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, 2014 |
Item 1. Reports to Stockholders
Semiannual report
Income and growth mutual fund
Delaware Dividend Income Fund
May 31, 2014
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and its summary prospectus, which may be obtained by visiting delawareinvestments.com or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.
You can obtain shareholder reports and prospectuses online instead of in the mail.
Visit delawareinvestments.com/edelivery.
Experience Delaware Investments
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Investments or obtain a prospectus for Delaware Dividend Income Fund at delawareinvestments.com.
Manage your investments online
• | 24-hour access to your account information |
• | Obtain share prices |
• | Check your account balance and recent transactions |
• | Request statements or literature |
• | Make purchases and redemptions |
Delaware Management Holdings, Inc. and its subsidiaries (collectively known by the marketing name of Delaware Investments) are wholly owned subsidiaries of Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services.
Investments in Delaware Dividend Income Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
1 | ||||
Security type / sector allocation and top 10 equity holdings | 3 | |||
6 | ||||
28 | ||||
30 | ||||
32 | ||||
34 | ||||
44 | ||||
61 |
Unless otherwise noted, views expressed herein are current as of May 31, 2014, 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.
© 2014 Delaware Management Holdings, Inc.
All third-party marks cited are the property of their respective owners.
For the six-month period from December 1, 2013 to May 31, 2014 (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, 2013 to May 31, 2014.
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
For the six-month period from December 1, 2013 to May 31, 2014 (Unaudited)
Delaware Dividend Income Fund
Expense analysis of an investment of $1,000
Beginning
| Ending
| Annualized
| Expenses
| |||||||||||
Actual Fund return† | ||||||||||||||
Class A | $1,000.00 | $1,065.40 | 1.10 | % | $5.66 | |||||||||
Class B | 1,000.00 | 1,062.70 | 1.61 | % | 8.28 | |||||||||
Class C | 1,000.00 | 1,061.30 | 1.85 | % | 9.51 | |||||||||
Class R | 1,000.00 | 1,064.00 | 1.35 | % | 6.95 | |||||||||
Institutional Class | 1,000.00 | 1,066.70 | 0.85 | % | 4.38 | |||||||||
Hypothetical 5% return (5% return before expenses) |
| |||||||||||||
Class A | $1,000.00 | $1,019.45 | 1.10 | % | $5.54 | |||||||||
Class B | 1,000.00 | 1,016.90 | 1.61 | % | 8.10 | |||||||||
Class C | 1,000.00 | 1,015.71 | 1.85 | % | 9.30 | |||||||||
Class R | 1,000.00 | 1,018.20 | 1.35 | % | 6.79 | |||||||||
Institutional Class |
| 1,000.00
|
|
| 1,020.69
|
|
| 0.85
| %
| 4.28
|
* | “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 Dividend Income Fund | As of May 31, 2014 (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
| Percentage of net assets
| ||||
Common Stock | 59.95 | % | |||
Consumer Discretionary | 4.45 | % | |||
Consumer Staples | 6.30 | % | |||
Diversified REIT | 0.11 | % | |||
Energy | 7.35 | % | |||
Financials | 6.61 | % | |||
Healthcare | 8.59 | % | |||
Hotel REITs | 0.61 | % | |||
Industrial REIT | 0.30 | % | |||
Industrials | 5.69 | % | |||
Information Technology | 8.45 | % | |||
Mall REITs | 0.65 | % | |||
Manufactured Housing REITs | 0.24 | % | |||
Materials | 1.56 | % | |||
Media | 0.08 | % | |||
Mixed REIT | 0.17 | % | |||
Multifamily REITs | 1.32 | % | |||
Office REITs | 0.74 | % | |||
Shopping Center REITs | 1.10 | % | |||
Single Tenant REIT | 0.44 | % | |||
Specialty | 0.15 | % | |||
Specialty REITs | 0.51 | % | |||
Telecommunication Services. | 2.87 | % | |||
Utilities | 1.66 | % | |||
Closed-End Fund | 0.24 | % | |||
Exchange-Traded Funds | 0.60 | % | |||
Convertible Preferred Stock | 3.23 | % | |||
Commercial Mortgage-Backed Security | 0.15 | % | |||
Convertible Bonds | 10.28 | % | |||
Basic Industry | 0.09 | % | |||
Brokerage | 0.14 | % | |||
Capital Goods | 0.73 | % | |||
Communications. | 2.11 | % | |||
Consumer Cyclical | 1.06 | % | |||
Consumer Non-Cyclical | 1.86 | % | |||
Energy | 0.96 | % |
3
Security type / sector allocation and top 10
equity holdings
Delaware Dividend Income Fund |
Sector
| Percentage of net assets
| ||||
Financials | 0.71 | % | |||
Healthcare | 0.03 | % | |||
Industrials | 0.28 | % | |||
REITs | 0.77 | % | |||
Technology | 1.54 | % | |||
Corporate Bonds | 14.13 | % | |||
Automotive | 0.42 | % | |||
Banking | 1.08 | % | |||
Basic Industry | 1.69 | % | |||
Capital Goods | 0.78 | % | |||
Consumer Cyclical | 0.74 | % | |||
Consumer Non-Cyclical | 0.31 | % | |||
Energy | 2.23 | % | |||
Financials | 0.09 | % | |||
Healthcare | 0.92 | % | |||
Insurance | 0.35 | % | |||
Media | 1.33 | % | |||
Services | 1.27 | % | |||
Technology | 0.25 | % | |||
Technology & Electronics | 0.81 | % | |||
Telecommunications | 1.46 | % | |||
Utilities | 0.40 | % | |||
Leveraged Non-Recourse Security | 0.00 | % | |||
Municipal Bonds | 1.93 | % | |||
Senior Secured Loans | 1.60 | % | |||
Sovereign Bond | 0.46 | % | |||
Limited Partnership | 0.12 | % | |||
Preferred Stock | 0.43 | % | |||
Warrant | 0.00 | % | |||
Short-Term Investments | 5.93 | % | |||
Total Value of Securities | 99.05 | % | |||
Option Written | (0.01 | %) | |||
Receivables and Other Assets Net of Liabilities | 0.96 | % | |||
Total Net Assets | 100.00 | % |
4
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
| ||||
Johnson Controls | 1.38 | % | |||
Cisco Systems | 1.37 | % | |||
Kraft Foods Group | 1.37 | % | |||
Verizon Communications | 1.36 | % | |||
Marsh & McLennan | 1.36 | % | |||
Broadcom Class A | 1.36 | % | |||
CVS Caremark | 1.35 | % | |||
Xerox | 1.35 | % | |||
Occidental Petroleum | 1.35 | % | |||
ConocoPhillips | 1.34 | % |
5
Delaware Dividend Income Fund | May 31, 2014 (Unaudited) |
Number of
| Value (U.S. $)
| |||||||
Common Stock – 59.95% | ||||||||
Consumer Discretionary – 4.45% | ||||||||
Asian Pay Television Trust | 5,980,000 | $ | 3,623,376 | |||||
Bayerische Motoren Werke | 3,102 | 389,416 | ||||||
Carnival | 1,243 | 49,757 | ||||||
Don Quijote Holdings | 3,300 | 194,528 | ||||||
General Motors | 97,492 | 3,371,273 | ||||||
Hanesbrands | 1,700 | 144,211 | ||||||
Johnson Controls | 203,900 | 9,860,604 | ||||||
Kering | 1,556 | 343,837 | ||||||
Las Vegas Sands | 1,452 | 111,107 | ||||||
Lowe’s | 199,300 | 9,383,044 | ||||||
Nitori Holdings | 9,286 | 455,701 | ||||||
Penney (J.C.) † | 150,000 | 1,348,500 | ||||||
Publicis Groupe | 6,675 | 575,807 | ||||||
Quiksilver † | 22,199 | 131,862 | ||||||
Techtronic Industries | 93,000 | 293,288 | ||||||
Toyota Motor | 15,600 | 882,955 | ||||||
United Rentals † | 1,448 | 146,320 | ||||||
Yue Yuen Industrial Holdings | 157,000 | 486,008 | ||||||
|
| |||||||
31,791,594 | ||||||||
|
| |||||||
Consumer Staples – 6.30% | ||||||||
Akorn † | 5,568 | 155,737 | ||||||
Archer-Daniels-Midland | 209,200 | 9,401,448 | ||||||
Aryzta † | 7,713 | 719,231 | ||||||
Carlsberg Class B | 4,610 | 480,900 | ||||||
Coca-Cola | 118,200 | 4,835,562 | ||||||
Coca-Cola Amatil | 36,741 | 323,518 | ||||||
CVS Caremark | 123,700 | 9,688,184 | ||||||
Kraft Foods Group | 164,400 | 9,775,224 | ||||||
Mondelez International Class A | 246,400 | 9,269,568 | ||||||
Tesco | 82,148 | 417,978 | ||||||
|
| |||||||
45,067,350 | ||||||||
|
| |||||||
Diversified REIT – 0.11% | ||||||||
Mapletree Commercial Trust | 759,000 | 813,884 | ||||||
|
| |||||||
813,884 | ||||||||
|
| |||||||
Energy – 7.35% | ||||||||
BP ADR | 63,500 | 3,203,575 | ||||||
Chevron | 75,000 | 9,209,250 | ||||||
CNOOC | 247,000 | 423,723 | ||||||
ConocoPhillips | 120,200 | 9,608,788 | ||||||
Halcon Resources † | 4,870 | 30,386 |
6
Number of
| Value (U.S. $)
| |||||||
Common Stock (continued) | ||||||||
Energy (continued) | ||||||||
Halliburton | 145,000 | $ | 9,372,800 | |||||
Kodiak Oil & Gas † | 13,885 | 176,756 | ||||||
Marathon Oil | 256,600 | 9,406,956 | ||||||
Occidental Petroleum | 96,700 | 9,640,023 | ||||||
Range Resources | 1,712 | 159,130 | ||||||
Saipem † | 17,086 | 445,336 | ||||||
Subsea 7 | 23,586 | 471,491 | ||||||
Total | 5,956 | 417,977 | ||||||
|
| |||||||
52,566,191 | ||||||||
|
| |||||||
Financials – 6.61% | ||||||||
Allstate | 162,400 | 9,461,424 | ||||||
Apollo Investment | 450,400 | 3,774,352 | ||||||
AXA | 29,263 | 722,432 | ||||||
Bank of New York Mellon | 273,700 | 9,459,072 | ||||||
Bank Rakyat Indonesia Persero | 285,998 | 249,865 | ||||||
BB&T | 245,900 | 9,324,528 | ||||||
Marsh & McLennan | 193,000 | 9,702,110 | ||||||
Mitsubishi UFJ Financial Group | 120,100 | 676,104 | ||||||
Nordea Bank | 56,321 | 830,688 | ||||||
Och-Ziff Capital Management Group | 142,300 | 1,891,167 | ||||||
Standard Chartered | 30,762 | 692,237 | ||||||
UniCredit | 54,417 | 474,389 | ||||||
|
| |||||||
47,258,368 | ||||||||
|
| |||||||
Healthcare – 8.59% | ||||||||
Baxter International | 125,600 | 9,345,896 | ||||||
Cardinal Health | 135,700 | 9,584,491 | ||||||
Healthcare Realty Trust | 43,300 | 1,079,469 | ||||||
Healthcare Trust of America Class A | 91,000 | 1,101,100 | ||||||
Johnson & Johnson | 93,400 | 9,476,364 | ||||||
Merck | 161,800 | 9,361,748 | ||||||
Novartis | 8,881 | 796,409 | ||||||
Pfizer | 302,638 | 8,967,164 | ||||||
Quest Diagnostics | 160,400 | 9,606,356 | ||||||
Sanofi | 7,087 | 757,809 | ||||||
Stada Arzneimittel | 8,389 | 393,966 | ||||||
Teva Pharmaceutical Industries ADR | 16,996 | 858,128 | ||||||
Valeant Pharmaceuticals International † | 862 | 113,103 | ||||||
|
| |||||||
61,442,003 | ||||||||
|
| |||||||
Hotel REITs – 0.61% | ||||||||
Concentradora Fibra Hotelera Mexicana | 737,685 | 1,255,993 |
7
Schedule of investments
Delaware Dividend Income Fund
Number of
| Value (U.S. $)
| |||||||
Common Stock (continued) | ||||||||
Hotel REITs (continued) | ||||||||
RLJ Lodging Trust | 40,300 | $ | 1,116,713 | |||||
Strategic Hotels & Resorts † | 183,300 | 1,997,970 | ||||||
|
| |||||||
4,370,676 | ||||||||
|
| |||||||
Industrial REIT – 0.30% | ||||||||
First Industrial Realty Trust | 117,200 | 2,172,888 | ||||||
|
| |||||||
2,172,888 | ||||||||
|
| |||||||
Industrials – 5.69% | ||||||||
Deutsche Post | 15,288 | 567,073 | ||||||
East Japan Railway | 6,046 | 461,239 | ||||||
General Electric | 334,200 | 8,953,218 | ||||||
ITOCHU | 43,289 | 511,634 | ||||||
Koninklijke Philips Electronics | 15,893 | 501,986 | ||||||
Northrop Grumman | 76,700 | 9,322,885 | ||||||
Raytheon | 96,700 | 9,435,019 | ||||||
Terreno Realty | 28,600 | 554,840 | ||||||
Vinci | 7,756 | 574,113 | ||||||
Waste Management | 209,800 | 9,373,864 | ||||||
WestJet Airlines | 20,556 | 461,498 | ||||||
|
| |||||||
40,717,369 | ||||||||
|
| |||||||
Information Technology – 8.45% | ||||||||
Apple | 10,100 | 6,393,300 | ||||||
Broadcom Class A | 304,200 | 9,694,854 | ||||||
CGI Group Class A † | 26,246 | 893,306 | ||||||
Cisco Systems | 398,200 | 9,803,684 | ||||||
Intel | 349,800 | 9,556,536 | ||||||
Microsoft | 226,800 | 9,285,192 | ||||||
Motorola Solutions | 68,045 | 4,587,594 | ||||||
Teleperformance | 9,260 | 579,469 | ||||||
Xerox | 782,400 | 9,662,640 | ||||||
|
| |||||||
60,456,575 | ||||||||
|
| |||||||
Mall REITs – 0.65% | ||||||||
Simon Property Group | 22,363 | 3,722,545 | ||||||
Taubman Centers | 12,500 | 936,250 | ||||||
|
| |||||||
4,658,795 | ||||||||
|
| |||||||
Manufactured Housing REITs – 0.24% | ||||||||
Equity Lifestyle Properties | 10,127 | 442,955 | ||||||
Sun Communities | 26,600 | 1,287,972 | ||||||
|
| |||||||
1,730,927 | ||||||||
|
| |||||||
Materials – 1.56% | ||||||||
AuRico Gold | 30,862 | 106,749 |
8
Number of
| Value (U.S. $)
| |||||||
Common Stock (continued) | ||||||||
Materials (continued) | ||||||||
duPont (E.I.) deNemours | 137,700 | $ | 9,543,987 | |||||
Lafarge | 4,918 | 424,846 | ||||||
Rexam | 53,839 | 479,652 | ||||||
Rio Tinto | 7,210 | 369,451 | ||||||
Yamana Gold | 29,313 | 218,735 | ||||||
|
| |||||||
11,143,420 | ||||||||
|
| |||||||
Media – 0.08% | ||||||||
DIRECTV Class A † | 3,850 | 317,394 | ||||||
Time Warner Cable | 1,723 | 243,219 | ||||||
|
| |||||||
560,613 | ||||||||
|
| |||||||
Mixed REIT – 0.17% | ||||||||
Duke Realty | 70,100 | 1,240,770 | ||||||
|
| |||||||
1,240,770 | ||||||||
|
| |||||||
Multifamily REITs – 1.32% | ||||||||
American Campus Communities | 18,300 | 710,772 | ||||||
American Residential Properties † | 118,400 | 2,166,720 | ||||||
AvalonBay Communities | 12,800 | 1,815,552 | ||||||
Equity Residential | 15,500 | 957,900 | ||||||
Essex Property Trust | 7,813 | 1,413,840 | ||||||
Post Properties | 45,700 | 2,337,555 | ||||||
|
| |||||||
9,402,339 | ||||||||
|
| |||||||
Office REITs – 0.74% | ||||||||
Alstria Office REIT † | 73,600 | 986,058 | ||||||
Brandywine Realty Trust | 31,200 | 477,360 | ||||||
Corporate Office Properties Trust | 41,600 | 1,146,080 | ||||||
First Potomac Realty Trust | 71,600 | 936,528 | ||||||
Highwoods Properties | 43,600 | 1,769,288 | ||||||
|
| |||||||
5,315,314 | ||||||||
|
| |||||||
Shopping Center REITs – 1.10% | ||||||||
Agree Realty † | 37,500 | 1,156,500 | ||||||
AmREIT | 8,100 | 143,937 | ||||||
DDR | 74,400 | 1,287,864 | ||||||
First Capital Realty | 45,403 | 781,460 | ||||||
Lippo Malls Indonesia Retail Trust | 2,593,000 | 837,252 | ||||||
Ramco-Gershenson Properties Trust | 110,500 | 1,834,300 | ||||||
Washington Prime Group † | 30,282 | 602,299 | ||||||
Wheeler Real Estate Investment Trust | 263,480 | 1,217,278 | ||||||
|
| |||||||
7,860,890 | ||||||||
|
| |||||||
Single Tenant REIT – 0.44% | ||||||||
Spirit Realty Capital | 279,600 | 3,156,684 | ||||||
|
| |||||||
3,156,684 | ||||||||
|
|
9
Schedule of investments
Delaware Dividend Income Fund
Number of
| Value (U.S. $)
| |||||||
Common Stock (continued) | ||||||||
Specialty – 0.15% | ||||||||
AMC Entertainment Holdings † | 48,000 | $ | 1,088,160 | |||||
|
| |||||||
1,088,160 | ||||||||
|
| |||||||
Specialty REITs – 0.51% | ||||||||
EPR Properties | 56,200 | 3,030,304 | ||||||
Gladstone Land | 54,610 | 610,540 | ||||||
|
| |||||||
3,640,844 | ||||||||
|
| |||||||
Telecommunication Services – 2.87% | ||||||||
AT&T | 262,600 | 9,314,422 | ||||||
Century Communications =† | 1,625,000 | 0 | ||||||
CenturyLink | 3,611 | 136,026 | ||||||
KDDI | 878 | 52,213 | ||||||
Mobile Telesystems ADR | 23,777 | 439,637 | ||||||
Nippon Telegraph & Telephone | 12,437 | 738,265 | ||||||
Verizon Communications | 195,200 | 9,752,192 | ||||||
Vodafone Group | 17,230 | 60,505 | ||||||
|
| |||||||
20,493,260 | ||||||||
|
| |||||||
Utilities – 1.66% | ||||||||
Edison International | 164,800 | 9,087,072 | ||||||
GDF Suez | 89,621 | 2,502,680 | ||||||
National Grid | 18,202 | 271,541 | ||||||
|
| |||||||
11,861,293 | ||||||||
|
| |||||||
Total Common Stock (cost $340,362,651) | 428,810,207 | |||||||
|
| |||||||
Closed-End Fund – 0.24% | ||||||||
Morgan Stanley Emerging Markets Domestic Debt Fund | 127,800 | 1,722,744 | ||||||
|
| |||||||
Total Closed-End Fund (cost $1,687,424) | 1,722,744 | |||||||
|
| |||||||
Exchange-Traded Funds – 0.60% | ||||||||
Aberdeen Asia-Pacific Income Fund | 352,162 | 2,197,491 | ||||||
Market Vectors High Yield Municipal Index | 69,400 | 2,118,782 | ||||||
|
| |||||||
Total Exchange-Traded Funds (cost $4,219,255) | 4,316,273 | |||||||
|
| |||||||
Convertible Preferred Stock – 3.23% | ||||||||
ArcelorMittal 6.00% exercise price $20.36, expiration date 12/21/15 | 70,950 | 1,665,111 | ||||||
Chesapeake Energy 144A 5.75% exercise price $27.77, expiration date 12/31/49 # | 1,069 | 1,290,149 | ||||||
El Paso Energy Capital Trust I 4.75% exercise price $34.49, expiration date 3/31/28 | 39,900 | 2,115,498 |
10
Number of
| Value (U.S. $)
| |||||||
Convertible Preferred Stock (continued) | ||||||||
Halcon Resources 5.75% exercise price $6.16, expiration date 12/31/49 | 1,855 | $ | 2,013,814 | |||||
HealthSouth 6.50% exercise price $30.01, expiration date 12/31/49 | 1,753 | 2,251,948 | ||||||
Huntington Bancshares 8.50% exercise price $11.95, expiration date 12/31/49 | 1,038 | 1,372,755 | ||||||
Intelsat 5.75% exercise price $22.05, expiration date 5/1/16 | 50,900 | 2,670,723 | ||||||
Maiden Holdings 7.25% exercise price $15.47, expiration date 9/15/16 | 45,775 | 2,220,087 | ||||||
MetLife 5.00% exercise price $44.27, expiration date 3/26/14 | �� | 67,870 | 2,005,559 | |||||
SandRidge Energy | 4,400 | 467,500 | ||||||
8.50% exercise price $8.01, expiration date 12/31/49 | 14,890 | 1,641,623 | ||||||
Wells Fargo 7.50% exercise price $156.71, expiration date 12/31/49 | 1,411 | 1,738,352 | ||||||
Weyerhaeuser 6.375% exercise price $33.30, expiration date 7/1/16 | 11,113 | 651,666 | ||||||
Wheeler Real Estate Investment Trust 9.00% exercise price $5.00, expiration date 12/31/49 | 20,790 | 557,796 | ||||||
Wheeler REIT 9.00% exercise price $5.50, expiration date 12/31/49@= | 414 | 432,424 | ||||||
|
| |||||||
Total Convertible Preferred Stock (cost $21,561,867) | 23,095,005 | |||||||
|
| |||||||
Principal amount°
| ||||||||
Commercial Mortgage-Backed Security – 0.15% | ||||||||
BAML Commercial Mortgage | 977,203 | 1,056,268 | ||||||
|
| |||||||
Total Commercial Mortgage-Backed Security (cost $991,478) | 1,056,268 | |||||||
|
| |||||||
Convertible Bonds – 10.28% | ||||||||
Basic Industry – 0.09% | ||||||||
Peabody Energy 4.75% exercise price $57.62, expiration date 12/15/41 | 788,000 | 617,103 | ||||||
|
| |||||||
617,103 | ||||||||
|
| |||||||
Brokerage – 0.14% | ||||||||
Gain Capital Holdings 144A 4.125% exercise price $12.00, expiration date 11/30/18 # | 1,035,000 | 1,020,122 | ||||||
|
| |||||||
1,020,122 | ||||||||
|
| |||||||
Capital Goods – 0.73% | ||||||||
Owens-Brockway Glass Container 144A 3.00% exercise price $47.47, expiration date 5/28/15 # | 2,517,000 | 2,584,644 |
11
Schedule of investments
Delaware Dividend Income Fund
Principal amount°
| Value (U.S. $)
| |||||||
Convertible Bonds (continued) | ||||||||
Capital Goods (continued) | ||||||||
Titan Machinery 3.75% exercise price $43.17, expiration date 4/30/19 | 2,973,000 | $ | 2,618,098 | |||||
|
| |||||||
5,202,742 | ||||||||
|
| |||||||
Communications – 2.11% | ||||||||
Alaska Communications Systems Group 144A 6.25% exercise price $10.28, expiration date 4/27/18 # | 1,810,000 | 1,506,825 | ||||||
Blucora 144A 4.25% exercise price $21.66, expiration date 3/29/19 # | 1,247,000 | 1,382,611 | ||||||
Clearwire Communications 144A 8.25% exercise price $7.08, expiration date 11/30/40 # | 2,181,000 | 2,538,139 | ||||||
Equinix 4.75% exercise price $84.32, expiration date 6/13/16 | 410,000 | 995,019 | ||||||
Leap Wireless International 4.50% exercise price $93.21, expiration date 7/10/14 | 2,433,000 | 2,448,206 | ||||||
Liberty Interactive 0.75% exercise price $1,000.00, expiration date 3/30/43 | 1,464,000 | 1,907,775 | ||||||
Liberty Interactive 144A 1.00% exercise price $74.31, expiration date 9/28/43 # | 2,662,000 | 2,741,860 | ||||||
Rovi 2.625% exercise price $47.36, expiration date 2/10/40 | 673,000 | 686,460 | ||||||
SBA Communications 4.00% exercise price $30.38, expiration date 9/29/14 | 271,000 | 900,567 | ||||||
|
| |||||||
15,107,462 | ||||||||
|
| |||||||
Consumer Cyclical – 1.06% | ||||||||
ArvinMeritor 4.00% exercise price $26.73, expiration date 2/12/27 f | 3,072,000 | 3,269,760 | ||||||
Iconix Brand Group 2.50% exercise price $30.75, expiration date 5/31/16 | 1,245,000 | 1,785,019 | ||||||
Live Nation Entertainment 144A 2.50% exercise price $34.68, expiration date 5/15/19 # | 352,000 | 366,080 | ||||||
Live Nation Entertainment 2.875% exercise price $27.14, expiration date 7/14/27 | 2,165,000 | 2,178,531 | ||||||
|
| |||||||
7,599,390 | ||||||||
|
| |||||||
Consumer Non-Cyclical – 1.86% | ||||||||
Alere 3.00% exercise price $43.98, expiration date 5/15/16 | 1,952,000 | 2,159,400 | ||||||
BioMarin Pharmaceutical 1.50% exercise price $94.15, expiration date 10/13/20 | 1,035,000 | 1,067,991 | ||||||
Dendreon 2.875% exercise price $51.24, expiration date 1/13/16 | 1,139,000 | 848,555 | ||||||
Hologic 2.00% exercise price $38.59, expiration date 12/15/43 | 1,666,000 | 1,823,229 | ||||||
Hologic 2.00% exercise price $31.17, expiration date 2/27/42 f | 1,168,000 | 1,290,640 |
12
Principal amount°
| Value (U.S. $)
| |||||||
Convertible Bonds (continued) | ||||||||
Consumer Non-Cyclical (continued) | ||||||||
NuVasive 2.75% exercise price $42.13, expiration date 6/30/17 | 2,636,000 | $ | 2,968,795 | |||||
Spectrum Pharmaceuticals 144A 2.75% exercise price $10.53, expiration date 12/13/18 # | 685,000 | 704,694 | ||||||
Vector Group 1.75% exercise price $27.16, expiration date 4/15/20 | 1,368,000 | 1,420,155 | ||||||
Vector Group 2.50% exercise price $17.62, expiration date 1/14/19 • | 739,000 | 986,698 | ||||||
|
| |||||||
13,270,157 | ||||||||
|
| |||||||
Energy – 0.96% | ||||||||
Chesapeake Energy 2.50% exercise price $50.90, expiration date 5/15/37 | 683,000 | 722,699 | ||||||
Energy XXI Bermuda 144A 3.00% exercise price $40.40, expiration date 12/13/18 # | 2,582,000 | 2,512,609 | ||||||
Helix Energy Solutions Group 3.25% exercise price $25.02, expiration date 3/12/32 | 1,387,000 | 1,772,759 | ||||||
Vantage Drilling 144A 5.50% exercise price $2.39, expiration date 7/15/43 # | 1,786,000 | 1,873,067 | ||||||
|
| |||||||
6,881,134 | ||||||||
|
| |||||||
Financials – 0.71% | ||||||||
Ares Capital 5.75% exercise price $19.13, expiration date 2/1/16 | 1,558,000 | 1,672,903 | ||||||
BGC Partners 4.50% exercise price $9.84, expiration date 7/13/16 | 2,293,000 | 2,457,809 | ||||||
New Mountain Finance 144A 5.00% exercise price $15.93, expiration date 6/15/19 # | 967,000 | 974,504 | ||||||
|
| |||||||
5,105,216 | ||||||||
|
| |||||||
Healthcare – 0.03% | ||||||||
Salix Pharmaceuticals 1.50% exercise price $65.81, expiration date 3/15/19 | 130,000 | 239,281 | ||||||
|
| |||||||
239,281 | ||||||||
|
| |||||||
Industrials – 0.28% | ||||||||
General Cable 4.50% exercise price $35.88, expiration date 11/15/29 f | 1,987,000 | 1,989,484 | ||||||
|
| |||||||
1,989,484 | ||||||||
|
| |||||||
REITs – 0.77% | ||||||||
Blackstone Mortgage Trust 5.25% exercise price $28.66, expiration date 12/1/18 | 2,032,000 | 2,289,810 | ||||||
Campus Crest Communities Operating Partnership 144A 4.75% exercise price $12.56, expiration date 10/11/18 # | 1,932,000 | 1,907,850 | ||||||
Forest City Enterprises 144A 3.625% exercise price $24.21, expiration date 8/14/20 # | 1,247,000 | 1,300,777 | ||||||
|
| |||||||
5,498,437 | ||||||||
|
|
13
Schedule of investments
Delaware Dividend Income Fund
Principal amount°
| Value (U.S. $)
| |||||||||||
Convertible Bonds (continued) | ||||||||||||
Technology – 1.54% | ||||||||||||
Cardtronics 144A 1.00% exercise price $52.35, expiration date 11/27/20 # | 2,490,000 | $ | 2,181,875 | |||||||||
Ciena 144A 3.75% exercise price $20.17, expiration date 10/15/18 # | 1,141,000 | 1,476,169 | ||||||||||
Nuance Communications 2.75% exercise price $32.30, expiration date 11/1/31 | 1,574,000 | 1,587,773 | ||||||||||
SanDisk 1.50% exercise price $51.69, expiration date 8/11/17 | 1,204,000 | 2,308,670 | ||||||||||
TIBCO Software 2.25% exercise price $50.57, expiration date 4/30/32 | 2,064,000 | 2,088,510 | ||||||||||
VeriSign 3.25% exercise price $34.37, expiration date 8/15/37 | 856,000 | 1,331,080 | ||||||||||
|
| |||||||||||
10,974,077 | ||||||||||||
|
| |||||||||||
Total Convertible Bonds (cost $68,229,672) | 73,504,605 | |||||||||||
|
| |||||||||||
Corporate Bonds – 14.13% | ||||||||||||
Automotive – 0.42% | ||||||||||||
American Axle & Manufacturing 7.75% 11/15/19 | 274,000 | 316,813 | ||||||||||
Chassix 144A 9.25% 8/1/18 # | 255,000 | 277,313 | ||||||||||
General Motors 144A 6.25% 10/2/43 # | 330,000 | 376,613 | ||||||||||
General Motors Financial 6.75% 6/1/18 | 515,000 | 589,031 | ||||||||||
Group 1 Automotive 144A 5.00% 6/1/22 # | 250,000 | 252,500 | ||||||||||
International Automotive Components Group 144A 9.125% 6/1/18 # | 628,000 | 671,960 | ||||||||||
Meritor | ||||||||||||
6.25% 2/15/24 | 180,000 | 184,050 | ||||||||||
6.75% 6/15/21 | 325,000 | 348,563 | ||||||||||
|
| |||||||||||
3,016,843 | ||||||||||||
|
| |||||||||||
Banking – 1.08% | ||||||||||||
Australia & New Zealand Banking Group | ||||||||||||
5.405% 6/20/22 • | AUD | 1,090,000 | 1,060,700 | |||||||||
Bank of America 4.11% 8/23/18 • | AUD | 1,100,000 | 1,042,321 | |||||||||
Barclays Bank 7.625% 11/21/22 | 550,000 | 633,187 | ||||||||||
Credit Suisse Group 144A 7.50% 12/11/49 #• | 520,000 | 568,126 | ||||||||||
Goldman Sachs Group | ||||||||||||
3.985% 8/21/19 • | AUD | 720,000 | 673,198 | |||||||||
4.383% 8/8/18 • | AUD | 770,000 | 732,316 | |||||||||
JPMorgan Chase | ||||||||||||
3.727% 5/17/18 • | AUD | 1,100,000 | 1,030,818 | |||||||||
6.75% 1/29/49 • | 335,000 | 363,475 | ||||||||||
Lloyds Banking Group 7.50% 4/30/49 • | 950,000 | 1,020,063 | ||||||||||
RBS Capital Trust I 2.099% 12/29/49 • | 600,000 | 585,000 | ||||||||||
|
|
14
Principal amount°
| Value (U.S. $)
| |||||||||
Corporate Bonds (continued) | ||||||||||
Banking (continued) | ||||||||||
7,709,204 | ||||||||||
|
| |||||||||
Basic Industry – 1.69% | ||||||||||
AK Steel 7.625% 5/15/20 | 593,000 | $ | 600,413 | |||||||
ArcelorMittal 6.125% 6/1/18 | 809,000 | 889,900 | ||||||||
Arch Coal 144A 8.00% 1/15/19 # | 510,000 | 502,350 | ||||||||
Axalta Coating System 144A 7.375% 5/1/21 # | 265,000 | 291,500 | ||||||||
Builders FirstSource 144A 7.625% 6/1/21 # | 684,000 | 733,590 | ||||||||
Cemex 144A 7.25% 1/15/21 # | 315,000 | 342,169 | ||||||||
Cemex Finance 144A 6.00% 4/1/24 # | 350,000 | 360,063 | ||||||||
CPG Merger Sub 144A 8.00% 10/1/21 # | 540,000 | 573,750 | ||||||||
Essar Steel Minnesota 144A 11.50% 5/15/20 # | 160,000 | 165,000 | ||||||||
First Quantum Minerals | ||||||||||
144A 6.75% 2/15/20 # | 223,000 | 228,575 | ||||||||
144A 7.00% 2/15/21 # | 223,000 | 228,575 | ||||||||
144A 7.25% 5/15/22 # | 405,000 | 417,150 | ||||||||
FMG Resources August 2006 144A 6.875% 4/1/22 # | 574,000 | 607,723 | ||||||||
HD Supply 11.50% 7/15/20 | 425,000 | 511,063 | ||||||||
INEOS Group Holdings 144A 5.875% 2/15/19 # | 640,000 | 653,600 | ||||||||
JMC Steel Group 144A 8.25% 3/15/18 # | 417,000 | 429,510 | ||||||||
Kissner Milling 144A 7.25% 6/1/19 # | 450,000 | 462,375 | ||||||||
LSB Industries 144A 7.75% 8/1/19 # | 410,000 | 439,725 | ||||||||
Masonite International 144A 8.25% 4/15/21 # | 560,000 | 613,200 | ||||||||
New Gold 144A 6.25% 11/15/22 # | 394,000 | 408,775 | ||||||||
Nortek 8.50% 4/15/21 | 375,000 | 415,313 | ||||||||
Perstorp Holding 144A 8.75% 5/15/17 # | 435,000 | 469,800 | ||||||||
Ryerson | ||||||||||
9.00% 10/15/17 | 277,000 | 298,121 | ||||||||
11.25% 10/15/18 | 112,000 | 126,000 | ||||||||
Sappi Papier Holding 144A 6.625% 4/15/21 # | 280,000 | 295,400 | ||||||||
TPC Group 144A 8.75% 12/15/20 # | 523,000 | 579,223 | ||||||||
Wise Metals Group 144A 8.75% 12/15/18 # | 235,000 | 251,450 | ||||||||
Wise Metals Intermediate Holdings 144A 9.75% 6/15/19 # | 160,000 | 159,800 | ||||||||
|
| |||||||||
12,054,113 | ||||||||||
|
| |||||||||
Capital Goods – 0.78% | ||||||||||
Accudyne Industries 7.75% 12/15/20 | 250,000 | 270,625 | ||||||||
B/E Aerospace 5.25% 4/1/22 | 270,000 | 288,225 | ||||||||
BOE Intermediate Holding 144A PIK 9.00% 11/1/17 #X | 369,931 | 386,809 | ||||||||
BOE Merger 144A PIK 9.50% 11/1/17 #T | 469,000 | 494,795 | ||||||||
Consolidated Container 144A 10.125% 7/15/20 # | 419,000 | 430,523 | ||||||||
Gardner Denver 144A 6.875% 8/15/21 # | 270,000 | 282,825 | ||||||||
Milacron 144A 7.75% 2/15/21 # | 435,000 | 480,675 | ||||||||
Plastipak Holdings 144A 6.50% 10/1/21 # | 405,000 | 427,275 |
15
Schedule of investments
Delaware Dividend Income Fund
Principal amount°
| Value (U.S. $)
| |||||||||
Corporate Bonds (continued) | ||||||||||
Capital Goods (continued) | ||||||||||
Reynolds Group Issuer 8.25% 2/15/21 | 720,000 | $ | 769,500 | |||||||
Signode Industrial Group 144A 6.375% 5/1/22 # | 515,000 | 521,437 | ||||||||
TransDigm | ||||||||||
144A 6.00% 7/15/22 # | 230,000 | 232,013 | ||||||||
144A 6.50% 7/15/24 # | 525,000 | 533,531 | ||||||||
7.50% 7/15/21 | 410,000 | 454,075 | ||||||||
|
| |||||||||
5,572,308 | ||||||||||
|
| |||||||||
Consumer Cyclical – 0.74% | ||||||||||
BI-LO 144A PIK 8.625% 9/15/18 #T | 375,000 | 383,437 | ||||||||
Dave & Buster’s Entertainment 144A 10.004% 2/15/16 #^ | 502,000 | 429,210 | ||||||||
DBP Holding 144A 7.75% 10/15/20 # | 358,000 | 307,880 | ||||||||
Landry’s 144A 9.375% 5/1/20 # | 531,000 | 588,746 | ||||||||
Michaels Stores 144A 5.875% 12/15/20 # | 425,000 | 434,563 | ||||||||
Pantry 8.375% 8/1/20 | 406,000 | 440,003 | ||||||||
Party City Holdings 8.875% 8/1/20 | 450,000 | 501,750 | ||||||||
PF Chang’s China Bistro 144A 10.25% 6/30/20 # | 467,000 | 482,177 | ||||||||
Quiksilver 144A 7.875% 8/1/18 # | 520,000 | 566,800 | ||||||||
Rite Aid 6.75% 6/15/21 | 505,000 | 549,187 | ||||||||
Roundy’s Supermarkets 144A 10.25% 12/15/20 # | 200,000 | 212,000 | ||||||||
Tempur-Pedic International 6.875% 12/15/20 | 330,000 | 363,000 | ||||||||
|
| |||||||||
5,258,753 | ||||||||||
|
| |||||||||
Consumer Non-Cyclical – 0.31% | ||||||||||
Crestview DS Merger Sub II 144A 10.00% 9/1/21 # | 330,000 | 367,950 | ||||||||
JBS Investments 144A 7.75% 10/28/20 # | 565,000 | 609,324 | ||||||||
Post Holdings | ||||||||||
144A 6.00% 12/15/22 # | 270,000 | 272,700 | ||||||||
144A 6.75% 12/1/21 # | 105,000 | 111,563 | ||||||||
Smithfield Foods 6.625% 8/15/22 | 390,000 | 429,487 | ||||||||
Spectrum Brands | ||||||||||
6.375% 11/15/20 | 77,000 | 83,834 | ||||||||
6.625% 11/15/22 | 291,000 | 320,100 | ||||||||
|
| |||||||||
2,194,958 | ||||||||||
|
| |||||||||
Energy – 2.23% | ||||||||||
Athlon Holdings 144A 6.00% 5/1/22 # | 485,000 | 497,125 | ||||||||
Baytex Energy | ||||||||||
144A 5.125% 6/1/21 # | 110,000 | 111,513 | ||||||||
144A 5.625% 6/1/24 # | 330,000 | 332,475 | ||||||||
Calumet Specialty Products Partners 7.625% 1/15/22 | 790,000 | 840,363 | ||||||||
Chaparral Energy | ||||||||||
7.625% 11/15/22 | 189,000 | 202,230 | ||||||||
8.25% 9/1/21 | 236,000 | 259,010 | ||||||||
CHC Helicopter 9.375% 6/1/21 | 685,000 | 726,100 |
16
Principal amount°
| Value (U.S. $)
| |||||||||
Corporate Bonds (continued) | ||||||||||
Energy (continued) | ||||||||||
Chesapeake Energy 4.875% 4/15/22 | 1,000,000 | $ | 1,037,500 | |||||||
Energy Transfer Equity 144A 5.875% 1/15/24 # | 252,000 | 262,080 | ||||||||
Energy XXI Gulf Coast 144A 6.875% 3/15/24 # | 550,000 | 555,500 | ||||||||
Exterran Partners 6.00% 4/1/21 | 460,000 | 469,200 | ||||||||
FTS International 144A 6.25% 5/1/22 # | 580,000 | 594,500 | ||||||||
Genesis Energy 5.75% 2/15/21 | 530,000 | 551,200 | ||||||||
Halcon Resources | ||||||||||
8.875% 5/15/21 | 147,000 | 157,290 | ||||||||
9.75% 7/15/20 | 465,000 | 511,500 | ||||||||
Hercules Offshore | ||||||||||
144A 6.75% 4/1/22 # | 170,000 | 165,537 | ||||||||
144A 7.50% 10/1/21 # | 255,000 | 258,187 | ||||||||
144A 8.75% 7/15/21 # | 140,000 | 150,500 | ||||||||
Key Energy Services 6.75% 3/1/21 | 505,000 | 530,250 | ||||||||
Laredo Petroleum | ||||||||||
5.625% 1/15/22 | 250,000 | 257,500 | ||||||||
7.375% 5/1/22 | 98,000 | 109,025 | ||||||||
Linn Energy | ||||||||||
6.50% 5/15/19 | 187,000 | 197,753 | ||||||||
8.625% 4/15/20 | 105,000 | 114,319 | ||||||||
Midstates Petroleum 9.25% 6/1/21 | 760,000 | 820,800 | ||||||||
Murphy Oil USA 144A 6.00% 8/15/23 # | 360,000 | 376,200 | ||||||||
Northern Blizzard Resources 144A 7.25% 2/1/22 # | 545,000 | 563,394 | ||||||||
Northern Oil & Gas 8.00% 6/1/20 | 430,000 | 459,025 | ||||||||
NuStar Logistics 6.75% 2/1/21 | 315,000 | 348,075 | ||||||||
Oasis Petroleum 144A 6.875% 3/15/22 # | 385,000 | 420,613 | ||||||||
Ocean Rig UDW 144A 7.25% 4/1/19 # | 665,000 | 661,675 | ||||||||
Offshore Group Investment 7.125% 4/1/23 | 210,000 | 213,150 | ||||||||
PDC Energy 7.75% 10/15/22 | 450,000 | 499,500 | ||||||||
Pioneer Energy Services 144A 6.125% 3/15/22 # | 545,000 | 561,350 | ||||||||
Regency Energy Partners 5.875% 3/1/22 | 550,000 | 585,750 | ||||||||
Samson Investment 144A 10.75% 2/15/20 # | 588,000 | 617,400 | ||||||||
SandRidge Energy 8.125% 10/15/22 | 849,000 | 925,410 | ||||||||
|
| |||||||||
15,942,999 | ||||||||||
|
| |||||||||
Financials – 0.09% | ||||||||||
Nuveen Investments 144A 9.50% 10/15/20 # | 571,000 | 680,917 | ||||||||
|
| |||||||||
680,917 | ||||||||||
|
| |||||||||
Healthcare – 0.92% | ||||||||||
Air Medical Group Holdings 9.25% 11/1/18 | 318,000 | 342,645 | ||||||||
Community Health Systems | 380,000 | 401,850 |
17
Schedule of investments
Delaware Dividend Income Fund
Principal amount°
| Value (U.S. $)
| |||||||
Corporate Bonds (continued) | ||||||||
Healthcare (continued) | ||||||||
Community Health Systems | ||||||||
7.125% 7/15/20 | 142,000 | $ | 154,247 | |||||
8.00% 11/15/19 | 53,000 | 58,300 | ||||||
Crimson Merger Sub 144A 6.625% 5/15/22 # | 530,000 | 526,687 | ||||||
Immucor 11.125% 8/15/19 | 555,000 | 624,375 | ||||||
Kinetic Concepts | ||||||||
10.50% 11/1/18 | 334,000 | 379,788 | ||||||
12.50% 11/1/19 | 245,000 | 283,587 | ||||||
Mallinckrodt International Finance 4.75% 4/15/23 | 305,000 | 296,613 | ||||||
MPH Acquisition Holdings 144A 6.625% 4/1/22 # | 265,000 | 275,600 | ||||||
Par Pharmaceutical 7.375% 10/15/20 | 1,092,000 | 1,190,280 | ||||||
Salix Pharmaceuticals 144A 6.00% 1/15/21 # | 640,000 | 688,000 | ||||||
Tenet Healthcare | ||||||||
6.00% 10/1/20 | 250,000 | 269,375 | ||||||
8.125% 4/1/22 | 315,000 | 359,100 | ||||||
Valeant Pharmaceuticals International | ||||||||
144A 5.625% 12/1/21 # | 440,000 | 457,600 | ||||||
144A 6.375% 10/15/20 # | 237,000 | 254,479 | ||||||
|
| |||||||
6,562,526 | ||||||||
|
| |||||||
Insurance – 0.35% | ||||||||
American International Group 8.175% 5/15/58 • | 480,000 | 651,600 | ||||||
Hockey Merger Sub 2 144A 7.875% 10/1/21 # | 610,000 | 657,275 | ||||||
Onex USI Acquisition 144A 7.75% 1/15/21 # | 446,000 | 461,610 | ||||||
XL Group 6.50% 12/29/49 • | 758,000 | 755,157 | ||||||
|
| |||||||
2,525,642 | ||||||||
|
| |||||||
Media – 1.33% | ||||||||
CCO Holdings 5.25% 9/30/22 | 662,000 | 676,067 | ||||||
CCU 144A 10.00% 1/15/18 # | 265,000 | 254,400 | ||||||
Cequel Communications Holdings I 144A 6.375% 9/15/20 # | 317,000 | 337,605 | ||||||
Clear Channel Communications PIK 14.00% 2/1/21 T | 300,000 | 306,750 | ||||||
Columbus International 144A 7.375% 3/30/21 # | 835,000 | 887,187 | ||||||
CSC Holdings | ||||||||
144A 5.25% 6/1/24 # | 675,000 | 676,687 | ||||||
6.75% 11/15/21 | 200,000 | 224,000 | ||||||
DISH DBS 5.00% 3/15/23 | 665,000 | 678,300 | ||||||
Gray Television 7.50% 10/1/20 | 510,000 | 549,525 | ||||||
MDC Partners 144A 6.75% 4/1/20 # | 585,000 | 621,563 | ||||||
Mediacom Broadband 144A 5.50% 4/15/21 # | 345,000 | 350,606 | ||||||
Numericable Group | ||||||||
144A 6.00% 5/15/22 # | 605,000 | 628,444 | ||||||
144A 6.25% 5/15/24 # | 200,000 | 209,500 |
18
Principal amount°
| Value (U.S. $)
| |||||||
Corporate Bonds (continued) | ||||||||
Media (continued) | ||||||||
ONO Finance II 144A 10.875% 7/15/19 # | 260,000 | $ | 288,275 | |||||
RCN Telecom Services 144A 8.50% 8/15/20 # | 270,000 | 289,575 | ||||||
Univision Communications 144A 8.50% 5/15/21 # | 604,000 | 665,910 | ||||||
UPCB Finance VI 144A 6.875% 1/15/22 # | 172,000 | 188,340 | ||||||
Virgin Media Finance 144A 6.375% 4/15/23 # | 580,000 | 614,800 | ||||||
VTR Finance 144A 6.875% 1/15/24 # | 975,000 | 1,035,940 | ||||||
|
| |||||||
9,483,474 | ||||||||
|
| |||||||
Services – 1.27% | ||||||||
Algeco Scotsman Global Finance 144A 10.75% 10/15/19 # | 1,094,000 | 1,145,965 | ||||||
Avis Budget Car Rental 5.50% 4/1/23 | 416,000 | 426,400 | ||||||
BlueLine Rental Finance 144A 7.00% 2/1/19 # | 315,000 | 337,837 | ||||||
Caesars Growth Properties Holdings 144A 9.375% 5/1/22 # | 600,000 | 606,375 | ||||||
Carlson Wagonlit 144A 6.875% 6/15/19 # | 425,000 | 457,385 | ||||||
Covanta Holding 5.875% 3/1/24 | 585,000 | 602,550 | ||||||
H&E Equipment Services 7.00% 9/1/22 | 364,000 | 402,220 | ||||||
Mattamy Group 144A 6.50% 11/15/20 # | 677,000 | 688,847 | ||||||
MGM Resorts International | ||||||||
6.75% 10/1/20 | 135,000 | 150,019 | ||||||
7.75% 3/15/22 | 197,000 | 231,721 | ||||||
11.375% 3/1/18 | 230,000 | 297,850 | ||||||
Navios South American Logistics 144A 7.25% 5/1/22 # | 530,000 | 546,563 | ||||||
PHH | ||||||||
6.375% 8/15/21 | 200,000 | 209,500 | ||||||
7.375% 9/1/19 | 219,000 | 246,923 | ||||||
Pinnacle Entertainment | ||||||||
7.75% 4/1/22 | 163,000 | 177,670 | ||||||
8.75% 5/15/20 | 25,000 | 27,437 | ||||||
PNK Finance 144A 6.375% 8/1/21 # | 210,000 | 222,075 | ||||||
Stena 144A 7.00% 2/1/24 # | 975,000 | 1,028,625 | ||||||
United Rentals North America 5.75% 11/15/24 | 800,000 | 829,000 | ||||||
Vander Intermediate Holding II 144A PIK 9.75% 2/1/19 #T | 205,000 | 217,813 | ||||||
Watco 144A 6.375% 4/1/23 # | 220,000 | 225,500 | ||||||
|
| |||||||
9,078,275 | ||||||||
|
| |||||||
Technology – 0.25% | ||||||||
Advanced Micro Devices 144A 6.75% 3/1/19 # | 375,000 | 396,563 | ||||||
Entegris 144A 6.00% 4/1/22 # | 580,000 | 584,350 | ||||||
First Data 11.25% 1/15/21 | 685,000 | 789,463 | ||||||
|
| |||||||
1,770,376 | ||||||||
|
| |||||||
Technology & Electronics – 0.81% | ||||||||
BMC Software Finance 144A 8.125% 7/15/21 # | 570,000 | 602,775 | ||||||
Commscope 144A 5.50% 6/15/24 # | 590,000 | 595,900 |
19
Schedule of investments
Delaware Dividend Income Fund
Principal amount°
| Value (U.S. $)
| |||||||
Corporate Bonds (continued) | ||||||||
Technology & Electronics (continued) | ||||||||
First Data 11.75% 8/15/21 | 735,000 | $ | 819,525 | |||||
First Data Holdings 144A PIK 14.50% 9/24/19 #T | 324,858 | 328,106 | ||||||
Freescale Semiconductor 10.75% 8/1/20 | 50,000 | 57,063 | ||||||
Infor Software Parent 144A PIK 7.125% 5/1/21 #T | 735,000 | 753,375 | ||||||
j2 Global 8.00% 8/1/20 | 618,000 | 673,620 | ||||||
Micron Technology 144A 5.875% 2/15/22 # | 570,000 | 609,900 | ||||||
NCR Escrow | ||||||||
144A 5.875% 12/15/21 # | 150,000 | 159,000 | ||||||
144A 6.375% 12/15/23 # | 460,000 | 497,950 | ||||||
SunGard Availability Services Capital 144A 8.75% 4/1/22 # | 445,000 | 417,187 | ||||||
Viasystems 144A 7.875% 5/1/19 # | 295,000 | 313,437 | ||||||
|
| |||||||
5,827,838 | ||||||||
|
| |||||||
Telecommunications – 1.46% | ||||||||
Altice 144A 7.75% 5/15/22 # | 605,000 | 637,519 | ||||||
CenturyLink 6.75% 12/1/23 | 370,000 | 405,150 | ||||||
Cogent Communications Finance 144A 5.625% 4/15/21 # | 530,000 | 523,375 | ||||||
Digicel Group | ||||||||
144A 7.125% 4/1/22 # | 200,000 | 206,500 | ||||||
144A 8.25% 9/30/20 # | 925,000 | 1,001,313 | ||||||
Hughes Satellite Systems 7.625% 6/15/21 | 368,000 | 421,360 | ||||||
Intelsat Luxembourg 8.125% 6/1/23 | 1,405,000 | 1,515,644 | ||||||
Level 3 Financing 144A 6.125% 1/15/21 # | 310,000 | 328,987 | ||||||
Sprint | ||||||||
144A 7.125% 6/15/24 # | 650,000 | 702,000 | ||||||
144A 7.25% 9/15/21 # | 130,000 | 144,463 | ||||||
144A 7.875% 9/15/23 # | 730,000 | 826,725 | ||||||
Sprint Capital 6.90% 5/1/19 | 165,000 | 183,150 | ||||||
T-Mobile USA | ||||||||
6.125% 1/15/22 | 160,000 | 170,200 | ||||||
6.25% 4/1/21 | 210,000 | 223,913 | ||||||
6.50% 1/15/24 | 100,000 | 106,500 | ||||||
6.731% 4/28/22 | 185,000 | 200,494 | ||||||
VimpelCom Holdings 144A 5.95% 2/13/23 # | 1,000,000 | 955,000 | ||||||
Wind Acquisition Finance 144A 7.375% 4/23/21 # | 720,000 | 747,000 | ||||||
Windstream | ||||||||
7.50% 6/1/22 | 223,000 | 240,840 | ||||||
7.75% 10/1/21 | 300,000 | 327,000 | ||||||
Zayo Group 10.125% 7/1/20 | 524,000 | 607,185 | ||||||
|
| |||||||
10,474,318 | ||||||||
|
| |||||||
Utilities – 0.40% | ||||||||
AES 7.375% 7/1/21 | 129,000 | 148,995 | ||||||
AES Gener 144A 8.375% 12/18/73 #• | 400,000 | 437,000 |
20
Principal amount°
| Value (U.S. $)
| |||||||
Corporate Bonds (continued) | ||||||||
Utilities (continued) | ||||||||
Calpine | ||||||||
144A 5.875% 1/15/24 # | 290,000 | $ | 305,225 | |||||
144A 6.00% 1/15/22 # | 280,000 | 301,700 | ||||||
Elwood Energy 8.159% 7/5/26 | 389,530 | 440,169 | ||||||
Enel 144A 8.75% 9/24/73 #• | 600,000 | 703,500 | ||||||
NRG Energy 144A 6.25% 5/1/24 # | 520,000 | 538,850 | ||||||
|
| |||||||
2,875,439 | ||||||||
|
| |||||||
Total Corporate Bonds (cost $96,604,092) | 101,027,983 | |||||||
|
| |||||||
Leveraged Non-Recourse Security – 0.00% | ||||||||
JPMorgan Fixed Income Pass Through Trust | ||||||||
Series 2007-B 144A 8.845% 1/15/87 #@¿ | 1,300,000 | 0 | ||||||
|
| |||||||
Total Leveraged Non-Recourse Security (cost $1,105,000) | 0 | |||||||
|
| |||||||
Municipal Bonds – 1.93% | ||||||||
California Pollution Control Financing Authority Water Revenue | ||||||||
144A 5.00% 11/21/45 (AMT) # | 1,000,000 | 1,022,720 | ||||||
California State | ||||||||
Various Purposes 5.00% 11/1/43 | 1,000,000 | 1,107,180 | ||||||
California Statewide Communities Development Authority | ||||||||
Series A 5.00% 4/1/42 | 855,000 | 926,341 | ||||||
(California Baptist University) Series A 6.375% 11/1/43 | 1,000,000 | 1,099,480 | ||||||
Colorado Health Facilities Authority Revenue | ||||||||
(Catholic Health Initiatives) Series A 5.25% 1/1/45 | 1,250,000 | 1,376,875 | ||||||
Dallas/Fort Worth International Airport | ||||||||
Series H 5.00% 11/1/42 (AMT) | 1,000,000 | 1,049,540 | ||||||
Golden State, California Tobacco Securitization | ||||||||
Corporation Settlement Revenue (Asset-Backed Senior Notes) Series A-1 | ||||||||
5.75% 6/1/47 | 1,300,000 | 1,097,629 | ||||||
Metropolitan Washington Airports Authority | ||||||||
(Dulles Metrorail and Capital) 5.00% 10/1/53 | 750,000 | 783,780 | ||||||
New Jersey Transportation Trust Fund | ||||||||
Series A 5.00% 6/15/42 | 240,000 | 256,958 | ||||||
Series AA 5.00% 6/15/44 | 760,000 | 817,471 | ||||||
New York City Water & Sewer System | ||||||||
(Second Generation) Series BB 5.00% 6/15/47 | 1,250,000 | 1,362,800 | ||||||
New York State Thruway Authority | ||||||||
Series J 5.00% 1/1/41 | 1,000,000 | 1,093,520 | ||||||
Palm Beach County Health Facilities Authority | ||||||||
(Sinai Residences Boca Raton Project) |
21
Schedule of investments
Delaware Dividend Income Fund
Principal amount° | Value (U.S. $) | |||||||||
Municipal Bonds (continued) | ||||||||||
Palm Beach County Health Facilities Authority 7.25% 6/1/34 | 65,000 | $ | 72,418 | |||||||
Series A 7.50% 6/1/49 | 325,000 | 362,759 | ||||||||
Texas Private Activity Bond Surface Transportation Senior Lien | 450,000 | 546,827 | ||||||||
Utility Debt Securitization Authority, New York | 750,000 | 848,707 | ||||||||
|
| |||||||||
Total Municipal Bonds (cost $12,663,524) | 13,825,005 | |||||||||
|
| |||||||||
Senior Secured Loans – 1.60%« | ||||||||||
Akorn Tranche B 4.50% 11/13/20 | 520,000 | 522,817 | ||||||||
Applied Systems 2nd Lien 7.50% 1/15/22 | 553,000 | 562,851 | ||||||||
Atkore International 2nd Lien 7.75% 9/27/21 | 295,000 | 296,291 | ||||||||
Avast Software 1st Lien 5.00% 3/18/20 | 300,000 | 300,062 | ||||||||
Avaya Tranche B-3 4.50% 10/27/17 | 185,000 | 179,424 | ||||||||
Avaya Tranche B6 6.50% 3/31/18 | 185,000 | 184,162 | ||||||||
Azure Midstream Tranche B 6.50% 10/21/18 | 279,563 | 283,057 | ||||||||
BJ’s Wholesale Club 2nd Lien 8.50% 3/31/20 | 590,000 | 607,921 | ||||||||
Borgata Tranche B 1st Lien 6.75% 8/15/18 | 538,650 | 547,572 | ||||||||
Caesars Growth Partners Tranche B 1st Lien 6.25% 5/8/21 | 300,000 | 298,875 | ||||||||
Citycenter Holdings Tranche B 5.00% 10/9/20 | 553,613 | 558,387 | ||||||||
Clear Channel Communications Tranche D 6.75% 1/30/19 | 905,000 | 896,758 | ||||||||
Flint Group Tranche 2nd Lien 8.25% 5/2/22 | 615,000 | 617,818 | ||||||||
Gentiva Health Services Tranche B 6.50% 10/10/19 | 423,938 | 425,174 | ||||||||
Gray Television 4.75% 10/11/19 | 597,000 | 598,866 | ||||||||
Hostess Brands 1st Lien 6.75% 3/12/20 | 585,000 | 609,131 | ||||||||
LTS Buyer 2nd Lien 8.00% 3/15/21 | 82,225 | 83,527 | ||||||||
Moxie Liberty Tranche B 7.50% 8/21/20 | 295,000 | 303,113 | ||||||||
Moxie Patriot (Panda Power Fund) Tranche B1 6.75% 12/18/20 | 290,000 | 297,794 | ||||||||
Nuveen Investments 2nd Lien 6.50% 2/28/19 | 280,000 | 283,325 | ||||||||
Otter Products Tranche B 5.25% 4/29/19 | 565,166 | 565,990 | ||||||||
Otterbox Tranche B 5.75% 5/30/20 | 555,000 | 549,450 | ||||||||
Panda Temple Power II Tranche B 1st Lien 7.25% 3/28/19 | 220,000 | 224,400 | ||||||||
Polymer Group Tranche B 5.25% 12/13/19 | 478,800 | 481,643 | ||||||||
Rite Aid 2nd Lien 5.75% 8/3/20 | 220,000 | 225,170 | ||||||||
Samson Investment 2nd Lien 5.00% 9/25/18 | 595,000 | 596,169 |
22
Principal amount° | Value (U.S. $) | |||||||||||
Senior Secured Loans« (continued) | ||||||||||||
Vantage Drilling Tranche B 1st Lien 5.75% 3/28/19 | 369,068 | $ | 367,223 | |||||||||
|
| |||||||||||
Total Senior Secured Loans (cost $11,389,347) | 11,466,970 | |||||||||||
|
| |||||||||||
Sovereign Bond – 0.46%D | ||||||||||||
Mexico – 0.46% | ||||||||||||
Mexican Bonos 8.00% 6/11/20 | MXN | 36,533,000 | 3,256,145 | |||||||||
|
| |||||||||||
Total Sovereign Bond (cost $3,316,455) | 3,256,145 | |||||||||||
|
| |||||||||||
Number of Shares | Value (U.S. $) | |||||||||||
Limited Partnership – 0.12% | ||||||||||||
Lehigh Gas Partners | 31,500 | 850,500 | ||||||||||
|
| |||||||||||
Total Limited Partnership (cost $820,931) | 850,500 | |||||||||||
|
| |||||||||||
Preferred Stock – 0.43% | ||||||||||||
Ally Financial 144A 7.00% # | 1,100 | 1,114,850 | ||||||||||
Freddie Mac 6.02% | 40,000 | 368,800 | ||||||||||
GMAC Capital Trust I 8.125% • | 17,000 | 461,040 | ||||||||||
Regions Financial 6.375% | 17,000 | 418,880 | ||||||||||
Vornado Realty Trust 6.625% | 28,600 | 729,586 | ||||||||||
|
| |||||||||||
Total Preferred Stock (cost $3,472,469) | 3,093,156 | |||||||||||
|
| |||||||||||
Warrant – 0.00% | ||||||||||||
Wheeler Real Estate Investment Trust strike price $5.50, | 24,948 | 19,958 | ||||||||||
|
| |||||||||||
Total Warrant (cost $207) | 19,958 | |||||||||||
|
| |||||||||||
Principal amount° | ||||||||||||
Short-Term Investments – 5.93% | ||||||||||||
Discount Notes – 2.25%≠ | ||||||||||||
Federal Home Loan Bank | ||||||||||||
0.04% 6/18/14 | 10,125,473 | 10,125,427 | ||||||||||
0.05% 7/28/14 | 2,397,228 | 2,397,170 | ||||||||||
0.05% 8/15/14 | 1,386,750 | 1,386,664 | ||||||||||
0.075% 11/19/14 | 2,201,190 | 2,200,567 | ||||||||||
|
| |||||||||||
16,109,828 | ||||||||||||
|
| |||||||||||
Repurchase Agreements – 3.37% | ||||||||||||
Bank of America Merrill Lynch | 7,898,094 | 7,898,094 |
23
Schedule of investments
Delaware Dividend Income Fund
Principal amount° | Value (U.S. $) | |||||||||
Short-Term Investments (continued) | ||||||||||
Repurchase Agreements (continued) | ||||||||||
BNP Paribas | 16,183,906 | $ | 16,183,906 | |||||||
|
| |||||||||
24,082,000 | ||||||||||
|
| |||||||||
U.S. Treasury Obligation – 0.31%≠ | ||||||||||
U.S. Treasury Bill 0.093% 11/13/14 | 2,208,836 | 2,208,370 | ||||||||
|
| |||||||||
2,208,370 | ||||||||||
|
| |||||||||
Total Short-Term Investments (cost $42,399,261) | 42,400,198 | |||||||||
|
| |||||||||
Total Value of Securities – 99.05% | $ | 708,445,017 | ||||||||
|
| |||||||||
Number of contracts | Value (U.S. $) | |||||||||
Option Written – (0.01%) | ||||||||||
Equity Call Option – (0.01%) | ||||||||||
Penney (J.C.), strike price $9.00, expires 6/21/14 (MSC) | (1,500 | ) | (52,500 | ) | ||||||
|
| |||||||||
Total Option Written | (52,500 | ) | ||||||||
|
|
# | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At May 31, 2014, the aggregate value of Rule 144A securities was $85,091,177, which represented 11.90% of the Fund’s net assets. See Note 10 in “Notes to financial statements.” |
@ | Illiquid security. At May 31, 2014, the aggregate value of illiquid securities was $1,529,674, which represented 0.21% of the Fund’s net assets. See Note 10 in “Notes to financial statements .” |
¿ | 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. |
X | 100% of the income received was in the form of additional par. |
T | 100% of the income received was in the form of additional cash. |
= | Security is being fair valued in accordance with the Fund’s fair valuation policy. At May 31, 2014, the aggregate value of fair valued securities was $432,424, which represented 0.06% of the Fund’s net assets. See Note 1 in “Notes to financial statements.” |
≠ | The rate shown is the effective yield at the time of purchase. |
° | Principal amount shown is stated in U.S. dollars unless noted that the security is denominated in another currency. |
† | Non income producing security. |
24
• Variable rate security. The rate shown is the rate as of May 31, 2014. Interest rates reset periodically.
D | Securities have been classified by country of origin. |
^ | Zero coupon security. The rate shown is the yield at the time of purchase. |
« | 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, 2014. |
f | Step coupon bond. Coupon increases or decreases periodically based on a predetermined schedule. Stated rate in effect at May 31, 2014. |
The following foreign currency exchange contracts, futures contract and swap contract were outstanding at May 31, 2014:1
Foreign Currency Exchange Contracts
Counterparty | Contracts to Receive (Deliver) | In Exchange For | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||||
BNP | RUB | 17,702,500 | USD | (509,827 | ) | 7/11/14 | $ | (7,579 | ) | |||||||||||||
BNYM | AUD | 87 | USD | (81 | ) | 6/2/14 | 0 | |||||||||||||||
BNYM | CHF | (16,907 | ) | USD | 18,828 | 6/2/14 | (54 | ) | ||||||||||||||
|
| |||||||||||||||||||||
$ | (7,633 | ) | ||||||||||||||||||||
|
|
Futures Contracts
Contracts to Buy (Sell) | Notional Cost (Proceeds) | Notional Value | Expiration Date | Unrealized Appreciation (Depreciation) | ||||||||||||
(24) U.S. Treasury 5 yr Note | $ | (2,870,560) | $ | (2,874,188) | 10/6/14 | $ | (3,628) |
Swap Contracts
CDS Contracts2
Counterparty | Swap Referenced Obligation | Notional Value | Annual Protection Payments | Termination Date | Unrealized | |||||||||||||
ICE | Protection Purchased: CDX.NA.HY.22 | $ | 4,950,000 | 5.00 | % | 6/20/19 | $ | (65,069) |
The use of foreign currency exchange contracts, futures contracts and swap contracts involves elements of market risk and risks in excess of the amounts 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.
1 See Note 7 in “Notes to financial statements.”
2 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
25
Schedule of investments
Delaware Dividend Income Fund
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 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.
Summary of abbreviations:
ADR – American Depositary Receipt
AMT – Subject to Alternative Minimum Tax
AUD – Australian Dollar
BNP – Banque Paribas
BNYM – Bank of New York Mellon
CDS – Credit Default Swap
CDX.NA.HY – Credit Default Swap Index North American High-Yield
CHF – Swiss Franc
ICE – IntercontinentalExchange, Inc.
MSC – Morgan Stanley Capital
MXN – Mexican Peso
PIK – Pay-in-kind
REIT – Real Estate Investment Trust
RUB – Russian Ruble
USD – United States Dollar
See accompanying notes, which are an integral part of the financial statements.
26
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Statement of assets and liabilities
Delaware Dividend Income Fund | May 31, 2014 (Unaudited) |
Assets: | ||||
Investments, at value1 | $ | 666,044,819 | ||
Short-term investments, at value2 | 42,400,198 | |||
Cash | 576,486 | |||
Cash collateral for derivatives | 22,000 | |||
Foreign currencies, at value3 | 108,341 | |||
Receivables for securities sold | 8,865,668 | |||
Dividends and interest receivable | 3,804,756 | |||
Receivables for fund shares sold | 2,362,197 | |||
Variation margin receivable on futures contracts | 1,313 | |||
|
| |||
Total assets | 724,185,778 | |||
|
| |||
Liabilities: | ||||
Option written, at value4 | 52,500 | |||
Payable for securities purchased | 6,722,559 | |||
Payable for fund shares redeemed | 711,349 | |||
Annual protection payments on credit default swap contracts | 50,187 | |||
Investment management fees payable | 379,241 | |||
Distribution fees payable to affiliates | 311,294 | |||
Other accrued expenses | 194,108 | |||
Other affiliates payable | 29,785 | |||
Trustees’ fees and expenses payable | 4,302 | |||
Unrealized loss on credit default swap contracts5 | 412,774 | |||
Unrealized loss on foreign currency exchange contracts | 7,633 | |||
Total liabilities | 8,875,732 | |||
|
| |||
Total Net Assets | $ | 715,310,046 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 728,823,424 | ||
Distributions in excess of net investment income | (269,314 | ) | ||
Accumulated net realized loss on investments | (112,831,434 | ) | ||
Net unrealized appreciation of investments and derivatives | 99,587,370 | |||
|
| |||
Total Net Assets | $ | 715,310,046 | ||
|
| |||
1 Investments, at cost | $ | 566,424,372 | ||
2 Short-term investments, at cost | 42,399,261 | |||
3 Foreign currencies, at cost | 107,918 | |||
4 Options written, at cost | (133,977 | ) | ||
5 Including upfront payments paid | (347,705 | ) |
28
Net Asset Value | ||||
Class A: | ||||
Net assets | $ | 306,527,976 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 22,744,750 | |||
Net asset value per share | $ | 13.48 | ||
Sales charge | 5.75 | % | ||
Offering price per share, equal to net asset value per share / (1 – sales charge) | $ | 14.30 | ||
Class B: | ||||
Net assets | $ | 7,463,272 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 553,260 | |||
Net asset value per share | $ | 13.49 | ||
Class C: | ||||
Net assets | $ | 289,615,081 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 21,460,218 | |||
Net asset value per share | $ | 13.50 | ||
Class R: | ||||
Net assets | $ | 3,176,614 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 235,716 | |||
Net asset value per share | $ | 13.48 | ||
Institutional Class: | ||||
Net assets | $ | 108,527,103 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 8,052,564 | |||
Net asset value per share | $ | 13.48 | ||
See accompanying notes, which are an integral part of the financial statements. |
29
Delaware Dividend Income Fund | Six months ended May 31, 2014 (Unaudited) |
Investment Income: | ||||
Dividends | $ | 6,406,028 | ||
Interest | 5,065,377 | |||
Foreign tax withheld | (54,970 | ) | ||
|
| |||
11,416,435 | ||||
|
| |||
Expenses: | ||||
Management fees | 2,116,163 | |||
Distribution expenses – Class A | 385,539 | |||
Distribution expenses – Class B | 42,147 | |||
Distribution expenses – Class C | 1,352,177 | |||
Distribution expenses – Class R | 7,917 | |||
Dividend disbursing and transfer agent fees and expenses | 391,015 | |||
Accounting and administration expenses | 114,916 | |||
Registration fees | 47,816 | |||
Reports and statements to shareholders | 40,815 | |||
Legal fees | 22,459 | |||
Audit and tax | 20,678 | |||
Trustees’ fees and expenses | 16,422 | |||
Custodian fees | 15,888 | |||
Other | 19,679 | |||
|
| |||
4,593,631 | ||||
Less waived distribution expenses – Class B | (9,991 | ) | ||
Less expense paid indirectly | (187 | ) | ||
|
| |||
Total operating expenses | 4,583,453 | |||
|
| |||
Net Investment Income | 6,832,982 | |||
|
| |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 27,606,049 | |||
Foreign currencies | (292,456 | ) | ||
Foreign currency exchange contracts | (98,361 | ) | ||
Futures contracts | (741,605 | ) | ||
Options written | 200,171 | |||
Swap contracts | (548,230 | ) | ||
|
| |||
Net realized gain | 26,125,568 | |||
|
|
30
Net change in unrealized appreciation (depreciation) of: | ||||
Investments | 8,257,184 | |||
Foreign currencies | 3,178 | |||
Foreign currency exchange contracts | (848 | ) | ||
Futures contracts | 266,668 | |||
Options written | 88,265 | |||
Swap contracts | 261,902 | |||
|
| |||
Net change in unrealized appreciation (depreciation) | 8,876,349 | |||
|
| |||
Net Realized and Unrealized Gain | 35,001,917 | |||
|
| |||
Net Increase in Net Assets Resulting from Operations | $ | 41,834,899 | ||
|
|
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 ended 5/31/14 (Unaudited) | Year ended 11/30/13 | |||||||
Increase in Net Assets from Operations: | ||||||||
Net investment income | $ | 6,832,982 | $ | 11,127,325 | ||||
Net realized gain | 26,125,568 | 17,291,247 | ||||||
Net change in unrealized appreciation (depreciation) | 8,876,349 | 59,142,315 | ||||||
|
|
|
| |||||
Net increase in net assets resulting from operations | 41,834,899 | 87,560,887 | ||||||
|
|
|
| |||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (3,811,681 | ) | (6,053,997 | ) | ||||
Class B | (79,527 | ) | (235,428 | ) | ||||
Class C | (2,345,196 | ) | (3,338,842 | ) | ||||
Class R | (35,699 | ) | (71,763 | ) | ||||
Institutional Class | (1,037,642 | ) | (1,226,175 | ) | ||||
|
|
|
| |||||
(7,309,745 | ) | (10,926,205 | ) | |||||
|
|
|
| |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 45,185,083 | 96,741,474 | ||||||
Class B | — | 205,221 | ||||||
Class C | 35,525,982 | 90,858,443 | ||||||
Class R | 712,252 | 1,189,004 | ||||||
Institutional Class | 47,925,471 | 38,525,198 | ||||||
Net asset value of shares based upon reinvestment of dividends and distributions: | ||||||||
Class A | 3,544,977 | 5,604,764 | ||||||
Class B | 75,012 | 217,686 | ||||||
Class C | 2,128,759 | 3,003,745 | ||||||
Class R | 35,233 | 71,517 | ||||||
Institutional Class | 870,835 | 1,057,730 | ||||||
|
|
|
| |||||
136,003,604 | 237,474,782 | |||||||
|
|
|
|
32
Six months ended 5/31/14 (Unaudited) | Year ended 11/30/13 | |||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares redeemed: | ||||||||
Class A | (55,128,345 | ) | (46,311,215 | ) | ||||
Class B | (3,175,468 | ) | (9,382,458 | ) | ||||
Class C | (17,089,636 | ) | (25,556,412 | ) | ||||
Class R | (765,503 | ) | (1,884,594 | ) | ||||
Institutional Class | (6,137,461 | ) | (14,947,724 | ) | ||||
|
|
|
| |||||
(82,296,413 | ) | (98,082,403 | ) | |||||
|
|
|
| |||||
Increase in net assets derived from capital share transactions | 53,707,191 | 139,392,379 | ||||||
|
|
|
| |||||
Net Increase in Net Assets | 88,232,345 | 216,027,061 | ||||||
Net Assets: | ||||||||
Beginning of period | 627,077,701 | 411,050,640 | ||||||
|
|
|
| |||||
End of period (including undistributed (distributions in excess of) net investment income of $(269,314) and $207,449, respectively) | $ | 715,310,046 | $ | 627,077,701 | ||||
|
|
|
|
See accompanying notes, which are an integral part of the financial statements.
33
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 from investment operations: |
Net investment income2 |
Net realized and unrealized gain |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
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 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 5/31/141 | Year ended | |||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | |||||||||||||||||
$ | 12.810 | $ | 10.940 | $ | 9.890 | $ | 9.810 | $ | 9.190 | $ | 7.010 | |||||||||||
0.152 | 0.316 | 0.348 | 0.351 | 0.373 | 0.407 | |||||||||||||||||
0.679 | 1.854 | 1.045 | 0.086 | 0.695 | 2.247 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
0.831 | 2.170 | 1.393 | 0.437 | 1.068 | 2.654 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(0.161 | ) | (0.300 | ) | (0.343 | ) | (0.357 | ) | (0.448 | ) | (0.474 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(0.161 | ) | (0.300 | ) | (0.343 | ) | (0.357 | ) | (0.448 | ) | (0.474 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 13.480 | $ | 12.810 | $ | 10.940 | $ | 9.890 | $ | 9.810 | $ | 9.190 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
6.54% | 20.07% | 14.25% | 4.39% | 11.91% | 39.35% | |||||||||||||||||
$ | 306,528 | $ | 297,117 | $ | 203,819 | $ | 189,313 | $ | 192,876 | $ | 200,720 | |||||||||||
1.10% | 1.12% | 1.16% | 1.19% | 1.26% | 1.17% | |||||||||||||||||
1.10% | 1.16% | 1.21% | 1.24% | 1.31% | 1.36% | |||||||||||||||||
2.34% | 2.62% | 3.28% | 3.41% | 3.93% | 5.22% | |||||||||||||||||
2.34% | 2.58% | 3.23% | 3.36% | 3.88% | 5.03% | |||||||||||||||||
| 36%
|
|
| 51%
|
|
| 47%
|
|
| 110%
|
|
| 109%
|
|
| 69%
|
|
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 from investment operations: |
Net investment income2 |
Net realized and unrealized gain |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
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 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.
36
Six months ended 5/31/141 | Year ended | |||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | |||||||||||||||||
$ | 12.820 | $ | 10.950 | $ | 9.900 | $ | 9.820 | $ | 9.190 | $ | 7.010 | |||||||||||
0.119 | 0.223 | 0.268 | 0.274 | 0.302 | 0.348 | |||||||||||||||||
0.680 | 1.856 | 1.046 | 0.086 | 0.694 | 2.248 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
0.799 | 2.079 | 1.314 | 0.360 | 0.996 | 2.596 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(0.129) | (0.209 | ) | (0.264 | ) | (0.280 | ) | (0.366 | ) | (0.416 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(0.129) | (0.209 | ) | (0.264 | ) | (0.280 | ) | (0.366 | ) | (0.416 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 13.490 | $ | 12.820 | $ | 10.950 | $ | 9.900 | $ | 9.820 | $ | 9.190 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
6.27% | 19.15% | 13.39% | 3.61% | 11.06% | 38.47% | |||||||||||||||||
$7,463 | $ | 10,161 | $ | 16,874 | $ | 22,803 | $ | 29,003 | $ | 33,725 | ||||||||||||
1.61% | 1.87% | 1.91% | 1.94% | 2.01% | 1.92% | |||||||||||||||||
1.85% | 1.87% | 1.91% | 1.94% | 2.01% | 2.06% | |||||||||||||||||
1.83% | 1.86% | 2.53% | 2.66% | 3.18% | 4.47% | |||||||||||||||||
1.59% | 1.86% | 2.53% | 2.66% | 3.18% | 4.33% | |||||||||||||||||
36% | 51% | 47% | 110% | 109% | 69% |
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 from investment operations: |
Net investment income2 |
Net realized and unrealized gain |
Total from investment operations. |
Less dividends and distributions from: |
Net investment income |
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 5/31/141 | Year ended | |||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | |||||||||||||||||
$ | 12.830 | $ | 10.960 | $ | 9.900 | $ | 9.820 | $ | 9.190 | $ | 7.010 | |||||||||||
0.104 | 0.226 | 0.268 | 0.274 | 0.302 | 0.348 | |||||||||||||||||
0.678 | 1.853 | 1.056 | 0.086 | 0.694 | 2.248 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
0.782 | 2.079 | 1.324 | 0.360 | 0.996 | 2.596 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(0.112 | ) | (0.209 | ) | (0.264 | ) | (0.280 | ) | (0.366 | ) | (0.416 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(0.112 | ) | (0.209 | ) | (0.264 | ) | (0.280 | ) | (0.366 | ) | (0.416 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 13.500 | $ | 12.830 | $ | 10.960 | $ | 9.900 | $ | 9.820 | $ | 9.190 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
6.13% | 19.13% | 13.50% | 3.61% | 11.06% | 38.27% | |||||||||||||||||
$ | 289,615 | $ | 254,961 | $ | 156,758 | $ | 151,107 | $ | 152,009 | $ | 155,028 | |||||||||||
1.85% | 1.87% | 1.91% | 1.94% | 2.01% | 1.92% | |||||||||||||||||
1.85% | 1.87% | 1.91% | 1.94% | 2.01% | 2.06% | |||||||||||||||||
1.59% | 1.87% | 2.53% | 2.66% | 3.18% | 4.47% | |||||||||||||||||
1.59% | 1.87% | 2.53% | 2.66% | 3.18% | 4.33% | |||||||||||||||||
| 36%
|
|
| 51%
|
|
| 47%
|
|
| 110%
|
|
| 109%
|
|
| 69%
|
|
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 from investment operations: |
Net investment income2 |
Net realized and unrealized gain |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
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 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.
40
Six months ended 5/31/141 | Year ended | |||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | |||||||||||||||||
$ | 12.810 | $ | 10.940 | $ | 9.890 | $ | 9.810 | $ | 9.190 | $ | 7.010 | |||||||||||
0.136 | 0.284 | 0.321 | 0.325 | 0.349 | 0.387 | |||||||||||||||||
0.678 | 1.856 | 1.046 | 0.086 | 0.693 | 2.246 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
0.814 | 2.140 | 1.367 | 0.411 | 1.042 | 2.633 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(0.144 | ) | (0.270 | ) | (0.317 | ) | (0.331 | ) | (0.422 | )�� | (0.453 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(0.144 | ) | (0.270 | ) | (0.317 | ) | (0.331 | ) | (0.422 | ) | (0.453 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 13.480 | $ | 12.810 | $ | 10.940 | $ | 9.890 | $ | 9.810 | $ | 9.190 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
6.40% | 19.77% | 13.97% | 4.13% | 11.60% | 39.15% | |||||||||||||||||
$ | 3,177 | $ | 3,030 | $ | 3,151 | $ | 3,340 | $ | 3,069 | $ | 3,067 | |||||||||||
1.35% | 1.37% | 1.41% | 1.44% | 1.51% | 1.42% | |||||||||||||||||
1.35% | 1.46% | 1.51% | 1.54% | 1.61% | 1.66% | |||||||||||||||||
2.09% | 2.37% | 3.03% | 3.16% | 3.68% | 4.97% | |||||||||||||||||
2.09% | 2.28% | 2.93% | 3.06% | 3.58% | 4.73% | |||||||||||||||||
| 36%
|
|
| 51%
|
|
| 47%
|
|
| 110%
|
|
| 109%
|
|
| 69%
|
|
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 from investment operations: |
Net investment income2 |
Net realized and unrealized gain |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
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.
42
Six months ended 5/31/141 | Year ended | |||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | |||||||||||||||||
$ | 12.810 | $ | 10.940 | $ | 9.890 | $ | 9.810 | $ | 9.190 | $ | 7.010 | |||||||||||
0.168 | 0.347 | 0.375 | 0.375 | 0.399 | 0.426 | |||||||||||||||||
0.679 | 1.853 | 1.045 | 0.088 | 0.697 | 2.246 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
0.847 | 2.200 | 1.420 | 0.463 | 1.096 | 2.672 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(0.177 | ) | (0.330 | ) | (0.370 | ) | (0.383 | ) | (0.476 | ) | (0.492 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(0.177 | ) | (0.330 | ) | (0.370 | ) | (0.383 | ) | (0.476 | ) | (0.492 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 13.480 | $ | 12.810 | $ | 10.940 | $ | 9.890 | $ | 9.810 | $ | 9.190 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
6.67% | 20.37% | 14.66% | 4.55% | 12.24% | 39.68% | |||||||||||||||||
$ | 108,527 | $ | 61,809 | $ | 30,449 | $ | 24,986 | $ | 12,766 | $ | 2,394 | |||||||||||
0.85% | 0.87% | 0.91% | 0.94% | 1.01% | 0.92% | |||||||||||||||||
0.85% | 0.87% | 0.91% | 0.94% | 1.01% | 1.06% | |||||||||||||||||
2.59% | 2.87% | 3.53% | 3.66% | 4.18% | 5.47% | |||||||||||||||||
2.59% | 2.87% | 3.53% | 3.66% | 4.18% | 5.33% | |||||||||||||||||
| 36%
|
|
| 51%
|
|
| 47%
|
|
| 110%
|
|
| 109%
|
|
| 69%
|
|
43
Delaware Dividend Income Fund | May 31, 2014 (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 1.00% 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 4.00% 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 1.00%, if redeemed during the first 12 months. Class R and Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to 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 and exchange-traded funds (ETFs), 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 on the valuation date. Securities and ETFs 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 or ETF 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. Debt securities and credit default swap (CDS) contracts are valued based upon valuations provided by an independent pricing service or 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. U.S. government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. For asset-backed securities, collateralized mortgage obligations, commercial mortgage securities and U.S. government agency mortgage securities, pricing vendors utilize matrix pricing which considers prepayment speed, attributes of the collateral, yield or price of bonds of comparable quality, coupon, maturity, and type as well as broker/dealer-supplied prices. 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. Foreign currency exchange contracts are valued at the mean between the bid and ask prices, 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
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contracts and options on futures contracts 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 and 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, 2010 — Nov. 30, 2013), and has concluded that no provision for federal income tax is required in the Fund’s financial statements. In regards 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 30, 2014.
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
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Notes to financial statements
Delaware Dividend Income Fund
1. Significant Accounting Policies (continued)
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. That portion of gains (losses) is included in the statements of operations under the caption net realized gain (loss) on foreign currencies. For foreign equity securities, these changes are included in net realized and unrealized gain or loss on investments. The Fund reports certain foreign currency related transactions as components of realized gains (losses) for financial reporting purposes, whereas such components are treated as ordinary income (loss) for federal income tax purposes.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the 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. 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 ex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer. The financial statements reflect an estimate of the reclassification of the distribution character. 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. The Fund declares and pays dividends from net investment income monthly and distributions from net realized gain on investments, if any, annually. The Fund may distribute 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, 2014.
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The Fund may receive earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. There were no earnings credits for the six months ended May 31, 2014.
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. If the amount earned is greater than one dollar, the expense paid under this arrangement is included in dividend disbursing and transfer agent fees and expenses and appears on the statement of operations with the corresponding expense offset shown as “expense paid indirectly.” For the six months ended May 31, 2014, the Fund earned $187 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, 2014, the Fund was charged $15,997 for these services.
DSC is also the transfer agent and dividend disbursing agent of the Fund. For these services, the Fund pays DSC fees based on the aggregate daily net assets of the retail funds within the Delaware Investments Family of Funds at the following annual rate: 0.025% of the first $20 billion; 0.020% of the next $5 billion; 0.015% of the next $5 billion; and 0.013% on average daily net assets in excess of $30 billion. This amount is included in the statement of operations as dividend disbursing and transfer agent fees and expenses. For the six months ended May 31, 2014, the amount charged by DSC was $72,795. 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 0.25% 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 0.50% of the average daily net assets of Class R shares. Effective March 28, 2014, DDLP has contracted to waive distribution and service fees through March 30, 2015 in order to prevent distribution and service fees of Class B from exceeding 0.25% of average daily net assets. Institutional Class shares pay no distribution and service expenses.
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Notes to financial statements
Delaware Dividend Income Fund
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
As provided in the investment management agreement, the Fund bears a portion of the cost of resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to the Fund. For the six months ended May 31, 2014, the Fund was charged $9,703 for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates’ employees.
For the six months ended May 31, 2014, DDLP earned $57,464 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2014, DDLP received gross CDSC commissions of $15 and $1,769 on redemptions of the Fund’s Class A and Class C shares, respectively, and these commissions were entirely used to offset upfront commissions previously paid by DDLP to broker/dealers on sales of those shares.
Trustees’ fees include expenses accrued by the Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, 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, 2014, the Fund made purchases of $260,203,964 and sales of $226,609,140 of investment securities other than U.S. government securities and short-term investments.
At May 31, 2014, 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, 2014, the cost of investments and unrealized appreciation (depreciation) were as follows:
Cost of investments | $ | 614,643,927 | ||
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Aggregate unrealized appreciation | $ | 105,254,719 | ||
Aggregate unrealized depreciation | (11,451,378 | ) | ||
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Net unrealized appreciation | $ | 93,803,341 | ||
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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, 2013 will expire as follows: $76,486,649 expires in 2016 and $54,749,050 expires in 2017.
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.
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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. (Examples: 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. (Examples: 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 – | Significant unobservable inputs, including the Fund’s own assumptions used to determine the fair value of investments. (Examples: 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.
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Notes to financial statements
Delaware Dividend Income Fund
3. Investments (continued)
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of May 31, 2014:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Agency, Asset-Backed & Mortgage-Backed Securities | $ | — | $ | 1,056,268 | $ | — | $ | 1,056,268 | ||||||||
Corporate Debt | — | 174,532,588 | — | 174,532,588 | ||||||||||||
Foreign Debt | — | 3,256,145 | — | 3,256,145 | ||||||||||||
Senior Secured Loans1 | — | 10,554,726 | 912,244 | 11,466,970 | ||||||||||||
Municipal Bonds | — | 13,825,005 | — | 13,825,005 | ||||||||||||
Leveraged Non-Recourse Security | — | — | — | — | ||||||||||||
Common Stock1 | 428,329,307 | 480,900 | — | 428,810,207 | ||||||||||||
Convertible Preferred Stock1 | 13,332,436 | 7,748,755 | 2,013,814 | 23,095,005 | ||||||||||||
Preferred Stock1 | 1,609,506 | 1,483,650 | — | 3,093,156 | ||||||||||||
Limited Partnership | 850,500 | — | — | 850,500 | ||||||||||||
Warrant | 19,958 | — | — | 19,958 | ||||||||||||
Closed End Fund | 1,722,744 | — | — | 1,722,744 | ||||||||||||
Exchange-Traded Funds | 4,316,273 | — | — | 4,316,273 | ||||||||||||
Short-Term Investments | — | 42,400,198 | — | 42,400,198 | ||||||||||||
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Total | $ | 450,180,724 | $ | 255,338,235 | $ | 2,926,058 | $ | 708,445,017 | ||||||||
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Foreign Currency Exchange Contracts | $ | — | $ | (7,633 | ) | $ | — | $ | (7,633 | ) | ||||||
Futures Contracts | (3,628 | ) | — | — | (3,628 | ) | ||||||||||
Options Written | (52,500 | ) | — | — | (52,500 | ) | ||||||||||
Swap Contracts | — | (65,069 | ) | — | (65,069 | ) |
1Security type is valued across multiple levels. Level 1 investments represent exchange-traded investments, Level 2 investments represent investments with observable input or matrix-price investments, and Level 3 investments represent investments without observable inputs. The amounts attributed to Level 1 investments, Level 2 investments, and Level 3 investments represent the following percentages of the total market value of these security types:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Senior Secured Loans | — | 92.04 | % | 7.96 | % | 100.00 | % | |||||||||
Common Stock | 99.89 | % | 0.11 | % | — | 100.00 | % | |||||||||
Convertible Preferred Stock | 57.73 | % | 40.40 | % | 1.87 | % | 100.00 | % | ||||||||
Preferred Stock | 52.03 | % | 47.97 | % | — | 100.00 | % |
The securities deemed worthless on the schedule of investments are considered to be Level 3 securities in this table.
During the six months ended May 31, 2014, there were no transfers between Level 1 investments, Level 2 investments, and 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.
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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 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 ended 5/31/14 | Year ended 11/30/13 | |||||||
Shares sold: | ||||||||
Class A | 3,476,970 | 7,963,286 | ||||||
Class B | — | 17,010 | ||||||
Class C | 2,733,410 | 7,445,097 | ||||||
Class R | 54,984 | 99,301 | ||||||
Institutional Class | 3,633,922 | 3,182,591 | ||||||
Shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | 271,732 | 467,743 | ||||||
Class B | 5,727 | 18,398 | ||||||
Class C | 162,832 | 250,979 | ||||||
Class R | 2,699 | 6,010 | ||||||
Institutional Class | 66,610 | 87,786 | ||||||
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10,408,886 | 19,538,201 | |||||||
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Shares redeemed: | ||||||||
Class A | (4,196,675 | ) | (3,863,148 | ) | ||||
Class B | (244,954 | ) | (783,456 | ) | ||||
Class C | (1,311,453 | ) | (2,126,944 | ) | ||||
Class R | (58,480 | ) | (156,755 | ) | ||||
Institutional Class | (472,713 | ) | (1,228,075 | ) | ||||
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(6,284,275 | ) | (8,158,378 | ) | |||||
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Net increase | 4,124,611 | 11,379,823 | ||||||
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For the six months ended May 31, 2014 and the year ended Nov. 30, 2013, 25,047 Class B shares were converted to 25,067 Class A shares valued at $324,772 and 105,064 Class B shares were converted to 105,126 Class A shares valued at $1,249,804, 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. Unfunded Commitments
The Fund may invest in floating rate loans. In connection with these investments, the Fund may also enter into unfunded corporate loan commitments (commitments). Commitments may obligate the Fund to furnish temporary financing to a borrower until permanent financing can be arranged. In connection with these commitments, the Fund earns a commitment fee, typically set as a percentage of the commitment amount.
As of May 31, 2014, the Fund had the following unfunded loan commitments:
Borrower | Unfunded Loan Commitment | ||||
Men’s Wearhouse Bridge Loan | $ | 645,000 | |||
Polymer Bridge Loan | 452,250 |
6. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), is a participant in a $225,000,000 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 of 0.08%, 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 will expire on Nov. 10, 2014.
The Fund had no amounts outstanding as of May 31, 2014 or at any time during the period then ended.
7. 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 as a way of managing foreign exchange rate risk. The Fund may enter into these contracts to fix the U.S. dollar value of a security that it has agreed to buy or sell for the period between the date the trade was entered into and the date the security is delivered and paid for. The Fund may also use these contracts to hedge the U.S. dollar value of securities it already owns that are denominated in foreign currencies. The change in value is recorded as an unrealized gain or loss. When the contract is closed, a realized gain or loss is recorded equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
The use of foreign currency exchange contracts does not eliminate fluctuations in the underlying prices of the securities, but does establish a rate of exchange that can be achieved in the future. Although foreign currency exchange contracts limit the risk of loss due to an unfavorable change in the value of 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
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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.
During the six months ended May 31, 2014, the Fund entered into foreign currency exchange contracts to hedge the U.S. dollar value of securities it already owns that are denominated in foreign currencies.
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 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 objective. The Fund may invest in financial futures contracts to hedge its existing portfolio securities against fluctuations in fair value caused by changes in prevailing market interest rates. 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. The Fund posted $22,000 cash collateral for open futures contracts, which is presented as cash collateral for derivatives on the statement of assets and liabilities.
During the six months ended May 31, 2014, the Fund used futures contracts to hedge the Fund’s existing portfolio securities against fluctuations in value caused by changes in interest rates or market conditions.
Options Contracts — During the six months ended May 31, 2014, 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: to manage the Fund’s exposure to changes in securities prices and foreign currencies; to earn income; as an efficient means of adjusting the Fund’s overall exposure to certain markets; to protect the value of portfolio securities; and as a cash management tool. The Fund may buy or write call or put options on securities, financial indices, and foreign currencies. When the Fund buys an option, a premium is paid and an asset is recorded and adjusted on a daily basis to reflect the current market value of the options purchased. When the Fund writes an option, a premium is received and a liability is recorded and adjusted on a daily basis to reflect the current market value of the options written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is treated as realized
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Notes to financial statements
Delaware Dividend Income Fund
7. Derivatives (continued)
gain or loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has a realized gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. When writing options, the Fund is subject to minimal counterparty risk because the counterparty is only obligated to pay premiums and does not bear the market risk of an unfavorable market change.
Transactions in options written during the six months ended May 31, 2014 for the Fund were as follows:
Number of Contracts | Premiums | |||||||
Options outstanding at Nov. 30, 2013 | 416 | $ | 46,460 | |||||
Options written | 2,568 | 287,687 | ||||||
Options expired | (1,068 | ) | (171,606 | ) | ||||
Options terminated in closing purchase transactions | (416 | ) | (28,564 | ) | ||||
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Options outstanding at May 31, 2014 | 1,500 | $ | 133,977 | |||||
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During the six months ended May 31, 2014, the Fund used options contracts to manage the Fund’s exposure to changes in securities prices caused by interest rates or market conditions.
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 Standard & Poor’s (S&P) or Baa3 by Moody’s Investors Service, Inc. (Moody’s) or is determined to be of equivalent quality by DMC.
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, 2014, 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 daily as unrealized appreciation or depreciation. A realized gain or loss is
54
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, 2014, the Fund did not enter into any CDS contracts as a seller of protection. Initial margin and variation margin is posted to central counterparties for CDS basket trades, 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 or (2) trading certain CDS baskets through a central counterparty.
During the six months ended May 31, 2014, the Fund used CDS contracts to hedge against a credit event.
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, 2014 were as follows:
Asset Derivatives | Liability Derivatives | |||||||||
Statement of Assets and Liabilities Location | Fair Value | Statement of Assets and Liabilities Location | Fair Value | |||||||
Forward currency exchange contracts (Foreign currency exchange contracts) | Unrealized gain on foreign currency exchange contracts | $— | Unrealized loss on foreign currency exchange contracts | $ | (7,633 | ) | ||||
Interest rate contracts (Futures contracts) | Variation margin receivable on futures contracts | — | Variation margin payable on futures contracts | (3,628 | )* | |||||
Equity contracts (Written options) | Written options, at value | — | Written options, at value | (52,500 | ) | |||||
Credit contracts (Swap contracts) | Unrealized gain of credit default swap contracts | — | Unrealized loss of credit default swap contracts | (65,069 | ) | |||||
|
|
| ||||||||
Total | $— | $ | (128,830 | ) | ||||||
|
|
|
55
Notes to financial statements
Delaware Dividend Income Fund
7. Derivatives (continued)
* Includes cumulative appreciation or depreciation of futures contracts from the date the contracts are opened through May 31, 2014. Only current day variation margin is reported on the Fund’s statement of assets and liabilities.
The effect of derivative instruments on the statement of operations for the six months ended May 31, 2014 was as follows:
Net Realized Gain (Loss) on: | ||||||||||||||||||||
Foreign Currency Transactions | Financial Futures Contracts | Options | Swaps | Total | ||||||||||||||||
Forward currency exchange contracts | $(98,361) | $ | — | $ | — | $ | — | $ | (98,361 | ) | ||||||||||
Interest rate contracts | — | (741,605 | ) | 200,171 | — | (541,434 | ) | |||||||||||||
Credit contracts | — | — | — | (548,230 | ) | (548,230 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $(98,361) | $ | (741,605 | ) | $ | 200,171 | $ | (548,230 | ) | $ | (1,188,025 | ) | ||||||||
|
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|
|
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|
|
Net Change in Unrealized Appreciation (Depreciation) of: | ||||||||||||||||||||
Foreign Currency Transactions | Financial Futures Contracts | Options | Swaps | Total | ||||||||||||||||
Forward currency exchange contracts | $(848) | $ | — | $ | — | $ | — | $ | (848 | ) | ||||||||||
Interest rate contracts | — | 266,668 | 88,265 | — | 354,933 | |||||||||||||||
Credit contracts | — | — | — | 261,902 | 261,902 | |||||||||||||||
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| |||||||||||
Total | $(848) | $ | 266,668 | $ | 88,265 | $ | 261,902 | $ | 615,987 | |||||||||||
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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, 2014. The average balance of derivatives held is generally similar to the volume of derivative activity for the six months ended May 31, 2014.
Long Derivative Volume | Short Derivative Volume | |||||||||||||||
Foreign currency exchange contracts | USD | 350,255 | USD | 584,965 | ||||||||||||
Futures contracts (average notional value) | — | 7,687,548 | ||||||||||||||
CDS contracts (average notional value)* | 8,197,600 | 280,000 |
* | Long represents buying protection and short represents selling protection. |
8. Offsetting
In December 2011, the Financial Accounting Standards Board (FASB) issued guidance that expands current disclosure requirements on the offsetting of certain assets and liabilities. The new disclosures are required for investments and derivative financial instruments subject to master netting or similar agreements which are eligible for offset in the statements of assets and liabilities and will require an entity to disclose both gross and net information about such investments and transactions in the financial statements. In January 2013, the FASB issued guidance that clarifies which investments and transactions are subject to the offsetting disclosure requirements. The scope of the disclosure
56
requirements for offsetting is limited to derivative instruments, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions. The guidance is effective for financial statements with fiscal years beginning on or after Jan. 1, 2013, and interim periods within those fiscal years. The Fund adopted the disclosure provisions on offsetting during the current reporting period.
In order to better define its contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund entered into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or a similar agreement with their derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs over-the-counter (OTC) derivatives and foreign exchange contracts and typically contains, among other things, collateral posting items and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instrument’s payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out) including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency or other events.
For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the statement of assets and liabilities.
At May 31, 2014, the Fund had the following assets and liabilities subject to offsetting provisions:
Offsetting of Financial Assets and Liabilities and Derivative Assets and Liabilities
Counterparty | Gross Value of Derivative Asset | Gross Value of Derivative Liability | Net Position | ||||||||||||
BNP Paribas | $— | $(7,579) | $(7,579) | ||||||||||||
BNY Mellon | — | (54) | (54) | ||||||||||||
|
|
|
|
|
| ||||||||||
Total | $— | $(7,633) | $(7,633) | ||||||||||||
|
|
|
|
|
|
Counterparty | Net Position | Fair Value of Non-Cash Collateral Received | Cash Collateral Received | Fair Value of Non-Cash Collateral Pledged | Cash Collateral Pledged | Net Amount(a) | ||||||||||||||||||||||||
BNP Paribas | $(7,579) | $— | $— | $— | $— | $(7,579) | ||||||||||||||||||||||||
BNY Mellon | (54) | — | — | — | — | (54) | ||||||||||||||||||||||||
|
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|
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|
|
|
|
|
| |||||||||||||||||||
Total | $(7,633) | $— | $— | $— | $— | $(7,633) | ||||||||||||||||||||||||
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|
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|
57
Notes to financial statements
Delaware Dividend Income Fund
8. Offsetting (continued)
Master Repurchase Agreements
Counterparty | Repurchase Agreements | Fair Value of Non-Cash Collateral Received | Cash Collateral Received | Net Amount(a) | ||||||||||||||||
Bank of America Merrill Lynch | $7,898,094 | $(7,898,094) | $— | $— | ||||||||||||||||
BNP Paribas | 16,183,906 | (16,183,906) | — | — | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | $24,082,000 | $(24,082,000) | $— | $— | ||||||||||||||||
|
|
|
|
|
|
|
|
(a) Net amount represents the receivable/(payable) that would be due from/(to) the counterparty in the event of default.
9. Securities Lending
The Fund, along with other funds in the Delaware Investments® Family of Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (1) 102% with respect to U.S. securities and foreign securities that are denominated and payable in U.S. dollars; and (2) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the 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 request of the borrower, BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security on any particular day may be more or less than the value of the security on loan.
Cash collateral received is generally invested in the Delaware Investments Collateral Fund No. 1 (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of funds managed by DMC that participate in BNY Mellon’s securities lending program. The Collective Trust may invest in U.S. government securities and high-quality corporate debt, asset-backed and other money market securities and in repurchase agreements collateralized by such securities, provided that the Collective Trust will generally have a dollar-weighted average portfolio maturity of 60 days or less. The 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.
58
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. This could occur if an investment in the Collective Trust defaulted or if it were necessary to liquidate assets in the Collective Trust to meet returns on outstanding security loans at a time when the Collective Trust’s net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the Collective Trust 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.
During the six months ended May 31, 2014, the Fund had no securities out on loan.
10. Credit and Market Risk
The Fund invests a portion of its assets in high yield fixed income securities, which are securities rated lower than BBB- by S&P and Baa3 by Moody’s, or similarly rated by another nationally recognized statistical rating organization. Investments in these higher yielding securities are generally accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment grade securities.
The Fund invests in fixed income securities whose value is derived from an underlying pool of mortgages or consumer loans. The value of these securities is sensitive to changes in economic conditions, including delinquencies and/or defaults, and may be adversely affected by shifts in the market’s perception of the issuers and changes in interest rates. Investors receive principal and interest payments as the underlying mortgages and consumer loans are paid back. Prepayment of mortgages may shorten the stated maturity of the obligations and can result in a loss of premium, if any has been paid.
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, 2014. 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 that may have liquidity protection designed to ensure that the receipt of payments due on the underlying security is timely. Such protection may be provided through guarantees, insurance policies or letters 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
59
Notes to financial statements
Delaware Dividend Income Fund
10. Credit and Market Risk (continued)
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 held by the Fund have been identified in the schedule of investments.
11. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
12. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to May 31, 2014 that would require recognition or disclosure in the Fund’s financial statements.
60
Board of trustees | ||||||
Patrick P. Coyne | Joseph W. Chow | Lucinda S. Landreth | Thomas K. Whitford | |||
Chairman, President, and | Former Executive Vice | Former Chief Investment | Former Vice Chairman | |||
Chief Executive Officer | President | Officer | PNC Financial Services Group | |||
Delaware Investments ® | State Street Corporation | Assurant, Inc. | Pittsburgh, PA | |||
Family of Funds | Brookline, MA | Philadelphia, PA | ||||
Philadelphia, PA | Janet L. Yeomans | |||||
John A. Fry | Frances A. | Former Vice President and | ||||
Thomas L. Bennett | President | Sevilla-Sacasa | Treasurer | |||
Private Investor | Drexel University | Chief Executive Officer | 3M Corporation | |||
Rosemont, PA | Philadelphia, PA | Banco Itaú International | St. Paul, MN | |||
Miami, FL | J. Richard Zecher | |||||
Founder | ||||||
Investor Analytics | ||||||
Scottsdale, AZ | ||||||
Affiliated officers | ||||||
David F. Connor | Daniel V. Geatens | David P. O’Connor | Richard Salus | |||
Senior Vice President, | Vice President and | Executive Vice President, | Senior Vice President and | |||
Deputy General Counsel, | Treasurer | General Counsel, | Chief Financial Officer | |||
and Secretary | Delaware Investments | and Chief Legal Officer | Delaware Investments | |||
Delaware Investments | Family of Funds | Delaware Investments | Family of Funds | |||
Family of Funds | Philadelphia, PA | Family of Funds | Philadelphia, PA | |||
Philadelphia, PA | Philadelphia, PA |
This semiannual report is for the information of Delaware Dividend Income Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware Investments Fund fact sheet for the most recently completed calendar quarter. These documents are available at 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.
61
Semiannual report
U.S. core equity mutual fund
Delaware Small Cap Core Fund
May 31, 2014
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and its summary prospectus, which may be obtained by visiting delawareinvestments.com or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.
You can obtain shareholder reports and prospectuses online instead of in the mail. Visit 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.
1 | ||||
Security type / sector allocation and top 10 equity holdings | 3 | |||
4 | ||||
10 | ||||
12 | ||||
13 | ||||
15 | ||||
23 | ||||
33 |
Unless otherwise noted, views expressed herein are current as of May 31, 2014, 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.
© 2014 Delaware Management Holdings, Inc.
All third-party marks cited are the property of their respective owners.
For the six-month period from December 1, 2013 to May 31, 2014 (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, 2013 to May 31, 2014.
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 expenses shown in the table assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
For the six-month period from December 1, 2013 to May 31, 2014 (Unaudited)
Delaware Small Cap Core Fund
Expense analysis of an investment of $1,000
Beginning Account Value 12/1/13 | Ending Account Value 5/31/14 | Annualized Expense Ratio | Expenses Paid During Period 12/1/13 to 5/31/14* | |||||||||||||||||
Actual Fund return† | ||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,007.70 | 1.28 | % | $ | 6.41 | ||||||||||||
Class C | 1,000.00 | 1,003.70 | 2.03 | % | 10.14 | |||||||||||||||
Class R | 1,000.00 | 1,006.70 | 1.53 | % | 7.65 | |||||||||||||||
Institutional Class | 1,000.00 | 1,008.60 | 1.03 | % | 5.16 | |||||||||||||||
Hypothetical 5% return (5% return before expenses) | ||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,018.55 | 1.28 | % | $ | 6.44 | ||||||||||||
Class C | 1,000.00 | 1,014.81 | 2.03 | % | 10.20 | |||||||||||||||
Class R | 1,000.00 | 1,017.30 | 1.53 | % | 7.70 | |||||||||||||||
Institutional Class | 1,000.00 | 1,019.80 | 1.03 | % | 5.19 |
* | “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 Core Fund | As of May 31, 2014 (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 | 96.26 | % | |||||||||
Basic Materials | 7.19 | % | |||||||||
Business Services | 6.19 | % | |||||||||
Capital Goods | 9.29 | % | |||||||||
Communications Services | 2.12 | % | |||||||||
Consumer Discretionary | 3.87 | % | |||||||||
Consumer Services | 4.36 | % | |||||||||
Consumer Staples | 3.35 | % | |||||||||
Credit Cyclicals | 1.27 | % | |||||||||
Energy | 5.64 | % | |||||||||
Financials | 16.36 | % | |||||||||
Healthcare | 13.25 | % | |||||||||
Media | 0.54 | % | |||||||||
Real Estate | 5.48 | % | |||||||||
Technology | 14.20 | % | |||||||||
Transportation | 1.58 | % | |||||||||
Utilities | 1.57 | % | |||||||||
Short-Term Investments | 4.64 | % | |||||||||
Total Value of Securities | 100.90 | % | |||||||||
Liabilities Net of Receivables and Other Assets | (0.90 | %) | |||||||||
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 | ||||||||||
Tenneco | 1.27 | % | |||||||||
InterMune | 1.20 | % | |||||||||
Align Technology | 1.15 | % | |||||||||
G-III Apparel Group | 1.12 | % | |||||||||
Iconix Brand Group | 1.12 | % | |||||||||
Jack in the Box | 1.10 | % | |||||||||
Synaptics | 1.06 | % | |||||||||
Casey’s General Stores | 1.04 | % | |||||||||
Popeyes Louisiana Kitchen | 1.04 | % | |||||||||
West Pharmaceutical Services | 1.03 | % |
3
Delaware Small Cap Core Fund | May 31, 2014 (Unaudited) |
Number of shares | Value (U.S. $) | |||||||
Common Stock – 96.26% | ||||||||
Basic Materials – 7.19% | ||||||||
Axiall | 47,800 | $ | 2,208,838 | |||||
Boise Cascade † | 68,365 | 1,788,428 | ||||||
Chemtura † | 99,600 | 2,488,008 | ||||||
Innophos Holdings | 27,000 | 1,417,500 | ||||||
Kaiser Aluminum | 25,900 | 1,773,373 | ||||||
Kraton Performance Polymers † | 69,600 | 1,730,952 | ||||||
Materion | 38,000 | 1,295,420 | ||||||
Neenah Paper | 37,400 | 1,824,372 | ||||||
Stepan | 22,100 | 1,182,792 | ||||||
Taminco † | 88,805 | 1,892,435 | ||||||
U.S. Silica Holdings | 19,795 | 1,001,033 | ||||||
Worthington Industries | 15,000 | 604,500 | ||||||
|
| |||||||
19,207,651 | ||||||||
|
| |||||||
Business Services – 6.19% | ||||||||
Cross Country Healthcare † | 135,100 | 779,527 | ||||||
FTI Consulting † | 72,600 | 2,342,802 | ||||||
Kforce | 118,075 | 2,601,192 | ||||||
McGrath RentCorp | 64,480 | 2,210,374 | ||||||
TeleTech Holdings † | 68,700 | 1,812,306 | ||||||
U.S. Ecology | 42,580 | 2,103,452 | ||||||
United Stationers | 61,600 | 2,453,528 | ||||||
WageWorks † | 55,393 | 2,242,309 | ||||||
|
| |||||||
16,545,490 | ||||||||
|
| |||||||
Capital Goods – 9.29% | ||||||||
Aaon | 84,187 | 2,626,634 | ||||||
Acuity Brands | 9,820 | 1,232,508 | ||||||
Applied Industrial Technologies | 52,840 | 2,516,241 | ||||||
Barnes Group | 68,200 | 2,549,316 | ||||||
Chart Industries † | 11,634 | 836,368 | ||||||
Columbus McKinnon | 79,820 | 2,247,731 | ||||||
ESCO Technologies | 36,600 | 1,230,492 | ||||||
Esterline Technologies † | 12,300 | 1,370,835 | ||||||
Granite Construction | 59,641 | 2,118,448 | ||||||
Kadant | 56,800 | 2,152,720 | ||||||
MasTec † | 33,400 | 1,202,400 | ||||||
MYR Group † | 46,900 | 1,173,438 | ||||||
Rofin-Sinar Technologies † | 80,800 | 1,877,792 | ||||||
Tetra Tech | 63,400 | 1,687,074 | ||||||
|
| |||||||
24,821,997 | ||||||||
|
| |||||||
Communications Services – 2.12% | ||||||||
Atlantic Tele-Network | 23,684 | 1,322,041 |
4
Number of shares | Value (U.S. $) | |||||||
Common Stock (continued) | ||||||||
Communications Services (continued) | ||||||||
InterXion Holding † | 67,491 | $ | 1,774,338 | |||||
RigNet † | 54,501 | 2,584,437 | ||||||
|
| |||||||
5,680,816 | ||||||||
|
| |||||||
Consumer Discretionary – 3.87% | ||||||||
Express † | 75,400 | 950,794 | ||||||
Francesca’s Holdings † | 51,768 | 794,121 | ||||||
G-III Apparel Group † | 40,900 | 2,998,788 | ||||||
Iconix Brand Group † | 71,500 | 2,998,710 | ||||||
Madden (Steven) † | 81,650 | 2,601,369 | ||||||
|
| |||||||
10,343,782 | ||||||||
|
| |||||||
Consumer Services – 4.36% | ||||||||
Buffalo Wild Wings † | 17,420 | 2,517,364 | ||||||
Cheesecake Factory | 37,800 | 1,733,886 | ||||||
Del Frisco’s Restaurant Group † | 62,100 | 1,677,321 | ||||||
Jack in the Box | 51,080 | 2,948,848 | ||||||
Popeyes Louisiana Kitchen † | 64,500 | 2,768,340 | ||||||
|
| |||||||
11,645,759 | ||||||||
|
| |||||||
Consumer Staples – 3.35% | ||||||||
Casey’s General Stores | 39,200 | 2,792,216 | ||||||
J&J Snack Foods | 19,686 | 1,843,988 | ||||||
Prestige Brands Holdings † | 65,700 | 2,246,940 | ||||||
Susser Holdings † | 26,150 | 2,073,957 | ||||||
|
| |||||||
8,957,101 | ||||||||
|
| |||||||
Credit Cyclicals – 1.27% | ||||||||
Tenneco † | 53,100 | 3,385,125 | ||||||
|
| |||||||
3,385,125 | ||||||||
|
| |||||||
Energy – 5.64% | ||||||||
Bonanza Creek Energy † | 11,200 | 600,544 | ||||||
Bristow Group | 16,050 | 1,219,479 | ||||||
C&J Energy Services † | 53,000 | 1,622,330 | ||||||
Carrizo Oil & Gas † | 42,900 | 2,465,034 | ||||||
Diamondback Energy † | 19,810 | 1,495,259 | ||||||
Jones Energy Class A † | 84,470 | 1,479,914 | ||||||
Kodiak Oil & Gas † | 145,800 | 1,856,034 | ||||||
Parsley Energy Class A † | 18,800 | 446,876 | ||||||
Pioneer Energy Services † | 45,500 | 723,450 | ||||||
Rosetta Resources † | 48,000 | 2,262,240 | ||||||
RSP Permian † | 33,515 | 904,905 | ||||||
|
| |||||||
15,076,065 | ||||||||
|
| |||||||
Financials – 16.36% | ||||||||
American Equity Investment Life Holding | 99,100 | 2,231,732 |
5
Schedule of investments
Delaware Small Cap Core Fund
Number of shares | Value (U.S. $) | |||||||
Common Stock (continued) | ||||||||
Financials (continued) | ||||||||
AMERISAFE | 37,200 | $ | 1,432,572 | |||||
BBCN Bancorp | 114,200 | 1,741,550 | ||||||
Bryn Mawr Bank | 21,100 | 599,451 | ||||||
Capital Bank Financial † | 63,497 | 1,540,437 | ||||||
Cardinal Financial | 107,600 | 1,869,012 | ||||||
City Holding | 41,950 | 1,812,660 | ||||||
Evercore Partners Class A | 40,900 | 2,251,136 | ||||||
Fidelity & Guaranty Life | 89,935 | 1,924,609 | ||||||
Flushing Financial | 75,200 | 1,495,728 | ||||||
Greenhill | 27,200 | 1,352,384 | ||||||
Independent Bank @ | 49,500 | 1,791,900 | ||||||
Infinity Property & Casualty @ | 16,900 | 1,081,769 | ||||||
Maiden Holdings | 118,600 | 1,451,664 | ||||||
Park National | 24,400 | 1,821,460 | ||||||
Primerica | 51,200 | 2,306,048 | ||||||
Prosperity Bancshares | 39,000 | 2,267,070 | ||||||
Selective Insurance Group @ | 71,700 | 1,704,309 | ||||||
Sterling Bancorp | 134,900 | 1,528,417 | ||||||
Stifel Financial † | 45,800 | 2,070,160 | ||||||
Susquehanna Bancshares | 182,200 | 1,800,136 | ||||||
Texas Capital Bancshares † | 35,800 | 1,832,960 | ||||||
United Fire Group | 49,500 | 1,373,625 | ||||||
Webster Financial | 79,500 | 2,378,640 | ||||||
Western Alliance Bancorp † | 90,600 | 2,072,928 | ||||||
|
| |||||||
43,732,357 | ||||||||
|
| |||||||
Healthcare – 13.25% | ||||||||
Acorda Therapeutics † | 62,600 | 2,058,288 | ||||||
Air Methods | 48,500 | 2,337,700 | ||||||
Akorn † | 60,400 | 1,689,388 | ||||||
Align Technology † | 56,470 | 3,083,827 | ||||||
Auxilium Pharmaceuticals † | 92,700 | 2,074,626 | ||||||
Cepheid † | 41,600 | 1,874,080 | ||||||
CONMED | 54,540 | 2,448,846 | ||||||
CryoLife | 133,405 | 1,177,966 | ||||||
DexCom † | 33,000 | 1,114,080 | ||||||
ICON † | 61,600 | 2,603,832 | ||||||
InterMune † | 81,200 | 3,217,144 | ||||||
Medicines † | 35,000 | 976,500 | ||||||
Merit Medical Systems † | 75,187 | 1,054,874 | ||||||
NPS Pharmaceuticals † | 65,100 | 2,026,563 | ||||||
Quidel † | 74,800 | 1,697,960 |
6
Number of shares | Value (U.S. $) | |||||||
Common Stock (continued) | ||||||||
Healthcare (continued) | ||||||||
Spectrum Pharmaceuticals † | 137,800 | $ | 1,073,462 | |||||
WellCare Health Plans † | 27,700 | 2,145,365 | ||||||
West Pharmaceutical Services | 65,520 | 2,757,737 | ||||||
|
| |||||||
35,412,238 | ||||||||
|
| |||||||
Media – 0.54% | ||||||||
National CineMedia | 91,550 | 1,434,589 | ||||||
|
| |||||||
1,434,589 | ||||||||
|
| |||||||
Real Estate – 5.48% | ||||||||
DCT Industrial Trust | 238,600 | 1,889,712 | ||||||
DuPont Fabros Technology | 71,600 | 1,830,812 | ||||||
EastGroup Properties | 23,700 | 1,508,742 | ||||||
EPR Properties | 37,100 | 2,000,432 | ||||||
Kite Realty Group Trust | 275,000 | 1,707,750 | ||||||
LaSalle Hotel Properties | 73,500 | 2,424,765 | ||||||
Ramco-Gershenson Properties Trust | 89,300 | 1,482,380 | ||||||
Sovran Self Storage | 23,330 | 1,791,744 | ||||||
|
| |||||||
14,636,337 | ||||||||
|
| |||||||
Technology – 14.20% | ||||||||
Anixter International | 25,150 | 2,590,450 | ||||||
Applied Micro Circuits † | 182,500 | 1,642,500 | ||||||
Brightcove † | 214,400 | 2,030,368 | ||||||
Callidus Software † | 64,000 | 672,640 | ||||||
ExlService Holdings † | 30,690 | 869,755 | ||||||
FARO Technologies † | 46,290 | 1,968,251 | ||||||
inContact † | 211,170 | 1,788,610 | ||||||
j2 Global @ | 48,400 | 2,292,224 | ||||||
KEYW Holding † | 170,182 | 1,803,929 | ||||||
Marin Software † | 46,600 | 466,000 | ||||||
NETGEAR † | 53,010 | 1,742,439 | ||||||
Plantronics | 36,100 | 1,636,774 | ||||||
Proofpoint † | 72,800 | 2,323,776 | ||||||
Rally Software Development † | 143,900 | 1,879,334 | ||||||
Rocket Fuel † | 51,600 | 1,290,000 | ||||||
SciQuest † | 58,800 | 995,484 | ||||||
Semtech † | 86,000 | 2,230,840 | ||||||
Shutterfly † | 41,900 | 1,723,766 | ||||||
SS&C Technologies Holdings † | 46,932 | 2,001,650 | ||||||
Synaptics † | 41,720 | 2,840,298 | ||||||
Trulia † | 38,100 | 1,472,565 | ||||||
WNS Holdings ADR † | 93,598 | 1,681,020 | ||||||
|
| |||||||
37,942,673 | ||||||||
|
|
7
Schedule of investments
Delaware Small Cap Core Fund
Number of shares | Value (U.S. $) | |||||||
Common Stock (continued) | ||||||||
Transportation – 1.58% | ||||||||
Roadrunner Transportation Systems † | 76,000 | $ | 1,985,120 | |||||
XPO Logistics † | 89,200 | 2,241,596 | ||||||
|
| |||||||
4,226,716 | ||||||||
|
| |||||||
Utilities – 1.57% | ||||||||
Cleco | 43,400 | 2,258,102 | ||||||
NorthWestern | 40,300 | 1,934,400 | ||||||
|
| |||||||
4,192,502 | ||||||||
|
| |||||||
Total Common Stock (cost $219,915,896) | 257,241,198 | |||||||
|
| |||||||
Principal amount° | ||||||||
Short-Term Investments – 4.64% | ||||||||
Discount Notes – 1.51%≠ | ||||||||
Federal Home Loan Bank | ||||||||
0.04% 6/18/14 | 2,455,884 | 2,455,862 | ||||||
0.05% 7/28/14 | 700,826 | 700,809 | ||||||
0.05% 8/15/14 | 336,349 | 336,328 | ||||||
0.075% 11/19/14 | 533,888 | 533,737 | ||||||
|
| |||||||
4,026,736 | ||||||||
|
| |||||||
Repurchase Agreements – 2.90% | ||||||||
Bank of America Merrill Lynch | 2,545,022 | 2,545,022 | ||||||
BNP Paribas | 5,214,978 | 5,214,978 | ||||||
|
| |||||||
7,760,000 | ||||||||
|
| |||||||
U.S. Treasury Obligation – 0.23%≠ | ||||||||
U.S. Treasury Bill 0.093% 11/13/14 | 616,255 | 616,125 | ||||||
|
| |||||||
616,125 | ||||||||
|
| |||||||
Total Short-Term Investments (cost $12,402,615) | 12,402,861 | |||||||
|
| |||||||
Total Value of Securities – 100.90% | $ | 269,644,059 | ||||||
|
|
@ | Illiquid security. At May 31, 2014, the aggregate value of illiquid securities was $6,870,202, which represented 2.57% of the Fund’s net assets. See Note 8 in “Notes to financial statements.” |
≠ | The rate shown is the effective yield at the time of purchase. |
8
° | Principal amount shown is stated in U.S. dollars unless noted that the security is denominated in another currency. |
† | Non income producing security. |
ADR – American Depositary Receipt
See accompanying notes, which are an integral part of the financial statements.
9
Statement of assets and liabilities
Delaware Small Cap Core Fund | May 31, 2014 (Unaudited) |
Assets: | ||||
Investments, at value1 | $ | 257,241,198 | ||
Short-term investments, at value2 | 12,402,861 | |||
Cash | 24,618 | |||
Receivable for fund shares sold | 2,549,165 | |||
Receivables for securities sold | 1,344,649 | |||
Dividends and interest receivable | 154,317 | |||
|
| |||
Total assets | 273,716,808 | |||
|
| |||
Liabilities: | ||||
Payable for securities purchased | 5,969,123 | |||
Payable for fund shares redeemed | 185,412 | |||
Investment management fees payable | 163,464 | |||
Other accrued expenses | 81,193 | |||
Distribution fees payable to affiliates | 57,190 | |||
Other affiliates payable | 15,739 | |||
Trustees’ fees and expenses payable | 1,578 | |||
|
| |||
Total liabilities | 6,473,699 | |||
|
| |||
Total Net Assets | $ | 267,243,109 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 221,101,787 | ||
Accumulated net investment loss | (717,843 | ) | ||
Accumulated net realized gain on investments | 9,533,617 | |||
Net unrealized appreciation of investments | 37,325,548 | |||
|
| |||
Total Net Assets | $ | 267,243,109 | ||
|
| |||
1 Investments, at cost | $ | 219,915,896 | ||
2 Short-term investments, at cost | 12,402,615 |
10
Net Asset Value | ||||
Class A: | ||||
Net assets | $ | 94,340,845 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 4,916,081 | |||
Net asset value per share | $ | 19.19 | ||
Sales charge | 5.75 | % | ||
Offering price per share, equal to net asset value per share / (1 – sales charge) | $ | 20.36 | ||
Class C: | ||||
Net assets | $ | 39,364,471 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 2,183,945 | |||
Net asset value per share | $ | 18.02 | ||
Class R: | ||||
Net assets | $ | 14,359,349 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 761,765 | |||
Net asset value per share | $ | 18.85 | ||
Institutional Class: | ||||
Net assets | $ | 119,178,444 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 6,138,591 | |||
Net asset value per share | $ | 19.41 |
See accompanying notes, which are an integral part of the financial statements.
11
Delaware Small Cap Core Fund | Six months ended May 31, 2014 (Unaudited) |
Investment Income: | ||||
Dividends | $ | 1,122,110 | ||
Interest | 1,724 | |||
|
| |||
1,123,834 | ||||
|
| |||
Expenses: | ||||
Management fees | 864,154 | |||
Distribution expenses – Class A | 105,121 | |||
Distribution expenses – Class C | 164,658 | |||
Distribution expenses – Class R | 33,137 | |||
Dividend disbursing and transfer agent fees and expenses | 162,994 | |||
Accounting and administration expenses | 66,443 | |||
Registration fees | 38,820 | |||
Audit and tax | 13,800 | |||
Reports and statements to shareholders | 12,865 | |||
Legal fees | 7,281 | |||
Trustees’ fees and expenses | 5,645 | |||
Custodian fees | 3,453 | |||
Other | 7,465 | |||
|
| |||
1,485,836 | ||||
Less expense paid indirectly | (70 | ) | ||
|
| |||
Total operating expenses | 1,485,766 | |||
|
| |||
Net Investment Loss | (361,932 | ) | ||
|
| |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain on investments | 10,461,742 | |||
Net change in unrealized appreciation (depreciation) of investments | (8,680,766 | ) | ||
|
| |||
Net Realized and Unrealized Gain | 1,780,976 | |||
|
| |||
Net Increase in Net Assets Resulting from Operations | $ | 1,419,044 | ||
|
|
See accompanying notes, which are an integral part of the financial statements.
12
Statements of changes in net assets
Delaware Small Cap Core Fund
Six months ended 5/31/14 (Unaudited) | Year ended 11/30/13 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment loss | $ | (361,932 | ) | $ | (267,756 | ) | ||
Net realized gain | 10,461,742 | 12,854,496 | ||||||
Net change in unrealized appreciation (depreciation) | (8,680,766 | ) | 33,855,724 | |||||
|
|
|
| |||||
Net increase in net assets resulting from operations | 1,419,044 | 46,442,464 | ||||||
|
|
|
| |||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | — | (22,899 | ) | |||||
Institutional Class | — | (133,052 | ) | |||||
Net realized gain: | ||||||||
Class A | (1,836,861 | ) | — | |||||
Class C | (741,927 | ) | — | |||||
Class R | (340,355 | ) | — | |||||
Institutional Class | (2,110,959 | ) | — | |||||
|
|
|
| |||||
(5,030,102 | ) | (155,951 | ) | |||||
|
|
|
| |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 41,240,075 | 38,621,136 | ||||||
Class C | 15,807,494 | 11,670,310 | ||||||
Class R | 3,646,650 | 4,701,991 | ||||||
Institutional Class | 45,360,050 | 29,676,984 | ||||||
Net asset value of shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | 1,789,683 | 22,424 | ||||||
Class C | 717,211 | — | ||||||
Class R | 340,354 | — | ||||||
Institutional Class | 2,073,221 | 131,836 | ||||||
|
|
|
| |||||
110,974,738 | 84,824,681 | |||||||
|
|
|
|
13
Six months ended 5/31/14 (Unaudited) | Year ended 11/30/13 | |||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares redeemed: | ||||||||
Class A | $ | (16,576,821 | ) | $ | (10,033,078 | ) | ||
Class C | (2,313,098 | ) | (1,587,669 | ) | ||||
Class R | (2,159,662 | ) | (2,037,193 | ) | ||||
Institutional Class | (8,927,679 | ) | (10,705,047 | ) | ||||
|
|
|
| |||||
(29,977,260 | ) | (24,362,987 | ) | |||||
|
|
|
| |||||
Increase in net assets derived from capital share transactions | 80,997,478 | 60,461,694 | ||||||
|
|
|
| |||||
Net Increase in Net Assets | 77,386,420 | 106,748,207 | ||||||
Net Assets: | ||||||||
Beginning of period | 189,856,689 | 83,108,482 | ||||||
|
|
|
| |||||
End of period (including accumulated (distributions in excess | $ | 267,243,109 | $ | 189,856,689 | ||||
|
|
|
|
See accompanying notes, which are an integral part of the financial statements.
14
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 |
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 some 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.
15
Six months ended 5/31/141 | Year ended | ||||||||||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | ||||||||||||||||||||||||
$ | 19.540 | $ | 13.560 | $ | 12.010 | $ | 11.150 | $ | 8.740 | $ | 6.930 | ||||||||||||||||||
(0.029 | ) | (0.036 | ) | (0.022 | ) | (0.024 | ) | 0.034 | 0.003 | ||||||||||||||||||||
0.177 | 6.027 | 1.572 | 0.928 | 2.376 | 1.815 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
0.148 | 5.991 | 1.550 | 0.904 | 2.410 | 1.818 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
— | (0.011 | ) | — | (0.044 | ) | — | (0.008 | ) | |||||||||||||||||||||
(0.498 | ) | — | — | — | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(0.498 | ) | (0.011 | ) | — | (0.044 | ) | — | (0.008 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
$ | 19.190 | $ | 19.540 | $ | 13.560 | $ | 12.010 | $ | 11.150 | $ | 8.740 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
0.77% | 44.21% | 12.91% | 8.10% | 27.57% | 25.36% | ||||||||||||||||||||||||
$ | 94,341 | $ | 69,386 | $ | 25,084 | $ | 24,242 | $ | 23,191 | $ | 24,512 | ||||||||||||||||||
1.28% | 1.31% | 1.36% | 1.39% | 1.40% | 1.45% | ||||||||||||||||||||||||
1.28% | 1.35% | 1.41% | 1.45% | 1.54% | 1.63% | ||||||||||||||||||||||||
(0.30% | ) | (0.22% | ) | (0.17% | ) | (0.20% | ) | 0.35% | 0.04% | ||||||||||||||||||||
(0.30% | ) | (0.26% | ) | (0.22% | ) | (0.26% | ) | 0.21% | (0.14% | ) | |||||||||||||||||||
| 14%
|
|
| 38%
|
|
| 37%
|
|
| 42%
|
|
| 37%
|
|
| 79%
|
|
16
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 |
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.
17
Six months ended 5/31/141 | Year ended | ||||||||||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | ||||||||||||||||||||||||
$ | 18.450 | $ | 12.890 | $ | 11.510 | $ | 10.720 | $ | 8.470 | $ | 6.750 | ||||||||||||||||||
(0.095 | ) | (0.152 | ) | (0.115 | ) | (0.112 | ) | (0.039 | ) | (0.052 | ) | ||||||||||||||||||
0.163 | 5.712 | 1.495 | 0.902 | 2.289 | 1.772 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
0.068 | 5.560 | 1.380 | 0.790 | 2.250 | 1.720 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(0.498 | ) | — | — | — | — | — | |||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||
(0.498 | ) | — | — | — | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
$ | 18.020 | $ | 18.450 | $ | 12.890 | $ | 11.510 | $ | 10.720 | $ | 8.470 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
0.37% | 43.14% | 11.99% | 7.37% | 26.56% | 25.48% | ||||||||||||||||||||||||
$ | 39,365 | $ | 25,828 | $ | 10,051 | $ | 7,702 | $ | 8,285 | $ | 7,468 | ||||||||||||||||||
2.03% | 2.06% | 2.11% | 2.14% | 2.15% | 2.20% | ||||||||||||||||||||||||
2.03% | 2.06% | 2.11% | 2.15% | 2.24% | 2.33% | ||||||||||||||||||||||||
(1.05% | ) | (0.97% | ) | (0.92% | ) | (0.95% | ) | (0.40% | ) | (0.71% | ) | ||||||||||||||||||
(1.05% | ) | (0.97% | ) | (0.92% | ) | (0.96% | ) | (0.49% | ) | (0.84% | ) | ||||||||||||||||||
| 14%
|
|
| 38%
|
|
| 37%
|
|
| 42%
|
|
| 37%
|
|
| 79%
|
|
18
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 |
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 some 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.
19
Six months ended 5/31/141 | Year ended | ||||||||||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | ||||||||||||||||||||||||
$ | 19.220 | $ | 13.360 | $ | 11.870 | $ | 11.030 | $ | 8.660 | $ | 6.870 | ||||||||||||||||||
(0.052 | ) | (0.076 | ) | (0.054 | ) | (0.054 | ) | 0.009 | (0.016 | ) | |||||||||||||||||||
0.180 | 5.936 | 1.544 | 0.913 | 2.361 | 1.806 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
0.128 | 5.860 | 1.490 | 0.859 | 2.370 | 1.790 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
�� | |||||||||||||||||||||||||||||
— | — | — | (0.019 | ) | — | — | |||||||||||||||||||||||
(0.498 | ) | — | — | — | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(0.498 | ) | — | — | (0.019 | ) | — | — | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
$ | 18.850 | $ | 19.220 | $ | 13.360 | $ | 11.870 | $ | 11.030 | $ | 8.660 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
0.67% | 43.86% | 12.55% | 7.79% | 27.37% | 26.06% | ||||||||||||||||||||||||
$ | 14,359 | $ | 12,785 | $ | 6,809 | $ | 5,786 | $ | 5,322 | $ | 3,848 | ||||||||||||||||||
1.53% | 1.56% | 1.61% | 1.64% | 1.65% | 1.70% | ||||||||||||||||||||||||
1.53% | 1.64% | 1.71% | 1.75% | 1.84% | 1.93% | ||||||||||||||||||||||||
(0.55% | ) | (0.47% | ) | (0.42% | ) | (0.45% | ) | 0.10% | (0.21% | ) | |||||||||||||||||||
(0.55% | ) | (0.55% | ) | (0.52% | ) | (0.56% | ) | (0.09% | ) | (0.44% | ) | ||||||||||||||||||
| 14%
|
|
| 38%
|
|
| 37%
|
|
| 42%
|
|
| 37%
|
|
| 79%
|
|
20
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 income (loss)2 |
Net realized and unrealized gain |
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. 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.
21
Six months ended 5/31/141 | Year ended | ||||||||||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | ||||||||||||||||||||||||
$ | 19.740 | $ | 13.690 | $ | 12.100 | $ | 11.230 | $ | 8.790 | $ | 6.970 | ||||||||||||||||||
(0.005 | ) | 0.005 | 0.011 | 0.006 | 0.060 | 0.022 | |||||||||||||||||||||||
0.173 | 6.089 | 1.579 | 0.934 | 2.385 | 1.830 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
0.168 | 6.094 | 1.590 | 0.940 | 2.445 | 1.852 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
— | (0.044 | ) | — | (0.070 | ) | (0.005 | ) | (0.032 | ) | ||||||||||||||||||||
(0.498 | ) | — | — | — | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(0.498 | ) | (0.044 | ) | — | (0.070 | ) | (0.005 | ) | (0.032 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
$ | 19.410 | $ | 19.740 | $ | 13.690 | $ | 12.100 | $ | 11.230 | $ | 8.790 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
0.86% | 44.64% | 13.14% | 8.37% | 27.83% | 25.78% | ||||||||||||||||||||||||
$ | 119,178 | $ | 81,858 | $ | 41,164 | $ | 30,923 | $ | 33,877 | $ | 30,401 | ||||||||||||||||||
1.03% | 1.06% | 1.11% | 1.14% | 1.15% | 1.20% | ||||||||||||||||||||||||
1.03% | 1.06% | 1.11% | 1.15% | 1.24% | 1.33% | ||||||||||||||||||||||||
(0.05% | ) | 0.03% | 0.08% | 0.05% | 0.60% | 0.29% | |||||||||||||||||||||||
(0.05% | ) | 0.03% | 0.08% | 0.04% | 0.51% | 0.16% | |||||||||||||||||||||||
| 14%
|
|
| 38%
|
|
| 37%
|
|
| 42%
|
|
| 37%
|
|
| 79%
|
|
22
Delaware Small Cap Core Fund | May 31, 2014 (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 1.00% 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 1.00%, if redeemed during the first 12 months. Class R and Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to 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 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. 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.
Federal Income Taxes – No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. Management has analyzed the Fund’s tax positions taken for all open federal income tax years (Nov. 30, 2010–Nov. 30, 2013), 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.
23
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 30, 2014.
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. The Fund declares and pays distributions from net investment income and net realized gain on investments, if any, annually. The Fund may distribute more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.
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, 2014.
The Fund may receive earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. There were no earnings credits for the six months ended May 31, 2014.
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. If the amount earned is greater than one dollar, the expense paid under this arrangement is included in dividend disbursing and transfer agent fees and expenses and appears on the statement of operations with the corresponding expense offset shown as “expense paid indirectly.” For the six months ended May 31, 2014, the Fund earned $70 under this agreement.
24
Notes to financial statements
Delaware Small Cap Core Fund
2. Investment Management, Administration Agreements and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee which is calculated daily at the rate of 0.75% on the first $500 million of average daily net assets of the Fund, 0.70% on the next $500 million, 0.65% on the next $1.5 billion, and 0.60% on average daily net assets in excess of $2.5 billion.
Prior to March 28, 2014, DMC had contractually agreed to waive that portion, if any, of its management fee and reimburse the Fund to the extent necessary to ensure that total annual operating expenses (excluding any 12b-1 plan, taxes, interest, inverse floater program expenses, short sale and dividend interest expenses, brokerage fees, certain insurance costs, acquired fund fees and expenses, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations, (collectively, nonroutine expenses)) did not exceed 1.15% of the Fund’s average daily net assets. For purposes of this waiver and reimbursement, nonroutine expenses may also include such additional costs and expenses as may be agreed upon from time to time by the Fund’s Board and DMC. This expense waiver and reimbursement applied only to expenses paid directly by the Fund.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Fund. For these services, the Fund pays DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all funds in the Delaware Investments Family of Funds on a relative net asset value basis. For the six months ended May 31, 2014, the Fund was charged $5,553 for these services.
DSC is also the transfer agent and dividend disbursing agent of the Fund. The Fund pays DSC fees based on the aggregate daily net assets of the retail funds within the Delaware Investments Family of Funds at the following annual rate: 0.025% of the first $20 billion; 0.020% of the next $5 billion; 0.015% of the next $5 billion; and 0.013% on average daily net assets in excess of $30 billion. This amount is included in the statement of operations as dividend disbursing and transfer agent fees and expenses. For the six months ended May 31, 2014, the amount charged by DSC was $25,263. 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 0.25% 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 0.50% of the average daily net assets of the R shares. Institutional Class shares pay no distribution and service expenses.
25
As provided in the investment management agreement, the Fund bears a portion of the cost of resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to the Fund. For the six months ended May 31, 2014, the Fund was charged $3,678 for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates’ employees.
For the six months ended May 31, 2014, DDLP earned $40,673 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2014, DDLP received gross CDSC commissions of $40, and $586 on redemptions of the Fund’s Class A and Class C shares, respectively, and these commissions were entirely used to offset upfront commissions previously paid by DDLP to broker/ dealers on sales of those shares.
Trustees’ fees include expenses accrued by the Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, 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, 2014, the Fund made purchases and sales of investment securities other than short-term investments as follows:
Purchases | $ | 105,723,713 | ||
Sales | 31,749,145 |
At May 31, 2014, 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, 2014, the cost of investments and unrealized appreciation (depreciation) were as follows:
Cost of investments | $ | 233,098,146 | ||
|
| |||
Aggregate unrealized appreciation | $ | 42,462,024 | ||
Aggregate unrealized depreciation | (5,916,111 | ) | ||
|
| |||
Net unrealized appreciation | $ | 36,545,913 | ||
|
|
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.
26
Notes to financial statements
Delaware Small Cap Core Fund
3. Investments (continued)
Level 1 | – | Inputs are quoted prices in active markets for identical investments. (Examples: 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. (Examples: 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 | – | Significant unobservable inputs, including the Fund’s own assumptions used to determine the fair value of investments. (Examples: 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, 2014:
Level 1 | Level 2 | Total | ||||||||||
Common Stock | $ | 257,241,198 | $ | — | $ | 257,241,198 | ||||||
Short-Term Investments | — | 12,402,861 | 12,402,861 | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 257,241,198 | $ | 12,402,861 | $ | 269,644,059 | ||||||
|
|
|
|
|
|
During the six months ended May 31, 2014, 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. At May 31, 2014, there were no Level 3 investments.
27
4. Capital Shares
Transactions in capital shares were as follows:
Six months ended 5/31/14 | Year ended 11/30/13 | |||||||||
Shares sold: | ||||||||||
Class A | 2,142,345 | 2,308,325 | ||||||||
Class C | 873,392 | 724,461 | ||||||||
Class R | 193,384 | 283,583 | ||||||||
Institutional Class | 2,345,053 | 1,783,487 | ||||||||
Shares issued upon reinvestment of dividends and distributions: | ||||||||||
Class A | 93,554 | 1,609 | ||||||||
Class C | 39,778 | — | ||||||||
Class R | 18,094 | — | ||||||||
Institutional Class | 107,255 | 9,390 | ||||||||
|
|
|
| |||||||
5,812,855 | 5,110,855 | |||||||||
|
|
|
| |||||||
Shares redeemed: | ||||||||||
Class A | (871,202 | ) | (608,787 | ) | ||||||
Class C | (129,264 | ) | (104,432 | ) | ||||||
Class R | (114,801 | ) | (128,048 | ) | ||||||
Institutional Class | (461,287 | ) | (651,586 | ) | ||||||
|
|
|
| |||||||
(1,576,554 | ) | (1,492,853 | ) | |||||||
|
|
|
| |||||||
Net increase | 4,236,301 | 3,618,002 | ||||||||
|
|
|
|
5. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), is a participant in a $225,000,000 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 of 0.08%, 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 available under the agreement will expire on Nov. 10, 2014.
The Fund had no amounts outstanding as of May 31, 2014 or at any time during the period then ended.
28
Notes to financial statements
Delaware Small Cap Core Fund
6. Offsetting
In December 2011, the Financial Accounting Standards Board (FASB) issued guidance that expands current disclosure requirements on the offsetting of certain assets and liabilities. The new disclosures are required for investments and derivative financial instruments subject to master netting or similar agreements which are eligible for offset in the statement of assets and liabilities and require an entity to disclose both gross and net information about such investments and transactions in the financial statements. In January 2013, the FASB issued guidance that clarifies which investments and transactions are subject to the offsetting disclosure requirements. The scope of the disclosure requirements for offsetting is limited to derivative instruments, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions. The guidance is effective for financial statements with fiscal years beginning on or after Jan. 1, 2013, and interim periods within those fiscal years. The Fund adopted the disclosure provisions on offsetting during the current reporting period.
In order to better define its contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund entered into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or a similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs over-the-counter (OTC) derivatives and foreign exchange contracts and typically contains, among other things, collateral posting items and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out) netting including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency or other events.
For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the statement of assets and liabilities.
At May 31, 2014, the Fund had the following assets and liabilities subject to offsetting provisions:
Master Repurchase Agreements
Counterparty | Repurchase | Fair Value of Non-Cash | Cash Collateral Received | Net | ||||||||||||||||
Bank of America | $ | 2,545,022 | $ | (2,545,022 | ) | $ | — | $ | — | |||||||||||
BNP Paribas | 5,214,978 | (5,214,978 | ) | — | — | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 7,760,000 | $ | (7,760,000 | ) | $ | — | $ | — | |||||||||||
|
|
|
|
|
|
|
|
(a) | Net amount represents the receivable/(payable) that would be due from/(to) the counterparty in the event of default. |
29
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 more or less than the value of the security on loan.
Cash collateral received is generally invested in the Delaware Investments Collateral Fund No. 1 (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of funds managed by DMC that participate in BNY Mellon’s securities lending program. The Collective Trust may invest in U.S. government securities and high-quality corporate debt, asset-backed and other money market securities, and in repurchase agreements collateralized by such securities, provided that the Collective Trust will generally have a dollar-weighted average portfolio maturity of 60 days or less. The 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.
30
Notes to financial statements
Delaware Small Cap Core Fund
7. 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. This could occur if an investment in the Collective Trust defaulted or if it were necessary to liquidate assets in the Collective Trust to meet returns on outstanding security loans at a time when the Collective Trust’s net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the Collective Trust 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, 2014, the Fund had no securities out on loan.
8. 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, 2014. The Fund’s REIT holdings are also affected by interest rate changes, particularly if the REITs it holds use floating rate debt to finance their ongoing operations.
The Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Fund’s Board has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s 15% limit on investments in illiquid securities. As of May 31, 2014, there were no Rule 144A securities held by the Fund. Illiquid securities have been identified in the schedule of investments.
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.
31
10. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to May 31, 2014 that would require recognition or disclosure in the Fund’s financial statements.
32
Board of trustees | ||||||
Patrick P. Coyne | Joseph W. Chow | Lucinda S. Landreth | Thomas K. Whitford | |||
Chairman, President, and | Former Executive Vice | Former Chief Investment | Former Vice Chairman | |||
Chief Executive Officer | President | Officer | PNC Financial Services Group | |||
Delaware Investments® | State Street Corporation | Assurant, Inc. | Pittsburgh, PA | |||
Family of Funds | Brookline, MA | Philadelphia, PA | ||||
Philadelphia, PA | Janet L. Yeomans | |||||
John A. Fry | Frances A. | Former Vice President | ||||
Thomas L. Bennett | President | Sevilla-Sacasa | and Treasurer | |||
Private Investor | Drexel University | Chief Executive Officer | 3M Corporation | |||
Rosemont, PA | Philadelphia, PA | Banco Itaú | St. Paul, MN | |||
International | ||||||
Miami, FL | J. Richard Zecher | |||||
Founder | ||||||
Investor Analytics | ||||||
Scottsdale, AZ | ||||||
Affiliated officers | ||||||
David F. Connor | Daniel V. Geatens | David P. O’Connor | Richard Salus | |||
Senior Vice President, | Vice President and | Executive Vice President, | Senior Vice President and | |||
Deputy General Counsel, | Treasurer | General Counsel, | Chief Financial Officer | |||
and Secretary | Delaware Investments | and Chief Legal Officer | Delaware Investments | |||
Delaware Investments | Family of Funds | Delaware Investments | Family of Funds | |||
Family of Funds | Philadelphia, PA | Family of Funds | Philadelphia, PA | |||
Philadelphia, PA | Philadelphia, PA |
This semiannual report is for the information of Delaware Small Cap Core Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware Investments Fund fact sheet for the most recently completed calendar quarter. These documents are available at 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.
33
Semiannual report
U.S. value equity mutual fund
Delaware Small Cap Value Fund
May 31, 2014
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and its summary prospectus, which may be obtained by visiting delawareinvestments.com or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.
You can obtain shareholder reports and prospectuses online instead of in the mail.
Visit 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.
1 | ||||
3 | ||||
4 | ||||
10 | ||||
12 | ||||
14 | ||||
16 | ||||
26 | ||||
36 |
Unless otherwise noted, views expressed herein are current as of May 31, 2014, 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.
© 2014 Delaware Management Holdings, Inc.
All third-party marks cited are the property of their respective owners.
For the six-month period from December 1, 2013 to May 31, 2014 (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, 2013 to May 31, 2014.
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
For the six-month period from December 1, 2013 to May 31, 2014 (Unaudited)
Delaware Small Cap Value Fund
Expense analysis of an investment of $1,000
Beginning Account Value 12/1/13 | Ending Account Value 5/31/14 | Annualized Expense Ratio | Expenses Paid During Period 12/1/13 to 5/31/14* | |||||||||||||
Actual Fund return† | ||||||||||||||||
Class A | $1,000.00 | $1,048.50 | 1.23% | $6.28 | ||||||||||||
Class B | 1,000.00 | 1,048.40 | 1.23% | 6.28 | ||||||||||||
Class C | 1,000.00 | 1,044.40 | 1.98% | 10.09 | ||||||||||||
Class R | 1,000.00 | 1,047.10 | 1.48% | 7.55 | ||||||||||||
Institutional Class | 1,000.00 | 1,049.80 | 0.98% | 5.01 | ||||||||||||
Hypothetical 5% return (5% return before expenses) |
| |||||||||||||||
Class A | $1,000.00 | $1,018.80 | 1.23% | $6.19 | ||||||||||||
Class B | 1,000.00 | 1,018.80 | 1.23% | 6.19 | ||||||||||||
Class C | 1,000.00 | 1,015.06 | 1.98% | 9.95 | ||||||||||||
Class R | 1,000.00 | 1,017.55 | 1.48% | 7.44 | ||||||||||||
Institutional Class | 1,000.00 | 1,020.04 | 0.98% | 4.94 |
* | “Expenses Paid During Period” are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 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, 2014 (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 | 97.25 | % | |||
Basic Industry | 9.64 | % | |||
Business Services | 1.03 | % | |||
Capital Spending | 10.88 | % | |||
Consumer Cyclical | 3.99 | % | |||
Consumer Services | 8.78 | % | |||
Consumer Staples | 0.69 | % | |||
Energy | 8.87 | % | |||
Financial Services | 21.03 | % | |||
Healthcare | 6.22 | % | |||
Real Estate | 6.73 | % | |||
Technology | 14.14 | % | |||
Transportation | 2.83 | % | |||
Utilities | 2.42 | % | |||
Exchange-Traded Fund | 0.55 | % | |||
Short-Term Investments | 2.15 | % | |||
Total Value of Securities | 99.95 | % | |||
Receivables and Other Assets Net of Liabilities | 0.05 | % | |||
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
| ||||
Whiting Petroleum | 2.61 | % | |||
East West Bancorp | 2.33 | % | |||
ITT | 1.96 | % | |||
Chemtura | 1.76 | % | |||
United Rentals | 1.74 | % | |||
Patterson-UTI Energy | 1.65 | % | |||
Fuller (H.B.) | 1.64 | % | |||
Platinum Underwriters Holdings | 1.63 | % | |||
Synopsys | 1.60 | % | |||
Helix Energy Solutions Group
|
| 1.58
| %
|
3
Schedule of investments | ||
Delaware Small Cap Value Fund | May 31, 2014 (Unaudited) |
Number of shares | Value (U.S. $) | |||||||
| ||||||||
Common Stock – 97.25% | ||||||||
| ||||||||
Basic Industry – 9.64% | ||||||||
Albemarle | 409,400 | $ | 28,326,386 | |||||
Berry Plastics Group † | 1,186,300 | 28,008,543 | ||||||
Chemtura † | 1,776,400 | 44,374,472 | ||||||
Cytec Industries | 327,200 | 32,507,320 | ||||||
Fuller (H.B.) | 864,400 | 41,344,252 | ||||||
Glatfelter | 776,600 | 20,440,112 | ||||||
Kaiser Aluminum | 448,927 | 30,738,032 | ||||||
Olin | 626,800 | 17,080,300 | ||||||
|
| |||||||
242,819,417 | ||||||||
|
| |||||||
Business Services – 1.03% | ||||||||
Brink’s | 440,600 | 11,764,020 | ||||||
United Stationers | 356,118 | 14,184,180 | ||||||
|
| |||||||
25,948,200 | ||||||||
|
| |||||||
Capital Spending – 10.88% | ||||||||
Actuant Class A | 583,900 | 20,745,967 | ||||||
Altra Holdings @ | 837,914 | 28,648,280 | ||||||
EnPro Industries † | 264,300 | 19,396,977 | ||||||
H&E Equipment Services † | 786,200 | 27,241,830 | ||||||
ITT | 1,133,000 | 49,489,440 | ||||||
MasTec † | 652,900 | 23,504,400 | ||||||
Primoris Services | 641,500 | 18,584,255 | ||||||
Regal-Beloit | 330,000 | 25,188,900 | ||||||
Thermon Group Holdings @† | 743,700 | 17,514,135 | ||||||
United Rentals † | 435,000 | 43,956,750 | ||||||
|
| |||||||
274,270,934 | ||||||||
|
| |||||||
Consumer Cyclical – 3.99% | ||||||||
Barnes Group | 551,000 | 20,596,380 | ||||||
Dana Holdings | 1,144,000 | 25,328,160 | ||||||
Knoll | 667,000 | 11,699,180 | ||||||
Meritage Homes † | 646,600 | 25,935,126 | ||||||
Standard Motor Products @ | 408,340 | 16,954,277 | ||||||
|
| |||||||
100,513,123 | ||||||||
|
| |||||||
Consumer Services – 8.78% | ||||||||
Asbury Automotive Group † | 267,100 | 17,265,344 | ||||||
Brinker International | 301,400 | 14,964,510 | ||||||
Cato Class A | 644,700 | 18,593,148 | ||||||
Cheesecake Factory | 517,300 | 23,728,551 | ||||||
Cinemark Holdings | 245,900 | 7,750,768 | ||||||
Finish Line Class A | 516,400 | 14,805,188 | ||||||
Genesco † | 265,500 | 19,883,295 |
4
Number of shares | Value (U.S. $) | |||||||
| ||||||||
Common Stock (continued) | ||||||||
| ||||||||
Consumer Services (continued) | ||||||||
Guess | 252,700 | $ | 6,443,850 | |||||
Hanesbrands | 225,700 | 19,146,131 | ||||||
Madden (Steven) † | 519,450 | 16,549,677 | ||||||
Meredith | 364,518 | 16,388,729 | ||||||
Pier 1 Imports | 775,800 | 13,661,838 | ||||||
Stage Stores | 554,300 | 10,182,491 | ||||||
Texas Roadhouse | 865,500 | 21,879,840 | ||||||
|
| |||||||
221,243,360 | ||||||||
|
| |||||||
Consumer Staples – 0.69% | ||||||||
Core-Mark Holding | 41,450 | 3,427,086 | ||||||
Pinnacle Foods | 447,300 | 14,004,963 | ||||||
|
| |||||||
17,432,049 | ||||||||
|
| |||||||
Energy – 8.87% | ||||||||
Helix Energy Solutions Group † | 1,701,600 | 39,783,408 | ||||||
Jones Energy Class A @† | 437,100 | 7,657,992 | ||||||
Parsley Energy Class A † | 140,000 | 3,327,800 | ||||||
Patterson-UTI Energy | 1,253,300 | 41,471,697 | ||||||
Southwest Gas | 536,300 | 28,080,668 | ||||||
Stone Energy † | 840,763 | 37,321,469 | ||||||
Whiting Petroleum † | 916,000 | 65,814,600 | ||||||
|
| |||||||
223,457,634 | ||||||||
|
| |||||||
Financial Services – 21.03% | ||||||||
Bank of Hawaii | 615,800 | 34,337,008 | ||||||
Boston Private Financial Holdings | 1,574,800 | 19,905,472 | ||||||
Community Bank System @ | 863,100 | 30,648,681 | ||||||
CVB Financial | 645,700 | 9,414,306 | ||||||
East West Bancorp | 1,750,323 | 58,600,814 | ||||||
First Financial Bancorp @ | 1,244,900 | 20,242,074 | ||||||
First Midwest Bancorp | 1,096,600 | 17,545,600 | ||||||
Hancock Holding | 1,130,800 | 38,198,424 | ||||||
Independent Bank @ | 702,000 | 25,412,400 | ||||||
Infinity Property & Casualty @ | 293,082 | 18,760,179 | ||||||
Main Street Capital | 549,900 | 17,063,397 | ||||||
NBT Bancorp @ | 1,047,300 | 23,794,656 | ||||||
Platinum Underwriters Holdings @ | 640,100 | 41,062,415 | ||||||
ProAssurance | 542,500 | 24,656,625 | ||||||
S&T Bancorp @ | 591,956 | 14,366,772 | ||||||
Selective Insurance Group @ | 1,236,400 | 29,389,228 | ||||||
StanCorp Financial Group | 221,800 | 13,330,180 | ||||||
Susquehanna Bancshares | 1,927,300 | 19,041,724 | ||||||
Validus Holdings | 538,684 | 20,109,074 |
5
Schedule of investments
Delaware Small Cap Value Fund
Number of shares | Value (U.S. $) | |||||||
| ||||||||
Common Stock (continued) | ||||||||
| ||||||||
Financial Services (continued) | ||||||||
Webster Financial | 1,136,300 | $ | 33,998,096 | |||||
WesBanco @ | 685,441 | 20,179,383 | ||||||
|
| |||||||
530,056,508 | ||||||||
|
| |||||||
Healthcare – 6.22% | ||||||||
Cooper | 124,200 | 16,024,284 | ||||||
Haemonetics † | 361,200 | 12,302,472 | ||||||
Owens & Minor | 633,100 | 21,955,908 | ||||||
Service Corp. International | 1,338,900 | 26,804,778 | ||||||
STERIS | 598,600 | 32,037,072 | ||||||
Teleflex | 231,900 | 24,729,816 | ||||||
VCA Antech † | 680,200 | 22,888,730 | ||||||
|
| |||||||
156,743,060 | ||||||||
|
| |||||||
Real Estate – 6.73% | ||||||||
Alexander & Baldwin | 509,300 | 19,307,563 | ||||||
Brandywine Realty Trust | 1,551,337 | 23,735,456 | ||||||
Education Realty Trust | 1,160,400 | 12,137,784 | ||||||
Healthcare Realty Trust | 714,600 | 17,814,978 | ||||||
Highwoods Properties | 615,200 | 24,964,816 | ||||||
Lexington Realty Trust | 2,236,100 | 25,379,735 | ||||||
Ramco-Gershenson Properties Trust | 878,689 | 14,586,237 | ||||||
Summit Hotel Properties | 1,248,200 | 12,531,928 | ||||||
Washington Real Estate Investment Trust | 741,400 | 19,150,362 | ||||||
|
| |||||||
169,608,859 | ||||||||
|
| |||||||
Technology – 14.14% | ||||||||
Black Box | 223,813 | 5,454,323 | ||||||
Brocade Communications Systems † | 2,476,400 | 22,584,768 | ||||||
Cirrus Logic † | 769,700 | 17,033,461 | ||||||
CommScope Holding † | 984,400 | 26,027,536 | ||||||
Compuware | 2,621,700 | 25,954,830 | ||||||
Electronics for Imaging † | 449,800 | 18,302,362 | ||||||
Netscout Systems † | 513,900 | 19,975,293 | ||||||
ON Semiconductor † | 3,277,500 | 28,481,475 | ||||||
Premiere Global Services @† | 962,850 | 12,526,679 | ||||||
PTC † | 813,600 | 29,940,480 | ||||||
RF Micro Devices † | 2,671,700 | 25,140,697 | ||||||
Synopsys † | 1,045,900 | 40,256,691 | ||||||
Tech Data † | 435,300 | 25,904,703 | ||||||
Teradyne | 1,401,300 | 24,943,140 | ||||||
Vishay Intertechnology | 2,264,300 | 33,783,356 | ||||||
|
| |||||||
356,309,794 | ||||||||
|
|
6
Number of shares | Value (U.S. $) | |||||||
| ||||||||
Common Stock (continued) | ||||||||
| ||||||||
Transportation – 2.83% | ||||||||
Kirby † | 166,300 | $ | 18,384,465 | |||||
Matson | 507,700 | 12,474,189 | ||||||
Saia † | 400,150 | 17,438,537 | ||||||
Werner Enterprises | 875,700 | 23,118,480 | ||||||
|
| |||||||
71,415,671 | ||||||||
|
| |||||||
Utilities – 2.42% | ||||||||
Black Hills | 371,100 | 21,401,337 | ||||||
El Paso Electric | 484,900 | 18,479,539 | ||||||
NorthWestern | 437,600 | 21,004,800 | ||||||
|
| |||||||
60,885,676 | ||||||||
|
| |||||||
Total Common Stock (cost $1,866,168,812) |
| 2,450,704,285 | ||||||
|
| |||||||
| ||||||||
Exchange-Traded Fund – 0.55% |
| |||||||
| ||||||||
iShares Russell 2000 Value ETF | 140,900 | 13,930,783 | ||||||
|
| |||||||
Total Exchange-Traded Fund (cost $12,138,626) |
| 13,930,783 | ||||||
|
| |||||||
Principal amount° | ||||||||
| ||||||||
Short-Term Investments – 2.15% | ||||||||
| ||||||||
Discount Notes – 1.18%≠ | ||||||||
Federal Home Loan Bank | ||||||||
0.04% 6/18/14 | 19,419,128 | 19,418,953 | ||||||
0.05% 7/28/14 | 3,978,574 | 3,978,478 | ||||||
0.05% 8/15/14 | 2,845,179 | 2,845,003 | ||||||
0.075% 11/19/14 | 3,455,570 | 3,454,592 | ||||||
|
| |||||||
29,697,026 | ||||||||
|
| |||||||
Repurchase Agreements – 0.90% | ||||||||
Bank of America Merrill Lynch | 7,465,178 | 7,465,178 | ||||||
BNP Paribas | 15,296,822 | 15,296,822 | ||||||
|
| |||||||
22,762,000 | ||||||||
|
| |||||||
U.S. Treasury Obligation – 0.07%≠ | ||||||||
U.S. Treasury Bill 0.093% 11/13/14 | 1,776,751 | 1,776,376 | ||||||
|
| |||||||
1,776,376 | ||||||||
|
| |||||||
Total Short-Term Investments (cost $54,234,239) |
| 54,235,402 | ||||||
|
|
7
Schedule of investments
Delaware Small Cap Value Fund
Total Value of Securities – 99.95% | $ | 2,518,870,470 | ||||
|
|
@ | Illiquid security. At May 31, 2014, the aggregate value of illiquid securities was $307,157,151, which represented 12.19% of the Fund’s net assets. See Note 8 in “Notes to financial statements.” |
≠ | The rate shown is the effective yield at the time of purchase. |
° | Principal amount shown is stated in U.S. dollars unless noted that the security is denominated in another currency. |
† | Non income producing security. |
ETF – Exchange-Traded Fund
See accompanying notes, which are an integral part of the financial statements.
8
This page intentionally left blank.
Statement of assets and liabilities | ||
Delaware Small Cap Value Fund | May 31, 2014 (Unaudited) |
Assets: | ||||
Investments, at value1 | $ | 2,464,635,068 | ||
Short-term investments, at value2 | 54,235,402 | |||
Cash | 355,750 | |||
Receivable for fund shares sold | 16,853,111 | |||
Dividends and interest receivable | 2,656,448 | |||
|
| |||
Total assets | 2,538,735,779 | |||
|
| |||
Liabilities: | ||||
Payable for fund shares redeemed | 9,313,366 | |||
Payable for securities purchased | 6,308,872 | |||
Income distribution payable | 1,622 | |||
Investment management fees payable | 1,435,980 | |||
Other accrued expenses | 1,161,852 | |||
Distribution fees payable to affiliates | 311,371 | |||
Other affiliates payable | 152,027 | |||
Trustees’ fees and expenses payable | 15,343 | |||
|
| |||
Total liabilities | 18,700,433 | |||
|
| |||
Total Net Assets | $ | 2,520,035,346 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 1,864,392,319 | ||
Undistributed net investment income | 1,517,601 | |||
Accumulated net realized gain on investments | 67,796,633 | |||
Net unrealized appreciation of investments | 586,328,793 | |||
|
| |||
Total Net Assets | $ | 2,520,035,346 | ||
|
| |||
1 Investments, at cost | $ | 1,878,307,438 | ||
2 Short-term investments, at cost | 54,234,239 |
10
Net Asset Value | ||||
Class A: | ||||
Net assets | $ | 867,118,620 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 16,145,210 | |||
Net asset value per share | $ | 53.71 | ||
Sales charge | 5.75 | % | ||
Offering price per share, equal to net asset value per share / (1 – sales charge) | $ | 56.99 | ||
Class B: | ||||
Net assets | $ | 1,265,240 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 27,390 | |||
Net asset value per share | $ | 46.19 | ||
Class C: | ||||
Net assets | $ | 104,566,354 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 2,274,525 | |||
Net asset value per share | $ | 45.97 | ||
Class R: | ||||
Net assets | $ | 80,734,405 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 1,543,056 | |||
Net asset value per share | $ | 52.32 | ||
Institutional Class: | ||||
Net assets | $ | 1,466,350,727 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 26,076,530 | |||
Net asset value per share | $ | 56.23 |
See accompanying notes, which are an integral part of the financial statements.
11
Statement of operations | ||
Delaware Small Cap Value Fund | Six months ended May 31, 2014 (Unaudited) |
Investment Income: | ||||
Dividends | $ | 16,595,029 | ||
Interest | 12,739 | |||
Foreign tax withheld | (2,186 | ) | ||
|
| |||
16,605,582 | ||||
|
| |||
Expenses: | ||||
Management fees | 8,119,579 | |||
Distribution expenses — Class A | 1,123,774 | |||
Distribution expenses — Class B | 10,039 | |||
Distribution expenses — Class C | 507,381 | |||
Distribution expenses — Class R | 194,982 | |||
Dividend disbursing and transfer agent fees and expenses | 2,628,548 | |||
Accounting and administration expenses | 412,599 | |||
Reports and statements to shareholders | 164,784 | |||
Legal fees | 79,764 | |||
Registration fees | 68,411 | |||
Trustees’ fees and expenses | 58,905 | |||
Custodian fees | 46,335 | |||
Audit and tax | 15,503 | |||
Other | 33,125 | |||
|
| |||
13,463,729 | ||||
Less waived distribution expenses — Class B | (7,529 | ) | ||
Less expense paid indirectly | (495 | ) | ||
|
| |||
Total operating expenses | 13,455,705 | |||
|
| |||
Net Investment Income | 3,149,877 | |||
|
| |||
Net Realized and Unrealized Gain: | ||||
Net realized gain on investments | 68,995,634 | |||
Net change in unrealized appreciation (depreciation) of investments | 42,230,128 | |||
|
| |||
Net Realized and Unrealized Gain | 111,225,762 | |||
|
| |||
Net Increase in Net Assets Resulting from Operations | $ | 114,375,639 | ||
|
|
See accompanying notes, which are an integral part of the financial statements.
12
This page intentionally left blank.
Statements of changes in net assets
Delaware Small Cap Value Fund
Six months ended 5/31/14 (Unaudited) | Year ended 11/30/13 | |||||||
Increase in Net Assets from Operations: | ||||||||
Net investment income | $ | 3,149,877 | $ | 5,195,670 | ||||
Net realized gain | 68,995,634 | 46,586,853 | ||||||
Net change in unrealized appreciation (depreciation) | 42,230,128 | 392,175,103 | ||||||
|
|
|
| |||||
Net increase in net assets resulting from operations | 114,375,639 | 443,957,626 | ||||||
|
|
|
| |||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (933,371 | ) | (1,279,159 | ) | ||||
Institutional Class | (3,846,800 | ) | (1,785,939 | ) | ||||
Net realized gain: | ||||||||
Class A | (18,684,386 | ) | (3,531,372 | ) | ||||
Class B | (57,082 | ) | (42,667 | ) | ||||
Class C | (2,419,192 | ) | (493,148 | ) | ||||
Class R | (1,637,404 | ) | (302,813 | ) | ||||
Institutional Class | (24,481,657 | ) | (2,388,692 | ) | ||||
|
|
|
| |||||
(52,059,892 | ) | (9,823,790 | ) | |||||
|
|
|
| |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 126,641,731 | 360,137,117 | ||||||
Class B | 19,261 | 38,348 | ||||||
Class C | 11,049,058 | 25,678,037 | ||||||
Class R | 11,842,073 | 35,157,866 | ||||||
Institutional Class | 365,893,588 | 845,588,890 | ||||||
Net asset value of shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | 19,373,775 | 4,730,881 | ||||||
Class B | 56,684 | 41,272 | ||||||
Class C | 2,330,338 | 468,386 | ||||||
Class R | 1,637,197 | 302,736 | ||||||
Institutional Class | 27,825,138 | 3,993,286 | ||||||
|
|
|
| |||||
566,668,843 | 1,276,136,819 | |||||||
|
|
|
|
14
Six months ended 5/31/14 (Unaudited) | Year ended 11/30/13 | |||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares redeemed: | ||||||||
Class A | $ | (185,484,948 | ) | $ | (199,410,980 | ) | ||
Class B | (2,332,309 | ) | (4,431,904 | ) | ||||
Class C | (9,930,499 | ) | (15,414,318 | ) | ||||
Class R | (11,213,433 | ) | (20,699,591 | ) | ||||
Institutional Class | (177,587,633 | ) | (180,684,573 | ) | ||||
|
|
|
| |||||
(386,548,822 | ) | (420,641,366 | ) | |||||
|
|
|
| |||||
Increase in net assets derived from capital share transactions | 180,120,021 | 855,495,453 | ||||||
|
|
|
| |||||
Net Increase in Net Assets | 242,435,768 | 1,289,629,289 | ||||||
Net Assets: | ||||||||
Beginning of period | 2,277,599,578 | 987,970,289 | ||||||
|
|
|
| |||||
End of period (including undistributed net investment income of $1,517,601 and $3,147,895, respectively) | $ | 2,520,035,346 | $ | 2,277,599,578 | ||||
|
|
|
|
See accompanying notes, which are an integral part of the financial statements.
15
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 |
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 some 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 5/31/141 | Year ended | ||||||||||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | ||||||||||||||||||||||||
$ | 52.370 | $ | 39.750 | $ | 37.860 | $ | 36.190 | $ | 27.530 | $ | 21.340 | ||||||||||||||||||
0.044 | 0.119 | 0.074 | (0.008 | ) | (0.003 | ) | 0.059 | ||||||||||||||||||||||
2.452 | 12.847 | 3.622 | 1.818 | 8.680 | 6.191 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
2.496 | 12.966 | 3.696 | 1.810 | 8.677 | 6.250 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(0.055 | ) | (0.092 | ) | — | — | (0.017 | ) | (0.060 | ) | ||||||||||||||||||||
(1.101 | ) | (0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(1.156 | ) | (0.346 | ) | (1.806 | ) | (0.140 | ) | (0.017 | ) | (0.060 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
$ | 53.710 | $ | 52.370 | $ | 39.750 | $ | 37.860 | $ | 36.190 | $ | 27.530 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
4.85% | 32.87% | 10.21% | 4.99% | 31.53% | 29.01% | ||||||||||||||||||||||||
$ | 867,119 | $ | 884,026 | $ | 522,403 | $ | 375,299 | $ | 301,747 | $ | 233,317 | ||||||||||||||||||
1.23% | 1.25% | 1.32% | 1.37% | 1.43% | 1.43% | ||||||||||||||||||||||||
1.23% | 1.29% | 1.37% | 1.42% | 1.49% | 1.62% | ||||||||||||||||||||||||
0.17% | 0.26% | 0.19% | (0.02% | ) | (0.01% | ) | 0.27% | ||||||||||||||||||||||
0.17% | 0.22% | 0.14% | (0.07% | ) | (0.07% | ) | 0.08% | ||||||||||||||||||||||
| 9%
|
|
| 28%
|
|
| 11%
|
|
| 29%
|
|
| 12%
|
|
| 19%
|
|
17
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 income (loss)2 |
Net realized and unrealized gain |
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 and does not reflect the impact of a sales charge. Total investment return during some of the periods shown reflects waivers by the manager and/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.
18
Six months ended 5/31/141 | Year ended | ||||||||||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | ||||||||||||||||||||||||
$ | 45.150 | $ | 34.460 | $ | 33.300 | $ | 32.080 | $ | 24.570 | $ | 19.130 | ||||||||||||||||||
0.037 | (0.177 | ) | (0.189 | ) | (0.262 | ) | (0.214 | ) | (0.088 | ) | |||||||||||||||||||
2.104 | 11.121 | 3.155 | 1.622 | 7.724 | 5.528 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
2.141 | 10.944 | 2.966 | 1.360 | 7.510 | 5.440 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(1.101 | ) | (0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(1.101 | ) | (0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
$ | 46.190 | $ | 45.150 | $ | 34.460 | $ | 33.300 | $ | 32.080 | $ | 24.570 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
4.84% | 31.97% | 9.37% | 4.23% | 30.57% | 28.44% | ||||||||||||||||||||||||
$ | 1,265 | $ | 3,462 | $ | 6,424 | $ | 9,835 | $ | 14,249 | $ | 17,532 | ||||||||||||||||||
1.23% | 1.96% | 2.07% | 2.12% | 2.18% | 2.18% | ||||||||||||||||||||||||
1.98% | 2.00% | 2.07% | 2.12% | 2.19% | 2.32% | ||||||||||||||||||||||||
0.17% | (0.45% | ) | (0.56% | ) | (0.77% | ) | (0.76% | ) | (0.48% | ) | |||||||||||||||||||
(0.58% | ) | (0.49% | ) | (0.56% | ) | (0.77% | ) | (0.77% | ) | (0.62% | ) | ||||||||||||||||||
| 9%
|
|
| 28%
|
|
| 11%
|
|
| 29%
|
|
| 12%
|
|
| 19%
|
|
19
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 |
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.
20
Six months ended 5/31/141 | Year ended | ||||||||||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | ||||||||||||||||||||||||
$ | 45.110 | $ | 34.450 | $ | 33.280 | $ | 32.070 | $ | 24.560 | $ | 19.120 | ||||||||||||||||||
(0.131 | ) | (0.196 | ) | (0.188 | ) | (0.260 | ) | (0.215 | ) | (0.090 | ) | ||||||||||||||||||
2.092 | 11.110 | 3.164 | 1.610 | 7.725 | 5.530 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
1.961 | 10.914 | 2.976 | 1.350 | 7.510 | 5.440 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(1.101 | ) | (0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(1.101 | ) | (0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
$ | 45.970 | $ | 45.110 | $ | 34.450 | $ | 33.280 | $ | 32.070 | $ | 24.560 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
4.44% | 31.93% | 9.37% | 4.20% | 30.58% | 28.45% | ||||||||||||||||||||||||
$ | 104,566 | $ | 99,099 | $ | 66,231 | $ | 52,648 | $ | 49,706 | $ | 44,564 | ||||||||||||||||||
1.98% | 2.00% | 2.07% | 2.12% | 2.18% | 2.18% | ||||||||||||||||||||||||
1.98% | 2.00% | 2.07% | 2.12% | 2.19% | 2.32% | ||||||||||||||||||||||||
(0.58% | ) | (0.49% | ) | (0.56% | ) | (0.77% | ) | (0.76% | ) | (0.48% | ) | ||||||||||||||||||
(0.58% | ) | (0.49% | ) | (0.56% | ) | (0.77% | ) | (0.77% | ) | (0.62% | ) | ||||||||||||||||||
| 9%
|
|
| 28%
|
|
| 11%
|
|
| 29%
|
|
| 12%
|
|
| 19%
|
|
21
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 |
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 some 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.
22
Six months ended 5/31/141 | Year ended | ||||||||||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | ||||||||||||||||||||||||
$ | 51.060 | $ | 38.770 | $ | 37.050 | $ | 35.510 | $ | 27.070 | $ | 20.970 | ||||||||||||||||||
(0.021 | ) | 0.004 | (0.022 | ) | (0.102 | ) | (0.081 | ) | 0.003 | ||||||||||||||||||||
2.382 | 12.540 | 3.548 | 1.782 | 8.521 | 6.097 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
2.361 | 12.544 | 3.526 | 1.680 | 8.440 | 6.100 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(1.101 | ) | (0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(1.101 | ) | (0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
$ | 52.320 | $ | 51.060 | $ | 38.770 | $ | 37.050 | $ | 35.510 | $ | 27.070 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
4.71% | 32.55% | 9.96% | 4.72% | 31.18% | 29.09% | ||||||||||||||||||||||||
$ | 80,734 | $ | 76,501 | $ | 44,379 | $ | 28,303 | $ | 20,757 | $ | 15,971 | ||||||||||||||||||
1.48% | 1.50% | 1.57% | 1.62% | 1.68% | 1.68% | ||||||||||||||||||||||||
1.48% | 1.58% | 1.67% | 1.72% | 1.79% | 1.92% | ||||||||||||||||||||||||
(0.08% | ) | 0.01% | (0.06% | ) | (0.27% | ) | (0.26% | ) | 0.02% | ||||||||||||||||||||
(0.08% | ) | (0.07% | ) | (0.16% | ) | (0.37% | ) | (0.37% | ) | (0.22% | ) | ||||||||||||||||||
| 9%
|
|
| 28%
|
|
| 11%
|
|
| 29%
|
|
| 12%
|
|
| 19%
|
|
23
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 from investment operations: |
Net investment income2 |
Net realized and unrealized gain |
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.
24
Six months ended 5/31/141 | Year ended | ||||||||||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | ||||||||||||||||||||||||
$ | 54.830 | $ | 41.590 | $ | 39.430 | $ | 37.590 | $ | 28.580 | $ | 22.170 | ||||||||||||||||||
0.115 | 0.250 | 0.180 | 0.090 | 0.081 | 0.116 | ||||||||||||||||||||||||
2.559 | 13.434 | 3.786 | 1.890 | 9.005 | 6.427 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
2.674 | 13.684 | 3.966 | 1.980 | 9.086 | 6.543 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(0.173 | ) | (0.190 | ) | — | — | (0.076 | ) | (0.133 | ) | ||||||||||||||||||||
(1.101 | ) | (0.254 | ) | (1.806 | ) | (0.140 | ) | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(1.274 | ) | (0.444 | ) | (1.806 | ) | (0.140 | ) | (0.076 | ) | (0.133 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
$ | 56.230 | $ | 54.830 | $ | 41.590 | $ | 39.430 | $ | 37.590 | $ | 28.580 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
4.98% | 33.22% | 10.49% | 5.26% | 31.85% | 29.28% | ||||||||||||||||||||||||
$ | 1,466,351 | $ | 1,214,512 | $ | 348,533 | $ | 91,442 | $ | 48,996 | $ | 15,912 | ||||||||||||||||||
0.98% | 1.00% | 1.07% | 1.12% | 1.18% | 1.18% | ||||||||||||||||||||||||
0.98% | 1.00% | 1.07% | 1.12% | 1.19% | 1.32% | ||||||||||||||||||||||||
0.42% | 0.51% | 0.44% | 0.23% | 0.24% | 0.52% | ||||||||||||||||||||||||
0.42% | 0.51% | 0.44% | 0.23% | 0.23% | 0.38% | ||||||||||||||||||||||||
| 9%
|
|
| 28%
|
|
| 11%
|
|
| 29%
|
|
| 12%
|
|
| 19%
|
|
25
Delaware Small Cap Value Fund | May 31, 2014 (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 1.00% 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 4.00% 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 1.00%, if redeemed during the first 12 months. Class R and Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to 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 and exchange-traded funds (ETFs), 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 on the valuation date. Securities and ETFs 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 or ETF 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. 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.
Federal and 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, 2010–Nov. 30, 2013), 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.
26
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 30, 2014.
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 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, annually. The Fund 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, 2014.
The Fund may receive earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. There were no earnings credits for the six months ended May 31, 2014.
27
Notes to financial statements
Delaware Small Cap Value Fund
1. Significant Accounting Policies (continued)
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. If the amount earned is greater than one dollar, the expense paid under this arrangement is included in dividend disbursing and transfer agent fees and expenses and appears on the statement of operations with the corresponding expense offset shown as “expense paid indirectly.” For the six months ended May 31, 2014, the Fund earned $495 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, 2014, the Fund was charged $57,432 for these services.
DSC is also the transfer agent and dividend disbursing agent of the Fund. The Fund pays DSC fees based on the aggregate daily net assets of the retail funds within the Delaware Investments Family of Funds at the following annual rate: 0.025% of the first $20 billion; 0.020% of the next $5 billion; 0.015% of the next $5 billion; and 0.013% on average daily net assets in excess of $30 billion. This amount is included in the statement of operations as dividend disbursing and transfer agent fees and expenses. For the six months ended May 31, 2014, the amount charged by DSC was $261,348. 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 0.25% of the Class A shares, 1.00% of the average daily net assets of the Class B and Class C shares, and 0.50% of the average daily net assets of the Class R shares. DDLP has contracted to waive Class B shares 12b-1 fees from Dec. 1, 2013 through May 31, 2014* to 0.25% of average daily net assets. This waiver and reimbursement may be terminated only by agreement of the distributor and the Fund.
As provided in the investment management agreement, the Fund bears a portion of the cost of resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to the Fund. For the six months ended May 31, 2014, the Fund
28
was charged $35,383 for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates’ employees.
For the six months ended May 31, 2014, DDLP earned $33,879 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2014, DDLP received gross CDSC commissions of $19 and $1,004 on redemption of the Fund’s Class A and Class C shares, respectively, and these commissions were entirely used to offset upfront commissions previously paid by DDLP to broker/dealers on sales of those shares.
Trustees’ fees include expenses accrued by the Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, DSC, and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Fund.
* | The contractual waiver period is Nov. 1, 2013 through March 30, 2015. |
3. Investments
For the six months ended May 31, 2014, the Fund made purchases of $343,323,082 and sales of $208,785,585 of investment securities other than short-term investments.
At May 31, 2014,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, 2014 the cost of investments and unrealized appreciation (depreciation) were as follows:
Cost of investments | $ | 1,933,437,598 | ||
|
| |||
Aggregate unrealized appreciation | $ | 600,315,984 | ||
Aggregate unrealized depreciation | (14,883,112 | ) | ||
|
| |||
Net unrealized appreciation | $ | 585,432,872 | ||
|
|
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. (Examples: equity securities, open-end investment companies, futures contracts, exchange-traded options contracts) |
29
Notes to financial statements
Delaware Small Cap Value Fund
3. Investments (continued)
Level 2 | – | Other observable inputs, including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, and default rates), or other market-corroborated inputs. (Examples: debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities) | ||
Level 3 | – | Significant unobservable inputs, including the Fund’s own assumptions used to determine the fair value of investments. (Examples: broker-quoted securities, 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, 2014:
Level 1 | Level 2 | Total | ||||||||||
Common Stock | $ | 2,450,704,285 | $ | — | $ | 2,450,704,285 | ||||||
Exchange-Traded Fund | 13,930,783 | — | 13,930,783 | |||||||||
Short-Term Investments | — | 54,235,402 | 54,235,402 | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 2,464,635,068 | $ | 54,235,402 | $ | 2,518,870,470 | ||||||
|
|
|
|
|
|
During the six months ended May 31, 2014, 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. At May 31, 2014, there were no Level 3 investments.
30
4. Capital Shares
Transactions in capital shares were as follows:
Six months ended 5/31/14 | Year ended 11/30/13 | |||||||
Shares sold: | ||||||||
Class A | 2,414,992 | 7,956,581 | ||||||
Class B | 431 | 961 | ||||||
Class C | 245,395 | 649,744 | ||||||
Class R | 231,162 | 803,908 | ||||||
Institutional Class | 6,650,731 | 17,365,329 | ||||||
Shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | 375,243 | 116,899 | ||||||
Class B | 1,276 | 1,176 | ||||||
Class C | 52,556 | 13,344 | ||||||
Class R | 32,516 | 7,655 | ||||||
Institutional Class | 515,280 | 94,471 | ||||||
|
|
|
| |||||
10,519,582 | 27,010,068 | |||||||
|
|
|
| |||||
Shares redeemed: | ||||||||
Class A | (3,524,594 | ) | (4,336,760 | ) | ||||
Class B | (50,997 | ) | (111,867 | ) | ||||
Class C | (220,482 | ) | (388,826 | ) | ||||
Class R | (218,938 | ) | (458,041 | ) | ||||
Institutional Class | (3,239,724 | ) | (3,689,734 | ) | ||||
|
|
|
| |||||
(7,254,735 | ) | (8,985,228 | ) | |||||
|
|
|
| |||||
Net increase | 3,264,847 | 18,024,840 | ||||||
|
|
|
|
For the six months ended May 31, 2014 and the year ended Nov. 30, 2013, 9,840 Class B shares were converted to 8,471 Class A shares valued at $452,892 and 26,366 Class B shares were converted to 22,814 Class A shares valued at $1,034,574, 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 $225,000,000 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 of 0.08%, 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,
31
Notes to financial statements
Delaware Small Cap Value Fund
5. Line of Credit (continued)
and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit under the agreement will expire on Nov. 10, 2014.
The Fund had no amounts outstanding as of May 31, 2014 or at any time during the period then ended.
6. Offsetting
In December 2011, the Financial Accounting Standards Board (FASB) issued guidance that expands current disclosure requirements on the offsetting of certain assets and liabilities. The new disclosures are required for investments and derivative financial instruments subject to master netting or similar agreements which are eligible for offset in the statement of assets and liabilities and require an entity to disclose both gross and net information about such investments and transactions in the financial statements. In January 2013, the FASB issued guidance that clarifies which investments and transactions are subject to the offsetting disclosure requirements. The scope of the disclosure requirements for offsetting is limited to derivative instruments, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions. The guidance is effective for financial statements with fiscal years beginning on or after Jan. 1, 2013, and interim periods within those fiscal years. The Fund adopted the disclosure provisions on offsetting during the current reporting period.
In order to better define its contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund entered into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs over-the-counter (OTC) derivatives and foreign exchange contracts and typically contains, among other things, collateral posting items and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out) netting including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency, or other events.
For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the statement of assets and liabilities.
32
At May 31, 2014, the Fund had the following assets and liabilities subject to offsetting provisions:
Master Repurchase Agreements
Counterparty | Repurchase | Fair Value of Non-Cash | Cash Collateral Received | Net Amount(a) | ||||||||||||||||
Bank of America | $ | 7,465,178 | $ | (7,465,178 | ) | $ | — | $ | — | |||||||||||
BNP Paribas | 15,296,822 | (15,296,822 | ) | — | — | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 22,762,000 | $ | (22,762,000 | ) | $ | — | $ | — | |||||||||||
|
|
|
|
|
|
|
|
(a)Net amount represents the receivable/(payable) that would be due from/(to) the counterparty in the event of default.
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: (1) 102% with respect to U.S. securities and foreign securities that are denominated and payable in U.S. dollars; and (2) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the 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 more or less than the value of the security on loan.
Cash collateral received is generally invested in the Delaware Investments Collateral Fund No. 1 (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of funds managed by DMC that participate in BNY Mellon’s securities lending program. The Collective Trust may invest in U.S. government securities and high-quality corporate debt, asset-backed and other money market securities, and in repurchase agreements collateralized by such securities, provided that the Collective Trust will generally have a dollar-weighted average portfolio maturity of 60 days or less. The 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
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Notes to financial statements
Delaware Small Cap Value Fund
7. Securities Lending (continued)
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. This could occur if an investment in a Collective Trust 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 Collective Trust’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, 2014, the Fund had no securities out on loan.
8. Credit and Market Risk
The Fund invests a significant portion of its assets in small companies and may be subject to certain risks associated with ownership of securities of 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, 2014. The Fund’s REIT holdings are also affected by interest rate changes, particularly if the REITs it holds use floating rate debt to finance their ongoing operations.
The Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Fund’s Board has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s 15% limit on investments in illiquid securities. As of May 31, 2014, there were no Rule 144A securities held by the Fund. Illiquid securities have been identified in the schedule of investments.
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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, 2014 that would require recognition or disclosure in the Fund’s financial statements.
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Board of trustees | ||||||
Patrick P. Coyne | Joseph W. Chow | Lucinda S. Landreth | Thomas K. Whitford | |||
Chairman, President, and | Former Executive Vice | Former Chief Investment | Former Vice Chairman | |||
Chief Executive Officer | President | Officer | PNC Financial Services Group | |||
Delaware Investments® | State Street Corporation | Assurant, Inc. | Pittsburgh, PA | |||
Family of Funds | Brookline, MA | Philadelphia, PA | ||||
Philadelphia, PA | Janet L. Yeomans | |||||
John A. Fry | Frances A. | Former Vice President | ||||
Thomas L. Bennett | President | Sevilla-Sacasa | and Treasurer | |||
Private Investor | Drexel University | Chief Executive Officer | 3M Corporation | |||
Rosemont, PA | Philadelphia, PA | Banco Itaú | St. Paul, MN | |||
International | ||||||
Miami, FL | J. Richard Zecher | |||||
Founder | ||||||
Investor Analytics | ||||||
Scottsdale, AZ | ||||||
Affiliated officers | ||||||
David F. Connor | Daniel V. Geatens | David P. O’Connor | Richard Salus | |||
Senior Vice President, | Vice President and | Executive Vice President, | Senior Vice President and | |||
Deputy General Counsel, | Treasurer | General Counsel, | Chief Financial Officer | |||
and Secretary | Delaware Investments | and Chief Legal Officer | Delaware Investments | |||
Delaware Investments | Family of Funds | Delaware Investments | Family of Funds | |||
Family of Funds | Philadelphia, PA | Family of Funds | Philadelphia, PA | |||
Philadelphia, PA | Philadelphia, PA |
This semiannual report is for the information of Delaware Small Cap Value Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware Investments Fund fact sheet for the most recently completed calendar quarter. These documents are available at 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.
36
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Included as part of report to shareholders filed under Item 1 of this Form N-CSR.
(b) Divestment of securities in accordance with Section 13(c) of the Investment Company Act of 1940.
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures
The registrant’s principal executive officer and principal financial officer have evaluated the registrant’s disclosure controls and procedures within 90 days of the filing of this report and have concluded that they are effective in providing reasonable assurance that the information required to be disclosed by the registrant in its reports or statements filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
There were no significant changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by the report to stockholders included herein (i.e., the registrant’s second fiscal quarter) that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits
(a) (1) Code of Ethics
Not applicable.
(2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are attached hereto as Exhibit 99.CERT.
(3) Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934.
Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized.
DELAWARE GROUP® EQUITY FUNDS V
/s/ PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
Date: | August 4, 2014 |
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 4, 2014 |
/s/ RICHARD SALUS | |
By: | Richard Salus |
Title: | Chief Financial Officer |
Date: | August 4, 2014 |