||
† | Alkermes | 45,430 | 515,857 | |||||
† | Catalyst Health Solutions | 13,090 | 501,215 | |||||
† | Celera | 51,610 | 364,883 | |||||
†* | Conmed | 23,940 | 465,394 | |||||
† | CryoLife | 45,700 | 236,726 | |||||
† | Eurand | 42,750 | 382,185 | |||||
†* | Human Genome Sciences | 9,200 | 227,792 | |||||
† | Inspire Pharmaceuticals | 38,900 | 221,147 | |||||
†* | Martek Biosciences | 15,200 | 282,568 | |||||
†* | Merit Medical Systems | 27,690 | 423,380 | |||||
† | Odyssey HealthCare | 13,000 | 345,280 | |||||
† | Onyx Pharmaceuticals | 18,590 | 414,371 | |||||
†* | PharMerica | 20,370 | 334,068 | |||||
†* | Quidel | 24,700 | 288,990 | |||||
†* | Regeneron Pharmaceuticals | 20,010 | 571,685 | |||||
† | Res-Care | 24,200 | 272,250 | |||||
† | SonoSite | 16,150 | 469,804 | |||||
† | Sun Healthcare Group | 43,650 | 397,652 | |||||
* | West Pharmaceutical Services | 12,310 | 484,399 | |||||
8,513,945 | ||||||||
Media – 1.60% | ||||||||
†* | Carmike Cinemas | 15,300 | 169,830 | |||||
† | DG FastChannel | 7,800 | 331,266 | |||||
* | Meredith | 7,500 | 251,925 | |||||
National CineMedia | 23,350 | 408,392 | ||||||
1,161,413 |
7
Statement of net assets
Delaware Small Cap Core Fund
Delaware Small Cap Core Fund
Number of shares | Value | |||||||
Common Stock (continued) | ||||||||
Real Estate – 4.93% | ||||||||
* | BioMed Realty Trust | 29,200 | $ | 496,692 | ||||
DuPont Fabros Technology | 18,200 | 464,828 | ||||||
* | EastGroup Properties | 13,000 | 480,740 | |||||
* | Entertainment Properties Trust | 12,600 | 515,844 | |||||
* | Home Properties | 11,110 | 540,279 | |||||
* | Sovran Self Storage | 14,130 | 509,104 | |||||
* | Tanger Factory Outlet Centers | 13,800 | 574,356 | |||||
3,581,843 | ||||||||
Technology – 19.61% | ||||||||
†* | Amkor Technologies | 62,600 | 426,306 | |||||
†* | Anixter International | 12,750 | 605,625 | |||||
†* | Applied Micro Circuits | 43,000 | 474,075 | |||||
† | Arris Group | 34,000 | 372,980 | |||||
†* | Atheros Communications | 14,000 | 476,000 | |||||
† | FARO Technologies | 21,990 | 525,781 | |||||
iGate | 46,980 | 548,726 | ||||||
†* | Informatica | 24,340 | 627,972 | |||||
† | IXYS | 44,800 | 417,536 | |||||
†* | j2 Global Communications | 20,100 | 465,114 | |||||
† | JDA Software Group | 18,950 | 506,344 | |||||
† | Knology | 24,650 | 294,814 | |||||
†* | Lawson Software | 68,450 | 564,370 | |||||
† | Liquidity Services | 25,500 | 338,130 | |||||
† | Netgear | 21,510 | 488,492 | |||||
NIC | 47,000 | 305,500 | ||||||
* | Plantronics | 10,100 | 302,394 | |||||
†* | Progress Software | 18,950 | 605,263 | |||||
* | Quality Systems | 9,250 | 546,120 | |||||
† | QuinStreet | 22,300 | 309,747 | |||||
†* | Rackspace Hosting | 19,000 | 334,400 | |||||
† | Radiant Systems | 36,700 | 508,662 | |||||
† | RightNow Technologies | 22,300 | 324,465 | |||||
†* | SAVVIS | 22,750 | 426,676 | |||||
†* | Semtech | 21,200 | 373,332 | |||||
† | Smith Micro Software | 8,100 | 79,785 | |||||
†* | SolarWinds | 19,480 | 369,341 | |||||
† | SS&C Technologies Holdings | 11,149 | 181,952 | |||||
†* | Synaptics | 17,820 | 533,174 |
8
Number of shares | Value | ||||||||
Common Stock (continued) | |||||||||
Technology (continued) | |||||||||
† | Tekelec | 34,390 | $ | 492,981 | |||||
†* | ValueClick | 42,430 | 493,461 | ||||||
† | ViaSat | 16,630 | 534,322 | ||||||
†* | Vocus | 24,750 | 387,585 | ||||||
14,241,425 | |||||||||
Transportation – 1.62% | |||||||||
† | Alaska Air Group | 6,100 | 284,870 | ||||||
†* | Hawaiian Holdings | 36,400 | 259,168 | ||||||
† | HUB Group | 20,770 | 635,562 | ||||||
1,179,600 | |||||||||
Utilities – 1.28% | |||||||||
NorthWestern | 15,100 | 397,734 | |||||||
* | Otter Tail | 12,970 | 256,676 | ||||||
* | UNITIL | 13,090 | 272,796 | ||||||
927,206 | |||||||||
Total Common Stock (cost $64,099,174) | 71,454,598 | ||||||||
Principal amount | |||||||||
≠Discount Note – 1.66% | |||||||||
Federal Home Loan Bank 0.06% 6/1/10 | $ | 1,207,009 | 1,207,009 | ||||||
Total Discount Note (cost $1,207,009) | 1,207,009 | ||||||||
Total Value of Securities Before Securities | |||||||||
Lending Collateral – 100.03% (cost $65,306,183) | 72,661,607 | ||||||||
Number of shares | |||||||||
Securities Lending Collateral** – 14.24% | |||||||||
Investment Companies | |||||||||
Mellon GSL DBT II Collateral Fund | 9,368,917 | 9,368,917 | |||||||
BNY Mellon SL DBT II Liquidating Fund | 977,332 | 965,799 | |||||||
†@Mellon GSL Reinvestment Trust II | 214,226 | 9,105 | |||||||
Total Securities Lending Collateral (cost $10,560,475) | 10,343,821 |
9
Statement of net assets
Delaware Small Cap Core Fund
Delaware Small Cap Core Fund
Total Value of Securities – 114.27% | ||||||
(cost $75,866,658) | $ | 83,005,428 | © | |||
Obligation to Return Securities | ||||||
Lending Collateral** – (14.54%) | (10,560,475 | ) | ||||
Receivables and Other Assets | ||||||
Net of Liabilities – 0.27% | 194,787 | |||||
Net Assets Applicable to 7,203,664 | ||||||
Shares Outstanding – 100.00% | $ | 72,639,740 | ||||
Net Asset Value – Delaware Small Cap Core Fund | ||||||
Class A ($22,063,310 / 2,184,232 Shares) | $10.10 | |||||
Net Asset Value – Delaware Small Cap Core Fund | ||||||
Class C ($8,025,512 / 823,350 Shares) | $9.75 | |||||
Net Asset Value – Delaware Small Cap Core Fund | ||||||
Class R ($4,996,949 / 499,780 Shares) | $10.00 | |||||
Net Asset Value – Delaware Small Cap Core Fund | ||||||
Institutional Class ($37,553,969 / 3,696,302 Shares) | $10.16 | |||||
Components of Net Assets at May 31, 2010: | ||||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 90,269,225 | ||||
Undistributed net investment income | 71,723 | |||||
Accumulated net realized loss on investments | (24,839,978 | ) | ||||
Net unrealized appreciation of investments | ||||||
and foreign currencies | 7,138,770 | |||||
Total net assets | $ | 72,639,740 |
† | Non income producing security. |
* | Fully or partially on loan. |
≠ | The rate shown is the effective yield at the time of purchase. |
** | See Note 8 in “Notes to financial statements.” |
@ | Illiquid security. At May 31, 2010, the aggregate amount of illiquid securities was $773,078 which represented 1.06% of the Fund’s net assets. See Note 9 in “Notes to financial statements.” |
© | Includes $10,148,613 of securities loaned. |
10
Net Asset Value and Offering Price per Share – | ||
Delaware Small Cap Core Fund | ||
Net asset value Class A (A) | $10.10 | |
Sales charge (5.75% of offering price) (B) | 0.62 | |
Offering price | $10.72 |
(A) | Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares. |
(B) | See the current prospectus for purchases of $50,000 or more. |
See accompanying notes
11
Statement of operations | |
Delaware Small Cap Core Fund | Six Months Ended May 31, 2010 (Unaudited) |
Investment Income: | |||||||||
Dividends | $ | 546,187 | |||||||
Interest | 428 | ||||||||
Securities lending income | 30,108 | ||||||||
Foreign tax withheld | (22 | ) | $ | 576,701 | |||||
Expenses: | |||||||||
Management fees | 271,211 | ||||||||
Dividend disbursing and transfer agent fees and expenses | 92,769 | ||||||||
Distribution expenses – Class A | 36,079 | ||||||||
Distribution expenses – Class C | 40,595 | ||||||||
Distribution expenses – Class R | 13,698 | ||||||||
Registration fees | 25,614 | ||||||||
Reports and statements to shareholders | 14,933 | ||||||||
Accounting and administration expenses | 14,381 | ||||||||
Audit and tax | 7,387 | ||||||||
Legal fees | 4,398 | ||||||||
Dues and services | 2,643 | ||||||||
Trustees’ fees | 2,372 | ||||||||
Pricing fees | 1,536 | ||||||||
Insurance fees | 1,219 | ||||||||
Custodian fees | 1,136 | ||||||||
Consulting fees | 367 | ||||||||
Trustees’ expenses | 194 | 530,532 | |||||||
Less fees waived | (24,181 | ) | |||||||
Less waived distribution expenses – Class A | (5,992 | ) | |||||||
Less waived distribution expenses – Class R | (2,275 | ) | |||||||
Total operating expenses | 498,084 | ||||||||
Net Investment Income | 78,617 | ||||||||
Net Realized and Unrealized Gain on Investments | |||||||||
and Foreign Currencies: | |||||||||
Net realized gain on investments | 2,015,180 | ||||||||
Net change in unrealized appreciation/depreciation of | |||||||||
investments and foreign currencies | 7,993,271 | ||||||||
Net Realized and Unrealized Gain on Investments | |||||||||
and Foreign Currencies | 10,008,451 | ||||||||
Net Increase in Net Assets Resulting from Operations | $ | 10,087,068 |
See accompanying notes
12
Statements of changes in net assets
Delaware Small Cap Core Fund
Delaware Small Cap Core Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
5/31/10 | 11/30/09 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 78,617 | $ | 25,115 | ||||
Net realized gain (loss) on investments and | ||||||||
foreign currencies | 2,015,180 | (11,634,973 | ) | |||||
Net change in unrealized appreciation/depreciation | ||||||||
of investments and foreign currencies | 7,993,271 | 24,460,977 | ||||||
Net increase in net assets resulting from operations | 10,087,068 | 12,851,119 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | — | (18,850 | ) | |||||
Institutional Class | (17,356 | ) | (108,923 | ) | ||||
(17,356 | ) | (127,773 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 2,753,941 | 10,062,961 | ||||||
Class C | 429,766 | 1,721,059 | ||||||
Class R | 1,490,947 | 2,086,498 | ||||||
Institutional Class | 4,732,634 | 7,210,564 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | — | 16,791 | ||||||
Institutional Class | 17,356 | 108,923 | ||||||
9,424,644 | 21,206,796 |
14
Six Months | Year | |||||||
Ended | Ended | |||||||
5/31/10 | 11/30/09 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares repurchased: | ||||||||
Class A | $ | (8,776,869 | ) | $ | (7,249,016 | ) | ||
Class C | (993,587 | ) | (3,393,126 | ) | ||||
Class R | (894,877 | ) | (1,611,578 | ) | ||||
Institutional Class | (2,418,332 | ) | (6,069,148 | ) | ||||
(13,083,665 | ) | (18,322,868 | ) | |||||
Increase (decrease) in net assets derived from capital | ||||||||
share transactions | (3,659,021 | ) | 2,883,928 | |||||
Net Increase in Net Assets | 6,410,691 | 15,607,274 | ||||||
Net Assets: | ||||||||
Beginning of period | 66,229,049 | 50,621,775 | ||||||
End of period (including undistributed net investment | ||||||||
income of $71,723 and $10,462, respectively) | $ | 72,639,740 | $ | 66,229,049 |
See accompanying notes
15
Financial highlights
Delaware Small Cap Core Fund Class A
Delaware Small Cap Core 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 income (loss)2 |
Net realized and unrealized gain (loss) on investments and foreign currencies |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain on investments |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income (loss) to average net assets |
Ratio of net investment income (loss) to average net assets |
prior to fees waived and expense paid indirectly |
Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 The average shares outstanding method has been applied for per share information.
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect.
See accompanying notes
16
Six Months Ended | Year Ended | |||||||||||||||||
5/31/101 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | 11/30/05 | |||||||||||||
(Unaudited) | ||||||||||||||||||
$8.740 | $6.930 | $12.150 | $13.030 | $11.380 | $14.600 | |||||||||||||
0.010 | 0.003 | 0.019 | (0.010 | ) | (0.015 | ) | 0.022 | |||||||||||
1.350 | 1.815 | (4.747 | ) | (0.450 | ) | 1.895 | 1.035 | |||||||||||
1.360 | 1.818 | (4.728 | ) | (0.460 | ) | 1.880 | 1.057 | |||||||||||
— | (0.008 | ) | — | — | — | (0.025 | ) | |||||||||||
— | — | (0.492 | ) | (0.420 | ) | (0.230 | ) | (4.252 | ) | |||||||||
— | (0.008 | ) | (0.492 | ) | (0.420 | ) | (0.230 | ) | (4.277 | ) | ||||||||
$10.100 | $8.740 | $6.930 | $12.150 | $13.030 | $11.380 | |||||||||||||
15.56% | 25.36% | (40.55% | ) | (3.62% | ) | 16.83% | 9.04% | |||||||||||
$22,063 | $24,512 | $17,529 | $41,871 | $25,220 | $3,863 | |||||||||||||
1.40% | 1.45% | 1.34% | 1.29% | 1.26% | 1.02% | |||||||||||||
1.52% | 1.63% | 1.57% | 1.47% | 1.73% | 2.53% | |||||||||||||
0.20% | 0.04% | 0.19% | (0.07% | ) | (0.13% | ) | 0.20% | |||||||||||
0.08% | (0.14% | ) | (0.04% | ) | (0.25% | ) | (0.60% | ) | (1.31% | ) | ||||||||
39% | 79% | 84% | 104% | 121% | 104% |
17
Financial highlights
Delaware Small Cap Core Fund Class C
Delaware Small Cap Core 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 loss3 |
Net realized and unrealized gain (loss) on investments and foreign currencies |
Total from investment operations |
Less dividends and distributions from: |
Net realized gain on investments |
Total dividends and distributions |
Net asset value, end of period |
Total return4 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment loss to average net assets |
Ratio of net investment loss to average net assets |
prior to fees waived and expense paid indirectly |
Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
2 Date of commencement of operations; ratios have been annualized and total return has not been annualized. |
3 The average shares outstanding method has been applied for per share information. |
See accompanying notes
18
8/1/052 | ||||||||||||||||||
Six Months Ended | Year Ended | to | ||||||||||||||||
5/31/101 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | 11/30/05 | |||||||||||||
(Unaudited) | ||||||||||||||||||
$8.470 | $6.750 | $11.940 | $12.910 | $11.360 | $11.590 | |||||||||||||
(0.026 | ) | (0.052 | ) | (0.055 | ) | (0.105 | ) | (0.106 | ) | (0.021 | ) | |||||||
1.306 | 1.772 | (4.643 | ) | (0.445 | ) | 1.886 | (0.209 | ) | ||||||||||
1.280 | 1.720 | (4.698 | ) | (0.550 | ) | 1.780 | (0.230 | ) | ||||||||||
— | — | (0.492 | ) | (0.420 | ) | (0.230 | ) | — | ||||||||||
— | — | (0.492 | ) | (0.420 | ) | (0.230 | ) | — | ||||||||||
$9.750 | $8.470 | $6.750 | $11.940 | $12.910 | $11.360 | |||||||||||||
15.11% | 25.48% | (41.03% | ) | (4.37% | ) | 15.97% | (1.98% | ) | ||||||||||
$8,026 | $7,468 | $7,494 | $18,697 | $11,777 | $866 | |||||||||||||
2.15% | 2.20% | 2.09% | 2.04% | 2.01% | 2.00% | |||||||||||||
2.22% | 2.33% | 2.27% | 2.17% | 2.43% | 5.14% | |||||||||||||
(0.55% | ) | (0.71% | ) | (0.56% | ) | (0.82% | ) | (0.88% | ) | (0.56% | ) | |||||||
(0.62% | ) | (0.84% | ) | (0.74% | ) | (0.95% | ) | (1.30% | ) | (3.71% | ) | |||||||
39% | 79% | 84% | 104% | 121% | 104% | 5 |
4 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
5 The portfolio turnover is representative of the Fund for the entire year. |
19
Financial highlights
Delaware Small Cap Core Fund Class R
Delaware Small Cap Core 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 loss3 |
Net realized and unrealized gain (loss) on investments and foreign currencies |
Total from investment operations |
Less dividends and distributions from: |
Net realized gain on investments |
Total dividends and distributions |
Net asset value, end of period |
Total return4 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment loss to average net assets |
Ratio of net investment loss to average net assets |
prior to fees waived and expense paid indirectly |
Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
2 As of November 30, 2005, the Delaware Small Cap Core Fund Class R had one share outstanding, representing the initial seed purchase. Shareholder data for this class prior to December 1, 2005 is not disclosed because management does not believe it to be meaningful. |
3 The average shares outstanding method has been applied for per share information. |
4 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect. |
See accompanying notes
20
Six Months Ended | Year Ended | ||||||||||||||
5/31/101 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/062 | |||||||||||
(Unaudited) | |||||||||||||||
$8.660 | $6.870 | $12.090 | $13.000 | $11.360 | |||||||||||
(0.003 | ) | (0.016 | ) | (0.005 | ) | (0.042 | ) | (0.047 | ) | ||||||
1.343 | 1.806 | (4.723 | ) | (0.448 | ) | 1.917 | |||||||||
1.340 | 1.790 | (4.728 | ) | (0.490 | ) | 1.870 | |||||||||
— | — | (0.492 | ) | (0.420 | ) | (0.230 | ) | ||||||||
— | — | (0.492 | ) | (0.420 | ) | (0.230 | ) | ||||||||
$10.000 | $8.660 | $6.870 | $12.090 | $13.000 | |||||||||||
15.47% | 26.06% | (40.75% | ) | (3.86% | ) | 16.78% | |||||||||
$4,997 | $3,848 | $2,611 | $3,100 | $215 | |||||||||||
1.65% | 1.70% | 1.59% | 1.54% | 1.51% | |||||||||||
1.82% | 1.93% | 1.87% | 1.77% | 2.03% | |||||||||||
(0.05% | ) | (0.21% | ) | (0.06% | ) | (0.32% | ) | (0.38% | ) | ||||||
(0.22% | ) | (0.44% | ) | (0.34% | ) | (0.55% | ) | (0.90% | ) | ||||||
39% | 79% | 84% | 104% | 121% |
21
Financial highlights
Delaware Small Cap Core Fund Institutional Class
Delaware Small Cap Core 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 income2 |
Net realized and unrealized gain (loss) on investments and foreign currencies |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain on investments |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income (loss) to average net assets |
prior to fees waived and expense paid indirectly |
Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
22
Six Months Ended | Year Ended | |||||||||||||||||
5/31/101 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | 11/30/05 | |||||||||||||
(Unaudited) | ||||||||||||||||||
$8.790 | $6.970 | $12.190 | $13.040 | $11.390 | $14.600 | |||||||||||||
0.022 | 0.022 | 0.044 | 0.023 | 0.015 | 0.031 | |||||||||||||
1.353 | 1.830 | (4.772 | ) | (0.453 | ) | 1.895 | 1.036 | |||||||||||
1.375 | 1.852 | (4.728 | ) | (0.430 | ) | 1.910 | 1.067 | |||||||||||
(0.005 | ) | (0.032 | ) | — | — | (0.030 | ) | (0.025 | ) | |||||||||
— | — | (0.492 | ) | (0.420 | ) | (0.230 | ) | (4.252 | ) | |||||||||
(0.005 | ) | (0.032 | ) | (0.492 | ) | (0.420 | ) | (0.260 | ) | (4.277 | ) | |||||||
$10.160 | $8.790 | $6.970 | $12.190 | $13.040 | $11.390 | |||||||||||||
15.65% | 25.78% | (40.41% | ) | (3.38% | ) | 17.13% | 9.14% | |||||||||||
$37,554 | $30,401 | $22,988 | $31,176 | $15,482 | $6,645 | |||||||||||||
1.15% | 1.20% | 1.09% | 1.04% | 1.01% | 0.94% | |||||||||||||
1.22% | 1.33% | 1.27% | 1.17% | 1.43% | 2.23% | |||||||||||||
0.45% | 0.29% | 0.44% | 0.18% | 0.12% | 0.28% | |||||||||||||
0.38% | 0.16% | 0.26% | 0.05% | (0.30% | ) | (1.01% | ) | |||||||||||
39% | 79% | 84% | 104% | 121% | 104% |
23
Notes to financial statements | |
Delaware Small Cap Core Fund | May 31, 2010 (Unaudited) |
Delaware Group® Equity Funds V (Trust) is organized as a Delaware statutory trust and offers three series: Delaware Dividend Income Fund, Delaware Small Cap Core Fund and Delaware Small Cap Value Fund. These financial statements and the related notes pertain to Delaware Small Cap Core Fund (Fund). The Trust is an open-end investment company. The Fund is considered diversified under the Investment Company Act of 1940, as amended, and offers Class A, Class C, Class R and Institutional Class shares. Class A shares are sold with a maximum front-end sales charge of up to 5.75%. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) of 1% if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class C shares are sold with a CDSC of 1%, if redeemed during the first twelve months. Class R and Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors.
The investment objective of the Fund is to seek long-term capital appreciation.
1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and are consistently followed by the Fund.
Security Valuation — Equity securities, except those traded on the Nasdaq Stock Market, Inc. (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange (NYSE) on the valuation date. Securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If on a particular day an equity security does not trade, then the mean between the bid and ask prices will be used. Short-term debt securities are valued at market value. Investment companies are valued at net asset value per share. 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 Fund’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. The Fund may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before the Fund values its securities at 4:00 p.m. Eastern time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, government actions or pronouncements, aftermarket trading, or news events may have occurred in the interim. To account for this, the Fund may frequently value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing).
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
24
“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 analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (November 30, 2006 — November 30, 2009), and has concluded that no provision for federal income tax is required in the Fund’s financial statements.
Class Accounting — Investment income, common expenses and realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Repurchase Agreements — The Fund may invest in a pooled cash account along with other members of the Delaware Investments® Family of Funds pursuant to an exemptive order issued by the Securities and Exchange Commission. The aggregate daily balance of the pooled cash account is invested in repurchase agreements secured by obligations of the U.S. government. The respective collateral is held by the Fund’s custodian bank until the maturity of the respective repurchase agreements. Each repurchase agreement is at least 102% collateralized. However, in the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral may be subject to legal proceedings. At May 31, 2010, the Fund held no investments in repurchase agreements.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Other — Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated amongst such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Distributions received from investments in Real Estate Investment Trusts (REITs) are recorded as dividend income on the ex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer. The Fund declares and pays dividends from net investment income and distributions from net realized gain on investments, if any, annually.
Subject to seeking best execution, the Fund may direct certain security trades to brokers who have agreed to rebate a portion of the related brokerage commission to the Fund in cash. In general, best execution refers to many factors, including the price paid or received for a security, the commission charged, the promptness and reliability of execution, the confidentiality and placement accorded the order, and other factors affecting the overall benefit obtained by the Fund on the transaction. There were no commission rebates for the six months ended May 31, 2010.
25
Notes to financial statements
Delaware Small Cap Core Fund
Delaware Small Cap Core Fund
1. Significant Accounting Policies (continued)
The Fund may receive earnings credits from its custodian when positive cash balances are maintained, which are used to offset custody fees. There were no earnings credits for the six months ended May 31, 2010.
2. Investment Management, Administration Agreements and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee which is calculated daily at the rate of 0.75% on the first $500 million of average daily net assets of the Fund, 0.70% on the next $500 million, 0.65% on the next $1.5 billion, and 0.60% on average daily net assets in excess of $2.5 billion.
Effective March 30, 2010, DMC has contractually agreed to waive that portion, if any, of its management fee and reimburse the Fund to the extent necessary to ensure that total annual operating expenses (excluding any 12b-1 plan and certain other expenses) do not exceed 1.15% of average daily net assets of the Fund through March 30, 2011. Prior to March 30, 2010, DMC had voluntarily agreed to waive that portion, if any, of its management fee and reimburse the Fund to the extent necessary to ensure that total annual operating expenses, (excluding any 12b-1 plan expenses, taxes, interest, inverse floater program expenses, brokerage fees, certain insurance costs, and non-routine expenses or costs including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations (collectively, nonroutine expenses)) did not exceed 1.15% of average daily net assets of the Fund. For purposes of this waiver and reimbursement, nonroutine expenses may also include such additional costs and expenses, as may be agreed upon from time to time by the Fund’s Board and DMC. This expense waiver and reimbursement applies only to expenses paid directly by the Fund.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Fund. For these services, the Fund pays DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments® Family of Funds on a relative net asset value basis. For the six months ended May 31, 2010, the Fund was charged $1,808 for these services.
DSC also provides dividend disbursing and transfer agency services. The Fund pays DSC a monthly fee based on the number of shareholder accounts for dividend disbursing and transfer agent services.
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and service fee not to exceed 0.30% of the average daily net assets of the Class A shares, 1.00% of the average daily net assets of the C shares
26
and 0.60% of the average daily net assets of Class R shares. Institutional Class shares pay no distribution and service expenses. DDLP has contracted to waive distribution and service fees through March 30, 2011, in order to prevent distribution and service fees of Class A and Class R shares from exceeding 0.25% and 0.50%, respectively, of average daily net assets.
At May 31, 2010, the Fund had liabilities payable to affiliates as follows:
Investment management fee payable to DMC | $ | 45,928 | |
Dividend disbursing, transfer agent and fund accounting | |||
oversight fees and other expenses payable to DSC | 4,574 | ||
Distribution fees payable to DDLP | 14,023 | ||
Other expenses payable to DMC and affiliates* | 7,416 |
*DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, fees for audit, legal and tax services, registration fees and trustees’ fees.
As provided in the investment management agreement, the Fund bears the cost of certain legal and tax services, including internal legal and tax services provided to the Fund by DMC and/or its affiliates’ employees. For the six months ended May 31, 2010, the Fund was charged $870 for internal legal and tax services provided by DMC and/or its affiliates’ employees.
For the six months ended May 31, 2010, DDLP earned $2,763 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2010, DDLP received gross CDSC commissions of $0 and $354 on redemption of the Fund’s Class A and Class C shares, respectively, and these commissions were entirely used to offset up-front commissions previously paid by DDLP to broker/dealers on sales of those shares.
Trustees’ fees include expenses accrued by the Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, DSC and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Fund.
3. Investments
For the six months ended May 31, 2010, the Fund made purchases of $13,652,972 and sales of $17,880,637 of investment securities other than short-term investments.
At May 31, 2010, the cost of investments for federal income tax purposes has been estimated since the final tax characteristics cannot be determined until fiscal year end. At May 31, 2010, the cost of investments was $77,977,525. At May 31, 2010, the net unrealized appreciation was $5,027,903, of which $10,023,035 related to unrealized appreciation of investments and $4,995,132 related to unrealized depreciation of investments.
U.S. 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 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.
27
Notes to financial statements
Delaware Small Cap Core Fund
Delaware Small Cap Core Fund
3. Investments (continued)
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 developed 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 below.
Level 1 – inputs are quoted prices in active markets
Level 2 – inputs are observable, directly or indirectly
Level 3 – inputs are unobservable and reflect assumptions on the part of the reporting entity
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of May 31, 2010:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Common Stock | $ | 71,454,598 | $ | — | $ | — | $ | 71,454,598 | ||||
Short-Term | — | 1,207,009 | — | 1,207,009 | ||||||||
Securities Lending Collateral | 9,368,917 | 965,799 | 9,105 | 10,343,821 | ||||||||
Total | $ | 80,823,515 | $ | 2,172,808 | $ | 9,105 | $ | 83,005,428 |
The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:
Securities | |||
Lending | |||
Collateral | |||
Balance as of 11/30/09 | $ | 9,105 | |
Net change in unrealized appreciation/depreciation | — | ||
Balance as of 5/31/10 | $ | 9 105 | |
Net change in unrealized appreciation/depreciation from | |||
investments still held as of 5/31/10 | $ | — |
In January 2010, the Financial Accounting Standards Board issued an Accounting Standards Update, Improving Disclosures about Fair Value Measurements, which introduces new disclosure requirements and clarifies certain existing disclosure requirements around fair value measurements currently presented above. The new disclosures and clarifications of existing disclosures are generally effective for the Fund’s year ending November 30, 2011 and interim periods therein. Management is evaluating the impact of this update on its current disclosures.
28
4. Dividend and Distribution Information
Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. Additionally, distributions from net gains on foreign currency transactions and net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the six months ended May 31, 2010 and the year ended November 30, 2009 was as follows:
Six Months | Year | |||
Ended | Ended | |||
5/31/10* | 11/30/09 | |||
Ordinary income | $17,356 | $127,773 |
*Tax information for the period ended May 31, 2010 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end.
5. Components of Net Assets on a Tax Basis
The components of net assets are estimated since final tax characteristics cannot be determined until fiscal year end. As of May 31, 2010, the estimated components of net assets on a tax basis were as follows:
Shares of beneficial interest | $ | 90,269,225 | ||
Undistributed ordinary income | 71,723 | |||
Realized gains 12/1/09 – 5/31/10 | 1,667,606 | |||
Capital loss carryforwards as of 11/30/09 | (24,396,717 | ) | ||
Unrealized appreciation of investments and foreign currencies | 5,027,903 | |||
Net assets | $ | 72,639,740 |
The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales.
The undistributed earnings for the Fund are estimated pending final notification of the tax character of distributions received from investments in REITs.
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at November 30, 2009 will expire as follows: $14,747,189 expires in 2016 and $9,649,528 expires in 2017.
For the six months ended May 31, 2010, the Fund had capital gains of $1,667,606, which may reduce the capital loss carryforwards.
29
Notes to financial statements
Delaware Small Cap Core Fund
Delaware Small Cap Core Fund
6. Capital Shares
Transactions in capital shares were as follows:
Six Months | Year | |||||
Ended | Ended | |||||
5/31/10 | 11/30/09 | |||||
Shares sold: | ||||||
Class A | 274,100 | 1,272,014 | ||||
Class C | 45,384 | 237,544 | ||||
Class R | 148,435 | 273,019 | ||||
Institutional Class | 468,988 | 942,754 | ||||
Shares issued upon reinvestment of dividends and distributions: | ||||||
Class A | — | 2,392 | ||||
Institutional Class | 1,846 | 15,472 | ||||
938,753 | 2,743,195 | |||||
Shares repurchased: | ||||||
Class A | (894,042 | ) | (1,000,945 | ) | ||
Class C | (104,108 | ) | (465,821 | ) | ||
Class R | (92,892 | ) | (208,639 | ) | ||
Institutional Class | (234,731 | ) | (797,017 | ) | ||
(1,325,773 | ) | (2,472,422 | ) | |||
Net increase (decrease) | (387,020 | ) | 270,773 |
7. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), participates in a $35,000,000 revolving line of credit with The Bank of New York Mellon (BNY Mellon) 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, which is allocated across the Participants on the basis of each Participant’s allocation of the entire facility. The Participants may borrow up to a maximum of one third of their net assets under the agreement. The agreement expires on November 16, 2010. The Fund had no amounts outstanding as of May 31, 2010 or at any time during the period then ended.
30
8. Securities Lending
The Fund, along with other funds in the Delaware Investments® Family of Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with BNY Mellon. With respect to each loan, if the aggregate market value of securities collateral held plus cash collateral received on any business day is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral not less than the applicable collateral requirements. Cash collateral received is generally invested in the BNY Mellon Securities Lending Overnight Fund (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of clients participating in its securities lending programs. The Collective Trust may only hold cash and high quality assets with a maturity of one business day or less (Cash/Overnight Assets). The Fund also has cash collateral invested in the BNY Mellon SL DBT II Liquidating Fund (Liquidating Fund), which generally holds the portfolio securities of the Fund’s previous cash collateral pool other than its Cash/Overnight Assets. The Liquidating Fund invests in fixed income securities, with a weighted average maturity not to exceed 90 days, rated in one of the top three tiers by Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc. or repurchase agreements collateralized by such securities. The Fund will not make additional investments of cash collateral in the Liquidating Fund; the Fund’s exposure to the Liquidating Fund is expected to decrease as the Liquidating Fund’s assets mature or are sold. Both the Collective Trust and the Liquidating Fund seek to maintain a net asset value per unit of $1.00, but there can be no assurance that they will always be able to do so. The Fund may incur investment losses as a result of investing securities lending collateral in the Collective Trust and the Liquidating Fund. This could occur if an investment in the Collective Trust or the Liquidating Fund defaulted or if it were necessary to liquidate assets in the Collective Trust or the Liquidating Fund to meet returns on outstanding security loans at a time when their net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the Collective Trust or the Liquidating Fund that is equal in amount to the collateral the Fund would be required to return to the borrower of the securities and the Fund would be required to make up for this shortfall. In October 2008, BNY Mellon transferred certain distressed securities from the Collective Trust into the Mellon GSL Reinvestment Trust II. The Fund can also accept U.S. 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 change 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
31
Notes to financial statements
Delaware Small Cap Core Fund
Delaware Small Cap Core Fund
8. Securities Lending (continued)
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.
At May 31, 2010, the value of the securities on loan was $10,148,613, for which cash collateral was received and invested in accordance with the Lending Agreement. At May 31, 2010, the value of invested collateral was $10,343,821. Such investments are presented on the statement of net assets under the caption “Securities Lending Collateral.”
9. Credit and Market Risk
The Fund invests a significant portion of its assets in small-sized companies and may be subject to certain risks associated with ownership of securities of such companies. Investments in small-sized companies may be more volatile than investments in larger companies for a number of reasons, which include more limited financial resources or a dependence on narrow product lines.
The Fund invests in REITs and is subject to the risks associated with that industry. If the Fund holds real estate directly as a result of defaults or receives rental income directly from real estate holdings, its tax status as a regulated investment company may be jeopardized. There were no direct real estate holdings during the period ended May 31, 2010. The Fund’s REIT holdings are also affected by interest rate changes, particularly if the REITs it holds use floating rate debt to finance their ongoing operations.
The Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Fund’s Board has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid assets. 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 May 31, 2010, there were no Rule 144A securities. Illiquid securities have been identified on the statement of net assets.
10. 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.
32
11. Sale of Delaware Investments to Macquarie Group
On August 18, 2009, Lincoln National Corporation (former parent company of Delaware Investments) and Macquarie Group (Macquarie) entered into an agreement pursuant to which Delaware Investments, including DMC, DDLP and DSC, would be acquired by Macquarie, an Australia-based global provider of banking, financial, advisory, investment and funds management services (Transaction). The Transaction was completed on January 4, 2010. DMC, DDLP and DSC are now wholly owned subsidiaries of Macquarie.
The Transaction resulted in a change of control of DMC which, in turn, caused the termination of the investment management agreement between DMC and the Fund. On January 4, 2010, the new investment management agreement between DMC and the Fund that was approved by the shareholders became effective.
12. Subsequent Events
Management has determined no material events or transactions occurred subsequent to May 31, 2010 that would require recognition or disclosure in the Fund’s financial statements.
33
Other Fund information
(Unaudited)
Delaware Small Cap Core Fund
(Unaudited)
Delaware Small Cap Core Fund
Proxy Results
At a Joint Special Meeting of Shareholders of Delaware Group Equity Funds (Trust), on behalf of Delaware Dividend Income Fund, Delaware Small Cap Value Fund and Delaware Small Cap Core Fund (hereinafter each, a “Fund” and collectively, the “Funds”) held on November 12, 2009 and reconvened on December 4, 2009 for Delaware Dividend Income Fund and Delaware Small Cap Value Fund only, and reconvened on January 7, 2010 for Delaware Small Cap Value Fund only, and March 16, 2010, the shareholders of each Fund voted to (i) elect a Board of Trustees for each Trust; and to (ii) approve new investment advisory agreements between each Trust, on behalf of the respective Fund, and Delaware Management Company, respectively. At the meeting, the following people were elected to serve as Independent Trustees: Thomas L. Bennett, John A. Fry, Anthony D. Knerr, Lucinda S. Landreth, Ann R. Leven, Thomas F. Madison, Janet L. Yeomans, and J. Richard Zecher. In addition, Patrick P. Coyne was elected to serve as an Interested Trustee.
The following proposals were submitted for a vote of the shareholders:
1. To elect a Board of Trustees for the Trust.
% of | % of | % of | % of | |||||||||||||
Outstanding | Shares | Outstanding | Shares | |||||||||||||
Shares Voted For | Shares | Voted | Shares Withheld | Shares | Voted | |||||||||||
Thomas L. Bennett | 37,264,611.899 | 58.255 | 96.44 | 1,374,076.546 | 2.149 | 3.556 | ||||||||||
Patrick P. Coyne | 37,249,306.218 | 58.232 | 96.404 | 1,389,382.227 | 2.172 | 3.596 | ||||||||||
John A. Fry | 37,265,698.875 | 58.257 | 96.477 | 1,372,989.570 | 2.147 | 3.553 | ||||||||||
Anthony D. Knerr | 37,079,372.299 | 57.966 | 95.964 | 1,559,316.146 | 2.438 | 4.036 | ||||||||||
Lucinda S. Landreth | 37,235,460.590 | 58.210 | 96.368 | 1,403,227.855 | 2.194 | 3.632 | ||||||||||
Ann R. Leven | 37,233,331.862 | 58.207 | 96.363 | 1,405,356.583 | 2.197 | 3.637 | ||||||||||
Thomas F. Madison | 37,245,056.953 | 58.225 | 96.393 | 1,393,631.492 | 2.179 | 3.607 | ||||||||||
Janet L. Yeomans | 37,245,703.155 | 58.226 | 96.395 | 1,392,985.290 | 2.178 | 3.605 | ||||||||||
J. Richard Zecher | 37,083,400.494 | 57.972 | 95.975 | 1,555,287.951 | 2.432 | 4.025 |
2. | To approve a new investment advisory agreement between each Trust, on behalf of the respective Fund, and Delaware Management Company. |
Delaware Small Cap Core Fund | |||
Shares Voted For | 2,801,870.969 | ||
Percentage of Outstanding Shares | 38.987% | ||
Percentage of Shares Voted | 71.208% | ||
Shares Voted Against | 32,844.100 | ||
Percentage of Outstanding Shares | 0.457% | ||
Percentage of Shares Voted | 0.835% | ||
Shares Abstained | 27,726.331 | ||
Percentage of Outstanding Shares | 0.386% | ||
Percentage of Shares Voted | 0.704% | ||
Broker Non-Votes | 1,072,330.816 |
34
Change in Independent Registered Public Accounting Firm
Due to independence matters under the Securities and Exchange Commission’s auditor independence rules relating to the January 4, 2010 acquisition of Delaware Investments (including DMC, DDLP and DSC) by Macquarie Group, Ernst & Young LLP (“E&Y”) has resigned as the independent registered public accounting firm for Delaware Group® Equity Funds V (the “Fund”) effective May 20, 2010. At a meeting held on May 20, 2010, the Board of Trustees of the Fund, upon recommendation of the Audit Committee, selected PricewaterhouseCoopers LLC (“PwC”) to serve as the independent registered public accounting firm for the Fund for the fiscal year ending November 30, 2010. During the fiscal years ended November 30, 2008 and November 30, 2009, E&Y’s audit reports on the financial statements of the Fund did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. In addition, there were no disagreements between the Fund and E&Y on accounting principles, financial statements disclosures or audit scope, which, if not resolved to the satisfaction of E&Y, would have caused them to make reference to the disagreement in their reports. Neither the Fund nor anyone on its behalf has consulted with PwC at any time prior to their selection with respect to the application of accounting principles to a specified transaction, either completed or proposed or the type of audit opinion that might be rendered on the Fund’s financial statements.
35
About the organization
Board of trustees | |||
Patrick P. Coyne Chairman, President, and Chief Executive Officer Delaware Investments® Family of Funds Philadelphia, PA Thomas L. Bennett Private Investor Rosemont, PA John A. Fry President Franklin & Marshall College Lancaster, PA | Anthony D. Knerr Founder and Managing Director Anthony Knerr & Associates New York, NY Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. Philadelphia, PA | Ann R. Leven Consultant ARL Associates New York, NY Thomas F. Madison President and Chief Executive Officer MLM Partners, Inc. Minneapolis, MN | Janet L. Yeomans Vice President and Treasurer 3M Corporation St. Paul, MN J. Richard Zecher Founder Investor Analytics Scottsdale, AZ |
Affiliated officers | |||
David F. Connor Vice President, Deputy General Counsel, and Secretary Delaware Investments Family of Funds Philadelphia, PA | Daniel V. Geatens Vice President and Treasurer Delaware Investments Family of Funds Philadelphia, PA | David P. O’Connor Senior Vice President, General Counsel, and Chief Legal Officer Delaware Investments Family of Funds Philadelphia, PA | Richard Salus Senior Vice President and Chief Financial Officer Delaware Investments Family of Funds Philadelphia, PA |
This semiannual report is for the information of Delaware Small Cap Core Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Small Cap Core Fund and the Delaware Investments Fund fact sheet for the most recently completed calendar quarter. These documents are available at www.delawareinvestments.com. The prospectus sets forth details about charges, expenses, investment objectives, and operating policies of the investment company. You should read the prospectus carefully before you invest. The figures in this report represent past results that are not a guarantee of future results. The return and principal value of an investment in the investment company will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. |
Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q, as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 800 523-1918; and (ii) on the SEC’s Web site at www.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 Fund’s Schedule of Investments are available without charge on the Fund’s Web site at www.delawareinvestments.com. The Fund’s Forms N-Q 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 Web site at www.delawareinvestments.com; and (ii) on the SEC’s Web site at www.sec.gov. |
36
![](https://capedge.com/proxy/N-CSR/0001206774-10-001807/del_topimg02.jpg)
Semiannual report Delaware Dividend Income Fund May 31, 2010 Value equity mutual fund |
This semiannual report is for the information of Delaware Dividend Income Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Dividend Income Fund. The figures in the semiannual report for Delaware Dividend Income Fund represent past results, which are not a guarantee of future results. The return and principal value of an investment in the Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. You should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The Delaware Dividend Income Fund prospectus contains this and other important information about the Fund. Prospectuses for all open-end funds in the Delaware Investments® Family of Funds are available from your financial advisor, online at www.delawareinvestments.com, or by phone at 800 523-1918. Please read the prospectus carefully before you invest or send money. |
You can obtain shareholder reports and prospectuses online instead of in the mail. Visit www.delawareinvestments.com/edelivery. |
Experience Delaware Investments
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Investments or obtain a prospectus for Delaware Dividend Income Fund at www.delawareinvestments.com.
Manage your investments online
- 24-hour access to your account information
- Obtain share prices
- Check your account balance and recent transactions
- Request statements or literature
- Make purchases and redemptions
On January 4, 2010, Delaware Management Holdings, Inc., and its subsidiaries (collectively known by the marketing name of Delaware Investments) were sold by a subsidiary of Lincoln National Corporation to Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services. Please see your Fund’s prospectus and any supplements thereto for more complete information.
Investments in Delaware Dividend Income Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Table of contents | |
Disclosure of Fund expenses | 1 |
Security type and top 10 equity holdings | 3 |
Statement of net assets | 6 |
Statement of operations | 30 |
Statements of changes in net assets | 32 |
Financial highlights | 34 |
Notes to financial statements | 44 |
Other Fund information | 59 |
About the organization | 61 |
Unless otherwise noted, views expressed herein are current as of May 31, 2010, and are subject to change.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Fund’s distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
© 2010 Delaware Management Holdings, Inc.
All third-party trademarks cited are the property of their respective owners.
Disclosure of Fund expenses
For the period December 1, 2009 to May 31, 2010
For the period December 1, 2009 to May 31, 2010
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from December 1, 2009 to May 31, 2010.
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 reflect fee waivers in effect. The expenses shown in the table assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
Delaware Dividend Income Fund
Expense analysis of an investment of $1,000
Expense analysis of an investment of $1,000
Beginning | Ending | Expenses | ||||||||||||
Account Value | Account Value | Annualized | Paid During Period | |||||||||||
12/1/09 | 5/31/10 | Expense Ratio | 12/1/09 to 5/31/10* | |||||||||||
Actual Fund return | ||||||||||||||
Class A | $ | 1,000.00 | $ | 1,029.00 | 1.27% | $ | 6.42 | |||||||
Class B | 1,000.00 | 1,025.30 | 2.02% | 10.20 | ||||||||||
Class C | 1,000.00 | 1,025.30 | 2.02% | 10.20 | ||||||||||
Class R | 1,000.00 | 1,026.70 | 1.52% | 7.68 | ||||||||||
Institutional Class | 1,000.00 | 1,030.30 | 1.02% | 5.16 | ||||||||||
Hypothetical 5% return (5% return before expenses) | ||||||||||||||
Class A | $ | 1,000.00 | $ | 1,018.60 | 1.27% | $ | 6.39 | |||||||
Class B | 1,000.00 | 1,014.86 | 2.02% | 10.15 | ||||||||||
Class C | 1,000.00 | 1,014.86 | 2.02% | 10.15 | ||||||||||
Class R | 1,000.00 | 1,017.35 | 1.52% | 7.64 | ||||||||||
Institutional Class | 1,000.00 | 1,019.85 | 1.02% | 5.14 |
*“Expenses Paid During Period” are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
2
Security type and top 10 equity holdings | ||||
Delaware Dividend Income Fund | As of May 31, 2010 |
Sector designations may be different than the sector designations presented in other Fund materials. The sector designations may represent the investment manager’s internal sector classifications, which may result in the sector designations for one fund being different than another fund’s sector designations.
Security type | Percentage of net assets | ||
Common Stock | 41.11 | % | |
Consumer Discretionary | 2.34 | % | |
Consumer Staples | 5.34 | % | |
Diversified REITs | 0.66 | % | |
Energy | 5.48 | % | |
Financials | 3.63 | % | |
Health Care | 6.98 | % | |
Health Care REITs | 0.70 | % | |
Hotel REITs | 0.03 | % | |
Industrial REITs | 0.03 | % | |
Industrials | 2.29 | % | |
Information Technology | 4.11 | % | |
Mall REITs | 0.72 | % | |
Materials | 1.06 | % | |
Mortgage REITs | 0.28 | % | |
Multifamily REITs | 0.88 | % | |
Office REITs | 0.47 | % | |
Self-Storage REITs | 0.53 | % | |
Shopping Center REITs | 0.43 | % | |
Single Tenant REITs | 0.09 | % | |
Specialty REITs | 0.28 | % | |
Telecommunications | 2.27 | % | |
Utilities | 2.51 | % | |
Convertible Preferred Stock | 2.91 | % | |
Commercial Mortgage-Backed Securities | 0.21 | % |
3
Security type and top 10 equity holdings
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Security type | Percentage of net assets | ||
Convertible Bonds | 21.32 | % | |
Aerospace & Defense | 0.94 | % | |
Banking, Finance & Insurance | 0.38 | % | |
Basic Materials | 2.42 | % | |
Building & Materials | 0.83 | % | |
Computers & Technology | 5.87 | % | |
Energy | 0.56 | % | |
Health Care & Pharmaceuticals | 4.31 | % | |
Leisure, Lodging & Entertainment | 1.09 | % | |
Real Estate | 0.86 | % | |
Retail | 0.43 | % | |
Telecommunications | 2.77 | % | |
Transportation | 0.56 | % | |
Utilities | 0.30 | % | |
Corporate Bonds | 24.72 | % | |
Basic Industry | 2.27 | % | |
Brokerage | 0.28 | % | |
Capital Goods | 2.06 | % | |
Consumer Cyclical | 2.82 | % | |
Consumer Non-Cyclical | 2.11 | % | |
Energy | 3.02 | % | |
Financials | 1.96 | % | |
Media | 2.16 | % | |
Real Estate | 0.08 | % | |
Services Cyclical | 2.41 | % | |
Services Non-Cyclical | 0.79 | % | |
Technology & Electronics | 0.52 | % | |
Telecommunications | 3.22 | % | |
Utilities | 1.02 | % |
4
Security type | Percentage of net assets | ||
Leveraged Non-Recourse Security | 0.00 | % | |
Residual Interest Trust Certificate | 0.00 | % | |
Senior Secured Loans | 0.64 | % | |
Exchange-Traded Funds | 1.90 | % | |
Limited Partnership | 0.19 | % | |
Preferred Stock | 0.26 | % | |
Right | 0.01 | % | |
Warrant | 0.00 | % | |
U.S. Treasury Obligation | 0.01 | % | |
Discount Note | 4.60 | % | |
Securities Lending Collateral | 10.85 | % | |
Total Value of Securities | 108.73 | % | |
Obligation to Return Securities Lending Collateral | (11.05 | %) | |
Receivables and Other Assets Net of Liabilities | 2.32 | % | |
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 | ||
Merck | 1.06 | % | |
Cardinal Health | 1.04 | % | |
CVS Caremark | 1.03 | % | |
Comcast Class A | 1.03 | % | |
Lowe’s | 1.02 | % | |
Travelers | 1.02 | % | |
Waste Management | 1.02 | % | |
ConocoPhillips | 1.01 | % | |
Edison International | 1.01 | % | |
Progress Energy | 1.01 | % |
5
Statement of net assets | ||
Delaware Dividend Income Fund | May 31, 2010 (Unaudited) |
Number of shares | Value | ||||
Common Stock – 41.11% | |||||
Consumer Discretionary – 2.34% | |||||
*† | Autoliv | 1,200 | $ | 57,000 | |
± | Bayerische Motoren Werke | 1,944 | 88,960 | ||
Comcast Class A | 213,500 | 3,862,216 | |||
† | DIRECTV Class A | 6,350 | 239,332 | ||
*± | Don Quijote | 2,900 | 74,838 | ||
± | Esprit Holdings | 5,500 | 31,040 | ||
± | ITOCHU | 9,689 | 79,787 | ||
Lowe’s | 153,900 | 3,809,025 | |||
*± | PPR | 490 | 57,673 | ||
*± | Publicis Groupe | 2,101 | 86,245 | ||
± | Round One | 5,000 | 33,948 | ||
± | Techtronic Industries | 87,500 | 76,113 | ||
*± | Toyota Motor | 3,200 | 115,855 | ||
± | Vivendi | 3,550 | 76,348 | ||
± | Yue Yuen Industrial Holdings | 21,500 | 65,049 | ||
8,753,429 | |||||
Consumer Staples – 5.34% | |||||
Archer-Daniels-Midland | 144,500 | 3,651,515 | |||
± | Coca-Cola Amatil | 7,798 | 71,266 | ||
ConAgra Foods | 50,000 | 1,209,000 | |||
CVS Caremark | 111,600 | 3,864,708 | |||
± | Greggs | 9,423 | 61,012 | ||
Kimberly-Clark | 60,500 | 3,672,350 | |||
Kraft Foods Class A | 127,200 | 3,637,920 | |||
± | Metro | 1,395 | 72,933 | ||
± | Parmalat | 31,927 | 76,330 | ||
* | Safeway | 165,800 | 3,670,812 | ||
19,987,846 | |||||
Diversified REITs – 0.66% | |||||
± | Champion REIT | 641,000 | 289,756 | ||
Colonial Properties Trust | 11,600 | 174,928 | |||
* | Digital Realty Trust | 13,000 | 739,830 | ||
* | Investors Real Estate Trust | 29,900 | 261,027 | ||
± | Stockland | 73,900 | 239,688 | ||
* | Vornado Realty Trust | 9,906 | 769,498 | ||
2,474,727 |
6
Number of shares | Value | ||||
Common Stock (continued) | |||||
Energy – 5.48% | |||||
Chevron | 50,700 | $ | 3,745,209 | ||
± | CNOOC | 56,000 | 86,407 | ||
ConocoPhillips | 73,100 | 3,790,966 | |||
Exxon Mobil | 25,000 | 1,511,500 | |||
Marathon Oil | 118,500 | 3,684,165 | |||
± | National Grid | 7,868 | 56,798 | ||
National Oilwell Varco | 98,700 | 3,763,431 | |||
Petroleo Brasiliero ADR | 2,100 | 65,037 | |||
*± | Total | 663 | 30,713 | ||
Williams | 191,200 | 3,776,200 | |||
20,510,426 | |||||
Financials – 3.63% | |||||
Allstate | 122,800 | 3,761,364 | |||
*± | AXA | 4,088 | 66,505 | ||
± | Banco Santander | 7,956 | 80,050 | ||
Bank of New York Mellon | 134,600 | 3,661,120 | |||
CVB Financial | 100,000 | 993,000 | |||
± | Mitsubishi UFJ Financial Group | 16,500 | 79,891 | ||
*± | Nordea Bank | 7,711 | 62,829 | ||
Solar Capital | 43,800 | 934,692 | |||
± | Standard Chartered | 3,334 | 78,425 | ||
Travelers | 76,900 | 3,804,243 | |||
*± | UniCredit | 37,081 | 76,923 | ||
13,599,042 | |||||
Health Care – 6.98% | |||||
† | Alliance HealthCare Services | 29,989 | 166,739 | ||
± | AstraZeneca | 755 | 31,724 | ||
Bristol-Myers Squibb | 158,300 | 3,674,143 | |||
Cardinal Health | 112,800 | 3,890,472 | |||
Covidien | 75,000 | 3,179,250 | |||
Johnson & Johnson | 62,600 | 3,649,580 | |||
Merck | 118,000 | 3,975,420 | |||
± | Novartis | 1,677 | 75,606 | ||
Pfizer | 243,438 | 3,707,561 | |||
Quest Diagnostics | 70,900 | 3,739,975 | |||
*± | Sanofi-Aventis | 544 | 32,563 | ||
26,123,033 |
7
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Number of shares | Value | ||||
Common Stock (continued) | |||||
Health Care REITs – 0.70% | |||||
Cogdell Spencer | 48,000 | $ | 322,080 | ||
* | HCP | 17,200 | 547,992 | ||
Health Care REIT | 4,900 | 211,092 | |||
Nationwide Health Properties | 11,400 | 404,586 | |||
* | Ventas | 24,100 | 1,131,495 | ||
2,617,245 | |||||
Hotel REITs – 0.03% | |||||
Hersha Hospitality Trust | 23,500 | 113,505 | |||
113,505 | |||||
Industrial REITs – 0.03% | |||||
* | DCT Industrial Trust | 24,800 | 120,032 | ||
120,032 | |||||
Industrials – 2.29% | |||||
± | Asahi Glass | 9,000 | 94,424 | ||
± | Chaoda Modern Agriculture Holdings | 78,000 | 74,942 | ||
*± | Cie de Saint-Gobain | 1,504 | 57,084 | ||
†* | Delta Air Lines | 46 | 625 | ||
± | Deutsche Post | 6,961 | 103,354 | ||
*± | Finmeccanica | 6,400 | 66,412 | ||
† | Flextronics International | 19,100 | 125,296 | ||
± | Koninklijke Philips Electronics | 2,734 | 81,056 | ||
† | Mobile Mini | 7,124 | 113,984 | ||
Northrop Grumman | 61,900 | 3,744,331 | |||
†=∏ | PT Holdings | 1,110 | 11 | ||
± | Singapore Airlines | 8,000 | 80,887 | ||
*± | Teleperformance | 2,854 | 78,500 | ||
±† | Tomkins | 22,448 | 78,747 | ||
± | Vallourec | 322 | 58,969 | ||
* | Waste Management | 117,000 | 3,803,669 | ||
8,562,291 | |||||
Information Technology – 4.11% | |||||
† | CGI Group Class A | 11,419 | 178,456 | ||
± | HTC | 6,000 | 81,022 | ||
Intel | 173,800 | 3,722,796 | |||
International Business Machines | 29,900 | 3,745,274 | |||
† | Motorola | 551,100 | 3,775,035 | ||
± | Nokia | 6,488 | 65,173 |
8
Number of shares | Value | ||||
Common Stock (continued) | |||||
Information Technology (continued) | |||||
†* | Sohu.com | 1,700 | $ | 75,140 | |
* | Xerox | 401,800 | 3,740,758 | ||
15,383,654 | |||||
Mall REITs – 0.72% | |||||
CBL & Associates Properties | 16,000 | 228,640 | |||
Macerich | 11,108 | 459,427 | |||
Simon Property Group | 20,963 | 1,782,484 | |||
Taubman Centers | 5,600 | 226,744 | |||
2,697,295 | |||||
Materials – 1.06% | |||||
Agrium | 900 | 49,401 | |||
± | ArcelorMittal | 1,491 | 45,003 | ||
duPont (E.I.) deNemours | 104,600 | 3,783,382 | |||
† | Golden Minerals | 42 | 338 | ||
*± | Lafarge | 955 | 54,460 | ||
* | Vale ADR | 1,900 | 51,661 | ||
3,984,245 | |||||
Mortgage REITs – 0.28% | |||||
Chimera Investment | 35,500 | 139,870 | |||
* | Cypress Sharpridge Investments | 25,400 | 332,486 | ||
Starwood Property Trust | 30,600 | 557,838 | |||
1,030,194 | |||||
Multifamily REITs – 0.88% | |||||
American Campus Communities | 24,700 | 661,219 | |||
Apartment Investment & Management | 8,100 | 167,103 | |||
Associated Estates Realty | 16,700 | 228,957 | |||
AvalonBay Communities | 7,000 | 686,420 | |||
Camden Property Trust | 10,300 | 470,092 | |||
Equity Residential | 24,000 | 1,083,120 | |||
3,296,911 | |||||
Office REITs – 0.47% | |||||
* | Alexandria Real Estate Equities | 4,200 | 275,436 | ||
* | Boston Properties | 10,200 | 782,136 | ||
* | Government Properties Income Trust | 12,000 | 319,440 | ||
SL Green Realty | 6,100 | 379,969 | |||
1,756,981 |
9
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Number of shares | Value | ||||
Common Stock (continued) | |||||
Self-Storage REITs – 0.53% | |||||
Public Storage | 21,500 | $ | 1,992,835 | ||
1,992,835 | |||||
Shopping Center REITs – 0.43% | |||||
Cedar Shopping Centers | 17,400 | 119,538 | |||
* | Federal Realty Investment Trust | 4,000 | 294,800 | ||
* | Inland Real Estate | 36,600 | 304,878 | ||
* | Kimco Realty | 21,800 | 311,740 | ||
* | Ramco-Gershenson Properties Trust | 10,200 | 110,262 | ||
Saul Centers | 5,900 | 226,265 | |||
* | Urstadt Biddle Properties Class A | 15,400 | 257,796 | ||
1,625,279 | |||||
Single Tenant REITs – 0.09% | |||||
* | National Retail Properties | 15,300 | 336,294 | ||
336,294 | |||||
Specialty REITs – 0.28% | |||||
* | Entertainment Properties Trust | 20,343 | 832,842 | ||
* | Plum Creek Timber | 6,200 | 217,124 | ||
1,049,966 | |||||
Telecommunications – 2.27% | |||||
AT&T | 155,300 | 3,773,789 | |||
†= | Century Communications | 1,625,000 | 0 | ||
Chunghwa Telecom ADR | 3,481 | 66,348 | |||
* | Frontier Communications | 86,800 | 690,060 | ||
† | GeoEye | 2,450 | 77,837 | ||
± | Telstra | 12,719 | 31,665 | ||
TELUS | 2,624 | 95,951 | |||
Verizon Communications | 135,100 | 3,717,952 | |||
± | Vodafone Group | 19,483 | 38,589 | ||
8,492,191 | |||||
Utilities – 2.51% | |||||
American Water Works | 50,000 | 1,017,000 | |||
Edison International | 117,000 | 3,786,120 | |||
† | Mirant | 448 | 5,564 | ||
NorthWestern | 31,200 | 821,808 | |||
Progress Energy | 98,100 | 3,785,679 | |||
9,416,171 | |||||
Total Common Stock (cost $170,868,020) | 153,923,592 |
10
Number of shares | Value | |||||||
Convertible Preferred Stock – 2.91% | ||||||||
Banking, Finance & Insurance – 0.91% | ||||||||
Aspen Insurance Holdings 5.625% | ||||||||
exercise price $29.28, expiration date 12/31/49 | 37,800 | $ | 2,024,663 | |||||
Citigroup 7.50% exercise price $3.94, | ||||||||
expiration date 12/15/12 | 11,300 | 1,351,932 | ||||||
@ | Fannie Mae 8.75% exercise price $32.45, | |||||||
expiration date 5/13/11 | 25,000 | 37,750 | ||||||
3,414,345 | ||||||||
Energy – 0.79% | ||||||||
* | El Paso Energy Capital Trust I 4.75% | |||||||
exercise price $41.59, expiration date 3/31/28 | 39,900 | 1,436,400 | ||||||
Whiting Petroleum 6.25% exercise price $43.42, | ||||||||
expiration date 12/31/49 | 7,300 | 1,509,202 | ||||||
2,945,602 | ||||||||
Health Care & Pharmaceuticals – 0.60% | ||||||||
Merck 6.00% exercise price $57.43, | ||||||||
expiration date 8/13/10 | 184 | 45,614 | ||||||
Mylan 6.50% exercise price $17.08, | ||||||||
expiration date 11/15/10 | 1,875 | 2,205,937 | ||||||
2,251,551 | ||||||||
Telecommunications – 0.61% | ||||||||
Lucent Technologies Capital Trust I 7.75% | ||||||||
exercise price $24.80, expiration date 3/15/17 | 3,000 | 2,280,750 | ||||||
2,280,750 | ||||||||
Total Convertible Preferred Stock (cost $12,717,591) | 10,892,248 | |||||||
Principal amount | ||||||||
Commercial Mortgage-Backed Securities – 0.21% | ||||||||
• | Bear Stearns Commercial Mortgage Securities | |||||||
Series 2007-T28 A4 5.742% 9/11/42 | $ | 500,000 | 512,651 | |||||
• | Morgan Stanley Capital I Series 2007-T27 A4 | |||||||
5.649% 6/11/42 | 250,000 | 256,596 | ||||||
Total Commercial Mortgage-Backed Securities | ||||||||
(cost $722,773) | 769,247 |
11
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Principal amount | Value | |||||||
Convertible Bonds – 21.32% | ||||||||
Aerospace & Defense – 0.94% | ||||||||
# | AAR 144A 1.75% exercise price $29.43, | |||||||
expiration date 2/1/26 | $ | 1,150,000 | $ | 1,058,000 | ||||
L-3 Communications Holdings | ||||||||
3.00% exercise price 98.94, | ||||||||
expiration date 8/1/35 | 930,000 | 945,113 | ||||||
*#144A 3.00% exercise price $98.94, | ||||||||
expiration date 8/1/35 | 1,500,000 | 1,524,375 | ||||||
3,527,488 | ||||||||
Banking, Finance & Insurance – 0.38% | ||||||||
* | Jefferies Group 3.875% exercise price $39.20, | |||||||
expiration date 11/1/29 | 1,480,000 | 1,430,050 | ||||||
1,430,050 | ||||||||
Basic Materials – 2.42% | ||||||||
# | Owens-Brockway Glass Container 144A 3.00% | |||||||
exercise price $47.47, expiration date 6/1/15 | 4,000,000 | 3,880,000 | ||||||
Rayonier TRS Holdings 3.75% exercise price $54.81 | ||||||||
expiration date 10/15/12 | 1,810,000 | 1,880,138 | ||||||
# | Sino-Forest 144A 5.00% exercise price $20.29, | |||||||
expiration date 8/1/13 | 2,970,000 | 3,292,987 | ||||||
9,053,125 | ||||||||
Building & Materials – 0.83% | ||||||||
ArvinMeritor 4.00% exercise price $26.73, | ||||||||
expiration date 2/15/27 | 2,910,000 | 2,371,650 | ||||||
Beazer Homes USA 4.625% exercise price $49.64, | ||||||||
expiration date 6/15/24 | 715,000 | 721,256 | ||||||
3,092,906 | ||||||||
Computers & Technology – 5.87% | ||||||||
Advanced Micro Devices 6.00% | ||||||||
exercise price $28.08, expiration date 5/1/15 | 1,930,000 | 1,881,750 | ||||||
#144A 6.00% exercise price $28.08, | ||||||||
expiration date 5/1/15 | 3,385,000 | 3,300,375 | ||||||
Euronet Worldwide 3.50% exercise price $40.48, | ||||||||
expiration date 10/15/25 | 4,055,000 | 3,796,493 | ||||||
Hutchinson Technology 3.25% | ||||||||
exercise price $36.43, expiration date 1/14/26 | 1,540,000 | 1,301,300 | ||||||
Intel 2.95% exercise price $31.14, | ||||||||
expiration date 12/15/35 | 1,790,000 | 1,760,913 |
12
Principal amount | Value | |||||||
Convertible Bonds (continued) | ||||||||
Computers & Technology (continued) | ||||||||
Linear Technology 3.00% exercise price $45.36, | ||||||||
expiration date 5/1/27 | $ | 3,155,000 | $ | 3,151,056 | ||||
# | Rovi 144A 2.625% exercise price $47.36, | |||||||
expiration date 2/15/40 | 3,010,000 | 3,055,150 | ||||||
* | SanDisk 1.00% exercise price $82.35, | |||||||
expiration date 5/15/13 | 2,750,000 | 2,488,750 | ||||||
VeriSign 3.25% exercise price $34.37, | ||||||||
expiration date 8/15/37 | 1,340,000 | 1,259,600 | ||||||
21,995,387 | ||||||||
Energy – 0.56% | ||||||||
Chesapeake Energy 2.25% exercise price $85.89, | ||||||||
expiration date 12/15/38 | 1,950,000 | 1,421,063 | ||||||
* | Peabody Energy 4.75% exercise price $58.44, | |||||||
expiration date 12/15/41 | 670,000 | 675,025 | ||||||
2,096,088 | ||||||||
Health Care & Pharmaceuticals – 4.31% | ||||||||
Allergan | ||||||||
*1.50% exercise price $63.33, | ||||||||
expiration date 4/1/26 | 600,000 | 663,750 | ||||||
#144A 1.50% exercise price $63.33, | ||||||||
expiration date 4/1/26 | 1,935,000 | 2,140,594 | ||||||
Amgen | ||||||||
0.375% exercise price $79.48, | ||||||||
expiration date 2/1/13 | 1,850,000 | 1,833,813 | ||||||
#144A 0.375% exercise price $79.48, | ||||||||
expiration date 2/1/13 | 775,000 | 768,219 | ||||||
Φ | Hologic 2.00% exercise price $38.59, | |||||||
expiration date 12/15/37 | 3,250,000 | 2,790,937 | ||||||
Inverness Medical Innovations 3.00% exercise price | ||||||||
$43.98, expiration date 5/15/16 | 1,680,000 | 1,698,900 | ||||||
LifePoint Hospitals 3.25% exercise price $61.22, | ||||||||
expiration date 8/15/25 | 2,660,000 | 2,530,324 | ||||||
Medtronic 1.625% exercise price $54.79, | ||||||||
expiration date 4/15/13 | 3,630,000 | 3,698,062 | ||||||
16,124,599 |
13
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Principal amount | Value | |||||||
Convertible Bonds (continued) | ||||||||
Leisure, Lodging & Entertainment – 1.09% | ||||||||
# | Gaylord Entertainment 144A 3.75% | |||||||
exercise price $27.25, expiration date 10/1/14 | $ | 1,985,000 | $ | 2,300,118 | ||||
International Game Technology 3.25% | ||||||||
exercise price $19.97, expiration date 5/1/14 | 1,410,000 | 1,704,338 | ||||||
Live Nation Entertainment 2.875% | ||||||||
exercise price $27.14, expiration date 7/15/27 | 110,000 | 95,975 | ||||||
4,100,431 | ||||||||
Real Estate – 0.86% | ||||||||
# | Digital Realty Trust 144A 5.50% | |||||||
exercise price $43.00, expiration date 4/15/29 | 1,185,000 | 1,657,519 | ||||||
# | Lexington Realty Trust 144A 6.00% | |||||||
exercise price $7.09, expiration date 1/15/30 | 1,510,000 | 1,564,647 | ||||||
3,222,166 | ||||||||
Retail – 0.43% | ||||||||
Pantry 3.00% exercise price $50.09, | ||||||||
expiration date 11/15/12 | 1,755,000 | 1,605,825 | ||||||
1,605,825 | ||||||||
Telecommunications – 2.77% | ||||||||
Alaska Communication System Group 5.75% | ||||||||
exercise price $12.90, expiration date 3/1/13 | 2,312,000 | 2,179,060 | ||||||
Leap Wireless International 4.50% | ||||||||
exercise price $93.21, expiration date 7/15/14 | 1,913,000 | 1,614,094 | ||||||
Level 3 Communications 5.25% | ||||||||
exercise price $3.98, expiration date 12/15/11 | 2,250,000 | 2,171,250 | ||||||
NII Holdings 3.125% exercise price $118.32, | ||||||||
expiration date 6/15/12 | 2,755,000 | 2,548,375 | ||||||
SBA Communications 4.00% exercise price $30.38, | ||||||||
expiration date 10/1/14 | 1,460,000 | 1,845,075 | ||||||
10,357,854 | ||||||||
Transportation – 0.56% | ||||||||
Bristow Group 3.00% exercise price $77.34, | ||||||||
expiration date 6/14/38 | 2,500,000 | 2,103,125 | ||||||
2,103,125 |
14
Principal amount | Value | |||||||
Convertible Bonds (continued) | ||||||||
Utilities – 0.30% | ||||||||
Dominion Resources 2.125% exercise price $35.44, | ||||||||
expiration date 12/15/23 | $ | 1,000,000 | $ | 1,128,750 | ||||
1,128,750 | ||||||||
Total Convertible Bonds (cost $76,872,277) | 79,837,794 | |||||||
Corporate Bonds – 24.72% | ||||||||
Basic Industry – 2.27% | ||||||||
* | AK Steel 7.625% 5/15/20 | 165,000 | 163,763 | |||||
*# | Algoma Acquisition 144A 9.875% 6/15/15 | 646,000 | 604,010 | |||||
#* | Appleton Papers 144A 10.50% 6/15/15 | 495,000 | 452,925 | |||||
Century Aluminum 8.00% 5/15/14 | 464,050 | 450,709 | ||||||
# | Essar Steel Algoma 144A 9.375% 3/15/15 | 55,000 | 56,650 | |||||
# | FMG Finance 144A 10.625% 9/1/16 | 985,000 | 1,088,424 | |||||
* | Hexion US Finance 9.75% 11/15/14 | 890,000 | 854,400 | |||||
* | Lyondell Chemical 11.00% 5/1/18 | 275,000 | 292,875 | |||||
# | MacDermid 144A 9.50% 4/15/17 | 1,169,000 | 1,177,767 | |||||
Millar Western Forest Products 7.75% 11/15/13 | 280,000 | 247,800 | ||||||
NewPage | ||||||||
*11.375% 12/31/14 | 55,000 | 51,700 | ||||||
#144A 11.375% 12/31/14 | 534,000 | 501,960 | ||||||
• | Noranda Aluminium Acquisition PIK | |||||||
5.373% 5/15/15 | 373,219 | 305,106 | ||||||
Novelis | ||||||||
7.25% 2/15/15 | 105,000 | 98,942 | ||||||
11.50% 2/15/15 | 286,000 | 311,740 | ||||||
#* | PE Paper Escrow 144A 12.00% 8/1/14 | 290,000 | 318,072 | |||||
=@ | Port Townsend 7.32% 8/27/12 | 325,364 | 235,889 | |||||
Ryerson | ||||||||
•7.719% 11/1/14 | 339,000 | 317,389 | ||||||
12.00% 11/1/15 | 547,000 | 559,308 | ||||||
*# | Steel Dynamics 144A 7.625% 3/15/20 | 420,000 | 417,900 | |||||
8,507,329 | ||||||||
Brokerage – 0.28% | ||||||||
E Trade Financial PIK 12.50% 11/30/17 | 930,000 | 1,036,950 | ||||||
1,036,950 |
15
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Principal amount | Value | |||||||
Corporate Bonds (continued) | ||||||||
Capital Goods – 2.06% | ||||||||
AMH Holdings 11.25% 3/1/14 | $ | 442,000 | $ | 442,000 | ||||
# | Associated Materials 144A 9.875% 11/15/16 | 64,000 | 69,120 | |||||
#* | Cemex Espana Luxembourg 9.25% 5/12/20 | 375,000 | 322,500 | |||||
# | DAE Aviation Holdings 144A 11.25% 8/1/15 | 410,000 | 413,075 | |||||
* | Graham Packaging Capital I 9.875% 10/15/14 | 511,000 | 517,388 | |||||
# | International Wire Group 144A 9.75% 4/15/15 | 485,000 | 483,181 | |||||
Intertape Polymer 8.50% 8/1/14 | 396,000 | 324,720 | ||||||
* | Manitowoc 9.50% 2/15/18 | 585,000 | 577,688 | |||||
* | NXP BV Funding 9.50% 10/15/15 | 550,000 | 475,063 | |||||
# | Plastipak Holdings 144A 10.625% 8/15/19 | 276,000 | 302,220 | |||||
# | Ply Gem Industries 144A 13.125% 7/15/14 | 595,000 | 603,925 | |||||
Pregis 12.375% 10/15/13 | 846,000 | 837,539 | ||||||
* | RBS Global/Rexnord 11.75% 8/1/16 | 696,000 | 730,799 | |||||
* | Solo Cup 8.50% 2/15/14 | 262,000 | 243,005 | |||||
# | Susser Holdings/Finance 144A 8.50% 5/15/16 | 215,000 | 213,388 | |||||
Thermadyne Holdings 11.50% 2/1/14 | 523,000 | 539,344 | ||||||
Thermo Fisher Scientific 3.20% 5/1/15 | 50,000 | 50,886 | ||||||
# | Trimas 144A 9.75% 12/15/17 | 455,000 | 464,100 | |||||
# | USG 144A 9.75% 8/1/14 | 109,000 | 114,723 | |||||
7,724,664 | ||||||||
Consumer Cyclical – 2.82% | ||||||||
#* | Allison Transmission 144A 11.00% 11/1/15 | 582,000 | 611,100 | |||||
American Axle & Manufacturing 7.875% 3/1/17 | 766,000 | 681,740 | ||||||
Ames True Temper 10.00% 7/15/12 | 340,000 | 329,800 | ||||||
ArvinMeritor | ||||||||
*8.125% 9/15/15 | 612,000 | 570,690 | ||||||
10.625% 3/15/18 | 310,000 | 319,300 | ||||||
Beazer Homes USA 8.125% 6/15/16 | 795,000 | 731,399 | ||||||
Burlington Coat Factory Investment Holdings | ||||||||
14.50% 10/15/14 | 900,000 | 949,499 | ||||||
* | Ford Motor 7.45% 7/16/31 | 705,000 | 630,975 | |||||
Ford Motor Credit 12.00% 5/15/15 | 500,000 | 583,046 | ||||||
‡ | General Motors 7.20% 1/15/11 | 1,015,000 | 319,725 | |||||
GMAC 8.00% 12/31/18 | 615,000 | 584,250 | ||||||
Interface | ||||||||
9.50% 2/1/14 | 59,000 | 60,623 | ||||||
#144A 11.375% 11/1/13 | 204,000 | 228,990 |
16
Principal amount | Value | |||||||
Corporate Bonds (continued) | ||||||||
Consumer Cyclical (continued) | ||||||||
K Hovnanian Enterprises | ||||||||
6.25% 1/15/15 | $ | 155,000 | $ | 122,450 | ||||
7.50% 5/15/16 | 291,000 | 219,705 | ||||||
# | Landry’s Restaurants 144A 11.625% 12/1/15 | 555,000 | 581,363 | |||||
M/I Homes 6.875% 4/1/12 | 281,000 | 274,678 | ||||||
# | Norcraft Finance 144A 10.50% 12/15/15 | 409,000 | 431,495 | |||||
Norcraft Holdings 9.75% 9/1/12 | 282,000 | 258,383 | ||||||
* | OSI Restaurant Partners 10.00% 6/15/15 | 317,000 | 312,245 | |||||
Quiksilver 6.875% 4/15/15 | 810,000 | 712,799 | ||||||
* | Rite Aid 9.375% 12/15/15 | 323,000 | 267,283 | |||||
Standard Pacific | ||||||||
8.375% 5/15/18 | 160,000 | 154,000 | ||||||
10.75% 9/15/16 | 314,000 | 342,260 | ||||||
* | Tenneco 8.625% 11/15/14 | 269,000 | 267,655 | |||||
10,545,453 | ||||||||
Consumer Non-Cyclical – 2.11% | ||||||||
* | Abbott Laboratories 4.125% 5/27/20 | 90,000 | 90,733 | |||||
Accellent 10.50% 12/1/13 | 409,000 | 396,730 | ||||||
# | Alliance One International 144A 10.00% 7/15/16 | 394,000 | 403,850 | |||||
* | Amgen 5.70% 2/1/19 | 30,000 | 33,994 | |||||
# | Anheuser-Busch InBev Worldwide 144A | |||||||
3.625% 4/15/15 | 55,000 | 55,536 | ||||||
Bausch & Lomb 9.875% 11/1/15 | 209,000 | 214,225 | ||||||
Baxter International 4.50% 8/15/19 | 35,000 | 36,678 | ||||||
Biomet 11.625% 10/15/17 | 508,000 | 544,830 | ||||||
# | BioScrip 144A 10.25% 10/1/15 | 545,000 | 534,100 | |||||
# | Cott Beverages 144A 8.375% 11/15/17 | 355,000 | 359,438 | |||||
Dean Foods 7.00% 6/1/16 | 295,000 | 272,506 | ||||||
DJO Finance 11.75% 11/15/14 | 385,000 | 395,588 | ||||||
Inverness Medical Innovations 9.00% 5/15/16 | 257,000 | 253,788 | ||||||
JBS USA 11.625% 5/1/14 | 268,000 | 295,631 | ||||||
# | JohnsonDiversey Holdings 144A 10.50% 5/15/20 | 803,000 | 867,239 | |||||
Life Technologies 6.00% 3/1/20 | 3,000 | 3,182 | ||||||
Medco Health Solutions 7.125% 3/15/18 | 35,000 | 41,050 | ||||||
# | Mylan 144A 7.875% 7/15/20 | 130,000 | 130,813 | |||||
Novartis Capital 4.40% 4/24/20 | 15,000 | 15,550 | ||||||
# | Novasep Holding 144A 9.75% 12/15/16 | 610,000 | 595,131 | |||||
Pfizer 6.20% 3/15/19 | 45,000 | 52,359 |
17
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Principal amount | Value | |||||||
Corporate Bonds (continued) | ||||||||
Consumer Non-Cyclical (continued) | ||||||||
#* | Quintiles Transnational PIK 144A 9.50% 12/30/14 | $ | 264,000 | $ | 264,000 | |||
# | Roche Holdings 144A 6.00% 3/1/19 | 55,000 | 62,286 | |||||
Smithfield Foods 7.75% 7/1/17 | 315,000 | 297,675 | ||||||
# | Tops Markets 144A 10.125% 10/15/15 | 317,000 | 328,888 | |||||
* | Universal Hospital Services PIK 8.50% 6/1/15 | 302,000 | 291,430 | |||||
# | Viskase 144A 9.875% 1/15/18 | 555,000 | 563,325 | |||||
* | Yankee Acquisition 9.75% 2/15/17 | 454,000 | 459,675 | |||||
Zimmer Holdings 4.625% 11/30/19 | 35,000 | 35,947 | ||||||
7,896,177 | ||||||||
Energy – 3.02% | ||||||||
# | Antero Resources Finance 144A 9.375% 12/1/17 | 441,000 | 434,385 | |||||
# | Aquilex Holdings 144A 11.125% 12/15/16 | 414,000 | 416,070 | |||||
Chesapeake Energy 9.50% 2/15/15 | 320,000 | 348,000 | ||||||
Complete Production Service 8.00% 12/15/16 | 318,000 | 314,820 | ||||||
Copano Energy/Finance 7.75% 6/1/18 | 167,000 | 159,485 | ||||||
*# | Crosstex Energy/Finance 144A 8.875% 2/15/18 | 455,000 | 450,450 | |||||
# | Drummond 144A 9.00% 10/15/14 | 550,000 | 550,000 | |||||
* | EOG Resources 4.40% 6/1/20 | 45,000 | 45,589 | |||||
# | Global Geophysical Services 144A 10.50% 5/1/17 | 230,000 | 221,950 | |||||
* | Headwaters 11.375% 11/1/14 | 282,000 | 285,525 | |||||
# | Helix Energy Solutions Group 144A 9.50% 1/15/16 | 611,000 | 601,835 | |||||
*# | Hercules Offshore 144A 10.50% 10/15/17 | 500,000 | 467,500 | |||||
# | Hilcorp Energy I/Finance 144A 8.00% 2/15/20 | 545,000 | 531,375 | |||||
# | Holly 144A 9.875% 6/15/17 | 488,000 | 495,320 | |||||
International Coal Group 9.125% 4/1/18 | 275,000 | 276,375 | ||||||
* | Key Energy Services 8.375% 12/1/14 | 552,000 | 552,000 | |||||
# | Linn Energy/Finance 144A 8.625% 4/15/20 | 390,000 | 388,050 | |||||
# | Murray Energy 144A 10.25% 10/15/15 | 441,000 | 441,000 | |||||
*# | NFR Energy 144A 9.75% 2/15/17 | 575,000 | 540,500 | |||||
OPTI Canada | ||||||||
7.875% 12/15/14 | 653,000 | 558,315 | ||||||
8.25% 12/15/14 | 360,000 | 309,600 | ||||||
Petrohawk Energy 7.875% 6/1/15 | 505,000 | 491,744 | ||||||
Petroleum Development 12.00% 2/15/18 | 539,000 | 557,865 | ||||||
# | Pioneer Drilling 144A 9.875% 3/15/18 | 265,000 | 263,675 | |||||
Quicksilver Resources 7.125% 4/1/16 | 826,000 | 749,594 |
18
Principal amount | Value | |||||||
Corporate Bonds (continued) | ||||||||
Energy (continued) | ||||||||
# | SandRidge Energy 144A | |||||||
*8.75% 1/15/20 | $ | 341,000 | $ | 310,310 | ||||
9.875% 5/15/16 | 460,000 | 455,400 | ||||||
TransCanada PipeLines | ||||||||
3.40% 6/1/15 | 80,000 | 80,582 | ||||||
•6.35% 5/15/67 | 5,000 | 4,542 | ||||||
# | Woodside Finance 144A 4.50% 11/10/14 | 5,000 | 5,199 | |||||
11,307,055 | ||||||||
Financials – 1.96% | ||||||||
• | American International Group 8.175% 5/15/58 | 945,000 | 744,188 | |||||
Capital One Capital V 10.25% 8/15/39 | 757,000 | 818,505 | ||||||
# | Cemex Finance 144A 9.50% 12/14/16 | 620,000 | 568,850 | |||||
City National Capital Trust I 9.625% 2/1/40 | 559,000 | 570,745 | ||||||
• | Genworth Financial 6.15% 11/15/66 | 1,031,000 | 724,278 | |||||
#• | HBOS Capital Funding 144A 6.071% 6/29/49 | 550,000 | 396,000 | |||||
•# | ILFC E-Capital Trust II 144A 6.25% 12/21/65 | 815,000 | 501,225 | |||||
# | International Lease Finance 144A 8.75% 3/15/17 | 275,000 | 252,313 | |||||
#• | Liberty Mutual Group 144A 7.00% 3/15/37 | 705,000 | 548,293 | |||||
Nuveen Investments 10.50% 11/15/15 | 784,000 | 709,520 | ||||||
# | Penson Worldwide 144A 12.50% 5/15/17 | 320,000 | 318,800 | |||||
#• | Rabobank Nederland 144A 11.00% 12/29/49 | 720,000 | 875,843 | |||||
∏• | XL Capital 6.50% 12/31/49 | 370,000 | 262,700 | |||||
Zions Bancorporation 5.65% 5/15/14 | 42,000 | 39,328 | ||||||
7,330,588 | ||||||||
Media – 2.16% | ||||||||
Affinion Group 11.50% 10/15/15 | 268,000 | 278,050 | ||||||
Cablevision Systems | ||||||||
*8.00% 4/15/20 | 60,000 | 59,400 | ||||||
#144A 8.625% 9/15/17 | 272,000 | 274,720 | ||||||
# | CCO Holdings/Capital 144A | |||||||
*7.875% 4/30/18 | 120,000 | 118,350 | ||||||
8.125% 4/30/20 | 150,000 | 149,250 | ||||||
# | Charter Communications Operating/Capital 144A | |||||||
10.875% 9/15/14 | 225,000 | 246,938 | ||||||
Clear Channel Communications 10.75% 8/1/16 | 500,000 | 372,500 | ||||||
#* | Columbus International 144A 11.50% 11/20/14 | 570,000 | 607,050 | |||||
DISH DBS 7.875% 9/1/19 | 550,000 | 558,250 | ||||||
# | Gray Television 144A 10.50% 6/29/15 | 505,000 | 479,750 |
19
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Principal amount | Value | |||||||
Corporate Bonds (continued) | ||||||||
Media (continued) | ||||||||
# | MDC Partners 144A 11.00% 11/1/16 | $ | 291,000 | $ | 312,825 | |||
*# | Nexstar Broadcasting 144A 8.875% 4/15/17 | 525,000 | 522,375 | |||||
Nielsen Finance | ||||||||
10.00% 8/1/14 | 302,000 | 308,418 | ||||||
11.625% 2/1/14 | 184,000 | 197,800 | ||||||
*Ω12.50% 8/1/16 | 242,000 | 225,060 | ||||||
# | Sinclair Television Group 144A 9.25% 11/1/17 | 437,000 | 434,815 | |||||
# | Sitel/Finance 144A 11.50% 4/1/18 | 540,000 | 515,700 | |||||
# | Terremark Worldwide 144A 12.25% 6/15/17 | 501,000 | 571,140 | |||||
#* | Umbrella Acquisition PIK 144A 9.75% 3/15/15 | 363,113 | 310,008 | |||||
# | Univision Communications 144A 12.00% 7/1/14 | 405,000 | 437,400 | |||||
# | UPC Holding 144A 9.875% 4/15/18 | 280,000 | 284,200 | |||||
# | XM Satellite Radio 144A 13.00% 8/1/13 | 760,000 | 835,999 | |||||
8,099,998 | ||||||||
Real Estate – 0.08% | ||||||||
*Felcor Lodging 10.00% 10/1/14 | 286,000 | 287,430 | ||||||
287,430 | ||||||||
Services Cyclical – 2.41% | ||||||||
# | Ashtead Capital 144A 9.00% 8/15/16 | 320,000 | 320,000 | |||||
Avis Budget Car Rental | ||||||||
*7.75% 5/15/16 | 152,000 | 142,120 | ||||||
#144A 9.625% 3/15/18 | 375,000 | 376,875 | ||||||
Burlington Northern Santa Fe 4.70% 10/1/19 | 60,000 | 61,709 | ||||||
# | Delta Air Lines 144A 12.25% 3/15/15 | 500,000 | 521,250 | |||||
#* | Equinox Holdings 144A 9.50% 2/1/16 | 610,000 | 600,850 | |||||
*# | General Maritime 144A 12.00% 11/15/17 | 579,000 | 596,370 | |||||
Harrah’s Operating | ||||||||
*10.00% 12/15/18 | 110,000 | 87,450 | ||||||
#144A 10.00% 12/15/18 | 678,000 | 539,010 | ||||||
# | Kansas City Southern de Mexico 144A | |||||||
*8.00% 2/1/18 | 240,000 | 240,900 | ||||||
12.50% 4/1/16 | 140,000 | 162,400 | ||||||
*# | MCE Finance 144A 10.25% 5/15/18 | 300,000 | 300,000 | |||||
MGM MIRAGE | ||||||||
7.50% 6/1/16 | 435,000 | 350,175 | ||||||
*#144A 11.375% 3/1/18 | 1,108,000 | 1,030,439 | ||||||
* | Mohegan Tribal Gaming Authority | |||||||
6.875% 2/15/15 | 136,000 | 99,620 | ||||||
7.125% 8/15/14 | 396,000 | 295,020 |
20
Principal amount | Value | |||||||
Corporate Bonds (continued) | ||||||||
Services Cyclical (continued) | ||||||||
# | NCL 144A 11.75% 11/15/16 | $ | 286,000 | $ | 307,450 | |||
‡@ | Northwest Airlines 10.00% 2/1/11 | 265,000 | 994 | |||||
*# | Peninsula Gaming 144A 10.75% 8/15/17 | 580,000 | 574,200 | |||||
# | Pinnacle Entertainment 144A 8.75% 5/15/20 | 290,000 | 269,700 | |||||
* | RSC Equipment Rental | |||||||
9.50% 12/1/14 | 551,000 | 526,205 | ||||||
#144A 10.25% 11/15/19 | 27,000 | 26,055 | ||||||
*# | ServiceMaster PIK 144A 10.75% 7/15/15 | 286,000 | 287,430 | |||||
# | Shingle Springs Tribal Gaming Authority 144A | |||||||
9.375% 6/15/15 | 625,000 | 490,625 | ||||||
# | United Air Lines 144A 12.00% 11/1/13 | 780,000 | 801,450 | |||||
9,008,297 | ||||||||
Services Non-Cyclical – 0.79% | ||||||||
# | Alion Science & Technology 144A 12.00% 11/1/14 | 440,954 | 440,944 | |||||
Casella Waste Systems 9.75% 2/1/13 | 568,000 | 559,479 | ||||||
# | Radiation Therapy Services 144A 9.875% 4/15/17 | 545,000 | 531,375 | |||||
# | Radnet Management 144A 10.375% 4/1/18 | 545,000 | 501,128 | |||||
Select Medical 7.625% 2/1/15 | 389,000 | 367,605 | ||||||
• | US Oncology Holdings PIK 6.643% 3/15/12 | 606,000 | 559,035 | |||||
2,959,566 | ||||||||
Technology & Electronics – 0.52% | ||||||||
# | Aspect Software 144A 10.625% 5/15/17 | 215,000 | 214,194 | |||||
* | First Data 9.875% 9/24/15 | 602,000 | 493,640 | |||||
*# | MagnaChip Semiconductor/Finance 144A | |||||||
10.50% 4/15/18 | 400,000 | 412,500 | ||||||
* | Sanmina-SCI 8.125% 3/1/16 | 395,000 | 378,213 | |||||
* | SunGard Data Systems 10.25% 8/15/15 | 437,000 | 444,101 | |||||
1,942,648 | ||||||||
Telecommunications – 3.22% | ||||||||
=@‡ | Allegiance Telecom 11.75% 2/15/11 | 10,000 | 0 | |||||
Cisco Systems 4.45% 1/15/20 | 60,000 | 61,725 | ||||||
# | Clearwire Communications 144A 12.00% 12/1/15 | 606,000 | 590,850 | |||||
* | Cricket Communications 10.00% 7/15/15 | 370,000 | 381,100 | |||||
*# | Digicel 144A 8.25% 9/1/17 | 385,000 | 379,225 | |||||
# | Digicel Group 144A 8.875% 1/15/15 | 490,000 | 476,525 | |||||
*# | GCI 144A 8.625% 11/15/19 | 388,000 | 378,300 | |||||
# | Global Crossing 144A 12.00% 9/15/15 | 369,000 | 404,055 | |||||
# | GXS Worldwide 144A 9.75% 6/15/15 | 559,000 | 526,858 |
21
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Principal amount | Value | |||||||
Corporate Bonds (continued) | ||||||||
Telecommunications (continued) | ||||||||
Intelsat Bermuda 11.25% 2/4/17 | $ | 692,000 | $ | 685,079 | ||||
# | Level 3 Financing 144A 10.00% 2/1/18 | 365,000 | 323,025 | |||||
* | MetroPCS Wireless 9.25% 11/1/14 | 421,000 | 435,735 | |||||
NII Capital 10.00% 8/15/16 | 541,000 | 581,575 | ||||||
* | PAETEC Holding 8.875% 6/30/17 | 263,000 | 261,028 | |||||
# | Primus Telecommunications Holding 144A | |||||||
13.00% 12/15/16 | 297,000 | 298,485 | ||||||
Sprint Capital 8.75% 3/15/32 | 906,000 | 867,494 | ||||||
Telecom Italia Capital 5.25% 10/1/15 | 5,000 | 5,002 | ||||||
Telesat Canada | ||||||||
11.00% 11/1/15 | 285,000 | 310,650 | ||||||
12.50% 11/1/17 | 456,000 | 517,560 | ||||||
ViaSat 8.875% 9/15/16 | 296,000 | 300,440 | ||||||
* | Virgin Media 6.50% 11/15/16 | 2,511,000 | 2,856,262 | |||||
Virgin Media Finance 8.375% 10/15/19 | 380,000 | 380,950 | ||||||
* | West 11.00% 10/15/16 | 427,000 | 433,405 | |||||
# | Wind Acquisition Finance 144A | |||||||
11.75% 7/15/17 | 200,000 | 205,000 | ||||||
12.00% 12/1/15 | 395,000 | 408,825 | ||||||
12,069,153 | ||||||||
Utilities – 1.02% | ||||||||
AES Energy 7.75% 3/1/14 | 356,000 | 357,780 | ||||||
# | American Transmission Systems 144A | |||||||
5.25% 1/15/22 | 5,000 | 5,231 | ||||||
Dynegy Holdings 7.75% 6/1/19 | 669,000 | 486,698 | ||||||
* | Edison Mission Energy 7.00% 5/15/17 | 377,000 | 256,831 | |||||
Elwood Energy 8.159% 7/5/26 | 590,275 | 562,237 | ||||||
* | Energy Future Holdings 10.875% 11/1/17 | 275,000 | 203,500 | |||||
Jersey Central Power & Light 5.625% 5/1/16 | 55,000 | 59,089 | ||||||
* | Mirant Americas Generation 8.50% 10/1/21 | 665,000 | 611,801 | |||||
NRG Energy 7.375% 2/1/16 | 226,000 | 219,220 | ||||||
PacifiCorp 5.50% 1/15/19 | 85,000 | 93,704 | ||||||
• | Puget Sound Energy 6.974% 6/1/67 | 402,000 | 368,579 | |||||
TXU 5.55% 11/15/14 | 427,000 | 301,786 | ||||||
* | Texas Competitive Electric Holdings | |||||||
10.25% 11/1/15 | 400,000 | 270,000 | ||||||
Xcel Energy 4.70% 5/15/20 | 40,000 | 40,481 | ||||||
3,836,937 | ||||||||
Total Corporate Bonds (cost $90,496,586) | 92,552,245 |
22
Principal amount | Value | |||||||
Leveraged Non-Recourse Security – 0.00% | ||||||||
#w@ | JPMorgan Fixed Income Pass Through Trust | |||||||
Series 2007-B 144A 0.003% 1/15/87 | $ | 1,300,000 | $ | 0 | ||||
Total Leveraged Non-Recourse Security (cost $1,105,000) | 0 | |||||||
Residual Interest Trust Certificate – 0.00% | ||||||||
w#=@ | Auction Pass Through Trust Series 2007-6 144A | 175,000 | 0 | |||||
Total Residual Interest Trust Certificate (cost $190,466) | 0 | |||||||
«Senior Secured Loans – 0.64% | ||||||||
BWAY Holding Bridge Term Tranche Loan | ||||||||
9.50% 12/30/11 | 1,060,000 | 1,060,000 | ||||||
Chester Downs & Marina Term Tranche Loan | ||||||||
12.375% 12/31/16 | 303,188 | 303,188 | ||||||
PQ Term Tranche Loan 6.73% 7/30/15 | 720,000 | 658,800 | ||||||
Texas Competitive Electric Holdings Term Tranche | ||||||||
Loan B2 3.729% 10/10/14 | 487,778 | 376,603 | ||||||
Total Senior Secured Loans (cost $2,321,063) | 2,398,591 | |||||||
Number of shares | ||||||||
Exchange-Traded Funds – 1.90% | ||||||||
Energy Select Sector SPDR Fund | 10,100 | 535,805 | ||||||
iShares Dow Jones US Real Estate Index Fund | 74,975 | 3,745,001 | ||||||
*† | SPDR Gold Trust | 23,800 | 2,829,820 | |||||
Total Exchange-Traded Funds (cost $6,874,357) | 7,110,626 | |||||||
Limited Partnership – 0.19% | ||||||||
Brookfield Infrastructure Partners | 45,000 | 705,600 | ||||||
Total Limited Partnership (cost $815,451) | 705,600 | |||||||
Preferred Stock – 0.26% | ||||||||
Banking, Finance & Insurance – 0.01% | ||||||||
*† | Freddie Mac 6.02% | 33,000 | 28,050 | |||||
28,050 | ||||||||
Industrials – 0.00% | ||||||||
=† | Port Townsend | 222 | 0 | |||||
0 |
23
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Number of shares | Value | |||||||
Preferred Stock (continued) | ||||||||
Real Estate – 0.25% | ||||||||
Developers Diversified Realty 7.50% | 10,850 | $ | 231,648 | |||||
SL Green Realty 7.625% | 13,400 | 311,282 | ||||||
Vornado Realty Trust 6.625% | 18,900 | 410,697 | ||||||
† | W2007 Grace Acquisitions Series B 8.75% | 20,900 | 6,270 | |||||
959,897 | ||||||||
Total Preferred Stock (cost $2,447,313) | 987,947 | |||||||
Right – 0.01% | ||||||||
± | National Grid | 10,291 | 20,416 | |||||
Total Right (cost $0) | 20,416 | |||||||
Warrant – 0.00% | ||||||||
†= | Port Townsend | 222 | 2 | |||||
Total Warrant (cost $5,328) | 2 | |||||||
Principal amount | ||||||||
U.S. Treasury Obligation – 0.01% | ||||||||
U.S. Treasury Bond 4.625% 2/15/40 | $ | 50,000 | 53,398 | |||||
Total U.S. Treasury Obligation (cost $54,714) | 53,398 | |||||||
≠Discount Note – 4.60% | ||||||||
Federal Home Loan Bank 0.06% 6/1/10 | 17,209,127 | 17,209,127 | ||||||
Total Discount Note (cost $17,209,127) | 17,209,127 | |||||||
Total Value of Securities Before Securities | ||||||||
Lending Collateral – 97.88% (cost $382,700,066) | 366,460,833 | |||||||
Number of shares | ||||||||
Securities Lending Collateral** – 10.85% | ||||||||
Investment Companies | ||||||||
Mellon GSL DBT II Collateral Fund | 36,574,206 | 36,574,206 | ||||||
BNY Mellon SL DBT II Liquidating Fund | 4,057,261 | 4,009,386 | ||||||
†@Mellon GSL Reinvestment Trust II | 741,807 | 31,527 | ||||||
Total Securities Lending Collateral (cost $41,373,274) | 40,615,119 |
24
Total Value of Securities – 108.73% | |||
(cost $424,073,340) | $ | 407,075,952 | © |
Obligation to Return Securities | |||
Lending Collateral** – (11.05%) | (41,373,274 | ) | |
Receivables and Other Assets | |||
Net of Liabilities – 2.32% | 8,704,485 | ||
Net Assets Applicable to 40,484,543 | |||
Shares Outstanding – 100.00% | $ | 374,407,163 | |
Net Asset Value – Delaware Dividend Income Fund | |||
Class A ($184,143,758 / 19,910,277 Shares) | $9.25 | ||
Net Asset Value – Delaware Dividend Income Fund | |||
Class B ($30,566,316 / 3,306,077 Shares) | $9.25 | ||
Net Asset Value – Delaware Dividend Income Fund | |||
Class C ($146,466,200 / 15,837,938 Shares) | $9.25 | ||
Net Asset Value – Delaware Dividend Income Fund | |||
Class R ($3,440,122 / 372,119 Shares) | $9.24 | ||
Net Asset Value – Delaware Dividend Income Fund | |||
Institutional Class ($9,790,767 / 1,058,132 Shares) | $9.25 | ||
Components of Net Assets at May 31, 2010: | |||
Shares of beneficial interest (unlimited authorization – no par) | $ | 565,984,594 | |
Accumulated net investment loss | (563,757 | ) | |
Accumulated net realized loss on investments | (173,697,818 | ) | |
Net unrealized depreciation of investments and foreign currencies | (17,315,856 | ) | |
Total net assets | $ | 374,407,163 |
† | Non income producing security. |
‡ | Non income producing security. Security is currently in default. |
• | Variable rate security. The rate shown is the rate as of May 31, 2010. Interest rates reset periodically. |
Φ | Step coupon bond. Coupon increases periodically based on a predetermined schedule. Stated rate in effect at May 31, 2010. |
w | Pass Through Agreement. Security represents the contractual right to receive a proportionate amount of underlying payments due to the counterparty pursuant to various agreements related to the rescheduling of obligations and the exchange of certain notes. |
25
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
# | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At May 31, 2010, the aggregate amount of Rule 144A securities was $67,839,865, which represented 18.12% of the Fund’s net assets. See Note 10 in “Notes to financial statements.” |
± | Security is being valued based on international fair value pricing. At May 31, 2010, the aggregate amount of international fair value priced securities was $3,465,978, which represented 0.93% of the Fund’s net assets. See Note 1 in “Notes to financial statements.” |
« | Senior Secured Loans generally pay interest at rates which are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates are generally: (i) the prime rate offered by one or more United States banks, (ii) the lending rate offered by one or more European banks such as the London Inter-Bank Offered Rate (LIBOR), and (iii) the certificate of deposit rate. Senior Secured Loans may be subject to restrictions on resale. Stated rate in effect at May 31, 2010. |
@ | Illiquid security. At May 31, 2010, the aggregate amount of illiquid securities was $306,160, which represented 0.08% of the Fund’s net assets. See Note 10 in “Notes to financial statements.” |
= | Security is being fair valued in accordance with the Fund’s fair valuation policy. At May 31, 2010, the aggregate amount of fair valued securities was $235,902, which represented 0.06% of the Fund’s net assets. See Note 1 in “Notes to financial statements.” |
* | Fully or partially on loan. |
** | See Note 9 in “Notes to financial statements.” |
© | Includes $40,641,019 of securities loaned. |
∏ | Restricted security. These investments are in securities not registered under the Securities Act of 1933, as amended, and have certain restrictions on resale which may limit their liquidity. At May 31, 2010, the aggregate amount of restricted securities was $262,711 or 0.07% of the Fund’s net assets. See Note 10 in “Notes to financial statements.” |
Ω | Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective. |
≠ | The rate shown is the effective yield at the time of purchase. |
26
Summary of abbreviations: ADR — American Depositary Receipts AUD — Australian Dollar CAD — Canadian Dollar CDS — Credit Default Swap CHF — Swiss Franc EUR — European Monetary Unit GBP — British Pound Sterling HKD — Hong Kong Dollar JPY — Japanese Yen PIK — Pay-in-kind REIT — Real Estate Investment Trust SEK — Swedish Krona SGD — Singapore Dollar USD — United States Dollar |
Net Asset Value and Offering Price Per Share – | |||
Delaware Dividend Income Fund | |||
Net asset value Class A (A) | $ | 9.25 | |
Sales charge (5.75% of offering price) (B) | 0.56 | ||
Offering price | $ | 9.81 |
(A) | Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares. |
(B) | See the current prospectus for purchases of $50,000 or more. |
1The following foreign currency exchange contracts and swap contracts were outstanding at May 31, 2010:
Foreign Currency Exchange Contracts
Unrealized | |||||||||||||
Contracts to Deliver | In Exchange For | Settlement Date | Depreciation | ||||||||||
AUD | (274,745 | ) | USD | 229,714 | 6/1/10 | $ | (2,723 | ) | |||||
CAD | (24,325 | ) | USD | 22,955 | 6/1/10 | (155 | ) | ||||||
CHF | (194,580 | ) | USD | 167,021 | 6/1/10 | (831 | ) | ||||||
EUR | (2,474,117 | ) | USD | 3,018,917 | 6/1/10 | (17,211 | ) | ||||||
GBP | (602,634 | ) | USD | 868,274 | 6/2/10 | (2,839 | ) | ||||||
HKD | (5,571,228 | ) | USD | 715,030 | 6/1/10 | (403 | ) | ||||||
JPY | (113,362,163 | ) | USD | 1,246,286 | 6/1/10 | (547 | ) | ||||||
JPY | (3,168,077 | ) | USD | 34,696 | 6/2/10 | (149 | ) | ||||||
SEK | (1,119,568 | ) | USD | 140,603 | 6/1/10 | (1,921 | ) | ||||||
SGD | (268,798 | ) | USD | 190,921 | 6/2/10 | (148 | ) | ||||||
$ | (26,927 | ) |
27
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Swap Contract CDS Contract |
Annual | ||||||||||
Swap Counterparty & | Protection | Termination | Unrealized | |||||||
Referenced Obligation | Notional Value | Payments | Date | Depreciation | ||||||
Protection Purchased: | ||||||||||
Morgan Stanley | ||||||||||
CDX.NA.HY.14 | $9,000,000 | 5.00% | 6/20/15 | $(248,890 | ) |
The use of foreign currency exchange contracts and swap contract involves elements of market risk and risks in excess of the amount recognized in the financial statements. The notional values presented above represent the Fund’s total exposure in such contracts, whereas only the net unrealized depreciation is reflected in the Fund’s net assets.
1See Note 8 in “Notes to financial statements.“
See accompanying notes
28
Statement of operations | |
Delaware Dividend Income Fund | Six Months Ended May 31, 2010 (Unaudited) |
Investment Income: | ||||||||
Dividends | $ | 3,366,892 | ||||||
Interest | 7,332,936 | |||||||
Security lending income | 55,474 | |||||||
Other income | 152,982 | |||||||
Foreign tax withheld | (24,216 | ) | $ | 10,884,068 | ||||
Expenses: | ||||||||
Management fees | 1,280,364 | |||||||
Distribution expenses – Class A | 297,174 | |||||||
Distribution expenses – Class B | 165,162 | |||||||
Distribution expenses – Class C | 773,829 | |||||||
Distribution expenses – Class R | 10,100 | |||||||
Dividend disbursing and transfer agent fees and expenses | 468,433 | |||||||
Accounting and administration expenses | 78,344 | |||||||
Reports and statements to shareholders | 40,544 | |||||||
Registration fees | 32,100 | |||||||
Legal fees | 22,038 | |||||||
Custodian fees | 20,675 | |||||||
Dues and services | 18,473 | |||||||
Audit and taxes | 17,434 | |||||||
Trustees’ fees | 13,063 | |||||||
Pricing fees | 12,652 | |||||||
Insurance fees | 7,236 | |||||||
Consulting fees | 1,937 | |||||||
Trustees’ expenses | 1,079 | 3,260,637 | ||||||
Less waived distribution expenses – Class A | (49,408 | ) | ||||||
Less waived distribution expenses – Class R | (1,682 | ) | ||||||
Total operating expenses | 3,209,547 | |||||||
Net Investment Income | 7,674,521 |
30
Net Realized and Unrealized Gain (Loss) on Investments | ||||
and Foreign Currencies: | ||||
Net realized loss on: | ||||
Investments | $ | (3,575,079 | ) | |
Foreign currencies | (166,809 | ) | ||
Swap contracts | (2,297 | ) | ||
Net realized loss | (3,744,185 | ) | ||
Net change in unrealized appreciation/depreciation of | ||||
investments and foreign currencies | 7,185,893 | |||
Net Realized and Unrealized Gain on Investments | ||||
and Foreign Currencies | 3,441,708 | |||
Net Increase in Net Assets Resulting from Operations | $ | 11,116,229 |
See accompanying notes
31
Statements of changes in net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
5/31/10 | 11/30/09 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 7,674,521 | $ | 17,578,394 | ||||
Net realized loss on investments and | ||||||||
foreign currencies | (3,744,185 | ) | (53,161,362 | ) | ||||
Net change in unrealized appreciation/depreciation | ||||||||
of investments and foreign currencies | 7,185,893 | 154,880,590 | ||||||
Net increase in net assets resulting | ||||||||
from operations | 11,116,229 | 119,297,622 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (4,405,194 | ) | (11,269,677 | ) | ||||
Class B | (620,360 | ) | (1,738,087 | ) | ||||
Class C | (2,906,459 | ) | (7,856,161 | ) | ||||
Class R | (69,634 | ) | (135,325 | ) | ||||
Institutional Class | (140,538 | ) | (153,038 | ) | ||||
(8,142,185 | ) | (21,152,288 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 13,335,576 | 25,368,703 | ||||||
Class B | 140,546 | 611,762 | ||||||
Class C | 9,749,316 | 10,000,150 | ||||||
Class R | 484,551 | 643,574 | ||||||
Institutional Class | 8,576,829 | 206,608 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 3,503,275 | 9,114,015 | ||||||
Class B | 508,479 | 1,446,023 | ||||||
Class C | 2,352,713 | 6,477,496 | ||||||
Class R | 69,633 | 135,324 | ||||||
Institutional Class | 107,456 | 137,924 | ||||||
38,828,374 | 54,141,579 |
32
Six Months | Year | |||||||
Ended | Ended | |||||||
5/31/10 | 11/30/09 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares repurchased: | ||||||||
Class A | $ | (35,197,959 | ) | $ | (63,105,023 | ) | ||
Class B | (4,093,591 | ) | (9,471,851 | ) | ||||
Class C | (21,855,970 | ) | (46,639,349 | ) | ||||
Class R | (200,407 | ) | (332,458 | ) | ||||
Institutional Class | (981,616 | ) | (910,528 | ) | ||||
(62,329,543 | ) | (120,459,209 | ) | |||||
Decrease in net assets derived from | ||||||||
capital share transactions | (23,501,169 | ) | (66,317,630 | ) | ||||
Net Increase (Decrease) in Net Assets | (20,527,125 | ) | 31,827,704 | |||||
Net Assets: | ||||||||
Beginning of period | 394,934,288 | 363,106,584 | ||||||
End of period (including accumulated net | ||||||||
investment loss and undistributed net investment | ||||||||
income of $(563,757) and $51,281, respectively) | $ | 374,407,163 | $ | 394,934,288 |
See accompanying notes
33
Financial highlights
Delaware Dividend Income Fund Class A
Delaware Dividend Income 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 income2 |
Net realized and unrealized gain (loss) on investments and foreign currencies |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain on investments |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived and expense paid indirectly |
Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect. |
See accompanying notes
34
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/101 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | 11/30/05 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$9.190 | $7.010 | $12.030 | $12.590 | $11.140 | $11.050 | |||||||||||||||
0.200 | 0.407 | 0.400 | 0.456 | 0.422 | 0.450 | |||||||||||||||
0.070 | 2.247 | (4.595 | ) | (0.529 | ) | 1.551 | 0.081 | |||||||||||||
0.270 | 2.654 | (4.195 | ) | (0.073 | ) | 1.973 | 0.531 | |||||||||||||
(0.210 | ) | (0.474 | ) | (0.489 | ) | (0.426 | ) | (0.457 | ) | (0.360 | ) | |||||||||
— | — | (0.336 | ) | (0.061 | ) | (0.066 | ) | (0.081 | ) | |||||||||||
(0.210 | ) | (0.474 | ) | (0.825 | ) | (0.487 | ) | (0.523 | ) | (0.441 | ) | |||||||||
$9.250 | $9.190 | $7.010 | $12.030 | $12.590 | $11.140 | |||||||||||||||
2.90% | 39.35% | (37.15% | ) | (0.72% | ) | 18.34% | 4.89% | |||||||||||||
$184,144 | $200,720 | $179,588 | $450,620 | $398,124 | $285,159 | |||||||||||||||
1.27% | 1.17% | 1.00% | 1.00% | 1.01% | 1.00% | |||||||||||||||
1.32% | 1.36% | 1.26% | 1.17% | 1.23% | 1.27% | |||||||||||||||
4.25% | 5.22% | 3.92% | 3.60% | 3.64% | 4.05% | |||||||||||||||
4.20% | 5.03% | 3.66% | 3.43% | 3.42% | 3.78% | |||||||||||||||
110% | 69% | 51% | 52% | 51% | 85% |
35
Financial highlights
Delaware Dividend Income Fund Class B
Delaware Dividend Income Fund Class B
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 income2 |
Net realized and unrealized gain (loss) on investments and foreign currencies |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain on investments |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived and expense paid indirectly |
Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 The average shares outstanding method has been applied for per share information.
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
See accompanying notes
36
Six Months Ended | Year Ended | ||||||||||||||||||
5/31/101 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | 11/30/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$9.190 | $7.010 | $12.020 | $12.580 | $11.130 | $11.040 | ||||||||||||||
0.165 | 0.348 | 0.324 | 0.360 | 0.335 | 0.367 | ||||||||||||||
0.071 | 2.248 | (4.590 | ) | (0.528 | ) | 1.552 | 0.079 | ||||||||||||
0.236 | 2.596 | (4.266 | ) | (0.168 | ) | 1.887 | 0.446 | ||||||||||||
(0.176 | ) | (0.416 | ) | (0.408 | ) | (0.331 | ) | (0.371 | ) | (0.275 | ) | ||||||||
— | — | (0.336 | ) | (0.061 | ) | (0.066 | ) | (0.081 | ) | ||||||||||
(0.176 | ) | (0.416 | ) | (0.744 | ) | (0.392 | ) | (0.437 | ) | (0.356 | ) | ||||||||
$9.250 | $9.190 | $7.010 | $12.020 | $12.580 | $11.130 | ||||||||||||||
2.53% | 38.47% | (37.72% | ) | (1.38% | ) | 17.46% | 4.09% | ||||||||||||
$30,566 | $33,725 | $32,534 | $78,235 | $77,757 | $57,904 | ||||||||||||||
2.02% | 1.92% | 1.75% | 1.75% | 1.76% | 1.75% | ||||||||||||||
2.02% | 2.06% | 1.96% | 1.87% | 1.93% | 1.97% | ||||||||||||||
3.50% | 4.47% | 3.17% | 2.85% | 2.89% | 3.30% | ||||||||||||||
3.50% | 4.33% | 2.96% | 2.73% | 2.72% | 3.08% | ||||||||||||||
110% | 69% | 51% | 52% | 51% | 85% |
37
Financial highlights
Delaware Dividend Income Fund Class C
Delaware Dividend Income 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 income2 |
Net realized and unrealized gain (loss) on investments and foreign currencies |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain on investments |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived and expense paid indirectly |
Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 The average shares outstanding method has been applied for per share information.
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
See accompanying notes
38
Six Months Ended | Year Ended | ||||||||||||||||||
5/31/101 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | 11/30/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$9.190 | $7.010 | $12.030 | $12.580 | $11.130 | $11.040 | ||||||||||||||
0.165 | 0.348 | 0.323 | 0.360 | 0.335 | 0.367 | ||||||||||||||
0.071 | 2.248 | (4.599 | ) | (0.518 | ) | 1.552 | 0.079 | ||||||||||||
0.236 | 2.596 | (4.276 | ) | (0.158 | ) | 1.887 | 0.446 | ||||||||||||
(0.176 | ) | (0.416 | ) | (0.408 | ) | (0.331 | ) | (0.371 | ) | (0.275 | ) | ||||||||
— | — | (0.336 | ) | (0.061 | ) | (0.066 | ) | (0.081 | ) | ||||||||||
(0.176 | ) | (0.416 | ) | (0.744 | ) | (0.392 | ) | (0.437 | ) | (0.356 | ) | ||||||||
$9.250 | $9.190 | $7.010 | $12.030 | $12.580 | $11.130 | ||||||||||||||
2.53% | 38.27% | (37.63% | ) | (1.38% | ) | 17.46% | 4.09% | ||||||||||||
$146,466 | $155,028 | $146,769 | $402,782 | $269,274 | $165,663 | ||||||||||||||
2.02% | 1.92% | 1.75% | 1.75% | 1.76% | 1.75% | ||||||||||||||
2.02% | 2.06% | 1.96% | 1.87% | 1.93% | 1.97% | ||||||||||||||
3.50% | 4.47% | 3.17% | 2.85% | 2.89% | 3.30% | ||||||||||||||
3.50% | 4.33% | 2.96% | 2.73% | 2.72% | 3.08% | ||||||||||||||
110% | 69% | 51% | 52% | 51% | 85% |
39
Financial highlights
Delaware Dividend Income Fund Class R
Delaware Dividend Income 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 income2 |
Net realized and unrealized gain (loss) on investments and foreign currencies |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain on investments |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived and expense paid indirectly |
Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 The average shares outstanding method has been applied for per share information.
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect.
See accompanying notes
40
Six Months Ended | Year Ended | ||||||||||||||||||
5/31/101 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | 11/30/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$9.190 | $7.010 | $12.020 | $12.580 | $11.130 | $11.040 | ||||||||||||||
0.189 | 0.387 | 0.374 | 0.424 | 0.394 | 0.416 | ||||||||||||||
0.060 | 2.246 | (4.585 | ) | (0.528 | ) | 1.551 | 0.078 | ||||||||||||
0.249 | 2.633 | (4.211 | ) | (0.104 | ) | 1.945 | 0.494 | ||||||||||||
(0.199 | ) | (0.453 | ) | (0.463 | ) | (0.395 | ) | (0.429 | ) | (0.323 | ) | ||||||||
— | — | (0.336 | ) | (0.061 | ) | (0.066 | ) | (0.081 | ) | ||||||||||
(0.199 | ) | (0.453 | ) | (0.799 | ) | (0.456 | ) | (0.495 | ) | (0.404 | ) | ||||||||
$9.240 | $9.190 | $7.010 | $12.020 | $12.580 | $11.130 | ||||||||||||||
2.67% | 39.15% | (37.39% | ) | (0.88% | ) | 18.06% | 4.55% | ||||||||||||
$3,440 | $3,067 | $1,928 | $6,220 | $4,275 | $1,429 | ||||||||||||||
1.52% | 1.42% | 1.25% | 1.25% | 1.26% | 1.30% | ||||||||||||||
1.62% | 1.66% | 1.56% | 1.47% | 1.53% | 1.57% | ||||||||||||||
4.00% | 4.97% | 3.67% | 3.35% | 3.39% | 3.75% | ||||||||||||||
3.90% | 4.73% | 3.36% | 3.13% | 3.12% | 3.48% | ||||||||||||||
110% | 69% | 51% | 52% | 51% | 85% |
41
Financial highlights
Delaware Dividend Income Fund Institutional Class
Delaware Dividend Income 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 income2 |
Net realized and unrealized gain (loss) on investments and foreign currencies |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain on investments |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived and expense paid indirectly |
Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 The average shares outstanding method has been applied for per share information.
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
See accompanying notes
42
Six Months Ended | Year Ended | ||||||||||||||||||
5/31/101 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | 11/30/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$9.190 | $7.010 | $12.040 | $12.600 | $11.140 | $11.050 | ||||||||||||||
0.212 | 0.426 | 0.425 | 0.488 | 0.452 | 0.477 | ||||||||||||||
0.070 | 2.246 | (4.602 | ) | (0.528 | ) | 1.559 | 0.082 | ||||||||||||
0.282 | 2.672 | (4.177 | ) | (0.040 | ) | 2.011 | 0.559 | ||||||||||||
(0.222 | ) | (0.492 | ) | (0.517 | ) | (0.459 | ) | (0.485 | ) | (0.388 | ) | ||||||||
— | — | (0.336 | ) | (0.061 | ) | (0.066 | ) | (0.081 | ) | ||||||||||
(0.222 | ) | (0.492 | ) | (0.853 | ) | (0.520 | ) | (0.551 | ) | (0.469 | ) | ||||||||
$9.250 | $9.190 | $7.010 | $12.040 | $12.600 | $11.140 | ||||||||||||||
3.03% | 39.68% | (37.04% | ) | (0.46% | ) | 18.72% | 5.16% | ||||||||||||
$9,791 | $2,394 | $2,288 | $5,384 | $2,656 | $941 | ||||||||||||||
1.02% | 0.92% | 0.75% | 0.75% | 0.76% | 0.75% | ||||||||||||||
1.02% | 1.06% | 0.96% | 0.87% | 0.93% | 0.97% | ||||||||||||||
4.50% | 5.47% | 4.17% | 3.85% | 3.89% | 4.30% | ||||||||||||||
4.50% | 5.33% | 3.96% | 3.73% | 3.72% | 4.08% | ||||||||||||||
110% | 69% | 51% | 52% | 51% | 85% |
43
Notes to financial statements | |
Delaware Dividend Income Fund | May 31, 2010 (Unaudited) |
Delaware Group® Equity Funds V (Trust) is organized as a Delaware statutory trust and offers three series: Delaware Dividend Income Fund, Delaware Small Cap Core Fund and Delaware Small Cap Value Fund. These financial statements and the related notes pertain to Delaware Dividend Income Fund (Fund). The Trust is an open-end investment company. The Fund is considered diversified under the Investment Company Act of 1940, as amended, and offers Class A, Class B, Class C, Class R and Institutional Class shares. Class A shares are sold with a maximum front-end sales charge of up to 5.75%. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) of 1% if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class B shares may only be purchased through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares were sold with a CDSC that declined from 4% to zero depending upon the period of time the shares were held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class C shares are sold with a CDSC of 1%, if redeemed during the first twelve months. Class R and Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors.
The investment objective of the Fund is to seek to provide high current income and an investment that has the potential for capital appreciation.
1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and are consistently followed by the Fund.
Security Valuation — Equity securities, except those traded on the Nasdaq Stock Market, Inc. (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange (NYSE) on the valuation date. Securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If on a particular day an equity security does not trade, then the mean between the bid and ask prices will be used. Securities listed on a foreign exchange are valued at the last quoted sales price on the valuation date. Short-term debt securities are valued at market value. U.S. government and agency securities are valued at the mean between the bid and ask prices. Foreign currency exchange contracts are valued at the mean between the bid and ask prices. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available. Other debt securities, credit default swap (CDS) contracts and interest rate swap contracts are valued by an independent pricing service or broker. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. Investment companies are valued at net asset value per share. Generally, index swap contracts and other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Fund’s Board of Trustees (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. The Fund may use fair value pricing
44
more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before the Fund values its securities at 4:00 p.m. Eastern time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, government actions or pronouncements, aftermarket trading, or news events may have occurred in the interim. To account for this, the Fund may frequently value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing).
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 return 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 analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (November 30, 2006 – November 30, 2009), and has concluded that no position for federal income tax is required in the Fund’s financial statements
Class Accounting — Investment income, common expenses and realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Repurchase Agreements — The Fund may invest in a pooled cash account along with other members of the Delaware Investments® Family of Funds pursuant to an exemptive order issued by the Securities and Exchange Commission. The aggregate daily balance of the pooled cash account is invested in repurchase agreements secured by obligations of the U.S. government. The respective collateral is held by the Fund’s custodian bank until the maturity of the respective repurchase agreements. Each repurchase agreement is at least 102% collateralized. However, in the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral may be subject to legal proceedings. At May 31, 2010, the Fund held no investments in repurchase agreements.
Foreign Currency Transactions — Transactions denominated in foreign currencies are recorded at the prevailing exchange rates on the valuation date. The value of all assets and liabilities denominated in foreign currencies is translated into U.S. dollars at the exchange rate of such currencies against the U.S. dollar daily. Transaction gains or losses resulting from changes in exchange rates during the reporting period or upon settlement of the foreign currency transaction are reported in operations for the current period. The Fund isolates that portion of realized gains and losses on investments in debt securities which is due to foreign exchange rates from that which is due to changes in market prices of debt securities. The Fund reports certain foreign currency related transactions as components of realized gains (losses) for financial reporting purposes, whereas such components are treated as ordinary income (loss) for federal income tax purposes.
45
Notes to financial statements
Delaware Dividend Income Fund
Delaware Dividend Income Fund
1. Significant Accounting Policies (continued)
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Other — Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated amongst such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Foreign dividends are also recorded on the ex-dividend date or as soon after the ex-dividend date that the Fund is aware of such dividends, net of all non-rebatable tax withholdings. Withholding taxes on foreign dividends and interest have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates. Discounts and premiums on non-convertible bonds are amortized to interest income over the lives of the respective securities. Distributions received from investments in Real Estate Investment Trusts (REITs) are recorded as dividend income on the ex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer. The Fund declares and pays dividends from net investment income quarterly and distributions from net realized gains on investments, if any, annually.
Subject to seeking best execution, the Fund may direct certain security trades to brokers who have agreed to rebate a portion of the related brokerage commission to the Fund in cash. Such commission rebates are included in realized gain on investments in the accompanying financial statements and totaled $6,186 for the six months ended May 31, 2010. In general, best execution refers to many factors, including the price paid or received for a security, the commission charged, the promptness and reliability of execution, the confidentiality and placement accorded the order, and other factors affecting the overall benefit obtained by the Fund on the transaction.
The Fund may receive earnings credits from its custodian when positive cash balances are maintained, which are used to offset custody fees. There were no earnings credits for the six months ended May 31, 2010.
2. Investment Management, Administration Agreements and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee which is calculated daily at the rate of 0.65% on the first $500 million of average daily net assets of the Fund, 0.60% on the next $500 million, 0.55% on the next $1.5 billion, and 0.50% on average daily net assets in excess of $2.5 billion.
46
Effective March 30, 2010, DMC has contractually agreed to waive that portion, if any, of its management fee and reimburse the Fund to the extent necessary to ensure that total annual operating expenses (excluding any 12b-1 plan and certain other expenses) do not exceed 1.07% of average daily net assets of the Fund through March 30, 2011. Prior to March 30, 2010, DMC had voluntarily agreed to waive that portion, if any, of its management fee and reimburse the Fund to the extent necessary to ensure that total annual operating expenses, (excluding any 12b-1 plan expenses, taxes, interest, inverse floater program expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations (collectively, nonroutine expenses)) did not exceed 1.07% of average daily net assets of the Fund. For purposes of this waiver and reimbursement, nonroutine expenses may also include such additional costs and expenses, as may be agreed upon from time to time by the Fund’s Board and DMC. This expense waiver and reimbursement applies only to expenses paid directly by the Fund.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Fund. For these services, the Fund pays DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments® Family of Funds on a relative net asset value basis. For the six months ended May 31, 2010, the Fund was charged $ 9,849 for these services.
DSC also provides dividend disbursing and transfer agency services. The Fund pays DSC a monthly fee based on the number of shareholder accounts for dividend disbursing and transfer agent services.
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and service fee not to exceed 0.30% of the average daily net assets of the Class A shares, 1.00% of the average daily net assets of the Class B and C shares and 0.60% of the average daily net assets of Class R shares. Institutional Class shares pay no distribution and service expenses. DDLP has contracted to waive distribution and service fees through March 30, 2011 in order to prevent distribution and service fees of Class A and Class R shares from exceeding 0.25% and 0.50%, respectively, of average daily net assets.
At May 31, 2010, the Fund had liabilities payable to affiliates as follows:
Investment management fee payable to DMC | $ | 211,625 | |
Dividend disbursing, transfer agent and fund accounting | |||
oversight fees and other expenses payable to DSC | 33,049 | ||
Distribution fees payable to DDLP | 196,759 | ||
Other expenses payable to DMC and affiliates* | 39,632 |
*DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, fees for audit, legal and tax services, registration fees and trustees’ fees.
47
Notes to financial statements
Delaware Dividend Income Fund
Delaware Dividend Income Fund
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
As provided in the investment management agreement, the Fund bears the cost of certain legal and tax services, including internal legal and tax services provided to the Fund by DMC and/or its affiliates’ employees. For the six months ended May 31, 2010, the Fund was charged $ 3,409 for internal legal and tax services provided by DMC and/or its affiliates’ employees.
For the six months ended May 31, 2010, DDLP earned $35,689 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2010 DDLP received gross CDSC commissions of $-, $25,780 and $3,414 on redemption of the Fund’s Class A, Class B and Class C shares, respectively, and these commissions were entirely used to offset up-front commissions previously paid by DDLP to broker/dealers on sales of those shares.
Trustees’ fees include expenses accrued by the Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, DSC and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Fund.
3. Investments
For the six months ended May 31, 2010, the Fund made purchases of $203,228,177 and sales of $254,323,828 of investment securities other than U.S. government securities and short-term investments. For the six months ended May 31, 2010, the Fund made purchases of $5,252,467 and sales of $5,154,141 of long-term U.S. government securities.
At May 31, 2010, the cost of investments for federal income tax purposes has been estimated since the final tax characteristics cannot be determined until fiscal year end. At May 31, 2010, the cost of investments was $429,780,275. At May 31, 2010, the net unrealized depreciation was $22,704,323 of which $16,564,030 related to unrealized appreciation of investments and $39,268,353 related to unrealized depreciation of investments.
U.S. 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 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 developed 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 below.
Level 1 – inputs are quoted prices in active markets
Level 2 – inputs are observable, directly or indirectly
Level 3 – inputs are unobservable and reflect assumptions on the part of the reporting entity
48
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of May 31, 2010:
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Agency, Asset-Backed & | ||||||||||||||
Mortgage-Backed Securities | $ | — | $ | 769,247 | $ | — | $ | 769,247 | ||||||
Common Stock | 150,478,019 | 3,445,562 | 11 | 153,923,592 | ||||||||||
Corporate Debt | 1,509,202 | 182,371,140 | 1,800,536 | 185,680,878 | ||||||||||
Investment Companies | 7,110,626 | — | — | 7,110,626 | ||||||||||
U.S. Treasury Obligations | 53,398 | — | — | 53,398 | ||||||||||
Short-Term | — | 17,209,127 | — | 17,209,127 | ||||||||||
Securities Lending Collateral | 36,574,206 | 4,009,386 | 31,527 | 40,615,119 | ||||||||||
Other | 705,600 | 1,002,093 | 6,272 | 1,713,965 | ||||||||||
Total | $ | 196,431,051 | $ | 208,806,555 | $ | 1,838,346 | $ | 407,075,952 | ||||||
Foreign Currency | ||||||||||||||
Exchange Contracts | $ | — | $ | (26,927 | ) | $ | — | $ | (26,927 | ) | ||||
Swap Contract | $ | — | $ | (248,890 | ) | $ | — | $ | (248,890 | ) |
The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:
Securities | ||||||||||||||||||||
Corporate | Common | Lending | Total | |||||||||||||||||
Debt | Stock | Collateral | Other | Fund | ||||||||||||||||
Balance as of 11/30/09 | $ | 235,890 | $ | 11 | $ | 31,527 | $ | 228,204 | $ | 495,632 | ||||||||||
Purchases | 1,510,000 | — | — | — | 1,510,000 | |||||||||||||||
Sales | (42 | ) | — | — | (235,095 | ) | (235,137 | ) | ||||||||||||
Net realized loss | — | — | — | (58,665 | ) | (58,665 | ) | |||||||||||||
Net change in unrealized | ||||||||||||||||||||
appreciation/depreciation | 54,688 | — | — | 71,828 | 126,516 | |||||||||||||||
Balance as of 5/31/10 | $ | 1,800,536 | $ | 11 | $ | 31,527 | $ | 6,272 | $ | 1,838,346 | ||||||||||
Net change in unrealized | ||||||||||||||||||||
appreciation/depreciation | ||||||||||||||||||||
from investments still held | ||||||||||||||||||||
as of 5/31/10 | $ | 54,688 | $ | — | $ | — | $ | 13,250 | $ | 67,938 |
In January 2010, the Financial Accounting Standards Board issued an Accounting Standards Update, Improving Disclosures about Fair Value Measurements, which introduces new disclosure requirements and clarifies certain existing disclosure requirements around fair value measurements currently presented above. The new disclosures and clarifications of existing disclosures are generally effective for the Fund’s year ending November 30, 2011 and interim periods therein. Management is evaluating the impact of this update on its current disclosures.
49
Notes to financial statements
Delaware Dividend Income Fund
Delaware Dividend Income Fund
4. Dividend and Distribution Information
Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. Additionally, distributions from net gains on foreign currency transactions and net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the six months ended May 31, 2010 and the year ended November 30, 2009 was as follows:
Six Months | Year | |||
Ended | Ended | |||
5/31/10* | 11/30/09 | |||
Ordinary income | $8,142,185 | $21,152,288 |
*Tax information for the period ended May 31, 2010 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end.
5. Components of Net Assets on a Tax Basis
The components of net assets are estimated since final tax characteristics cannot be determined until fiscal year end. As of May 31, 2010, the estimated components of net assets on a tax basis were as follows:
Shares of beneficial interest | $ | 565,984,594 | ||
Undistributed ordinary income | 2,993,534 | |||
Realized gains 12/1/09 – 5/31/10 | 1,515,492 | |||
Capital loss carryforwards as of 11/30/09* | (169,506,375 | ) | ||
Other temporary differences | (3,840,057 | ) | ||
Unrealized depreciation of investments and foreign currencies | (22,740,025 | ) | ||
Net assets | $ | 374,407,163 |
*The amount of this loss which can be utilized in subsequent years is subject to an annual limitation in accordance with the Internal Revenue Code due to the Fund merger with Lincoln Convertible Securities Fund in 2005.
The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales, tax deferral of market discount and premium on debt instruments, mark-to-market of forward foreign currency contracts, tax treatment of partnership income, CDS contracts and contingent payment debt instruments.
The undistributed earnings for the Fund are estimated pending final notification of the tax character of distributions received from investments in REITs.
For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of gain (loss) on foreign currency transactions, market discount and premium on certain debt instruments and CDS contracts. Results of operations and net assets were not affected by these reclassifications. For the six months ended May 31, 2010, the Fund recorded an estimate of these differences since final tax characteristics cannot be determined until fiscal year end.
Undistributed net investment income | $ | (147,374 | ) | |
Accumulated net realized loss | 147,374 |
50
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at November 30, 2009 will expire as follows: $8,064,444 expires in 2010, $106,372,004 expires in 2016 and 55,069,927 expires in 2017.
For the six months ended May 31, 2010, the Fund had capital gains of $1,515,492, which may reduce the capital loss carryforwards.
6. Capital Shares
Transactions in capital shares were as follows:
Six Months | Year | |||||
Ended | Ended | |||||
5/31/10 | 11/30/09 | |||||
Shares sold: | ||||||
Class A | 1,243,354 | 3,288,030 | ||||
Class B | 14,719 | 80,130 | ||||
Class C | 690,978 | 1,258,467 | ||||
Class R | 47,889 | 84,027 | ||||
Institutional Class | 888,523 | 27,580 | ||||
Shares issued upon reinvestment of dividends and distributions: | ||||||
Class A | 534,091 | 1,243,442 | ||||
Class B | 53,760 | 198,084 | ||||
Class C | 587,021 | 886,298 | ||||
Class R | 11,468 | 18,304 | ||||
Institutional Class | 11,285 | 18,886 | ||||
4,083,088 | 7,103,248 | |||||
Shares repurchased: | ||||||
Class A | (3,707,670 | ) | (8,301,519 | ) | ||
Class B | (432,686 | ) | (1,249,285 | ) | ||
Class C | (2,307,467 | ) | (6,210,822 | ) | ||
Class R | (21,127 | ) | (43,605 | ) | ||
Institutional Class | (102,016 | ) | (112,221 | ) | ||
(6,570,966 | ) | (15,917,452 | ) | |||
Net decrease | (2,487,878 | ) | (8,814,204 | ) |
For the six months ended May 31, 2010 and the year ended November 30, 2009, 45,768 Class B shares were converted to 45,720 Class A shares valued at $436,327 and 156,813 Class B shares were converted to 156,608 Class A shares valued at $1,205,448, respectively. The respective amounts are included in Class B redemptions and Class A subscriptions in the table above and the statements of changes in net assets.
51
Notes to financial statements
Delaware Dividend Income Fund
Delaware Dividend Income Fund
7. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), participates in a $35,000,000 revolving line of credit with The Bank of New York Mellon (BNY Mellon) 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, which is allocated across the Participants on the basis of each Participant’s allocation of the entire facility. The Participants may borrow up to a maximum of one third of their net assets under the agreement. The agreement expires on November 16, 2010. The Fund had no amounts outstanding as of May 31, 2010 or at any time during the period then ended.
8. Derivatives
U.S. GAAP requires enhanced disclosures that enable investors to understand: 1) how and why an entity uses derivatives, 2) how they are accounted for, and 3) how they affect an entity’s results of operations and financial position.
Foreign Currency Exchange Contracts — The Fund may enter into foreign currency exchange contracts as a way of managing foreign exchange rate risk. The Fund may enter into these contracts to fix the U.S. dollar value of a security that it has agreed to buy or sell for the period between the date the trade was entered into and the date the security is delivered and paid for. The Fund may also use these contracts to hedge the U.S. dollar value of securities it already owns that are denominated in foreign currencies. The change in value is recorded as an unrealized gain or loss. When the contract is closed, a realized gain or loss is recorded equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
The use of foreign currency exchange contracts does not eliminate fluctuations in the underlying prices of the securities, but does establish a rate of exchange that can be achieved in the future. Although foreign currency exchange contracts limit the risk of loss due to a decline in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency increase. In addition, the Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts. The Fund’s maximum risk of loss from counterparty credit risk is the value of its currency exchanged with the counterparty. The risk is generally mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.
Swap Contracts — The Fund may enter into interest rate swap contracts, index swap contracts and CDS contracts in the normal course of pursuing its investment objective. The Fund may use interest rate swaps to adjust the Fund’s sensitivity to interest rates or to hedge against changes in interest rates. Index swaps may be used to gain exposure to markets that the Fund invests in, such as the corporate bond market. The Fund may also use index swaps as a substitute for futures or options contracts if such contracts are not directly available to the Fund on favorable terms. The Fund may enter into CDS contracts in order to hedge against a credit event, to enhance total return or to gain exposure to certain securities or markets.
52
Interest Rate Swaps. An interest rate swap contract is an exchange of interest rates between counterparties. In one instance, an interest rate swap involves payments received by the Fund from another party based on a variable or floating interest rate, in return for making payments based on a fixed interest rate. An interest rate swap can also work in reverse with the Fund receiving payments based on a fixed interest rate and making payments based on a variable or floating interest rate. Interest rate swaps may be used to adjust the Fund’s sensitivity to interest rates or to hedge against changes in interest rates. Periodic payments on such contracts are accrued daily and recorded as unrealized appreciation/depreciation on swap contracts. Upon periodic payment/ receipt or termination of the contract, such amounts are recorded as realized gains or losses on swap contracts. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from/paid to the counterparty over the interest rate swap contract’s remaining life, to the extent that the amount is positive. This risk is mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.
Index Swaps. Index swaps involve commitments to pay interest in exchange for a market linked return based on a notional amount. To the extent the total return of the security, instrument or basket of instruments underlying the transaction exceeds the offsetting interest obligation, the Fund will receive a payment from the counterparty. To the extent the total return of the security, instrument or basket of instruments underlying the transaction falls short of the offsetting interest obligation, the Fund will make a payment to the counterparty. The change in value of swap contracts outstanding, if any, is recorded as unrealized appreciation or depreciation daily. A realized gain or loss is recorded on maturity or termination of the swap contract. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from/paid to the counterparty over the index swap contract’s remaining life, to the extent that the amount is positive. This risk is mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.
Credit Default Swaps. A CDS contract is a risk-transfer instrument through which one party (purchaser of protection) transfers to another party (seller of protection) the financial risk of a credit event (as defined in the CDS agreement), as it relates to a particular referenced security or basket of securities (such as an index). In exchange for the protection offered by the seller of protection, the purchaser of protection agrees to pay the seller of protection a periodic amount at a stated rate that is applied to the notional amount of the CDS contract. In addition, an upfront payment may be made or received by the Fund in connection with an unwinding or assignment of a CDS contract. Upon the occurrence of a credit event, the seller of protection would pay the par (or other agreed-upon) value of the referenced security (or basket of securities) to the counterparty. Credit events generally include, among others, bankruptcy, failure to pay, and obligation default.
53
Notes to financial statements
Delaware Dividend Income Fund
Delaware Dividend Income Fund
8. Derivatives (continued)
During the six months ended May 31, 2010, the Fund entered into CDS contracts as a purchaser of protection. Periodic payments on such contracts are accrued daily and recorded as unrealized losses (gains) on swap contracts. Upon payment, such amounts are recorded as realized losses (gains) on swap contracts. Upfront payments made or received in connection with CDS contracts are amortized over the expected life of the CDS contracts as unrealized losses (gains) on swap contracts. The change in value of CDS contracts is recorded as unrealized appreciation or depreciation daily. A realized gain or loss is recorded upon a credit event (as defined in the CDS agreement) or the maturity or termination of the agreement. For the six months ended May 31, 2010, the Fund did not enter into any CDS contracts as a seller of protection. At May 31, 2010, the aggregate unrealized depreciation of credit default swaps was $248,890. If a credit event had occurred for all swap transactions where collateral posting was required as of May 31, 2010, the swaps’ credit-risk-related contingent features would have been triggered and the Fund would have been received $9,000,000 less the value of the contracts’ related reference obligations.
CDS may involve greater risks than if the Fund had invested in the reference obligation directly. CDSs are subject to general market risk, liquidity risk, counterparty risk and credit risk. The Fund’s maximum risk of loss from counterparty credit risk, either as the seller of protection or the buyer of protection, is the fair value of the contract. This risk is mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.
Swaps Generally. Because there is no organized market for swap contracts, the value of open swaps may differ from that which would be realized in the event the Fund terminated its position in the agreement. Risks of entering into these contracts include the potential inability of the counterparty to meet the terms of the contracts. This type of risk is generally limited to the amount of favorable movement in the value of the underlying security, instrument or basket of instruments, if any, at the day of default. Risks also arise from potential losses from adverse market movements and such losses could exceed the unrealized amounts shown on the statement of net assets.
54
Fair values of derivative instruments as of May 31, 2010 were as follows:
Asset Derivatives | Liability Derivatives | ||||||||||||
Statement of Net | Statement of Net | ||||||||||||
Assets Location | Fair Value | Assets Location | Fair Value | ||||||||||
Foreign exchange contracts | |||||||||||||
(Forward currency contracts) | Receivables and other assets net of liabilities | $ | — | Liabilities net of receivables and other assets | $ | (26,927 | ) | ||||||
Credit contracts | |||||||||||||
(Swaps) | Receivables and other assets net of liabilities | — | Liabilities net of receivables and other assets | (248,890 | ) | ||||||||
Total | $ | — | $ | (275,817 | ) |
The effect of derivative instruments on the statements of operations for the six months ended May 31, 2010 was a follows:
Realized Gain | Change in Unrealized | |||||||||||||
or Loss on | Appreciation | |||||||||||||
Derivatives | (Depreciation) | |||||||||||||
Location of Gain or Loss on | Recognized in | on Derivatives | ||||||||||||
Derivatives Recognized in Income | Income | Recognized in Income | ||||||||||||
Foreign exchange contracts | ||||||||||||||
(Forward Currency Contracts) | Net realized loss on foreign currencies/net change in unrealized appreciation/depreciation of investments and foreign currencies | $ | (166,809 | ) | $ | (26,927 | ) | |||||||
Credit contracts | ||||||||||||||
(Swaps) | Net realized loss on swap contracts/net change in unrealized appreciation/depreciation of investments and foreign currencies | (2,297 | ) | (248,890 | ) | |||||||||
Total | $ | (169,106 | ) | $ | (275,817 | ) |
55
Notes to financial statements
Delaware Dividend Income Fund
Delaware Dividend Income Fund
9. Securities Lending
The Fund, along with other funds in the Delaware Investments® Family of Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with BNY Mellon. With respect to each loan, if the aggregate market value of securities collateral held plus cash collateral received on any business day is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral not less than the applicable collateral requirements. Cash collateral received is generally invested in the BNY Mellon Securities Lending Overnight Fund (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of clients participating in its securities lending programs. The Collective Trust may only hold cash and high quality assets with a maturity of one business day or less (Cash/Overnight Assets). The Fund also has cash collateral invested in the BNY Mellon SL DBT II Liquidating Fund (Liquidating Fund), which generally holds the portfolio securities of the Fund’s previous cash collateral pool other than its Cash/Overnight Assets. The Liquidating Fund invests in fixed income securities, with a weighted average maturity not to exceed 90 days, rated in one of the top three tiers by Standard & Poor’s Ratings Group (S&P) or Moody’s Investors Service, Inc. (Moody’s) or repurchase agreements collateralized by such securities. The Fund will not make additional investments of cash collateral in the Liquidating Fund; the Fund’s exposure to the Liquidating Fund is expected to decrease as the Liquidating Fund’s assets mature or are sold. Both the Collective Trust and the Liquidating Fund seek to maintain a net asset value per unit of $1.00, but there can be no assurance that they will always be able to do so. The Fund may incur investment losses as a result of investing securities lending collateral in the Collective Trust and the Liquidating Fund. This could occur if an investment in the Collective Trust or the Liquidating Fund defaulted or if it were necessary to liquidate assets in the Collective Trust or the Liquidating Fund to meet returns on outstanding security loans at a time when their net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the Collective Trust or the Liquidating Fund that is equal in amount to the collateral the Fund would be required to return to the borrower of the securities and the Fund would be required to make up for this shortfall. In October 2008, BNY Mellon transferred certain distressed securities from the Collective Trust into the Mellon GSL Reinvestment Trust II. The Fund can also accept U.S. 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 change 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
56
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.
At May 31, 2010, the value of securities on loan was $40,641,019, for which the Fund received collateral, comprised of non-cash collateral valued at $428,460, and cash collateral of $41,373,274. At May 31, 2010, the value of invested collateral was $40,615,119. Investments purchased with cash collateral are presented on the statement of net assets under the caption “Securities Lending Collateral”.
10. Credit and Market Risk
The Fund invests a portion of its assets in high yield fixed income securities, which carry ratings of BBB or lower by S&P and/or Baa or lower by Moody’s. Investments in these higher yielding securities are generally accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment grade securities.
The Fund invests in REITs and is subject to the risks associated with that industry. If the Fund holds real estate directly as a result of defaults or receives rental income directly from real estate holdings, its tax status as a regulated investment company may be jeopardized. There were no direct real estate holdings during the period ended May 31, 2010. The Fund’s REIT holdings are also affected by interest rate changes, particularly if the REITs it holds use floating rate debt to finance their ongoing operations.
The Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Fund’s Board has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid assets. 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. Rule 144A and illiquid securities have been identified on the statement of net assets.
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.
57
Notes to financial statements
Delaware Dividend Income Fund
Delaware Dividend Income Fund
12. Sale of Delaware Investments to Macquarie Group
On August 18, 2009, Lincoln National Corporation (former parent company of Delaware Investments) and Macquarie Group (Macquarie) entered into an agreement pursuant to which Delaware Investments, including DMC, DDLP and DSC, would be acquired by Macquarie, an Australia-based global provider of banking, financial, advisory, investment and funds management services (Transaction). The Transaction was completed on January 4, 2010. DMC, DDLP and DSC are now wholly owned subsidiaries of Macquarie.
The Transaction resulted in a change of control of DMC which, in turn, caused the termination of the investment management agreement between DMC and the Fund. On January 4, 2010, the new investment management agreement between DMC and the Fund that was approved by the shareholders became effective.
13. Subsequent Events
Management has determined no material events or transactions occurred subsequent to May 31, 2010 that would require recognition or disclosure in the Fund’s financial statements.
58
Other Fund information
(Unaudited)
Delaware Dividend Income Fund
(Unaudited)
Delaware Dividend Income Fund
Proxy Results
At Joint Special Meetings of Shareholders of Delaware Group® Equity Funds V (the “Trust”), on behalf of Delaware Dividend Income Fund (the “Fund”), held on November 12, 2009 and reconvened on December 4, 2009 and March 16, 2010, the shareholders of the Fund voted to (i) elect a Board of Trustees for the Trust; and to (ii) approve a new investment advisory agreement between the Trust, on behalf of the Fund, and Delaware Management Company. At the meeting, the following people were elected to serve as Independent Trustees: Thomas L. Bennett, John A. Fry, Anthony D. Knerr, Lucinda S. Landreth, Ann R. Leven, Thomas F. Madison, Janet L. Yeomans, and J. Richard Zecher. In addition, Patrick P. Coyne was elected to serve as an Interested Trustee.
The following proposals were submitted for a vote of the shareholders:
1. To elect a Board of Trustees for the Trust.
% of | % of | % of | % of | |||||||||
Outstanding | Shares | Outstanding | Shares | |||||||||
Shares Voted For | Shares | Voted | Shares Withheld | Shares | Voted | |||||||
Thomas L. Bennett | 37,264,611.899 | 58.255 | 96.440 | 1,374,076.546 | 2.149 | 3.556 | ||||||
Patrick P. Coyne | 37,249,306.218 | 58.232 | 96.404 | 1,389,382.227 | 2.172 | 3.596 | ||||||
John A. Fry | 37,265,698.875 | 58.257 | 96.477 | 1,372,989.570 | 2.147 | 3.553 | ||||||
Anthony D. Knerr | 37,079,372.299 | 57.966 | 95.964 | 1,559,316.146 | 2.438 | 4.036 | ||||||
Lucinda S. Landreth | 37,235,460.590 | 58.210 | 96.368 | 1,403,227.855 | 2.194 | 3.632 | ||||||
Ann R. Leven | 37,233,331.862 | 58.207 | 96.363 | 1,405,356.583 | 2.197 | 3.637 | ||||||
Thomas F. Madison | 37,245,056.953 | 58.225 | 96.393 | 1,393,631.492 | 2.179 | 3.607 | ||||||
Janet L. Yeomans | 37,245,703.155 | 58.226 | 96.395 | 1,392,985.290 | 2.178 | 3.605 | ||||||
J. Richard Zecher | 37,083,400.494 | 57.972 | 95.975 | 1,555,287.951 | 2.432 | 4.025 |
2. | To approve a new investment advisory agreement between each Trust, on behalf of the respective Fund, and Delaware Management Company. |
Delaware Dividend Income Fund | |||
Shares Voted For | 16,983,605.534 | ||
Percentage of Outstanding Shares | 38.360% | ||
Percentage of Shares Voted | 67.214% | ||
Shares Voted Against | 536,958.680 | ||
Percentage of Outstanding Shares | 1.213% | ||
Percentage of Shares Voted | 2.125% | ||
Shares Abstained | 666,309.249 | ||
Percentage of Outstanding Shares | 1.505% | ||
Percentage of Shares Voted | 2.637% | ||
Broker Non-Votes | 7,081,161.133 |
59
Other Fund information
(Unaudited)
Delaware Dividend Income Fund
(Unaudited)
Delaware Dividend Income Fund
Change in Independent Registered Public Accounting Firm
Due to independence matters under the Securities and Exchange Commission’s auditor independence rules relating to the January 4, 2010 acquisition of Delaware Investments (including DMC, DDLP and DSC) by Macquarie Group, Ernst & Young LLP (“E&Y”) has resigned as the independent registered public accounting firm for Delaware Group® Equity Funds V (the “Fund”) effective May 20, 2010. At a meeting held on May 20, 2010, the Board of Trustees of the Fund, upon recommendation of the Audit Committee, selected PricewaterhouseCoopers LLC (“PwC”) to serve as the independent registered public accounting firm for the Fund for the fiscal year ending November 30, 2010. During the fiscal years ended November 30, 2008 and November 30, 2009, E&Y’s audit reports on the financial statements of the Fund did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. In addition, there were no disagreements between the Fund and E&Y on accounting principles, financial statements disclosures or audit scope, which, if not resolved to the satisfaction of E&Y, would have caused them to make reference to the disagreement in their reports. Neither the Fund nor anyone on its behalf has consulted with PwC at any time prior to their selection with respect to the application of accounting principles to a specified transaction, either completed or proposed or the type of audit opinion that might be rendered on the Fund’s financial statements.
60
About the organization
Board of trustees | |||
Patrick P. Coyne Chairman, President, and Chief Executive Officer Delaware Investments® Family of Funds Philadelphia, PA Thomas L. Bennett Private Investor Rosemont, PA John A. Fry President Franklin & Marshall College Lancaster, PA | Anthony D. Knerr Founder and Managing Director Anthony Knerr & Associates New York, NY Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. Philadelphia, PA | Ann R. Leven Consultant ARL Associates New York, NY Thomas F. Madison President and Chief Executive Officer MLM Partners, Inc. Minneapolis, MN | Janet L. Yeomans Vice President and Treasurer 3M Corporation St. Paul, MN J. Richard Zecher Founder Investor Analytics Scottsdale, AZ |
Affiliated officers | |||
David F. Connor Vice President, Deputy General Counsel, and Secretary Delaware Investments Family of Funds Philadelphia, PA | Daniel V. Geatens Vice President and Treasurer Delaware Investments Family of Funds Philadelphia, PA | David P. O’Connor Senior Vice President, General Counsel, and Chief Legal Officer Delaware Investments Family of Funds Philadelphia, PA | Richard Salus Senior Vice President and Chief Financial Officer Delaware Investments Family of Funds Philadelphia, PA |
This semiannual report is for the information of Delaware Dividend Income Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Dividend Income Fund and the Delaware Investments Fund fact sheet for the most recently completed calendar quarter. These documents are available at www.delawareinvestments.com. The prospectus sets forth details about charges, expenses, investment objectives, and operating policies of the investment company. You should read the prospectus carefully before you invest. The figures in this report represent past results that are not a guarantee of future results. The return and principal value of an investment in the investment company will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. |
Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q, as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 800 523-1918; and (ii) on the SEC’s Web site at www.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 Fund’s Schedule of Investments are available without charge on the Fund’s Web site at www.delawareinvestments.com. The Fund’s Forms N-Q 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 Web site at www.delawareinvestments.com; and (ii) on the SEC’s Web site at www.sec.gov. |
![](https://capedge.com/proxy/N-CSR/0001206774-10-001807/del_topimg02.jpg)
Semiannual report Delaware Small Cap Value Fund May 31, 2010 Value equity mutual fund |
This semiannual report is for the information of Delaware Small Cap Value Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Small Cap Value Fund. The figures in the semiannual report for Delaware Small Cap Value Fund represent past results, which are not a guarantee of future results. The return and principal value of an investment in the Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. You should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The Delaware Small Cap Value Fund prospectus contains this and other important information about the Fund. Prospectuses for all open-end funds in the Delaware Investments® Family of Funds are available from your financial advisor, online at www.delawareinvestments.com, or by phone at 800 523-1918. Please read the prospectus carefully before you invest or send money. |
You can obtain shareholder reports and prospectuses online instead of in the mail. Visit www.delawareinvestments.com/edelivery. |
Experience Delaware Investments
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Investments or obtain a prospectus for Delaware Small Cap Value Fund at www.delawareinvestments.com.
Manage your investments online |
|
On January 4, 2010, Delaware Management Holdings, Inc., and its subsidiaries (collectively known by the marketing name of Delaware Investments) were sold by a subsidiary of Lincoln National Corporation to Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services. Please see your Fund’s prospectus and any supplements thereto for more complete information.
Investments in Delaware Small Cap Value Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Table of contents | |
Disclosure of Fund expenses | 1 |
Sector allocation and top 10 holdings | 3 |
Statement of net assets | 4 |
Statement of operations | 10 |
Statements of changes in net assets | 12 |
Financial highlights | 14 |
Notes to financial statements | 24 |
Other Fund information | 34 |
About the organization | 36 |
Unless otherwise noted, views expressed herein are current as of May 31, 2010, and are subject to change.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Fund’s distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
© 2010 Delaware Management Holdings, Inc.
All third-party trademarks cited are the property of their respective owners.
Disclosure of Fund expenses
For the period December 1, 2009 to May 31, 2010
For the period December 1, 2009 to May 31, 2010
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from December 1, 2009 to May 31, 2010.
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 reflect fee waivers in effect. The expenses shown in the table assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
Delaware Small Cap Value Fund
Expense analysis of an investment of $1,000
Expense analysis of an investment of $1,000
Beginning | Ending | Expenses | ||||||||||
Account Value | Account Value | Annualized | Paid During Period | |||||||||
12/1/09 | 5/31/10 | Expense Ratio | 12/1/09 to 5/31/10* | |||||||||
Actual Fund return | ||||||||||||
Class A | $ | 1,000.00 | $ | 1,161.20 | 1.45% | $ | 7.81 | |||||
Class B | 1,000.00 | 1,157.10 | 2.20% | 11.83 | ||||||||
Class C | 1,000.00 | 1,157.20 | 2.20% | 11.83 | ||||||||
Class R | 1,000.00 | 1,159.60 | 1.70% | 9.15 | ||||||||
Institutional Class | 1,000.00 | 1,162.80 | 1.20% | 6.47 | ||||||||
Hypothetical 5% return (5% return before expenses) | ||||||||||||
Class A | $ | 1,000.00 | $ | 1,017.70 | 1.45% | $ | 7.29 | |||||
Class B | 1,000.00 | 1,013.96 | 2.20% | 11.05 | ||||||||
Class C | 1,000.00 | 1,013.96 | 2.20% | 11.05 | ||||||||
Class R | 1,000.00 | 1,016.45 | 1.70% | 8.55 | ||||||||
Institutional Class | 1,000.00 | 1,018.95 | 1.20% | 6.04 |
*“Expenses Paid During Period” are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
2
Sector allocation and top 10 holdings | |
Delaware Small Cap Value Fund | As of May 31, 2010 |
Sector designations may be different than the sector designations presented in other Fund materials. The sector designations may represent the investment manager’s internal sector classifications, which may result in the sector designations for one fund being different than another fund’s sector designations.
Sector | Percentage of net assets | |
Common Stock | 97.95 | % |
Basic Industry | 11.25 | % |
Business Services | 1.79 | % |
Capital Spending | 9.64 | % |
Consumer Cyclical | 2.06 | % |
Consumer Services | 13.13 | % |
Consumer Staples | 4.22 | % |
Energy | 7.50 | % |
Financial Services | 21.99 | % |
Health Care | 4.69 | % |
Real Estate | 3.88 | % |
Technology | 12.23 | % |
Transportation | 3.12 | % |
Utilities | 2.45 | % |
Discount Note | 2.28 | % |
Securities Lending Collateral | 17.23 | % |
Total Value of Securities | 117.46 | % |
Obligation to Return Securities Lending Collateral | (17.34 | %) |
Liabilities Net of Receivables and Other Assets | (0.12 | %) |
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 holdings | Percentage of net assets | |
Whiting Petroleum | 2.88 | % |
Cirrus Logic | 2.63 | % |
Platinum Underwriters Holdings | 2.31 | % |
Del Monte Foods | 2.25 | % |
FMC | 2.23 | % |
Walter Energy | 2.22 | % |
Newfield Exploration | 2.20 | % |
Albemarle | 2.20 | % |
Cytec Industries | 2.01 | % |
East West Bancorp | 1.89 | % |
3
Statement of net assets | |
Delaware Small Cap Value Fund | May 31, 2010 (Unaudited) |
Number of shares | Value | ||||||
Common Stock – 97.95% | |||||||
Basic Industry – 11.25% | |||||||
* | Albemarle | 181,700 | $ | 7,824,002 | |||
† | Crown Holdings | 223,900 | 5,263,889 | ||||
Cytec Industries | 167,400 | 7,153,002 | |||||
* | FMC | 131,100 | 7,938,121 | ||||
Glatfelter | 135,000 | 1,566,000 | |||||
* | Kaiser Aluminum | 59,200 | 2,215,856 | ||||
† | Thompson Creek Metals | 273,000 | 2,689,050 | ||||
Valspar | 173,300 | 5,436,421 | |||||
40,086,341 | |||||||
Business Services – 1.79% | |||||||
Brink’s | 101,500 | 2,301,005 | |||||
† | United Stationers | 52,359 | 3,058,813 | ||||
Viad | 43,800 | 1,014,408 | |||||
6,374,226 | |||||||
Capital Spending – 9.64% | |||||||
* | Actuant Class A | 225,000 | 4,549,500 | ||||
† | Altra Holdings | 116,800 | 1,457,664 | ||||
† | Chicago Bridge & Iron | 180,700 | 3,590,509 | ||||
* | Gardner Denver | 126,300 | 5,751,702 | ||||
@ | Insteel Industries | 135,600 | 1,719,408 | ||||
* | Mueller Water Products Class A | 371,788 | 1,609,842 | ||||
* | Regal Beloit | 87,400 | 5,269,346 | ||||
* | Wabtec | 57,000 | 2,470,950 | ||||
* | Walter Energy | 99,700 | 7,909,201 | ||||
34,328,122 | |||||||
Consumer Cyclical – 2.06% | |||||||
*† | Autoliv | 46,700 | 2,218,250 | ||||
Knoll | 34,500 | 510,255 | |||||
* | MDC Holdings | 147,300 | 4,622,274 | ||||
7,350,779 | |||||||
Consumer Services – 13.13% | |||||||
bebe Stores | 152,700 | 1,045,995 | |||||
* | Brinker International | 123,900 | 2,202,942 | ||||
Cato Class A | 155,300 | 3,685,269 | |||||
*† | CEC Entertainment | 82,900 | 3,352,476 | ||||
† | Children’s Place Retail Stores | 78,000 | 3,676,140 | ||||
† | Collective Brands | 99,500 | 2,226,810 |
4
Number of shares | Value | ||||||
Common Stock (continued) | |||||||
Consumer Services (continued) | |||||||
Finish Line Class A | 138,400 | $ | 2,304,360 | ||||
† | Genesco | 120,400 | 3,746,848 | ||||
*† | Jack in the Box | 146,700 | 3,291,948 | ||||
Men’s Wearhouse | 124,600 | 2,708,804 | |||||
* | Meredith | 118,200 | 3,970,338 | ||||
*† | Movado Group | 155,500 | 1,909,540 | ||||
PETsMART | 126,800 | 4,027,168 | |||||
Stage Stores | 195,700 | 2,773,069 | |||||
† | Warnaco Group | 82,800 | 3,526,452 | ||||
* | Wolverine World Wide | 81,550 | 2,340,485 | ||||
46,788,644 | |||||||
Consumer Staples – 4.22% | |||||||
* | Del Monte Foods | 549,700 | 8,014,626 | ||||
Herbalife | 106,200 | 4,803,426 | |||||
* | Schweitzer-Mauduit International | 39,800 | 2,196,960 | ||||
15,015,012 | |||||||
Energy – 7.50% | |||||||
*† | Forest Oil | 130,700 | 3,481,848 | ||||
*† | Newfield Exploration | 150,600 | 7,840,236 | ||||
* | Southwest Gas | 172,900 | 5,121,298 | ||||
† | Whiting Petroleum | 122,600 | 10,262,846 | ||||
26,706,228 | |||||||
Financial Services – 21.99% | |||||||
Bank of Hawaii | 126,100 | 6,056,583 | |||||
Berkley (W.R.) | 101,900 | 2,777,794 | |||||
Boston Private Financial Holdings | 304,900 | 2,231,868 | |||||
Community Bank System | 135,000 | 3,084,750 | |||||
CVB Financial | 138,000 | 1,370,340 | |||||
East West Bancorp | 396,023 | 6,732,391 | |||||
First Financial Bancorp | 163,100 | 2,592,475 | |||||
First Midwest Bancorp | 161,700 | 2,242,779 | |||||
Hancock Holding | 134,900 | 5,157,227 | |||||
@ | Harleysville Group | 159,400 | 5,201,222 | ||||
@ | Independent Bank | 167,600 | 4,059,272 | ||||
@ | Infinity Property & Casualty | 131,500 | 6,154,200 | ||||
@ | NBT Bancorp | 229,900 | 5,046,305 | ||||
Platinum Underwriters Holdings | 223,300 | 8,219,672 |
5
Statement of net assets
Delaware Small Cap Value Fund
Delaware Small Cap Value Fund
Number of shares | Value | ||||
Common Stock (continued) | |||||
Financial Services (continued) | |||||
S&T Bancorp | 76,300 | $ | 1,645,791 | ||
@ | Selective Insurance Group | 343,000 | 5,350,800 | ||
* | StanCorp Financial Group | 54,500 | 2,332,055 | ||
Sterling Bancshares | 569,100 | 3,044,685 | |||
Univest Corporation of Pennsylvania | 30,100 | 579,726 | |||
Validus Holdings | 112,384 | 2,760,151 | |||
@ | Wesbanco | 88,700 | 1,669,334 | ||
78,309,420 | |||||
Health Care – 4.69% | |||||
*† | Alliance HealthCare Services | 179,100 | 995,796 | ||
* | Cooper | 77,800 | 2,867,708 | ||
* | Owens & Minor | 105,000 | 3,136,350 | ||
* | Service Corporation International | 575,400 | 4,913,916 | ||
* | Universal Health Services Class B | 113,200 | 4,797,416 | ||
16,711,186 | |||||
Real Estate – 3.88% | |||||
* | Brandywine Realty Trust | 252,937 | 2,931,540 | ||
* | Education Realty Trust | 203,400 | 1,293,624 | ||
* | Government Properties Income Trust | 89,800 | 2,390,476 | ||
Highwoods Properties | 111,300 | 3,278,898 | |||
Washington Real Estate Investment Trust | 134,100 | 3,939,858 | |||
13,834,396 | |||||
Technology – 12.23% | |||||
† | Brocade Communications Systems | 282,100 | 1,537,445 | ||
*† | Checkpoint Systems | 166,600 | 3,317,006 | ||
*† | Cirrus Logic | 659,500 | 9,374,793 | ||
*† | Compuware | 399,600 | 3,272,724 | ||
*† | Electronics for Imaging | 152,300 | 1,696,622 | ||
*† | ON Semiconductor | 287,000 | 2,097,970 | ||
*† | Parametric Technology | 302,500 | 4,985,200 | ||
@† | Premiere Global Services | 291,850 | 2,328,963 | ||
*@ | QAD | 218,000 | 1,044,220 | ||
*† | Synopsys | 291,500 | 6,243,930 | ||
*† | Tech Data | 80,800 | 3,284,520 | ||
*† | Vishay Intertechnology | 483,000 | 4,371,150 | ||
43,554,543 |
6
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Transportation – 3.12% | ||||||
* | Alexander & Baldwin | 168,700 | $ | 5,430,453 | ||
*† | Kirby | 101,100 | 3,986,373 | |||
† | Saia | 113,800 | 1,703,586 | |||
11,120,412 | ||||||
Utilities – 2.45% | ||||||
* | Black Hills | 75,200 | 2,157,488 | |||
† | El Paso Electric | 259,000 | 5,133,380 | |||
* | Otter Tail | 72,500 | 1,434,775 | |||
8,725,643 | ||||||
Total Common Stock (cost $291,502,849) | 348,904,952 | |||||
Principal amount | ||||||
≠Discount Note – 2.28% | ||||||
Federal Home Loan Bank 0.06% 6/1/10 | $8,113,060 | 8,113,060 | ||||
Total Discount Note (cost $8,113,060) | 8,113,060 | |||||
Total Value of Securities Before Securities | ||||||
Lending Collateral – 100.23% (cost $299,615,909) | 357,018,012 | |||||
Number of shares | ||||||
Securities Lending Collateral** – 17.23% | ||||||
Mellon GSL DBT II Collateral Fund | 58,483,901 | 58,483,901 | ||||
BNY Mellon SL DBT II Liquidating Fund | 2,892,659 | 2,858,526 | ||||
@† | Mellon GSL Reinvestment Trust II | 392,139 | 16,666 | |||
Total Securities Lending Collateral (cost $61,768,699) | 61,359,093 | |||||
Total Value of Securities – 117.46% | ||||||
(cost $361,384,608) | 418,377,105 | © | ||||
Obligation to Return Securities | ||||||
Lending Collateral** – (17.34%) | (61,768,699 | ) | ||||
Liabilities Net of Receivables and | ||||||
Other Assets – (0.12%) | (428,203 | ) | ||||
Net Assets Applicable to 11,374,063 | ||||||
Shares Outstanding – 100.00% | $ | 356,180,203 |
7
Statement of net assets
Delaware Small Cap Value Fund
Delaware Small Cap Value Fund
Net Asset Value – Delaware Small Cap Value Fund | ||||
Class A ($252,281,311 / 7,897,102 Shares) | $31.95 | |||
Net Asset Value – Delaware Small Cap Value Fund | ||||
Class B ($16,413,160 / 577,354 Shares) | $28.43 | |||
Net Asset Value – Delaware Small Cap Value Fund | ||||
Class C ($45,666,113 / 1,607,101 Shares) | $28.42 | |||
Net Asset Value – Delaware Small Cap Value Fund | ||||
Class R ($18,243,987 / 581,249 Shares) | $31.39 | |||
Net Asset Value – Delaware Small Cap Value Fund | ||||
Institutional Class ($23,575,632 / 711,257 Shares) | $33.15 | |||
Components of Net Assets at May 31, 2010: | ||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 300,416,618 | ||
Accumulated net realized loss on investments | (1,228,912 | ) | ||
Net unrealized appreciation of investments | 56,992,497 | |||
Total net assets | $ | 356,180,203 |
@ | Illiquid security. At May 31, 2010, the aggregate amount of illiquid securities was $32,590,390, which represented 9.15% of the Fund’s net assets. See Note 9 in “Notes to financial statements.” |
* | Fully or partially on loan. |
** | See Note 8 in “Notes to financial statements.” |
© | Includes $59,677,150 of securities loaned. |
† | Non income producing security. |
≠ | The rate shown is the effective yield at the time of purchase. |
8
Net Asset Value and Offering Price Per Share – | ||
Delaware Small Cap Value Fund | ||
Net asset value Class A (A) | $ | 31.95 |
Sales charge (5.75% of offering price) (B) | 1.95 | |
Offering Price | $ | 33.90 |
(A) | Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares. |
(B) | See the current prospectus for purchases of $50,000 or more. |
See accompanying notes
9
Statement of operations | |
Delaware Small Cap Value Fund | Six Months Ended May 31, 2010 (Unaudited) |
Investment Income: | |||||||
Dividends | $ | 2,343,274 | |||||
Interest | 1,687 | ||||||
Securities lending income | 28,859 | $ | 2,373,820 | ||||
Expenses: | |||||||
Management fees | 1,329,955 | ||||||
Distribution expenses – Class A | 381,667 | ||||||
Distribution expenses – Class B | 86,203 | ||||||
Distribution expenses – Class C | 235,338 | ||||||
Distribution expenses – Class R | 53,036 | ||||||
Dividend disbursing and transfer agent fees and expenses | 620,145 | ||||||
Accounting and administration expenses | 70,521 | ||||||
Registration fees | 37,576 | ||||||
Reports and statements to shareholders | 34,381 | ||||||
Legal fees | 20,155 | ||||||
Dues and services | 15,654 | ||||||
Audit and tax | 14,615 | ||||||
Trustees’ fees | 11,580 | ||||||
Insurance fees | 6,074 | ||||||
Custodian fees | 3,027 | ||||||
Consulting fees | 1,724 | ||||||
Pricing fees | 1,519 | ||||||
Trustees’ expenses | 950 | 2,924,120 | |||||
Less fees waived | (45,610 | ) | |||||
Less waived distribution expenses – Class A | (63,755 | ) | |||||
Less waived distribution expenses – Class R | (8,834 | ) | |||||
Total operating expenses | 2,805,921 | ||||||
Net Investment Loss | (432,101 | ) | |||||
Net Realized and Unrealized Gain on Investments: | |||||||
Net realized gain on Investments | 13,495,913 | ||||||
Net change in unrealized appreciation/depreciation of investments | 37,888,983 | ||||||
Net Realized and Unrealized Gain on Investments | 51,384,896 | ||||||
Net Increase in Net Assets Resulting from Operations | $ | 50,952,795 |
See accompanying notes
10
Statements of changes in net assets
Delaware Small Cap Value Fund
Delaware Small Cap Value Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
5/31/10 | 11/30/09 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income (loss) | $ | (432,101 | ) | $ | 337,317 | |||
Net realized gain (loss) on investments | 13,495,913 | (14,057,488 | ) | |||||
Net change in unrealized | ||||||||
appreciation/depreciation of investments | 37,888,983 | 89,703,069 | ||||||
Net increase in net assets resulting from operations | 50,952,795 | 75,982,898 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (143,912 | ) | (565,105 | ) | ||||
Institutional Class | (42,552 | ) | (83,885 | ) | ||||
(186,464 | ) | (648,990 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 23,828,853 | 33,966,564 | ||||||
Class B | 165,159 | 312,567 | ||||||
Class C | 1,976,884 | 3,420,315 | ||||||
Class R | 3,995,729 | 5,800,215 | ||||||
Institutional Class | 12,594,997 | 5,657,163 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 135,343 | 531,579 | ||||||
Institutional Class | 42,441 | 83,443 | ||||||
42,739,406 | 49,771,846 |
12
Six Months | Year | ||||||
Ended | Ended | ||||||
5/31/10 | 11/30/09 | ||||||
(Unaudited) | |||||||
Capital Share Transactions (continued): | |||||||
Cost of shares repurchased: | |||||||
Class A | $ | (41,788,463 | ) | $ | (61,137,820 | ) | |
Class B | (3,883,540 | ) | (8,925,026 | ) | |||
Class C | (7,717,713 | ) | (13,209,767 | ) | |||
Class R | (4,206,605 | ) | (6,254,696 | ) | |||
Institutional Class | (7,025,664 | ) | (6,566,062 | ) | |||
(64,621,985 | ) | (96,093,371 | ) | ||||
Decrease in net assets derived from capital share transactions | (21,882,579 | ) | (46,321,525 | ) | |||
Net Increase in Net Assets | 28,883,752 | 29,012,383 | |||||
Net Assets: | |||||||
Beginning of period | 327,296,451 | 298,284,068 | |||||
End of period (including undistributed net investment | |||||||
income of $- and $147,155, respectively) | $ | 356,180,203 | $ | 327,296,451 |
See accompanying notes
13
Financial highlights
Delaware Small Cap Value Fund Class A
Delaware Small Cap 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 income (loss)2 |
Net realized and unrealized gain (loss) on investments and foreign currencies |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain on investments |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income (loss) to average net assets |
Ratio of net investment income (loss) to average net assets |
prior to fees waived and expense paid indirectly |
Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during some of the periods shown reflects waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect. |
See accompanying notes
14
Six Months Ended | Year Ended | ||||||||||||||||||
5/31/101 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | 11/30/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$27.530 | $21.340 | $36.000 | $41.970 | $39.110 | $39.640 | ||||||||||||||
(0.017 | ) | 0.059 | 0.072 | (0.050 | ) | (0.047 | ) | (0.075 | ) | ||||||||||
4.454 | 6.191 | (11.314 | ) | (2.647 | ) | 5.960 | 4.170 | ||||||||||||
4.437 | 6.250 | (11.242 | ) | (2.697 | ) | 5.913 | 4.095 | ||||||||||||
(0.017 | ) | (0.060 | ) | — | — | — | — | ||||||||||||
— | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | (4.625 | ) | ||||||||||
(0.017 | ) | (0.060 | ) | (3.418 | ) | (3.273 | ) | (3.053 | ) | (4.625 | ) | ||||||||
$31.950 | $27.530 | $21.340 | $36.000 | $41.970 | $39.110 | ||||||||||||||
16.12% | 29.01% | (34.55% | ) | (6.90% | ) | 16.26% | 11.42% | ||||||||||||
$252,281 | $233,317 | $205,439 | $389,129 | $493,193 | $409,567 | ||||||||||||||
1.45% | 1.43% | 1.44% | 1.37% | 1.41% | 1.44% | ||||||||||||||
1.52% | 1.62% | 1.52% | 1.42% | 1.44% | 1.44% | ||||||||||||||
(0.11% | ) | 0.27% | 0.25% | (0.12% | ) | (0.12% | ) | (0.20% | ) | ||||||||||
(0.18% | ) | 0.08% | 0.17% | (0.17% | ) | (0.15% | ) | (0.20% | ) | ||||||||||
5% | 19% | 13% | 23% | 36% | 33% |
15
Financial highlights
Delaware Small Cap Value Fund Class B
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 loss2 |
Net realized and unrealized gain (loss) on investments and foreign currencies |
Total from investment operations |
Less dividends and distributions from: |
Net realized gain on investments |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment loss to average net assets |
Ratio of net investment loss to average net assets |
prior to fees waived and expense paid indirectly |
Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
16
Six Months Ended | Year Ended | ||||||||||||||||||
5/31/101 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | 11/30/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$24.570 | $19.130 | $32.860 | $38.860 | $36.690 | $37.690 | ||||||||||||||
(0.115 | ) | (0.088 | ) | (0.127 | ) | (0.314 | ) | (0.306 | ) | (0.311 | ) | ||||||||
3.975 | 5.528 | (10.185 | ) | (2.413 | ) | 5.529 | 3.936 | ||||||||||||
3.860 | 5.440 | (10.312 | ) | (2.727 | ) | 5.223 | 3.625 | ||||||||||||
— | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | (4.625 | ) | ||||||||||
— | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | (4.625 | ) | ||||||||||
$28.430 | $24.570 | $19.130 | $32.860 | $38.860 | $36.690 | ||||||||||||||
15.71% | 28.44% | (35.08% | ) | (7.59% | ) | 15.38% | 10.68% | ||||||||||||
$16,413 | $17,532 | $21,825 | $54,684 | $94,495 | $110,684 | ||||||||||||||
2.20% | 2.18% | 2.19% | 2.12% | 2.14% | 2.14% | ||||||||||||||
2.22% | 2.32% | 2.22% | 2.12% | 2.14% | 2.14% | ||||||||||||||
(0.86% | ) | (0.48% | ) | (0.50% | ) | (0.87% | ) | (0.85% | ) | (0.90% | ) | ||||||||
(0.88% | ) | (0.62% | ) | (0.53% | ) | (0.87% | ) | (0.85% | ) | (0.90% | ) | ||||||||
5% | 19% | 13% | 23% | 36% | 33% |
17
Financial highlights
Delaware Small Cap Value Fund Class C
Delaware Small Cap 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 loss2 |
Net realized and unrealized gain (loss) on investments and foreign currencies |
Total from investment operations |
Less dividends and distributions from: |
Net realized gain on investments |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment loss to average net assets |
Ratio of net investment loss to average net assets |
prior to fees waived and expense paid indirectly |
Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
18
Six Months Ended | Year Ended | ||||||||||||||||||
5/31/101 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | 11/30/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$24.560 | $19.120 | $32.850 | $38.840 | $36.670 | $37.680 | ||||||||||||||
(0.116 | ) | (0.090 | ) | (0.126 | ) | (0.314 | ) | (0.306 | ) | (0.313 | ) | ||||||||
3.976 | 5.530 | (10.186 | ) | (2.403 | ) | 5.529 | 3.928 | ||||||||||||
3.860 | 5.440 | (10.312 | ) | (2.717 | ) | 5.223 | 3.615 | ||||||||||||
— | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | (4.625 | ) | ||||||||||
— | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | (4.625 | ) | ||||||||||
$28.420 | $24.560 | $19.120 | $32.850 | $38.840 | $36.670 | ||||||||||||||
15.72% | 28.45% | (35.05% | ) | (7.56% | ) | 15.39% | 10.65% | ||||||||||||
$45,666 | $44,564 | $44,339 | $97,428 | $145,385 | $119,968 | ||||||||||||||
2.20% | 2.18% | 2.19% | 2.12% | 2.14% | 2.14% | ||||||||||||||
2.22% | 2.32% | 2.22% | 2.12% | 2.14% | 2.14% | ||||||||||||||
(0.86% | ) | (0.48% | ) | (0.50% | ) | (0.87% | ) | (0.85% | ) | (0.90% | ) | ||||||||
(0.88% | ) | (0.62% | ) | (0.53% | ) | (0.87% | ) | (0.85% | ) | (0.90% | ) | ||||||||
5% | 19% | 13% | 23% | 36% | 33% |
19
Financial highlights
Delaware Small Cap Value Fund Class R
Delaware Small Cap 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 income (loss)2 |
Net realized and unrealized gain (loss) on investments and foreign currencies |
Total from investment operations |
Less dividends and distributions from: |
Net realized gain on investments |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income (loss) to average net assets |
Ratio of net investment loss to average net assets |
prior to fees waived and expense paid indirectly |
Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect. |
See accompanying notes
20
Six Months Ended | Year Ended | ||||||||||||||||||
5/31/101 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | 11/30/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$27.070 | $20.970 | $35.530 | $41.550 | $38.840 | $39.480 | ||||||||||||||
(0.055 | ) | 0.003 | (0.002 | ) | (0.146 | ) | (0.138 | ) | (0.169 | ) | |||||||||
4.375 | 6.097 | (11.140 | ) | (2.601 | ) | 5.901 | 4.154 | ||||||||||||
4.320 | 6.100 | (11.142 | ) | (2.747 | ) | 5.763 | 3.985 | ||||||||||||
— | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | (4.625 | ) | ||||||||||
— | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | (4.625 | ) | ||||||||||
$31.390 | $27.070 | $20.970 | $35.530 | $41.550 | $38.840 | ||||||||||||||
15.96% | 29.09% | (34.74% | ) | (7.11% | ) | 15.97% | 11.15% | ||||||||||||
$18,244 | $15,971 | $12,761 | $21,126 | $20,564 | $10,574 | ||||||||||||||
1.70% | 1.68% | 1.69% | 1.62% | 1.64% | 1.70% | ||||||||||||||
1.82% | 1.92% | 1.82% | 1.72% | 1.74% | 1.74% | ||||||||||||||
(0.36% | ) | 0.02% | — | (0.37% | ) | (0.35% | ) | (0.46% | ) | ||||||||||
(0.48% | ) | (0.22% | ) | (0.13% | ) | (0.47% | ) | (0.45% | ) | (0.50% | ) | ||||||||
5% | 19% | 13% | 23% | 36% | 33% |
21
Financial highlights
Delaware Small Cap Value Fund Institutional Class
Delaware Small Cap 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 income2 |
Net realized and unrealized gain (loss) on investments and foreign currencies |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain on investments |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived and expense paid indirectly |
Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
22
Six Months Ended | Year Ended | ||||||||||||||||||
5/31/101 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | 11/30/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$28.580 | $22.170 | $37.190 | $43.140 | $40.020 | $40.350 | ||||||||||||||
0.021 | 0.116 | 0.148 | 0.049 | 0.058 | 0.036 | ||||||||||||||
4.625 | 6.427 | (11.750 | ) | (2.726 | ) | 6.115 | 4.259 | ||||||||||||
4.646 | 6.543 | (11.602 | ) | (2.677 | ) | 6.173 | 4.295 | ||||||||||||
(0.076 | ) | (0.133 | ) | — | — | — | — | ||||||||||||
— | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | (4.625 | ) | ||||||||||
(0.076 | ) | (0.133 | ) | (3.418 | ) | (3.273 | ) | (3.053 | ) | (4.625 | ) | ||||||||
$33.150 | $28.580 | $22.170 | $37.190 | $43.140 | $40.020 | ||||||||||||||
16.28% | 29.28% | (34.38% | ) | (6.65% | ) | 16.56% | 11.77% | ||||||||||||
$23,576 | $15,912 | $13,920 | $26,308 | $37,033 | $30,918 | ||||||||||||||
1.20% | 1.18% | 1.19% | 1.12% | 1.14% | 1.14% | ||||||||||||||
1.22% | 1.32% | 1.22% | 1.12% | 1.14% | 1.14% | ||||||||||||||
0.14% | 0.52% | 0.50% | 0.13% | 0.15% | 0.10% | ||||||||||||||
0.12% | 0.38% | 0.47% | 0.13% | 0.15% | 0.10% | ||||||||||||||
5% | 19% | 13% | 23% | 36% | 33% |
23
Notes to financial statements | |
Delaware Small Cap Value Fund | May 31, 2010 (Unaudited) |
Delaware Group® Equity Funds V (Trust) is organized as a Delaware statutory trust and offers three series: Delaware Dividend Income Fund, Delaware Small-Cap Core Fund, and Delaware Small Cap Value Fund. These financial statements and the related notes pertain to Delaware Small Cap Value Fund (Fund). The Trust is an open-end investment company. The Fund is considered diversified under the Investment Company Act of 1940, as amended and offers Class A, Class B, Class C, Class R, and Institutional Class shares. Class A shares are sold with a maximum front-end sales charge of up to 5.75%. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) of 1% if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class B shares may only be purchased through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares were sold with a CDSC that declined from 4% to zero depending upon the period of time the shares were held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class C shares are sold with a CDSC of 1%, if redeemed during the first twelve months. Class R and Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors.
The investment objective of the Fund is to seek capital appreciation.
1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and are consistently followed by the Fund.
Security Valuation — Equity securities, except those traded on the Nasdaq Stock Market, Inc. (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange (NYSE) on the valuation date. Securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If on a particular day an equity security does not trade, then the mean between the bid and ask prices will be used. Short-term debt securities are valued at market value. Investment companies are valued at net asset value per share. 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 Fund’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. The Fund may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before the Fund values its securities at 4:00 p.m. Eastern time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, government actions or pronouncements, aftermarket trading, or news events may have occurred in the interim. To account for this, the Fund may frequently value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing).
24
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 return 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 analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (November 30, 2006 – November 30, 2009), and has concluded that no provision for federal income tax is required in the Fund’s financial statements.
Class Accounting — Investment income, common expenses and realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Repurchase Agreements — The Fund may invest in a pooled cash account along with other members of the Delaware Investments® Family of Funds pursuant to an exemptive order issued by the Securities and Exchange Commission. The aggregate daily balance of the pooled cash account is invested in repurchase agreements secured by obligations of the U.S. government. The respective collateral is held by the Fund’s custodian bank until the maturity of the respective repurchase agreements. Each repurchase agreement is at least 102% collateralized. However, in the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral may be subject to legal proceedings. At May 31, 2010, the Fund held no investments in repurchase agreements.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Other — Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments Family of Funds are generally allocated amongst such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Distributions received from investments in Real Estate Investment Trusts (REITs) are recorded as dividend income on the ex-dividend date, subject to reclassification upon notice of the character of such distribution by the issuer. The Fund declares and pays dividends from net investment income and distributions from net realized gain on investments, if any, annually.
25
Notes to financial statements
Delaware Small Cap Value Fund
Delaware Small Cap Value Fund
1. Significant Accounting Policies (continued)
Subject to seeking best execution, the Fund may direct certain security trades to brokers who have agreed to rebate a portion of the related brokerage commission to the Fund in cash. In general, best execution refers to many factors, including the price paid or received for a security, the commission charged, the promptness and reliability of execution, the confidentiality and placement accorded the order, and other factors affecting the overall benefit obtained by the Fund on the transaction. There were no commission rebate for the six months ended May 31, 2010.
The Fund may receive earnings credits from its custodian when positive cash balances are maintained, which are used to offset custody fees. There were no earnings credits for the period ended May 31, 2010.
2. Investment Management, Administration Agreements and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee which is calculated daily at the rate of 0.75% on the first $500 million of average daily net assets of the Fund, 0.70% on the next $500 million, 0.65% on the next $1.5 billion and 0.60% on the average daily net assets in excess $2.5 billion.
Effective March 30, 2010, DMC has contractually agreed to waive that portion, if any, of its management fee and reimburse the Fund to the extent necessary to ensure that total annual operating expenses (excluding any 12b-1 plan and certain other expenses) do not exceed 1.20% of average daily net assets of the Fund through March 30, 2011. Prior to March 30, 2010, this expense limitation was voluntary. This expense waiver and reimbursement applies only to expenses paid directly by the Fund.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Fund. For these services, the Fund pays DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments Family of Funds on a relative net asset value basis. For the six months ended May 31, 2010, the Fund was charged $8,866 for these services.
DSC also provides dividend disbursing and transfer agency services. The Fund pays DSC a monthly fee based on the number of shareholder accounts for dividend disbursing and transfer agent services.
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and service fee not to exceed 0.30% of the average daily net assets of the Class A shares, 1.00% of the average daily net assets of the Class B and C shares and 0.60% of the average daily net assets of Class R shares. Institutional Class shares pay
26
no distribution and service expenses. DDLP has contracted to waive distribution and service fees through March 30, 2011 in order to prevent distribution and service fees of Class A and Class R shares from exceeding 0.25% and 0.50%, respectively, of average daily net assets.
At May 31, 2010, the Fund had liabilities payable to affiliates as follows:
Investment management fee payable to DMC | $ | 229,638 |
Dividend disbursing, transfer agent and fund accounting | ||
oversight fees and other expenses payable to DSC | 37,509 | |
Distribution fees payable to DDLP | 117,776 | |
Other expenses payable to DMC and affiliates* | 49,573 |
*DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, fees for audit, legal and tax services, registration fees and trustees’ fees.
As provided in the investment management agreement, the Fund bears the cost of certain legal and tax services, including internal legal and tax services provided to the Fund by DMC and/or its affiliates’ employees. For the six months ended May 31, 2010, the Fund was charged $ 3,991 for internal legal and tax services provided by DMC and/or its affiliates’ employees.
For the six months ended May 31, 2010, DDLP earned $37,511 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2010, DDLP received gross CDSC commissions of $-, $8,518 and $3,416 on redemption of the Fund’s Class A, Class B and Class C shares, respectively, and these commissions were entirely used to offset up-front commissions previously paid by DDLP to broker/dealers on sales of those shares.
Trustees’ fees include expenses accrued by the Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, DSC and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Fund.
3. Investments
For the six months ended May 31, 2010, the Fund made purchases of $9,126,281 and sales of $36,595,796 of investment securities other than short-term investments.
At May 31, 2010, the cost of investments for federal income tax purposes has been estimated since the final tax characteristics cannot be determined until fiscal year end. At May 31, 2010, the cost of investments was $361,493,721. At May 31, 2010, the net unrealized appreciation was $56,883,384, of which $91,874,648 related to unrealized appreciation of investments and $34,991,264 related to unrealized depreciation of investments.
U.S. 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 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
27
Notes to financial statements
Delaware Small Cap Value Fund
Delaware Small Cap Value Fund
3. Investments (continued)
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 developed 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 below.
Level 1 – inputs are quoted prices in active markets
Level 2 – inputs are observable, directly or indirectly
Level 3 – inputs are unobservable and reflect assumptions on the part of the reporting entity
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of May 31, 2010:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Common Stock | $ | 348,904,952 | $ | — | $ | — | $ | 348,904,952 | ||||
Short-Term Investments | — | 8,113,060 | — | 8,113,060 | ||||||||
Securities Lending Collateral | 58,483,901 | 2,858,526 | 16,666 | 61,359,093 | ||||||||
Total | $ | 407,388,853 | $ | 10,971,586 | $ | 16,666 | $ | 418,377,105 |
The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:
Securities | |||||||||||||||
Total | Common | Corporate | Lending | ||||||||||||
Fund | Stock | Debt | Collateral | ||||||||||||
Balance as of 11/30/09 | $ | 4,669,302 | $ | 1,599,064 | $ | 3,053,572 | $ | 16,666 | |||||||
Purchase | 1,892,000 | 1,892,000 | — | — | |||||||||||
Sales | (4,774,784 | ) | (2,882,784 | ) | (1,892,000 | ) | — | ||||||||
Net change in unrealized | |||||||||||||||
appreciation/depreciation | (1,769,852 | ) | (608,280 | ) | (1,161,572 | ) | — | ||||||||
Balance as of 5/31/10 | $ | 16,666 | $ | — | $ | — | $ | 16,666 | |||||||
Net change in unrealized appreciation/ | |||||||||||||||
depreciation from investments still | |||||||||||||||
held as of 5/31/10 | $ | 16,666 | $ | — | $ | — | $ | 16,666 |
In January 2010, the Financial Accounting Standards Board issued an Accounting Standards Update, Improving Disclosures about Fair Value Measurements, which introduces new disclosure requirements and clarifies certain existing disclosure requirements around fair value measurements currently presented above. The new disclosures and clarifications of existing disclosures are generally effective for the Fund’s year ending November 30, 2011 and interim periods therein. Management is evaluating the impact of this update on its current disclosures.
28
4. Dividend and Distribution Information
Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from U.S. 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 six months ended May 31, 2010 and the year ended November 30, 2009 was as follows:
Six Months | Year | ||||
Ended | Ended | ||||
5/31/10* | 11/30/09 | ||||
Ordinary income | $186,464 | $648,990 |
*Tax information for the period ended May 31, 2010 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end.
5. Components of Net Assets on a Tax Basis
The components of net assets are estimated since final tax characteristics cannot be determined until fiscal year end. As of May 31, 2010, the estimated components of net assets on a tax basis were as follows:
Shares of beneficial interest | $ | 300,416,618 | ||
Realized gains 12/1/09 – 5/31/10 | 13,495,913 | |||
Capital loss carryforwards as of 11/30/09 | (14,615,712 | ) | ||
Unrealized appreciation of investments | 56,883,384 | |||
Net assets | $ | 356,180,203 |
The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales.
For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of gain (loss) on foreign currency transactions. Results of operations and net assets were not affected by these reclassifications. For the six months ended May 31, 2010, the Fund recorded an estimate of these differences since the final tax characteristics cannot be determined until fiscal year end.
Paid-in capital | $ | (471,410 | ) | |
Undistributed net investment income | 471,410 |
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at November 30, 2009 will expire as follows: $297,876 expires in 2016 and $14,317,836 expires in 2017.
For the six months ended May 31, 2010, the Fund had capital gains of $13,495,913, which may reduce the capital loss carryforwards.
29
Notes to financial statements
Delaware Small Cap Value Fund
Delaware Small Cap Value Fund
6. Capital Shares
Transactions in capital shares were as follows:
Six Months | Year | |||||
Ended | Ended | |||||
5/31/10 | 11/30/09 | |||||
Shares sold: | ||||||
Class A | 742,547 | 1,527,883 | ||||
Class B | 5,853 | 15,520 | ||||
Class C | 71,761 | 166,728 | ||||
Class R | 128,150 | 261,081 | ||||
Institutional Class | 373,216 | 224,300 | ||||
Shares issued upon reinvestment of dividends and distributions: | ||||||
Class A | 11,296 | 25,029 | ||||
Institutional Class | 1,388 | 3,795 | ||||
1,334,211 | 2,224,336 | |||||
Shares repurchased: | ||||||
Class A | (1,332,184 | ) | (2,704,685 | ) | ||
Class B | (141,916 | ) | (442,843 | ) | ||
Class C | (278,902 | ) | (671,019 | ) | ||
Class R | (137,012 | ) | (279,423 | ) | ||
Institutional Class | (220,091 | ) | (299,069 | ) | ||
(2,110,105 | ) | (4,397,039 | ) | |||
Net decrease | (775,894 | ) | (2,172,703 | ) | ||
For the six months ended May 31, 2010 and year ended November 30, 2009, 81,358 Class B shares were converted to 72,562 Class A shares valued at $2,207,541 and 184,080 Class B shares were converted to 164,901 Class A shares valued at $3,863,811, respectively. The respective amounts are included in Class B redemptions and Class A subscriptions in the table above and the statements of changes in net assets.
7. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), participates in a $35,000,000 revolving line of credit with The Bank of New York Mellon (BNY Mellon) 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, which is allocated across the Participants on the basis of each Participant’s allocation of the entire facility. The Participants may borrow up to a maximum of one third of their net assets under the agreement. The agreement expires on November 16, 2010. The Fund had no amounts outstanding as of May 31, 2010, or at any time during the period then ended.
30
8. Securities Lending
The Fund, along with other funds in the Delaware Investments® Family of Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with BNY Mellon. With respect to each loan, if the aggregate market value of securities collateral held plus cash collateral received on any business day is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral not less than the applicable collateral requirements. Cash collateral received is generally invested in the BNY Mellon Securities Lending Overnight Fund (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of clients participating in its securities lending programs. The Collective Trust may only hold cash and high quality assets with a maturity of one business day or less (Cash/Overnight Assets). The Fund also has cash collateral invested in the BNY Mellon SL DBT II Liquidating Fund (Liquidating Fund), which generally holds the portfolio securities of the Fund’s previous cash collateral pool other than its Cash/Overnight Assets. The Liquidating Fund invests in fixed income securities, with a weighted average maturity not to exceed 90 days, rated in one of the top three tiers by Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc. or repurchase agreements collateralized by such securities. The Fund will not make additional investments of cash collateral in the Liquidating Fund; the Fund’s exposure to the Liquidating Fund is expected to decrease as the Liquidating Fund’s assets mature or are sold. Both the Collective Trust and the Liquidating Fund seek to maintain a net asset value per unit of $1.00, but there can be no assurance that they will always be able to do so. The Fund may incur investment losses as a result of investing securities lending collateral in the Collective Trust and the Liquidating Fund. This could occur if an investment in the Collective Trust or the Liquidating Fund defaulted or if it were necessary to liquidate assets in the Collective Trust or the Liquidating Fund to meet returns on outstanding security loans at a time when their net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the Collective Trust or the Liquidating Fund that is equal in amount to the collateral the Fund would be required to return to the borrower of the securities and the Fund would be required to make up for this shortfall. In October 2008, BNY Mellon transferred certain distressed securities from the Collective Trust into the Mellon GSL Reinvestment Trust II. The Fund can also accept U.S. 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 change 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
31
Notes to financial statements
Delaware Small Cap Value Fund
Delaware Small Cap Value Fund
8. Securities Lending (continued)
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.
At May 31, 2010, the value of the securities on loan was $59,677,150, for which cash collateral was received and invested in accordance with the Lending Agreement. At May 31, 2010, the value of invested collateral was $61,359,093. Such investments are presented on the statement of net assets under the caption “Securities Lending Collateral.”
9. Credit and Market Risk
The Fund invests a significant portion of its assets in small companies and may be subject to certain risks associated with ownership of securities of such companies. Investments in small-sized companies may be more volatile than investments in larger companies for a number of reasons, which include more limited financial resources or a dependence on narrow product lines.
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 of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Fund’s Board has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid assets. 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 May 31, 2010, there were no Rule 144A securities. Illiquid securities have been identified on the statement of net assets.
10. 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.
11. Sale of Delaware Investments to Macquarie Group
On August 18, 2009, Lincoln National Corporation (former parent company of Delaware Investments) and Macquarie Group (Macquarie) entered into an agreement pursuant to which Delaware Investments, including DMC, DDLP and DSC, would be acquired by Macquarie, an Australia-based global provider of banking, financial, advisory, investment and funds management services (Transaction). The Transaction was completed on January 4, 2010. DMC, DDLP and DSC are now wholly owned subsidiaries of Macquarie.
32
The Transaction resulted in a change of control of DMC which, in turn, caused the termination of the investment management agreement between DMC and the Fund. On January 4, 2010, the new investment management agreement between DMC and the Fund that was approved by the shareholders became effective.
12. Subsequent Events
Management has determined no material events or transactions occurred subsequent to May 31, 2010 that would require recognition or disclosure in the Fund’s financial statements.
33
Other Fund information
(Unaudited)
Delaware Small Cap Value Fund
(Unaudited)
Delaware Small Cap Value Fund
Proxy Results
At Joint Special Meetings of Shareholders of Delaware Group® Equity Funds V (the “Trust”), on behalf of Delaware Small Cap Value Fund (the “Fund”), held on November 12, 2009 and reconvened on December 4, 2009 and March 16, 2010, the shareholders of the Fund voted to (i) elect a Board of Trustees for the Trust; and to (ii) approve a new investment advisory agreement between the Trust, on behalf of the Fund, and Delaware Management Company. At the meeting, the following people were elected to serve as Independent Trustees: Thomas L. Bennett, John A. Fry, Anthony D. Knerr, Lucinda S. Landreth, Ann R. Leven, Thomas F. Madison, Janet L. Yeomans, and J. Richard Zecher. In addition, Patrick P. Coyne was elected to serve as an Interested Trustee.
The following proposals were submitted for a vote of the shareholders:
1. | To elect a Board of Trustees for the Trust. |
% of | % of | % of | % of | |||||||||
Outstanding | Shares | Outstanding | Shares | |||||||||
Shares Voted For | Shares | Voted | Shares Withheld | Shares | Voted | |||||||
Thomas L. Bennett | 37,264,611.899 | 58.255 | 96.440 | 1,374,076.546 | 2.149 | 3.556 | ||||||
Patrick P. Coyne | 37,249,306.218 | 58.232 | 96.404 | 1,389,382.227 | 2.172 | 3.596 | ||||||
John A. Fry | 37,265,698.875 | 58.257 | 96.477 | 1,372,989.570 | 2.147 | 3.553 | ||||||
Anthony D. Knerr | 37,079,372.299 | 57.966 | 95.964 | 1,559,316.146 | 2.438 | 4.036 | ||||||
Lucinda S. Landreth | 37,235,460.590 | 58.210 | 96.368 | 1,403,227.855 | 2.194 | 3.632 | ||||||
Ann R. Leven | 37,233,331.862 | 58.207 | 96.363 | 1,405,356.583 | 2.197 | 3.637 | ||||||
Thomas F. Madison | 37,245,056.953 | 58.225 | 96.393 | 1,393,631.492 | 2.179 | 3.607 | ||||||
Janet L. Yeomans | 37,245,703.155 | 58.226 | 96.395 | 1,392,985.290 | 2.178 | 3.605 | ||||||
J. Richard Zecher | 37,083,400.494 | 57.972 | 95.975 | 1,555,287.951 | 2.432 | 4.025 |
2. | To approve a new investment advisory agreement between each Trust, on behalf of the respective Fund, and Delaware Management Company. |
Delaware Small Cap Value Fund | |||
Shares Voted For | 5,948,926.818 | ||
Percentage of Outstanding Shares | 47.564% | ||
Percentage of Shares Voted | 67.081% | ||
Shares Voted Against | 187,945.047 | ||
Percentage of Outstanding Shares | 1.503% | ||
Percentage of Shares Voted | 2.119% | ||
Shares Abstained | 164,730.841 | ||
Percentage of Outstanding Shares | 1.317% | ||
Percentage of Shares Voted | 1.858% | ||
Broker Non-Votes | 2,566,696.990 |
34
Change in Independent Registered Public Accounting Firm
Due to independence matters under the Securities and Exchange Commission’s auditor independence rules relating to the January 4, 2010 acquisition of Delaware Investments (including DMC, DDLP and DSC) by Macquarie Group, Ernst & Young LLP (“E&Y”) has resigned as the independent registered public accounting firm for Delaware Group® Equity Funds V (the “Fund”) effective May 20, 2010. At a meeting held on May 20, 2010, the Board of Trustees of the Fund, upon recommendation of the Audit Committee, selected PricewaterhouseCoopers LLC (“PwC”) to serve as the independent registered public accounting firm for the Fund for the fiscal year ending November 30, 2010. During the fiscal years ended November 30, 2009 and 2008, E&Y’s audit reports on the financial statements of the Fund did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. In addition, there were no disagreements between the Fund and E&Y on accounting principles, financial statements disclosures or audit scope, which, if not resolved to the satisfaction of E&Y, would have caused them to make reference to the disagreement in their reports. Neither the Fund nor anyone on its behalf has consulted with PwC at any time prior to their selection with respect to the application of accounting principles to a specified transaction, either completed or proposed or the type of audit opinion that might be rendered on the Fund’s financial statements.
35
About the organization
Board of trustees | |||
Patrick P. Coyne Chairman, President, and Chief Executive Officer Delaware Investments® Family of Funds Philadelphia, PA Thomas L. Bennett Private Investor Rosemont, PA John A. Fry President Franklin & Marshall College Lancaster, PA | Anthony D. Knerr Founder and Managing Director Anthony Knerr & Associates New York, NY Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. Philadelphia, PA | Ann R. Leven Consultant ARL Associates New York, NY Thomas F. Madison President and Chief Executive Officer MLM Partners, Inc. Minneapolis, MN | Janet L. Yeomans Vice President and Treasurer 3M Corporation St. Paul, MN J. Richard Zecher Founder Investor Analytics Scottsdale, AZ |
Affiliated officers | |||
David F. Connor Vice President, Deputy General Counsel, and Secretary Delaware Investments Family of Funds Philadelphia, PA | Daniel V. Geatens Vice President and Treasurer Delaware Investments Family of Funds Philadelphia, PA | David P. O’Connor Senior Vice President, General Counsel, and Chief Legal Officer Delaware Investments Family of Funds Philadelphia, PA | Richard Salus Senior Vice President and Chief Financial Officer Delaware Investments Family of Funds Philadelphia, PA |
This semiannual report is for the information of Delaware Small Cap Value Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Small Cap Value Fund and the Delaware Investments Fund fact sheet for the most recently completed calendar quarter. These documents are available at www.delawareinvestments.com. The prospectus sets forth details about charges, expenses, investment objectives, and operating policies of the investment company. You should read the prospectus carefully before you invest. The figures in this report represent past results that are not a guarantee of future results. The return and principal value of an investment in the investment company will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. |
Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q, as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 800 523-1918; and (ii) on the SEC’s Web site at www.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 Fund’s Schedule of Investments are available without charge on the Fund’s Web site at www.delawareinvestments.com. The Fund’s Forms N-Q 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 Web site at www.delawareinvestments.com; and (ii) on the SEC’s Web site at www.sec.gov. |
36
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. 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 officer have evaluated the registrant’s disclosure controls and procedures within 90 days of the filing of this report and have concluded that they are effective in providing reasonable assurance that the information required to be disclosed by the registrant in its reports or statements filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
There were no significant changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by the report to stockholders included herein (i.e., the registrant’s second fiscal quarter) that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits
(a) (1) Code of Ethics
Not applicable.
(2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are attached hereto as Exhibit 99.CERT.
(3) Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934.
Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized.
Name of Registrant: Delaware Group® Equity Funds V
/S/PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
Date: | August 3, 2010 |
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/PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
Date: | August 3, 2010 |
/S/RICHARD SALUS | |
By: | Richard Salus |
Title: | Chief Financial Officer |
Date: | August 3, 2010 |