UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: | 811-04997 | |
Exact name of registrant as specified in charter: | Delaware Group® Equity Funds V | |
Address of principal executive offices: | 2005 Market Street | |
Philadelphia, PA 19103 | ||
Name and address of agent for service: | David F. Connor, Esq. | |
2005 Market Street | ||
Philadelphia, PA 19103 | ||
Registrant’s telephone number, including area code: | (800) 523-1918 | |
Date of fiscal year end: | November 30 | |
Date of reporting period: | May 31, 2013 |
Item 1. Reports to Stockholders
![](https://capedge.com/proxy/N-CSRS/0001206774-13-002767/del_topimg02.jpg)
Semiannual report Delaware Dividend Income Fund May 31, 2013 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 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. |
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 delawareinvestments.com.
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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 | 30 |
Statements of changes in net assets | 32 |
Financial highlights | 34 |
Notes to financial statements | 44 |
About the organization | 60 |
Unless otherwise noted, views expressed herein are current as of May 31, 2013, 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.
© 2013 Delaware Management Holdings, Inc.
All third-party marks cited are the property of their respective owners.
Disclosure of Fund expenses
For the six-month period from December 1, 2012 to May 31, 2013 (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/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 Dec. 1, 2012 to May 31, 2013.
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
Beginning | Ending | Expenses | |||||||||||||||
Account Value | Account Value | Annualized | Paid During Period | ||||||||||||||
12/1/12 | 5/31/13 | Expense Ratio | 12/1/12 to 5/31/13* | ||||||||||||||
Actual Fund return† | |||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,124.90 | 1.12 | % | $ | 5.93 | |||||||||
Class B | 1,000.00 | 1,120.70 | 1.87 | % | 9.89 | ||||||||||||
Class C | 1,000.00 | 1,119.70 | 1.87 | % | 9.88 | ||||||||||||
Class R | 1,000.00 | 1,123.60 | 1.37 | % | 7.25 | ||||||||||||
Institutional Class | 1,000.00 | 1,126.40 | 0.87 | % | 4.61 | ||||||||||||
Hypothetical 5% return (5% return before expenses) | |||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,018.40 | 1.12 | % | $ | 5.64 | |||||||||
Class B | 1,000.00 | 1,024.93 | 1.87 | % | 9.44 | ||||||||||||
Class C | 1,000.00 | 1,014.66 | 1.87 | % | 9.39 | ||||||||||||
Class R | 1,000.00 | 1,017.15 | 1.37 | % | 6.89 | ||||||||||||
Institutional Class | 1,000.00 | 1,019.65 | 0.87 | % | 4.38 |
* | “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). |
† | Because actual returns reflect only the most recent six month period, the returns may differ significantly from fiscal year returns. |
2
Security type/sector allocation and | |
top 10 equity holdings | |
Delaware Dividend Income Fund | As of May 31, 2013 (Unaudited) |
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 | 57.84 | % |
Consumer Discretionary | 4.32 | % |
Consumer Staples | 5.89 | % |
Diversified REITs | 0.69 | % |
Energy | 7.45 | % |
Financials | 6.20 | % |
Healthcare | 8.80 | % |
Healthcare REITs | 0.61 | % |
Hotel REITs | 0.41 | % |
Industrial REITs | 0.22 | % |
Industrials | 4.89 | % |
Information Technology | 6.23 | % |
Mall REITs | 0.96 | % |
Manufactured Housing REIT | 0.17 | % |
Materials | 1.70 | % |
Mixed REITs | 0.42 | % |
Mortgage REIT | 0.37 | % |
Multifamily REITs | 1.06 | % |
Office REITs | 0.60 | % |
Self-Storage REIT | 0.14 | % |
Shopping Center REITs | 0.87 | % |
Single Tenant REIT | 0.24 | % |
Specialty Retail | 0.41 | % |
Specialty REIT | 0.07 | % |
Telecommunications | 3.44 | % |
Utilities | 1.68 | % |
Convertible Preferred Stock | 2.43 | % |
Commercial Mortgage-Backed Securities | 0.46 | % |
3
Security type/sector allocation and
top 10 equity holdings
Delaware Dividend Income Fund
Security type/sector | Percentage of net assets | |
Convertible Bonds | 10.54 | % |
Basic Industry | 0.29 | % |
Capital Goods | 1.24 | % |
Communications | 1.49 | % |
Consumer Cyclical | 1.69 | % |
Consumer Non-Cyclical | 1.69 | % |
Energy | 0.51 | % |
Financials | 0.91 | % |
Industrials | 0.16 | % |
Insurance | 0.18 | % |
Technology | 2.38 | % |
Corporate Bonds | 17.17 | % |
Automobiles | 0.47 | % |
Banking | 0.31 | % |
Basic Industry | 2.06 | % |
Capital Goods | 0.96 | % |
Communications | 1.47 | % |
Consumer Cyclical | 1.26 | % |
Consumer Non-Cyclical | 0.61 | % |
Energy | 2.63 | % |
Financials | 0.37 | % |
Healthcare | 1.06 | % |
Insurance | 0.76 | % |
Media | 1.48 | % |
Services | 1.87 | % |
Technology | 1.03 | % |
Utilities | 0.83 | % |
4
Security type/sector | Percentage of net assets | |
Leveraged Non-Recourse Security | 0.00 | % |
Senior Secured Loans | 0.36 | % |
Limited Partnerships | 0.47 | % |
Preferred Stock | 0.53 | % |
Short-Term Investments | 9.42 | % |
Securities Lending Collateral | 0.18 | % |
Total Value of Securities | 99.40 | % |
Obligation to Return Securities Lending Collateral | (0.29 | %) |
Receivables and Other Assets Net of Other Liabilities | 0.89 | % |
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 | |
Northrop Grumman | 1.60 | % |
Raytheon | 1.57 | % |
Marathon Oil | 1.54 | % |
duPont (E.I.) deNemours | 1.52 | % |
Intel | 1.52 | % |
Johnson Controls | 1.50 | % |
Kraft Foods Group | 1.50 | % |
Cisco Systems | 1.48 | % |
Cardinal Health | 1.47 | % |
Occidental Petroleum | 1.47 | % |
5
Statement of net assets | |
Delaware Dividend Income Fund | May 31, 2013 (Unaudited) |
Number of shares | Value | ||||
Common Stock – 57.84% | |||||
Consumer Discretionary – 4.32% | |||||
Bayerische Motoren Werke | 1,648 | $ | 156,392 | ||
Cablevision Systems Class A | 85,900 | 1,298,808 | |||
Carnival | 5,299 | 175,397 | |||
† | DIRECTV Class A | 6,350 | 388,176 | ||
Don Quijote | 2,500 | 112,711 | |||
Hyundai Home Shopping Network | 679 | 95,382 | |||
Johnson Controls | 196,200 | 7,330,031 | |||
L Brands | 4,616 | 230,846 | |||
Las Vegas Sands | 51,400 | 2,976,060 | |||
Lowe’s | 165,100 | 6,952,361 | |||
Nitori Holdings | 2,143 | 168,700 | |||
PPR | 642 | 139,511 | |||
Publicis Groupe | 2,755 | 197,121 | |||
Techtronic Industries | 38,000 | 97,485 | |||
Toyota Motor | 6,400 | 373,649 | |||
*† | United Rentals | 4,175 | 237,307 | ||
Yue Yuen Industrial Holdings | 67,000 | 195,220 | |||
21,125,157 | |||||
Consumer Staples – 5.89% | |||||
Archer-Daniels-Midland | 206,800 | 6,665,164 | |||
Aryzta | 5,838 | 334,997 | |||
Carlsberg Class B | 2,067 | 196,303 | |||
CVS Caremark | 120,000 | 6,909,600 | |||
Greggs | 4,661 | 28,839 | |||
Kraft Foods Group | 132,800 | 7,321,264 | |||
Mondelez International Class A | 152,000 | 4,477,920 | |||
* | Safeway | 83,400 | 1,919,034 | ||
TESCO | 39,110 | 216,574 | |||
Wal-Mart Stores | 10,200 | 763,368 | |||
28,833,063 | |||||
Diversified REITs – 0.69% | |||||
Fibra Uno Administracion | 268,200 | 931,023 | |||
Lexington Reality Trust | 135,600 | 1,707,204 | |||
Washington Real Estate Investment Trust | 26,400 | 734,448 | |||
3,372,675 |
6
Number of shares | Value | ||||
Common Stock (continued) | |||||
Energy – 7.45% | |||||
Chevron | 56,900 | $ | 6,984,475 | ||
CNOOC | 101,000 | 176,923 | |||
ConocoPhillips | 110,900 | 6,802,606 | |||
Halliburton | 169,600 | 7,097,760 | |||
Marathon Oil | 219,200 | 7,538,289 | |||
Occidental Petroleum | 78,200 | 7,199,875 | |||
Saipem | 3,316 | 88,426 | |||
* | Subsea 7 | 7,556 | 166,436 | ||
Total | 4,957 | 247,767 | |||
Transocean | 2,849 | 143,105 | |||
36,445,662 | |||||
Financials – 6.20% | |||||
Allstate | 133,900 | 6,459,336 | |||
Aspen Insurance Holdings | 7,115 | 261,396 | |||
AXA | 12,078 | 243,851 | |||
Bank of New York Mellon | 227,700 | 6,844,661 | |||
Huntington Bancshares | 299,100 | 2,318,025 | |||
Marsh & McLennan | 170,700 | 6,831,414 | |||
Mitsubishi UFJ Financial Group | 49,700 | 288,550 | |||
Nordea Bank | 23,246 | 285,600 | |||
Standard Chartered | 7,266 | 168,246 | |||
Travelers | 77,400 | 6,479,928 | |||
UniCredit | 30,761 | 172,637 | |||
30,353,644 | |||||
Healthcare – 8.80% | |||||
† | Alliance Healthcare Services | 5,998 | 97,228 | ||
Baxter International | 99,900 | 7,025,967 | |||
Cardinal Health | 153,600 | 7,213,056 | |||
Johnson & Johnson | 82,100 | 6,911,178 | |||
Meda Class A | 6,214 | 79,853 | |||
* | Merck | 146,400 | 6,836,880 | ||
Novartis | 3,793 | 271,771 | |||
Pfizer | 246,038 | 6,699,615 | |||
Quest Diagnostics | 115,200 | 7,123,968 | |||
Sanofi | 2,924 | 311,781 | |||
Stada Arzneimittel | 5,506 | 240,786 | |||
Teva Pharmaceutical Industries ADR | 7,015 | 267,973 | |||
43,080,056 |
7
Statement of net assets
Delaware Dividend Income Fund
Number of shares | Value | ||||
Common Stock (continued) | |||||
Healthcare REITs – 0.61% | |||||
Healthcare Realty Trust | 23,600 | $ | 627,996 | ||
Healthcare Trust of America | 61,500 | 706,635 | |||
Senior Housing Properties Trust | 41,600 | 1,075,360 | |||
Ventas | 7,800 | 556,686 | |||
2,966,677 | |||||
Hotel REITs – 0.41% | |||||
Ashford Hospitality Trust | 38,000 | 501,980 | |||
Concentradora Fibra Hotelera | 371,500 | 764,582 | |||
Summit Hotel Properties | 73,696 | 727,380 | |||
1,993,942 | |||||
Industrial REITs – 0.22% | |||||
First Industrial Realty Trust | 11,200 | 189,168 | |||
First Potomac Realty Trust | 25,500 | 348,840 | |||
STAG Industrial | 25,526 | 561,572 | |||
1,099,580 | |||||
Industrials – 4.89% | |||||
Alstom | 3,676 | 138,355 | |||
† | Delta Air Lines | 123 | 2,215 | ||
Deutsche Post | 8,355 | 210,545 | |||
East Japan Railway | 2,946 | 218,240 | |||
† | Flextronics International | 19,100 | 142,486 | ||
ITOCHU | 18,689 | 231,697 | |||
Koninklijke Philips Electronics | 6,560 | 185,753 | |||
Northrop Grumman | 95,200 | 7,843,528 | |||
Raytheon | 115,300 | 7,683,592 | |||
Vinci | 4,101 | 210,319 | |||
* | Waste Management | 168,200 | 7,052,626 | ||
23,919,356 | |||||
Information Technology – 6.23% | |||||
Apple | 2,200 | 989,296 | |||
† | CGI Group Class A | 12,832 | 392,964 | ||
Cisco Systems | 299,700 | 7,216,776 | |||
Intel | 307,200 | 7,458,816 | |||
Motorola Solutions | 123,542 | 7,160,494 | |||
Teleperformance | 5,889 | 277,181 | |||
Xerox | 793,500 | 6,974,865 | |||
30,470,392 |
8
Number of shares | Value | ||||
Common Stock (continued) | |||||
Mall REITs – 0.96% | |||||
CBL & Associates Properties | 60,000 | $ | 1,379,400 | ||
General Growth Properties | 78,300 | 1,607,499 | |||
Simon Property Group | 10,163 | 1,691,530 | |||
4,678,429 | |||||
Manufactured Housing REIT – 0.17% | |||||
Sun Communities | 16,300 | 814,511 | |||
814,511 | |||||
Materials – 1.70% | |||||
AuRico Gold | 15,160 | 77,084 | |||
* | duPont (E.I.) deNemours | 133,700 | 7,459,122 | ||
Lafarge | 3,000 | 213,932 | |||
Rexam | 22,221 | 177,869 | |||
Rio Tinto | 4,395 | 187,720 | |||
Yamana Gold | 16,214 | 191,167 | |||
8,306,894 | |||||
Mixed REITs – 0.42% | |||||
Liberty Property Trust | 43,300 | 1,757,114 | |||
* | PS Business Parks | 3,900 | 297,609 | ||
2,054,723 | |||||
Mortgage REIT – 0.37% | |||||
Starwood Property Trust | 70,700 | 1,793,659 | |||
1,793,659 | |||||
Multifamily REITs – 1.06% | |||||
American Campus Communities | 17,500 | 714,525 | |||
Apartment Investment & Management | 33,665 | 1,018,703 | |||
* | BRE Properties | 11,400 | 569,886 | ||
Camden Property Trust | 6,600 | 457,050 | |||
Colonial Properties Trust | 12,900 | 285,219 | |||
Education Realty Trust | 26,100 | 273,006 | |||
Equity Residential | 33,300 | 1,883,115 | |||
5,201,504 | |||||
Office REITs – 0.60% | |||||
Boston Properties | 14,000 | 1,492,119 | |||
Corporate Office Properties Trust | 18,900 | 503,307 | |||
Nippon Building Fund | 24 | 246,919 | |||
Parkway Properties | 39,443 | 677,631 | |||
2,919,976 |
9
Statement of net assets
Delaware Dividend Income Fund
Number of shares | Value | ||||
Common Stock (continued) | |||||
Self-Storage REIT – 0.14% | |||||
Extra Space Storage | 16,000 | $ | 670,240 | ||
670,240 | |||||
Shopping Center REITs – 0.87% | |||||
Agree Realty | 25,200 | 839,916 | |||
* | First Capital Realty | 43,366 | 809,203 | ||
Kimco Realty | 37,000 | 819,550 | |||
* | Ramco-Gershenson Properties Trust | 55,600 | 867,916 | ||
Westfield Group | 83,700 | 919,223 | |||
4,255,808 | |||||
Single Tenant REIT – 0.24% | |||||
* | National Retail Properties | 33,100 | 1,187,297 | ||
1,187,297 | |||||
Specialty REIT – 0.07% | |||||
GLP J-REIT | 369 | 339,475 | |||
339,475 | |||||
Specialty Retail – 0.41% | |||||
Gladstone Land | 51,010 | 779,943 | |||
Home Loan Servicing Solutions | 54,505 | 1,244,894 | |||
2,024,837 | |||||
Telecommunications – 3.44% | |||||
AT&T | 194,400 | 6,802,057 | |||
=† | Century Communications | 1,625,000 | 0 | ||
CenturyLink | 25,606 | 874,445 | |||
KDDI | 4,078 | 184,048 | |||
Mobile TeleSystems ADR | 8,416 | 162,176 | |||
Telstra | 124,672 | 564,043 | |||
Verizon Communications | 138,800 | 6,729,024 | |||
* | Vivendi | 73,539 | 1,439,332 | ||
Vodafone Group | 25,010 | 72,484 | |||
16,827,609 | |||||
Utilities – 1.68% | |||||
Duke Energy | 15,266 | 1,021,753 | |||
Edison International | 149,700 | 6,877,218 | |||
National Grid | 7,512 | 89,324 | |||
NRG Energy | 8,696 | 221,922 | |||
8,210,217 | |||||
Total Common Stock (cost $225,025,842) | 282,945,383 |
10
Number of shares | Value | |||||
Convertible Preferred Stock – 2.43% | ||||||
#* | Chesapeake Energy 144A 5.75% | |||||
exercise price $27.83, expiration date 12/31/49 | 703 | $ | 773,300 | |||
El Paso Energy Capital Trust I 4.75% | ||||||
exercise price $34.49, expiration date 3/31/28 | 39,900 | 2,372,054 | ||||
HealthSouth 6.50% exercise price $30.50, | ||||||
expiration date 12/31/49 | 1,753 | 2,141,290 | ||||
Huntington Bancshares 8.50% | ||||||
exercise price $11.95, expiration date 12/31/49 | 988 | 1,309,110 | ||||
MetLife 5.00% exercise price $44.28, | ||||||
expiration date 9/4/13 | 25,620 | 1,363,240 | ||||
PPL 9.50% exercise price $28.80, | ||||||
expiration date 7/1/13 | 24,450 | 1,282,892 | ||||
SandRidge Energy | ||||||
7.00% exercise price $7.76, | ||||||
expiration date 12/31/49 | 5,300 | 469,381 | ||||
8.50% exercise price $8.01, | ||||||
expiration date 12/31/49 | 4,290 | 414,543 | ||||
Wells Fargo 7.50% exercise price $156.71, | ||||||
expiration date 12/31/49 | 1,411 | 1,770,805 | ||||
Total Convertible Preferred Stock (cost $10,540,824) | 11,896,615 | |||||
Principal amount | ||||||
Commercial Mortgage-Backed Securities – 0.46% | ||||||
Bank of America Commercial Mortgage Trust | ||||||
Series 2006-4 A4 5.634% 7/10/46 | $ | 1,000,000 | 1,108,676 | |||
• | Morgan Stanley Capital I Trust | |||||
Series 2007-T27 A4 5.647% 6/11/42 | 1,000,000 | 1,149,693 | ||||
Total Commercial Mortgage-Backed Securities | ||||||
(cost $1,997,930) | 2,258,369 | |||||
Convertible Bonds – 10.54% | ||||||
Basic Industry – 0.29% | ||||||
* | Peabody Energy 4.75% exercise price $57.95, | |||||
expiration date 12/15/41 | 788,000 | 682,113 | ||||
Steel Dynamics 5.125% exercise price $17.25, | ||||||
expiration date 6/15/14 | 658,000 | 727,912 | ||||
1,410,025 |
11
Statement of net assets
Delaware Dividend Income Fund
Principal amount | Value | |||||
Convertible Bonds (continued) | ||||||
Capital Goods – 1.24% | ||||||
L-3 Communications Holdings 3.00% | ||||||
exercise price $90.24, expiration date 8/1/35 | $ | 1,492,000 | $ | 1,533,030 | ||
# | Owens-Brockway Glass Container 144A 3.00% | |||||
exercise price $47.47, expiration date 5/28/15 | 2,554,000 | 2,621,042 | ||||
Titan Machinery 3.75% exercise price $43.17, | ||||||
expiration date 4/30/19 | 1,935,000 | 1,898,719 | ||||
6,052,791 | ||||||
Communications – 1.49% | ||||||
# | Alaska Communications Systems Group 144A | |||||
6.25% exercise price $10.28, | ||||||
expiration date 4/27/18 | 1,660,000 | 1,326,963 | ||||
# | Blucora 144A 4.25% exercise price $21.66, | |||||
expiration date 3/29/19 | 633,000 | 716,477 | ||||
# | Clearwire Communications 144A 8.25% | |||||
exercise price $7.08, expiration date 11/30/40 | 1,028,000 | 1,145,578 | ||||
Leap Wireless International 4.50% | ||||||
exercise price $93.21, expiration date 7/10/14 | 1,709,000 | 1,745,315 | ||||
Rovi 2.625% exercise price $47.36, | ||||||
expiration date 2/10/40 | 971,000 | 1,006,199 | ||||
SBA Communications 4.00% exercise price $30.38, | ||||||
expiration date 9/29/14 | 546,000 | 1,363,635 | ||||
7,304,167 | ||||||
Consumer Cyclical – 1.69% | ||||||
* | ArvinMeritor 4.00% exercise price $26.73, | |||||
expiration date 2/12/27 | 2,433,000 | 2,279,417 | ||||
Iconix Brand Group 2.50% exercise price $30.75, | ||||||
expiration date 5/31/16 | 1,245,000 | 1,458,206 | ||||
International Game Technology 3.25% | ||||||
exercise price $19.93, expiration date 5/1/14 | 554,000 | 606,976 | ||||
Live Nation Entertainment 2.875% | ||||||
exercise price $27.14, expiration date 7/14/27 | 2,165,000 | 2,183,944 | ||||
MGM Resorts International 4.25% | ||||||
exercise price $18.58, expiration date 4/10/15 | 1,507,000 | 1,717,038 | ||||
8,245,581 |
12
Principal amount | Value | |||||
Convertible Bonds (continued) | ||||||
Consumer Non-Cyclical – 1.69% | ||||||
Alere 3.00% exercise price $43.98, | ||||||
expiration date 5/15/16 | $ | 1,162,000 | $ | 1,167,810 | ||
Dendreon 2.875% exercise price $51.24, | ||||||
expiration date 1/13/16 | 1,139,000 | 857,098 | ||||
*Φ | Hologic 2.00% exercise price $31.17, | |||||
expiration date 2/27/42 | 1,168,000 | 1,208,880 | ||||
# | Illumina 144A 0.25% exercise price $83.55, | |||||
expiration date 3/11/16 | 574,000 | 615,974 | ||||
LifePoint Hospitals 3.50% exercise price $51.79, | ||||||
expiration date 5/14/14 | 1,000,000 | 1,101,875 | ||||
Mylan 3.75% exercise price $13.32, | ||||||
expiration date 9/10/15 | 419,000 | 976,794 | ||||
NuVasive 2.75% exercise price $42.13, | ||||||
expiration date 6/30/17 | 2,116,000 | 2,080,292 | ||||
# | Opko Health 144A 3.00% exercise price $7.07, | |||||
expiration date 1/28/33 | 278,000 | 270,876 | ||||
8,279,599 | ||||||
Energy – 0.51% | ||||||
* | Chesapeake Energy 2.50% exercise price $50.90, | |||||
expiration date 5/15/37 | 683,000 | 685,988 | ||||
Helix Energy Solutions Group 3.25% | ||||||
exercise price $25.02, expiration date 3/12/32 | 1,387,000 | 1,797,899 | ||||
2,483,887 | ||||||
Financials – 0.91% | ||||||
* | Ares Capital 5.75% exercise price $19.13, | |||||
expiration date 2/1/16 | 1,558,000 | 1,717,695 | ||||
BGC Partners 4.50% exercise price $9.84, | ||||||
expiration date 7/13/16 | 1,378,000 | 1,433,120 | ||||
PHH 4.00% exercise price $25.80, | ||||||
expiration date 8/27/14 | 1,212,000 | 1,311,990 | ||||
4,462,805 | ||||||
Industrials – 0.16% | ||||||
Φ | General Cable 4.50% exercise price $36.75, | |||||
expiration date 11/15/29 | 623,000 | 774,856 | ||||
774,856 |
13
Statement of net assets
Delaware Dividend Income Fund
Principal amount | Value | |||||
Convertible Bonds (continued) | ||||||
Insurance – 0.18% | ||||||
# | WellPoint 144A 2.75% exercise price $75.47, | |||||
expiration date 10/15/42 | $ | 736,000 | $ | 902,520 | ||
902,520 | ||||||
Technology – 2.38% | ||||||
Advanced Micro Devices | ||||||
6.00% exercise price $28.08, | ||||||
expiration date 4/30/15 | 987,000 | 1,017,844 | ||||
#144A 6.00% exercise price $28.08, | ||||||
expiration date 4/30/15 | 660,000 | 680,625 | ||||
# | Ciena 144A 3.75% exercise price $20.17, | |||||
expiration date 10/15/18 | 1,141,000 | 1,357,077 | ||||
Linear Technology 3.00% exercise price $41.46, | ||||||
expiration date 4/30/27 | 1,912,000 | 2,037,475 | ||||
Nuance Communications 2.75% | ||||||
exercise price $32.30, expiration date 11/1/31 | 1,574,000 | 1,638,928 | ||||
SanDisk 1.50% exercise price $52.37, | ||||||
expiration date 8/11/17 | 1,204,000 | 1,603,578 | ||||
TIBCO Software 2.25% exercise price $50.57, | ||||||
expiration date 4/30/32 | 2,064,000 | 2,042,069 | ||||
VeriSign 3.25% exercise price $34.37, | ||||||
expiration date 8/15/37 | 856,000 | 1,278,650 | ||||
11,656,246 | ||||||
Total Convertible Bonds (cost $47,435,864) | 51,572,477 | |||||
Corporate Bonds – 17.17% | ||||||
Automobiles – 0.47% | ||||||
* | American Axle & Manufacturing 7.75% 11/15/19 | 264,000 | 302,280 | |||
Chrysler Group 8.25% 6/15/21 | 610,000 | 692,349 | ||||
# | International Automotive Components Group 144A | |||||
9.125% 6/1/18 | 498,000 | 494,888 | ||||
# | Jaguar Land Rover 144A | |||||
5.625% 2/1/23 | 280,000 | 287,700 | ||||
8.125% 5/15/21 | 255,000 | 288,788 | ||||
Meritor 6.75% 6/15/21 | 220,000 | 218,350 | ||||
2,284,355 |
14
Principal amount | Value | |||||
Corporate Bonds (continued) | ||||||
Banking – 0.31% | ||||||
*• | Bank of America 5.20% 12/29/49 | $400,000 | $ | 398,000 | ||
• | Fifth Third Bancorp 5.10% 12/31/49 | 210,000 | 210,000 | |||
#• | HBOS Capital Funding 144A 6.071% 6/29/49 | 982,000 | 900,985 | |||
1,508,985 | ||||||
Basic Industry – 2.06% | ||||||
* | AK Steel 7.625% 5/15/20 | 218,000 | 196,200 | |||
# | American Builders & Contractors Supply 144A | |||||
5.625% 4/15/21 | 125,000 | 126,875 | ||||
# | APERAM 144A 7.75% 4/1/18 | 275,000 | 275,000 | |||
ArcelorMittal 6.125% 6/1/18 | 784,000 | 833,979 | ||||
# | Builders FirstSource 144A 7.625% 6/1/21 | 310,000 | 312,325 | |||
# | Cemex Espana Luxembourg 144A 9.25% 5/12/20 | 485,000 | 522,587 | |||
# | Essar Steel Algoma 144A 9.375% 3/15/15 | 204,000 | 190,740 | |||
# | FMG Resources August 2006 144A | |||||
6.875% 2/1/18 | 222,000 | 226,718 | ||||
*6.875% 4/1/22 | 187,000 | 189,571 | ||||
HD Supply | ||||||
#144A 7.50% 7/15/20 | 405,000 | 430,313 | ||||
10.50% 1/15/21 | 62,000 | 64,558 | ||||
Headwaters 7.625% 4/1/19 | 393,000 | 423,458 | ||||
# | Inmet Mining 144A 8.75% 6/1/20 | 379,000 | 410,268 | |||
# | JMC Steel Group 144A 8.25% 3/15/18 | 507,000 | 515,872 | |||
# | Kinove German Bondco 144A 9.625% 6/15/18 | 310,000 | 346,425 | |||
# | MacDermid 144A 9.50% 4/15/17 | 481,000 | 498,736 | |||
# | Masonite International 144A 8.25% 4/15/21 | 460,000 | 512,899 | |||
# | New Gold 144A 6.25% 11/15/22 | 384,000 | 397,440 | |||
* | Norcraft 10.50% 12/15/15 | 233,000 | 243,776 | |||
Nortek 8.50% 4/15/21 | 435,000 | 478,500 | ||||
# | Perstorp Holding 144A 8.75% 5/15/17 | 435,000 | 451,313 | |||
Rockwood Specialties Group 4.625% 10/15/20 | 362,000 | 370,598 | ||||
# | Ryerson 144A | |||||
9.00% 10/15/17 | 247,000 | 267,686 | ||||
*11.25% 10/15/18 | 102,000 | 108,885 | ||||
# | Sappi Papier Holding 144A 8.375% 6/15/19 | 455,000 | 503,343 | |||
# | Taminco Global Chemical 144A 9.75% 3/31/20 | 349,000 | 396,988 | |||
# | TPC Group 144A 8.75% 12/15/20 | 458,000 | 485,480 | |||
# | U.S. Coatings Acquisition 144A 7.375% 5/1/21 | 265,000 | 280,569 | |||
10,061,102 |
15
Statement of net assets
Delaware Dividend Income Fund
Principal amount | Value | |||||
Corporate Bonds (continued) | ||||||
Capital Goods – 0.96% | ||||||
# | Ardagh Packaging Finance 144A 7.00% 11/15/20 | $ | 415,000 | $ | 426,413 | |
Berry Plastics 9.75% 1/15/21 | 215,000 | 249,400 | ||||
# | BOE Intermediate Holding PIK 144A 9.00% 11/1/17 | 160,000 | 158,400 | |||
# | BOE Merger PIK 144A 9.50% 11/1/17 | 419,000 | 438,902 | |||
# | Consolidated Container 144A 10.125% 7/15/20 | 379,000 | 429,218 | |||
# | Crown Americas 144A 4.50% 1/15/23 | 35,000 | 34,388 | |||
# | GenCorp 144A 7.125% 3/15/21 | 180,000 | 193,500 | |||
Kratos Defense & Security Solutions 10.00% 6/1/17 | 362,000 | 396,390 | ||||
# | Milacron 144A 7.75% 2/15/21 | 415,000 | 437,825 | |||
Mueller Water Products 7.375% 6/1/17 | 204,000 | 210,120 | ||||
Reynolds Group Issuer | ||||||
5.75% 10/15/20 | 280,000 | 284,900 | ||||
9.875% 8/15/19 | 565,000 | 617,968 | ||||
# | Sealed Air 144A | |||||
8.125% 9/15/19 | 90,000 | 102,375 | ||||
8.375% 9/15/21 | 252,000 | 292,320 | ||||
# | Silver II Borrower 144A 7.75% 12/15/20 | 400,000 | 417,000 | |||
4,689,119 | ||||||
Communications – 1.47% | ||||||
# | Clearwire Communications 144A 12.00% 12/1/15 | 378,000 | 404,951 | |||
# | Columbus International 144A 11.50% 11/20/14 | 295,000 | 329,663 | |||
# | Digicel Group 144A 8.25% 9/30/20 | 630,000 | 674,099 | |||
Equinix | ||||||
4.875% 4/1/20 | 145,000 | 148,263 | ||||
5.375% 4/1/23 | 290,000 | 300,875 | ||||
Hughes Satellite Systems 7.625% 6/15/21 | 358,000 | 401,855 | ||||
# | Intelsat Jackson Holdings 144A 5.50% 8/1/23 | 95,000 | 93,338 | |||
# | Intelsat Luxembourg 144A | |||||
7.75% 6/1/21 | 500,000 | 527,500 | ||||
8.125% 6/1/23 | 560,000 | 601,299 | ||||
Level 3 Communications | ||||||
8.875% 6/1/19 | 153,000 | 166,579 | ||||
11.875% 2/1/19 | 310,000 | 357,275 | ||||
Level 3 Financing 7.00% 6/1/20 | 276,000 | 291,525 | ||||
# | MetroPCS Wireless 144A 6.25% 4/1/21 | 200,000 | 210,250 | |||
Sprint Capital 8.75% 3/15/32 | 211,000 | 246,870 |
16
Principal amount | Value | |||||
Corporate Bonds (continued) | ||||||
Communications (continued) | ||||||
Sprint Nextel | ||||||
8.375% 8/15/17 | $ | 333,000 | $ | 385,448 | ||
9.125% 3/1/17 | 409,000 | 480,575 | ||||
# | Wind Acquisition Finance 144A | |||||
*6.50% 4/30/20 | 200,000 | 206,500 | ||||
7.25% 2/15/18 | 200,000 | 209,500 | ||||
11.75% 7/15/17 | 225,000 | 237,938 | ||||
Windstream 7.50% 6/1/22 | 213,000 | 226,845 | ||||
Zayo Group 10.125% 7/1/20 | 609,000 | 711,007 | ||||
7,212,155 | ||||||
Consumer Cyclical – 1.26% | ||||||
# | BC Mountain 144A 7.00% 2/1/21 | 114,000 | 121,125 | |||
# | Bon-Ton Department Stores 144A 8.00% 6/15/21 | 445,000 | 458,906 | |||
Burlington Coat Factory Warehouse 10.00% 2/15/19 | 413,000 | 463,076 | ||||
# | CDR DB Sub 144A 7.75% 10/15/20 | 451,000 | 472,423 | |||
CKE Restaurants 11.375% 7/15/18 | 14,000 | 14,648 | ||||
# | Claire’s Stores 144A 7.75% 6/1/20 | 125,000 | 127,188 | |||
Dave & Buster’s 11.00% 6/1/18 | 321,000 | 361,928 | ||||
#^ | Dave & Buster’s Entertainment 144A | |||||
10.004% 2/15/16 | 502,000 | 391,560 | ||||
# | Landry’s 144A 9.375% 5/1/20 | 511,000 | 558,267 | |||
# | LKQ 144A 4.75% 5/15/23 | 465,000 | 465,000 | |||
Michaels Stores 11.375% 11/1/16 | 74,000 | 77,608 | ||||
Pantry 8.375% 8/1/20 | 396,000 | 435,105 | ||||
# | Party City Holdings 144A 8.875% 8/1/20 | 430,000 | 484,824 | |||
* | Quiksilver 6.875% 4/15/15 | 458,000 | 458,577 | |||
Rite Aid 9.25% 3/15/20 | 384,000 | 435,360 | ||||
# | Tempur-Pedic International 144A 6.875% 12/15/20 | 320,000 | 346,800 | |||
# | Wok Acquisition 144A 10.25% 6/30/20 | 417,000 | 469,125 | |||
6,141,520 | ||||||
Consumer Non-Cyclical – 0.61% | ||||||
# | Alphabet Holding PIK 144A 7.75% 11/1/17 | 145,000 | 150,075 | |||
B&G Foods 4.625% 6/1/21 | 245,000 | 245,000 | ||||
Constellation Brands | ||||||
3.75% 5/1/21 | 75,000 | 73,313 | ||||
4.25% 5/1/23 | 290,000 | 285,650 | ||||
Del Monte 7.625% 2/15/19 | 393,000 | 409,210 | ||||
#* | ESAL 144A 6.25% 2/5/23 | 200,000 | 199,500 |
17
Statement of net assets
Delaware Dividend Income Fund
Principal amount | Value | |||||
Corporate Bonds (continued) | ||||||
Consumer Non-Cyclical (continued) | ||||||
# | First Quality Finance 144A 4.625% 5/15/21 | $ | 250,000 | $ | 245,000 | |
# | Heinz (H.J.) Finance 144A 7.125% 8/1/39 | 195,000 | 220,838 | |||
# | JBS USA 144A 8.25% 2/1/20 | 358,000 | 394,695 | |||
Smithfield Foods 6.625% 8/15/22 | 145,000 | 165,300 | ||||
# | Spectrum Brands Escrow 144A | |||||
6.375% 11/15/20 | 77,000 | 82,871 | ||||
6.625% 11/15/22 | 281,000 | 304,183 | ||||
Visant 10.00% 10/1/17 | 227,000 | 218,488 | ||||
2,994,123 | ||||||
Energy – 2.63% | ||||||
AmeriGas Finance 7.00% 5/20/22 | 415,000 | 452,350 | ||||
Antero Resources Finance 6.00% 12/1/20 | 475,000 | 496,375 | ||||
# | Athlon Holdings 144A 7.375% 4/15/21 | 315,000 | 328,388 | |||
Calumet Specialty Products Partners 9.375% 5/1/19 | 755,000 | 843,712 | ||||
Chaparral Energy | ||||||
7.625% 11/15/22 | 179,000 | 194,215 | ||||
8.25% 9/1/21 | 226,000 | 250,860 | ||||
# | CHC Helicopter 144A 9.375% 6/1/21 | 220,000 | 226,325 | |||
Chesapeake Energy | ||||||
5.375% 6/15/21 | 90,000 | 91,800 | ||||
5.75% 3/15/23 | 135,000 | 140,738 | ||||
6.125% 2/15/21 | 72,000 | 78,840 | ||||
6.625% 8/15/20 | 315,000 | 352,013 | ||||
Comstock Resources 7.75% 4/1/19 | 401,000 | 426,063 | ||||
Copano Energy 7.125% 4/1/21 | 141,000 | 163,208 | ||||
Crosstex Energy | ||||||
7.125% 6/1/22 | 166,000 | 178,450 | ||||
8.875% 2/15/18 | 274,000 | 295,920 | ||||
# | Drill Rigs Holdings 144A 6.50% 10/1/17 | 396,000 | 405,900 | |||
# | Exterran Partners 144A 6.00% 4/1/21 | 440,000 | 453,200 | |||
# | Genesis Energy 144A 5.75% 2/15/21 | 510,000 | 521,155 | |||
# | Halcon Resources 144A 8.875% 5/15/21 | 432,000 | 441,720 | |||
# | Hercules Offshore 144A 10.50% 10/15/17 | 555,000 | 599,399 | |||
# | Hilcorp Energy I 144A 8.00% 2/15/20 | 328,000 | 364,080 | |||
Kodiak Oil & Gas | ||||||
#*144A 5.50% 1/15/21 | 84,000 | 87,255 | ||||
8.125% 12/1/19 | 366,000 | 413,580 |
18
Principal amount | Value | ||||||
Corporate Bonds (continued) | |||||||
Energy (continued) | |||||||
Laredo Petroleum | |||||||
7.375% 5/1/22 | $ | 98,000 | $ | 108,290 | |||
9.50% 2/15/19 | 435,000 | 494,813 | |||||
Linn Energy | |||||||
6.50% 5/15/19 | 187,000 | 191,208 | |||||
8.625% 4/15/20 | 235,000 | 258,500 | |||||
# | Midstates Petroleum 144A 9.25% 6/1/21 | 385,000 | 383,556 | ||||
Northern Oil and Gas 8.00% 6/1/20 | 410,000 | 428,450 | |||||
# | Offshore Group Investment 144A 7.125% 4/1/23 | 200,000 | 207,500 | ||||
# | PDC Energy 144A 7.75% 10/15/22 | 430,000 | 470,850 | ||||
Pioneer Drilling 9.875% 3/15/18 | 462,000 | 505,889 | |||||
Range Resources 5.00% 8/15/22 | 370,000 | 377,400 | |||||
# | Regency Energy Partners 144A 4.50% 11/1/23 | 90,000 | 89,325 | ||||
Rosetta Resources 5.625% 5/1/21 | 280,000 | 281,050 | |||||
# | Samson Investment 144A 9.75% 2/15/20 | 358,000 | 375,005 | ||||
SandRidge Energy 8.125% 10/15/22 | 619,000 | 663,877 | |||||
# | Targa Resources Partners 144A 4.25% 11/15/23 | 210,000 | 201,075 | ||||
12,842,334 | |||||||
Financials – 0.37% | |||||||
ETrade Financial 6.375% 11/15/19 | 392,000 | 413,560 | |||||
#• | ILFC E-Capital Trust II 144A 6.25% 12/21/65 | 593,000 | 560,385 | ||||
International Lease Finance 4.625% 4/15/21 | 200,000 | 198,875 | |||||
# | Nuveen Investments 144A 9.50% 10/15/20 | 521,000 | 561,378 | ||||
# | Provident Funding Associates 144A 6.75% 6/15/21 | 85,000 | 87,125 | ||||
1,821,323 | |||||||
Healthcare – 1.06% | |||||||
Air Medical Group Holdings 9.25% 11/1/18 | 348,000 | 383,670 | |||||
# | Alere 144A | ||||||
6.50% 6/15/20 | 250,000 | 252,188 | |||||
7.25% 7/1/18 | 202,000 | 220,180 | |||||
# | Biomet 144A 6.50% 10/1/20 | 392,000 | 398,860 | ||||
# | CDRT Holding PIK 144A 9.25% 10/1/17 | 192,000 | 198,240 | ||||
Community Health Systems | |||||||
7.125% 7/15/20 | 217,000 | 238,429 | |||||
8.00% 11/15/19 | 333,000 | 367,965 | |||||
Immucor 11.125% 8/15/19 | 345,000 | 392,438 |
19
Statement of net assets
Delaware Dividend Income Fund
Principal amount | Value | ||||||
Corporate Bonds (continued) | |||||||
Healthcare (continued) | |||||||
Kinetic Concepts | |||||||
10.50% 11/1/18 | $ | 324,000 | $ | 352,350 | |||
12.50% 11/1/19 | 264,000 | 274,560 | |||||
# | MultiPlan 144A 9.875% 9/1/18 | 346,000 | 389,250 | ||||
* | Radnet Management 10.375% 4/1/18 | 261,000 | 281,554 | ||||
# | Sky Growth Acquisition 144A 7.375% 10/15/20 | 592,000 | 631,959 | ||||
# | STHI Holding 144A 8.00% 3/15/18 | 370,000 | 405,150 | ||||
# | Truven Health Analytics 144A 10.625% 6/1/20 | 158,000 | 179,330 | ||||
# | VPI Escrow 144A 6.375% 10/15/20 | 227,000 | 239,485 | ||||
5,205,608 | |||||||
Insurance – 0.76% | |||||||
• | American International Group 8.175% 5/15/58 | 455,000 | 598,325 | ||||
# | Hub International 144A 8.125% 10/15/18 | 451,000 | 487,080 | ||||
*• | ING Groep 5.775% 12/29/49 | 1,031,000 | 1,010,380 | ||||
#• | Liberty Mutual Group 144A 7.00% 3/15/37 | 443,000 | 465,150 | ||||
# | Onex USI Acquisition 144A 7.75% 1/15/21 | 396,000 | 408,870 | ||||
• | XL Group 6.50% 12/29/49 | 758,000 | 763,685 | ||||
3,733,490 | |||||||
Media – 1.48% | |||||||
* | AMC Networks 4.75% 12/15/22 | 225,000 | 225,563 | ||||
CCO Holdings 5.25% 9/30/22 | 392,000 | 393,960 | |||||
# | Cequel Communications Holdings 1 144A | ||||||
6.375% 9/15/20 | 307,000 | 322,350 | |||||
Clear Channel Communications 9.00% 3/1/21 | 811,000 | 808,973 | |||||
Clear Channel Worldwide Holdings 7.625% 3/15/20 | 393,000 | 419,333 | |||||
# | Cogeco Cable 144A 4.875% 5/1/20 | 215,000 | 215,000 | ||||
CSC Holdings 6.75% 11/15/21 | 295,000 | 331,875 | |||||
DISH DBS 5.00% 3/15/23 | 645,000 | 612,750 | |||||
# | Griffey Intermediate 144A 7.00% 10/15/20 | 394,000 | 400,895 | ||||
# | Lynx II 144A 6.375% 4/15/23 | 420,000 | 439,950 | ||||
# | MDC Partners 144A 6.75% 4/1/20 | 280,000 | 287,700 | ||||
# | Nara Cable Funding 144A 8.875% 12/1/18 | 400,000 | 421,000 | ||||
# | Nexstar Broadcasting 144A 6.875% 11/15/20 | 391,000 | 418,370 | ||||
# | ONO Finance II 144A 10.875% 7/15/19 | 260,000 | 276,250 | ||||
Satelites Mexicanos 9.50% 5/15/17 | 222,000 | 240,870 |
20
Principal amount | Value | ||||||
Corporate Bonds (continued) | |||||||
Media (continued) | |||||||
# | Sirius XM Radio 144A 4.625% 5/15/23 | $ | 170,000 | $ | 163,625 | ||
# | Univision Communications 144A 8.50% 5/15/21 | 834,000 | 906,974 | ||||
# | UPCB Finance VI 144A 6.875% 1/15/22 | 322,000 | 349,370 | ||||
7,234,808 | |||||||
Services – 1.87% | |||||||
# | Algeco Scotsman Global Finance 144A | ||||||
8.50% 10/15/18 | 215,000 | 224,675 | |||||
10.75% 10/15/19 | 579,000 | 576,105 | |||||
# | Avis Budget Car Rental 144A 5.50% 4/1/23 | 390,000 | 395,850 | ||||
#* | Beazer Homes USA 144A 7.25% 2/1/23 | 120,000 | 127,650 | ||||
Caesars Entertainment Operating 8.50% 2/15/20 | 379,000 | 362,182 | |||||
# | Carlson Wagonlit 144A 6.875% 6/15/19 | 425,000 | 449,438 | ||||
# | DigitalGlobe 144A 5.25% 2/1/21 | 330,000 | 334,125 | ||||
# | Geo Group 144A 5.125% 4/1/23 | 370,000 | 378,325 | ||||
H&E Equipment Services 7.00% 9/1/22 | 354,000 | 384,090 | |||||
M/I Homes 8.625% 11/15/18 | 605,000 | 671,549 | |||||
#* | Mattamy Group 144A 6.50% 11/15/20 | 392,000 | 392,980 | ||||
Meritage Homes 7.00% 4/1/22 | 77,000 | 86,818 | |||||
MGM Resorts International | |||||||
7.75% 3/15/22 | 187,000 | 214,115 | |||||
11.375% 3/1/18 | 710,000 | 922,999 | |||||
NCL | |||||||
#144A 5.00% 2/15/18 | 138,000 | 141,450 | |||||
9.50% 11/15/18 | 42,000 | 47,565 | |||||
* | PHH | ||||||
7.375% 9/1/19 | 209,000 | 238,260 | |||||
9.25% 3/1/16 | 196,000 | 228,830 | |||||
Pinnacle Entertainment | |||||||
7.75% 4/1/22 | 153,000 | 167,535 | |||||
8.75% 5/15/20 | 25,000 | 27,406 | |||||
RSC Equipment Rental 8.25% 2/1/21 | 345,000 | 383,813 | |||||
Seven Seas Cruises 9.125% 5/15/19 | 379,000 | 415,953 | |||||
Swift Services Holdings 10.00% 11/15/18 | 370,000 | 424,575 | |||||
# | Taylor Morrison Communities 144A 7.75% 4/15/20 | 281,000 | 314,720 | ||||
Toll Brothers Finance 4.375% 4/15/23 | 480,000 | 487,200 | |||||
United Rentals North America | |||||||
6.125% 6/15/23 | 72,000 | 75,780 | |||||
7.625% 4/15/22 | 102,000 | 113,475 |
21
Statement of net assets
Delaware Dividend Income Fund
Principal amount | Value | ||||||
Corporate Bonds (continued) | |||||||
Services (continued) | |||||||
# | Watco 144A 6.375% 4/1/23 | $ | 210,000 | $ | 222,075 | ||
# | Wynn Las Vegas 144A 4.25% 5/30/23 | 320,000 | 311,600 | ||||
9,121,138 | |||||||
Technology – 1.03% | |||||||
# | Avaya 144A 10.50% 3/1/21 | 361,000 | 305,045 | ||||
CDW | |||||||
8.50% 4/1/19 | 230,000 | 255,588 | |||||
12.535% 10/12/17 | 174,000 | 187,920 | |||||
# | CommScope Holdings PIK 144A 6.625% 6/1/20 | 85,000 | 84,363 | ||||
First Data | |||||||
#144A 8.25% 1/15/21 | 383,000 | 407,895 | |||||
11.25% 3/31/16 | 407,000 | 411,070 | |||||
#144A 11.25% 1/15/21 | 295,000 | 303,113 | |||||
#*144A 11.75% 8/15/21 | 205,000 | 198,850 | |||||
GXS Worldwide 9.75% 6/15/15 | 378,000 | 388,395 | |||||
iGate 9.00% 5/1/16 | 116,000 | 125,280 | |||||
Infor US 9.375% 4/1/19 | 562,000 | 636,465 | |||||
j2 Global 8.00% 8/1/20 | 598,000 | 645,839 | |||||
MagnaChip Semiconductor 10.50% 4/15/18 | 178,000 | 198,025 | |||||
# | Seagate HDD Cayman 144A 4.75% 6/1/23 | 475,000 | 463,125 | ||||
# | Viasystems 144A 7.875% 5/1/19 | 410,000 | 440,750 | ||||
5,051,723 | |||||||
Utilities – 0.83% | |||||||
AES | |||||||
4.875% 5/15/23 | 280,000 | 275,800 | |||||
7.375% 7/1/21 | 319,000 | 374,825 | |||||
8.00% 6/1/20 | 45,000 | 54,225 | |||||
#• | Electricite de France 144A 5.25% 12/29/49 | 2,000,000 | 2,011,270 | ||||
Elwood Energy 8.159% 7/5/26 | 408,623 | 445,399 | |||||
GenOn Energy 9.875% 10/15/20 | 392,000 | 444,920 | |||||
Mirant Americas 8.50% 10/1/21 | 410,000 | 475,600 | |||||
4,082,039 | |||||||
Total Corporate Bonds (cost $79,242,273) | 83,983,822 |
22
Principal amount | Value | ||||||
Leveraged Non-Recourse Security – 0.00% | |||||||
#t@ | 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 | ||||||
«Senior Secured Loans – 0.36% | |||||||
Equipower Resources Holdings Tranche 2nd Lien | |||||||
10.00% 5/23/19 | 180,000 | 185,400 | |||||
Hostess Brands Tranche 1st Lien 6.75% 3/12/20 | 360,000 | 369,000 | |||||
JC Penney Tranche 1st Lien 6.00% 5/21/18 | 230,000 | 233,594 | |||||
Panda Temple Power II Tranche B 1st Lien | |||||||
7.25% 3/28/19 | 360,000 | 367,200 | |||||
Rite Aid Tranche 2nd Lien 5.75% 8/3/20 | 220,000 | 228,113 | |||||
Smart & Final Tranche 2nd Lien 10.50% 11/8/20 | 344,615 | 354,092 | |||||
Total Senior Secured Loans (cost $1,703,108) | 1,737,399 | ||||||
Number of shares | |||||||
Limited Partnerships – 0.47% | |||||||
Brookfield Infrastructure Partners | 35,600 | 1,292,992 | |||||
* | Lehigh Gas Partners | 41,200 | 1,022,172 | ||||
Total Limited Partnerships (cost $2,049,113) | 2,315,164 | ||||||
Preferred Stock – 0.53% | |||||||
# | Ally Financial 144A 7.00% | 500 | 490,219 | ||||
† | Freddie Mac 6.02% | 40,000 | 202,000 | ||||
• | GMAC Capital Trust I 8.125% | 17,000 | 452,540 | ||||
* | Regions Financial 6.375% | 17,000 | 430,610 | ||||
SL Green Realty 7.625% | 13,413 | 339,885 | |||||
Vornado Realty 6.625% | 27,300 | 692,874 | |||||
Total Preferred Stock (cost $3,225,964) | 2,608,128 | ||||||
Principal amount | |||||||
Short-Term Investments – 9.42% | |||||||
≠Discount Notes – 3.96% | |||||||
Fannie Mae 0.60% 9/16/13 | $ | 4,540,428 | 4,539,897 | ||||
Federal Home Loan Bank | |||||||
0.045% 7/24/13 | 1,839,194 | 1,839,142 | |||||
0.05% 7/26/13 | 1,059,376 | 1,059,345 |
23
Statement of net assets
Delaware Dividend Income Fund
Principal amount | Value | ||||||
Short-Term Investments (continued) | |||||||
≠Discount Notes (continued) | |||||||
Federal Home Loan Bank (continued) | |||||||
0.06% 7/2/13 | $ | 4,211,212 | $ | 4,211,144 | |||
0.06% 8/14/13 | 4,423,500 | 4,423,234 | |||||
0.06% 8/16/13 | 1,452,963 | 1,452,873 | |||||
0.06% 8/21/13 | 1,839,194 | 1,839,072 | |||||
19,364,707 | |||||||
Repurchase Agreements – 5.46% | |||||||
Bank of America 0.03%, dated 5/31/13, to be | |||||||
repurchased on 6/3/13, repurchase price | |||||||
$5,415,299 (collateralized by U.S. government | |||||||
obligations 0.75%-3.625% 6/15/14-8/15/19; | |||||||
market value $5,523,591) | 5,415,285 | 5,415,285 | |||||
BNP Paribas 0.05%, dated 5/31/13, to be | |||||||
repurchased on 6/3/13, repurchase price | |||||||
$21,304,804 (collateralized by U.S. government | |||||||
obligations 0.00%-1.75% 8/29/13-1/31/18; | |||||||
market value $21,730,809) | 21,304,715 | 21,304,715 | |||||
26,720,000 | |||||||
Total Short-Term Investments (cost $46,083,657) | 46,084,707 | ||||||
Total Value of Securities Before Securities | |||||||
Lending Collateral – 99.22% (cost $418,409,575) | 485,402,064 | ||||||
Number of shares | |||||||
**Securities Lending Collateral – 0.18% | |||||||
Investment Companies | |||||||
Delaware Investments Collateral Fund No. 1 | 894,548 | 894,548 | |||||
†@Mellon GSL Reinvestment Trust II | 506,944 | 0 | |||||
Total Securities Lending Collateral (cost $1,401,492) | 894,548 | ||||||
©Total Value of Securities – 99.40% | |||||||
(cost $419,811,067) | 486,296,612 |
24
**Obligation to Return Securities | ||||
Lending Collateral – (0.29%) | $ | (1,401,492 | ) | |
«Receivables and Other Assets | ||||
Net of Other Liabilities – 0.89% | 4,334,131 | |||
Net Assets Applicable to 40,279,485 | ||||
Shares Outstanding – 100.00% | $ | 489,229,251 | ||
Net Asset Value – Delaware Dividend Income Fund | ||||
Class A ($240,956,568 / 19,848,118 Shares) | $12.14 | |||
Net Asset Value – Delaware Dividend Income Fund | ||||
Class B ($14,003,107 / 1,152,504 Shares) | $12.15 | |||
Net Asset Value – Delaware Dividend Income Fund | ||||
Class C ($187,341,167 / 15,412,994 Shares) | $12.15 | |||
Net Asset Value – Delaware Dividend Income Fund | ||||
Class R ($3,059,809 / 252,066 Shares) | $12.14 | |||
Net Asset Value – Delaware Dividend Income Fund | ||||
Institutional Class ($43,868,600 / 3,613,803 Shares) | $12.14 | |||
Components of Net Assets at May 31, 2013: | ||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 568,502,685 | ||
Distributions in excess of net investment income | (369,424 | ) | ||
Accumulated net realized loss on investments | (144,449,906 | ) | ||
Net unrealized appreciation of investments and derivatives | 65,545,896 | |||
Total net assets | $ | 489,229,251 |
† | Non income producing security. |
* | Fully or partially on loan. |
# | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At May 31, 2013, the aggregate value of Rule 144A securities was $55,165,055, which represented 11.28% of the Fund’s net assets. See Note 8 in “Notes to financial statements.” |
• | Variable rate security. The rate shown is the rate as of May 31, 2013. Interest rates reset periodically. |
Φ | Step coupon bond. Coupon increases or decreases periodically based on a predetermined schedule. Stated rate in effect at May 31, 2013. |
^ | Zero coupon security. The rate shown is the yield at the time of purchase. |
25
Statement of net assets
Delaware Dividend Income Fund
@ | Illiquid security. At May 31, 2013, the aggregate value of illiquid securities was $0 which represented 0.00% of the Fund’s net assets. See Note 8 in “Notes to financial statements.” |
t | 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 which are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates are generally: (i) the prime rate offered by one or more United States banks, (ii) the lending rate offered by one or more European banks such as the London Inter-Bank Offered Rate (LIBOR), and (iii) the certificate of deposit rate. Senior Secured Loans may be subject to restrictions on resale. Stated rate in effect at May 31, 2013. |
≠ | The rate shown is the effective yield at the time of purchase. |
** | See Note 7 in “Notes to financial statements” for additional information on securities lending collateral. |
© | Includes $1,343,891 of securities loaned. |
« | Includes foreign currency valued at $63,072 with a cost of $63,175. |
= | Security is being fair valued in accordance with the Fund’s fair valuation policy. At May 31, 2013, the aggregate value of fair valued securities was $0, which represented 0.00% of the Fund’s net assets. See Note 1 in “Notes to financial statements.” |
Net Asset Value and Offering Price per Share – | |||
Delaware Dividend Income Fund | |||
Net asset value Class A (A) | $ | 12.14 | |
Sales charge (5.75% of offering price) (B) | 0.74 | ||
Offering price | $ | 12.88 |
(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. |
26
The following foreign currency exchange contracts, futures contract and swap contracts were outstanding at May 31, 2013:1 |
Foreign Currency Exchange Contracts
Unrealized | ||||||||||||||||||||
Appreciation | ||||||||||||||||||||
Counterparty | Contracts to Receive (Deliver) | In Exchange For | Settlement Date | (Depreciation) | ||||||||||||||||
MNB | AUD | (109,816 | ) | USD | 105,544 | 6/3/13 | $ | 408 | ||||||||||||
MNB | GBP | (609 | ) | USD | 917 | 6/3/13 | (8 | ) | ||||||||||||
MNB | GBP | (175 | ) | USD | 265 | 6/4/13 | (1 | ) | ||||||||||||
MNB | GBP | (1,057 | ) | USD | 1,601 | 6/5/13 | (5 | ) | ||||||||||||
MNB | JPY | (1,989,533 | ) | USD | 19,625 | 6/3/13 | (189 | ) | ||||||||||||
MNB | JPY | (2,146,350 | ) | USD | 21,092 | 6/4/13 | (283 | ) | ||||||||||||
$ | (78 | ) |
Futures Contract
Unrealized | |||||||||
Appreciation | |||||||||
Contract to Sell | Notional Proceeds | Notional Value | Expiration Date | (Depreciation) | |||||
(95) S&P 500 EMINI | $(7,305,781) | $(7,737,750) | 6/22/13 | $(431,969) |
1See Note 6 in “Notes to financial statements.”
27
Statement of net assets
Delaware Dividend Income Fund
Swap Contracts CDS Contracts2 |
Annual | Unrealized | ||||||||||||||
Protection | Termination | Appreciation | |||||||||||||
Counterparty | Swap Referenced Obligation | Notional Value | Payments | Date | (Depreciation) | ||||||||||
Protection Purchased: | |||||||||||||||
BCLY | CDX.NA.HY.20 | $ | 2,000,000 | 5.00% | 6/20/18 | $ | (36,766 | ) | |||||||
GSC | CDX.NA.HY.20 | 5,500,000 | 5.00% | 6/20/18 | (101,107 | ) | |||||||||
JPMC | CDX.NA.HY.20 | 9,000,000 | 5.00% | 6/20/18 | (115,462 | ) | |||||||||
MSC | CDX.NA.HY.20 | 10,500,000 | 5.00% | 6/20/18 | (82,813 | ) | |||||||||
Total | $ | (336,148 | ) |
The use of foreign currency contracts, futures contract and swaps contracts involves elements of market risk and risks in excess of the amount disclosed in the financial statements. The foreign currency exchange contracts and notional values presented above represent the Fund’s total exposure in such contracts, whereas only the net unrealized appreciation (depreciation) is reflected in the Fund’s net assets.
2A CDS contract is a risk-transfer instrument through which one party (purchaser of protection) transfers to another party (seller of protection) the financial risk of a credit event (as defined in the CDS agreement), as it relates to a particular reference security or basket of securities (such as an index). Periodic payments (receipts) on such contracts are accrued daily and recorded as unrealized losses (gains) on swap contracts. Upon payment (receipt), such amounts are recorded as unrealized losses (gains) on swap contracts. Upfront payments made or received in connection with CDS contracts are amortized over the expected life of the CDS contracts as unrealized losses (gains) on swap contracts. The change in value of CDS contracts is recorded as unrealized appreciation or depreciation daily. A realized gain or loss is recorded upon a credit event (as defined in the CDS agreement) or the maturity or termination of the agreement.
28
Summary of abbreviations: |
See accompanying notes, which are an integral part of the financial statements.
29
Statement of operations | |
Delaware Dividend Income Fund | Six Months Ended May 31, 2013 (Unaudited) |
Investment Income: | |||||||
Interest | $ | 4,223,249 | |||||
Dividends | 4,189,185 | ||||||
Security lending income | 15,674 | ||||||
Foreign tax withheld | (43,587 | ) | $ | 8,384,521 | |||
Expenses: | |||||||
Management fees | 1,452,396 | ||||||
Distribution expenses – Class A | 332,611 | ||||||
Distribution expenses – Class B | 76,927 | ||||||
Distribution expenses – Class C | 853,020 | ||||||
Distribution expenses – Class R | 9,898 | ||||||
Dividend disbursing and transfer agent fees and expenses | 266,102 | ||||||
Accounting and administration expenses | 86,602 | ||||||
Registration fees | 37,827 | ||||||
Reports and statements to shareholders | 25,259 | ||||||
Audit and taxes | 20,902 | ||||||
Legal fees | 16,453 | ||||||
Custodian fees | 12,750 | ||||||
Trustees’ fees | 10,620 | ||||||
Pricing fees | 5,665 | ||||||
Dues and services | 5,300 | ||||||
Insurance fees | 4,065 | ||||||
Consulting fees | 2,259 | ||||||
Trustees’ expenses | 753 | 3,219,409 | |||||
Less waived distribution expenses – Class A | (55,198 | ) | |||||
Less waived distribution expenses – Class R | (1,650 | ) | |||||
Less expense paid indirectly | (369 | ) | |||||
Total operating expenses | 3,162,192 | ||||||
Net Investment Income | 5,222,329 |
30
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | $ | 13,222,199 | ||
Foreign currencies | (37,427 | ) | ||
Foreign currency exchange contracts | (42,017 | ) | ||
Futures contracts | 50,070 | |||
Options written | 227,146 | |||
Swap contracts | (1,766,590 | ) | ||
Net realized gain | 11,653,381 | |||
Net change in unrealized appreciation (depreciation) of: | ||||
Investments | 34,525,299 | |||
Foreign currencies | 3,921 | |||
Foreign currency exchange contracts | 748 | |||
Futures contracts | (482,863 | ) | ||
Options written | 105,001 | |||
Swap contracts | (174,916 | ) | ||
Net change in unrealized appreciation (depreciation) | 33,977,190 | |||
Net Realized and Unrealized Gain | 45,630,571 | |||
Net Increase in Net Assets Resulting from Operations | $ | 50,852,900 |
See accompanying notes, which are an integral part of the financial statements.
31
Statements of changes in net assets
Delaware Dividend Income Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
5/31/13 | 11/30/12 | |||||||
(Unaudited) | ||||||||
Increase in Net Assets from Operations: | ||||||||
Net investment income | $ | 5,222,329 | $ | 12,119,863 | ||||
Net realized gain | 11,653,381 | 6,224,448 | ||||||
Net change in unrealized appreciation (depreciation) | 33,977,190 | 34,303,651 | ||||||
Net increase in net assets resulting from operations | 50,852,900 | 52,647,962 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (3,019,526 | ) | (6,418,029 | ) | ||||
Class B | (150,808 | ) | (493,834 | ) | ||||
Class C | (1,697,256 | ) | (3,896,652 | ) | ||||
Class R | (40,753 | ) | (98,748 | ) | ||||
Institutional Class | (544,777 | ) | (1,017,121 | ) | ||||
(5,453,120 | ) | (11,924,384 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 33,321,456 | 29,742,813 | ||||||
Class B | 72,775 | 102,079 | ||||||
Class C | 23,623,868 | 17,557,460 | ||||||
Class R | 614,467 | 1,266,352 | ||||||
Institutional Class | 14,957,698 | 12,708,292 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 2,772,817 | 5,582,624 | ||||||
Class B | 138,643 | 438,026 | ||||||
Class C | 1,517,277 | 3,398,886 | ||||||
Class R | 40,753 | 98,747 | ||||||
Institutional Class | 466,659 | 806,893 | ||||||
77,526,413 | 71,702,172 |
32
Six Months | Year | |||||||
Ended | Ended | |||||||
5/31/13 | 11/30/12 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares redeemed: | ||||||||
Class A | $ | (21,440,645 | ) | $ | (40,612,519 | ) | ||
Class B | (4,715,915 | ) | (8,621,617 | ) | ||||
Class C | (11,887,634 | ) | (31,006,812 | ) | ||||
Class R | (1,091,273 | ) | (1,881,753 | ) | ||||
Institutional Class | (5,612,115 | ) | (10,801,705 | ) | ||||
(44,747,582 | ) | (92,924,406 | ) | |||||
Increase (decrease) in net assets derived from capital | ||||||||
share transactions | 32,778,831 | (21,222,234 | ) | |||||
Net Increase in Net Assets | 78,178,611 | 19,501,344 | ||||||
Net Assets: | ||||||||
Beginning of period | 411,050,640 | 391,549,296 | ||||||
End of period (including distributions in excess | ||||||||
of net investment income of $369,424 and | ||||||||
$138,633 respectively) | $ | 489,229,251 | $ | 411,050,640 |
See accompanying notes, which are an integral part of the financial statements.
33
Financial highlights
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) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total 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 |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived |
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.
34
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/131 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | 11/30/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$10.940 | $9.890 | $9.810 | $9.190 | $7.010 | $12.030 | |||||||||||||||
0.153 | 0.348 | 0.351 | 0.373 | 0.407 | 0.400 | |||||||||||||||
1.206 | 1.045 | 0.086 | 0.695 | 2.247 | (4.595 | ) | ||||||||||||||
1.359 | 1.393 | 0.437 | 1.068 | 2.654 | (4.195 | ) | ||||||||||||||
(0.159 | ) | (0.343 | ) | (0.357 | ) | (0.448 | ) | (0.474 | ) | (0.489 | ) | |||||||||
— | — | — | — | — | (0.336 | ) | ||||||||||||||
(0.159 | ) | (0.343 | ) | (0.357 | ) | (0.448 | ) | (0.474 | ) | (0.825 | ) | |||||||||
$12.140 | $10.940 | $9.890 | $9.810 | $9.190 | $7.010 | |||||||||||||||
12.49% | 14.25% | 4.39% | 11.91% | 39.35% | (37.15% | ) | ||||||||||||||
$240,956 | $203,819 | $189,313 | $192,876 | $200,720 | $179,588 | |||||||||||||||
1.12% | 1.16% | 1.19% | 1.26% | 1.17% | 1.00% | |||||||||||||||
1.17% | 1.21% | 1.24% | 1.31% | 1.36% | 1.26% | |||||||||||||||
2.63% | 3.28% | 3.41% | 3.93% | 5.22% | 3.92% | |||||||||||||||
2.58% | 3.23% | 3.36% | 3.88% | 5.03% | 3.66% | |||||||||||||||
29% | 47% | 110% | 109% | 69% | 51% |
35
Financial highlights
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) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total 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 |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived |
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 | |||||||||||||||||||
5/31/131 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | 11/30/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$10.950 | $9.900 | $9.820 | $9.190 | $7.010 | $12.020 | |||||||||||||||
0.109 | 0.268 | 0.274 | 0.302 | 0.348 | 0.324 | |||||||||||||||
1.207 | 1.046 | 0.086 | 0.694 | 2.248 | (4.590 | ) | ||||||||||||||
1.316 | 1.314 | 0.360 | 0.996 | 2.596 | (4.266 | ) | ||||||||||||||
(0.116 | ) | (0.264 | ) | (0.280 | ) | (0.366 | ) | (0.416 | ) | (0.408 | ) | |||||||||
— | — | — | — | — | (0.336 | ) | ||||||||||||||
(0.116 | ) | (0.264 | ) | (0.280 | ) | (0.366 | ) | (0.416 | ) | (0.744 | ) | |||||||||
$12.150 | $10.950 | $9.900 | $9.820 | $9.190 | $7.010 | |||||||||||||||
12.07% | 13.39% | 3.61% | 11.06% | 38.47% | (37.72% | ) | ||||||||||||||
$14,003 | $16,874 | $22,803 | $29,003 | $33,725 | $32,534 | |||||||||||||||
1.87% | 1.91% | 1.94% | 2.01% | 1.92% | 1.75% | |||||||||||||||
1.87% | 1.91% | 1.94% | 2.01% | 2.06% | 1.96% | |||||||||||||||
1.88% | 2.53% | 2.66% | 3.18% | 4.47% | 3.17% | |||||||||||||||
1.88% | 2.53% | 2.66% | 3.18% | 4.33% | 2.96% | |||||||||||||||
29% | 47% | 110% | 109% | 69% | 51% |
37
Financial highlights
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) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total 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 |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived |
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.
38
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/131 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | 11/30/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$10.960 | $9.900 | $9.820 | $9.190 | $7.010 | $12.030 | |||||||||||||||
0.110 | 0.268 | 0.274 | 0.302 | 0.348 | 0.323 | |||||||||||||||
1.196 | 1.056 | 0.086 | 0.694 | 2.248 | (4.599 | ) | ||||||||||||||
1.306 | 1.324 | 0.360 | 0.996 | 2.596 | (4.276 | ) | ||||||||||||||
(0.116 | ) | (0.264 | ) | (0.280 | ) | (0.366 | ) | (0.416 | ) | (0.408 | ) | |||||||||
— | — | — | — | — | (0.336 | ) | ||||||||||||||
(0.116 | ) | (0.264 | ) | (0.280 | ) | (0.366 | ) | (0.416 | ) | (0.744 | ) | |||||||||
$12.150 | $10.960 | $9.900 | $9.820 | $9.190 | $7.010 | |||||||||||||||
11.97% | 13.50% | 3.61% | 11.06% | 38.27% | (37.63% | ) | ||||||||||||||
$187,341 | $156,758 | $151,107 | $152,009 | $155,028 | $146,769 | |||||||||||||||
1.87% | 1.91% | 1.94% | 2.01% | 1.92% | 1.75% | |||||||||||||||
1.87% | 1.91% | 1.94% | 2.01% | 2.06% | 1.96% | |||||||||||||||
1.88% | 2.53% | 2.66% | 3.18% | 4.47% | 3.17% | |||||||||||||||
1.88% | 2.53% | 2.66% | 3.18% | 4.33% | 2.96% | |||||||||||||||
29% | 47% | 110% | 109% | 69% | 51% |
39
Financial highlights
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) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total 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 |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived |
Portfolio turnover |
See accompanying notes, which are an integral part of the financial statements.
40
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/131 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | 11/30/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$10.940 | $9.890 | $9.810 | $9.190 | $7.010 | $12.020 | |||||||||||||||
0.138 | 0.321 | 0.325 | 0.349 | 0.387 | 0.374 | |||||||||||||||
1.207 | 1.046 | 0.086 | 0.693 | 2.246 | (4.585 | ) | ||||||||||||||
1.345 | 1.367 | 0.411 | 1.042 | 2.633 | (4.211 | ) | ||||||||||||||
(0.145 | ) | (0.317 | ) | (0.331 | ) | (0.422 | ) | (0.453 | ) | (0.463 | ) | |||||||||
— | — | — | — | — | (0.336 | ) | ||||||||||||||
(0.145 | ) | (0.317 | ) | (0.331 | ) | (0.422 | ) | (0.453 | ) | (0.799 | ) | |||||||||
$12.140 | $10.940 | $9.890 | $9.810 | $9.190 | $7.010 | |||||||||||||||
12.36% | 13.97% | 4.13% | 11.60% | 39.15% | (37.39% | ) | ||||||||||||||
$3,060 | $3,151 | $3,340 | $3,069 | $3,067 | $1,928 | |||||||||||||||
1.37% | 1.41% | 1.44% | 1.51% | 1.42% | 1.25% | |||||||||||||||
1.47% | 1.51% | 1.54% | 1.61% | 1.66% | 1.56% | |||||||||||||||
2.38% | 3.03% | 3.16% | 3.68% | 4.97% | 3.67% | |||||||||||||||
2.28% | 2.93% | 3.06% | 3.58% | 4.73% | 3.36% | |||||||||||||||
29% | 47% | 110% | 109% | 69% | 51% |
41
Financial highlights
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) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total 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 |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived |
Portfolio turnover |
See accompanying notes, which are an integral part of the financial statements.
42
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/131 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | 11/30/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$10.940 | $9.890 | $9.810 | $9.190 | $7.010 | $12.040 | |||||||||||||||
0.168 | 0.375 | 0.375 | 0.399 | 0.426 | 0.425 | |||||||||||||||
1.206 | 1.045 | 0.088 | 0.697 | 2.246 | (4.602 | ) | ||||||||||||||
1.374 | 1.420 | 0.463 | 1.096 | 2.672 | (4.177 | ) | ||||||||||||||
(0.174 | ) | (0.370 | ) | (0.383 | ) | (0.476 | ) | (0.492 | ) | (0.517 | ) | |||||||||
— | — | — | — | — | (0.336 | ) | ||||||||||||||
(0.174 | ) | (0.370 | ) | (0.383 | ) | (0.476 | ) | (0.492 | ) | (0.853 | ) | |||||||||
$12.140 | $10.940 | $9.890 | $9.810 | $9.190 | $7.010 | |||||||||||||||
12.64% | 14.66% | 4.55% | 12.24% | 39.68% | (37.04% | ) | ||||||||||||||
$43,869 | $30,449 | $24,986 | $12,766 | $2,394 | $2,288 | |||||||||||||||
0.87% | 0.91% | 0.94% | 1.01% | 0.92% | 0.75% | |||||||||||||||
0.87% | 0.91% | 0.94% | 1.01% | 1.06% | 0.96% | |||||||||||||||
2.88% | 3.53% | 3.66% | 4.18% | 5.47% | 4.17% | |||||||||||||||
2.88% | 3.53% | 3.66% | 4.18% | 5.33% | 3.96% | |||||||||||||||
29% | 47% | 110% | 109% | 69% | 51% |
43
Notes to financial statements | |
Delaware Dividend Income Fund | May 31, 2013 (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 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, which approximates fair value. Securities listed on a foreign exchange are normally valued at the last quoted sales price on the valuation date. U.S. government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. Debt securities and credit default swap (CDS) contracts are valued based upon valuations provided by an independent pricing service or broker/counterparty and reviewed by management. 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. Valuations for fixed income securities utilize matrix systems, which reflect such factors as security prices, yields, maturities, and ratings, and are supplemented by dealer and exchange quotations. Swap prices are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades and values of the underlying reference instruments. Investment company securities are valued at net asset value per share, as reported by the underlying investment company. Foreign currency exchange contracts and forward foreign
44
cross currency exchange contracts are valued at the mean between the bid and ask price, which approximates fair value. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available. Futures contracts and options on futures are valued at the daily quoted settlement prices. 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, which approximates fair value. 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 & Foreign 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 for all open federal income tax years (Nov. 30, 2009 – Nov. 30, 2012), and has concluded that no provision for federal income tax is required in the Fund’s financial statements. In regard to foreign taxes only, the Fund has open tax years in certain foreign countries it invests in that may date back to the inception of the Fund.
Class Accounting — Investment income, common expenses and realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Repurchase Agreements — The Fund may purchase certain U.S. government securities subject to the counterparty’s agreement to repurchase them at an agreed upon date and price. The counterparty will be required on a daily basis to maintain the value of the collateral subject to the agreement at not less than the repurchase price (including accrued interest). The agreements are conditioned upon the collateral being deposited under the Federal Reserve book-entry system with the Fund’s custodian or a third-party sub-custodian. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. All open repurchase agreements as of the date of this report were entered into on May 31, 2013.
45
Notes to financial statements
Delaware Dividend Income Fund
1. Significant Accounting Policies (continued)
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 daily into U.S. dollars at the exchange rate of such currencies against the U.S. dollar. 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 bifurcates that portion of realized gains and losses on investments in debt securities which is due to changes in 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. That portion of gains (losses) is included in the statements of operations under the caption net realized gain (loss) on foreign currencies. 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 fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other — Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated among such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Foreign dividends are also recorded on the ex-dividend date or as soon after the ex-dividend date that the Fund is aware of such dividends, net of all tax withholdings, a portion of which may be reclaimable. Withholding taxes and reclaims 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 debt securities are amortized to interest income over the lives of the respective securities using the effective interest method. 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. Dividends and distributions, if any, are recorded on the ex-dividend date. The Fund may distribute more frequently, if necessary for tax purposes.
46
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, 2013.
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, 2013.
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, 2013, the Fund earned $369 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.
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, 2013, the Fund was charged $10,824 for these services.
DSC is also the transfer agent and dividend disbursing agent of the Fund. The Fund pays DSC a monthly asset-based fee for these services. Pursuant to a sub-transfer agency agreement between DSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to the Fund. Sub-transfer agency fees are passed on to and paid directly by the Fund.
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
47
Notes to financial statements
Delaware Dividend Income Fund
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
no distribution and service expenses. DDLP has contracted to waive distribution and service fees through March 28, 2014 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, 2013, the Fund had liabilities payable to affiliates as follows:
Investment management fee payable to DMC | $ | 269,488 | |
Dividend disbursing, transfer agent and fund accounting | |||
oversight fees and other expenses payable to DSC | 11,088 | ||
Distribution fees payable to DDLP | 222,687 | ||
Other expenses payable to DMC and affiliates* | 13,759 |
*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, 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, 2013, the Fund was charged $6,958 for internal legal and tax services provided by DMC and/or its affiliates’ employees.
For the six months ended May 31, 2013, DDLP earned $49,187 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2013, DDLP received gross CDSC commissions of $128, $2,169 and $908 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, 2013, the Fund made purchases of $127,592,868 and sales of $121,951,347 of investment securities other than U.S. government securities and short-term investments.
At May 31, 2013, 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, 2013, the cost of investments was $427,716,596. At May 31, 2013, the net unrealized appreciation was $58,580,016 of which $72,695,057 related to unrealized appreciation of investments and $14,115,041 related to unrealized depreciation of investments.
For federal income tax purposes, at Nov. 30, 2012, capital loss carryforwards of $145,626,126 may be carried forward and applied against future capital gains. Capital loss carryforwards will expire as follows: $90,877,076 expires in 2016 and $54,749,050 expires in 2017.
48
On Dec. 22, 2010, the Regulated Investment Company Modernization Act of 2010 (Act) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes were generally effective for taxable years beginning after the date of enactment. Under the Act, the Fund is permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.
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, exchange-traded options contracts) |
Level 2 | – | other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) (e.g., debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities) |
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) |
49
Notes to financial statements
Delaware Dividend Income Fund
3. Investments (continued)
Level 3 investments are valued using significant unobservable inputs. The Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of May 31, 2013:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Commercial Mortgage-Backed | ||||||||||||||||
Securities | $ | — | $ | 2,258,369 | $ | — | $ | 2,258,369 | ||||||||
Common Stock | 271,983,413 | 10,961,970 | — | 282,945,383 | ||||||||||||
Corporate Debt | 6,815,210 | 142,375,103 | — | 149,190,313 | ||||||||||||
Other | 4,231,073 | 692,219 | — | 4,923,292 | ||||||||||||
Short-Term Investments | — | 46,084,707 | — | 46,084,707 | ||||||||||||
Securities Lending Collateral | — | 894,548 | — | 894,548 | ||||||||||||
Total | $ | 283,029,696 | $ | 203,266,916 | $ | — | $ | 486,296,612 | ||||||||
Foreign Currency | ||||||||||||||||
Exchange Contracts | $ | — | $ | (78 | ) | $ | — | $ | (78 | ) | ||||||
Futures Contract | $ | (431,969 | ) | $ | — | $ | — | $ | (431,969 | ) | ||||||
Swap Contracts | $ | — | $ | (336,148 | ) | $ | — | $ | (336,148 | ) |
Security type is valued across multiple levels. The amount attributed to level 1 securities and level 2 securities represents the following percentages of the total market value of this security type for the Fund.
Level 1 | Level 2 | Total | |||||||||
Common Stock | 96 | % | 4 | % | 100% | ||||||
Corporate Debt | 5 | % | 95 | % | 100% | ||||||
Other | 86 | % | 14 | % | 100% |
The securities that have been deemed worthless on the statement of net assets are considered to be Level 3 securities in this table.
During the six months ended May 31, 2013, there were no transfers between Level 1 investments, Level 2 investments or Level 3 investments that had a significant impact to the Fund. The Fund’s policy is to recognize transfers between levels at the beginning of the reporting period.
50
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim or end of the period in relation to net assets. Management has determined not to provide additional disclosure on Level 3 inputs under ASU No. 2011-04 since the Level 3 investments are not considered significant to the Fund’s net assets at the end of the period.
4. Capital Shares
Transactions in capital shares were as follows:
Six Months | Year | ||||
Ended | Ended | ||||
5/31/13 | 11/30/12 | ||||
Shares sold: | |||||
Class A | 2,832,438 | 2,797,793 | |||
Class B | 6,243 | 9,586 | |||
Class C | 1,998,718 | 1,650,812 | |||
Class R | 53,009 | 120,275 | |||
Institutional Class | 1,272,704 | 1,204,797 | |||
Shares issued upon reinvestment of dividends and distributions: | |||||
Class A | 238,087 | 526,855 | |||
Class B | 11,959 | 41,400 | |||
Class C | 130,348 | 320,522 | |||
Class R | 3,509 | 9,332 | |||
Institutional Class | 39,963 | 76,031 | |||
6,586,978 | 6,757,403 | ||||
Shares redeemed: | |||||
Class A | (1,847,249 | ) | (3,846,267 | ) | |
Class B | (406,233 | ) | (814,349 | ) | |
Class C | (1,022,369 | ) | (2,927,509 | ) | |
Class R | (92,409 | ) | (179,453 | ) | |
Institutional Class | (481,307 | ) | (1,025,570 | ) | |
(3,849,567 | ) | (8,793,148 | ) | ||
Net increase (decrease) | 2,737,411 | (2,035,745 | ) |
For the six months ended May 31, 2013 and the year ended Nov. 30, 2012, 60,259 Class B shares were converted to 60,285 Class A shares valued at $693,401 and 204,345 Class B shares were converted to 204,433 Class A shares valued at $2,148,049, 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.
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Notes to financial statements
Delaware Dividend Income Fund
5. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), is a participant in a $125,000,000 revolving line of credit 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. Each Participant is individually, and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit under the agreement expires on Nov. 12, 2013. The Fund had no amounts outstanding as of May 31, 2013 or at any time during the period then ended.
6. Derivatives
U.S. GAAP requires 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 enters into foreign currency exchange contracts and forward foreign cross 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 and forward foreign cross 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 the 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 its currency exchanged with the counterparty. The risk is generally mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.
Futures Contracts — A futures contract is an agreement in which the writer (or seller) of the contract agrees to deliver to the buyer an amount of cash or securities equal to a specific dollar amount times the difference between the value of a specific security or index at the close of the
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last trading day of the contract and the price at which the agreement is made. The Fund may use futures in the normal course of pursuing its investment objectives. The Fund may invest in futures contracts to hedge its existing portfolio securities against fluctuations in fair value caused by changes in prevailing market interest rates. The Fund may use futures contracts to a limited extent, with the objectives of maintaining full exposure to the stock market, enhancing returns, maintaining liquidity and minimizing costs. Upon entering into a futures contract, the Fund deposits cash or pledges U.S. government securities to a broker, equal to the minimum “initial margin” requirements of the exchange on which the contract is traded. Subsequent payments are received from the broker or paid to the broker each day, based on the daily fluctuation in the market value of the contract. These receipts or payments are known as “variation margin” and are recorded daily by the Fund as unrealized gains or losses until the contracts are closed. When the contracts are closed, the Fund records a realized gain or loss 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. Risks of entering into futures contracts include potential imperfect correlation between the futures contracts and the underlying securities and the possibility of an illiquid secondary market for these instruments. When investing in futures, there is reduced counterparty credit risk to the Fund because futures are exchange-traded and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees against default.
Options Contracts — During the six months ended May 31, 2013, 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, futures, swaps “swaptions”, 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.
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Notes to financial statements
Delaware Dividend Income Fund
6. Derivatives (continued)
Transactions in options written during the six months ended May 31, 2013 for the Fund were as follows:
Number of | ||||||||
Contracts | Premiums | |||||||
Options outstanding at Nov. 30, 2012 | 450 | $ | 146,999 | |||||
Options written | 1,360 | 268,827 | ||||||
Options expired | (1,055 | ) | (227,146 | ) | ||||
Options terminated in closing sales transactions | (755 | ) | (188,680 | ) | ||||
Options outstanding at May 31, 2013 | — | $ | — |
Swap Contracts — The Fund may enter into CDS contracts in the normal course of pursuing its investment objective. The Fund may enter into CDS contracts in order to hedge against a credit event, to enhance total return or to gain exposure to certain securities or markets. The Fund will not be permitted to enter into any swap transactions unless, at the time of entering into such transactions, the unsecured long-term debt of the actual counterparty combined with any credit enhancements, is rated at least BBB- by S&P or Baa3 by Moody’s or is determined to be of equivalent quality by the manager.
Credit Default Swaps. A CDS contract is a risk-transfer instrument through which one party (purchaser of protection) transfers to another party (seller of protection) the financial risk of a credit event (as defined in the CDS agreement), as it relates to a particular reference security or basket of securities (such as an index). In exchange for the protection offered by the seller of protection, the purchaser of protection agrees to pay the seller of protection a periodic amount at a stated rate that is applied to the notional amount of the CDS contract. In addition, an upfront payment may be made or received by the Fund in connection with an unwinding or assignment of a CDS contract. Upon the occurrence of a credit event, the seller of protection would pay the par (or other agreed-upon) value of the reference security (or basket of securities) to the counterparty. Credit events generally include, among others, bankruptcy, failure to pay, and obligation default.
During the six months ended May 31, 2013, the Fund entered into CDS contracts as a purchaser of protection. Periodic payments on such contracts are accrued daily and recorded as unrealized losses on swap contracts. Upon payment, such amounts are recorded as realized losses (gains) on swap contracts. Upfront payments made or received in connection with CDS contracts are amortized over the expected life of the CDS contracts as unrealized losses (gains) on swap contracts. The change in value of CDS contracts is recorded as unrealized appreciation or depreciation daily. A realized gain or loss is recorded upon a credit event (as defined in the CDS agreement) or the maturity or termination of the agreement. For the six months ended May 31, 2013, the Fund did not enter into any CDS contracts as a seller of protection. For trades
54
prior to June 10, 2013, the Fund had posted $1,560,000 as cash collateral for certain open derivatives. Initial margin and variation margin is posted to central counterparties for CDS basket trades submitted on or after June 10, 2013, as determined by the applicable central counterparty.
CDS contracts may involve greater risks than if the Fund had invested in the reference obligation directly. CDS contracts are subject to general market risk, liquidity risk, counterparty risk and credit risk. The Fund’s maximum risk of loss from counterparty credit risk, either as the seller of protection or the buyer of protection, is the fair value of the contract. This risk is mitigated by (1) 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 for trades entered prior to June 10, 2013, and (2) trading these instruments through a central counterparty for trades entered on or after June 10, 2013.
Swaps Generally. The value of open swaps may differ from that which would be realized in the event the Fund terminated its position in the agreement. Risks of entering into these contracts include the potential inability of the counterparty to meet the terms of the contracts. This type of risk is generally limited to the amount of favorable movement in the value of the underlying security, instrument or basket of instruments, if any, at the day of default. Risks also arise from potential losses from adverse market movements and such losses could exceed the unrealized amounts shown on the statement of net assets.
Fair values of derivative instruments as of May 31, 2013 were as follows:
Asset Derivatives | Liability Derivatives | ||||||||||||
Statement of Net | Fair | Statement of Net | |||||||||||
Assets Location | Value | Assets Location | Fair Value | ||||||||||
Forward currency exchange contracts (Foreign currency | |||||||||||||
exchange contracts) | Receivables and other assets net of other liabilities | $ | 408 | Receivables and other assets net of other liabilities | $ | (486 | ) | ||||||
Interest rate contracts | |||||||||||||
(Futures contracts) | Receivables and other assets net of other liabilities | — | Receivables and other assets net of other liabilities | (431,969 | ) | ||||||||
Credit contracts | |||||||||||||
(Swap contracts) | Receivables and other assets net of other liabilities | — | Receivables and other assets net of other liabilities | (336,148 | ) | ||||||||
Total | $ | 408 | $ | (768,603 | ) |
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Notes to financial statements
Delaware Dividend Income Fund
6. Derivatives (continued)
The effect of derivative instruments on the statement of operations for the six months ended May 31, 2013 was as follows:
Realized Gain | Change in Unrealized | |||||||||||||
or Loss on | Appreciation or | |||||||||||||
Derivatives | Depreciation | |||||||||||||
Location of Gain or Loss on | Recognized in | on Derivatives | ||||||||||||
Derivatives Recognized in Income | Income | Recognized in Income | ||||||||||||
Forward currency exchange contracts (Foreign currency | ||||||||||||||
exchange contracts) | Net realized loss on foreign currency exchange contracts and net change in unrealized appreciation (depreciation) of foreign currency exchange contracts | $ | (42,017 | ) | $ | 748 | ||||||||
Interest rate contracts | ||||||||||||||
(Futures contracts) | Net realized gain on futures contracts and net change in unrealized appreciation (depreciation) of futures contracts | 50,070 | (482,863 | ) | ||||||||||
Equity contracts | ||||||||||||||
(Options written) | Net realized gain on options written and net change in unrealized appreciation (depreciation) of options written | 227,146 | 105,001 | |||||||||||
Credit contracts | ||||||||||||||
(Swap contracts) | Net realized loss on swap contracts and net change in unrealized appreciation (depreciation) of swap contracts | (1,766,590 | ) | (149,708 | ) | |||||||||
Total | $ | (1,531,391 | ) | $ | (526,822 | ) |
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Derivatives Generally. The table below summarizes the average balance of derivative holdings by the Fund during the six months ended May 31, 2013.
Long | Short | |||
Derivative | Derivative | |||
Volume | Volume | |||
Foreign currency exchange contracts (average cost) | USD | 158,247 | USD 149,415 | |
Futures contracts (average notional value) | 863,033 | 4,501,941 | ||
Options contracts (average notional value) | — | 19,697 | ||
CDS contracts (average notional value)* | 22,572,581 | — |
*Long represents buying protection and short represents selling protection.
7. Securities Lending
The Fund, along with other funds in the Delaware Investments® Family of Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (i) 102% with respect to U.S. securities and foreign securities that are denominated and payable in U.S. dollars; and (ii) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon the request of the borrower BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security 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. In Oct. 2008, BNY Mellon transferred certain distressed securities from the Fund’s 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
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Notes to financial statements
Delaware Dividend Income Fund
7. Securities Lending (continued)
with securities loans. In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the collateral received is insufficient to cover the value of the loaned securities and provided such collateral shortfall is not the result of investment losses, the lending agent has agreed to pay the amount of the shortfall to the Fund or, at the discretion of the lending agent, replace the loaned securities. The Fund continues to record dividends or interest, as applicable, on the securities loaned and is subject to changes in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to recover the securities from the borrower on demand. With respect to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.
The Collective Trust used for the investment of cash collateral received from borrowers of securities 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 for this shortfall.
At May 31, 2013 the value of securities on loan was $1,343,891, for which cash collateral was received and invested in accordance with the Lending Agreement. At May 31, 2013 the value of invested collateral was $894,548. These investments are presented on the statement of net assets under the caption “Securities Lending Collateral”.
8. 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 Investors Service, 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.
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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, 2013. 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 invests in certain obligations held by the Fund that may have liquidity protection to ensure that the receipt of payments due on the underlying security is timely. Such protection may be provided through guarantees, insurance policies or letter of credit obtained by the issuer or sponsor through third parties, through various means of structuring the transaction or through a combination of such approaches. The Fund will not pay any additional fees for such credit support, although the existence of credit support may increase the price of a security.
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.
9. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
10. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to May 31, 2013 that would require recognition or disclosure in the Fund’s financial statements.
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About the organization
Board of trustees | |||
Patrick P. Coyne Thomas L. Bennett | Joseph W. Chow John A. Fry Anthony D. Knerr | Lucinda S. Landreth Frances A. | Thomas K. Whitford Janet L. Yeomans J. Richard Zecher |
Affiliated officers | |||
David F. Connor | Daniel V. Geatens | David P. O’Connor | Richard Salus |
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 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 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 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 delawareinvestments.com; and (ii) on the SEC’s website at sec.gov. |
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![](https://capedge.com/proxy/N-CSRS/0001206774-13-002767/del_topimg02.jpg)
Semiannual report Delaware Small Cap Core Fund May 31, 2013 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 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 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 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 | 13 | |
Statements of changes in net assets | 14 | |
Financial highlights | 16 | |
Notes to financial statements | 24 | |
About the organization | 34 |
Unless otherwise noted, views expressed herein are current as of May 31, 2013, 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.
© 2013 Delaware Management Holdings, Inc.
All third-party marks cited are the property of their respective owners.
Disclosure of Fund expenses
For the six-month period from December 1, 2012 to May 31, 2013 (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/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 Dec. 1, 2012 to May 31, 2013.
Actual expenses
The first section of the table shown, “Actual Fund return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second section of the table shown, “Hypothetical 5% return,” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund’s expenses shown in the table reflect fee waivers in effect. The expenses shown in the table assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
Delaware Small Cap Core Fund
Expense analysis of an investment of $1,000
Beginning | Ending | Expenses | |||||||||||||||
Account Value | Account Value | Annualized | Paid During Period | ||||||||||||||
12/1/12 | 5/31/13 | Expense Ratio | 12/1/12 to 5/31/13* | ||||||||||||||
Actual Fund return† | |||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,182.30 | 1.31% | $ | 7.13 | ||||||||||
Class C | 1,000.00 | 1,177.70 | 2.06% | 11.18 | |||||||||||||
Class R | 1,000.00 | 1,181.10 | 1.56% | 8.48 | |||||||||||||
Institutional Class | 1,000.00 | 1,184.10 | 1.06% | 5.77 | |||||||||||||
Hypothetical 5% return (5% return before expenses) | |||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,018.40 | 1.31% | $ | 6.59 | ||||||||||
Class C | 1,000.00 | 1,014.66 | 2.06% | 10.35 | |||||||||||||
Class R | 1,000.00 | 1,017.15 | 1.56% | 7.85 | |||||||||||||
Institutional Class | 1,000.00 | 1,019.65 | 1.06% | 5.34 |
*“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).
†Because actual returns reflect only the most recent six month period, the returns shown may differ significantly from fiscal year returns.
2
Security type/sector allocation and | |
Delaware Small Cap Core Fund | As of May 31, 2013 (Unaudited) |
Sector designations may be different than the sector designations presented in other Fund materials. The sector designations may represent the investment manager’s internal sector classifications, which may result in the sector designations for one fund being different than another fund’s sector designations.
Sector type/sector | Percentage of net assets | ||||
Common Stock | 94.45 | % | |||
Basic Materials | 5.49 | % | |||
Business Services | 5.37 | % | |||
Capital Goods | 9.88 | % | |||
Communication Services | 1.98 | % | |||
Consumer Discretionary | 5.72 | % | |||
Consumer Services | 4.40 | % | |||
Consumer Staples | 3.23 | % | |||
Credit Cyclicals | 1.76 | % | |||
Energy | 4.50 | % | |||
Financials | 13.56 | % | |||
Healthcare | 12.17 | % | |||
Media | 0.54 | % | |||
Real Estate | 6.01 | % | |||
Technology | 16.18 | % | |||
Transportation | 1.76 | % | |||
Utilities | 1.90 | % | |||
Exchange-Traded Fund | 0.81 | % | |||
Short-Term Investments | 4.23 | % | |||
Securities Lending Collateral | 0.20 | % | |||
Total Value of Securities | 99.69 | % | |||
Obligation to Return Securities Lending Collateral | (0.32 | %) | |||
Receivables and Other Assets Net of Other Liabilities | 0.63 | % | |||
Total Net Assets | 100.00 | % |
3
Security type/sector allocation and |
Delaware Small Cap Core Fund |
Top 10 equity holdings | Percentage of net assets | ||||
Steven Madden | 1.12 | % | |||
Semtech | 1.09 | % | |||
Alkermes | 1.08 | % | |||
Applied Industrial Technologies | 1.05 | % | |||
AAON | 1.02 | % | |||
Align Technology | 1.00 | % | |||
Casey’s General Stores | 0.99 | % | |||
Tenneco | 0.98 | % | |||
Jack in the Box | 0.98 | % | |||
EastGroup Properties | 0.94 | % |
4
Statement of net assets | |
Delaware Small Cap Core Fund | May 31, 2013 (Unaudited) |
Number of shares | Value | |||||
Common Stock – 94.45% | ||||||
Basic Materials – 5.49% | ||||||
Boise | 81,900 | $ | 660,114 | |||
Cabot | 17,400 | 712,356 | ||||
† | Chemtura | 37,700 | 864,461 | |||
† | Coeur Mining | 26,700 | 378,873 | |||
Innophos Holdings | 13,700 | 692,946 | ||||
Kaiser Aluminum | 12,900 | 818,376 | ||||
Koppers Holdings | 6,920 | 284,896 | ||||
Materion | 25,600 | 762,880 | ||||
Neenah Paper | 27,700 | 870,057 | ||||
Stepan | 11,000 | 594,330 | ||||
6,639,289 | ||||||
Business Services – 5.37% | ||||||
† | Cross Country Healthcare | 67,900 | 353,759 | |||
*† | FTI Consulting | 20,000 | 759,800 | |||
† | Kforce | 72,450 | 1,078,782 | |||
McGrath RentCorp | 18,580 | 613,697 | ||||
† | TeleTech Holdings | 43,100 | 969,319 | |||
U.S. Ecology | 36,880 | 1,009,774 | ||||
United Stationers | 30,900 | 1,066,359 | ||||
† | WageWorks | 22,093 | 640,034 | |||
6,491,524 | ||||||
Capital Goods – 9.88% | ||||||
AAON | 37,125 | 1,234,035 | ||||
Acuity Brands | 11,520 | 864,806 | ||||
Applied Industrial Technologies | 26,440 | 1,270,970 | ||||
Barnes Group | 34,100 | 1,030,502 | ||||
† | Chart Industries | 9,534 | 927,468 | |||
† | Columbus McKinnon | 39,820 | 842,193 | |||
ESCO Technologies | 18,300 | 587,796 | ||||
† | Esterline Technologies | 6,400 | 469,696 | |||
Granite Construction | 14,341 | 442,563 | ||||
Kadant | 28,400 | 849,728 | ||||
Lufkin Industries | 4,180 | 368,927 | ||||
† | MYR Group | 35,600 | 720,544 | |||
† | Rofin-Sinar Technologies | 34,100 | 912,516 | |||
† | Tetra Tech | 31,800 | 876,726 | |||
*† | Titan Machinery | 26,750 | 548,643 | |||
11,947,113 |
5
Statement of net assets
Delaware Small Cap Core Fund
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Communication Services – 1.98% | ||||||
Atlantic Tele-Network | 11,884 | $ | 591,467 | |||
† | InterXion Holding | 33,691 | 924,818 | |||
† | RigNet | 35,101 | 875,419 | |||
2,391,704 | ||||||
Consumer Discretionary – 5.72% | ||||||
† | Express | 37,800 | 824,040 | |||
† | Francesca’s Holdings | 14,300 | 408,265 | |||
† | G-III Apparel Group | 24,800 | 1,044,328 | |||
† | Iconix Brand Group | 35,800 | 1,077,222 | |||
Jones Group | 29,800 | 434,186 | ||||
*† | Jos. A. Bank Clothiers | 20,950 | 941,284 | |||
† | Perry Ellis International | 39,300 | 829,623 | |||
† | Steven Madden | 28,000 | 1,358,000 | |||
6,916,948 | ||||||
Consumer Services – 4.40% | ||||||
† | AFC Enterprises | 29,300 | 1,068,278 | |||
† | Buffalo Wild Wings | 9,020 | 865,559 | |||
CEC Entertainment | 8,510 | 340,826 | ||||
Cheesecake Factory | 19,000 | 758,480 | ||||
† | Jack in the Box | 32,380 | 1,181,546 | |||
† | SHFL Entertainment | 64,100 | 1,105,725 | |||
5,320,414 | ||||||
Consumer Staples – 3.23% | ||||||
Casey’s General Stores | 19,800 | 1,203,048 | ||||
J&J Snack Foods | 9,786 | 742,757 | ||||
† | Prestige Brands Holdings | 32,800 | 963,992 | |||
† | Susser Holdings | 21,050 | 996,507 | |||
3,906,304 | ||||||
Credit Cyclicals – 1.76% | ||||||
* | Cooper Tire & Rubber | 36,400 | 940,576 | |||
† | Tenneco | 26,700 | 1,184,412 | |||
2,124,988 | ||||||
Energy – 4.50% | ||||||
*† | Bonanza Creek Energy | 26,300 | 977,044 | |||
Bristow Group | 8,050 | 505,943 | ||||
† | C&J Energy Services | 26,600 | 494,760 | |||
† | Carrizo Oil & Gas | 30,300 | 777,498 |
6
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Energy (continued) | ||||||
† | Diamondback Energy | 10,110 | $ | 341,415 | ||
† | Kodiak Oil & Gas | 100,800 | 885,024 | |||
† | Pioneer Energy Services | 83,200 | 580,736 | |||
† | Rosetta Resources | 18,800 | 880,968 | |||
5,443,388 | ||||||
Financials – 13.56% | ||||||
American Equity Investment Life Holding | 59,000 | 955,800 | ||||
AMERISAFE | 16,700 | 566,631 | ||||
BBCN Bancorp | 57,300 | 738,597 | ||||
Bryn Mawr Bank | 8,165 | 185,182 | ||||
† | Capital Bank Financial | 41,297 | 739,216 | |||
Cardinal Financial | 54,000 | 817,560 | ||||
City Holding | 20,850 | 826,077 | ||||
Dime Community Bancshares | 48,800 | 703,208 | ||||
Evercore Partners Class A | 17,100 | 679,212 | ||||
Flushing Financial | 47,900 | 748,677 | ||||
Greenhill | 13,700 | 682,397 | ||||
Home BancShares | 17,800 | 749,380 | ||||
@ | Independent Bank | 24,900 | 820,455 | |||
Maiden Holdings | 61,800 | 660,024 | ||||
Park National | 12,400 | 856,592 | ||||
Primerica | 25,700 | 905,154 | ||||
Prosperity Bancshares | 19,600 | 981,765 | ||||
† | Stifel Financial | 23,000 | 827,770 | |||
Susquehanna Bancshares | 74,300 | 892,343 | ||||
† | Texas Capital Bancshares | 13,600 | 600,576 | |||
Webster Financial | 39,800 | 929,330 | ||||
† | Western Alliance Bancorporation | 36,000 | 529,200 | |||
16,395,146 | ||||||
Healthcare – 12.17% | ||||||
† | Acorda Therapeutics | 27,400 | 916,530 | |||
* | Air Methods | 26,400 | 988,416 | |||
† | Align Technology | 33,670 | 1,203,702 | |||
† | Alkermes | 41,930 | 1,310,312 | |||
† | Auxilium Pharmaceuticals | 23,100 | 344,652 | |||
*† | Cepheid | 10,800 | 375,408 | |||
CONMED | 27,340 | 900,306 | ||||
CryoLife | 69,000 | 427,110 | ||||
*† | Greenway Medical Technologies | 33,804 | 405,648 |
7
Statement of net assets
Delaware Small Cap Core Fund
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Healthcare (continued) | ||||||
*† | Haemonetics | 23,800 | $ | 982,464 | ||
† | ICON | 30,900 | 1,061,106 | |||
*† | Incyte | 32,000 | 709,440 | |||
*† | InterMune | 61,500 | 607,620 | |||
† | Merit Medical Systems | 53,887 | 531,865 | |||
† | Nektar Therapeutics | 46,400 | 439,408 | |||
*† | Quidel | 45,500 | 1,087,905 | |||
† | Spectrum Pharmaceuticals | 69,100 | 567,311 | |||
† | WellCare Health Plans | 14,100 | 735,174 | |||
West Pharmaceutical Services | 16,410 | 1,124,906 | ||||
14,719,283 | ||||||
Media – 0.54% | ||||||
National CineMedia | 39,750 | 660,248 | ||||
660,248 | ||||||
Real Estate – 6.01% | ||||||
DCT Industrial Trust | 135,700 | 1,001,466 | ||||
* | DuPont Fabros Technology | 41,100 | 995,853 | |||
EastGroup Properties | 19,300 | 1,134,261 | ||||
EPR Properties | 21,100 | 1,106,062 | ||||
LaSalle Hotel Properties | 42,300 | 1,116,720 | ||||
* | Ramco-Gershenson Properties Trust | 51,400 | 802,354 | |||
Sovran Self Storage | 17,130 | 1,111,223 | ||||
7,267,939 | ||||||
Technology – 16.18% | ||||||
† | Accelrys | 90,600 | 755,604 | |||
*† | Amkor Technology | 106,900 | 485,326 | |||
*† | Anixter International | 12,650 | 970,635 | |||
† | Applied Micro Circuits | 94,700 | 730,137 | |||
† | Brightcove | 56,600 | 423,368 | |||
*† | Cirrus Logic | 32,800 | 598,600 | |||
† | EPAM Systems | 20,921 | 484,530 | |||
† | ExactTarget | 35,933 | 826,818 | |||
† | ExlService Holdings | 15,290 | 448,456 | |||
† | FARO Technologies | 26,590 | 994,998 | |||
† | inContact | 49,070 | 356,248 | |||
* | j2 Global | 24,300 | 993,627 | |||
*† | KEYW Holding | 65,682 | 968,810 | |||
† | Liquidity Services | 21,500 | 860,215 |
8
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Technology (continued) | ||||||
† | Netgear | 18,910 | $ | 629,325 | ||
Plantronics | 18,000 | 831,600 | ||||
† | Proofpoint | 45,400 | 917,080 | |||
† | RPX | 28,059 | 430,425 | |||
† | Semtech | 36,100 | 1,319,093 | |||
*† | Shutterfly | 20,800 | 1,013,792 | |||
*† | SS&C Technologies Holdings | 23,632 | 747,480 | |||
† | Synaptics | 22,820 | 941,553 | |||
Syntel | 9,500 | 607,145 | ||||
† | Trulia | 12,200 | 375,028 | |||
† | ValueClick | 22,830 | 601,342 | |||
† | Vocus | 57,350 | 501,239 | |||
† | WNS Holdings ADR | 46,798 | 753,448 | |||
19,565,922 | ||||||
Transportation – 1.76% | ||||||
† | Genesee & Wyoming Class A | 9,900 | 881,595 | |||
† | Roadrunner Transportation | 18,100 | 501,370 | |||
*† | XPO Logistics | 44,700 | 743,361 | |||
2,126,326 | ||||||
Utilities – 1.90% | ||||||
Cleco | 21,800 | 992,118 | ||||
NorthWestern | 16,500 | 679,140 | ||||
UIL Holdings | 16,216 | 631,775 | ||||
2,303,033 | ||||||
Total Common Stock (cost $89,915,860) | 114,219,569 | |||||
Exchange-Traded Fund – 0.81% | ||||||
iShares Russell 2000 Index Fund | 10,000 | 978,500 | ||||
Total Exchange-Traded Fund (cost $862,480) | 978,500 | |||||
Principal amount | ||||||
Short-Term Investments – 4.23% | ||||||
≠Discount Notes – 1.77% | ||||||
Fannie Mae 0.06% 9/16/13 | $472,007 | 471,951 | ||||
Federal Home Loan Bank | ||||||
0.045% 7/24/13 | 202,467 | 202,462 | ||||
0.05% 7/26/13 | 116,621 | 116,618 |
9
Statement of net assets
Delaware Small Cap Core Fund
Principal amount | Value | ||||||
Short-Term Investments (continued) | |||||||
≠Discount Notes (continued) | |||||||
Federal Home Loan Bank (continued) | |||||||
0.06% 7/2/13 | $509,062 | $ | 509,054 | ||||
0.06% 8/14/13 | 486,960 | 486,931 | |||||
0.06% 8/16/13 | 159,949 | 159,939 | |||||
0.06% 8/21/13 | 202,467 | 202,454 | |||||
2,149,409 | |||||||
Repurchase Agreements – 2.46% | |||||||
Bank of America 0.03%, dated 5/31/13, to be | |||||||
repurchased on 6/3/13, repurchase price | |||||||
$602,534 (collateralized by U.S. government | |||||||
obligations 0.75%-3.625% 6/15/14-8/15/19; | |||||||
market value $614,582) | 602,532 | 602,532 | |||||
BNP Paribas 0.05%, dated 5/31/13, to be | |||||||
repurchased on 6/3/13, repurchase price | |||||||
$2,370,478 (collateralized by U.S. government | |||||||
obligations 0.00%-1.75% 8/29/13-1/31/18; | |||||||
market value $2,417,878) | 2,370,468 | 2,370,468 | |||||
2,973,000 | |||||||
Total Short-Term Investments (cost $5,122,293) | 5,122,409 | ||||||
Total Value of Securities Before Securities | |||||||
Lending Collateral – 99.49% (cost $95,900,633) | 120,320,478 | ||||||
Number of shares | |||||||
**Securities Lending Collateral – 0.20% | |||||||
Investment Companies | |||||||
Delaware Investments Collateral Fund No. 1 | 236,537 | 236,537 | |||||
†@Mellon GSL Reinvestment Trust II | 146,400 | 0 | |||||
Total Securities Lending Collateral (cost $382,937) | 236,537 | ||||||
©Total Value of Securities – 99.69% | |||||||
(cost $96,283,570) | 120,557,015 | ||||||
**Obligation to Return Securities | |||||||
Lending Collateral – (0.32%) | (382,937 | ) | |||||
Receivables and Other Assets Net | |||||||
of Other Liabilities – 0.63% | 757,557 | ||||||
Net Assets Applicable to 7,577,180 | |||||||
Shares Outstanding – 100.00% | $ | 120,931,635 |
10
Net Asset Value – Delaware Small Cap Core Fund | ||||
Class A ($40,694,073 / 2,540,687 Shares) | $16.02 | |||
Net Asset Value – Delaware Small Cap Core Fund | ||||
Class C ($14,591,130 / 961,193 Shares) | $15.18 | |||
Net Asset Value – Delaware Small Cap Core Fund | ||||
Class R ($8,652,572 / 548,355 Shares) | $15.78 | |||
Net Asset Value – Delaware Small Cap Core Fund | ||||
Institutional Class ($56,993,860 / 3,526,945 Shares) | $16.16 | |||
Components of Net Assets at May 31, 2013: | ||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 100,978,064 | ||
Accumulated net investment loss | (219,546 | ) | ||
Accumulated net realized loss on investments | (4,100,328 | ) | ||
Net unrealized appreciation of investments | 24,273,445 | |||
Total net assets | $ | 120,931,635 |
† | Non income producing security. |
* | Fully or partially on loan. |
≠ | The rate shown is the effective yield at the time of purchase. |
** | See Note 6 in “Notes to financial statements” for additional information on securities lending collateral. |
@ | Illiquid security. At May 31, 2013, the aggregate value of illiquid securities was $820,455, which represented 0.68% of the Fund’s net assets. See Note 7 in “Notes to financial statements.” |
© | Includes $371,287 of securities loaned. |
Net Asset Value and Offering Price Per Share – | |||
Delaware Small Cap Core Fund | |||
Net asset value Class A (A) | $ | 16.02 | |
Sales charge (5.75% of offering price) (B) | 0.98 | ||
Offering price | $ | 17.00 |
(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. |
ADR — American Depositary Receipt
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, 2013 (Unaudited) |
Investment Income: | ||||||
Dividends | $ | 670,624 | ||||
Securities lending income | 9,781 | |||||
Interest | 1,505 | $ | 681,910 | |||
Expenses: | ||||||
Management fees | 380,101 | |||||
Distribution expenses – Class A | 50,807 | |||||
Distribution expenses – Class C | 60,318 | |||||
Distribution expenses – Class R | 22,862 | |||||
Dividend disbursing and transfer agent fees and expenses | 76,995 | |||||
Registration fees | 29,821 | |||||
Accounting and administration expenses | 19,641 | |||||
Audit and tax | 6,910 | |||||
Reports and statements to shareholders | 6,016 | |||||
Dues and services | 4,423 | |||||
Legal fees | 4,175 | |||||
Trustees’ fees | 2,389 | |||||
Custodian fees | 2,235 | |||||
Pricing fees | 1,611 | |||||
Insurance fees | 763 | |||||
Consulting fees | 465 | |||||
Trustees’ expenses | 163 | 669,695 | ||||
Less waived distribution expenses – Class A | (8,468 | ) | ||||
Less waived distribution expenses – Class R | (3,810 | ) | ||||
Less expense paid indirectly | (74 | ) | ||||
Total operating expenses | 657,343 | |||||
Net Investment Income | 24,567 | |||||
Net Realized and Unrealized Gain: | ||||||
Net realized gain on investments | 4,496,240 | |||||
Net change in unrealized appreciation (depreciation) of investments | 12,122,855 | |||||
Net Realized and Unrealized Gain | 16,619,095 | |||||
Net Increase in Net Assets Resulting from Operations | $ | 16,643,662 |
See accompanying notes, which are an integral part of the financial statements.
13
Statements of changes in net assets
Delaware Small Cap Core Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
5/31/13 | 11/30/12 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income (loss) | $ | 24,567 | $ | (122,098 | ) | |||
Net realized gain | 4,496,240 | 5,527,183 | ||||||
Net change in unrealized appreciation (depreciation) | 12,122,855 | 3,363,440 | ||||||
Net increase in net assets resulting from operations | 16,643,662 | 8,768,525 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (22,906 | ) | — | |||||
Institutional Class | (133,052 | ) | — | |||||
(155,958 | ) | — | ||||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 14,521,760 | 8,834,083 | ||||||
Class C | 3,473,542 | 3,125,991 | ||||||
Class R | 1,566,810 | 2,206,774 | ||||||
Institutional Class | 12,881,735 | 10,737,301 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 22,424 | — | ||||||
Institutional Class | 131,836 | — | ||||||
32,598,107 | 24,904,149 |
14
Six Months | Year | |||||||
Ended | Ended | |||||||
5/31/13 | 11/30/12 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares redeemed: | ||||||||
Class A | $ | (4,429,791 | ) | $ | (10,866,354 | ) | ||
Class C | (845,661 | ) | (1,705,061 | ) | ||||
Class R | (966,807 | ) | (1,931,142 | ) | ||||
Institutional Class | (5,020,399 | ) | (4,714,614 | ) | ||||
(11,262,658 | ) | (19,217,171 | ) | |||||
Increase in net assets derived from | ||||||||
capital share transactions | 21,335,449 | 5,686,978 | ||||||
Net Increase in Net Assets | 37,823,153 | 14,455,503 | ||||||
Net Assets: | ||||||||
Beginning of period | 83,108,482 | 68,652,979 | ||||||
End of period (including accumulated net investment | ||||||||
loss of $219,546 and $88,155, respectively) | $ | 120,931,635 | $ | 83,108,482 |
See accompanying notes, which are an integral part of the financial statements.
15
Financial highlights
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) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total 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 |
Ratio of net investment income (loss) to average net assets |
Ratio of net investment income (loss) to average net assets |
prior to fees waived |
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.
16
Six Months Ended | Year Ended | ||||||||||||||||||
5/31/131 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | 11/30/08 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$13.560 | $12.010 | $11.150 | $8.740 | $ 6.930 | $12.150 | ||||||||||||||
0.003 | (0.022 | ) | (0.024 | ) | 0.034 | 0.003 | 0.019 | ||||||||||||
2.468 | 1.572 | 0.928 | 2.376 | 1.815 | (4.747 | ) | |||||||||||||
2.471 | 1.550 | 0.904 | 2.410 | 1.818 | (4.728 | ) | |||||||||||||
(0.011 | ) | — | (0.044 | ) | — | (0.008 | ) | — | |||||||||||
— | — | — | — | — | (0.492 | ) | |||||||||||||
(0.011 | ) | — | (0.044 | ) | — | (0.008 | ) | (0.492 | ) | ||||||||||
$16.020 | $13.560 | $12.010 | $11.150 | $8.740 | $6.930 | ||||||||||||||
18.23% | 12.91% | 8.10% | 27.57% | 25.36% | (40.55% | ) | |||||||||||||
$40,694 | $25,084 | $24,242 | $23,191 | $24,512 | $17,529 | ||||||||||||||
1.31% | 1.36% | 1.39% | 1.40% | 1.45% | 1.34% | ||||||||||||||
1.36% | 1.41% | 1.45% | 1.54% | 1.63% | 1.57% | ||||||||||||||
0.04% | (0.17% | ) | (0.20% | ) | 0.35% | 0.04% | 0.19% | ||||||||||||
(0.01% | ) | (0.22% | ) | (0.26% | ) | 0.21% | (0.14% | ) | (0.04% | ) | |||||||||
19% | 37% | 42% | 37% | 79% | 84% |
17
Financial highlights
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) |
Total from investment operations |
Less dividends and distributions from: |
Net realized gain |
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 |
Ratio of net investment loss to average net assets |
Ratio of net investment loss to average net assets |
prior to fees waived |
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 waivers 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 | |||||||||||||||||||
5/31/131 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | 11/30/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$12.890 | $11.510 | $10.720 | $8.470 | $6.750 | $11.940 | |||||||||||||||
(0.050 | ) | (0.115 | ) | (0.112 | ) | (0.039 | ) | (0.052 | ) | (0.055 | ) | |||||||||
2.340 | 1.495 | 0.902 | 2.289 | 1.772 | (4.643 | ) | ||||||||||||||
2.290 | 1.380 | 0.790 | 2.250 | 1.720 | (4.698 | ) | ||||||||||||||
— | — | — | — | — | (0.492 | ) | ||||||||||||||
— | — | — | — | — | (0.492 | ) | ||||||||||||||
$15.180 | $12.890 | $11.510 | $10.720 | $8.470 | $6.750 | |||||||||||||||
17.77% | 11.99% | 7.37% | 26.56% | 25.48% | (41.03% | ) | ||||||||||||||
$14,591 | $10,051 | $7,702 | $8,285 | $7,468 | $7,494 | |||||||||||||||
2.06% | 2.11% | 2.14% | 2.15% | 2.20% | 2.09% | |||||||||||||||
2.06% | 2.11% | 2.15% | 2.24% | 2.33% | 2.27% | |||||||||||||||
(0.71% | ) | (0.92% | ) | (0.95% | ) | (0.40% | ) | (0.71% | ) | (0.56% | ) | |||||||||
(0.71% | ) | (0.92% | ) | (0.96% | ) | (0.49% | ) | (0.84% | ) | (0.74% | ) | |||||||||
19% | 37% | 42% | 37% | 79% | 84% |
19
Financial highlights
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) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total 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 |
Ratio of net investment income (loss) to average net assets |
Ratio of net investment loss to average net assets |
prior to fees waived |
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.
20
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/131 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | 11/30/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$13.360 | $11.870 | $11.030 | $8.660 | $6.870 | $12.090 | |||||||||||||||
(0.016 | ) | (0.054 | ) | (0.054 | ) | 0.009 | (0.016 | ) | (0.005 | ) | ||||||||||
2.436 | 1.544 | 0.913 | 2.361 | 1.806 | (4.723 | ) | ||||||||||||||
2.420 | 1.490 | 0.859 | 2.370 | 1.790 | (4.728 | ) | ||||||||||||||
— | — | (0.019 | ) | — | — | — | ||||||||||||||
— | — | — | — | — | (0.492 | ) | ||||||||||||||
— | — | (0.019 | ) | — | — | (0.492 | ) | |||||||||||||
$15.780 | $13.360 | $11.870 | $11.030 | $8.660 | $6.870 | |||||||||||||||
18.11% | 12.55% | 7.79% | 27.37% | 26.06% | (40.75% | ) | ||||||||||||||
$8,653 | $6,809 | $5,786 | $5,322 | $3,848 | $2,611 | |||||||||||||||
1.56% | 1.61% | 1.64% | 1.65% | 1.70% | 1.59% | |||||||||||||||
1.66% | 1.71% | 1.75% | 1.84% | 1.93% | 1.87% | |||||||||||||||
(0.21% | ) | (0.42% | ) | (0.45% | ) | 0.10% | (0.21% | ) | (0.06% | ) | ||||||||||
(0.31% | ) | (0.52% | ) | (0.56% | ) | (0.09% | ) | (0.44% | ) | (0.34% | ) | |||||||||
19% | 37% | 42% | 37% | 79% | 84% |
21
Financial highlights
Delaware Small Cap Core Fund Institutional Class
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total 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 |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived |
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 | ||||||||||||||||||||
5/31/131 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | 11/30/08 | ||||||||||||||||
(Unaudited) | |||||||||||||||||||||
$13.690 | $12.100 | $11.230 | $8.790 | $6.970 | $12.190 | ||||||||||||||||
0.022 | 0.011 | 0.006 | 0.060 | 0.022 | 0.044 | ||||||||||||||||
2.492 | 1.579 | 0.934 | 2.385 | 1.830 | (4.772 | ) | |||||||||||||||
2.514 | 1.590 | 0.940 | 2.445 | 1.852 | (4.728 | ) | |||||||||||||||
(0.044 | ) | — | (0.070 | ) | (0.005 | ) | (0.032 | ) | — | ||||||||||||
— | — | — | — | — | (0.492 | ) | |||||||||||||||
(0.044 | ) | — | (0.070 | ) | (0.005 | ) | (0.032 | ) | (0.492 | ) | |||||||||||
$16.160 | $13.690 | $12.100 | $11.230 | $8.790 | $6.970 | ||||||||||||||||
18.41% | 13.14% | 8.37% | 27.83% | 25.78% | (40.41% | ) | |||||||||||||||
$56,994 | $41,164 | $30,923 | $33,877 | $30,401 | $22,988 | ||||||||||||||||
1.06% | 1.11% | 1.14% | 1.15% | 1.20% | 1.09% | ||||||||||||||||
1.06% | 1.11% | 1.15% | 1.24% | 1.33% | 1.27% | ||||||||||||||||
0.29% | 0.08% | 0.05% | 0.60% | 0.29% | 0.44% | ||||||||||||||||
0.29% | 0.08% | 0.04% | 0.51% | 0.16% | 0.26% | ||||||||||||||||
19% | 37% | 42% | 37% | 79% | 84% |
23
Notes to financial statements Delaware Small Cap Core Fund | May 31, 2013 (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 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, which approximates fair value. U.S. government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. Open-end investment companies are valued at their published net asset value. Investment company securities are valued at net asset value per share, as reported by the underlying investment company. 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 for all open federal income tax years (Nov. 30, 2009 – Nov. 30, 2012), and has concluded that no provision for federal income tax is required in the Fund’s financial statements.
Class Accounting — Investment income, common expenses and realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Repurchase Agreements — The Fund may purchase certain U.S. government securities subject to the counterparty’s agreement to repurchase them at an agreed upon date and price. The counterparty will be required on a daily basis to maintain the value of the collateral subject to the agreement at not less than the repurchase price (including accrued interest). The agreements are conditioned upon the collateral being deposited under the Federal Reserve book-entry system with the Fund’s custodian or a third-party sub-custodian. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. All open repurchase agreements as of the date of this report were entered into on May 31, 2013.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other — Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated among 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 ex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer. The Fund declares and pays distributions from net investment income and net realized gain on investments, if any, annually. Dividends and distributions, if any, are recorded on the ex-dividend date. The Fund may distribute more frequently, if necessary for tax purposes.
25
Notes to financial statements
Delaware Small Cap Core Fund
1. Significant Accounting Policies (continued)
Subject to seeking best execution, the Fund may direct certain security trades to brokers who have agreed to rebate a portion of the related brokerage commission to the Fund in cash. In general, best execution refers to many factors, including the price paid or received for a security, the commission charged, the promptness and reliability of execution, the confidentiality and placement accorded the order, and other factors affecting the overall benefit obtained by the Fund on the transaction. There were no commission rebates for the six months ended May 31, 2013.
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, 2013.
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, 2013, the Fund earned $74 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 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)) do not exceed 1.15% of average daily net assets of the Fund through March 28, 2014. For purposes of this waiver and reimbursement, nonroutine expenses may also include such additional costs and expenses as maybe agreed upon from time to time by the Fund’s Board and DMC. This expense waiver and reimbursement applies only to expenses paid directly by the Fund and may only be terminated by agreement of DMC and 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
26
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, 2013, the Fund was charged $2,455 for these services.
DSC is also the transfer agent and dividend disbursing agent of the Fund. The Fund pays DSC a monthly asset-based fee for these services. Pursuant to a sub-transfer agency agreement between DSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to the Fund. Sub-transfer agency fees are passed on to and paid directly by the Fund.
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 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 28, 2014, 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, 2013, the Fund had liabilities payable to affiliates as follows:
Investment management fee payable to DMC | $ | 75,289 |
Dividend disbursing, transfer agent and fund accounting | ||
oversight fees and other expenses payable to DSC | 2,685 | |
Distribution fees payable to DDLP | 23,821 | |
Other expenses payable to DMC and affiliates* | 5,851 |
*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, 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, 2013, the Fund was charged $ 1,549 for internal legal and tax services provided by DMC and/or its affiliates’ employees.
For the six months ended May 31, 2013, DDLP earned $12,727 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2013, DDLP received gross CDSC commissions of $ 269 and $ 318 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.
27
Notes to financial statements
Delaware Small Cap Core Fund
3. Investments
For the six months ended May 31, 2013, the Fund made purchases of $ 35,649,552 and sales of $18,701,006 of investment securities other than short-term investments.
At May 31, 2013, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At May 31, 2013, the cost of investments was $97,218,328. At May 31, 2013, the net unrealized appreciation was $23,338,687, of which $26,247,388 related to unrealized appreciation of investments and $2,908,701 related to unrealized appreciation of investments.
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at Nov. 30, 2012, if not utilized in future years, will expire as follows: $7,390,998 expires in 2017.
On Dec. 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the Act) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes were generally effective for taxable years beginning after the date of enactment. Under the Act, the Fund is permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.
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
28
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, exchange-traded options contracts) |
Level 2 | – | other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) (e.g., debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities) |
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) |
Level 3 investments are valued using significant unobservable inputs. The Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of May 31, 2013:
Level 1 | Level 2 | Level 3 | Total | ||||||||||
Common Stock | $ | 114,219,569 | $ | — | $ | — | $ | 114,219,569 | |||||
Investment Companies | 978,500 | — | — | 978,500 | |||||||||
Short-Term Investments | — | 5,122,409 | — | 5,122,409 | |||||||||
Securities Lending Collateral | — | 236,537 | — | 236,537 | |||||||||
Total | $ | 115,198,069 | $ | 5,358,946 | $ | — | $ | 120,557,015 |
The securities that have been deemed worthless on the statement of net assets are considered to be Level 3 securities in this table.
During the six months ended May 31, 2013, there were no transfers between Level 1 investments, Level 2 investments or Level 3 investments that had a significant impact to the Fund. The Fund’s policy is to recognize transfers between levels at the beginning of the reporting period.
29
Notes to financial statements
Delaware Small Cap Core Fund
3. Investments (continued)
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim or end of the period in relation to net assets. Management has determined not to provide additional disclosure on Level 3 inputs under ASU No. 2011-04 since the Level 3 investments are not considered significant to the Fund’s net assets at the end of the period.
4. Capital Shares
Transactions in capital shares were as follows:
Six Months | Year | ||||
Ended | Ended | ||||
5/31/13 | 11/30/12 | ||||
Shares sold: | |||||
Class A | 985,226 | 665,954 | |||
Class C | 241,673 | 247,010 | |||
Class R | 104,779 | 169,158 | |||
Institutional Class | 847,266 | 805,690 | |||
Shares issued upon reinvestment of dividends and distributions: | |||||
Class A | 1,610 | — | |||
Institutional Class | 9,390 | — | |||
2,189,944 | 1,887,812 | ||||
Shares redeemed: | |||||
Class A | (296,386 | ) | (833,529 | ) | |
Class C | (60,490 | ) | (136,402 | ) | |
Class R | (65,977 | ) | (147,035 | ) | |
Institutional Class | (335,991 | ) | (354,193 | ) | |
(758,844 | ) | (1,471,159 | ) | ||
Net increase | 1,431,100 | 416,653 |
5. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), is a participant in a $125,000,000 revolving line of credit 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. Each Participant is individually, and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit under the agreement expires on Nov. 12, 2013. The Fund had no amounts outstanding as of May 31, 2013 or at any time during the period then ended.
30
6. 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 The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (i) 102% with respect to U.S. securities and foreign securities that are denominated and payable in U.S. dollars; and (ii) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon the request of the borrower BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security 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. In Oct. 2008, BNY Mellon transferred certain distressed securities from the Fund’s 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 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.
31
Notes to financial statements
Delaware Small Cap Core Fund
6. Securities Lending (continued)
The Collective Trust used for the investment of cash collateral received from borrowers of securities 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 for this shortfall.
At May 31, 2013, the value of securities on loan was $371,287, for which cash collateral was received and invested in accordance with the Lending Agreement. At May 31, 2013, the value of invested collateral was $236,537. These investments are presented on the statement of net assets under the caption “Securities Lending Collateral.”
7. 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, 2013. 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, 2013, there were no Rule 144A securities. Illiquid securities have been identified on the statement of net assets.
32
8. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
9. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to May 31, 2013 that would require recognition or disclosure in the Fund’s financial statements.
33
About the organization
Board of trustees | |||
Patrick P. Coyne Thomas L. Bennett | Joseph W. Chow John A. Fry Anthony D. Knerr | Lucinda S. Landreth Frances A. | Thomas K. Whitford Janet L. Yeomans J. Richard Zecher |
Affiliated officers | |||
David F. Connor | Daniel V. Geatens | David P. O’Connor | Richard Salus |
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 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 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 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 delawareinvestments.com; and (ii) on the SEC’s website at sec.gov. |
34
![](https://capedge.com/proxy/N-CSRS/0001206774-13-002767/del_topimg02.jpg)
Semiannual report Delaware Small Cap Value Fund May 31, 2013 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 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 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 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 |
About the organization | 34 |
Unless otherwise noted, views expressed herein are current as of May 31, 2013, 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.
© 2013 Delaware Management Holdings, Inc.
All third-party marks cited are the property of their respective owners.
Disclosure of Fund expenses
For the six-month period from December 1, 2012 to May 31, 2013 (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/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 Dec. 1, 2012 to May 31, 2013.
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
Beginning | Ending | Expenses | ||||||||||||||||||
Account Value | Account Value | Annualized | Paid During Period | |||||||||||||||||
12/1/12 | 5/31/13 | Expense Ratio | 12/1/12 to 5/31/13* | |||||||||||||||||
Actual Fund return† | ||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,175.50 | 1.24 | % | $ | 6.73 | ||||||||||||
Class B | 1,000.00 | 1,171.20 | 1.99 | % | 10.77 | |||||||||||||||
Class C | 1,000.00 | 1,171.30 | 1.99 | % | 10.77 | |||||||||||||||
Class R | 1,000.00 | 1,173.90 | 1.49 | % | 8.08 | |||||||||||||||
Institutional Class | 1,000.00 | 1,176.90 | 0.99 | % | 5.37 | |||||||||||||||
Hypothetical 5% return (5% return before expenses) | ||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,018.75 | 1.24 | % | $ | 6.24 | ||||||||||||
Class B | 1,000.00 | 1,015.01 | 1.99 | % | 10.00 | |||||||||||||||
Class C | 1,000.00 | 1,015.01 | 1.99 | % | 10.00 | |||||||||||||||
Class R | 1,000.00 | 1,017.50 | 1.49 | % | 7.49 | |||||||||||||||
Institutional Class | 1,000.00 | 1,020.00 | 0.99 | % | 4.99 |
* | “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). |
† | Because actual returns reflect only the most recent six month period, the returns shown may differ significantly from fiscal year returns. |
2
Security type/sector allocation and top 10 equity holdings | |
Delaware Small Cap Value Fund | As of May 31, 2013 (Unaudited) |
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 | 93.06 | % |
Basic Industry | 10.45 | % |
Business Services | 1.23 | % |
Capital Spending | 10.20 | % |
Consumer Cyclical | 3.08 | % |
Consumer Services | 12.32 | % |
Consumer Staples | 1.26 | % |
Energy | 6.30 | % |
Financial Services | 17.84 | % |
Healthcare | 7.19 | % |
Real Estate | 3.46 | % |
Technology | 14.26 | % |
Transportation | 3.07 | % |
Utilities | 2.40 | % |
Exchange Traded Fund | 3.38 | % |
Short-Term Investments | 3.52 | % |
Securities Lending Collateral | 0.03 | % |
Total Value of Securities | 99.99 | % |
Obligation to Return Securities Lending Collateral | (0.05 | %) |
Receivables and Other Assets Net of Other Liabilities | 0.06 | % |
Total Net Assets | 100.00 | % |
3
Security type/sector allocation and
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 | |
United Rentals | 3.07 | % |
Platinum Underwriters Holdings | 2.23 | % |
East West Bancorp | 2.12 | % |
Whiting Petroleum | 2.10 | % |
Chicago Bridge & Iron | 2.03 | % |
Helix Energy Solutions Group | 1.92 | % |
Synopsys | 1.92 | % |
Fuller (H.B.) | 1.71 | % |
Vishay Intertechnology | 1.67 | % |
Chemtura | 1.46 | % |
4
Statement of net assets | |
Delaware Small Cap Value Fund | May 31, 2013 (Unaudited) |
Number of shares | Value | ||||
Common Stock – 93.06% | |||||
Basic Industry – 10.45% | |||||
Albemarle | 356,300 | $ | 23,843,596 | ||
† | Berry Plastics Group | 717,800 | 15,080,978 | ||
† | Chemtura | 1,069,800 | 24,530,514 | ||
Cytec Industries | 270,700 | 19,346,929 | |||
Fuller (H.B.) | 691,600 | 28,749,812 | |||
Glatfelter | 633,700 | 15,671,401 | |||
Kaiser Aluminum | 366,827 | 23,271,505 | |||
Olin | 483,400 | 12,051,162 | |||
Valspar | 186,900 | 13,395,123 | |||
175,941,020 | |||||
Business Services – 1.23% | |||||
Brink’s | 338,500 | 9,081,955 | |||
United Stationers | 336,218 | 11,602,883 | |||
20,684,838 | |||||
Capital Spending – 10.20% | |||||
Actuant Class A | 627,500 | 21,335,000 | |||
@ | Altra Holdings | 665,500 | 19,173,055 | ||
Chicago Bridge & Iron | 538,800 | 34,106,040 | |||
† | EnPro Industries | 202,800 | 10,215,036 | ||
ITT Corp | 412,700 | 12,442,905 | |||
Regal Beloit | 337,900 | 22,811,629 | |||
† | United Rentals | 909,600 | 51,701,664 | ||
171,785,329 | |||||
Consumer Cyclical – 3.08% | |||||
* | Autoliv | 131,700 | 10,333,182 | ||
Dana Holdings | 798,600 | 15,109,512 | |||
Knoll | 566,800 | 8,876,088 | |||
† | Meritage Homes | 369,400 | 17,494,784 | ||
51,813,566 | |||||
Consumer Services – 12.32% | |||||
† | Big Lots | 350,200 | 11,924,310 | ||
Brinker International | 370,000 | 14,507,700 | |||
Cato Class A | 630,700 | 15,704,430 | |||
CEC Entertainment | 267,200 | 10,701,360 | |||
Cheesecake Factory | 417,800 | 16,678,576 | |||
† | Children’s Place Retail Stores | 210,200 | 11,209,966 | ||
Finish Line Class A | 673,500 | 14,183,910 |
5
Statement of net assets
Delaware Small Cap Value Fund
Number of shares | Value | ||||
Common Stock (continued) | |||||
Consumer Services (continued) | |||||
† | Genesco | 188,100 | $ | 12,711,798 | |
Guess | 219,600 | 6,978,888 | |||
Hanesbrands | 432,400 | 21,559,464 | |||
† | Jack in the Box | 58,200 | 2,123,718 | ||
Men’s Wearhouse | 310,600 | 11,243,720 | |||
Meredith | 345,400 | 14,154,492 | |||
Rent-A-Center | 320,000 | 11,705,600 | |||
Stage Stores | 440,900 | 10,145,109 | |||
Texas Roadhouse | 647,400 | 15,311,010 | |||
* | Wolverine World Wide | 125,650 | 6,577,778 | ||
207,421,829 | |||||
Consumer Staples – 1.26% | |||||
Harris Teeter Supermarkets | 453,100 | 21,295,700 | |||
21,295,700 | |||||
Energy – 6.30% | |||||
† | Helix Energy Solutions Group | 1,355,700 | 32,347,002 | ||
Patterson-UTI Energy | 854,500 | 17,953,045 | |||
Southwest Gas | 433,900 | 20,545,165 | |||
† | Whiting Petroleum | 766,300 | 35,303,441 | ||
106,148,653 | |||||
Financial Services – 17.84% | |||||
Bank of Hawaii | 444,300 | 22,383,834 | |||
Berkley (W.R.) | 138,400 | 5,670,248 | |||
Boston Private Financial Holdings | 1,135,300 | 11,182,705 | |||
Comerica | 90,255 | 3,564,170 | |||
@ | Community Bank System | 634,300 | 18,623,048 | ||
CVB Financial | 429,800 | 4,929,806 | |||
East West Bancorp | 1,355,323 | 35,699,208 | |||
First Financial Bancorp | 898,700 | 13,848,967 | |||
First Midwest Bancorp | 685,000 | 9,014,600 | |||
Hancock Holding | 764,700 | 21,832,185 | |||
@ | Independent Bank | 503,800 | 16,600,210 | ||
@ | Infinity Property & Casualty | 290,800 | 16,793,700 | ||
@ | NBT Bancorp | 717,700 | 14,267,876 | ||
Platinum Underwriters Holdings | 657,300 | 37,531,829 | |||
S&T Bancorp | 406,900 | 7,869,446 | |||
@ | Selective Insurance Group | 902,900 | 21,425,817 | ||
StanCorp Financial Group | 172,600 | 7,841,218 |
6
Number of shares | Value | ||||
Common Stock (continued) | |||||
Financial Services (continued) | |||||
Validus Holdings | 333,484 | $ | 12,042,107 | ||
Webster Financial | 300,541 | 7,017,632 | |||
@ | WesBanco | 491,500 | 12,312,075 | ||
300,450,681 | |||||
Healthcare – 7.19% | |||||
Cooper | 111,800 | 12,634,518 | |||
† | Haemonetics | 356,600 | 14,720,448 | ||
* | Owens & Minor | 408,900 | 13,976,202 | ||
Service Corp. International | 1,039,500 | 18,690,210 | |||
STERIS | 353,400 | 16,023,156 | |||
Teleflex | 202,500 | 15,861,825 | |||
Universal Health Services Class B | 230,000 | 15,902,200 | |||
† | VCA Antech | 516,700 | 13,206,852 | ||
121,015,411 | |||||
Real Estate – 3.46% | |||||
† | Alexander & Baldwin | 417,900 | 14,747,691 | ||
Brandywine Realty Trust | 738,937 | 10,463,348 | |||
Education Realty Trust | 762,500 | 7,975,750 | |||
Government Properties Income Trust | 182,200 | 4,429,282 | |||
Highwoods Properties | 329,900 | 12,014,958 | |||
Washington Real Estate Investment Trust | 312,900 | 8,704,878 | |||
58,335,907 | |||||
Technology – 14.26% | |||||
@ | Black Box | 204,013 | 5,489,990 | ||
† | Brocade Communications Systems | 2,524,700 | 13,709,121 | ||
† | Cirrus Logic | 841,500 | 15,357,375 | ||
Compuware | 1,984,400 | 22,284,812 | |||
† | Electronics for Imaging | 444,300 | 12,391,527 | ||
† | NetScout Systems | 536,500 | 13,063,775 | ||
† | ON Semiconductor | 2,324,200 | 19,895,152 | ||
@† | Premiere Global Services | 924,150 | 11,136,008 | ||
† | PTC | 931,100 | 23,379,921 | ||
@ | QAD Class A | 64,559 | 808,924 | ||
@ | QAD Class B | 18,140 | 191,377 | ||
† | RF Micro Devices | 1,559,300 | 8,607,336 | ||
† | Synopsys | 886,300 | 32,305,635 | ||
† | Tech Data | 281,700 | 14,118,804 | ||
† | Teradyne | 1,066,600 | 19,134,804 |
7
Statement of net assets
Delaware Small Cap Value Fund
Number of shares | Value | |||||
Common Stock (continued) | ||||||
Technology (continued) | ||||||
† | Vishay Intertechnology | 1,937,000 | $ | 28,202,720 | ||
240,077,281 | ||||||
Transportation – 3.07% | ||||||
† | Kirby | 144,700 | 11,298,176 | |||
Matson | 441,700 | 11,117,589 | ||||
† | Saia | 246,500 | 11,779,003 | |||
* | Werner Enterprises | 698,400 | 17,480,952 | |||
51,675,720 | ||||||
Utilities – 2.40% | ||||||
Black Hills | 217,700 | 10,334,219 | ||||
El Paso Electric | 468,200 | 16,756,878 | ||||
NorthWestern | 322,300 | 13,265,868 | ||||
40,356,965 | ||||||
Total Common Stock (cost $1,229,444,115) | 1,567,002,900 | |||||
Exchange Traded Fund – 3.38% | ||||||
* | iShares Russell 2000 Value Index Fund | 659,000 | 56,884,880 | |||
Total Exchange Traded Fund (cost $57,356,401) | 56,884,880 | |||||
Principal amount | ||||||
Short-Term Investments – 3.52% | ||||||
≠Discount Notes – 1.62% | ||||||
Fannie Mae Discount Notes 0.06% 9/16/13 | $ | 6,373,004 | 6,372,259 | |||
Federal Home Loan Bank Discount Notes | ||||||
0.045% 7/24/13 | 2,367,199 | 2,367,133 | ||||
0.05% 7/26/13 | 1,363,507 | 1,363,467 | ||||
0.06% 7/2/13 | 7,214,934 | 7,214,818 | ||||
0.06% 8/14/13 | 5,693,421 | 5,693,080 | ||||
0.06% 8/16/13 | 1,870,087 | 1,869,971 | ||||
0.06% 8/21/13 | 2,367,199 | 2,367,043 | ||||
27,247,771 |
8
Principal amount | Value | ||||||
Short-Term Investments (continued) | |||||||
Repurchase Agreements – 1.90% | |||||||
Bank of America 0.03%, dated 5/31/13, to be | |||||||
repurchased on 6/3/13, repurchase price | |||||||
$6,493,697 (collateralized by U.S. Government | |||||||
obligations 0.75%-3.625% 6/15/14-8/15/19; | |||||||
market value $6,623,554) | $ | 6,493,681 | $ | 6,493,681 | |||
BNP Paribas 0.05%, dated 5/31/13, to be | |||||||
repurchased on 6/3/13, repurchase price | |||||||
$25,547,426 (collateralized by U.S. Government | |||||||
obligations 0.00%-1.75% 8/29/13-1/31/18; | |||||||
market value $26,058,266) | 25,547,319 | 25,547,319 | |||||
32,041,000 | |||||||
Total Short-Term Investments (cost $59,287,323) | 59,288,771 | ||||||
Total Value of Securities Before Securities | |||||||
Lending Collateral – 99.96% (cost $1,346,087,839) | 1,683,176,551 | ||||||
Number of shares | |||||||
** Securities Lending Collateral – 0.03% | |||||||
Investment Companies | |||||||
Delaware Investments Collateral Fund No. 1 | 568,897 | 568,897 | |||||
†@Mellon GSL Reinvestment Trust II | 267,984 | 0 | |||||
Total Securities Lending Collateral (cost $836,881) | 568,897 | ||||||
©Total Value of Securities – 99.99% | |||||||
(cost $1,346,924,720) | 1,683,745,448 | ||||||
** Obligation to Return Securities | |||||||
Lending Collateral – (0.05%) | (836,881 | ) | |||||
Receivables and Other Assets | |||||||
Net of Other Liabilities – 0.06% | 998,730 | ||||||
Net Assets Applicable to 35,929,274 | |||||||
Shares Outstanding – 100.00% | $ | 1,683,907,297 |
9
Statement of net assets
Delaware Small Cap Value Fund
Net Asset Value – Delaware Small Cap Value Fund | |||||
Class A ($727,694,042 / 15,707,391 Shares) | $46.33 | ||||
Net Asset Value – Delaware Small Cap Value Fund | |||||
Class B ($5,365,319 / 133,911 Shares) | $40.07 | ||||
Net Asset Value – Delaware Small Cap Value Fund | |||||
Class C ($84,050,121 / 2,098,636 Shares) | $40.05 | ||||
Net Asset Value – Delaware Small Cap Value Fund | |||||
Class R ($65,110,078 / 1,439,787 Shares) | $45.22 | ||||
Net Asset Value – Delaware Small Cap Value Fund | |||||
Institutional Class ($801,687,737 / 16,549,549 Shares) | $48.44 | ||||
Components of Net Assets at May 31, 2013: | |||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 1,337,711,447 | |||
Undistributed net investment income | 228,007 | ||||
Accumulated net realized gain on investments | 9,147,115 | ||||
Net unrealized appreciation of investments | 336,820,728 | ||||
Total net assets | $ | 1,683,907,297 |
† | Non income producing security. |
@ | Illiquid security. At May 31, 2013, the aggregate value of illiquid securities was $136,822,080, which represented 8.13% of the Fund’s net assets. See Note 7 in “Notes to Financial Statements.” |
* | Fully or partially on loan. |
≠ | The rate shown is the effective yield at the time of purchase. |
** | See Note 6 in “Notes to Financial Statements” for additional information on securities lending collateral. |
© | Includes $805,066 of securities loaned. |
Net Asset Value and Offering Price Per Share – | |||
Delaware Small Cap Value Fund | |||
Net asset value Class A (A) | $ | 46.33 | |
Sales charge (5.75% of offering price) (B) | 2.83 | ||
Offering Price | $ | 49.16 |
(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, 2013 (Unaudited) |
Investment Income: | |||||||
Dividends | $ | 9,926,714 | |||||
Interest | 25,467 | ||||||
Securities lending income | 2,172 | ||||||
Foreign tax withheld | (8,048 | ) | $ | 9,946,305 | |||
Expenses: | |||||||
Management fees | 4,514,239 | ||||||
Dividend disbursing and transfer agent fees and expenses | 1,282,942 | ||||||
Distribution expenses – Class A | 954,021 | ||||||
Distribution expenses – Class B | 29,235 | ||||||
Distribution expenses – Class C | 379,222 | ||||||
Distribution expenses – Class R | 170,818 | ||||||
Accounting and administration expenses | 246,850 | ||||||
Reports and statements to shareholders | 80,970 | ||||||
Registration fees | 69,264 | ||||||
Legal fees | 46,197 | ||||||
Trustees’ fees | 29,502 | ||||||
Audit and tax | 20,026 | ||||||
Custodian fees | 12,342 | ||||||
Insurance fees | 7,266 | ||||||
Dues and services | 6,481 | ||||||
Consulting fees | 4,834 | ||||||
Trustees’ expenses | 1,982 | ||||||
Pricing fees | 1,721 | 7,857,912 | |||||
Less waiver of distribution expenses – Class A | (159,004 | ) | |||||
Less waiver of distribution expenses – Class R | (28,470 | ) | |||||
Less expense paid indirectly | (737 | ) | |||||
Total expenses | 7,669,701 | ||||||
Net Investment Income | 2,276,604 | ||||||
Net Realized and Unrealized Gain on Investments: | |||||||
Net realized gain on investments | 9,653,249 | ||||||
Net change in unrealized appreciation (depreciation) of investments | 184,897,166 | ||||||
Net Realized and Unrealized Gain on Investments | 194,550,415 | ||||||
Net Increase in Net Assets Resulting from Operations | $ | 196,827,019 |
See accompanying notes, which are an integral part of the financial statements.
11
Statements of changes in net assets
Delaware Small Cap Value Fund
Six Months | Year | ||||||
Ended | Ended | ||||||
5/31/13 | 11/30/12 | ||||||
(Unaudited) | |||||||
Increase in Net Assets from Operations: | |||||||
Net investment income | $ | 2,276,604 | $ | 1,335,675 | |||
Net realized gain | 9,653,249 | 6,504,252 | |||||
Net change in unrealized appreciation (depreciation) | 184,897,166 | 54,895,533 | |||||
Net increase in net assets resulting from operations | 196,827,019 | 62,735,460 | |||||
Dividends and Distributions to Shareholders from: | |||||||
Net investment income: | |||||||
Class A | (1,279,088 | ) | — | ||||
Institutional Class | (1,786,832 | ) | — | ||||
Net realized gain on investments: | |||||||
Class A | (3,531,372 | ) | (18,061,149 | ) | |||
Class B | (42,667 | ) | (503,913 | ) | |||
Class C | (493,148 | ) | (2,847,089 | ) | |||
Class R | (302,814 | ) | (4,348,768 | ) | |||
Institutional Class | (2,388,692 | ) | (1,391,736 | ) | |||
(9,824,613 | ) | (27,152,655 | ) | ||||
Capital Share Transactions: | |||||||
Proceeds from shares sold: | |||||||
Class A | 198,547,199 | 254,891,248 | |||||
Class B | 18,147 | 60,866 | |||||
Class C | 13,666,225 | 20,845,992 | |||||
Class R | 21,822,835 | 26,856,223 | |||||
Institutional Class | 448,358,279 | 304,482,220 | |||||
Net asset value of shares issued upon reinvestment | |||||||
of dividends and distributions: | |||||||
Class A | 4,730,814 | 17,499,346 | |||||
Class B | 41,258 | 476,308 | |||||
Class C | 468,386 | 2,639,701 | |||||
Class R | 302,736 | 1,391,128 | |||||
Institutional Class | 3,993,285 | 3,578,023 | |||||
691,949,164 | 632,721,055 |
12
Six Months | Year | ||||||
Ended | Ended | ||||||
5/31/13 | 11/30/12 | ||||||
(Unaudited) | |||||||
Capital Share Transactions (continued): | |||||||
Cost of shares redeemed: | |||||||
Class A | $ | (94,314,607 | ) | $ | (146,679,412 | ) | |
Class B | (2,035,899 | ) | (4,265,249 | ) | |||
Class C | (7,564,429 | ) | (12,058,654 | ) | |||
Class R | (9,993,065 | ) | (13,904,316 | ) | |||
Institutional Class | (69,106,562 | ) | (60,952,716 | ) | |||
(183,014,562 | ) | (237,860,347 | ) | ||||
Increase in net assets derived | |||||||
from capital share transactions | 508,934,602 | 394,860,708 | |||||
Net Increase in Net Assets | 695,937,008 | 430,443,513 | |||||
Net Assets: | |||||||
Beginning of period | 987,970,289 | 557,526,776 | |||||
End of period (including undistributed net investment | |||||||
income of $228,007 and $1,017,323, respectively) | $ | 1,683,907,297 | $ | 987,970,289 |
See accompanying notes, which are an integral part of the financial statements.
13
Financial highlights
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) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total 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 |
Ratio of net investment income (loss) to average net assets |
Ratio of net investment income (loss) to average net assets |
prior to fees waived |
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 | |||||||||||||||||||
5/31/131 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | 11/30/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$39.750 | $37.860 | $36.190 | $27.530 | $21.340 | $36.000 | |||||||||||||||
0.069 | 0.074 | (0.008 | ) | (0.003 | ) | 0.059 | 0.072 | |||||||||||||
6.857 | 3.622 | 1.818 | 8.680 | 6.191 | (11.314 | ) | ||||||||||||||
6.926 | 3.696 | 1.810 | 8.677 | 6.250 | (11.242 | ) | ||||||||||||||
(0.092 | ) | — | — | (0.017 | ) | (0.060 | ) | — | ||||||||||||
(0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | (3.418 | ) | |||||||||||
(0.346 | ) | (1.806 | ) | (0.140 | ) | (0.017 | ) | (0.060 | ) | (3.418 | ) | |||||||||
$46.330 | $39.750 | $37.860 | $36.190 | $27.530 | $21.340 | |||||||||||||||
17.55% | 10.21% | 4.99% | 31.53% | 29.01% | (34.55% | ) | ||||||||||||||
$727,694 | $522,403 | $375,299 | $301,747 | $233,317 | $205,439 | |||||||||||||||
1.24% | 1.32% | 1.37% | 1.43% | 1.43% | 1.44% | |||||||||||||||
1.29% | 1.37% | 1.42% | 1.49% | 1.62% | 1.52% | |||||||||||||||
0.32% | 0.19% | (0.02% | ) | (0.01% | ) | 0.27% | 0.25% | |||||||||||||
0.27% | 0.14% | (0.07% | ) | (0.07% | ) | 0.08% | 0.17% | |||||||||||||
15% | 11% | 29% | 12% | 19% | 13% |
15
Financial highlights
Delaware Small Cap Value Fund Class B
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment loss2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net realized gain |
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 |
Ratio of net investment loss to average net assets |
Ratio of net investment loss to average net assets |
prior to fees waived |
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 | |||||||||||||||||||
5/31/131 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | 11/30/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$34.460 | $33.300 | $32.080 | $24.570 | $19.130 | $32.860 | |||||||||||||||
(0.081 | ) | (0.189 | ) | (0.262 | ) | (0.214 | ) | (0.088 | ) | (0.127 | ) | |||||||||
5.945 | 3.155 | 1.622 | 7.724 | 5.528 | (10.185 | ) | ||||||||||||||
5.864 | 2.966 | 1.360 | 7.510 | 5.440 | (10.312 | ) | ||||||||||||||
(0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | (3.418 | ) | |||||||||||
(0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | (3.418 | ) | |||||||||||
$40.070 | $34.460 | $33.300 | $32.080 | $24.570 | $19.130 | |||||||||||||||
17.12% | 9.37% | 4.23% | 30.57% | 28.44% | (35.08% | ) | ||||||||||||||
$5,365 | $6,424 | $9,835 | $14,249 | $17,532 | $21,825 | |||||||||||||||
1.99% | 2.07% | 2.12% | 2.18% | 2.18% | 2.19% | |||||||||||||||
1.99% | 2.07% | 2.12% | 2.19% | 2.32% | 2.22% | |||||||||||||||
(0.43% | ) | (0.56% | ) | (0.77% | ) | (0.76% | ) | (0.48% | ) | (0.50% | ) | |||||||||
(0.43% | ) | (0.56% | ) | (0.77% | ) | (0.77% | ) | (0.62% | ) | (0.53% | ) | |||||||||
15% | 11% | 29% | 12% | 19% | 13% |
17
Financial highlights
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) |
Total from investment operations |
Less dividends and distributions from: |
Net realized gain |
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 |
Ratio of net investment loss to average net assets |
Ratio of net investment loss to average net assets |
prior to fees waived |
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 | |||||||||||||||||||
5/31/131 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | 11/30/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$34.450 | $33.280 | $32.070 | $24.560 | $19.120 | $32.850 | |||||||||||||||
(0.081 | ) | (0.188 | ) | (0.260 | ) | (0.215 | ) | (0.090 | ) | (0.126 | ) | |||||||||
5.935 | 3.164 | 1.610 | 7.725 | 5.530 | (10.186 | ) | ||||||||||||||
5.854 | 2.976 | 1.350 | 7.510 | 5.440 | (10.312 | ) | ||||||||||||||
(0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | (3.418 | ) | |||||||||||
(0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | (3.418 | ) | |||||||||||
$40.050 | $34.450 | $33.280 | $32.070 | $24.560 | $19.120 | |||||||||||||||
17.13% | 9.37% | 4.20% | 30.58% | 28.45% | (35.05% | ) | ||||||||||||||
$84,050 | $66,231 | $52,648 | $49,706 | $44,564 | $44,339 | |||||||||||||||
1.99% | 2.07% | 2.12% | 2.18% | 2.18% | 2.19% | |||||||||||||||
1.99% | 2.07% | 2.12% | 2.19% | 2.32% | 2.22% | |||||||||||||||
(0.43% | ) | (0.56% | ) | (0.77% | ) | (0.76% | ) | (0.48% | ) | (0.50% | ) | |||||||||
(0.43% | ) | (0.56% | ) | (0.77% | ) | (0.77% | ) | (0.62% | ) | (0.53% | ) | |||||||||
15% | 11% | 29% | 12% | 19% | 13% |
19
Financial highlights
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) |
Total from investment operations |
Less dividends and distributions from: |
Net realized gain |
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 |
Ratio of net investment income (loss) to average net assets |
Ratio of net investment loss to average net assets |
prior to fees waived |
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.
20
Six Months Ended | Year Ended | |||||||||||||||||||
5/31/131 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | 11/30/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$38.770 | $37.050 | $35.510 | $27.070 | $20.970 | $35.530 | |||||||||||||||
0.015 | (0.022 | ) | (0.102 | ) | (0.081 | ) | 0.003 | (0.002 | ) | |||||||||||
6.689 | 3.548 | 1.782 | 8.521 | 6.097 | (11.140 | ) | ||||||||||||||
6.704 | 3.526 | 1.680 | 8.440 | 6.100 | (11.142 | ) | ||||||||||||||
(0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | (3.418 | ) | |||||||||||
(0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | (3.418 | ) | |||||||||||
$45.220 | $38.770 | $37.050 | $35.510 | $27.070 | $20.970 | |||||||||||||||
17.39% | 9.96% | 4.72% | 31.18% | 29.09% | (34.74% | ) | ||||||||||||||
$65,110 | $44,379 | $28,303 | $20,757 | $15,971 | $12,761 | |||||||||||||||
1.49% | 1.57% | 1.62% | 1.68% | 1.68% | 1.69% | |||||||||||||||
1.59% | 1.67% | 1.72% | 1.79% | 1.92% | 1.82% | |||||||||||||||
0.07% | (0.06% | ) | (0.27% | ) | (0.26% | ) | 0.02% | — | ||||||||||||
(0.03% | ) | (0.16% | ) | (0.37% | ) | (0.37% | ) | (0.22% | ) | (0.13% | ) | |||||||||
15% | 11% | 29% | 12% | 19% | 13% |
21
Financial highlights
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) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total 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 |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived |
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 | ||||||||||||||||||
5/31/131 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | 11/30/08 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$41.590 | $39.430 | $37.590 | $28.580 | $22.170 | $37.190 | ||||||||||||||
0.130 | 0.180 | 0.090 | 0.081 | 0.116 | 0.148 | ||||||||||||||
7.164 | 3.786 | 1.890 | 9.005 | 6.427 | (11.750 | ) | |||||||||||||
7.294 | 3.966 | 1.980 | 9.086 | 6.543 | (11.602 | ) | |||||||||||||
(0.190 | ) | — | — | (0.076 | ) | (0.133 | ) | — | |||||||||||
(0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | (3.418 | ) | ||||||||||
(0.444 | ) | (1.806 | ) | (0.140 | ) | (0.076 | ) | (0.133 | ) | (3.418 | ) | ||||||||
$48.440 | $41.590 | $39.430 | $37.590 | $28.580 | $22.170 | ||||||||||||||
17.69% | 10.49% | 5.26% | 31.85% | 29.28% | (34.38% | ) | |||||||||||||
$801,688 | $348,533 | $91,442 | $48,996 | $15,912 | $13,920 | ||||||||||||||
0.99% | 1.07% | 1.12% | 1.18% | 1.18% | 1.19% | ||||||||||||||
0.99% | 1.07% | 1.12% | 1.19% | 1.32% | 1.22% | ||||||||||||||
0.57% | 0.44% | 0.23% | 0.24% | 0.52% | 0.50% | ||||||||||||||
0.57% | 0.44% | 0.23% | 0.23% | 0.38% | 0.47% | ||||||||||||||
15% | 11% | 29% | 12% | 19% | 13% |
23
Notes to financial statements | |
Delaware Small Cap Value Fund | May 31, 2013 (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 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, which approximates fair value. Investment company securities are valued at net asset value per share, as reported by the underlying investment company. U.S. government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. 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 & Foreign 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 for all open federal income tax years (Nov. 30, 2009 – Nov. 30, 2012), and has concluded that no provision for federal income tax is required in the Fund’s financial statements. In regard to foreign taxes only, the Fund has open tax years in certain foreign countries it invests in that may date back to the inception of the Fund.
Class Accounting — Investment income, common expenses and realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Repurchase Agreements — The Fund may purchase certain U.S. government securities subject to the counterparty’s agreement to repurchase them at an agreed upon date and price. The counterparty will be required on a daily basis to maintain the value of the collateral subject to the agreement at not less than the repurchase price (including accrued interest). The agreements are conditioned upon the collateral being deposited under the Federal Reserve book-entry system with the Fund’s custodian or a third-party sub-custodian. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. All open repurchase agreements as of the date of this report were entered into on May 31, 2013.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other — Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated among 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. Foreign dividends
25
Notes to financial statements
Delaware Small Cap Value Fund
1. Significant Accounting Policies (continued)
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 tax withholdings, a portion of which may be reclaimable. Withholding taxes and reclaims on foreign dividends have been recorded in accordance with the Fund’s understanding of the applicable country’s tax rules and rates. The Fund declares and pays distributions from net investment income and net realized gain on investments, if any, at least annually and may distribute 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, 2013.
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, 2013.
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, 2013, the Fund earned $737 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.
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, 2013, the Fund was charged $30,850 for these services.
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DSC is also the transfer agent and dividend disbursing agent of the Fund. The Fund pays DSC a monthly asset-based fee for these services. Pursuant to a sub-transfer agency agreement between DSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to the Fund. Sub-transfer agency fees are passed on to and paid directly by the Fund.
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 of 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 28, 2014 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, 2013, the Fund had liabilities payable to affiliates as follows:
Investment management fee payable to DMC | $ | 910,045 | |
Dividend disbursing, transfer agent and fund accounting | |||
oversight fees and other expenses payable to DSC | 34,822 | ||
Distribution fees payable to DDLP | 253,292 | ||
Other expenses payable to DMC and affiliates* | 110,711 |
*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, 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, 2013, the Fund was charged $19,400 for internal legal and tax services provided by DMC and/or its affiliates’ employees.
For the six months ended May 31, 2013, DDLP earned $30,638 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2013, DDLP received gross CDSC commissions of $3, $70 and $1,703 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.
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Notes to financial statements
Delaware Small Cap Value Fund
3. Investments
For the six months ended May 31, 2013, the Fund made purchases of $672,547,621 and sales of $185,264,371 of investment securities other than short-term investments.
At May 31, 2013, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At May 31, 2013, the cost of investments was $1,348,631,631. At May 31, 2013, the net unrealized appreciation was $335,113,817 of which $344,699,265 related to unrealized appreciation of investments and $9,585,448 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, exchange-traded options contracts) |
Level 2 | – | other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) (e.g., debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities) |
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) |
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Level 3 investments are valued using significant unobservable inputs. The Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of May 31, 2013:
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Common Stock | $ | 1,567,002,900 | $ | — | $ | — | $ | 1,567,002,900 | ||||||
Exchange Traded Fund | 56,884,880 | — | — | 56,884,880 | ||||||||||
Short-Term Investments | — | 59,288,771 | — | 59,288,771 | ||||||||||
Securities Lending Collateral | — | 568,897 | — | 568,897 | ||||||||||
Total | $ | 1,623,887,780 | $ | 59,857,668 | $ | — | $ | 1,683,745,448 |
The securities that have been deemed worthless on the statement of net assets are considered to be Level 3 securities in this table.
During the six months ended May 31, 2013, there were no transfers between Level 1 investments, Level 2 investments or Level 3 investments that had a significant impact to the Fund. The Fund’s policy is to recognize transfers between levels at the beginning of the reporting period.
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim or end of the period in relation to net assets. Management has determined not to provide additional disclosure on Level 3 inputs under ASU No. 2011-04 since the Level 3 investments are not considered significant to the Fund’s net assets at the end of the period.
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Notes to financial statements
Delaware Small Cap Value Fund
4. Capital Shares
Transactions in capital shares were as follows:
Six Months | Year | |||||
Ended | Ended | |||||
5/31/13 | 11/30/12 | |||||
Shares sold: | ||||||
Class A | 4,623,067 | 6,535,447 | ||||
Class B | 481 | 1,802 | ||||
Class C | 363,493 | 615,066 | ||||
Class R | 521,275 | 705,870 | ||||
Institutional Class | 9,596,053 | 7,453,049 | ||||
Shares issued upon reinvestment of dividends and distributions: | ||||||
Class A | 116,897 | 481,148 | ||||
Class B | 1,175 | 14,997 | ||||
Class C | 13,344 | 83,166 | ||||
Class R | 7,655 | 39,131 | ||||
Institutional Class | 94,471 | 94,233 | ||||
15,337,911 | 16,023,909 | |||||
Shares redeemed: | ||||||
Class A | (2,175,422 | ) | (3,787,414 | ) | ||
Class B | (54,155 | ) | (125,780 | ) | ||
Class C | (200,995 | ) | (357,385 | ) | ||
Class R | (233,937 | ) | (364,034 | ) | ||
Institutional Class | (1,521,152 | ) | (1,485,984 | ) | ||
(4,185,661 | ) | (6,120,597 | ) | |||
Net increase | 11,152,250 | 9,903,312 |
For the six months ended May 31, 2013 and the year ended Nov. 30, 2012, 14,556 Class B shares were converted to 12,612 Class A shares valued at $547,491 and 54,036 Class B shares were converted to 47,127 Class A shares valued at $1,832,315, 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.
5. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), is a participant in a $125,000,000 revolving line of credit 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
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agreement. Each Participant is individually, and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit under the agreement expires on Nov. 12, 2013. The Fund had no amounts outstanding as of May 31, 2013 or at any time during the period then ended.
6. 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 The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (i) 102% with respect to U.S. securities and foreign securities that are denominated and payable in U.S. dollars; and (ii) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon the request of the borrower BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security 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. In Oct. 2008, BNY Mellon transferred certain distressed securities from the Fund’s 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 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
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Notes to financial statements
Delaware Small Cap Value Fund
6. Securities Lending (continued)
security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.
The Collective Trust used for the investment of cash collateral received from borrowers of securities 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 for this shortfall.
At May 31, 2013 the value of securities on loan was $805,066, for which cash collateral was received and invested in accordance with the Lending Agreement. At May 31, 2013 the value of invested collateral was $568,897. These investments are presented on the statement of net assets under the caption “Securities Lending Collateral”.
7. Credit and Market Risk
The Fund invests a significant portion of its assets in small companies and may be subject to certain risks associated with ownership of securities of such companies. Investments in small-sized companies may be more volatile than investments in larger companies for a number of reasons, which include limited financial resources or a dependence on narrow product lines.
The Fund invests in REITs and is subject to 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, 2013. 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
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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, 2013, there were no Rule 144A securities. Illiquid securities have been identified on the statement of net assets.
8. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
9. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to May 31, 2013 that would require recognition or disclosure in the Fund’s financial statements.
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About the organization
Board of trustees | |||
Patrick P. Coyne Thomas L. Bennett | Joseph W. Chow John A. Fry Anthony D. Knerr | Lucinda S. Landreth Frances A. | Thomas K. Whitford Janet L. Yeomans J. Richard Zecher |
Affiliated officers | |||
David F. Connor | Daniel V. Geatens | David P. O’Connor | Richard Salus |
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 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 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 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 delawareinvestments.com; and (ii) on the SEC’s website at sec.gov. |
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Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Included as part of report to shareholders filed under Item 1 of this Form N-CSR.
(b) Divestment of securities in accordance with Section 13(c) of the Investment Company Act of 1940.
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures
The registrant’s principal executive officer and principal financial officer have evaluated the registrant’s disclosure controls and procedures within 90 days of the filing of this report and have concluded that they are effective in providing reasonable assurance that the information required to be disclosed by the registrant in its reports or statements filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
There were no significant changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by the report to stockholders included herein (i.e., the registrant’s second fiscal quarter) that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits
(a) | (1) Code of Ethics | |
Not applicable. | ||
(2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are attached hereto as Exhibit 99.CERT. | ||
(3) Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934. | ||
Not applicable. | ||
(b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized.
Name of Registrant: DELAWARE GROUP® EQUITY FUNDS V
/s/ PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
Date: | August 5, 2013 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
Date: | August 5, 2013 |
/s/ RICHARD SALUS | |
By: | Richard Salus |
Title: | Chief Financial Officer |
Date: | August 5, 2013 |