UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT 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
Philadelphia, PA 19103
Name and address of agent for service:
David F. Connor, Esq.
2005 Market Street
Philadelphia, PA 19103
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, 2011
Item 1. Reports to Stockholders
![](https://capedge.com/proxy/N-CSR/0001206774-11-001610/del_topimg02.jpg)
Semiannual report Delaware Dividend Income Fund May 31, 2011 Income and growth mutual fund |
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and, if available, its summary prospectus, which may be obtained by visiting www.delawareinvestments.com or calling 800 523-1918. Investors should read the prospectus and, if available, the summary prospectus carefully before investing. |
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
Delaware Management Holdings, Inc. and its subsidiaries (collectively known by the marketing name of Delaware Investments) are wholly owned subsidiaries of Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services.
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/sector allocation | |
and top 10 equity holdings | 3 |
Statement of net assets | 6 |
Statement of operations | 28 |
Statements of changes in net assets | 30 |
Financial highlights | 32 |
Notes to financial statements | 42 |
Other Fund information | 55 |
About the organization | 56 |
Unless otherwise noted, views expressed herein are current as of May 31, 2011, and 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.
© 2011 Delaware Management Holdings, Inc.
All third-party trademarks cited are the property of their respective owners.
Disclosure of Fund expenses
For the six-month period from December 1, 2010 to May 31, 2011
For the six-month period from December 1, 2010 to May 31, 2011
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 six-month period from December 1, 2010 to May 31, 2011.
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 | ||||||||||||
12/1/10 | 5/31/11 | Expense Ratio | 12/1/10 to 5/31/11* | ||||||||||||
Actual Fund return | |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,131.90 | 1.21 | % | $ | 6.43 | |||||||
Class B | 1,000.00 | 1,127.50 | 1.96 | % | 10.40 | ||||||||||
Class C | 1,000.00 | 1,127.50 | 1.96 | % | 10.40 | ||||||||||
Class R | 1,000.00 | 1,130.50 | 1.46 | % | 7.76 | ||||||||||
Institutional Class | 1,000.00 | 1,133.20 | 0.96 | % | 5.11 | ||||||||||
Hypothetical 5% return (5% return before expenses) | |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,018.90 | 1.21 | % | $ | 6.09 | |||||||
Class B | 1,000.00 | 1,015.16 | 1.96 | % | 9.85 | ||||||||||
Class C | 1,000.00 | 1,015.16 | 1.96 | % | 9.85 | ||||||||||
Class R | 1,000.00 | 1,017.65 | 1.46 | % | 7.34 | ||||||||||
Institutional Class | 1,000.00 | 1,020.14 | 0.96 | % | 4.84 |
* | “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/sector allocation and | |
top 10 equity holdings | |
Delaware Dividend Income Fund | As of May 31, 2011 |
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/sector | Percentage of net assets | |
Common Stock | 50.77 | % |
Consumer Discretionary | 3.05 | % |
Consumer Staples | 6.23 | % |
Diversified REITs | 0.21 | % |
Energy | 4.95 | % |
Financials | 6.19 | % |
Healthcare | 8.59 | % |
Healthcare REITs | 0.41 | % |
Hotel REITs | 0.19 | % |
Industrial REITs | 0.38 | % |
Industrials | 4.89 | % |
Information Technology | 5.01 | % |
Mall REITs | 0.20 | % |
Materials | 1.87 | % |
Mixed REITs | 0.56 | % |
Mortgage REIT | 0.15 | % |
Multifamily REITs | 0.53 | % |
Office REITs | 0.34 | % |
Real Estate Operating Companies | 0.39 | % |
Self-Storage REITs | 0.31 | % |
Shopping Center REITs | 0.21 | % |
Specialty REIT | 0.11 | % |
Telecommunications | 2.90 | % |
Timber REIT | 0.14 | % |
Utilities | 2.96 | % |
Convertible Preferred Stock | 5.20 | % |
Auto Parts & Equipment | 0.27 | % |
Banking, Finance & Insurance | 1.86 | % |
Computers & Technology | 0.09 | % |
Energy | 1.76 | % |
Healthcare & Pharmaceuticals | 0.57 | % |
Telecommunications | 0.65 | % |
Commercial Mortgage-Backed Securities | 0.60 | % |
3
Security type/sector allocation and
top 10 equity holdings
Delaware Dividend Income Fund
top 10 equity holdings
Delaware Dividend Income Fund
Security type/sector | Percentage of net assets | |
Convertible Bonds | 17.63 | % |
Aerospace & Defense | 0.68 | % |
Auto Parts & Equipment | 0.66 | % |
Banking, Finance & Insurance | 0.93 | % |
Basic Materials | 1.40 | % |
Cable, Media & Publishing | 0.41 | % |
Computers & Technology | 4.84 | % |
Energy | 0.34 | % |
Healthcare & Pharmaceuticals | 1.98 | % |
Leisure, Lodging & Entertainment | 0.59 | % |
Machinery | 0.29 | % |
Real Estate | 1.51 | % |
Retail | 0.38 | % |
Telecommunications | 3.62 | % |
Corporate Bonds | 20.13 | % |
Banking | 0.55 | % |
Basic Industry | 1.95 | % |
Brokerage | 0.21 | % |
Capital Goods | 1.62 | % |
Consumer Cyclical | 2.30 | % |
Consumer Non-Cyclical | 1.78 | % |
Energy | 2.12 | % |
Finance & Investments | 1.12 | % |
Media | 1.42 | % |
Services Cyclical | 2.50 | % |
Services Non-Cyclical | 0.71 | % |
Technology & Electronics | 0.90 | % |
Telecommunications | 2.46 | % |
Utilities | 0.49 | % |
4
Security type/sector | Percentage of net assets | |
Leverage Non-Recourse Security | 0.00 | % |
Senior Secured Loans | 0.62 | % |
Limited Partnerships | 0.58 | % |
Preferred Stock | 0.94 | % |
Warrant | 0.00 | % |
Short-Term Investments | 4.02 | % |
Securities Lending Collateral | 10.70 | % |
Total Value of Securities | 111.19 | % |
Obligation to Return Securities Lending Collateral | (10.86 | %) |
Other Liabilities Net of Receivables and Other Assets | (0.33 | %) |
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 | |
Raytheon | 1.54 | % |
Pfizer | 1.43 | % |
Merck | 1.31 | % |
Marathon Oil | 1.19 | % |
Archer-Daniels-Midland | 1.18 | % |
Motorola Solutions | 1.17 | % |
Johnson & Johnson | 1.17 | % |
duPont (E.I.) deNemours | 1.17 | % |
Baxter International | 1.17 | % |
Bank of New York Mellon | 1.17 | % |
5
Statement of net assets | |
Delaware Dividend Income Fund | May 31, 2011 (Unaudited) |
Number of shares | Value | ||||
Common Stock – 50.77% | |||||
Consumer Discretionary – 3.05% | |||||
Bayerische Motoren Werke | 3,752 | $ | 332,864 | ||
Comcast Class A | 209,100 | 5,277,685 | |||
† | DIRECTV Class A | 6,350 | 319,151 | ||
* | Don Quijote | 5,900 | 206,227 | ||
Hyundai Department Store | 1,547 | 263,613 | |||
Lowe’s | 214,500 | 5,178,030 | |||
PPR | 1,407 | 245,527 | |||
* | Publicis Groupe | 4,389 | 241,817 | ||
Sumitomo Rubber Industries | 6,355 | 73,626 | |||
* | Techtronic Industries | 214,500 | 262,832 | ||
Toyota Motor | 15,800 | 660,228 | |||
Vivendi | 17,158 | 480,528 | |||
Yue Yuen Industrial Holdings | 113,000 | 392,975 | |||
13,935,103 | |||||
Consumer Staples – 6.23% | |||||
Archer-Daniels-Midland | 166,400 | 5,393,024 | |||
* | Aryzta | 9,357 | 520,574 | ||
Coca-Cola Amatil | 17,070 | 214,729 | |||
CVS Caremark | 137,000 | 5,300,530 | |||
Greggs | 45,546 | 394,733 | |||
Kimberly-Clark | 76,800 | 5,245,440 | |||
Kraft Foods Class A | 149,200 | 5,217,524 | |||
Metro | 5,511 | 368,182 | |||
Parmalat | 141,161 | 523,598 | |||
Safeway | 213,900 | 5,283,330 | |||
28,461,664 | |||||
Diversified REITs – 0.21% | |||||
Lexington Realty Trust | 41,900 | 395,536 | |||
Liberty Property Trust | 10,000 | 360,600 | |||
Vastned Offices | 1,533 | 27,374 | |||
Vornado Realty Trust | 1,606 | 157,998 | |||
941,508 | |||||
Energy – 4.95% | |||||
Chevron | 50,400 | 5,287,464 | |||
CNOOC | 165,000 | 414,293 | |||
ConocoPhillips | 72,100 | 5,279,162 | |||
Marathon Oil | 100,500 | 5,444,085 | |||
Petroleo Brasiliero ADR | 12,277 | 383,779 |
6
Number of shares | Value | ||||
Common Stock (continued) | |||||
Energy (continued) | |||||
Total | 7,805 | $ | 450,727 | ||
Williams | 169,800 | 5,330,022 | |||
22,589,532 | |||||
Financials – 6.19% | |||||
Allstate | 167,400 | 5,253,012 | |||
* | AXA | 23,157 | 496,477 | ||
Banco Santander | 24,686 | 294,149 | |||
Bank of New York Mellon | 189,800 | 5,335,278 | |||
CVB Financial | 155,000 | 1,390,350 | |||
JPMorgan Chase | 40,000 | 1,729,600 | |||
Marsh & McLennan | 167,400 | 5,134,158 | |||
Mitsubishi UFJ Financial Group | 79,700 | 367,444 | |||
Nordea Bank | 37,271 | 437,897 | |||
Standard Chartered | 16,112 | 432,556 | |||
Travelers | 82,900 | 5,146,432 | |||
UniCredit | 179,236 | 408,832 | |||
Wells Fargo | 65,000 | 1,844,050 | |||
28,270,235 | |||||
Healthcare – 8.59% | |||||
*† | Alliance HealthCare Services | 29,989 | 129,852 | ||
Baxter International | 89,800 | 5,344,896 | |||
Cardinal Health | 114,900 | 5,218,758 | |||
Johnson & Johnson | 79,600 | 5,356,284 | |||
* | Meda Class A | 51,349 | 573,262 | ||
Merck | 162,900 | 5,986,575 | |||
Novartis | 8,106 | 522,884 | |||
Pfizer | 305,038 | 6,543,066 | |||
Quest Diagnostics | 88,800 | 5,187,696 | |||
Roche Holding ADR | 75,000 | 3,297,570 | |||
* | Sanofi-Aventis | 5,796 | 459,546 | ||
Teva Pharmaceutical Industries ADR | 11,928 | 607,135 | |||
39,227,524 | |||||
Healthcare REITs – 0.41% | |||||
Cogdell Spencer | 35,700 | 214,200 | |||
HCP | 21,915 | 831,455 | |||
Health Care REIT | 8,200 | 436,158 | |||
Ventas | 6,800 | 383,520 | |||
1,865,333 |
7
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Hotel REITs – 0.19% | ||||||
Ashford Hospitality Trust | 35,000 | $ | 499,450 | |||
DiamondRock Hospitality | 9,800 | 112,700 | ||||
LaSalle Hotel Properties | 9,600 | 268,608 | ||||
880,758 | ||||||
Industrial REITs – 0.38% | ||||||
* | First Potomac Realty Trust | 8,700 | 145,986 | |||
Goodman Group | 696,600 | 547,249 | ||||
Segro | 80,000 | 428,395 | ||||
† | STAG Industrial | 49,237 | 625,310 | |||
1,746,940 | ||||||
Industrials – 4.89% | ||||||
* | Alstom | 7,697 | 478,022 | |||
Asahi Glass | 23,000 | 271,760 | ||||
Compagnie de Saint-Gobain | 7,266 | 482,082 | ||||
† | Delta Air Lines | 96 | 968 | |||
Deutsche Post | 33,641 | 634,790 | ||||
* | Finmeccanica | 34,677 | 432,756 | |||
† | Flextronics International | 19,100 | 138,284 | |||
ITOCHU | 46,689 | 483,005 | ||||
Koninklijke Philips Electronics | 12,854 | 357,906 | ||||
*† | Mobile Mini | 7,124 | 160,290 | |||
* | Northrop Grumman | 79,600 | 5,197,084 | |||
=∏† | PT Holdings | 1,110 | 11 | |||
Raytheon | 139,700 | 7,038,086 | ||||
Singapore Airlines | 36,000 | 413,471 | ||||
* | Teleperformance | 16,086 | 550,882 | |||
Vallourec | 3,111 | 390,858 | ||||
Waste Management | 135,800 | 5,279,904 | ||||
22,310,159 | ||||||
Information Technology – 5.01% | ||||||
† | CGI Group Class A | 43,494 | 1,002,586 | |||
HTC | 13,250 | 566,191 | ||||
Intel | 231,900 | 5,220,069 | ||||
International Business Machines | 31,200 | 5,270,616 | ||||
*† | Motorola Solutions | 111,942 | 5,358,663 | |||
† | Sohu.com | 1,320 | 106,432 | |||
Xerox | 522,400 | 5,333,704 | ||||
22,858,261 |
8
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Mall REITs – 0.20% | ||||||
General Growth Properties | 15,566 | $ | 256,528 | |||
Macerich | 5,200 | 282,724 | ||||
Simon Property Group | 3,263 | 385,229 | ||||
924,481 | ||||||
Materials – 1.87% | ||||||
ArcelorMittal | 7,209 | 241,327 | ||||
duPont (E.I.) deNemours | 100,300 | 5,345,990 | ||||
Lafarge | 6,253 | 433,008 | ||||
Monsanto | 29,700 | 2,109,888 | ||||
Rio Tinto | 5,692 | 396,608 | ||||
8,526,821 | ||||||
Mixed REITs – 0.56% | ||||||
* | Digital Realty Trust | 19,900 | 1,241,163 | |||
DuPont Fabros Technology | 20,900 | 546,326 | ||||
Mission West Properties | 38,254 | 315,596 | ||||
PS Business Parks | 8,100 | 465,669 | ||||
2,568,754 | ||||||
Mortgage REIT – 0.15% | ||||||
Starwood Property Trust | 30,600 | 665,244 | ||||
665,244 | ||||||
Multifamily REITs – 0.53% | ||||||
American Campus Communities | 11,000 | 388,740 | ||||
Associated Estates Realty | 21,800 | 367,548 | ||||
BRE Properties | 11,900 | 607,138 | ||||
Camden Property Trust | 10,300 | 662,084 | ||||
* | Home Properties | 6,600 | 408,540 | |||
2,434,050 | ||||||
Office REITs – 0.34% | ||||||
* | Alexandria Real Estate Equities | 10,000 | 825,400 | |||
Boston Properties | 1,200 | 130,020 | ||||
Government Properties Income Trust | 12,000 | 317,760 | ||||
Japan Prime Realty Investment | 100 | 290,342 | ||||
1,563,522 |
9
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Real Estate Operating Companies – 0.39% | ||||||
* | First Capital Realty | 60,947 | $ | 1,056,502 | ||
Mitsubishi Estate | 21,000 | 375,127 | ||||
Mitsui Fudosan | 21,000 | 354,345 | ||||
1,785,974 | ||||||
Self-Storage REITs – 0.31% | ||||||
Extra Space Storage | 39,900 | 868,224 | ||||
Public Storage | 4,800 | 568,032 | ||||
1,436,256 | ||||||
Shopping Center REITs – 0.21% | ||||||
* | Kimco Realty | 25,100 | 489,701 | |||
Ramco-Gershenson Properties Trust | 13,400 | 176,076 | ||||
Urstadt Biddle Properties Class A | 15,400 | 295,064 | ||||
960,841 | ||||||
Specialty REIT – 0.11% | ||||||
* | Entertainment Properties Trust | 10,343 | 502,463 | |||
502,463 | ||||||
Telecommunications – 2.90% | ||||||
AT&T | 167,600 | 5,289,456 | ||||
=† | Century Communications | 1,625,000 | 0 | |||
* | Frontier Communications | 123,300 | 1,091,205 | |||
† | GeoEye | 2,450 | 81,267 | |||
Mobile TeleSystems ADR | 16,453 | 333,502 | ||||
† | NII Holdings | 11,348 | 495,454 | |||
Telefonica | 18,192 | 442,304 | ||||
Verizon Communications | 142,400 | 5,258,832 | ||||
Vodafone Group | 94,172 | 261,838 | ||||
13,253,858 | ||||||
Timber REIT – 0.14% | ||||||
Rayonier | 9,600 | 637,344 | ||||
637,344 |
10
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Utilities – 2.96% | ||||||
* | AGL Resources | 68,200 | $ | 2,803,702 | ||
Edison International | 128,600 | 5,061,696 | ||||
† | GenOn Energy | 1,270 | 5,067 | |||
National Grid | 39,279 | 405,502 | ||||
Progress Energy | 110,200 | 5,247,725 | ||||
13,523,692 | ||||||
Total Common Stock (cost $207,536,144) | 231,870,317 | |||||
Convertible Preferred Stock – 5.20% | ||||||
Auto Parts & Equipment – 0.27% | ||||||
Goodyear Tire & Rubber 5.875% | ||||||
exercise price $18.21 expiration date 4/1/14 | 20,700 | 1,220,006 | ||||
1,220,006 | ||||||
Banking, Finance & Insurance – 1.86% | ||||||
Aspen Insurance Holdings 5.625% | ||||||
exercise price $29.28, expiration date 12/31/49 | 39,227 | 2,110,903 | ||||
* | Bank of America 7.25% exercise price $50.00, | |||||
expiration date 12/31/49 | 2,155 | 2,252,514 | ||||
Citigroup 7.50% exercise price $39.37 | ||||||
expiration date 12/15/12 | 15,350 | 1,849,675 | ||||
† | Freddie Mac 6.02% exercise price $25.00 | |||||
expiration date 6/30/12 | 35,000 | 93,153 | ||||
Metlife 5.00% exercise price $44.27 | ||||||
expiration date 9/11/13 | 26,300 | 2,175,273 | ||||
8,481,518 | ||||||
Computers & Technology – 0.09% | ||||||
Unisys 6.25% exercise price $45.66 | ||||||
expiration date 3/1/14 | 5,200 | 427,050 | ||||
427,050 | ||||||
Energy – 1.76% | ||||||
* | Apache 6.00% exercise price $109.12, | |||||
expiration date 8/1/13 | 20,300 | 1,350,559 | ||||
*# | Chesapeake Energy 144A 5.75% | |||||
exercise price $27.94, expiration date 12/31/49 | 1,570 | 2,082,213 |
11
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Number of shares | Value | ||||||
Convertible Preferred Stock (continued) | |||||||
Energy (continued) | |||||||
El Paso Energy Capital Trust I 4.75% | |||||||
exercise price $41.59, expiration date 3/31/28 | 39,900 | $ | 1,782,732 | ||||
SandRidge Energy 8.50% exercise price $8.01, | |||||||
expiration date 12/31/49 | 17,390 | 2,838,917 | |||||
8,054,421 | |||||||
Healthcare & Pharmaceuticals – 0.57% | |||||||
HealthSouth 6.50% exercise price $30.50, | |||||||
expiration date 12/31/49 | 2,213 | 2,611,893 | |||||
2,611,893 | |||||||
Telecommunications – 0.65% | |||||||
* | Lucent Technologies Capital Trust I 7.75% | ||||||
exercise price $24.80, expiration date 3/15/17 | 3,000 | 2,970,000 | |||||
2,970,000 | |||||||
Total Convertible Preferred Stock (cost $22,995,189) | 23,764,888 | ||||||
Principal amount | |||||||
Commercial Mortgage-Backed Securities – 0.60% | |||||||
Bank of America Commercial Mortgage Securities | |||||||
Series 2006-4 A4 5.634% 7/10/46 | $ | 1,000,000 | 1,102,026 | ||||
#• | Goldman Sachs Mortgage Securities II | ||||||
Series 2010 C1 C 144A 5.635% 8/10/43 | 500,000 | 518,526 | |||||
• | Morgan Stanley Capital I Series 2007-T27 A4 | ||||||
5.641% 6/11/42 | 1,000,000 | 1,123,967 | |||||
Total Commercial Mortgage-Backed Securities | |||||||
(cost $2,509,434) | 2,744,519 | ||||||
Convertible Bonds – 17.63% | |||||||
Aerospace & Defense – 0.68% | |||||||
AAR | |||||||
1.75% exercise price $29.43, | |||||||
expiration date 2/1/26 | 1,696,000 | 1,861,360 | |||||
#144A 1.75% exercise price $29.43, | |||||||
expiration date 2/1/26 | 1,150,000 | 1,262,125 | |||||
3,123,485 |
12
Principal amount | Value | ||||||
Convertible Bonds (continued) | |||||||
Auto Parts & Equipment – 0.66% | |||||||
ArvinMeritor 4.00% exercise price $26.73, | |||||||
expiration date 2/15/27 | $ | 3,067,000 | $ | 2,997,993 | |||
2,997,993 | |||||||
Banking, Finance & Insurance – 0.93% | |||||||
# | Ares Capital 144A 5.75% exercise price $19.13, | ||||||
expiration date 2/1/16 | 1,558,000 | 1,635,900 | |||||
* | Jefferies Group 3.875% exercise price $38.72, | ||||||
expiration date 11/1/29 | 2,567,000 | 2,605,505 | |||||
4,241,405 | |||||||
Basic Materials – 1.40% | |||||||
# | Owens-Brockway Glass Container 144A 3.00% | ||||||
exercise price $47.47, expiration date 6/1/15 | 4,000,000 | 4,170,000 | |||||
*# | Sino-Forest 144A 5.00% exercise price $20.29, | ||||||
expiration date 8/1/13 | 1,977,000 | 2,238,953 | |||||
6,408,953 | |||||||
Cable, Media & Publishing – 0.41% | |||||||
Φ | General Cable 4.50% exercise price $36.75, | ||||||
expiration date 11/15/29 | 1,385,000 | 1,897,450 | |||||
1,897,450 | |||||||
Computers & Technology – 4.84% | |||||||
Advanced Micro Devices | |||||||
6.00% exercise price $28.08, | |||||||
expiration date 5/1/15 | 962,000 | 1,004,088 | |||||
#144A 6.00% exercise price $28.08, | |||||||
expiration date 5/1/15 | 660,000 | 688,875 | |||||
Equinix 4.75% exercise price $84.32, | |||||||
expiration date 6/15/16 | 1,222,000 | 1,742,878 | |||||
Euronet Worldwide 3.50% | |||||||
exercise price $40.48, | |||||||
expiration date 10/15/25 | 4,055,000 | 4,075,274 | |||||
* | Intel 3.25% exercise price $22.68, | ||||||
expiration date 8/1/39 | 1,527,000 | 1,901,115 | |||||
Level 3 Communications 6.50% | |||||||
exercise price $1.24, | |||||||
expiration date 10/1/16 | 1,441,000 | 2,909,018 | |||||
Linear Technology 3.00% | |||||||
exercise price $44.11, | |||||||
expiration date 5/1/27 | 4,452,000 | 4,824,854 |
13
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Principal amount | Value | ||||||
Convertible Bonds (continued) | |||||||
Computers & Technology (continued) | |||||||
Rovi 2.625% exercise price $47.36, | |||||||
expiration date 2/15/40 | $ | 1,710,000 | $ | 2,357,663 | |||
* | SanDisk 1.50% exercise price $52.37 | ||||||
expiration date 8/15/17 | 2,255,000 | 2,587,613 | |||||
22,091,378 | |||||||
Energy – 0.34% | |||||||
Peabody Energy 4.75% exercise price $58.31, | |||||||
expiration date 12/15/41 | 1,220,000 | 1,543,300 | |||||
1,543,300 | |||||||
Healthcare & Pharmaceuticals – 1.98% | |||||||
Alere 3.00% exercise price $43.98, | |||||||
expiration date 5/15/16 | 1,680,000 | 1,950,900 | |||||
* | Dendreon 2.875% exercise price $51.24, | ||||||
expiration date 1/15/16 | 1,732,000 | 1,974,480 | |||||
Φ | Hologic 2.00% exercise price $38.59, | ||||||
expiration date 12/15/37 | 3,250,000 | 3,189,063 | |||||
Mylan 3.75% exercise price $13.32, | |||||||
expiration date 9/15/15 | 1,012,000 | 1,921,535 | |||||
9,035,978 | |||||||
Leisure, Lodging & Entertainment – 0.59% | |||||||
# | Gaylord Entertainment 144A 3.75% | ||||||
exercise price $27.25, expiration date 10/1/14 | 1,985,000 | 2,682,231 | |||||
2,682,231 | |||||||
Machinery – 0.29% | |||||||
# | Altra Holdings 144A 2.75% exercise price $27.70, | ||||||
expiration date 3/1/31 | 1,139,000 | 1,322,664 | |||||
1,322,664 | |||||||
Real Estate – 1.51% | |||||||
# | Digital Realty Trust 144A 5.50% | ||||||
exercise price $42.49, expiration date 4/15/29 | 1,185,000 | 1,798,978 | |||||
* | Health Care REIT 3.00% exercise price $51.08, | ||||||
expiration date 12/1/29 | 2,496,000 | 2,832,960 | |||||
# | Lexington Realty Trust 144A 6.00% | ||||||
exercise price $7.09, expiration date 1/15/30 | 1,604,000 | 2,269,660 | |||||
6,901,598 |
14
Principal amount | Value | ||||||
Convertible Bonds (continued) | |||||||
Retail – 0.38% | |||||||
Pantry 3.00% exercise price $50.09, | |||||||
expiration date 11/15/12 | $ | 1,755,000 | $ | 1,746,225 | |||
1,746,225 | |||||||
Telecommunications – 3.62% | |||||||
# | Alaska Communications System Group 144A 6.25% | ||||||
exercise price $10.28, expiration date 5/1/18 | 2,400,000 | 2,418,000 | |||||
Alcatel-Lucent USA 2.875% exercise price $15.35, | |||||||
expiration date 6/15/25 | 1,716,000 | 1,705,275 | |||||
# | Ciena 144A 3.75% exercise price $20.17, | ||||||
expiration date 10/15/18 | 1,616,000 | 2,484,600 | |||||
# | Clearwire Communications 144A 8.25% | ||||||
exercise price $7.08, expiration date 12/1/40 | 1,320,000 | 1,329,900 | |||||
# | InterDigital 144A 2.50% exercise price $57.65, | ||||||
expiration date 3/15/16 | 145,000 | 157,144 | |||||
* | Leap Wireless International 4.50% | ||||||
exercise price $93.21, expiration date 7/15/14 | 3,409,000 | 3,353,603 | |||||
SBA Communications 4.00% exercise price $30.38, | |||||||
expiration date 10/1/14 | 1,460,000 | 2,107,875 | |||||
VeriSign 3.25% exercise price $34.37, | |||||||
expiration date 8/15/37 | 2,502,000 | 2,980,507 | |||||
16,536,904 | |||||||
Total Convertible Bonds (cost $70,816,378) | 80,529,564 | ||||||
Corporate Bonds – 20.13% | |||||||
Banking – 0.55% | |||||||
BAC Capital Trust VI 5.625% 3/8/35 | 835,000 | 772,840 | |||||
• | Fifth Third Capital Trust IV 6.50% 4/15/37 | 505,000 | 505,000 | ||||
#• | HBOS Capital Funding 144A 6.071% 6/29/49 | 587,000 | 531,235 | ||||
• | SunTrust Capital VIII 6.10% 12/15/36 | 730,000 | 725,016 | ||||
2,534,091 | |||||||
Basic Industry – 1.95% | |||||||
* | AK Steel 7.625% 5/15/20 | 601,000 | 628,045 | ||||
# | Algoma Acquisition 144A 9.875% 6/15/15 | 458,000 | 429,375 | ||||
# | APERAM 144A 7.75% 4/1/18 | 425,000 | 440,938 | ||||
# | Appleton Papers 144A 10.50% 6/15/15 | 350,000 | 372,750 |
15
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Principal amount | Value | ||||||
Corporate Bonds (continued) | |||||||
Basic Industry (continued) | |||||||
# | FMG Resources August 2006 144A | ||||||
6.875% 2/1/18 | $ | 300,000 | $ | 315,000 | |||
7.00% 11/1/15 | 345,000 | 360,525 | |||||
Georgia-Pacific 8.00% 1/15/24 | 430,000 | 520,300 | |||||
# | Headwaters 144A 7.625% 4/1/19 | 462,000 | 452,760 | ||||
* | Hexion US Finance 9.00% 11/15/20 | 360,000 | 388,800 | ||||
International Coal Group 9.125% 4/1/18 | 599,000 | 730,779 | |||||
# | James River Escrow 144A 7.875% 4/1/19 | 430,000 | 440,750 | ||||
# | JMC Steel Group 144A 8.25% 3/15/18 | 490,000 | 508,375 | ||||
# | Longview Fiber Paper & Packaging 144A | ||||||
8.00% 6/1/16 | 490,000 | 499,800 | |||||
Lyondell Chemical 11.00% 5/1/18 | 275,000 | 311,094 | |||||
# | MacDermid 144A 9.50% 4/15/17 | 395,000 | 423,638 | ||||
# | Millar Western Forest Products 144A | ||||||
8.50% 4/1/21 | 460,000 | 441,600 | |||||
# | Momentive Performance Materials 144A | ||||||
9.00% 1/15/21 | 770,000 | 825,824 | |||||
=@ | PT Holdings 12.431% 8/27/12 | 325,364 | 148,041 | ||||
Ryerson | |||||||
•7.648% 11/1/14 | 239,000 | 243,481 | |||||
12.00% 11/1/15 | 387,000 | 418,928 | |||||
8,900,803 | |||||||
Brokerage – 0.21% | |||||||
E Trade Financial | |||||||
6.75% 6/1/16 | 185,000 | 185,925 | |||||
PIK 12.50% 11/30/17 | 625,000 | 754,688 | |||||
940,613 | |||||||
Capital Goods – 1.62% | |||||||
# | Associated Materials 144A 9.125% 11/1/17 | 339,000 | 351,289 | ||||
Berry Plastics | |||||||
9.75% 1/15/21 | 412,000 | 414,575 | |||||
10.25% 3/1/16 | 315,000 | 318,150 | |||||
# | Building Materials Corporation of America 144A | ||||||
6.75% 5/1/21 | 492,000 | 496,920 | |||||
# | Cemex Espana Luxembourg 144A 9.25% 5/12/20 | 955,000 | 982,455 | ||||
# | DAE Aviation Holdings 144A 11.25% 8/1/15 | 311,000 | 328,494 | ||||
Kratos Defense & Security Solutions 10.00% 6/1/17 | 425,000 | 469,625 | |||||
* | Manitowoc 9.50% 2/15/18 | 414,000 | 460,575 |
16
Principal amount | Value | ||||||
Corporate Bonds (continued) | |||||||
Capital Goods (continued) | |||||||
# | Masonite International 144A 8.25% 4/15/21 | $ | 475,000 | $ | 480,938 | ||
* | Mueller Water Products 7.375% 6/1/17 | 490,000 | 493,675 | ||||
# | Nortek 144A 8.50% 4/15/21 | 495,000 | 474,581 | ||||
Ply Gem Industries 13.125% 7/15/14 | 421,000 | 460,995 | |||||
# | Polypore International 144A 7.50% 11/15/17 | 482,000 | 514,535 | ||||
Pregis 12.375% 10/15/13 | 437,000 | 435,908 | |||||
* | RBS Global/Rexnord 11.75% 8/1/16 | 324,000 | 347,490 | ||||
TriMas 9.75% 12/15/17 | 321,000 | 358,316 | |||||
7,388,521 | |||||||
Consumer Cyclical – 2.30% | |||||||
* | American Axle & Manufacturing 7.875% 3/1/17 | 435,000 | 448,050 | ||||
ArvinMeritor 8.125% 9/15/15 | 434,000 | 457,870 | |||||
# | Beazer Homes USA 144A 9.125% 5/15/19 | 542,000 | 516,255 | ||||
# | Brown Group 144A 7.125% 5/15/19 | 385,000 | 375,375 | ||||
# | Burlington Coat Factory Warehouse 144A | ||||||
10.00% 2/15/19 | 760,000 | 765,699 | |||||
*# | Chrysler Group 144A 8.25% 6/15/21 | 475,000 | 476,188 | ||||
CKE Restaurants 11.375% 7/15/18 | 170,000 | 187,000 | |||||
* | Dana Holding 6.75% 2/15/21 | 395,000 | 396,975 | ||||
Dave & Buster’s 11.00% 6/1/18 | 377,000 | 412,815 | |||||
# | DineEquity 144A 9.50% 10/30/18 | 430,000 | 473,000 | ||||
# | Dunkin Finance 144A 9.625% 12/1/18 | 339,000 | 343,658 | ||||
Ford Motor 7.45% 7/16/31 | 410,000 | 467,600 | |||||
Ford Motor Credit 12.00% 5/15/15 | 500,000 | 639,546 | |||||
Interface 7.625% 12/1/18 | 348,000 | 374,100 | |||||
# | International Automotive Components Group 144A | ||||||
9.125% 6/1/18 | 330,000 | 339,075 | |||||
# | Jaguar Land Rover 144A 8.125% 5/15/21 | 490,000 | 502,250 | ||||
# | M/I Homes 144A 8.625% 11/15/18 | 711,000 | 701,223 | ||||
*# | Needle Merger Sub 144A 8.125% 3/15/19 | 395,000 | 401,913 | ||||
Norcarft | |||||||
10.50% 12/15/15 | 289,000 | 304,173 | |||||
#144A 10.50% 12/15/15 | 245,000 | 257,863 | |||||
# | Pinafore 144A 9.00% 10/1/18 | 382,000 | 421,155 | ||||
Quiksilver 6.875% 4/15/15 | 683,000 | 671,047 | |||||
Standard Pacific 10.75% 9/15/16 | 221,000 | 256,360 | |||||
WMG Acquisition 9.50% 6/15/16 | 285,000 | 303,881 | |||||
10,493,071 |
17
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Principal amount | Value | |||||
Corporate Bonds (continued) | ||||||
Consumer Non-Cyclical – 1.78% | ||||||
# | Accellent 144A 10.00% 11/1/17 | $ | 262,000 | $ | 260,690 | |
# | AMGH Merger Sub 144A 9.25% 11/1/18 | 460,000 | 496,225 | |||
# | Armored Autogroup 144A 9.25% 11/1/18 | 451,000 | 459,456 | |||
# | Blue Merger Sub 144A 7.625% 2/15/19 | 462,000 | 473,839 | |||
# | Bumble Bee Acquisition 144A 9.00% 12/15/17 | 273,000 | 281,873 | |||
Cott Beverages 8.375% 11/15/17 | 251,000 | 269,825 | ||||
* | Dean Foods 7.00% 6/1/16 | 486,000 | 489,645 | |||
# | DJO Finance 144A 9.75% 10/15/17 | 664,000 | 694,709 | |||
Lantheus Medical Imaging 9.75% 5/15/17 | 605,000 | 623,150 | ||||
LVB Acquisition 11.625% 10/15/17 | 426,000 | 480,315 | ||||
# | NBTY 144A 9.00% 10/1/18 | 589,000 | 634,648 | |||
* | PHH 9.25% 3/1/16 | 390,000 | 435,825 | |||
* | Pinnacle Foods Finance 10.625% 4/1/17 | 401,000 | 432,078 | |||
# | Quintiles Transnational PIK 144A 9.50% 12/30/14 | 186,000 | 191,580 | |||
# | Reynolds Group Issuer 144A | |||||
8.25% 2/15/21 | 100,000 | 102,250 | ||||
9.00% 4/15/19 | 710,000 | 757,037 | ||||
# | STHI Holding 144A 8.00% 3/15/18 | 435,000 | 450,225 | |||
Tops Holdings 10.125% 10/15/15 | 167,000 | 179,316 | ||||
# | Viskase 144A 9.875% 1/15/18 | 393,000 | 414,124 | |||
8,126,810 | ||||||
Energy – 2.12% | ||||||
American Petroleum Tankers Parent 10.25% 5/1/15 | 304,000 | 324,520 | ||||
Antero Resources Finance 9.375% 12/1/17 | 230,000 | 251,850 | ||||
Aquilex Holdings 11.125% 12/15/16 | 315,000 | 311,850 | ||||
# | Calumet Specialty Products Partners 144A | |||||
9.375% 5/1/19 | 480,000 | 506,700 | ||||
# | Chaparral Energy 144A 8.25% 9/1/21 | 620,000 | 644,799 | |||
Chesapeake Energy | ||||||
6.625% 8/15/20 | 387,000 | 408,769 | ||||
6.875% 11/15/20 | 52,000 | 54,990 | ||||
Comstock Resources 7.75% 4/1/19 | 448,000 | 455,280 | ||||
Copano Energy 7.75% 6/1/18 | 220,000 | 231,550 | ||||
Crosstex Energy 8.875% 2/15/18 | 321,000 | 349,890 | ||||
# | Helix Energy Solutions Group 144A 9.50% 1/15/16 | 527,000 | 561,254 | |||
*# | Hercules Offshore 144A 10.50% 10/15/17 | 347,000 | 370,423 | |||
*# | Hilcorp Energy I 144A 8.00% 2/15/20 | 385,000 | 411,950 | |||
Holly 9.875% 6/15/17 | 236,000 | 266,090 |
18
Principal amount | Value | |||||
Corporate Bonds (continued) | ||||||
Energy (continued) | ||||||
# | Laredo Petroleum 144A 9.50% 2/15/19 | $ | 510,000 | $ | 544,425 | |
Linn Energy | ||||||
8.625% 4/15/20 | 276,000 | 303,600 | ||||
#144A 6.50% 5/15/19 | 220,000 | 220,550 | ||||
# | Murray Energy 144A 10.25% 10/15/15 | 361,000 | 390,783 | |||
*# | NFR Energy 144A 9.75% 2/15/17 | 407,000 | 401,913 | |||
# | Oasis Petroleum 144A 7.25% 2/1/19 | 380,000 | 383,800 | |||
Offshore Group Investments | ||||||
11.50% 8/1/15 | 340,000 | 376,550 | ||||
#144A 11.50% 8/1/15 | 45,000 | 49,725 | ||||
PetroHawk Energy 7.25% 8/15/18 | 472,000 | 497,370 | ||||
Petroleum Development 12.00% 2/15/18 | 381,000 | 430,530 | ||||
Pioneer Drilling 9.875% 3/15/18 | 187,000 | 203,596 | ||||
* | Quicksilver Resources 7.125% 4/1/16 | 238,000 | 235,620 | |||
# | SandRidge Energy 144A 7.50% 3/15/21 | 490,000 | 507,763 | |||
9,696,140 | ||||||
Finance & Investments – 1.12% | ||||||
• | American International Group 8.175% 5/15/58 | 606,000 | 671,145 | |||
Cardtronics 8.25% 9/1/18 | 110,000 | 120,725 | ||||
• | Genworth Financial 6.15% 11/15/66 | 320,000 | 248,800 | |||
#• | ILFC E-Capital Trust I 144A 5.97% 12/21/65 | 355,000 | 300,035 | |||
#• | ILFC E-Capital Trust II 144A 6.25% 12/21/65 | 818,000 | 723,930 | |||
• | ING Groep 5.775% 12/29/49 | 630,000 | 589,050 | |||
#• | Liberty Mutual Group 144A 7.00% 3/15/37 | 568,000 | 566,732 | |||
Nuveen Investments | ||||||
*10.50% 11/15/15 | 675,000 | 718,875 | ||||
#144A 10.50% 11/15/15 | 207,000 | 219,420 | ||||
*# | UPCB Finance III 144A 6.625% 7/1/20 | 226,000 | 226,565 | |||
• | XL Group 6.50% 12/31/49 | 783,000 | 746,787 | |||
5,132,064 | ||||||
Media – 1.42% | ||||||
# | Affinion Group 144A 7.875% 12/15/18 | 457,000 | 436,435 | |||
# | AMO Escrow 144A 11.50% 12/15/17 | 234,000 | 254,475 | |||
Cablevision Systems 8.00% 4/15/20 | 197,000 | 217,193 | ||||
CCO Holdings | ||||||
8.125% 4/30/20 | 549,000 | 596,350 | ||||
*#144A 7.00% 1/15/19 | 45,000 | 46,069 |
19
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Principal amount | Value | |||||
Corporate Bonds (continued) | ||||||
Media (continued) | ||||||
# | Clear Channel Communications 144A 9.00% 3/1/21 | $ | 457,000 | $ | 460,428 | |
# | Columbus International 144A 11.50% 11/20/14 | 570,000 | 658,748 | |||
Entravision Communications 8.75% 8/1/17 | 275,000 | 293,563 | ||||
# | InVentiv Health 144A 10.00% 8/15/18 | 392,000 | 409,150 | |||
# | Kabel BW Erste Beteiligungs 144A 7.50% 3/15/19 | 345,000 | 360,956 | |||
MDC Partners | ||||||
11.00% 11/1/16 | 389,000 | 434,221 | ||||
#144A 11.00% 11/1/16 | 235,000 | 259,969 | ||||
* | Nexstar Broadcasting 8.875% 4/15/17 | 371,000 | 404,390 | |||
# | ONO Finance II 144A 10.875% 7/15/19 | 450,000 | 501,750 | |||
# | Sinclair Television Group 144A 9.25% 11/1/17 | 309,000 | 346,853 | |||
# | UPC Holding 144A 9.875% 4/15/18 | 480,000 | 540,000 | |||
* | Visant 10.00% 10/1/17 | 267,000 | 283,688 | |||
6,504,238 | ||||||
Services Cyclical – 2.50% | ||||||
*# | ARAMARK Holdings 144A PIK 8.625% 5/1/16 | 475,000 | 488,063 | |||
# | CMA CGM 144A 8.50% 4/15/17 | 495,000 | 452,925 | |||
# | Delta Air Lines 144A 12.25% 3/15/15 | 354,000 | 398,693 | |||
# | Equinox Holdings 144A 9.50% 2/1/16 | 433,000 | 465,475 | |||
Harrah’s Operating 10.00% 12/15/18 | 1,071,000 | 996,029 | ||||
# | Icon Health & Fitness 144A 11.875% 10/15/16 | 245,000 | 257,863 | |||
Kansas City Southern de Mexico | ||||||
8.00% 2/1/18 | 243,000 | 270,338 | ||||
#144A 6.125% 6/15/21 | 230,000 | 232,300 | ||||
Live Nation Entertainment 2.875% 7/15/27 | 4,202,000 | 3,949,879 | ||||
*# | Marina District Finance 144A 9.875% 8/15/18 | 247,000 | 259,350 | |||
* | MGM MIRAGE 11.375% 3/1/18 | 1,180,000 | 1,362,899 | |||
‡@ | Northwest Airlines 10.00% 2/1/11 | 265,000 | 1,988 | |||
* | Pinnacle Entertainment 8.75% 5/15/20 | 354,000 | 383,205 | |||
RSC Equipment Rental | ||||||
8.25% 2/1/21 | 255,000 | 264,563 | ||||
10.25% 11/15/19 | 21,000 | 23,888 | ||||
# | Seven Seas Cruises 144A 9.125% 5/15/19 | 475,000 | 490,437 | |||
*# | Swift Services Holdings 144A 10.00% 11/15/18 | 160,000 | 178,400 | |||
*# | Swift Transportation 144A 12.50% 5/15/17 | 299,000 | 322,173 | |||
# | United Air Lines 144A 12.00% 11/1/13 | 553,000 | 600,004 | |||
11,398,472 |
20
Principal amount | Value | |||||
Corporate Bonds (continued) | ||||||
Services Non-Cyclical – 0.71% | ||||||
# | Casella Waste Systems 144A 7.75% 2/15/19 | $ | 505,000 | $ | 513,838 | |
Community Health Systems 8.875% 7/15/15 | 445,000 | 460,575 | ||||
# | Darling International 144A 8.50% 12/15/18 | 250,000 | 273,750 | |||
*# | HCA Holdings 144A 7.75% 5/15/21 | 646,000 | 679,107 | |||
HealthSouth 7.75% 9/15/22 | 95,000 | 101,888 | ||||
# | Multiplan 144A 9.875% 9/1/18 | 471,000 | 511,035 | |||
Radiation Therapy Services 9.875% 4/15/17 | 385,000 | 392,219 | ||||
Radnet Management 10.375% 4/1/18 | 307,000 | 320,815 | ||||
3,253,227 | ||||||
Technology & Electronics – 0.90% | ||||||
* | Advanced Micro Devices 7.75% 8/1/20 | 610,000 | 643,549 | |||
Aspect Software 10.625% 5/7/17 | 152,000 | 164,920 | ||||
* | First Data | |||||
9.875% 9/24/15 | 526,000 | 545,725 | ||||
11.25% 3/31/16 | 457,000 | 460,428 | ||||
# | iGate 144A 9.00% 5/1/16 | 465,000 | 480,113 | |||
# | International Wire Group Holdings 144A | |||||
9.75% 4/15/15 | 409,000 | 431,495 | ||||
MagnaChip Semiconductor 10.50% 4/15/18 | 283,000 | 320,851 | ||||
# | MedAssets 144A 8.00% 11/15/18 | 227,000 | 235,229 | |||
# | Seagate HDD Cayman 144A 7.75% 12/15/18 | 475,000 | 502,313 | |||
SunGard Data Systems 10.25% 8/15/15 | 309,000 | 322,133 | ||||
4,106,756 | ||||||
Telecommunications – 2.46% | ||||||
Avaya | ||||||
9.75% 11/1/15 | 80,000 | 83,500 | ||||
#144A 7.00% 4/1/19 | 914,000 | 898,004 | ||||
PIK 10.125% 11/1/15 | 100,000 | 104,500 | ||||
# | Buccaneer Merger 144A 9.125% 1/15/19 | 370,000 | 398,213 | |||
# | Clearwire Communications 144A | |||||
12.00% 12/1/15 | 548,000 | 602,115 | ||||
12.00% 12/1/15 | 200,000 | 219,250 | ||||
*12.00% 12/1/17 | 585,000 | 639,844 | ||||
Cricket Communications 7.75% 10/15/20 | 486,000 | 482,355 | ||||
# | Digicel Group 144A 10.50% 4/15/18 | 710,000 | 805,850 | |||
# | EH Holding 144A 7.625% 6/15/21 | 390,000 | 400,725 |
21
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Principal amount | Value | |||||
Corporate Bonds (continued) | ||||||
Telecommunications (continued) | ||||||
* | GXS Worldwide 9.75% 6/15/15 | $ | 434,000 | $ | 443,765 | |
# | Integra Telecom Holdings 144A 10.75% 4/15/16 | 360,000 | 379,800 | |||
Intelsat Bermuda | ||||||
11.25% 2/4/17 | 1,165,000 | 1,264,024 | ||||
PIK 11.50% 2/4/17 | 450,469 | 490,448 | ||||
# | Intelsat Jackson Holdings 144A 7.25% 10/15/20 | 12,000 | 12,090 | |||
* | Level 3 Financing 10.00% 2/1/18 | 437,000 | 475,238 | |||
* | MetroPCS Wireless 7.875% 9/1/18 | 195,000 | 210,844 | |||
NII Capital | ||||||
7.625% 4/1/21 | 240,000 | 255,900 | ||||
*10.00% 8/15/16 | 100,000 | 115,250 | ||||
# | PAETEC Holding 144A 9.875% 12/1/18 | 310,000 | 334,025 | |||
*# | Satmex Escrow 144A 9.50% 5/15/17 | 240,000 | 247,200 | |||
Sprint Capital 8.75% 3/15/32 | 434,000 | 481,198 | ||||
# | Telcordia Technologies 144A 11.00% 5/1/18 | 535,000 | 607,225 | |||
Telesat Canada 12.50% 11/1/17 | 291,000 | 349,200 | ||||
Virgin Media Finance 8.375% 10/15/19 | 380,000 | 429,400 | ||||
# | West 144A 7.875% 1/15/19 | 480,000 | 490,200 | |||
11,220,163 | ||||||
Utilities – 0.49% | ||||||
AES | ||||||
7.75% 3/1/14 | 252,000 | 277,200 | ||||
8.00% 6/1/20 | 53,000 | 57,638 | ||||
9.75% 4/15/16 | 33,000 | 38,363 | ||||
Elwood Energy 8.159% 7/5/26 | 536,250 | 533,568 | ||||
* | GenOn Energy 9.50% 10/15/18 | 289,000 | 305,618 | |||
Mirant Americas 8.50% 10/1/21 | 665,000 | 693,262 | ||||
• | Puget Sound Energy 6.974% 6/1/67 | 323,000 | 330,266 | |||
2,235,915 | ||||||
Total Corporate Bonds (cost $87,155,199) | 91,930,884 | |||||
Leveraged Non-Recourse Security – 0.00% | ||||||
w#@ | JPMorgan Fixed Income Pass Through Trust | |||||
Series 2007-B 144A 0.00% 1/15/87 | 1,300,000 | 0 | ||||
Total Leveraged Non-Recourse Security | ||||||
(cost $1,105,000) | 0 |
22
Principal amount | Value | ||||||
«Senior Secured Loans – 0.62% | |||||||
Brock Holdings III 10.50% 2/15/18 | $160,000 | $ | 165,000 | ||||
Endo Pharmaceuticals Holdings 7.25% 4/10/12 | 325,000 | 325,000 | |||||
Level 3 Financing 14.00% 4/11/12 | 410,000 | 410,000 | |||||
PQ 6.72% 7/30/15 | 720,000 | 714,150 | |||||
Silgan Holdings 7.75% 1/20/12 | 735,000 | 735,000 | |||||
Texas Competitive Electric Holdings 3.50% 10/10/14 | 585,000 | 499,163 | |||||
Total Senior Secured Loans (cost $2,748,125) | 2,848,313 | ||||||
Number of shares | |||||||
Limited Partnerships – 0.58% | |||||||
Brookfield Infrastructure Partners | 35,000 | 866,250 | |||||
* | Enterprise Products Partners | 42,300 | 1,761,371 | ||||
Total Limited Partnerships (cost $2,394,403) | 2,627,621 | ||||||
Preferred Stock – 0.94% | |||||||
Ally Financial | |||||||
∏•8.50% | 20,000 | 526,800 | |||||
*#144A 7.00% | 800 | 772,825 | |||||
=†w#@ | Auction Pass Through Trust | ||||||
Series 2007-6 144A 0.00% | 125,000 | 0 | |||||
Cogdell Spencer 8.50% | 45,300 | 1,133,859 | |||||
* | Developers Diversified Realty 7.50% | 10,850 | 273,963 | ||||
• | GMAC Capital Trust I 8.125% | 30,000 | 788,100 | ||||
=† | PT Holdings | 222 | 0 | ||||
*@ | SL Green Realty 7.625% | 13,400 | 339,020 | ||||
* | Vornado Realty Trust 6.625% | 18,900 | 469,665 | ||||
† | W2007 Grace Acquisitions Series B 8.75% | 20,900 | 12,801 | ||||
Total Preferred Stock (cost $4,769,748) | 4,317,033 | ||||||
Warrant – 0.00% | |||||||
=@∏ | PT Holdings | 222 | 2 | ||||
Total Warrant (cost $5,328) | 2 |
23
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Principal amount | Value | |||||||
≠Short-Term Investments – 4.02% | ||||||||
Discount Notes – 4.02% | ||||||||
Federal Home Loan Bank | ||||||||
0.01% 6/1/11 | $ | 17,783,009 | $ | 17,783,009 | ||||
0.06% 6/7/11 | 582,010 | 582,008 | ||||||
Total Short-Term Investments (cost $18,365,013) | 18,365,017 | |||||||
Total Value of Securities Before Securities | ||||||||
Lending Collateral – 100.49% (cost $420,399,961) | 458,998,158 | |||||||
Number of shares | ||||||||
Securities Lending Collateral** – 10.70% | ||||||||
Investment Companies | ||||||||
BNY Mellon SL DBT II Liquidating Fund | 576,769 | 562,580 | ||||||
Delaware Investments Collateral Fund No. 1 | 48,304,562 | 48,304,562 | ||||||
@†Mellon GSL Reinvestment Trust II | 704,271 | 0 | ||||||
Total Securities Lending Collateral (cost $49,585,602) | 48,867,142 | |||||||
Total Value of Securities – 111.19% | ||||||||
(cost $469,985,563) | 507,865,300 | © | ||||||
Obligation to Return Securities | ||||||||
Lending Collateral** – (10.86%) | (49,585,602 | ) | ||||||
Other Liabilities Net of Receivables | ||||||||
and Other Assets – (0.33%) | (1,530,618 | ) | ||||||
Net Assets Applicable to 41,841,477 | ||||||||
Shares Outstanding – 100.00% | $ | 456,749,080 | ||||||
Net Asset Value – Delaware Dividend Income Fund | ||||||||
Class A ($222,065,926 / 20,354,375 Shares) | $10.91 | |||||||
Net Asset Value – Delaware Dividend Income Fund | ||||||||
Class B ($28,518,891 / 2,611,366 Shares) | $10.92 | |||||||
Net Asset Value – Delaware Dividend Income Fund | ||||||||
Class C ($177,030,589 / 16,205,335 Shares) | $10.92 | |||||||
Net Asset Value – Delaware Dividend Income Fund | ||||||||
Class R ($3,331,733 / 305,396 Shares) | $10.91 | |||||||
Net Asset Value – Delaware Dividend Income Fund | ||||||||
Institutional Class ($25,801,941 / 2,365,005 Shares) | $10.91 |
24
Components of Net Assets at May 31, 2011: | |||
Shares of beneficial interest (unlimited authorization – no par) | $ | 579,620,506 | |
Distributions in excess of net investment income | (2,079,759 | ) | |
Accumulated net realized loss on investments | (158,679,582 | ) | |
Net unrealized appreciation of investments and foreign currencies | 37,887,915 | ||
Total net assets | $ | 456,749,080 |
† | Non income producing security. |
* | Fully or partially on loan. |
= | Security is being fair valued in accordance with the Fund’s fair valuation policy. At May 31, 2011, the aggregate amount of fair valued securities was $148,054, which represented 0.03% of the Fund’s net assets. See Note 1 in “Notes to financial statements.” |
∏ | 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, 2011, the aggregate amount of the restricted securities was $526,813 or 0.12% of the Fund’s net assets. See Note 10 in “Notes to financial statements.” |
@ | Illiquid security. At May 31, 2011, the aggregate amount of illiquid securities was $489,051, which represented 0.11% of the Fund’s net assets. See Note 10 in “Notes to financial statements.” |
• | Variable rate security. The rate shown is the rate as of May 31, 2011. Interest rates reset periodically. |
# | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At May 31, 2011 the aggregate amount of Rule 144A securities was $73,407,390, which represented 16.07% of the Fund’s net assets. See Note 10 in “Notes to financial statements.” |
Φ | Step coupon bond. Coupon increases or decreases periodically based on a predetermined schedule. Stated rate in effect at May 31, 2011. |
‡ | Non income producing security. Security is currently in default. |
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. |
« | Senior Secured Loans generally pay interest at rates that 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, 2011. |
25
Statement of net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
≠ | The rate shown is the effective yield at the time of purchase. |
** | See Note 9 in “Notes to financial statements.” |
© | Includes $48,505,541 of securities loaned. |
Summary of abbreviations:
ADR — American Depositary Receipt
PIK — Pay-in-kind
REIT — Real Estate Investment Trust
ADR — American Depositary Receipt
PIK — Pay-in-kind
REIT — Real Estate Investment Trust
Net Asset Value and Offering Price Per Share – | |||
Delaware Dividend Income Fund | |||
Net asset value Class A (A) | $ | 10.91 | |
Sales charge (5.75% of offering price) (B) | 0.67 | ||
Offering price | $ | 11.58 |
(A) | Net asset value per share, as illustrated, is the amount that would be paid upon redemption or repurchase of shares. |
(B) | See the current prospectus for purchases of $50,000 or more. |
See accompanying notes, which are an integral part of the financial statements.
26
Statement of operations | |
Delaware Dividend Income Fund | Six Months Ended May 31, 2011 (Unaudited) |
Investment Income: | ||||||||
Interest | $ | 5,841,209 | ||||||
Dividends | 3,888,908 | |||||||
Security lending income | 98,708 | |||||||
Foreign tax withheld | (70,194 | ) | $ | 9,758,631 | ||||
Expenses: | ||||||||
Management fees | 1,403,611 | |||||||
Distribution expenses – Class A | 319,772 | |||||||
Distribution expenses – Class B | 146,325 | |||||||
Distribution expenses – Class C | 842,660 | |||||||
Distribution expenses – Class R | 9,787 | |||||||
Dividend disbursing and transfer agent fees and expenses | 427,073 | |||||||
Accounting and administration expenses | 84,932 | |||||||
Reports and statements to shareholders | 38,647 | |||||||
Registration fees | 36,472 | |||||||
Custodian fees | 24,648 | |||||||
Legal fees | 16,581 | |||||||
Audit and taxes | 15,895 | |||||||
Trustees’ fees | 11,172 | |||||||
Dues and services | 5,994 | |||||||
Insurance fees | 5,763 | |||||||
Pricing fees | 5,075 | |||||||
Consulting fees | 2,626 | |||||||
Trustees’ expenses | 673 | 3,397,706 | ||||||
Less waived distribution expenses – Class A | (52,942 | ) | ||||||
Less waived distribution expenses – Class R | (1,631 | ) | ||||||
Less expense paid indirectly | (742 | ) | ||||||
Total operating expenses | 3,342,391 | |||||||
Net Investment Income | 6,416,240 |
28
Net Realized and Unrealized Gain (Loss) on Investments | ||||
and Foreign Currencies: | ||||
Net realized gain (loss) on: | ||||
Investments | $ | 14,097,708 | ||
Foreign currencies | 51,054 | |||
Foreign currency exchange contracts | (212,876 | ) | ||
Written options | 164,679 | |||
Net realized gain | 14,100,565 | |||
Net change in unrealized appreciation/depreciation of | ||||
investments and foreign currencies | 31,227,408 | |||
Net Realized and Unrealized Gain on Investments | ||||
and Foreign Currencies | 45,327,973 | |||
Net Increase in Net Assets Resulting from Operations | $ | 51,744,213 |
See accompanying notes, which are an integral part of the financial statements.
29
Statements of changes in net assets
Delaware Dividend Income Fund
Delaware Dividend Income Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
5/31/11 | 11/30/10 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 6,416,240 | $ | 13,892,879 | ||||
Net realized gain (loss) on investments and | ||||||||
foreign currencies | 14,100,565 | (2,793,120 | ) | |||||
Net change in unrealized appreciation/depreciation | ||||||||
of investments and foreign currencies | 31,227,408 | 31,162,256 | ||||||
Net increase in net assets resulting | ||||||||
from operations | 51,744,213 | 42,262,015 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
�� Class A | (3,763,043 | ) | (9,092,299 | ) | ||||
Class B | (401,777 | ) | (1,216,637 | ) | ||||
Class C | (2,338,285 | ) | (5,878,746 | ) | ||||
Class R | (53,575 | ) | (151,477 | ) | ||||
Institutional Class | (360,245 | ) | (431,703 | ) | ||||
(6,916,925 | ) | (16,770,862 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 33,607,915 | 27,671,433 | ||||||
Class B | 160,670 | 284,117 | ||||||
Class C | 23,422,521 | 19,653,715 | ||||||
Class R | 341,032 | 756,560 | ||||||
Institutional Class | 13,241,890 | 12,586,556 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 3,054,332 | 7,304,780 | ||||||
Class B | 329,385 | 1,000,567 | ||||||
Class C | 1,923,454 | 4,801,845 | ||||||
Class R | 53,521 | 151,477 | ||||||
Institutional Class | 275,113 | 313,834 | ||||||
76,409,833 | 74,524,884 |
30
Six Months | Year | |||||||
Ended | Ended | |||||||
5/31/11 | 11/30/10 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares repurchased: | ||||||||
Class A | $ | (29,557,496 | ) | $ | (55,570,505 | ) | ||
Class B | (4,099,423 | ) | (8,071,290 | ) | ||||
Class C | (17,799,679 | ) | (37,547,418 | ) | ||||
Class R | (476,194 | ) | (1,147,063 | ) | ||||
Institutional Class | (2,278,692 | ) | (2,890,606 | ) | ||||
(54,211,484 | ) | (105,226,882 | ) | |||||
Increase (decrease) in net assets derived | ||||||||
from capital share transactions | 22,198,349 | (30,701,998 | ) | |||||
Net Increase (Decrease) in Net Assets | 67,025,637 | (5,210,845 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 389,723,443 | 394,934,288 | ||||||
End of period (including distributions | ||||||||
in excess of net investment income of | ||||||||
$1,998,776 and $2,249,604, respectively) | $ | 456,749,080 | $ | 389,723,443 |
See accompanying notes, which are an integral part of the financial statements.
31
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 have been annualized and total return and portfolio turnover have 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/or distributor. Performance would have been lower had the waivers not been in effect.
See accompanying notes, which are an integral part of the financial statements.
32
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/111 | 11/30/10 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$9.810 | $9.190 | $7.010 | $12.030 | $12.590 | $11.140 | |||||||||||||||
0.174 | 0.373 | 0.407 | 0.400 | 0.456 | 0.422 | |||||||||||||||
1.112 | 0.695 | 2.247 | (4.595 | ) | (0.529 | ) | 1.551 | |||||||||||||
1.286 | 1.068 | 2.654 | (4.195 | ) | (0.073 | ) | 1.973 | |||||||||||||
(0.186 | ) | (0.448 | ) | (0.474 | ) | (0.489 | ) | (0.426 | ) | (0.457 | ) | |||||||||
— | — | — | (0.336 | ) | (0.061 | ) | (0.066 | ) | ||||||||||||
(0.186 | ) | (0.448 | ) | (0.474 | ) | (0.825 | ) | (0.487 | ) | (0.523 | ) | |||||||||
$10.910 | $9.810 | $9.190 | $7.010 | $12.030 | $12.590 | |||||||||||||||
13.19% | 11.91% | 39.35% | (37.15% | ) | (0.72% | ) | 18.34% | |||||||||||||
$222,066 | $192,876 | $200,720 | $179,588 | $450,620 | $398,124 | |||||||||||||||
1.21% | 1.26% | 1.17% | 1.00% | 1.00% | 1.01% | |||||||||||||||
1.26% | 1.31% | 1.36% | 1.26% | 1.17% | 1.23% | |||||||||||||||
3.31% | 3.93% | 5.22% | 3.92% | 3.60% | 3.64% | |||||||||||||||
3.26% | 3.88% | 5.03% | 3.66% | 3.43% | 3.42% | |||||||||||||||
49% | 109% | 69% | 51% | 52% | 51% |
33
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 have been annualized and total return and portfolio turnover have 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, which are an integral part of the financial statements.
34
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/111 | 11/30/10 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$9.820 | $9.190 | $7.010 | $12.020 | $12.580 | $11.130 | |||||||||||||||
0.135 | 0.302 | 0.348 | 0.324 | 0.360 | 0.335 | |||||||||||||||
1.111 | 0.694 | 2.248 | (4.590 | ) | (0.528 | ) | 1.552 | |||||||||||||
1.246 | 0.996 | 2.596 | (4.266 | ) | (0.168 | ) | 1.887 | |||||||||||||
(0.146 | ) | (0.366 | ) | (0.416 | ) | (0.408 | ) | (0.331 | ) | (0.371 | ) | |||||||||
— | — | — | (0.336 | ) | (0.061 | ) | (0.066 | ) | ||||||||||||
(0.146 | ) | (0.366 | ) | (0.416 | ) | (0.744 | ) | (0.392 | ) | (0.437 | ) | |||||||||
$10.920 | $9.820 | $9.190 | $7.010 | $12.020 | $12.580 | |||||||||||||||
12.75% | 11.06% | 38.47% | (37.72% | ) | (1.38% | ) | 17.46% | |||||||||||||
$28,519 | $29,003 | $33,725 | $32,534 | $78,235 | $77,757 | |||||||||||||||
1.96% | 2.01% | 1.92% | 1.75% | 1.75% | 1.76% | |||||||||||||||
1.96% | 2.01% | 2.06% | 1.96% | 1.87% | 1.93% | |||||||||||||||
2.56% | 3.18% | 4.47% | 3.17% | 2.85% | 2.89% | |||||||||||||||
2.56% | 3.18% | 4.33% | 2.96% | 2.73% | 2.72% | |||||||||||||||
49% | 109% | 69% | 51% | 52% | 51% |
35
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 have been annualized and total return and portfolio turnover have 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, which are an integral part of the financial statements.
36
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/111 | 11/30/10 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$9.820 | $9.190 | $7.010 | $12.030 | $12.580 | $11.130 | |||||||||||||||
0.135 | 0.302 | 0.348 | 0.323 | 0.360 | 0.335 | |||||||||||||||
1.111 | 0.694 | 2.248 | (4.599 | ) | (0.518 | ) | 1.552 | |||||||||||||
1.246 | 0.996 | 2.596 | (4.276 | ) | (0.158 | ) | 1.887 | |||||||||||||
(0.146 | ) | (0.366 | ) | (0.416 | ) | (0.408 | ) | (0.331 | ) | (0.371 | ) | |||||||||
— | — | — | (0.336 | ) | (0.061 | ) | (0.066 | ) | ||||||||||||
(0.146 | ) | (0.366 | ) | (0.416 | ) | (0.744 | ) | (0.392 | ) | (0.437 | ) | |||||||||
$10.920 | $9.820 | $9.190 | $7.010 | $12.030 | $12.580 | |||||||||||||||
12.75% | 11.06% | 38.27% | (37.63% | ) | (1.38% | ) | 17.46% | |||||||||||||
$177,030 | $152,009 | $155,028 | $146,769 | $402,782 | $269,274 | |||||||||||||||
1.96% | 2.01% | 1.92% | 1.75% | 1.75% | 1.76% | |||||||||||||||
1.96% | 2.01% | 2.06% | 1.96% | 1.87% | 1.93% | |||||||||||||||
2.56% | 3.18% | 4.47% | 3.17% | 2.85% | 2.89% | |||||||||||||||
2.56% | 3.18% | 4.33% | 2.96% | 2.73% | 2.72% | |||||||||||||||
49% | 109% | 69% | 51% | 52% | 51% |
37
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 have been annualized and total return and portfolio turnover have 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/or distributor. Performance would have been lower had the waivers not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
38
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/111 | 11/30/10 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$9.810 | $9.190 | $7.010 | $12.020 | $12.580 | $11.130 | |||||||||||||||
0.161 | 0.349 | 0.387 | 0.374 | 0.424 | 0.394 | |||||||||||||||
1.112 | 0.693 | 2.246 | (4.585 | ) | (0.528 | ) | 1.551 | |||||||||||||
1.273 | 1.042 | 2.633 | (4.211 | ) | (0.104 | ) | 1.945 | |||||||||||||
(0.173 | ) | (0.422 | ) | (0.453 | ) | (0.463 | ) | (0.395 | ) | (0.429 | ) | |||||||||
— | — | — | (0.336 | ) | (0.061 | ) | (0.066 | ) | ||||||||||||
(0.173 | ) | (0.422 | ) | (0.453 | ) | (0.799 | ) | (0.456 | ) | (0.495 | ) | |||||||||
$10.910 | $9.810 | $9.190 | $7.010 | $12.020 | $12.580 | |||||||||||||||
13.05% | 11.60% | 39.15% | (37.39% | ) | (0.88% | ) | 18.06% | |||||||||||||
$3,332 | $3,069 | $3,067 | $1,928 | $6,220 | $4,275 | |||||||||||||||
1.46% | 1.51% | 1.42% | 1.25% | 1.25% | 1.26% | |||||||||||||||
1.56% | 1.61% | 1.66% | 1.56% | 1.47% | 1.53% | |||||||||||||||
3.06% | 3.68% | 4.97% | 3.67% | 3.35% | 3.39% | |||||||||||||||
2.96% | 3.58% | 4.73% | 3.36% | 3.13% | 3.12% | |||||||||||||||
49% | 109% | 69% | 51% | 52% | 51% |
39
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 have been annualized and total return and portfolio turnover have 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, which are an integral part of the financial statements.
40
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/111 | 11/30/10 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$9.810 | $9.190 | $7.010 | $12.040 | $12.600 | $11.140 | |||||||||||||||
0.188 | 0.399 | 0.426 | 0.425 | 0.488 | 0.452 | |||||||||||||||
1.111 | 0.697 | 2.246 | (4.602 | ) | (0.528 | ) | 1.559 | |||||||||||||
1.299 | 1.096 | 2.672 | (4.177 | ) | (0.040 | ) | 2.011 | |||||||||||||
(0.199 | ) | (0.476 | ) | (0.492 | ) | (0.517 | ) | (0.459 | ) | (0.485 | ) | |||||||||
— | — | — | (0.336 | ) | (0.061 | ) | (0.066 | ) | ||||||||||||
(0.199 | ) | (0.476 | ) | (0.492 | ) | (0.853 | ) | (0.520 | ) | (0.551 | ) | |||||||||
$10.910 | $9.810 | $9.190 | $7.010 | $12.040 | $12.600 | |||||||||||||||
13.32% | 12.24% | 39.68% | (37.04% | ) | (0.46% | ) | 18.72% | |||||||||||||
$25,802 | $12,766 | $2,394 | $2,288 | $5,384 | $2,656 | |||||||||||||||
0.96% | 1.01% | 0.92% | 0.75% | 0.75% | 0.76% | |||||||||||||||
0.96% | 1.01% | 1.06% | 0.96% | 0.87% | 0.93% | |||||||||||||||
3.56% | 4.18% | 5.47% | 4.17% | 3.85% | 3.89% | |||||||||||||||
3.56% | 4.18% | 5.33% | 3.96% | 3.73% | 3.72% | |||||||||||||||
49% | 109% | 69% | 51% | 52% | 51% |
41
Notes to financial statements | |
Delaware Dividend Income Fund | May 31, 2011 (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 be purchased only 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. Other debt securities 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 company securities are valued at net asset value per share. Exchange-traded options are valued at the last reported sale price or, if no sales are reported, at the mean between the last reported bid and ask prices. 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
42
Fund values its securities, generally as of 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, 2007–November 30, 2010), 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.
Foreign Currency Transactions — Transactions denominated in foreign currencies are recorded at the prevailing exchange rates on the valuation date in accordance with the Fund’s prospectus. 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 generally 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. For foreign equity securities, these changes are included in net realized and unrealized gain or loss on investments. 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.
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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other — Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware 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
43
Notes to financial statements
Delaware Dividend Income Fund
Delaware Dividend Income Fund
1. Significant Accounting Policies (continued)
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 have been recorded 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 monthly and distributions from net realized gain on investments, if any, annually. The Fund may distribute income dividends and capital gains more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.
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, 2011.
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, 2011.
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which are used to offset transfer agent fees. The expense paid under this arrangement is included in dividend disbursing and transfer agent fees and expenses on the statement of operations with the corresponding expense offset shown as “expense paid indirectly.” For the six months ended May 31, 2011, the Fund earned $742 under this agreement.
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.
44
Effective March 30, 2011, 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 0.98% of average daily net assets of the Fund through March 29, 2012. Prior to March 30, 2011, DMC had 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 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. The expense waiver and reimbursement apply 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, 2011, the Fund was charged $10,692 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 Class C shares and 0.60% of the average daily net assets of the Class R shares. Institutional Class shares pay no distribution and service expenses. DDLP has contracted to waive distribution and service fees through March 29, 2012 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, 2011, the Fund had liabilities payable to affiliates as follows:
Investment management fee payable to DMC | $ | 250,480 | |
Dividend disbursing, transfer agent and fund accounting | |||
oversight fees and other expenses payable to DSC | 30,279 | ||
Distribution fees payable to DDLP | 223,136 | ||
Other expenses payable to DMC and affiliates* | 22,876 |
*DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. Expenses include items such as printing of shareholder reports, fees for audit, legal and tax services, registration fees and trustees’ fees.
45
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, 2011, the Fund was charged $1,507 for internal legal and tax services provided by DMC and/or its affiliates’ employees.
For the six months ended May 31, 2011, DDLP earned $54,821 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2011 DDLP received gross CDSC commissions of $0, $15,853 and $2,416 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, 2011, the Fund made purchases of $228,592,520 and sales of $202,821,476 of investment securities other than U.S. government securities and short-term investments. For the six months ended May 31, 2011, the Fund made purchases of $1,514,327 and sales of $48,800 of long-term U.S. government securities.
At May 31, 2011, 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, 2011, the cost of investments was $480,747,306. At May 31, 2011, the net unrealized appreciation was $27,117,994 of which $47,494,873 related to unrealized appreciation of investments and $20,376,879 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 for identical investments (e.g., equity securities, open-end investment companies, futures contracts, options contracts) |
46
Level 2 – | other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) (e.g., debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing) |
Level 3 – | inputs are significant unobservable inputs (including the Fund’s own assumptions used to determine the fair value of investments) (e.g., broker-quoted securities, fair valued securities) |
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of May 31, 2011:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Agency, Asset-Backed & | ||||||||||||
Mortgage-Backed Securities | $ | — | $ | 2,744,519 | $ | — | $ | 2,744,519 | ||||
Common Stock | 209,267,472 | 22,602,834 | 11 | 231,870,317 | ||||||||
Corporate Debt | — | 197,865,608 | 1,208,041 | 199,073,649 | ||||||||
Short-Term Investments | — | 18,365,017 | — | 18,365,017 | ||||||||
Securities Lending Collateral | — | 48,867,142 | — | 48,867,142 | ||||||||
Other | 6,159,028 | 785,626 | 2 | 6,944,656 | ||||||||
Total | $ | 215,426,500 | $ | 291,230,746 | $ | 1,208,054 | $ | 507,865,300 |
The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:
Securities | ||||||||||||||||||
Corporate | Common | Lending | ||||||||||||||||
Debt | Stock | Collateral | Other | Total | ||||||||||||||
Balance as of 11/30/10 | $ | 966,947 | $ | 11 | $ | — | $ | 14,637 | $ | 981,595 | ||||||||
Purchases | 1,855,000 | — | — | — | 1,855,000 | |||||||||||||
Sales | (1,538,431 | ) | — | — | (4 | ) | (1,538,435 | ) | ||||||||||
Net realized gain | 10,473 | — | — | 4 | 10,477 | |||||||||||||
Transfer out of Level 3 | — | — | — | (553,160 | ) | (553,160 | ) | |||||||||||
Net change in unrealized | ||||||||||||||||||
appreciation/depreciation | (85,948 | ) | — | — | 538,525 | 452,577 | ||||||||||||
Balance as of 5/31/11 | $ | 1,208,041 | $ | 11 | $ | — | $ | 2 | $ | 1,208,054 | ||||||||
Net change in unrealized | ||||||||||||||||||
appreciation/depreciation | ||||||||||||||||||
from investments still held | ||||||||||||||||||
as of 5/31/11 | $ | (87,849 | ) | $ | — | $ | — | $ | — | $ | (87,849 | ) |
47
Notes to financial statements
Delaware Dividend Income Fund
Delaware Dividend Income Fund
3. Investments (continued)
During the six months ended May 31, 2011, the Fund had transfers out of Level 3 investments into Level 2 investments in the amount of $553,160, which was due to the Fund’s pricing vendor being able to supply a matrix price for an investment that had been utilizing a broker quoted price. During the six months ended May 31, 2011, there were no transfers between Level 1 investments and Level 2 investments that had a material impact to the Fund. This does not include transfers between Level 1 investments and Level 2 investments due to the Fund utilizing international fair value pricing during the period.
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, 2011 and the year ended November 30, 2010 was as follows:
Six Months | Year | |||
Ended | Ended | |||
5/31/11* | 11/30/10 | |||
Ordinary Income | $6,916,925 | $16,770,862 |
*Tax information for the period ended May 31, 2011 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, 2011, the estimated components of net assets on a tax basis were as follows:
Shares of beneficial interest | $ | 579,620,506 | ||
Undistributed ordinary income | 169,845 | |||
Realized gains 12/1/10–5/31/11 | 13,141,914 | |||
Capital loss carryforwards as of 11/30/10 | (161,121,054 | ) | ||
Other temporary differences | (2,188,303 | ) | ||
Unrealized appreciation of investments and foreign currencies | 27,126,172 | |||
Net assets | $ | 456,749,080 |
The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales, tax treatment of market discount and premium on debt instruments, tax treatment of partnership income and contingent payment debt instruments.
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
48
passive foreign investment companies. Results of operations and net assets were not affected by these reclassifications. For the six months ended May 31, 2011, the Fund recorded an estimate of these differences since final tax characteristics cannot be determined until fiscal year end.
Undistributed net investment income | $ | 670,530 | ||
Accumulated net realized loss | (670,530 | ) |
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, 2010 will expire as follows: $106,372,004 expires in 2016 and $54,749,050 expires in 2017.
For the six months ended May 31, 2011, the Fund had capital gains of $13,060,931, which may reduce the capital loss carryforwards.
6. Capital Shares
Transactions in capital shares were as follows:
Six Months | Year | |||||
Ended | Ended | |||||
5/31/11 | 11/30/10 | |||||
Shares sold: | ||||||
Class A | 3,200,340 | 2,903,974 | ||||
Class B | 15,551 | 29,560 | ||||
Class C | 2,231,778 | 2,058,302 | ||||
Class R | 32,358 | 80,422 | ||||
Institutional Class | 1,253,868 | 1,307,297 | ||||
Shares issued upon reinvestment of dividends and distributions: | ||||||
Class A | 289,273 | 773,532 | ||||
Class B | 31,196 | 105,905 | ||||
Class C | 181,936 | 507,969 | ||||
Class R | 5,068 | 16,044 | ||||
Institutional Class | 25,925 | 33,090 | ||||
7,267,293 | 7,816,095 | |||||
Shares repurchased: | ||||||
Class A | (2,802,987 | ) | (5,850,259 | ) | ||
Class B | (389,942 | ) | (851,188 | ) | ||
Class C | (1,689,783 | ) | (3,952,273 | ) | ||
Class R | (45,041 | ) | (117,344 | ) | ||
Institutional Class | (216,503 | ) | (299,012 | ) | ||
(5,144,256 | ) | (11,070,076 | ) | |||
Net increase (decrease) | 2,123,037 | (3,253,981 | ) |
49
Notes to financial statements
Delaware Dividend Income Fund
Delaware Dividend Income Fund
6. Capital Shares (continued)
For the six months ended May 31, 2011 and the year ended November 30, 2010, 28,126 Class B shares were converted to 28,154 Class A shares valued at $291,190 and 87,197 Class B shares were converted to 87,127 Class A shares valued at $830,839, 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 $50,000,000 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 are permitted to borrow up to a maximum of one third of their net assets under the agreement. The agreement as amended expires on November 15, 2011. The Fund had no amounts outstanding as of May 31, 2011 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 an unfavorable change in the value of hedged currency, they also limit any potential gain that might result should the value of the currency change favorably. 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 their 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. No foreign currency exchange contracts were outstanding at May 31, 2011.
50
Options Contracts — During the six months ended May 31, 2011, the Fund entered into options contracts in the normal course of pursuing its investment objective. The Fund may buy or write options contracts for any number of reasons, including without limitation: to manage the Fund’s exposure to changes in securities prices and foreign currencies; to earn income; as an efficient means of adjusting the Fund’s overall exposure to certain markets; to protect the value of portfolio securities; and as a cash management tool. The Fund may buy or write call or put options on securities, financial indices, and foreign currencies.
When the Fund buys an option, a premium is paid and an asset is recorded and adjusted on a daily basis to reflect the current market value of the options purchased. When the Fund writes an option, a premium is received and a liability is recorded and adjusted on a daily basis to reflect the current market value of the options written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is treated as realized gain or loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has a realized gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund.
The Fund, as writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. When writing options, the Fund is subject to minimal counterparty risk because the counterparty is only obligated to pay premiums and does not bear the market risk of an unfavorable market change.
Transactions in written options during the six months ended May 31, 2011 for the Fund were as follows:
Number of | |||||||
contracts | Premiums | ||||||
Options outstanding at November 30, 2010 | — | $ | — | ||||
Options written | 5,817 | 202,096 | |||||
Options terminated in closing purchase transactions | (488 | ) | (36,824 | ) | |||
Options expired | (5,329 | ) | (165,272 | ) | |||
Options outstanding at May 31, 2011 | — | $ | — |
The volume of derivative transactions varies throughout the period. Information about derivative transactions reflected on the financial statements is as of the date of this report, but may not be indicative of the type and volume of derivative activity for the six months ended May 31, 2011.
51
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 on any business day the aggregate market value of securities collateral plus cash collateral held 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 by the end of the following business day which, together with the collateral already held, will be not less than the applicable collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable collateral requirement, upon the request of the borrower BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security may be temporarily more or less than the value of the security on loan.
Cash collateral received is generally invested in the Delaware Investments Collateral Fund No. 1 (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of funds managed by DMC that participate in BNY Mellon’s securities lending program. The Collective Trust may invest in U.S. government securities and high quality corporate debt, asset-backed and other money market securities and in repurchase agreements collateralized by such securities, provided that the Collective Trust will generally have a dollar-weighted average portfolio maturity of 60 days or less. The Collective Trust seeks to maintain a net asset value per unit of $1.00, but there can be no assurance that it 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 or another collateral investment pool. This could occur if an investment in a collateral investment pool defaulted or if it were necessary to liquidate assets in the collateral investment pool to meet returns on outstanding security loans at a time when the collateral investment pool’s net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the collateral investment pool 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 this shortfall. Effective April 20, 2009, BNY Mellon transferred the assets of the Fund’s previous collateral investment pool other than cash and assets with a maturity of one business day or less to the BNY Mellon SL DBT II Liquidating Fund (Liquidating Fund), effectively bifurcating the previous collateral investment pool. The Fund’s exposure to the Liquidating Fund is expected to decrease as the Liquidating Fund’s assets mature or are sold. In October 2008, BNY Mellon transferred certain distressed securities from the previous collateral investment pool 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
52
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 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, 2011, the value of securities on loan was $48,505,541, for which the Fund received collateral, comprised of non-cash collateral valued at $131,588 and cash collateral of $49,585,602. At May 31, 2011, the value of invested collateral was $48,867,142. Investments purchased with cash collateral are presented on the statement of net asset 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 are securities rated lower than BBB- by Standard & Poor’s and Baa3 by Moody’s Investor Services or similarly rated by another nationally recognized statistical rating organization. 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 six months ended May 31, 2011. 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 securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s 15% limit on investments in illiquid securities. Rule 144A and illiquid securities have been identified on the statement of net assets.
53
Notes to financial statements
Delaware Dividend Income Fund
Delaware Dividend Income Fund
11. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
12. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to May 31, 2011 that would require recognition or disclosure in the Fund’s financial statements.
54
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 Trust) effective May 20, 2010. At a meeting held on May 20, 2010, the Board of Trustees of the Trust, upon recommendation of the Audit Committee, selected PricewaterhouseCoopers LLP (PwC) to serve as the independent registered public accounting firm for the Trust 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 Trust 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 Trust 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 Trust 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 Trust’s financial statements.
55
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 Drexel University Philadelphia, 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 the Delaware Investments Fund fact sheet for the most recently completed calendar quarter. These documents are available at www.delawareinvestments.com. |
Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (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 website 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 website 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 website at www.delawareinvestments.com; and (ii) on the SEC’s website at www.sec.gov. |
56
![](https://capedge.com/proxy/N-CSR/0001206774-11-001610/del_topimg02.jpg)
Semiannual report Delaware Small Cap Core Fund May 31, 2011 U.S. core equity mutual fund |
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and, if available, its summary prospectus, which may be obtained by visiting www.delawareinvestments.com or calling 800 523-1918. Investors should read the prospectus and, if available, the summary prospectus carefully before investing. |
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
Delaware Management Holdings, Inc. and its subsidiaries (collectively known by the marketing name of Delaware Investments) are wholly owned subsidiaries of Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services.
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 |
Security type/sector allocation | |
and top 10 equity holdings | 3 |
Statement of net assets | 5 |
Statement of operations | 12 |
Statements of changes in net assets | 14 |
Financial highlights | 16 |
Notes to financial statements | 24 |
Other Fund information | 33 |
About the organization | 34 |
Unless otherwise noted, views expressed herein are current as of May 31, 2011, and 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.
© 2011 Delaware Management Holdings, Inc.
All third-party trademarks cited are the property of their respective owners.
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.
© 2011 Delaware Management Holdings, Inc.
All third-party trademarks cited are the property of their respective owners.
Disclosure of Fund expenses
For the six-month period from December 1, 2010 to May 31, 2011
For the six-month period from December 1, 2010 to May 31, 2011
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 six-month period from December 1, 2010 to May 31, 2011.
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
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 | ||||||||||||
12/1/10 | 5/31/11 | Expense Ratio | 12/1/10 to 5/31/11* | ||||||||||||
Actual Fund return | |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,213.30 | 1.40 | % | $ | 7.73 | |||||||
Class C | 1,000.00 | 1,208.00 | 2.15 | % | 11.84 | ||||||||||
Class R | 1,000.00 | 1,210.40 | 1.65 | % | 9.09 | ||||||||||
Institutional Class | 1,000.00 | 1,214.40 | 1.15 | % | 6.35 | ||||||||||
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
Security type/sector allocation and | |
top 10 equity holdings | |
Delaware Small Cap Core Fund | As of May 31, 2011 |
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/sector | Percentage of net assets | |
Common Stock | 96.69 | % |
Basic Materials | 4.49 | % |
Business Services | 5.78 | % |
Capital Goods | 12.58 | % |
Communication Services | 2.75 | % |
Consumer Discretionary | 6.76 | % |
Consumer Services | 3.35 | % |
Consumer Staples | 3.52 | % |
Energy | 6.94 | % |
Financials | 11.50 | % |
Healthcare | 12.08 | % |
Media | 1.20 | % |
Real Estate | 5.80 | % |
Technology | 16.76 | % |
Transportation | 1.23 | % |
Utilities | 1.95 | % |
Short-Term Investments | 3.45 | % |
Securities Lending Collateral | 24.39 | % |
Total Value of Securities | 124.53 | % |
Obligation to Return Securities Lending Collateral | (24.63 | %) |
Receivables and Other Assets Net of Other Liabilities | 0.10 | % |
Total Net Assets | 100.00 | % |
3
Security type/sector allocation and
top 10 equity holdings
Delaware Small Cap Core Fund
top 10 equity holdings
Delaware Small Cap Core Fund
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 | |
Berry Petroleum Class A | 1.16 | % |
G-III Apparel Group | 1.10 | % |
Pioneer Drilling | 1.04 | % |
Key Energy Services | 1.04 | % |
Esterline Technologies | 1.01 | % |
Rock-Tenn Class A | 1.01 | % |
Perry Ellis International | 1.01 | % |
HUB Group Class A | 1.00 | % |
Catalyst Health Solutions | 1.00 | % |
United Stationers | 0.99 | % |
4
Statement of net assets | |
Delaware Small Cap Core Fund | May 31, 2011 (Unaudited) |
Number of shares | Value | ||||
Common Stock – 96.69% | |||||
Basic Materials – 4.49% | |||||
† | Castle (A.M.) | 15,200 | $ | 280,896 | |
† | Ferro | 40,500 | 530,550 | ||
*† | KapStone Paper & Packaging | 23,600 | 388,220 | ||
* | Rock-Tenn Class A | 10,990 | 844,362 | ||
† | Rockwood Holdings | 15,280 | 803,575 | ||
Schulman (A.) | 10,200 | 259,998 | |||
* | Silgan Holdings | 14,460 | 649,109 | ||
3,756,710 | |||||
Business Services – 5.78% | |||||
*† | AMN Healthcare Services | 70,230 | 607,490 | ||
† | CRA International | 12,320 | 344,960 | ||
† | Kforce | 38,150 | 514,644 | ||
Lincoln Educational Services | 21,130 | 309,132 | |||
* | McGrath RentCorp | 10,880 | 305,075 | ||
† | TeleTech Holdings | 30,200 | 546,620 | ||
† | Tetra Tech | 17,700 | 430,641 | ||
*† | Titan Machinery | 20,750 | 555,893 | ||
* | U.S. Ecology | 22,380 | 392,545 | ||
* | United Stationers | 11,250 | 832,724 | ||
4,839,724 | |||||
Capital Goods – 12.58% | |||||
* | AAON | 17,350 | 584,695 | ||
* | Acuity Brands | 9,720 | 592,531 | ||
Applied Industrial Technologies | 20,440 | 728,073 | |||
* | Barnes Group | 23,900 | 576,229 | ||
† | Chart Industries | 7,834 | 380,576 | ||
*† | Columbus McKinnon | 27,920 | 544,440 | ||
* | Cooper Tire & Rubber | 22,200 | 536,352 | ||
Ducommun | 20,900 | 410,267 | |||
* | ESCO Technologies | 12,800 | 480,896 | ||
† | Esterline Technologies | 11,200 | 846,943 | ||
† | Gibraltar Industries | 50,000 | 653,000 | ||
* | Granite Construction | 11,200 | 307,888 | ||
† | Kadant | 19,900 | 585,458 | ||
Koppers Holdings | 16,320 | 654,922 | |||
* | Lufkin Industries | 4,880 | 442,665 | ||
*† | MYR Group | 25,000 | 563,750 | ||
† | Rofin-Sinar Technologies | 17,600 | 636,064 |
5
Statement of net assets
Delaware Small Cap Core Fund
Delaware Small Cap Core Fund
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Capital Goods (continued) | ||||||
*† | Tenneco | 16,100 | $ | 672,175 | ||
* | Tutor Perini | 16,480 | 334,544 | |||
10,531,468 | ||||||
Communication Services – 2.75% | ||||||
* | Alaska Communications Systems Group | 35,600 | 321,112 | |||
* | Atlantic Tele-Network | 8,384 | 320,520 | |||
† | InterXion Holding | 15,891 | 224,222 | |||
*† | IPG Photonics | 6,900 | 518,535 | |||
* | NTELOS Holdings | 24,490 | 510,617 | |||
*† | RigNet | 24,300 | 405,567 | |||
2,300,573 | ||||||
Consumer Discretionary – 6.76% | ||||||
* | Big 5 Sporting Goods | 27,700 | 263,150 | |||
*† | Citi Trends | 12,900 | 215,430 | |||
*† | DSW Class A | 16,600 | 832,490 | |||
† | G-III Apparel Group | 21,400 | 918,488 | |||
*† | Iconix Brand Group | 24,000 | 592,800 | |||
* | Jones Group | 15,200 | 186,808 | |||
*† | Jos. A. Bank Clothiers | 10,950 | 625,245 | |||
† | Perry Ellis International | 27,000 | 842,535 | |||
*† | Steven Madden | 13,600 | 758,064 | |||
*† | Ulta Salon Cosmetics & Fragrance | 7,600 | 425,448 | |||
5,660,458 | ||||||
Consumer Services – 3.35% | ||||||
† | AFC Enterprises | 43,400 | 719,572 | |||
*† | Bally Technologies | 7,440 | 293,210 | |||
*† | Buffalo Wild Wings | 6,320 | 395,885 | |||
* | CEC Entertainment | 12,610 | 513,101 | |||
*† | Jack in the Box | 16,080 | 357,137 | |||
*† | Shuffle Master | 48,100 | 523,809 | |||
2,802,714 | ||||||
Consumer Staples – 3.52% | ||||||
* | Casey’s General Stores | 18,200 | 754,390 | |||
† | Fresh Market | 9,689 | 389,885 | |||
J&J Snack Foods | 11,200 | 577,024 | ||||
† | Prestige Brands Holdings | 46,300 | 597,733 | |||
*† | Susser Holdings | 43,950 | 630,243 | |||
2,949,275 |
6
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Energy – 6.94% | ||||||
* | Berry Petroleum Class A | 18,600 | $ | 974,825 | ||
Bristow Group | 13,750 | 631,813 | ||||
*† | Carrizo Oil & Gas | 21,300 | 813,873 | |||
† | Complete Production Services | 16,319 | 541,628 | |||
*† | Key Energy Services | 49,200 | 869,856 | |||
† | Pioneer Drilling | 59,500 | 871,080 | |||
*† | Rosetta Resources | 9,800 | 481,670 | |||
† | Swift Energy | 15,900 | 623,757 | |||
5,808,502 | ||||||
Financials – 11.50% | ||||||
Alterra Capital Holdings | 21,450 | 487,988 | ||||
American Equity Investment Life Holding | 45,100 | 585,849 | ||||
Apollo Investment | 51,750 | 590,468 | ||||
Boston Private Financial Holdings | 63,300 | 417,780 | ||||
Cardinal Financial | 37,900 | 419,553 | ||||
City Holding | 11,350 | 366,265 | ||||
Delphi Financial Group | 19,500 | 568,815 | ||||
Dime Community Bancshares | 34,100 | 478,082 | ||||
Flushing Financial | 32,800 | 440,176 | ||||
GFI Group | 72,600 | 328,878 | ||||
@ | Harleysville Group | 13,770 | 441,053 | |||
Home BancShares | 20,300 | 486,794 | ||||
@ | Independent Bank | 14,600 | 432,744 | |||
Park National | 7,500 | 505,725 | ||||
† | Piper Jaffray | 10,200 | 338,844 | |||
† | ProAssurance | 8,830 | 620,837 | |||
Prosperity Bancshares | 15,500 | 678,124 | ||||
† | Texas Capital Bancshares | 17,300 | 433,019 | |||
Trustmark | 26,400 | 629,376 | ||||
Webster Financial | 17,900 | 373,394 | ||||
9,623,764 | ||||||
Healthcare – 12.08% | ||||||
† | Acorda Therapeutics | 14,500 | 476,325 | |||
*† | Air Methods | 9,600 | 586,080 | |||
† | Align Technology | 29,870 | 731,815 | |||
*† | Alkermes | 42,430 | 777,318 | |||
*† | Catalyst Health Solutions | 13,690 | 835,500 | |||
*† | CONMED | 16,740 | 473,742 |
7
Statement of net assets
Delaware Small Cap Core Fund
Delaware Small Cap Core Fund
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Healthcare (continued) | ||||||
† | CryoLife | 48,300 | $ | 270,963 | ||
*† | Haemonetics | 8,400 | 568,092 | |||
† | ICON ADR | 21,600 | 552,744 | |||
*† | Incyte | 26,200 | 464,526 | |||
† | Merit Medical Systems | 41,987 | 823,784 | |||
† | Onyx Pharmaceuticals | 18,490 | 784,901 | |||
*† | Quidel | 32,000 | 490,880 | |||
*† | Regeneron Pharmaceuticals | 11,410 | 684,828 | |||
*† | SonoSite | 17,250 | 615,998 | |||
† | Sun Healthcare Group | 37,716 | 376,029 | |||
* | West Pharmaceutical Services | 12,910 | 600,057 | |||
10,113,582 | ||||||
Media – 1.20% | ||||||
*† | Carmike Cinemas | 25,200 | 182,952 | |||
Cinemark Holdings | 17,743 | 385,910 | ||||
National CineMedia | 24,650 | 439,017 | ||||
1,007,879 | ||||||
Real Estate – 5.80% | ||||||
* | BioMed Realty Trust | 16,600 | 340,134 | |||
* | DuPont Fabros Technology | 22,000 | 575,080 | |||
* | EastGroup Properties | 13,600 | 637,976 | |||
* | Entertainment Properties Trust | 13,200 | 641,256 | |||
* | Home Properties | 11,910 | 737,228 | |||
LaSalle Hotel Properties | 10,900 | 304,982 | ||||
* | Sabra Healthcare REIT | 27,716 | 482,536 | |||
* | Sovran Self Storage | 15,030 | 630,659 | |||
* | Tanger Factory Outlet Centers | 18,500 | 508,010 | |||
4,857,861 | ||||||
Technology – 16.76% | ||||||
ADTRAN | 13,100 | 561,466 | ||||
*† | Amkor Technology | 66,100 | 422,379 | |||
* | Anixter International | 9,750 | 659,977 | |||
*† | Applied Micro Circuits | 48,100 | 508,898 | |||
† | Arris Group | 35,900 | 405,311 | |||
† | FARO Technologies | 10,090 | 451,628 |
8
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Technology (continued) | ||||||
† | IXYS | 36,900 | $ | 512,541 | ||
*† | j2 Global Communications | 21,300 | 617,487 | |||
*† | Keyw Holding | 32,182 | 363,013 | |||
† | Knology | 34,950 | 545,570 | |||
*† | Liquidity Services | 27,100 | 568,016 | |||
*† | LogMeIn | 15,377 | 669,206 | |||
*† | Netgear | 11,310 | 473,324 | |||
* | Plantronics | 14,400 | 526,608 | |||
*† | Progress Software | 22,925 | 620,580 | |||
* | Quality Systems | 6,850 | 589,648 | |||
*† | QuinStreet | 27,200 | 420,512 | |||
*† | Rackspace Hosting | 11,900 | 523,600 | |||
† | Radiant Systems | 25,500 | 535,500 | |||
† | RPX | 3,485 | 100,717 | |||
† | Semtech | 17,900 | 512,298 | |||
† | SolarWinds | 24,880 | 613,292 | |||
† | SS&C Technologies Holdings | 31,732 | 620,361 | |||
*† | Synaptics | 17,920 | 502,656 | |||
* | Syntel | 3,300 | 177,771 | |||
*† | ValueClick | 25,830 | 466,232 | |||
*† | ViaSat | 10,730 | 475,017 | |||
† | Vocus | 21,350 | 581,574 | |||
14,025,182 | ||||||
Transportation – 1.23% | ||||||
† | Box Ships | 17,961 | 194,877 | |||
† | HUB Group Class A | 21,970 | 838,375 | |||
1,033,252 | ||||||
Utilities – 1.95% | ||||||
* | Cleco | 15,300 | 536,877 | |||
Northwestern | 10,400 | 343,928 | ||||
* | UIL Holdings | 11,216 | 371,586 | |||
* | Unitil | 14,790 | 379,068 | |||
1,631,459 | ||||||
Total Common Stock (cost $59,294,972) | 80,942,403 |
9
Statement of net assets
Delaware Small Cap Core Fund
Delaware Small Cap Core Fund
Principal amount | Value | |||||||
≠Short-Term Investments – 3.45% | ||||||||
Discount Notes – 3.45% | ||||||||
Federal Home Loan | ||||||||
0.01% 6/1/11 | $2,754,001 | $ | 2,754,001 | |||||
0.06% 6/7/11 | 132,611 | 132,611 | ||||||
Total Short-Term Investments (cost $2,886,611) | 2,886,612 | |||||||
Total Value of Securities Before Securities | ||||||||
Lending Collateral – 100.14% (cost $62,181,583) | 83,829,015 | |||||||
Number of shares | ||||||||
Securities Lending Collateral** – 24.39% | ||||||||
Investment Companies | ||||||||
BNY Mellon SL DBT II Liquidating Fund | 138,935 | 135,517 | ||||||
Delaware Investments Collateral Fund No.1 | 20,278,035 | 20,278,035 | ||||||
@†Mellon GSL Reinvestment Trust II | 203,386 | 0 | ||||||
Total Securities Lending Collateral (cost $20,620,356) | 20,413,552 | |||||||
Total Value of Securities – 124.53% | ||||||||
(cost $82,801,939) | 104,242,567 | © | ||||||
Obligation to Return Securities | ||||||||
Lending Collateral** – (24.63%) | (20,620,356 | ) | ||||||
Receivables and Other Assets | ||||||||
Net of Other Liabilities – 0.10% | 87,755 | |||||||
Net Assets Applicable to 6,228,173 | ||||||||
Shares Outstanding – 100.00% | $ | 83,709,966 | ||||||
Net Asset Value – Delaware Small Cap Core Fund | ||||||||
Class A ($28,238,880 / 2,095,426 Shares) | $13.48 | |||||||
Net Asset Value – Delaware Small Cap Core Fund | ||||||||
Class C ($9,830,081 / 758,803 Shares) | $12.95 | |||||||
Net Asset Value – Delaware Small Cap Core Fund | ||||||||
Class R ($6,511,753 / 488,406 Shares) | $13.33 | |||||||
Net Asset Value – Delaware Small Cap Core Fund | ||||||||
Institutional Class ($39,129,252 / 2,885,538 Shares) | $13.56 |
10
Components of Net Assets at May 31, 2011: | ||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 79,868,254 | ||
Accumulated net realized loss on investments | (17,598,916 | ) | ||
Net unrealized appreciation of investments | 21,440,628 | |||
Total net assets | $ | 83,709,966 |
† | 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, 2011, the aggregate amount of illiquid securities was $873,797, which represented 1.04% of the Fund’s net assets. See Note 9 in “Notes to financial statements.” |
© | Includes $20,314,458 of securities loaned. |
Summary of abbreviations:
ADR — American Depositary Receipts
REIT — Real Estate Investment Trust
ADR — American Depositary Receipts
REIT — Real Estate Investment Trust
Net Asset Value and Offering Price per Share – | |||
Delaware Small Cap Core Fund | |||
Net asset value Class A (A) | $ | 13.48 | |
Sales charge (5.75% of offering price) (B) | 0.82 | ||
Offering price | $ | 14.30 |
(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, which are an integral part of the financial statements.
11
Statement of operations | |
Delaware Small Cap Core Fund | Six Months Ended May 31, 2011 (Unaudited) |
Investment Income: | �� | ||||||
Dividends | $ | 428,781 | |||||
Securities lending income | 14,635 | ||||||
Interest | 522 | $ | 443,938 | ||||
Expenses: | |||||||
Management fees | 298,298 | ||||||
Distribution expenses – Class A | 39,336 | ||||||
Distribution expenses – Class C | 46,205 | ||||||
Distribution expenses – Class R | 17,925 | ||||||
Dividend disbursing and transfer agent fees and expenses | 82,596 | ||||||
Registration fees | 27,152 | ||||||
Accounting and administration expenses | 15,643 | ||||||
Reports and statements to shareholders | 14,174 | ||||||
Audit and tax | 7,459 | ||||||
Dues and services | 4,435 | ||||||
Legal fees | 3,644 | ||||||
Trustees’ fees | 2,070 | ||||||
Pricing fees | 1,261 | ||||||
Custodian fees | 1,221 | ||||||
Insurance fees | 1,032 | ||||||
Consulting fees | 379 | ||||||
Trustees’ expenses | 125 | 562,955 | |||||
Less fees waived | (2,308 | ) | |||||
Less waived distribution expenses – Class A | (6,556 | ) | |||||
Less waived distribution expenses – Class R | (2,987 | ) | |||||
Less expense paid indirectly | (110 | ) | |||||
Total operating expenses | 550,994 | ||||||
Net Investment Loss | (107,056 | ) | |||||
Net Realized and Unrealized Gain on Investments: | |||||||
Net realized gain on investments | 5,733,901 | ||||||
Net change in unrealized appreciation/depreciation of investments | 9,365,854 | ||||||
Net Realized and Unrealized Gain on Investments | 15,099,755 | ||||||
Net Increase in Net Assets Resulting from Operations | $ | 14,992,699 |
See accompanying notes, which are an integral part of the financial statements.
12
Statements of changes in net assets
Delaware Small Cap Core Fund
Delaware Small Cap Core Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
5/31/11 | 11/30/10 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income (loss) | $ | (107,056 | ) | $ | 261,395 | |||
Net realized gain on investments | 5,733,901 | 3,522,341 | ||||||
Net change in unrealized | ||||||||
appreciation/depreciation of investments | 9,365,854 | 12,929,275 | ||||||
Net increase in net assets resulting from operations | 14,992,699 | 16,713,011 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (92,099 | ) | — | |||||
Class R | (8,964 | ) | — | |||||
Institutional Class | (212,181 | ) | (17,356 | ) | ||||
(313,244 | ) | (17,356 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 3,223,216 | 4,306,525 | ||||||
Class C | 808,012 | 686,381 | ||||||
Class R | 1,269,244 | 2,049,922 | ||||||
Institutional Class | 2,936,574 | 7,109,533 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 78,094 | — | ||||||
Class R | 8,964 | — | ||||||
Institutional Class | 208,938 | 17,356 | ||||||
8,533,042 | 14,169,717 |
14
Six Months | Year | |||||||
Ended | Ended | |||||||
5/31/11 | 11/30/10 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares repurchased: | ||||||||
Class A | $ | (3,111,670 | ) | $ | (11,425,713 | ) | ||
Class C | (973,989 | ) | (1,741,133 | ) | ||||
Class R | (1,197,811 | ) | (1,642,766 | ) | ||||
Institutional Class | (4,894,286 | ) | (11,609,584 | ) | ||||
(10,177,756 | ) | (26,419,196 | ) | |||||
Decrease in net assets derived from capital share transactions | (1,644,714 | ) | (12,249,479 | ) | ||||
Net Increase in Net Assets | 13,034,741 | 4,446,176 | ||||||
Net Assets: | ||||||||
Beginning of period | 70,675,225 | 66,229,049 | ||||||
End of period (including undistributed net investment | ||||||||
income of $- and $280,680, respectively) | $ | 83,709,966 | $ | 70,675,225 |
See accompanying notes, which are an integral part of the financial statements.
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 have been annualized and total return and portfolio turnover have 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, which are an integral part of the financial statements.
16
Six Months Ended | Year Ended | ||||||||||||||||||
5/31/111 | 11/30/10 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$11.150 | $8.740 | $6.930 | $12.150 | $13.030 | $11.380 | ||||||||||||||
(0.018 | ) | 0.034 | 0.003 | 0.019 | (0.010 | ) | (0.015 | ) | |||||||||||
2.392 | 2.376 | 1.815 | (4.747 | ) | (0.450 | ) | 1.895 | ||||||||||||
2.374 | 2.410 | 1.818 | (4.728 | ) | (0.460 | ) | 1.880 | ||||||||||||
(0.044 | ) | — | (0.008 | ) | — | — | — | ||||||||||||
— | — | — | (0.492 | ) | (0.420 | ) | (0.230 | ) | |||||||||||
(0.044 | ) | — | (0.008 | ) | (0.492 | ) | (0.420 | ) | (0.230 | ) | |||||||||
$13.480 | $11.150 | $8.740 | $6.930 | $12.150 | $13.030 | ||||||||||||||
21.33% | 27.57% | 25.36% | (40.55% | ) | (3.62% | ) | 16.83% | ||||||||||||
$28,239 | $23,191 | $24,512 | $17,529 | $41,871 | $25,220 | ||||||||||||||
1.40% | 1.40% | 1.45% | 1.34% | 1.29% | 1.26% | ||||||||||||||
1.46% | 1.54% | 1.63% | 1.57% | 1.47% | 1.73% | ||||||||||||||
(0.28% | ) | 0.35% | 0.04% | 0.19% | (0.07% | ) | (0.13% | ) | |||||||||||
(0.34% | ) | 0.21% | (0.14% | ) | (0.04% | ) | (0.25% | ) | (0.60% | ) | |||||||||
21% | 37% | 79% | 84% | 104% | 121% |
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 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 have been annualized and total return and portfolio turnover have 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 a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
18
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/111 | 11/30/10 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$10.720 | $8.470 | $6.750 | $11.940 | $12.910 | $11.360 | |||||||||||||||
(0.062 | ) | (0.039 | ) | (0.052 | ) | (0.055 | ) | (0.105 | ) | (0.106 | ) | |||||||||
2.292 | 2.289 | 1.772 | (4.643 | ) | (0.445 | ) | 1.886 | |||||||||||||
2.230 | 2.250 | 1.720 | (4.698 | ) | (0.550 | ) | 1.780 | |||||||||||||
— | — | — | (0.492 | ) | (0.420 | ) | (0.230 | ) | ||||||||||||
— | — | — | (0.492 | ) | (0.420 | ) | (0.230 | ) | ||||||||||||
$12.950 | $10.720 | $8.470 | $6.750 | $11.940 | $12.910 | |||||||||||||||
20.80% | 26.56% | 25.48% | (41.03% | ) | (4.37% | ) | 15.97% | |||||||||||||
$9,830 | $8,285 | $7,468 | $7,494 | $18,697 | $11,777 | |||||||||||||||
2.15% | 2.15% | 2.20% | 2.09% | 2.04% | 2.01% | |||||||||||||||
2.16% | 2.24% | 2.33% | 2.27% | 2.17% | 2.43% | |||||||||||||||
(1.03% | ) | (0.40% | ) | (0.71% | ) | (0.56% | ) | (0.82% | ) | (0.88% | ) | |||||||||
(1.04% | ) | (0.49% | ) | (0.84% | ) | (0.74% | ) | (0.95% | ) | (1.30% | ) | |||||||||
21% | 37% | 79% | 84% | 104% | 121% |
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 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 loss to average net assets |
prior to fees waived and expense paid indirectly |
Portfolio turnover |
1 Ratios have been annualized and total return and portfolio turnover have 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, which are an integral part of the financial statements.
20
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/111 | 11/30/10 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$11.030 | $8.660 | $6.870 | $12.090 | $13.000 | $11.360 | |||||||||||||||
(0.033 | ) | 0.009 | (0.016 | ) | (0.005 | ) | (0.042 | ) | (0.047 | ) | ||||||||||
2.352 | 2.361 | 1.806 | (4.723 | ) | (0.448 | ) | 1.917 | |||||||||||||
2.319 | 2.370 | 1.790 | (4.728 | ) | (0.490 | ) | 1.870 | |||||||||||||
(0.019 | ) | — | — | — | — | — | ||||||||||||||
— | — | — | (0.492 | ) | (0.420 | ) | (0.230 | ) | ||||||||||||
(0.019 | ) | — | — | (0.492 | ) | (0.420 | ) | (0.230 | ) | |||||||||||
$13.330 | $11.030 | $8.660 | $6.870 | $12.090 | $13.000 | |||||||||||||||
21.04% | 27.37% | 26.06% | (40.75% | ) | (3.86% | ) | 16.78% | |||||||||||||
$6,512 | $5,322 | $3,848 | $2,611 | $3,100 | $215 | |||||||||||||||
1.65% | 1.65% | 1.70% | 1.59% | 1.54% | 1.51% | |||||||||||||||
1.76% | 1.84% | 1.93% | 1.87% | 1.77% | 2.03% | |||||||||||||||
(0.53% | ) | 0.10% | (0.21% | ) | (0.06% | ) | (0.32% | ) | (0.38% | ) | ||||||||||
(0.64% | ) | (0.09% | ) | (0.44% | ) | (0.34% | ) | (0.55% | ) | (0.90% | ) | |||||||||
21% | 37% | 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 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 have been annualized and total return and portfolio turnover have 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, which are an integral part of the financial statements.
22
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/111 | 11/30/10 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$11.230 | $8.790 | $6.970 | $12.190 | $13.040 | $11.390 | |||||||||||||||
(0.002 | ) | 0.060 | 0.022 | 0.044 | 0.023 | 0.015 | ||||||||||||||
2.402 | 2.385 | 1.830 | (4.772 | ) | (0.453 | ) | 1.895 | |||||||||||||
2.400 | 2.445 | 1.852 | (4.728 | ) | (0.430 | ) | 1.910 | |||||||||||||
(0.070 | ) | (0.005 | ) | (0.032 | ) | — | — | (0.030 | ) | |||||||||||
— | — | — | (0.492 | ) | (0.420 | ) | (0.230 | ) | ||||||||||||
(0.070 | ) | (0.005 | ) | (0.032 | ) | (0.492 | ) | (0.420 | ) | (0.260 | ) | |||||||||
$13.560 | $11.230 | $8.790 | $6.970 | $12.190 | $13.040 | |||||||||||||||
21.44% | 27.83% | 25.78% | (40.41% | ) | (3.38% | ) | 17.13% | |||||||||||||
$39,129 | $33,877 | $30,401 | $22,988 | $31,176 | $15,482 | |||||||||||||||
1.15% | 1.15% | 1.20% | 1.09% | 1.04% | 1.01% | |||||||||||||||
1.16% | 1.24% | 1.33% | 1.27% | 1.17% | 1.43% | |||||||||||||||
(0.03% | ) | 0.60% | 0.29% | 0.44% | 0.18% | 0.12% | ||||||||||||||
(0.04% | ) | 0.51% | 0.16% | 0.26% | 0.05% | (0.30% | ) | |||||||||||||
21% | 37% | 79% | 84% | 104% | 121% |
23
Notes to financial statements | |
Delaware Small Cap Core Fund | May 31, 2011 (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. U.S. government and agency securities are valued at the mean between the bid and ask prices. Investment company securities 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 generally as of 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
24
distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (November 30, 2007 – November 30, 2010), 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.
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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other — Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware 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. The Fund may distribute income dividends and capital gains more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.
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 period ended May 31, 2011.
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, 2011.
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 transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. The expense paid under this arrangement is included in dividend disbursing and transfer agent fees and expenses on the statement of operations with the corresponding expense offset shown as “expense paid indirectly.” For the six months ended May 31, 2011, the Fund earned $110 under this agreement.
2. Investment Management, Administration Agreements and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee which is calculated daily at the rate of 0.75% on the first $500 million of average daily net assets of the Fund, 0.70% on the next $500 million, 0.65% on the next $1.5 billion, and 0.60% on average daily net assets in excess of $2.5 billion.
DMC has contractually agreed to waive that portion, if any, of its management fee and reimburse the Fund to the extent necessary to ensure that 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 29, 2012. 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, 2011, the Fund was charged $1,969 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 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 29, 2012, 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.
26
At May 31, 2011, the Fund had liabilities payable to affiliates as follows:
Investment management fee payable to DMC | $ | 51,956 | |
Dividend disbursing, transfer agent and fund accounting | |||
oversight fees and other expenses payable to DSC | 4,233 | ||
Distribution fees payable to DDLP | 16,831 | ||
Other expenses payable to DMC and affiliates* | 6,305 |
*DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. 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, 2011, the Fund was charged $822 for internal legal and tax services provided by DMC and/or its affiliates’ employees.
For the six months ended May 31, 2011, DDLP earned $1,775 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2011, DDLP received gross CDSC commissions of $0 and $43 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, 2011, the Fund made purchases of $16,261,276 and sales of $20,086,872 of investment securities other than short-term investments.
At May 31, 2011, 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, 2011, the cost of investments was $84,587,634. At May 31, 2011, net unrealized appreciation was $19,654,933, of which $23,026,674 related to unrealized appreciation of investments and $3,371,741 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
27
Notes to financial statements
Delaware Small Cap Core Fund
Delaware Small Cap Core Fund
3. Investments (continued)
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 for identical investments (e.g., equity securities, open-end investment companies, futures contracts, options contracts) |
Level 2 – | other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) (e.g., debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing) |
Level 3 – | inputs are significant unobservable inputs (including the Fund’s own assumptions used to determine the fair value of investments) (e.g., broker-quoted securities, fair valued securities) |
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of May 31, 2011:
Level 1 | Level 2 | Level 3 | Total | ||||||||||
Common Stock | $ | 80,942,403 | $ | — | $— | $ | 80,942,403 | ||||||
Short-Term Investments | — | 2,886,612 | — | 2,886,612 | |||||||||
Securities Lending Collateral | — | 20,413,552 | — | 20,413,552 | |||||||||
Total | $ | 80,942,403 | $ | 23,300,164 | $— | $ | 104,242,567 |
The value of Level 3 investments was zero at the beginning and end of the period and there was no change in unrealized appreciation/depreciation.
During the six months ended May 31, 2011, there were no transfers between Level 1 investments, Level 2 investments or Level 3 investments that had a material impact to the Fund.
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, 2011 and the year end November 30, 2010 was as follows:
Six Months | ||||
Ended | Year Ended | |||
5/31/11* | 11/30/10 | |||
Ordinary income | $313,244 | $17,356 |
*Tax information for the six months ended May 31, 2011 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, 2011, the estimated components of net assets on a tax basis were as follows:
Shares of beneficial interest | $ | 79,868,254 | ||
Capital loss carrryforwards as of 5/31/11 | (21,078,487 | ) | ||
Realized gains 12/1/10 – 5/31/11 | 5,265,266 | |||
Unrealized appreciation of investments | 19,654,933 | |||
Net assets | $ | 83,709,966 |
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 dividends and distributions. Results of operations and net assets were not affected by these reclassifications. For the six months ended May 31, 2011, the Fund recorded the following reclassifications.
Accumulated net investment loss | $ | 139,620 | ||
Paid-in capital | (139,620 | ) |
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, 2010 will expire as follows: $11,444,334 expires in 2016 and $9,634,153 expires in 2017.
For the six months ended May 31, 2011, the Fund had capital gains of $5,265,266, 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 | |||||
5/31/11 | 11/30/10 | |||||
Shares sold: | ||||||
Class A | 257,283 | 429,893 | ||||
Class C | 67,373 | 72,175 | ||||
Class R | 102,661 | 205,640 | ||||
Institutional Class | 233,179 | 711,873 | ||||
Shares issued upon reinvestment of dividends and distributions: | ||||||
Class A | 6,438 | — | ||||
Class R | 746 | — | ||||
Institutional Class | 17,126 | 1,846 | ||||
684,806 | 1,421,427 | |||||
Shares repurchased: | ||||||
Class A | (247,365 | ) | (1,154,997 | ) | ||
Class C | (81,134 | ) | (181,685 | ) | ||
Class R | (97,639 | ) | (167,239 | ) | ||
Institutional Class | (380,443 | ) | (1,158,242 | ) | ||
(806,581 | ) | (2,662,163 | ) | |||
Net decrease | (121,775 | ) | (1,240,736 | ) |
7. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), participates in a $50,000,000 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 are permitted to borrow up to a maximum of one third of their net assets under the agreement. The agreement as amended expires November 15, 2011. The Fund had no amounts outstanding as of May 31, 2011, or at any time during the period then ended.
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 on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the
30
subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day which, together with the collateral already held, will be not less than the applicable collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable collateral requirement, upon the request of the borrower BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security may be temporarily more or less than the value of the security on loan.
Cash collateral received is generally invested in the Delaware Investments Collateral Fund No. 1 (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of funds managed by DMC that participate in BNY Mellon’s securities lending program. The Collective Trust may invest in U.S. government securities and high quality corporate debt, asset-backed and other money market securities and in repurchase agreements collateralized by such securities, provided that the Collective Trust will generally have a dollar-weighted average portfolio maturity of 60 days or less. The Collective Trust seeks to maintain a net asset value per unit of $1.00, but there can be no assurance that it 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 or another collateral investment pool. This could occur if an investment in a collateral investment pool defaulted or if it were necessary to liquidate assets in the collateral investment pool to meet returns on outstanding security loans at a time when the collateral investment pool’s net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the collateral investment pool 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 this shortfall. Effective April 20, 2009, BNY Mellon transferred the assets of the Fund’s previous collateral investment pool other than cash and assets with a maturity of one business day or less to the BNY Mellon SL DBT II Liquidating Fund (Liquidating Fund), effectively bifurcating the previous collateral investment pool. The Fund’s exposure to the Liquidating Fund is expected to decrease as the Liquidating Fund’s assets mature or are sold. In October 2008, BNY Mellon transferred certain distressed securities from the previous collateral investment pool 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 collateralized by cash
31
Notes to financial statements
Delaware Small Cap Core Fund
Delaware Small Cap Core Fund
8. Securities Lending (continued)
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, 2011, the value of securities on loan was $20,314,458, for which the Fund received collateral, comprised of securities collateral valued at $684 and cash collateral of $20,620,356. At May 31, 2011, the value of invested collateral was $20,413,552. Investments purchased with cash collateral are presented on the statement of net asset 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 six months ended May 31, 2011. 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 DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s 15% limit on investments in illiquid securities. As of May 31, 2011, 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. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to May 31, 2011 that would require recognition or disclosure in the Fund’s financial statements.
32
Other Fund information
(Unaudited)
Delaware Small Cap Core Fund
(Unaudited)
Delaware Small Cap Core 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 Trust) effective May 20, 2010. At a meeting held on May 20, 2010, the Board of Trustees of the Trust, upon recommendation of the Audit Committee, selected PricewaterhouseCoopers LLP (PwC) to serve as the independent registered public accounting firm for the Trust 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 Trust 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 Trust 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 Trust 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 Trust’s financial statements.
33
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 Drexel University Philadelphia, 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 the Delaware Investments Fund fact sheet for the most recently completed calendar quarter. These documents are available at www.delawareinvestments.com. |
Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (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 website 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 website 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 website at www.delawareinvestments.com; and (ii) on the SEC’s website at www.sec.gov. |
34
![](https://capedge.com/proxy/N-CSR/0001206774-11-001610/del_topimg02.jpg)
Semiannual report Delaware Small Cap Value Fund May 31, 2011 U.S. value equity mutual fund |
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and, if available, its summary prospectus, which may be obtained by visiting www.delawareinvestments.com or calling 800 523-1918. Investors should read the prospectus and, if available, the summary prospectus carefully before investing. |
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
- 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
Delaware Management Holdings, Inc. and its subsidiaries (collectively known by the marketing name of Delaware Investments) are wholly owned subsidiaries of Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services.
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 |
Security type/sector allocation | |
and top 10 equity holdings | 3 |
Statement of net assets | 5 |
Statement of operations | 11 |
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, 2011, and 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.
© 2011 Delaware Management Holdings, Inc.
All third-party trademarks cited are the property of their respective owners.
Disclosure of Fund expenses
For the six-month period from December 1, 2010 to May 31, 2011
For the six-month period from December 1, 2010 to May 31, 2011
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 six-month period from December 1, 2010 to May 31, 2011.
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 | ||||||||||||
12/1/10 | 5/31/11 | Expense Ratio | 12/1/10 to 5/31/11* | ||||||||||||
Actual Fund return | |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,139.80 | 1.37 | % | $ | 7.31 | |||||||
Class B | 1,000.00 | 1,135.80 | 2.12 | % | 11.29 | ||||||||||
Class C | 1,000.00 | 1,135.60 | 2.12 | % | 11.29 | ||||||||||
Class R | 1,000.00 | 1,138.50 | 1.62 | % | 8.64 | ||||||||||
Institutional Class | 1,000.00 | 1,141.50 | 1.12 | % | 5.98 | ||||||||||
Hypothetical 5% return (5% return before expenses) | |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,018.10 | 1.37 | % | $ | 6.89 | |||||||
Class B | 1,000.00 | 1,014.36 | 2.12 | % | 10.65 | ||||||||||
Class C | 1,000.00 | 1,014.36 | 2.12 | % | 10.65 | ||||||||||
Class R | 1,000.00 | 1,016.85 | 1.62 | % | 8.15 | ||||||||||
Institutional Class | 1,000.00 | 1,019.35 | 1.12 | % | 5.64 |
* | “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/sector allocation and | |
top 10 equity holdings | |
Delaware Small Cap Value Fund | As of May 31, 2011 |
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/sector | Percentage of net assets | |
Common Stock | 94.09 | % |
Basic Industry | 11.95 | % |
Business Services | 1.79 | % |
Capital Spending | 8.23 | % |
Consumer Cyclical | 2.30 | % |
Consumer Services | 13.94 | % |
Consumer Staples | 0.88 | % |
Energy | 6.54 | % |
Financial Services | 19.40 | % |
Healthcare | 7.00 | % |
Real Estate | 3.69 | % |
Technology | 12.60 | % |
Transportation | 3.23 | % |
Utilities | 2.54 | % |
Short-Term Investments | 6.15 | % |
Securities Lending Collateral | 6.98 | % |
Total Value of Securities | 107.22 | % |
Obligation to Return Securities Lending Collateral | (7.05 | %) |
Other Liabilities Net of Receivables and Other Assets | (0.17 | %) |
Total Net Assets | 100.00 | % |
3
Security type/sector allocation and
top 10 equity holdings
Delaware Small Cap Value Fund
top 10 equity holdings
Delaware Small Cap Value Fund
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 | |
Whiting Petroleum | 3.28 | % |
Albemarle | 3.15 | % |
Gardner Denver | 2.46 | % |
FMC | 2.34 | % |
Cytec Industries | 2.12 | % |
Forest Oil | 1.87 | % |
Synopsys | 1.79 | % |
East West Bancorp | 1.77 | % |
El Paso Electric | 1.71 | % |
Infinity Property & Casualty | 1.63 | % |
4
Statement of net assets | |
Delaware Small Cap Value Fund | May 31, 2011 (Unaudited) |
Number of shares | Value | |||||
Common Stock – 94.09% | ||||||
Basic Industry – 11.95% | ||||||
Albemarle | 248,500 | $ | 17,603,740 | |||
* | Cytec Industries | 210,300 | 11,816,757 | |||
†* | Ferro | 447,800 | 5,866,180 | |||
FMC | 155,100 | 13,082,685 | ||||
* | Glatfelter (P.H.) | 188,000 | 2,897,080 | |||
* | Kaiser Aluminum | 89,200 | 4,704,408 | |||
† | Thompson Creek Metals | 354,500 | 3,849,870 | |||
Valspar | 179,900 | 6,918,954 | ||||
66,739,674 | ||||||
Business Services – 1.79% | ||||||
* | Brink’s | 131,800 | 3,921,050 | |||
United Stationers | 68,159 | 5,045,129 | ||||
Viad | 44,500 | 1,006,590 | ||||
9,972,769 | ||||||
Capital Spending – 8.23% | ||||||
Actuant Class A | 272,600 | 6,853,164 | ||||
†* | Altra Holdings | 225,600 | 5,944,560 | |||
Chicago Bridge & Iron | 195,300 | 7,433,118 | ||||
Gardner Denver | 164,000 | 13,739,920 | ||||
Regal-Beloit | 113,700 | 7,845,300 | ||||
Wabtec | 61,000 | 4,122,990 | ||||
45,939,052 | ||||||
Consumer Cyclical – 2.30% | ||||||
* | Autoliv | 58,300 | 4,487,934 | |||
Knoll | 181,800 | 3,488,742 | ||||
MDC Holdings | 180,100 | 4,853,695 | ||||
12,830,371 | ||||||
Consumer Services – 13.94% | ||||||
† | Big Lots | 137,100 | 4,580,511 | |||
Brinker International | 161,000 | 4,150,580 | ||||
Cato Class A | 180,400 | 4,910,488 | ||||
CEC Entertainment | 107,700 | 4,382,313 | ||||
† | Cheesecake Factory | 115,900 | 3,682,143 | |||
†* | Children’s Place Retail Stores | 76,200 | 3,828,288 | |||
† | Collective Brands | 213,100 | 3,324,360 | |||
Finish Line Class A | 263,500 | 6,076,310 |
5
Statement of net assets
Delaware Small Cap Value Fund
Delaware Small Cap Value Fund
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Consumer Services (continued) | ||||||
† | Genesco | 150,000 | $ | 6,748,500 | ||
† | Jack in the Box | 176,800 | 3,926,728 | |||
Men’s Wearhouse | 179,700 | 6,187,071 | ||||
* | Meredith | 123,900 | 3,916,479 | |||
Movado Group | 88,600 | 1,467,216 | ||||
PETsMART | 138,700 | 6,283,110 | ||||
* | Stage Stores | 254,100 | 4,583,964 | |||
†* | Warnaco Group | 79,600 | 4,389,940 | |||
* | Wolverine World Wide | 137,450 | 5,377,044 | |||
77,815,045 | ||||||
Consumer Staples – 0.88% | ||||||
* | Ruddick | 111,900 | 4,918,005 | |||
4,918,005 | ||||||
Energy – 6.54% | ||||||
† | Forest Oil | 349,400 | 10,447,060 | |||
* | Southwest Gas | 199,300 | 7,784,658 | |||
† | Whiting Petroleum | 272,600 | 18,291,460 | |||
36,523,178 | ||||||
Financial Services – 19.40% | ||||||
Bank of Hawaii | 163,800 | 7,764,120 | ||||
Berkley (W.R.) | 105,300 | 3,486,483 | ||||
Boston Private Financial Holdings | 372,700 | 2,459,820 | ||||
Community Bank System | 240,900 | 6,041,772 | ||||
CVB Financial | 160,800 | 1,442,376 | ||||
East West Bancorp | 491,523 | 9,874,697 | ||||
First Financial Bancorp | 279,800 | 4,476,800 | ||||
First Midwest Bancorp | 251,700 | 3,080,808 | ||||
Hancock Holding | 234,100 | 7,563,771 | ||||
@ | Harleysville Group | 187,900 | 6,018,437 | |||
@ | Independent Bank | 217,800 | 6,455,592 | |||
@ | Infinity Property & Casualty | 170,800 | 9,079,728 | |||
@ | NBT Bancorp | 368,000 | 8,092,320 | |||
Platinum Underwriters Holdings | 264,600 | 9,033,444 | ||||
S&T Bancorp | 131,000 | 2,440,530 | ||||
Selective Insurance Group | 445,500 | 7,381,935 | ||||
StanCorp Financial Group | 70,800 | 3,057,144 | ||||
Sterling Bancshares | 323,700 | 2,748,213 |
6
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Financial Services (continued) | ||||||
Univest Corp. of Pennsylvania | 32,300 | $ | 550,069 | |||
Validus Holdings | 127,784 | 4,118,478 | ||||
WesBanco | 159,700 | 3,163,657 | ||||
108,330,194 | ||||||
Healthcare – 7.00% | ||||||
Cooper | 118,100 | 8,846,871 | ||||
Hill-Rom Holdings | 123,400 | 5,631,976 | ||||
* | Owens & Minor | 136,200 | 4,712,520 | |||
Service Corp. International | 747,300 | 8,579,004 | ||||
* | Teleflex | 53,000 | 3,291,300 | |||
Universal Health Services Class B | 146,800 | 7,999,132 | ||||
39,060,803 | ||||||
Real Estate – 3.69% | ||||||
Brandywine Realty Trust | 328,437 | 4,190,856 | ||||
Education Realty Trust | 264,300 | 2,299,410 | ||||
* | Government Properties Income Trust | 116,400 | 3,082,272 | |||
Highwoods Properties | 138,600 | 5,000,688 | ||||
Washington Real Estate Investment Trust | 175,000 | 6,042,750 | ||||
20,615,976 | ||||||
Technology – 12.60% | ||||||
Black Box | 99,913 | 3,293,132 | ||||
† | Brocade Communications Systems | 672,100 | 4,482,907 | |||
†* | Checkpoint Systems | 262,200 | 4,748,442 | |||
† | Cirrus Logic | 270,700 | 4,453,015 | |||
† | Compuware | 643,200 | 6,554,208 | |||
† | Electronics for Imaging | 197,800 | 3,570,290 | |||
†* | ON Semiconductor | 462,200 | 5,185,884 | |||
† | Parametric Technology | 370,600 | 8,631,274 | |||
† | Premiere Global Services | 500,950 | 4,217,999 | |||
†* | QAD Class A | 90,160 | 973,728 | |||
QAD Class B | 22,540 | 233,514 | ||||
† | Synopsys | 364,900 | 9,976,367 | |||
†* | Tech Data | 123,700 | 5,859,669 | |||
† | Vishay Intertechnology | 474,500 | 7,530,315 | |||
†* | Vishay Precision Group | 35,700 | 650,811 | |||
70,361,555 |
7
Statement of net assets
Delaware Small Cap Value Fund
Delaware Small Cap Value Fund
Number of shares | Value | ||||||
Common Stock (continued) | |||||||
Transportation – 3.23% | |||||||
Alexander & Baldwin | 170,600 | $ | 8,354,282 | ||||
† | Kirby | 131,400 | 7,551,558 | ||||
†* | Saia | 134,100 | 2,106,711 | ||||
18,012,551 | |||||||
Utilities – 2.54% | |||||||
* | Black Hills | 92,000 | 2,853,840 | ||||
*† | El Paso Electric | 305,800 | 9,522,612 | ||||
* | Otter Tail | 82,100 | 1,799,632 | ||||
14,176,084 | |||||||
Total Common Stock (cost $397,783,422) | 525,295,257 | ||||||
Principal amount | |||||||
≠Short-Term Investments – 6.15% | |||||||
Discount Notes – 6.15% | |||||||
Federal Home Loan Bank | |||||||
0.01% 6/1/11 | $ | 33,443,017 | 33,443,018 | ||||
0.06% 6/7/11 | 867,564 | 867,562 | |||||
Total Short-Term Investments (cost $34,310,573) | 34,310,580 | ||||||
Total Value of Securities Before Securities | |||||||
Lending Collateral – 100.24% (cost $432,093,995) | 559,605,837 | ||||||
Number of shares | |||||||
Securities Lending Collateral** – 6.98% | |||||||
Investment Companies | |||||||
BNY Mellon SL DBT II Liquidating Fund | 411,212 | 401,096 | |||||
Delaware Investments Collateral Fund No. 1 | 38,574,584 | 38,574,584 | |||||
@†Mellon GSL Reinvestment Trust II | 372,297 | 0 | |||||
Total Securities Lending Collateral (cost $39,358,093) | 38,975,680 |
8
Total Value of Securities – 107.22% | ||||||
(cost $471,452,088) | $ | 598,581,517 | © | |||
Obligation to Return Securities | ||||||
Lending Collateral** – (7.05%) | (39,358,093 | ) | ||||
Other Liabilities Net of Receivables | ||||||
and Other Assets – (0.17%) | (923,379 | ) | ||||
Net Assets Applicable to 13,747,121 | ||||||
Shares Outstanding – 100.00% | $ | 558,300,045 | ||||
Net Asset Value – Delaware Small Cap Value Fund | ||||||
Class A ($364,659,686 / 8,871,608 Shares) | $41.10 | |||||
Net Asset Value – Delaware Small Cap Value Fund | ||||||
Class B ($13,239,519 / 364,840 Shares) | $36.29 | |||||
Net Asset Value – Delaware Small Cap Value Fund | ||||||
Class C ($59,846,656 / 1,649,949 Shares) | $36.27 | |||||
Net Asset Value – Delaware Small Cap Value Fund | ||||||
Class R ($28,843,776 / 716,033 Shares) | $40.28 | |||||
Net Asset Value – Delaware Small Cap Value Fund | ||||||
Institutional Class ($91,710,408 / 2,144,691 Shares) | $42.76 | |||||
Components of Net Assets at May 31, 2011: | ||||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 391,860,105 | ||||
Accumulated net realized gain on investments | 39,310,511 | |||||
Net unrealized appreciation of investments | 127,129,429 | |||||
Total net assets | $ | 558,300,045 |
* | Fully or partially on loan. |
† | Non income producing security. |
@ | Illiquid security. At May 31, 2011, the aggregate amount of illiquid securities was $29,646,077, which represented 5.31% of the Fund’s net assets. See Note 9 in “Notes to financial statements.” |
≠ | The rate shown is the effective yield at the time of purchase. |
** | See Note 8 in “Notes to financial statements.” |
© | Includes $38,879,587 of securities loaned. |
9
Statement of net assets
Delaware Small Cap Value Fund
Delaware Small Cap Value Fund
Net Asset Value and Offering Price Per Share – | |||
Delaware Small Cap Value Fund | |||
Net asset value Class A (A) | $ | 41.10 | |
Sales charge (5.75% of offering price) (B) | 2.51 | ||
Offering Price | $ | 43.61 |
(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, which are an integral part of the financial statements.
10
Statement of operations
Delaware Small Cap Value Fund | Six Months Ended May 31, 2011 (Unaudited) |
Investment Income: | ||||||||
Dividends | $ | 3,008,620 | ||||||
Interest | 5,108 | |||||||
Securities lending income | 19,238 | |||||||
Foreign tax withheld | (2,884 | ) | $ | 3,030,082 | ||||
Expenses: | ||||||||
Management fees | 1,912,424 | |||||||
Distribution expenses – Class A | 517,669 | |||||||
Distribution expenses – Class B | 69,989 | |||||||
Distribution expenses – Class C | 282,384 | |||||||
Distribution expenses – Class R | 77,496 | |||||||
Dividend disbursing and transfer agent fees and expenses | 698,840 | |||||||
Accounting and administration expenses | 100,573 | |||||||
Reports and statements to shareholders | 46,204 | |||||||
Registration fees | 38,484 | |||||||
Legal fees | 25,631 | |||||||
Audit and tax | 15,023 | |||||||
Trustees’ fees | 13,221 | |||||||
Dues and services | 5,812 | |||||||
Insurance fees | 5,688 | |||||||
Custodian fees | 3,830 | |||||||
Consulting fees | 2,868 | |||||||
Pricing fees | 1,411 | |||||||
Trustees’ expenses | 767 | 3,818,314 | ||||||
Less waived distribution expenses – Class A | (86,278 | ) | ||||||
Less waived distribution expenses – Class R | (12,916 | ) | ||||||
Less expenses paid indirectly | (981 | ) | ||||||
Total operating expenses | 3,718,139 | |||||||
Net Investment Loss | (688,057 | ) | ||||||
Net Realized and Unrealized Gain on Investments: | ||||||||
Net realized gain on investments | 39,682,853 | |||||||
Net change in unrealized appreciation/depreciation of investments | 23,561,852 | |||||||
Net Realized and Unrealized Gain on Investments | 63,244,705 | |||||||
Net Increase in Net Assets Resulting from Operations | $ | 62,556,648 |
See accompanying notes, which are an integral part of the financial statements.
11
Statements of changes in net assets
Delaware Small Cap Value Fund
Delaware Small Cap Value Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
5/31/11 | 11/30/10 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (688,057 | ) | $ | (483,604 | ) | ||
Net realized gain on investments | 39,682,853 | 16,083,685 | ||||||
Net change in unrealized appreciation/depreciation | ||||||||
of investments | 23,561,852 | 84,464,063 | ||||||
Net increase in net assets resulting from operations | 62,556,648 | 100,064,144 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (4,170 | ) | (143,912 | ) | ||||
Class C | (509 | ) | — | |||||
Institutional Class | — | (42,552 | ) | |||||
Net realized gain on investments: | ||||||||
Class A | (1,183,704 | ) | — | |||||
Class B | (58,291 | ) | — | |||||
Class C | (219,108 | ) | — | |||||
Class R | (84,036 | ) | — | |||||
Institutional Class | (186,063 | ) | — | |||||
(1,735,881 | ) | (186,464 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 69,448,204 | 69,133,015 | ||||||
Class B | 121,796 | 256,093 | ||||||
Class C | 9,967,898 | 5,440,766 | ||||||
Class R | 12,689,204 | 8,274,775 | ||||||
Institutional Class | 54,802,428 | 34,976,228 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 1,137,730 | 135,343 | ||||||
Class B | 54,435 | — | ||||||
Class C | 204,306 | — | ||||||
Class R | 83,842 | — | ||||||
Institutional Class | 136,429 | 42,441 | ||||||
148,646,272 | 118,258,661 |
12
Six Months | Year | |||||||
Ended | Ended | |||||||
5/31/11 | 11/30/10 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares repurchased: | ||||||||
Class A | $ | (49,824,012 | ) | $ | (71,846,195 | ) | ||
Class B | (2,928,994 | ) | (7,834,135 | ) | ||||
Class C | (6,684,765 | ) | (12,744,076 | ) | ||||
Class R | (7,639,798 | ) | (8,353,991 | ) | ||||
Institutional Class | (19,544,263 | ) | (9,199,557 | ) | ||||
(86,621,832 | ) | (109,977,954 | ) | |||||
Increase in net assets derived | ||||||||
from capital share transactions | 62,024,440 | 8,280,707 | ||||||
Net Increase in Net Assets | 122,845,207 | 108,158,387 | ||||||
Net Assets: | ||||||||
Beginning of period | 435,454,838 | 327,296,451 | ||||||
End of period (there was no undistributed net investment | ||||||||
income at either period end) | $ | 558,300,045 | $ | 435,454,838 |
See accompanying notes, which are an integral part of the financial statements.
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 have been annualized and total return and portfolio turnover have 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 a waiver by the manager and/or distributor. Performance would have been lower had the waivers not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
14
Six Months Ended | Year Ended | ||||||||||||||||||||
5/31/111 | 11/30/10 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | ||||||||||||||||
(Unaudited) | |||||||||||||||||||||
$36.190 | $27.530 | $21.340 | $36.000 | $41.970 | $39.110 | ||||||||||||||||
(0.037 | ) | (0.003 | ) | 0.059 | 0.072 | (0.050 | ) | (0.047 | ) | ||||||||||||
5.087 | 8.680 | 6.191 | (11.314 | ) | (2.647 | ) | 5.960 | ||||||||||||||
5.050 | 8.677 | 6.250 | (11.242 | ) | (2.697 | ) | 5.913 | ||||||||||||||
— | (0.017 | ) | (0.060 | ) | — | — | — | ||||||||||||||
(0.140 | ) | — | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | ||||||||||||
(0.140 | ) | (0.017 | ) | (0.060 | ) | (3.418 | ) | (3.273 | ) | (3.053 | ) | ||||||||||
$41.100 | $36.190 | $27.530 | $21.340 | $36.000 | $41.970 | ||||||||||||||||
13.98% | 31.53% | 29.01% | (34.55% | ) | (6.90% | ) | 16.26% | ||||||||||||||
$364,660 | $301,747 | $233,317 | $205,439 | $389,129 | $493,193 | ||||||||||||||||
1.37% | 1.43% | 1.43% | 1.44% | 1.37% | 1.41% | ||||||||||||||||
1.42% | 1.49% | 1.62% | 1.52% | 1.42% | 1.44% | ||||||||||||||||
(0.19% | ) | (0.01% | ) | 0.27% | 0.25% | (0.12% | ) | (0.12% | ) | ||||||||||||
(0.24% | ) | (0.07% | ) | 0.08% | 0.17% | (0.17% | ) | (0.15% | ) | ||||||||||||
15% | 12% | 19% | 13% | 23% | 36% |
15
Financial highlights
Delaware Small Cap Value Fund Class B
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 have been annualized and total return and portfolio turnover have 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, which are an integral part of the financial statements.
16
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/111 | 11/30/10 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$32.080 | $24.570 | $19.130 | $32.860 | $38.860 | $36.690 | |||||||||||||||
(0.164 | ) | (0.214 | ) | (0.088 | ) | (0.127 | ) | (0.314 | ) | (0.306 | ) | |||||||||
4.514 | 7.724 | 5.528 | (10.185 | ) | (2.413 | ) | 5.529 | |||||||||||||
4.350 | 7.510 | 5.440 | (10.312 | ) | (2.727 | ) | 5.223 | |||||||||||||
(0.140 | ) | — | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | |||||||||||
(0.140 | ) | — | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | |||||||||||
$36.290 | $32.080 | $24.570 | $19.130 | $32.860 | $38.860 | |||||||||||||||
13.58% | 30.57% | 28.44% | (35.08% | ) | (7.59% | ) | 15.38% | |||||||||||||
$13,239 | $14,249 | $17,532 | $21,825 | $54,684 | $94,495 | |||||||||||||||
2.12% | 2.18% | 2.18% | 2.19% | 2.12% | 2.14% | |||||||||||||||
2.12% | 2.19% | 2.32% | 2.22% | 2.12% | 2.14% | |||||||||||||||
(0.94% | ) | (0.76% | ) | (0.48% | ) | (0.50% | ) | (0.87% | ) | (0.85% | ) | |||||||||
(0.94% | ) | (0.77% | ) | (0.62% | ) | (0.53% | ) | (0.87% | ) | (0.85% | ) | |||||||||
15% | 12% | 19% | 13% | 23% | 36% |
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 have been annualized and total return and portfolio turnover have 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, which are an integral part of the financial statements.
18
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/111 | 11/30/10 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$32.070 | $24.560 | $19.120 | $32.850 | $38.840 | $36.670 | |||||||||||||||
(0.164 | ) | (0.215 | ) | (0.090 | ) | (0.126 | ) | (0.314 | ) | (0.306 | ) | |||||||||
4.504 | 7.725 | 5.530 | (10.186 | ) | (2.403 | ) | 5.529 | |||||||||||||
4.340 | 7.510 | 5.440 | (10.312 | ) | (2.717 | ) | 5.223 | |||||||||||||
(0.140 | ) | — | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | |||||||||||
(0.140 | ) | — | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | |||||||||||
$36.270 | $32.070 | $24.560 | $19.120 | $32.850 | $38.840 | |||||||||||||||
13.56% | 30.58% | 28.45% | (35.05% | ) | (7.56% | ) | 15.39% | |||||||||||||
$59,847 | $49,706 | $44,564 | $44,339 | $97,428 | $145,385 | |||||||||||||||
2.12% | 2.18% | 2.18% | 2.19% | 2.12% | 2.14% | |||||||||||||||
2.12% | 2.19% | 2.32% | 2.22% | 2.12% | 2.14% | |||||||||||||||
(0.94% | ) | (0.76% | ) | (0.48% | ) | (0.50% | ) | (0.87% | ) | (0.85% | ) | |||||||||
(0.94% | ) | (0.77% | ) | (0.62% | ) | (0.53% | ) | (0.87% | ) | (0.85% | ) | |||||||||
15% | 12% | 19% | 13% | 23% | 36% |
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 have been annualized and total return and portfolio turnover have 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 and/or distributor. Performance would have been lower had the waivers not been in effect.
See accompanying notes, which are an integral part of the financial statements.
20
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/111 | 11/30/10 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$35.510 | $27.070 | $20.970 | $35.530 | $41.550 | $38.840 | |||||||||||||||
(0.085 | ) | (0.081 | ) | 0.003 | (0.002 | ) | (0.146 | ) | (0.138 | ) | ||||||||||
4.995 | 8.521 | 6.097 | (11.140 | ) | (2.601 | ) | 5.901 | |||||||||||||
4.910 | 8.440 | 6.100 | (11.142 | ) | (2.747 | ) | 5.763 | |||||||||||||
(0.140 | ) | — | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | |||||||||||
(0.140 | ) | — | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | |||||||||||
$40.280 | $35.510 | $27.070 | $20.970 | $35.530 | $41.550 | |||||||||||||||
13.85% | 31.18% | 29.09% | (34.74% | ) | (7.11% | ) | 15.97% | |||||||||||||
$28,844 | $20,757 | $15,971 | $12,761 | $21,126 | $20,564 | |||||||||||||||
1.62% | 1.68% | 1.68% | 1.69% | 1.62% | 1.64% | |||||||||||||||
1.72% | 1.79% | 1.92% | 1.82% | 1.72% | 1.74% | |||||||||||||||
(0.44% | ) | (0.26% | ) | 0.02% | — | (0.37% | ) | (0.35% | ) | |||||||||||
(0.54% | ) | (0.37% | ) | (0.22% | ) | (0.13% | ) | (0.47% | ) | (0.45% | ) | |||||||||
15% | 12% | 19% | 13% | 23% | 36% |
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 have been annualized and total return and portfolio turnover have 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, which are an integral part of the financial statements.
22
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/111 | 11/30/10 | 11/30/09 | 11/30/08 | 11/30/07 | 11/30/06 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$37.590 | $28.580 | $22.170 | $37.190 | $43.140 | $40.020 | |||||||||||||||
0.013 | 0.081 | 0.116 | 0.148 | 0.049 | 0.058 | |||||||||||||||
5.297 | 9.005 | 6.427 | (11.750 | ) | (2.726 | ) | 6.115 | |||||||||||||
5.310 | 9.086 | 6.543 | (11.602 | ) | (2.677 | ) | 6.173 | |||||||||||||
— | (0.076 | ) | (0.133 | ) | — | — | — | |||||||||||||
(0.140 | ) | — | — | (3.418 | ) | (3.273 | ) | (3.053 | ) | |||||||||||
(0.140 | ) | (0.076 | ) | (0.133 | ) | (3.418 | ) | (3.273 | ) | (3.053 | ) | |||||||||
$42.760 | $37.590 | $28.580 | $22.170 | $37.190 | $43.140 | |||||||||||||||
14.15% | 31.85% | 29.28% | (34.38% | ) | (6.65% | ) | 16.56% | |||||||||||||
$91,710 | $48,996 | $15,912 | $13,920 | $26,308 | $37,033 | |||||||||||||||
1.12% | 1.18% | 1.18% | 1.19% | 1.12% | 1.14% | |||||||||||||||
1.12% | 1.19% | 1.32% | 1.22% | 1.12% | 1.14% | |||||||||||||||
0.06% | 0.24% | 0.52% | 0.50% | 0.13% | 0.15% | |||||||||||||||
0.06% | 0.23% | 0.38% | 0.47% | 0.13% | 0.15% | |||||||||||||||
15% | 12% | 19% | 13% | 23% | 36% |
23
Notes to financial statements | |
Delaware Small Cap Value Fund | May 31, 2011 (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. Investment company securities are valued at net asset value per share. 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. 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 generally as of 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 returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (November 30, 2007 – November 30, 2010), 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.
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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the difference could be material.
Other — Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware 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. Dividends and distributions, if any are recorded on the ex-dividend date. The Fund may distribute income dividends and capital gains more frequently, if necessary for tax purposes.
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, 2011.
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, 2011.
25
Notes to financial statements
Delaware Small Cap Value Fund
Delaware Small Cap Value Fund
1. Significant Accounting Policies (continued)
The Fund may receive earnings credits from its transfer agent when positive cash balances are maintained, which are used to offset transfer agent fees. The expense paid under this arrangement is included in dividend disbursing and transfer agent fees and expenses on the statement of operations with the corresponding expense offset shown as “expense paid indirectly.” For the six months ended May 31, 2011, the Fund earned $981 under this agreement.
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.
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 29, 2012. 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, 2011, the Fund was charged $12,660 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 29, 2012 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.
26
At May 31, 2011, the Fund had receivables due from or liabilities payable to affiliates as follows:
Investment management fee payable to DMC | $ | 350,482 |
Dividend disbursing, transfer agent and fund accounting | ||
oversight fees and other expenses payable to DSC | 41,225 | |
Distribution fees payable to DDLP | 150,763 | |
Other expenses payable to DMC and affiliates* | 42,938 |
*DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. 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, 2011, the Fund was charged $ 7,724 for internal legal and tax services provided by DMC and/or its affiliates’ employees.
For the six months ended May 31, 2011, DDLP earned $24,373 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2011, DDLP received gross CDSC commissions of $ 0, $ 6,293 and $ 664 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, 2011, the Fund made purchases of $119,167,798 and sales of $75,851,678 of investment securities other than short-term investments.
At May 31, 2011, 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, 2011, the cost of investments was $471,617,294. At May 31, 2011, the net unrealized appreciation was $126,964,223, of which $152,279,030 related to unrealized appreciation of investments and $25,314,807 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 Value Fund
Delaware Small Cap Value 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 for identical investments (e.g., equity securities, open-end investment companies, futures contracts, options contracts) |
Level 2 | – | other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) (e.g., debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing) |
Level 3 | – | inputs are significant unobservable inputs (including the Fund’s own assumptions used to determine the fair value of investments) (e.g., broker-quoted securities, fair valued securities) |
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of May 31, 2011:
Level 1 | Level 2 | Level 3 | Total | ||||||||
Common Stock | $ | 525,295,257 | $ | — | $ | — | $ | 525,295,257 | |||
Short-Term Investments | — | 34,310,580 | — | 34,310,580 | |||||||
Securities Lending Collateral | — | 38,975,680 | — | 38,975,680 | |||||||
Total | $ | 525,295,257 | $ | 73,286,260 | $ | — | $ | 598,581,517 |
The value of Level 3 investments was zero at the beginning and end of the period and there was no change in unrealized appreciation/depreciation.
During the six months ended May 31, 2011, there were no transfers between Level 1 Investments, Level 2 investments, or Level 3 investments that had a material impact to the Fund.
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, 2011 and the year ended November 30, 2010 was as follows:
Six Months | Year | ||||
Ended | Ended | ||||
5/31/11* | 11/30/10 | ||||
Ordinary income | $ | 4,679 | $ | 184,464 | |
Long-term capital gain | 1,731,202 | — | |||
Total | $ | 1,735,881 | $ | 184,464 |
*Tax information for the period ended May 31, 2011 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, 2011, the estimated components of net assets on a tax basis were as follows:
Shares of beneficial interest | $ | 391,860,105 |
Undistributed Ordinary Income | 6,311,335 | |
Undistributed long-term capital gains | 33,164,382 | |
Unrealized appreciation of investments | 126,964,223 | |
Net assets | $ | 558,300,045 |
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 net operating losses and overdistribution. Results of operations and net assets were not affected by these reclassifications. For the six months ended May 31, 2011, the Fund recorded an estimate of these differences since the final tax characteristics cannot be determined until fiscal year end.
Paid-in capital | $ | (692,736 | ) |
Accumulated net investment loss | 692,736 |
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 | ||||
5/31/11 | 11/30/10 | ||||
Shares sold: | |||||
Class A | 1,747,847 | 2,114,409 | |||
Class B | 3,449 | 8,932 | |||
Class C | 284,324 | 187,602 | |||
Class R | 324,355 | 256,654 | |||
Institutional Class | 1,307,798 | 1,028,999 | |||
Shares issued upon reinvestment of dividends and distributions: | |||||
Class A | 29,399 | 4,585 | |||
Class B | 1,588 | — | |||
Class C | 5,962 | — | |||
Class R | 2,208 | — | |||
Institutional Class | 3,391 | 1,388 | |||
3,710,321 | 3,602,569 | ||||
Shares repurchased: | |||||
Class A | (1,244,319 | ) | (2,255,756 | ) | |
Class B | (84,355 | ) | (278,191 | ) | |
Class C | (190,436 | ) | (451,745 | ) | |
Class R | (195,097 | ) | (262,198 | ) | |
Institutional Class | (469,816 | ) | (283,813 | ) | |
(2,184,023 | ) | (3,531,703 | ) | ||
Net increase | 1,526,298 | 70,866 |
For the six months ended May 31, 2011 and the year ended November 30, 2010, 37,063 Class B shares were converted to 32,807 Class A shares valued at $1,266,301 and 158,555 Class B shares were converted to 141,196 Class A shares valued at $4,460,506, 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 $50,000,000 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
30
each Participant’s allocation of the entire facility. The Participants are permitted to borrow up to a maximum of one third of their net assets under the agreement. The agreement as amended expires on November 15, 2011. The Fund had no amounts outstanding as of May 31, 2011 or at any time during the period then ended.
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 on any business day the aggregate market value of securities collateral plus cash collateral held 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 by the end of the following business day which, together with the collateral already held, will be not less than the applicable collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable collateral requirement, upon the request of the borrower BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security may be temporarily more or less than the value of the security on loan.
Cash collateral received is generally invested in the Delaware Investments Collateral Fund No. 1 (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of funds managed by DMC that participate in BNY Mellon’s securities lending program. The Collective Trust may invest in U.S. government securities and high quality corporate debt, asset-backed and other money market securities and in repurchase agreements collateralized by such securities, provided that the Collective Trust will generally have a dollar-weighted average portfolio maturity of 60 days or less. The Collective Trust seeks to maintain a net asset value per unit of $1.00, but there can be no assurance that it 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 or another collateral investment pool. This could occur if an investment in a collateral investment pool defaulted or if it were necessary to liquidate assets in the collateral investment pool to meet returns on outstanding security loans at a time when the collateral investment pool’s net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the collateral investment pool 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 this shortfall. Effective April 20, 2009, BNY Mellon transferred the assets of the Fund’s previous collateral investment pool other than cash and assets with a maturity of one business day or less to the BNY Mellon SL DBT II Liquidating Fund (Liquidating Fund), effectively bifurcating the previous collateral investment pool. The Fund’s exposure to the Liquidating Fund is expected to decrease as the Liquidating Fund’s assets mature or are sold. In October 2008, BNY Mellon transferred certain distressed securities from the previous collateral investment pool into the Mellon GSL Reinvestment Trust II. The Fund can also accept U.S. government securities and
31
Notes to financial statements
Delaware Small Cap Value Fund
Delaware Small Cap Value Fund
8. Securities Lending (continued)
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 are subject to changes in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to recover the securities from the borrower on demand. With respect to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.
At May 31, 2011, the value of the securities on loan was $38,879,587, for which cash collateral was received and invested in accordance with the Lending Agreement. At May 31, 2011, the value of invested collateral was $38,975,680. 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 invests in REITs and is subject to some of the risks associated with that industry. If the Fund holds real estate directly as a result of defaults or receives rental income directly from real estate holdings, its tax status as a regulated investment company may be jeopardized. There were no direct real estate holdings during the six months ended May 31, 2011. 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 securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s 15% limit on investments in illiquid securities. As of May 31, 2011, there were no Rule 144A securities. Illiquid securities have been identified on the statement of net assets.
32
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. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to May 31, 2011 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
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 Trust) effective May 20, 2010. At a meeting held on May 20, 2010, the Board of Trustees of the Trust, upon recommendation of the Audit Committee, selected PricewaterhouseCoopers LLP (PwC) to serve as the independent registered public accounting firm for the Trust 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 Trust 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 Trust 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 Trust 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 Trust’s financial statements.
34
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 Drexel University Philadelphia, 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 the Delaware Investments Fund fact sheet for the most recently completed calendar quarter. These documents are available at www.delawareinvestments.com. |
Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (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 website 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 website 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 website at www.delawareinvestments.com; and (ii) on the SEC’s website 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
PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
Date: | July 25, 2011 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
Date: | July 25, 2011 |
RICHARD SALUS | |
By: | Richard Salus |
Title: | Chief Financial Officer |
Date: | July 25, 2011 |