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, 2018 |
Item 1. Reports to Stockholders
Table of Contents
Multi-asset mutual fund
Delaware Wealth Builder Fund
May 31, 2018
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and its summary prospectus, which may be obtained by visiting delawarefunds.com/literature or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.
You can obtain shareholder reports and prospectuses online instead of in the mail.
Visit delawarefunds.com/edelivery.
Table of Contents
Experience Delaware Funds® by Macquarie
Macquarie Investment Management (MIM) is a global asset manager with offices throughout the United States, Europe, Asia, and Australia. We are active managers who prioritize autonomy and accountability at the investment team level in pursuit of opportunities that matter for our clients. Delaware Funds is one of the longest-standing mutual fund families, with more than 75 years in existence.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Funds or obtain a prospectus for Delaware Wealth Builder Fund at delawarefunds.com/literature.
Manage your account online
• | Check your account balance and transactions |
• | View statements and tax forms |
• | Make purchases and redemptions |
Visit delawarefunds.com/account-access.
Macquarie Asset Management (MAM) offers a diverse range of product including securities investment management, infrastructure and real asset management, and fund and equity-based structured products. Macquarie Investment Management (MIM) is the marketing name for certain companies comprising the asset management division of Macquarie Group. This includes the following registered investment advisers: Macquarie Investment Management Business Trust (MIMBT), Macquarie Funds Management Hong Kong Limited, Macquarie Investment Management Austria Kapitalanlage AG, Macquarie Investment Management Global Limited, Macquarie Investment Management Limited, Macquarie Investment Management Europe Limited, and Macquarie Capital Investment Management LLC.
The Fund is distributed by Delaware Distributors, L.P.
(DDLP), an affiliate of MIMBT and Macquarie Group Limited.
Other than Macquarie Bank Limited (MBL), none of the entities noted are authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities, unless noted otherwise. The Fund is governed by US laws and regulations.
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Security type / sector allocation and top 10 equity holdings | 3 | |||
6 | ||||
30 | ||||
32 | ||||
34 | ||||
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44 | ||||
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68 |
Unless otherwise noted, views expressed herein are current as of May 31, 2018, and subject to change for events occurring after such date.
The Fund is not FDIC insured and is not guaranteed. It is possible to lose the principal amount invested.
Advisory services provided by Delaware Management Company, a series of MIMBT, a US registered investment advisor.
All third-party marks cited are the property of their respective owners.
© 2018 Macquarie Management Holdings, Inc.
Table of Contents
For the six-month period from December 1, 2017 to May 31, 2018 (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, 2017 to May 31, 2018.
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
Table of Contents
Disclosure of Fund expenses
For the six-month period from December 1, 2017 to May 31, 2018 (Unaudited)
Delaware Wealth Builder Fund
Expense analysis of an investment of $1,000
Beginning Account Value 12/1/17 | Ending Account Value 5/31/18 | Annualized Expense Ratio | Expenses Paid During Period 12/1/17 to 5/31/18* | |||||||||||||
Actual Fund return† | ||||||||||||||||
Class A | $1,000.00 | $ 985.70 | 1.11 | % | $5.50 | |||||||||||
Class C | 1,000.00 | 981.80 | 1.86 | % | 9.19 | |||||||||||
Class R | 1,000.00 | 984.80 | 1.36 | % | 6.73 | |||||||||||
Institutional Class | 1,000.00 | 987.00 | 0.86 | % | 4.26 | |||||||||||
Hypothetical 5% return (5% return before expenses) |
| |||||||||||||||
Class A | $1,000.00 | $1,019.40 | 1.11 | % | $5.59 | |||||||||||
Class C | 1,000.00 | 1,015.66 | 1.86 | % | 9.35 | |||||||||||
Class R | 1,000.00 | 1,018.15 | 1.36 | % | 6.84 | |||||||||||
Institutional Class | 1,000.00 | 1,020.64 | 0.86 | % | 4.33 | |||||||||||
*“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. |
In addition to the Fund’s expenses reflected above, the Fund also indirectly bears its portion of the fees and expenses of the investment companies in which it invests (Underlying Funds), including exchange-traded funds. The table above does not reflect the expenses of the Underlying Funds.
2
Table of Contents
Security type / sector allocation and top 10 equity holdings
Delaware Wealth Builder Fund | As of May 31, 2018 (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.
Security type / sector | Percentage of net assets | |
Common Stock | 58.07% | |
Consumer Discretionary | 4.11% | |
Consumer Staples | 5.51% | |
Diversified REITs | 0.22% | |
Energy | 6.22% | |
Financials | 6.71% | |
Healthcare | 11.38% | |
Healthcare REITs | 0.70% | |
Hotel REITs | 0.74% | |
Industrial REITs | 0.07% | |
Industrials | 4.70% | |
Information Technology | 6.33% | |
Information Technology REIT | 0.23% | |
Mall REITs | 0.19% | |
Manufactured Housing REITs | 0.23% | |
Materials | 1.49% | |
Multifamily REITs | 2.00% | |
Office REITs | 0.60% | |
Real Estate Operating/Development | 0.68% | |
Self-Storage REITs | 0.14% | |
Shopping Center REITs | 0.41% | |
Single Tenant REITs | 0.24% | |
Specialty REITs | 0.51% | |
Telecommunication Services | 3.21% | |
Utilities | 1.45% | |
Convertible Preferred Stock | 1.83% | |
Exchange-Traded Funds | 1.43% | |
Limited Partnerships | 1.17% | |
Master Limited Partnership | 0.17% | |
Convertible Bonds | 10.38% | |
Basic Industry | 0.28% | |
Brokerage | 0.33% | |
Capital Goods | 1.74% | |
Communications | 0.79% | |
Consumer Cyclical | 0.56% | |
Consumer Non-Cyclical | 2.15% | |
Energy | 1.04% | |
Financials | 0.68% |
3
Table of Contents
Security type / sector allocation and top 10 equity holdings
Delaware Wealth Builder Fund
Security type / sector | Percentage of net assets | |
Real Estate Investment Trusts | 1.18% | |
Technology | 1.54% | |
Utilities | 0.09% | |
Corporate Bonds | 13.40% | |
Banking | 1.61% | |
Basic Industry | 1.72% | |
Capital Goods | 0.58% | |
Consumer Cyclical | 0.93% | |
Consumer Non-Cyclical | 1.03% | |
Energy | 2.46% | |
Financials | 0.42% | |
Healthcare | 0.76% | |
Insurance | 0.23% | |
Media | 0.93% | |
Real Estate Investment Trusts | 0.46% | |
Services | 0.43% | |
Technology & Electronics | 0.54% | |
Telecommunications | 0.60% | |
Transportation | 0.06% | |
Utilities | 0.64% | |
Leveraged Non-Recourse Security | 0.00% | |
Municipal Bonds | 4.67% | |
Non-Agency Commercial Mortgage-Backed Security | 0.08% | |
Regional Bond | 0.07% | |
Loan Agreement | 0.00% | |
Sovereign Bonds | 0.69% | |
US Treasury Obligations | 0.77% | |
Preferred Stock | 1.13% | |
Warrant | 0.00% | |
Short-Term Investments | 7.79% | |
Total Value of Securities | 101.65% | |
Liabilities Net of Receivables and Other Assets | (1.65%) | |
Total Net Assets | 100.00% |
4
Table of Contents
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 | |
Brookdale Senior Living | 2.30% | |
Merck & Co. | 1.50% | |
Pfizer | 1.48% | |
Equity Residential | 1.48% | |
Occidental Petroleum | 1.40% | |
AT&T | 1.40% | |
Verizon Communications | 1.37% | |
International Business Machines | 1.37% | |
CA | 1.21% | |
Intel
| 1.20% | |
5
Table of Contents
Delaware Wealth Builder Fund | May 31, 2018 (Unaudited) |
Number of shares | Value (US $) | |||||||
Common Stock – 58.07% | ||||||||
Consumer Discretionary – 4.11% | ||||||||
Aramark | 1,045 | $ | 40,567 | |||||
Bayerische Motoren Werke | 13,583 | 1,357,269 | ||||||
BorgWarner | 905 | 44,146 | ||||||
Casey’s General Stores | 255 | 24,684 | ||||||
Cie Generale des Etablissements Michelin | 6,659 | 860,897 | ||||||
Cinemark Holdings | 570 | 19,249 | ||||||
Comcast Class A | 1,505 | 46,926 | ||||||
Ford Motor | 559,110 | 6,457,721 | ||||||
Home Depot | 455 | 84,880 | ||||||
Kering | 2,477 | 1,421,588 | ||||||
Lowe’s | 2,200 | 209,022 | ||||||
NIKE Class B | 825 | 59,235 | ||||||
Nitori Holdings | 2,528 | 433,623 | ||||||
Publicis Groupe | 7,460 | 520,680 | ||||||
Puma | 288 | 174,389 | ||||||
Starbucks | 925 | 52,420 | ||||||
Target | 87,600 | 6,385,164 | ||||||
Techtronic Industries | 204,000 | 1,213,575 | ||||||
Toyota Motor | 22,086 | 1,400,852 | ||||||
Tractor Supply | 370 | 27,495 | ||||||
Valeo | 15,732 | 999,489 | ||||||
Walt Disney | 750 | 74,603 | ||||||
Whirlpool | 25,300 | 3,662,175 | ||||||
Yue Yuen Industrial Holdings | 527,000 | 1,625,422 | ||||||
|
| |||||||
27,196,071 | ||||||||
|
| |||||||
Consumer Staples – 5.51% | ||||||||
Archer-Daniels-Midland | 92,500 | 4,044,100 | ||||||
British American Tobacco ADR | 101,984 | 5,221,581 | ||||||
Carlsberg Class B | 7,573 | 841,037 | ||||||
Coca-Cola Amatil | 26,518 | 177,852 | ||||||
General Mills | 475 | 20,088 | ||||||
Imperial Brands | 54,321 | 1,954,845 | ||||||
Japan Tobacco | 6,200 | 167,043 | ||||||
Kimberly-Clark | 73,500 | 7,412,475 | ||||||
Kraft Heinz | 66,300 | 3,810,924 | ||||||
Matsumotokiyoshi Holdings | 23,300 | 1,122,062 | ||||||
Mondelez International | 101,700 | 3,993,759 | ||||||
PepsiCo | 355 | 35,589 | ||||||
Pinnacle Foods | 480 | 30,691 | ||||||
Procter & Gamble | 103,300 | 7,558,461 | ||||||
|
| |||||||
36,390,507 | ||||||||
|
|
6
Table of Contents
Number of shares | Value (US $) | |||||||
Common Stock (continued) | ||||||||
Diversified REITs – 0.22% | ||||||||
American Tower | 595 | $ | 82,330 | |||||
Cousins Properties | 4,025 | 37,915 | ||||||
EPR Properties | 925 | 56,786 | ||||||
Lexington Realty Trust | 3,175 | 27,400 | ||||||
PS Business Parks | 650 | 79,664 | ||||||
Vornado Realty Trust | 17,025 | 1,186,813 | ||||||
|
| |||||||
1,470,908 | ||||||||
|
| |||||||
Energy – 6.22% | ||||||||
Chevron | 43,635 | 5,423,831 | ||||||
ConocoPhillips | 3,700 | 249,343 | ||||||
EOG Resources | 595 | 70,097 | ||||||
Halliburton | 5,635 | 280,285 | ||||||
Marathon Oil | 12,632 | 270,704 | ||||||
Occidental Petroleum | 110,275 | 9,285,155 | ||||||
Pioneer Natural Resources | 295 | 56,965 | ||||||
Royal Dutch Shell ADR | 106,900 | 7,732,077 | ||||||
Suncor Energy | 29,900 | 1,190,834 | ||||||
Targa Resources | 46,000 | 2,236,980 | ||||||
TOTAL | 23,719 | 1,441,970 | ||||||
TOTAL ADR | 128,300 | 7,781,395 | ||||||
Williams | 190,300 | 5,111,458 | ||||||
|
| |||||||
41,131,094 | ||||||||
|
| |||||||
Financials – 6.71% | ||||||||
Aflac | 1,740 | 78,404 | ||||||
Allstate | 1,800 | 168,264 | ||||||
American International Group | 146,600 | 7,739,014 | ||||||
Arthur J Gallagher & Co. | 57,800 | 3,830,984 | ||||||
AXA | 60,392 | 1,513,151 | ||||||
Banco Espirito Santo =† | 105,000 | 0 | ||||||
Banco Santander | 142,944 | 777,388 | ||||||
Bank of New York Mellon | 3,400 | 186,150 | ||||||
Bank Rakyat Indonesia Persero | 5,174,090 | 1,142,905 | ||||||
BB&T | 150,600 | 7,906,500 | ||||||
BlackRock | 135 | 72,121 | ||||||
Capital One Financial | 540 | 50,760 | ||||||
Comerica | 585 | 55,160 | ||||||
East West Bancorp | 600 | 41,688 | ||||||
ING Groep | 94,823 | 1,381,070 | ||||||
Intercontinental Exchange | 2,417 | 171,341 | ||||||
Invesco | 1,605 | 43,849 | ||||||
JPMorgan Chase & Co. | 37,780 | 4,042,838 | ||||||
KeyCorp | 2,975 | 57,834 |
7
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Number of shares | Value (US $) | |||||||
Common Stock (continued) | ||||||||
Financials (continued) | ||||||||
Marsh & McLennan | 2,200 | $ | 176,814 | |||||
MGIC Investment † | 5,885 | 61,145 | ||||||
Mitsubishi UFJ Financial Group | 253,114 | 1,525,827 | ||||||
Nordea Bank | 185,808 | 1,786,939 | ||||||
Prudential Financial | 13,780 | 1,334,455 | ||||||
Raymond James Financial | 480 | 46,349 | ||||||
Reinsurance Group of America | 170 | 25,405 | ||||||
Standard Chartered | 127,785 | 1,279,563 | ||||||
State Street | 465 | 44,691 | ||||||
Travelers | 265 | 34,058 | ||||||
UniCredit | 58,808 | 975,559 | ||||||
US Bancorp | 865 | 43,241 | ||||||
Validus Holdings | 430 | 29,137 | ||||||
Wells Fargo & Co. | 143,600 | 7,752,964 | ||||||
|
| |||||||
44,375,568 | ||||||||
|
| |||||||
Healthcare – 11.38% | ||||||||
Abbott Laboratories | 4,430 | 272,578 | ||||||
AbbVie | 63,020 | 6,235,199 | ||||||
Amgen | 21,900 | 3,933,678 | ||||||
AstraZeneca ADR | 209,800 | 7,768,894 | ||||||
Brookdale Senior Living † | 1,932,825 | 15,211,333 | ||||||
Cardinal Health | 114,300 | 5,953,887 | ||||||
Cigna | 285 | 48,270 | ||||||
CVS Health | 92,900 | 5,888,931 | ||||||
Eli Lilly & Co. | 480 | 40,819 | ||||||
Johnson & Johnson | 49,985 | 5,979,206 | ||||||
Koninklijke Philips | 31,603 | 1,301,466 | ||||||
Merck & Co. | 167,085 | 9,946,570 | ||||||
Novartis | 20,751 | 1,542,687 | ||||||
Pfizer | 271,976 | 9,772,098 | ||||||
Quest Diagnostics | 1,900 | 202,407 | ||||||
Sanofi | 10,917 | 836,830 | ||||||
Shire | 4,172 | 227,784 | ||||||
Thermo Fisher Scientific | 270 | 56,233 | ||||||
West Pharmaceutical Services | 255 | 23,715 | ||||||
|
| |||||||
75,242,585 | ||||||||
|
| |||||||
Healthcare REITs – 0.70% | ||||||||
Assura | 3,698,798 | 2,782,214 | ||||||
HCP | 25,300 | 606,441 | ||||||
Healthcare Realty Trust | 20,225 | 550,929 | ||||||
Healthcare Trust of America Class A | 2,137 | 54,835 | ||||||
LTC Properties | 1,350 | 55,539 |
8
Table of Contents
Number of shares | Value (US $) | |||||||
Common Stock (continued) | ||||||||
Healthcare REITs (continued) | ||||||||
Sabra Health Care REIT | 22,325 | $ | 462,797 | |||||
Ventas | 800 | 43,728 | ||||||
Welltower | 800 | 46,120 | ||||||
|
| |||||||
4,602,603 | ||||||||
|
| |||||||
Hotel REITs – 0.74% | ||||||||
Host Hotels & Resorts | 5,260 | 113,774 | ||||||
LaSalle Hotel Properties | 2,745 | 94,153 | ||||||
MGM Growth Properties Class A | 119,200 | 3,537,856 | ||||||
Pebblebrook Hotel Trust | 2,345 | 95,723 | ||||||
RLJ Lodging Trust | 1,675 | 39,195 | ||||||
Sunstone Hotel Investors | 58,000 | 1,008,620 | ||||||
|
| |||||||
4,889,321 | ||||||||
|
| |||||||
Industrial REITs – 0.07% | ||||||||
DCT Industrial Trust | 1,619 | 105,445 | ||||||
EastGroup Properties | 360 | 33,563 | ||||||
First Industrial Realty Trust | 4,250 | 139,953 | ||||||
Gramercy Property Trust | 1,683 | 46,400 | ||||||
Liberty Property Trust | 1,500 | 66,315 | ||||||
Prologis | 1,325 | 85,264 | ||||||
|
| |||||||
476,940 | ||||||||
|
| |||||||
Industrials – 4.70% | ||||||||
ABB ADR | 80,600 | 1,832,844 | ||||||
Deutsche Post | 45,501 | 1,725,711 | ||||||
East Japan Railway | 7,449 | 735,254 | ||||||
Eaton | 445 | 34,078 | ||||||
Honeywell International | 255 | 37,717 | ||||||
Ingersoll-Rand | 255 | 22,323 | ||||||
ITOCHU | 130,862 | 2,448,661 | ||||||
Leonardo | 40,872 | 416,393 | ||||||
Lockheed Martin | 16,120 | 5,070,385 | ||||||
Meggitt | 163,347 | 1,066,249 | ||||||
MINEBEA MITSUMI | 70,900 | 1,337,996 | ||||||
Nielsen Holdings | 2,185 | 65,921 | ||||||
Northrop Grumman | 600 | 196,350 | ||||||
Oshkosh | 335 | 24,371 | ||||||
Parker-Hannifin | 350 | 59,815 | ||||||
Raytheon | 1,000 | 209,500 | ||||||
Rexel | 34,573 | 508,608 | ||||||
Rockwell Automation | 85 | 14,910 | ||||||
Rockwell Collins | 255 | 35,065 | ||||||
Southwest Airlines | 405 | 20,687 | ||||||
Teleperformance | 9,906 | 1,566,446 |
9
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Number of shares | Value (US $) | |||||||
Common Stock (continued) | ||||||||
Industrials (continued) | ||||||||
Union Pacific | 580 | $ | 82,801 | |||||
United Technologies | 30,970 | 3,865,675 | ||||||
Vinci | 17,610 | 1,731,995 | ||||||
Waste Management | 95,400 | 7,890,534 | ||||||
WestRock | 748 | 44,042 | ||||||
|
| |||||||
31,044,331 | ||||||||
|
| |||||||
Information Technology – 6.33% | ||||||||
Accenture Class A | 350 | 54,509 | ||||||
Analog Devices | 300 | 29,154 | ||||||
Apple | 950 | 177,527 | ||||||
Broadcom | 265 | 66,799 | ||||||
CA | 224,038 | 8,007,118 | ||||||
Canon ADR | 113,100 | 3,849,924 | ||||||
Cisco Systems | 185,615 | 7,927,617 | ||||||
Intel | 144,105 | 7,954,596 | ||||||
International Business Machines | 64,000 | 9,043,840 | ||||||
Microsoft | 19,410 | 1,918,484 | ||||||
Oracle | 3,900 | 182,208 | ||||||
Playtech | 134,349 | 1,395,650 | ||||||
Samsung Electronics | 25,136 | 1,180,326 | ||||||
SS&C Technologies Holdings | 725 | 36,910 | ||||||
|
| |||||||
41,824,662 | ||||||||
|
| |||||||
Information Technology REIT – 0.23% | ||||||||
Crown Castle International | 14,700 | 1,531,005 | ||||||
|
| |||||||
1,531,005 | ||||||||
|
| |||||||
Mall REITs – 0.19% | ||||||||
GGP | 2,300 | 46,644 | ||||||
Macerich | 750 | 41,723 | ||||||
Simon Property Group | 6,988 | 1,119,617 | ||||||
Tanger Factory Outlet Centers | 1,500 | 32,235 | ||||||
Taubman Centers | 725 | 39,578 | ||||||
|
| |||||||
1,279,797 | ||||||||
|
| |||||||
Manufactured Housing REITs – 0.23% | ||||||||
Equity LifeStyle Properties | 1,125 | 102,263 | ||||||
Sun Communities | 14,600 | 1,411,528 | ||||||
|
| |||||||
1,513,791 | ||||||||
|
| |||||||
Materials – 1.49% | ||||||||
Alamos Gold | 7,180 | 39,704 | ||||||
DowDuPont | 122,161 | 7,831,742 | ||||||
Eastman Chemical | 625 | 65,194 |
10
Table of Contents
Number of shares | Value (US $) | |||||||
Common Stock (continued) | ||||||||
Materials (continued) | ||||||||
Rio Tinto | 33,203 | $ | 1,872,692 | |||||
Yamana Gold | 9,748 | 28,343 | ||||||
|
| |||||||
9,837,675 | ||||||||
|
| |||||||
Multifamily REITs – 2.00% | ||||||||
American Homes 4 Rent | 25,690 | 511,745 | ||||||
Apartment Investment & Management | 27,800 | 1,135,074 | ||||||
AvalonBay Communities | 350 | 57,939 | ||||||
Equity Residential | 152,410 | 9,752,716 | ||||||
Essex Property Trust | 225 | 53,782 | ||||||
Gecina | 3,027 | 523,330 | ||||||
Mid-America Apartment Communities | 698 | 65,305 | ||||||
UDR | 31,375 | 1,144,246 | ||||||
|
| |||||||
13,244,137 | ||||||||
|
| |||||||
Office REITs – 0.60% | ||||||||
Boston Properties | 575 | 70,018 | ||||||
Brandywine Realty Trust | 69,700 | 1,133,322 | ||||||
Columbia Property Trust | 67,600 | 1,495,312 | ||||||
Douglas Emmett | 1,750 | 67,357 | ||||||
Easterly Government Properties | 49,800 | 1,008,450 | ||||||
Empire State Realty Trust | 725 | 12,296 | ||||||
Highwoods Properties | 1,325 | 63,375 | ||||||
JBG SMITH Properties | 300 | 11,067 | ||||||
Kilroy Realty | 825 | 62,824 | ||||||
SL Green Realty | 500 | 48,760 | ||||||
|
| |||||||
3,972,781 | ||||||||
|
| |||||||
Real Estate Operating/Development – 0.68% | ||||||||
Etalon Group GDR 144A # | 6,500 | 19,175 | ||||||
Grainger | 705,247 | 2,862,513 | ||||||
Sun Hung Kai Properties | 102,000 | 1,640,757 | ||||||
|
| |||||||
4,522,445 | ||||||||
|
| |||||||
Self-Storage REITs – 0.14% | ||||||||
CubeSmart | 24,000 | 732,000 | ||||||
Extra Space Storage | 1,000 | 96,250 | ||||||
Life Storage | 300 | 27,756 | ||||||
Public Storage | 450 | 95,328 | ||||||
|
| |||||||
951,334 | ||||||||
|
| |||||||
Shopping Center REITs – 0.41% | ||||||||
Brixmor Property Group | 1,505 | 23,899 | ||||||
DDR | 1,437 | 21,828 | ||||||
Federal Realty Investment Trust | 475 | 56,473 | ||||||
Kimco Realty | 2,250 | 34,785 | ||||||
Kite Realty Group Trust | 2,400 | 37,656 |
11
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Number of shares | Value (US $) | |||||||
Common Stock (continued) | ||||||||
Shopping Center REITs (continued) | ||||||||
Ramco-Gershenson Properties Trust | 6,310 | $ | 77,613 | |||||
Regency Centers | 1,907 | 110,759 | ||||||
Retail Properties of America | 81,300 | 996,738 | ||||||
Urban Edge Properties | 37,125 | 811,924 | ||||||
Weingarten Realty Investors | 17,600 | 516,032 | ||||||
|
| |||||||
2,687,707 | ||||||||
|
| |||||||
Single Tenant REITs – 0.24% | ||||||||
National Retail Properties | 13,800 | 571,734 | ||||||
Spirit Realty Capital | 4,425 | 38,763 | ||||||
STORE Capital | 37,200 | 996,960 | ||||||
|
| |||||||
1,607,457 | ||||||||
|
| |||||||
Specialty REITs – 0.51% | ||||||||
Invitation Homes | 92,900 | 2,044,729 | ||||||
Safety Income & Growth | 68,800 | 1,319,584 | ||||||
|
| |||||||
3,364,313 | ||||||||
|
| |||||||
Telecommunication Services – 3.21% | ||||||||
AT&T | 285,705 | 9,233,986 | ||||||
Century Communications =† | 1,625,000 | 0 | ||||||
Mobile TeleSystems PJSC ADR | 38,283 | 366,751 | ||||||
Nippon Telegraph & Telephone | 31,686 | 1,480,272 | ||||||
Tele2 Class B | 85,823 | 1,050,207 | ||||||
Verizon Communications | 190,100 | 9,062,067 | ||||||
|
| |||||||
21,193,283 | ||||||||
|
| |||||||
Utilities – 1.45% | ||||||||
Edison International | 59,000 | 3,667,440 | ||||||
National Grid | 90,027 | 993,626 | ||||||
National Grid ADR | 87,808 | 4,900,564 | ||||||
|
| |||||||
9,561,630 | ||||||||
|
| |||||||
Total Common Stock (cost $374,056,553) | 383,911,945 | |||||||
|
| |||||||
Convertible Preferred Stock – 1.83% | ||||||||
A Schulman 1.86% exercise price $52.33 y | 2,140 | 2,219,767 | ||||||
AMG Capital Trust II exercise price $200.00, maturity date 10/15/37 | 43,948 | 2,619,419 | ||||||
Bank of America 1.64% exercise price $50.00 y | 1,873 | 2,371,218 | ||||||
El Paso Energy Capital Trust I exercise price $34.49, maturity date 3/31/28 | 49,900 | 2,376,487 | ||||||
Wells Fargo & Co. 2.85% exercise price $156.71 y | 1,989 | 2,500,173 | ||||||
|
| |||||||
Total Convertible Preferred Stock (cost $11,361,496) | 12,087,064 | |||||||
|
|
12
Table of Contents
Number of shares | Value (US $) | |||||||
Exchange-Traded Funds – 1.43% | ||||||||
ProShares Short High Yield | 50,400 | $ | 1,172,808 | |||||
SPDR Gold Shares † | 32,100 | 3,951,510 | ||||||
VanEck Vectors High-Yield Municipal Index ETF | 138,600 | 4,361,742 | ||||||
|
| |||||||
Total Exchange-Traded Funds (cost $9,479,178) | 9,486,060 | |||||||
|
| |||||||
Limited Partnerships – 1.17% | ||||||||
Brookfield Infrastructure Partners | 53,400 | 2,034,540 | ||||||
Merion Champion’s Walk =p† | 2,593,304 | 2,463,639 | ||||||
Merion Countryside 144A #=p† | 2,342,813 | 3,254,167 | ||||||
|
| |||||||
Total Limited Partnerships (cost $6,639,618) | 7,752,346 | |||||||
|
| |||||||
Master Limited Partnership – 0.17% | ||||||||
Blackstone Group | 35,700 | 1,139,901 | ||||||
|
| |||||||
Total Master Limited Partnership (cost $1,163,449) | 1,139,901 | |||||||
|
| |||||||
Principal amount° | ||||||||
Convertible Bonds – 10.38% | ||||||||
Basic Industry – 0.28% | ||||||||
Team | 1,504,000 | 1,832,585 | ||||||
|
| |||||||
1,832,585 | ||||||||
|
| |||||||
Brokerage – 0.33% | ||||||||
GAIN Capital Holdings | 1,764,000 | 2,160,900 | ||||||
|
| |||||||
2,160,900 | ||||||||
|
| |||||||
Capital Goods – 1.74% | ||||||||
Aerojet Rocketdyne Holdings | 1,222,000 | 1,591,088 | ||||||
Cemex | 2,430,000 | 2,420,910 | ||||||
Chart Industries | 1,391,000 | 1,745,197 | ||||||
Kaman | 1,916,000 | 2,383,280 | ||||||
Tesla Energy Operations | 3,673,000 | 3,401,716 | ||||||
|
| |||||||
11,542,191 | ||||||||
|
| |||||||
Communications – 0.79% | ||||||||
DISH Network | 2,480,000 | 2,085,320 |
13
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Convertible Bonds (continued) | ||||||||
Communications (continued) | ||||||||
DISH Network | 1,225,000 | $ | 1,089,417 | |||||
Liberty Interactive | 1,533,000 | 1,591,734 | ||||||
Liberty Media | 420,000 | 439,456 | ||||||
|
| |||||||
5,205,927 | ||||||||
|
| |||||||
Consumer Cyclical – 0.56% | ||||||||
Booking Holdings | 700,000 | 1,134,888 | ||||||
Huron Consulting Group | 1,585,000 | 1,515,160 | ||||||
Live Nation Entertainment | 1,042,000 | 1,049,434 | ||||||
|
| |||||||
3,699,482 | ||||||||
|
| |||||||
Consumer Non-Cyclical – 2.15% | ||||||||
BioMarin Pharmaceutical | 945,000 | 1,098,805 | ||||||
Brookdale Senior Living | 3,305,000 | 3,311,458 | ||||||
Insulet | 721,000 | 850,484 | ||||||
Medicines | 2,488,000 | 2,423,093 | ||||||
Pacira Pharmaceuticals | 1,717,000 | 1,629,546 | ||||||
Paratek Pharmaceuticals | 628,000 | 618,382 | ||||||
Spectrum Pharmaceuticals | 425,000 | 795,867 | ||||||
Vector Group | 2,566,000 | 2,707,941 | ||||||
2.50% exercise price $14.50, maturity date 1/15/19 • | 586,000 | 790,977 | ||||||
|
| |||||||
14,226,553 | ||||||||
|
|
14
Table of Contents
Principal amount° | Value (US $) | |||||||
Convertible Bonds (continued) | ||||||||
Energy – 1.04% | ||||||||
Cheniere Energy | 2,892,000 | $ | 2,313,019 | |||||
Helix Energy Solutions Group | 69,000 | 79,783 | ||||||
4.25% exercise price $13.89, maturity date 5/1/22 | 2,574,000 | 2,621,748 | ||||||
PDC Energy | 1,803,000 | 1,879,627 | ||||||
|
| |||||||
6,894,177 | ||||||||
|
| |||||||
Financials – 0.68% | ||||||||
Ares Capital | 1,836,000 | 1,871,550 | ||||||
Blackhawk Network Holdings | 343,000 | 381,070 | ||||||
New Mountain Finance | 2,166,000 | 2,220,011 | ||||||
|
| |||||||
4,472,631 | ||||||||
|
| |||||||
Real Estate Investment Trusts – 1.18% | ||||||||
Blackstone Mortgage Trust | 2,124,000 | 2,083,767 | ||||||
5.25% exercise price $27.36, maturity date 12/1/18 | 1,994,000 | 2,276,301 | ||||||
Spirit Realty Capital | 2,499,000 | 2,525,167 | ||||||
VEREIT | 924,000 | 934,777 | ||||||
|
| |||||||
7,820,012 | ||||||||
|
| |||||||
Technology – 1.54% | ||||||||
Ciena | 1,154,000 | 1,363,429 | ||||||
Electronics For Imaging | 1,313,000 | 1,299,273 | ||||||
Knowles | 1,515,000 | 1,666,052 | ||||||
PROS Holdings | 410,000 | 483,110 | ||||||
144A 2.00% exercise price $48.63, maturity date 6/1/47 # | 1,169,000 | 1,151,570 | ||||||
Synaptics | 1,812,000 | 1,672,476 | ||||||
Verint Systems | 2,646,000 | 2,561,047 | ||||||
|
| |||||||
10,196,957 | ||||||||
|
|
15
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Convertible Bonds (continued) | ||||||||
Utilities – 0.09% | ||||||||
NRG Energy | 569,000 | $ | 583,712 | |||||
|
| |||||||
583,712 | ||||||||
|
| |||||||
Total Convertible Bonds (cost $66,122,493) | 68,635,127 | |||||||
|
| |||||||
Corporate Bonds – 13.40% | ||||||||
Banking – 1.61% | ||||||||
Ally Financial 5.75% 11/20/25 | 448,000 | 458,416 | ||||||
Bank of America 4.183% 11/25/27 | 680,000 | 667,526 | ||||||
Bank of New York Mellon 2.661% 5/16/23 µ | 680,000 | 661,493 | ||||||
Credit Suisse Group 144A 6.25% #µy | 560,000 | 557,060 | ||||||
Fifth Third Bancorp 2.60% 6/15/22 | 600,000 | 583,339 | ||||||
Goldman Sachs Group 6.00% 6/15/20 | 600,000 | 634,445 | ||||||
JPMorgan Chase & Co. 6.75% µy | 700,000 | 757,960 | ||||||
Lloyds Banking Group 7.50% µy | 650,000 | 681,687 | ||||||
Morgan Stanley 5.00% 11/24/25 | 600,000 | 627,024 | ||||||
PNC Financial Services Group 5.00% µy | 700,000 | 689,500 | ||||||
Popular 7.00% 7/1/19 | 405,000 | 415,125 | ||||||
Royal Bank of Scotland Group | 600,000 | 586,369 | ||||||
8.625% µy | 720,000 | 780,984 | ||||||
State Street 2.653% 5/15/23 µ | 600,000 | 585,379 | ||||||
SunTrust Bank 2.45% 8/1/22 | 600,000 | 578,927 | ||||||
UBS Group Funding Switzerland 6.875% 1/1/00 µy | 720,000 | 732,161 | ||||||
Wells Fargo & Co. 3.589% (LIBOR03M + 1.23%) 10/31/23 • | 600,000 | 612,481 | ||||||
|
| |||||||
10,609,876 | ||||||||
|
| |||||||
Basic Industry – 1.72% | ||||||||
BHP Billiton Finance USA 144A 6.25% 10/19/75 #µ | 700,000 | 731,850 | ||||||
BMC East 144A 5.50% 10/1/24 # | 318,000 | 308,857 | ||||||
Boise Cascade 144A 5.625% 9/1/24 # | 585,000 | 590,119 | ||||||
Braskem Netherlands Finance 144A 4.50% 1/10/28 # | 750,000 | 703,050 | ||||||
Builders FirstSource 144A 5.625% 9/1/24 # | 260,000 | 256,357 | ||||||
Chemours 5.375% 5/15/27 | 379,000 | 371,420 | ||||||
CSN Resources 144A 7.625% 2/13/23 # | 500,000 | 458,750 | ||||||
FMG Resources August 2006 144A 5.125% 5/15/24 # | 246,000 | 242,310 | ||||||
Freeport-McMoRan | 200,000 | 195,000 | ||||||
6.875% 2/15/23 | 744,000 | 801,660 |
16
Table of Contents
Principal amount° | Value (US $) | |||||||
Corporate Bonds (continued) | ||||||||
Basic Industry (continued) | ||||||||
Hudbay Minerals | 55,000 | $ | 57,063 | |||||
144A 7.625% 1/15/25 # | 470,000 | 495,850 | ||||||
Jeld-Wen | 60,000 | 56,850 | ||||||
144A 4.875% 12/15/27 # | 390,000 | 363,675 | ||||||
Joseph T Ryerson & Son 144A 11.00% 5/15/22 # | 198,000 | 218,790 | ||||||
Koppers 144A 6.00% 2/15/25 # | 434,000 | 441,053 | ||||||
Kraton Polymers 144A 7.00% 4/15/25 # | 308,000 | 318,780 | ||||||
Nexa Resources 144A 5.375% 5/4/27 # | 500,000 | 484,380 | ||||||
NOVA Chemicals 144A 5.25% 6/1/27 # | 370,000 | 351,500 | ||||||
Novelis 144A 6.25% 8/15/24 # | 647,000 | 656,770 | ||||||
Olin | 135,000 | 127,244 | ||||||
5.125% 9/15/27 | 562,000 | 547,950 | ||||||
Standard Industries | 750,000 | 691,875 | ||||||
144A 5.00% 2/15/27 # | 40,000 | 37,675 | ||||||
Steel Dynamics 5.00% 12/15/26 | 330,000 | 327,129 | ||||||
Tronox Finance 144A 5.75% 10/1/25 # | 305,000 | 296,613 | ||||||
US Concrete 6.375% 6/1/24 | 485,000 | 495,306 | ||||||
Zekelman Industries 144A 9.875% 6/15/23 # | 645,000 | 709,500 | ||||||
|
| |||||||
11,337,376 | ||||||||
|
| |||||||
Capital Goods – 0.58% | ||||||||
Ardagh Packaging Finance 144A 6.00% 2/15/25 # | 275,000 | 270,187 | ||||||
BWAY Holding | 551,000 | 545,490 | ||||||
144A 7.25% 4/15/25 # | 295,000 | 290,398 | ||||||
Crown Americas 144A 4.75% 2/1/26 # | 538,000 | 509,540 | ||||||
John Deere Capital 2.15% 9/8/22 | 600,000 | 575,073 | ||||||
L3 Technologies 3.85% 6/15/23 | 660,000 | 660,457 | ||||||
Siemens Financieringsmaatschappij 144A 3.125% 3/16/24 # | 630,000 | 617,789 | ||||||
TransDigm 6.375% 6/15/26 | 332,000 | 334,490 | ||||||
|
| |||||||
3,803,424 | ||||||||
|
| |||||||
Consumer Cyclical – 0.93% | ||||||||
AMC Entertainment Holdings 6.125% 5/15/27 | 539,000 | 522,561 | ||||||
American Axle & Manufacturing 6.25% 3/15/26 | 325,000 | 315,315 | ||||||
American Tire Distributors 144A 10.25% 3/1/22 # | 96,000 | 47,520 | ||||||
Atento Luxco 1 144A 6.125% 8/10/22 # | 5,000 | 4,881 | ||||||
Boyd Gaming 6.375% 4/1/26 | 902,000 | 926,805 | ||||||
Ford Motor Credit 3.096% 5/4/23 | 480,000 | 460,582 |
17
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Corporate Bonds (continued) | ||||||||
Consumer Cyclical (continued) | ||||||||
Goodyear Tire & Rubber 4.875% 3/15/27 | 530,000 | $ | 492,900 | |||||
Hilton Worldwide Finance 4.875% 4/1/27 | 725,000 | 696,000 | ||||||
KFC Holding/Pizza Hut Holdings/Taco Bell of America | 620,000 | 607,600 | ||||||
MGM Resorts International 4.625% 9/1/26 | 372,000 | 345,960 | ||||||
Penn National Gaming 144A 5.625% 1/15/27 # | 542,000 | 518,965 | ||||||
Penske Automotive Group 5.50% 5/15/26 | 779,000 | 769,263 | ||||||
PulteGroup 5.00% 1/15/27 | 15,000 | 14,363 | ||||||
Scientific Games International 10.00% 12/1/22 | 402,000 | 432,656 | ||||||
|
| |||||||
6,155,371 | ||||||||
|
| |||||||
Consumer Non-Cyclical – 1.03% | ||||||||
Abbott Laboratories 3.40% 11/30/23 | 660,000 | 654,720 | ||||||
Becton Dickinson 3.363% 6/6/24 | 680,000 | 657,741 | ||||||
Cott Holdings 144A 5.50% 4/1/25 # | 272,000 | 268,600 | ||||||
CVS Health 4.10% 3/25/25 | 680,000 | 681,308 | ||||||
ESAL 144A 6.25% 2/5/23 # | 650,000 | 623,194 | ||||||
JBS USA | 548,000 | 513,750 | ||||||
144A 6.75% 2/15/28 # | 350,000 | 331,187 | ||||||
Live Nation Entertainment 144A 4.875% 11/1/24 # | 15,000 | 14,625 | ||||||
Pernod Ricard 144A 4.45% 1/15/22 # | 500,000 | 517,351 | ||||||
Post Holdings | 311,000 | 292,340 | ||||||
144A 5.625% 1/15/28 # | 160,000 | 151,400 | ||||||
144A 5.75% 3/1/27 # | 5,000 | 4,848 | ||||||
Shire Acquisitions Investments Ireland 2.875% 9/23/23 | 600,000 | 566,716 | ||||||
Tempur Sealy International 5.50% 6/15/26 | 369,000 | 357,007 | ||||||
Thermo Fisher Scientific 3.00% 4/15/23 | 600,000 | 586,114 | ||||||
United Rentals North America 5.50% 5/15/27 | 613,000 | 608,403 | ||||||
|
| |||||||
6,829,304 | ||||||||
|
| |||||||
Energy – 2.46% | ||||||||
Alta Mesa Holdings 7.875% 12/15/24 | 553,000 | 584,797 | ||||||
AmeriGas Partners 5.875% 8/20/26 | 614,000 | 600,185 | ||||||
Antero Resources 5.625% 6/1/23 | 331,000 | 337,620 | ||||||
Banco do Brasil 144A 4.875% 4/19/23 # | 500,000 | 487,500 | ||||||
Cheniere Corpus Christi Holdings | 23,000 | 22,943 | ||||||
7.00% 6/30/24 | 235,000 | 260,263 | ||||||
Chesapeake Energy 144A 8.00% 12/15/22 # | 124,000 | 131,595 | ||||||
8.00% 1/15/25 | 175,000 | 174,344 | ||||||
Crestwood Midstream Partners 5.75% 4/1/25 | 484,000 | 479,765 |
18
Table of Contents
Principal amount° | Value (US $) | |||||||
Corporate Bonds (continued) | ||||||||
Energy (continued) | ||||||||
Ecopetrol 7.375% 9/18/43 | 500,000 | $ | 563,750 | |||||
Energy Transfer Partners 5.875% 3/1/22 | 600,000 | 637,881 | ||||||
Genesis Energy 6.75% 8/1/22 | 662,000 | 675,240 | ||||||
Gulfport Energy | 15,000 | 14,175 | ||||||
6.625% 5/1/23 | 600,000 | 606,000 | ||||||
Hilcorp Energy I 144A 5.00% 12/1/24 # | 240,000 | 235,200 | ||||||
Israel Electric 144A 4.25% 8/14/28 # | 500,000 | 476,371 | ||||||
Laredo Petroleum 6.25% 3/15/23 | 594,000 | 594,000 | ||||||
MPLX 4.875% 12/1/24 | 600,000 | 625,986 | ||||||
Murphy Oil 6.875% 8/15/24 | 825,000 | 876,563 | ||||||
Murphy Oil USA 5.625% 5/1/27 | 479,000 | 475,407 | ||||||
Newfield Exploration 5.375% 1/1/26 | 493,000 | 509,639 | ||||||
NuStar Logistics 5.625% 4/28/27 | 493,000 | 471,431 | ||||||
ONEOK 7.50% 9/1/23 | 545,000 | 633,766 | ||||||
Petrobras Global Finance 7.25% 3/17/44 | 400,000 | 377,000 | ||||||
Petroleos Mexicanos 6.75% 9/21/47 | 810,000 | 767,945 | ||||||
QEP Resources 5.625% 3/1/26 | 545,000 | 522,519 | ||||||
Raizen Fuels Finance 144A 5.30% 1/20/27 # | 500,000 | 479,440 | ||||||
Sabine Pass Liquefaction 5.75% 5/15/24 | 600,000 | 644,892 | ||||||
Southwestern Energy | 281,000 | 273,975 | ||||||
6.70% 1/23/25 | 577,000 | 571,230 | ||||||
Syngenta Finance 144A 5.182% 4/24/28 # | 500,000 | 490,207 | ||||||
Targa Resources Partners | 10,000 | 9,900 | ||||||
5.375% 2/1/27 | 452,000 | 439,570 | ||||||
Tecpetrol 144A 4.875% 12/12/22 # | 500,000 | 468,845 | ||||||
Transocean 144A 9.00% 7/15/23 # | 498,000 | 538,463 | ||||||
Transocean Proteus 144A 6.25% 12/1/24 # | 228,600 | 232,886 | ||||||
|
| |||||||
16,291,293 | ||||||||
|
| |||||||
Financials – 0.42% | ||||||||
AerCap Global Aviation Trust 144A 6.50% 6/15/45 #µ | 440,000 | 462,000 | ||||||
Air Lease 3.625% 4/1/27 | 600,000 | 562,284 | ||||||
E*TRADE Financial 5.875% µy | 530,000 | 538,613 | ||||||
International Lease Finance 8.625% 1/15/22 | 600,000 | 693,452 | ||||||
Jefferies Group 5.125% 1/20/23 | 500,000 | 524,346 | ||||||
|
| |||||||
2,780,695 | ||||||||
�� |
|
| ||||||
Healthcare – 0.76% | ||||||||
Air Medical Group Holdings 144A 6.375% 5/15/23 # | 709,000 | 671,777 | ||||||
DaVita 5.00% 5/1/25 | 334,000 | 317,400 |
19
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Corporate Bonds (continued) | ||||||||
Healthcare (continued) | ||||||||
Encompass Health | ||||||||
5.75% 11/1/24 | 580,000 | $ | 590,875 | |||||
5.75% 9/15/25 | 244,000 | 250,100 | ||||||
HCA | ||||||||
5.375% 2/1/25 | 569,000 | 560,465 | ||||||
5.875% 2/15/26 | 309,000 | 311,707 | ||||||
7.58% 9/15/25 | 219,000 | 238,710 | ||||||
Hill-Rom Holdings | ||||||||
144A 5.00% 2/15/25 # | 242,000 | 237,160 | ||||||
144A 5.75% 9/1/23 # | 272,000 | 280,160 | ||||||
Hologic 144A 4.625% 2/1/28 # | 300,000 | 283,500 | ||||||
MPH Acquisition Holdings 144A 7.125% 6/1/24 # | 403,000 | 419,120 | ||||||
Service Corp International 4.625% 12/15/27 | 280,000 | 267,683 | ||||||
Tenet Healthcare | ||||||||
144A 5.125% 5/1/25 # | 345,000 | 335,944 | ||||||
8.125% 4/1/22 | 241,000 | 252,751 | ||||||
Universal Health Services 144A 5.00% 6/1/26 # | 5,000 | 4,856 | ||||||
|
| |||||||
5,022,208 | ||||||||
|
| |||||||
Insurance – 0.23% | ||||||||
HUB International 144A 7.00% 5/1/26 # | 85,000 | 85,243 | ||||||
Nuveen Finance 144A 4.125% 11/1/24 # | 600,000 | 603,811 | ||||||
USIS Merger Sub 144A 6.875% 5/1/25 # | 843,000 | 851,430 | ||||||
XLIT 4.805% (LIBOR03M + 2.458%) y• | 10,000 | 9,752 | ||||||
|
| |||||||
1,550,236 | ||||||||
|
| |||||||
Media – 0.93% | ||||||||
Altice France 144A 7.375% 5/1/26 # | 710,000 | 694,913 | ||||||
AMC Networks 4.75% 8/1/25 | 365,000 | 344,013 | ||||||
CCO Holdings | ||||||||
144A 5.50% 5/1/26 # | 41,000 | 39,680 | ||||||
144A 5.75% 2/15/26 # | 218,000 | 214,120 | ||||||
144A 5.875% 5/1/27 # | 664,000 | 654,455 | ||||||
Cequel Communications Holdings I 144A 7.75% 7/15/25 # | 465,000 | 483,600 | ||||||
CSC Holdings 5.25% 6/1/24 | 5,000 | 4,739 | ||||||
Gray Television 144A 5.875% 7/15/26 # | 613,000 | 580,817 | ||||||
Lamar Media 5.75% 2/1/26 | 453,000 | 460,361 | ||||||
Nexstar Broadcasting 144A 5.625% 8/1/24 # | 761,000 | 746,275 | ||||||
Radiate Holdco 144A 6.625% 2/15/25 # | 10,000 | 9,200 | ||||||
Sinclair Television Group 144A 5.125% 2/15/27 # | 362,000 | 338,470 |
20
Table of Contents
Principal amount° | Value (US $) | |||||||
Corporate Bonds (continued) | ||||||||
Media (continued) | ||||||||
Sirius XM Radio | ||||||||
144A 5.00% 8/1/27 # | 685,000 | $ | 654,271 | |||||
144A 5.375% 4/15/25 # | 461,000 | 456,966 | ||||||
144A 5.375% 7/15/26 # | 20,000 | 19,400 | ||||||
Tribune Media 5.875% 7/15/22 | 433,000 | 440,036 | ||||||
|
| |||||||
6,141,316 | ||||||||
|
| |||||||
Real Estate Investment Trusts – 0.46% | ||||||||
American Tower 4.00% 6/1/25 | 600,000 | 591,277 | ||||||
Crown Castle International 5.25% 1/15/23 | 680,000 | 716,147 | ||||||
CyrusOne 5.375% 3/15/27 | 378,000 | 381,780 | ||||||
ESH Hospitality 144A 5.25% 5/1/25 # | 494,000 | 475,771 | ||||||
GEO Group 6.00% 4/15/26 | 336,000 | 330,120 | ||||||
Iron Mountain US Holdings 144A 5.375% 6/1/26 # | 508,000 | 485,140 | ||||||
MGM Growth Properties Operating Partnership 4.50% 9/1/26 | 15,000 | 13,875 | ||||||
SBA Communications 4.875% 9/1/24 | 15,000 | 14,063 | ||||||
|
| |||||||
3,008,173 | ||||||||
|
| |||||||
Services – 0.43% | ||||||||
Advanced Disposal Services 144A 5.625% 11/15/24 # | 544,000 | 545,360 | ||||||
Aramark Services 144A 5.00% 2/1/28 # | 120,000 | 115,800 | ||||||
Avis Budget Car Rental 144A 6.375% 4/1/24 # | 244,000 | 240,340 | ||||||
Covanta Holding 5.875% 7/1/25 | 548,000 | 529,669 | ||||||
Herc Rentals 144A 7.75% 6/1/24 # | 491,000 | 529,053 | ||||||
KAR Auction Services 144A 5.125% 6/1/25 # | 200,000 | 190,500 | ||||||
Prime Security Services Borrower 144A 9.25% 5/15/23 # | 636,000 | 675,559 | ||||||
United Rentals North America 5.875% 9/15/26 | 5,000 | 5,131 | ||||||
|
| |||||||
2,831,412 | ||||||||
|
| |||||||
Technology & Electronics – 0.54% | ||||||||
Apple 2.10% 9/12/22 | 600,000 | 578,954 | ||||||
Baidu 4.375% 3/29/28 | 500,000 | 502,606 | ||||||
CDK Global 5.00% 10/15/24 | 161,000 | 164,713 | ||||||
CDW Finance 5.00% 9/1/25 | 156,000 | 154,877 | ||||||
CommScope Technologies 144A 5.00% 3/15/27 # | 615,000 | 576,563 | ||||||
First Data | ||||||||
144A 5.75% 1/15/24 # | 320,000 | 322,400 | ||||||
144A 7.00% 12/1/23 # | 17,000 | 17,850 | ||||||
Infor US 6.50% 5/15/22 | 447,000 | 456,499 | ||||||
Sensata Technologies UK Financing 144A 6.25% 2/15/26 # | 285,000 | 298,181 | ||||||
Solera 144A 10.50% 3/1/24 # | 313,000 | 348,901 | ||||||
Symantec 144A 5.00% 4/15/25 # | 180,000 | 174,449 | ||||||
|
| |||||||
3,595,993 | ||||||||
|
|
21
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Corporate Bonds (continued) | ||||||||
Telecommunications – 0.60% | ||||||||
CenturyLink 6.75% 12/1/23 | 410,000 | $ | 412,563 | |||||
Digicel Group 144A 7.125% 4/1/22 # | 850,000 | 593,937 | ||||||
Level 3 Financing 5.375% 5/1/25 | 438,000 | 424,860 | ||||||
Myriad International Holdings 144A 4.85% 7/6/27 # | 635,000 | 621,506 | ||||||
Sprint | ||||||||
7.125% 6/15/24 | 682,000 | 688,820 | ||||||
7.875% 9/15/23 | 22,000 | 23,144 | ||||||
Telecom Italia 144A 5.303% 5/30/24 # | 200,000 | 199,750 | ||||||
T-Mobile USA | ||||||||
6.375% 3/1/25 | 166,000 | 173,868 | ||||||
6.50% 1/15/26 | 180,000 | 188,325 | ||||||
Zayo Group | ||||||||
144A 5.75% 1/15/27 # | 15,000 | 14,550 | ||||||
6.375% 5/15/25 | 627,000 | 637,973 | ||||||
|
| |||||||
3,979,296 | ||||||||
|
| |||||||
Transportation – 0.06% | ||||||||
XPO Logistics 144A 6.125% 9/1/23 # | 368,000 | 377,550 | ||||||
|
| |||||||
377,550 | ||||||||
|
| |||||||
Utilities – 0.64% | ||||||||
AES | ||||||||
5.50% 4/15/25 | 5,000 | 5,075 | ||||||
6.00% 5/15/26 | 103,000 | 106,734 | ||||||
Calpine | ||||||||
144A 5.25% 6/1/26 # | 655,000 | 621,431 | ||||||
5.75% 1/15/25 | 230,000 | 209,875 | ||||||
DTE Energy 2.85% 10/1/26 | 525,000 | 481,650 | ||||||
Emera 6.75% 6/15/76 µ | 500,000 | 531,849 | ||||||
Enel 144A 8.75% 9/24/73 #µ | 200,000 | 226,750 | ||||||
Enel Finance International 144A 3.625% 5/25/27 # | 480,000 | 439,081 | ||||||
Exelon 3.497% 6/1/22 | 600,000 | 594,962 | ||||||
National Rural Utilities Cooperative Finance 5.25% 4/20/46 µ | 700,000 | 726,420 | ||||||
Vistra Energy 144A 8.00% 1/15/25 # | 277,000 | 301,237 | ||||||
|
| |||||||
4,245,064 | ||||||||
|
| |||||||
Total Corporate Bonds (cost $90,952,372) | 88,558,587 | |||||||
|
| |||||||
Leveraged Non-Recourse Security – 0.00% | ||||||||
JPMorgan Fixed Income Pass Through Trust Auction 144A | ||||||||
Series 2007-C 0.00% 1/15/87 #¨= | 1,300,000 | 0 | ||||||
|
| |||||||
Total Leveraged Non-Recourse Security (cost $1,105,000) | 0 | |||||||
|
|
22
Table of Contents
Principal amount° | Value (US $) | |||||||
Municipal Bonds – 4.67% | ||||||||
Allentown, Pennsylvania Neighborhood Improvement Zone | ||||||||
Development Authority Revenue | ||||||||
(City Center Project) 144A 5.00% 5/1/42 # | 500,000 | $ | 537,920 | |||||
Arizona Industrial Development Authority | ||||||||
(American Charter Schools Foundation Project) 144A 6.00% 7/1/47 # | 1,000,000 | 1,057,990 | ||||||
Buckeye, Ohio Tobacco Settlement Financing Authority | ||||||||
(Asset-Backed Senior Turbo) | ||||||||
Series A-2 5.875% 6/1/47 | 1,250,000 | 1,249,975 | ||||||
Series A-2 6.00% 6/1/42 | 1,000,000 | 1,000,000 | ||||||
Series A-2 6.50% 6/1/47 | 750,000 | 759,030 | ||||||
California State | ||||||||
(Various Purposes) 5.00% 11/1/43 | 1,000,000 | 1,128,410 | ||||||
California Statewide Communities Development Authority | ||||||||
(California Baptist University) Series A 6.375% 11/1/43 | 1,000,000 | 1,154,880 | ||||||
City of Apple Valley, Minnesota | ||||||||
(Minnesota Senior Living Project) Series 2016 D 7.25% 1/1/52 | 1,000,000 | 1,015,840 | ||||||
City of Chicago, Illinois | ||||||||
(General Obligation Bonds Project) Series 2005D 5.50% 1/1/40 | 1,000,000 | 1,062,760 | ||||||
Colorado Health Facilities Authority Revenue | ||||||||
(Catholic Health Initiatives) Series A 5.25% 1/1/45 | 1,250,000 | 1,340,063 | ||||||
Conley Road Transportation Development District, | ||||||||
Missouri | ||||||||
5.375% 5/1/47 | 500,000 | 511,695 | ||||||
Cuyahoga County, Ohio | ||||||||
5.00% 2/15/57 | 1,000,000 | 1,049,540 | ||||||
Series 2017 5.50% 2/15/57 | 1,000,000 | 1,103,800 | ||||||
Dallas/Fort Worth International Airport, Texas | ||||||||
Series H 5.00% 11/1/42 (AMT) | 1,000,000 | 1,067,660 | ||||||
Dominion Water & Sanitation District, Colorado 6.00% 12/1/46 | 1,000,000 | 1,049,950 | ||||||
Golden State, California Tobacco Securitization Settlement Revenue | ||||||||
(Asset-Backed Senior Notes) Series A-1 5.125% 6/1/47 | 1,000,000 | 1,000,030 |
23
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Municipal Bonds (continued) | ||||||||
Illinois State | ||||||||
Series A 5.00% 12/1/34 | 400,000 | $ | 421,632 | |||||
Series A 5.00% 4/1/38 | 100,000 | 102,664 | ||||||
Lower Alabama Gas District, Alabama | 1,000,000 | 1,232,580 | ||||||
M-S-R Energy Authority, California | 1,000,000 | 1,420,820 | ||||||
New Jersey Economic Development Authority | 250,000 | 263,687 | ||||||
New Jersey Transportation Trust Fund Authority | 1,000,000 | 1,050,910 | ||||||
New York City Industrial Development Agency | 750,000 | 757,260 | ||||||
New York Liberty Development Revenue | ||||||||
(Goldman Sachs Headquarters) 5.25% 10/1/35 | 1,000,000 | 1,257,220 | ||||||
(World Trade Center Project) Class 1-3 144A 5.00% 11/15/44 # | 1,000,000 | 1,063,320 | ||||||
New York State Thruway Authority | 1,000,000 | 1,104,110 | ||||||
New York Transportation Development | 500,000 | 564,030 | ||||||
Palm Beach County, Florida Health Facilities Authority | ||||||||
Series A 7.25% 6/1/34 | 65,000 | 74,770 | ||||||
Series A 7.50% 6/1/49 | 325,000 | 376,184 | ||||||
Public Authority for Colorado Energy Natural Gas Revenue | 1,000,000 | 1,404,500 | ||||||
Public Finance Authority, Wisconsin | 1,000,000 | 1,095,450 | ||||||
Salt Verde, Arizona Financial Senior Gas Revenue | 1,000,000 | 1,198,020 | ||||||
Tobacco Settlement Financing | 500,000 | 537,860 | ||||||
Utility Debt Securitization Authority, New York | 750,000 | 842,573 | ||||||
|
| |||||||
Total Municipal Bonds (cost $29,273,107) | 30,857,133 | |||||||
|
|
24
Table of Contents
Principal amount° | Value (US $) | |||||||
Non-Agency Commercial Mortgage-Backed Security – 0.08% | ||||||||
JPMBB Commercial Mortgage Securities Trust | 500,000 | $ | 505,126 | |||||
|
| |||||||
Total Non-Agency Commercial Mortgage-Backed Security | 505,126 | |||||||
|
| |||||||
| ||||||||
Regional Bond – 0.07%D | ||||||||
| ||||||||
Argentina – 0.07% | ||||||||
Provincia de Cordoba 144A 7.125% 8/1/27 # | 500,000 | 447,630 | ||||||
|
| |||||||
Total Regional Bond (cost $492,500) | 447,630 | |||||||
|
| |||||||
| ||||||||
Loan Agreement – 0.00% | ||||||||
| ||||||||
Republic of Angola 8.734% (LIBOR06M + 6.25%) | 23,250 | 21,729 | ||||||
|
| |||||||
Total Loan Agreement (cost $23,250) | 21,729 | |||||||
|
| |||||||
| ||||||||
Sovereign Bonds – 0.69%D | ||||||||
| ||||||||
Argentina – 0.13% | ||||||||
Argentine Republic Government International Bond | 1,000,000 | 825,000 | ||||||
|
| |||||||
825,000 | ||||||||
|
| |||||||
Indonesia – 0.56% | ||||||||
Indonesia Government International Bonds 144A 5.125% 1/15/45 # | 1,500,000 | 1,510,161 | ||||||
144A 6.75% 1/15/44 # | 1,800,000 | 2,203,763 | ||||||
|
| |||||||
3,713,924 | ||||||||
|
| |||||||
Total Sovereign Bonds (cost $4,649,850) | 4,538,924 | |||||||
|
| |||||||
| ||||||||
US Treasury Obligations – 0.77% | ||||||||
| ||||||||
US Treasury Notes | ||||||||
1.875% 7/31/22 | 2,185,000 | 2,118,383 | ||||||
2.00% 10/31/22 | 340,000 | 330,690 | ||||||
2.25% 11/15/27 | 2,750,000 | 2,611,157 | ||||||
|
| |||||||
Total US Treasury Obligations (cost $5,203,968) | 5,060,230 | |||||||
|
| |||||||
Number of shares | ||||||||
Preferred Stock – 1.13% | ||||||||
| ||||||||
Bank of America 6.50% µy | 595,000 | 632,187 | ||||||
Colony NorthStar 15.46% y | 32,800 | 824,592 | ||||||
DDR 9.56% y | 22,900 | 530,135 | ||||||
Federal Home Loan Mortgage y† | 40,000 | 202,000 | ||||||
General Electric 5.00% µy | 700,000 | 692,475 | ||||||
GMAC Capital Trust I (LIBOR03M + 5.785%) 2/15/40 • | 5,000 | 130,550 | ||||||
LaSalle Hotel Properties 5.05% y | 46,295 | 1,162,930 |
25
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Number of shares | Value (US $) | |||||||
Preferred Stock (continued) | ||||||||
Sabra Health Care REIT 6.32% y | 41,681 | $ | 1,058,697 | |||||
Taubman Centers 4.53% y | 68,477 | 1,651,665 | ||||||
Washington Prime Group 13.32% y | 28,700 | 600,117 | ||||||
|
| |||||||
Total Preferred Stock (cost $8,392,746) | 7,485,348 | |||||||
|
| |||||||
Warrant – 0.00% | ||||||||
Wheeler Real Estate Investment Trust strike price $44, | 43,188 | 928 | ||||||
|
| |||||||
Total Warrant (cost $358) | 928 | |||||||
|
| |||||||
Principal amount° | ||||||||
Short-Term Investments – 7.79% | ||||||||
Discount Note – 1.51%≠ | ||||||||
Federal Home Loan Bank 1.48% 6/1/18 | 9,957,044 | 9,957,044 | ||||||
|
| |||||||
9,957,044 | ||||||||
|
| |||||||
Repurchase Agreements – 6.28% | ||||||||
Bank of America Merrill Lynch | 5,666,265 | 5,666,265 | ||||||
Bank of Montreal | 16,998,794 | 16,998,794 | ||||||
BNP Paribas | 18,878,351 | 18,878,351 | ||||||
|
| |||||||
41,543,410 | ||||||||
|
| |||||||
Total Short-Term Investments (cost $51,500,454) | 51,500,454 | |||||||
|
| |||||||
Total Value of Securities – 101.65% | $ | 671,988,532 | ||||||
|
|
# | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At May 31, 2018, the aggregate value of Rule 144A securities was $57,409,609, which represents 8.68% 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. |
26
Table of Contents
= | The value of this security was determined using significant unobservable inputs and is reported as a Level 3 security in the disclosure table located in Note 3 in “Notes to financial statements.” |
≠ | The rate shown is the effective yield at the time of purchase. |
° | Principal amount shown is stated in US dollars unless noted that the security is denominated in another currency. |
D | Securities have been classified by country of origin. |
µ | Fixed to variable rate investment. The rate shown reflects the fixed rate in effect at May 31, 2018. Rate will reset at a future date. |
p | Restricted security. These investments are in securities not registered under the Securities Act of 1933, as amended, and have certain restrictions on resale which may limit their liquidity. At May 31, 2018, the aggregate value of restricted securities was $5,717,806, which represented 8.68% of the Fund’s net assets. See table below for additional details on restricted securities. |
y | No contractual maturity date. |
† | Non-income producing security. |
• | Variable rate investment. Rates reset periodically. Rate shown reflects the rate in effect at May 31, 2018. For securities based on a published reference rate and spread, the reference rate and spread are indicated in their description above. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions, or for mortgage-backed securities, are impacted by the individual mortgages which are paying off over time. These securities do not indicate a reference rate and spread in their description above. |
Restricted Securities
Investments | Date of Acquisition | Cost | Value | |||||||||
Merion Champion’s Walk | 8/4/17 | $ | 2,474,325 | $ | 2,401,352 | |||||||
Merion Champion’s Walk | 2/13/18 | 64,180 | 62,287 | |||||||||
Merion Countryside | 5/11/16 | 1,667,974 | 2,889,700 | |||||||||
Merion Countryside | 4/7/17 | 151,763 | 234,300 | |||||||||
Merion Countryside | 2/13/18 | 93,713 | 130,167 | |||||||||
|
|
|
| |||||||||
Total | $ | 4,451,955 | $ | 5,717,806 | ||||||||
|
|
|
|
27
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
The following foreign currency exchange contracts, futures contracts, and swap contracts were outstanding at May 31, 2018:1
Foreign Currency Exchange Contracts
Counterparty | Contracts to Receive (Deliver) | In Exchange For | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||
BNYM | AUD | (41,391 | ) | USD | 31,212 | 6/1/18 | $ | — | $ | (90 | ) | |||||||||||
BNYM | EUR | (38,601 | ) | USD | 45,016 | 6/1/18 | — | (114 | ) | |||||||||||||
BNYM | HKD | (4,155,293 | ) | USD | 529,513 | 6/1/18 | — | (300 | ) | |||||||||||||
BNYM | JPY | (215,877,775 | ) | USD | 1,980,393 | 6/4/18 | — | (4,489 | ) | |||||||||||||
BNYM | KRW | (289,328,306 | ) | USD | 269,473 | 6/1/18 | 1,151 | — | ||||||||||||||
|
|
|
| |||||||||||||||||||
Total Foreign Currency Exchange Contracts | $ | 1,151 | $ | (4,993 | ) | |||||||||||||||||
|
|
|
|
Futures Contracts
Contracts to Buy (Sell) | Notional Amount | Notional Cost (Proceeds) | Expiration Date | Value/ Unrealized Appreciation | Variation Margin Due from (Due to Brokers) | |||||||||||||||||
(150) | E-mini S&P 500 Index | $ | (20,291,250 | ) | $ | (20,917,451 | ) | 6/18/18 | $ | 626,201 | $ | 142,947 |
Swap Contracts
CDS Contracts2
Reference Obligation/ Termination Date/ Payment Frequency | Notional Amount3 | Annual Protection Payments | Value | Upfront Payments Paid (Received) | Unrealized Depreciation4 | Variation Margin Due from (Due to) Brokers | ||||||||||||||||||
Centrally Cleared/ | ||||||||||||||||||||||||
CDX.NA.HY.295 12/20/22- | ||||||||||||||||||||||||
Quarterly | 3,000,000 | 5.00 | % | $ | (198,863 | ) | $ | (190,037 | ) | $ | (8,826 | ) | $ | 2,226 | ||||||||||
CDX.NA.HY.305 6/20/23- | ||||||||||||||||||||||||
Quarterly | 8,500,000 | 5.00 | % | (528,916 | ) | (462,074 | ) | (66,842 | ) | 7,048 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total CDS Contracts | $ | (727,779 | ) | $ | (652,111 | ) | $ | (75,668) | $ | 9,274 | ||||||||||||||
|
|
|
|
|
|
|
|
The use of foreign currency exchange contracts, futures contracts, and swap contracts involve elements of market risk and risks in excess of the amounts disclosed in these financial statements. The foreign currency exchange contract and notional amounts 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.” |
28
Table of Contents
2A CDS contract is a risk-transfer instrument through which one party (purchaser of protection) transfers to another party (seller of protection) the financial risk of a credit event (as defined in the CDS agreement), as it relates to a particular reference security or basket of securities (such as an index). Periodic payments (receipts) on such contracts are accrued daily and recorded as unrealized losses (gains) on swap contracts. Upon payment (receipt), such amounts are recorded as 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 recorded upon a credit event (as defined in the CDS agreement) or the maturity or termination of the agreement.
3Notional amount shown is stated in US dollars unless noted that the swap is denominated in another currency.
4Unrealized appreciation (depreciation) does not include periodic interest payments on swap contracts accrued daily in the amount of $(81,459).
5Markit’s CDX.NA.HY Index is composed of one hundred (100) of the most liquid North American entities with high yield credit ratings that trade in the CDS market.
Summary of abbreviations:
ADR – American Depositary Receipt
AMT – Subject to Alternative Minimum Tax
AUD – Australian Dollar
BNYM – BNY Mellon
CDS – Credit Default Swap
CDX.NA.HY – Credit Default Swap Index North America High Yield
ETF – Exchange-Traded Fund
EUR – European Monetary Unit
GDR – Global Depository Receipt
HKD – Hong Kong Dollar
ICE – Intercontinental Exchange
JPY – Japanese Yen
KRW – South Korean Won
LIBOR – London Interbank Offered Rate
LIBOR03M – ICE LIBOR USD 3 Month
LIBOR06M – ICE LIBOR USD 6 Month
REIT – Real Estate Investment Trust
SPDR – S&P Depository Receipts
S&P – Standard & Poor’s
USD – US Dollar
See accompanying notes, which are an integral part of the financial statements.
29
Table of Contents
Statement of assets and liabilities
Delaware Wealth Builder Fund | May 31, 2018 (Unaudited) |
Assets: | ||||
Investments, at value1 | $ | 671,988,532 | ||
Foreign currencies, at value2 | 257,435 | |||
Cash collateral due from broker | 2,085,817 | |||
Receivable for securities sold | 5,445,077 | |||
Dividends and interest receivable | 4,035,403 | |||
Foreign tax reclaims receivable | 528,106 | |||
Receivable for fund shares sold | 393,846 | |||
Variation margin due from broker on futures contracts | 142,947 | |||
Variation margin due from broker on centrally cleared credit default swap contracts | 9,274 | |||
Unrealized appreciation on foreign currency exchange contracts | 1,151 | |||
Other assets3 | 270,461 | |||
|
| |||
Total assets | 685,158,049 | |||
|
| |||
Liabilities: | ||||
Cash due to custodian | 81,975 | |||
Payable for securities purchased | 20,613,355 | |||
Payable for fund shares redeemed | 829,602 | |||
Upfront payments received on centrally cleared credit default swap contracts | 652,111 | |||
Contingent liabilities3 | 901,538 | |||
Investment management fees payable to affiliates | 362,743 | |||
Other accrued expenses | 240,131 | |||
Distribution fees payable to affiliates | 234,200 | |||
Swap payments payable | 116,597 | |||
Audit and tax fees payable | 15,440 | |||
Dividend disbursing and transfer agent fees and expenses payable to affiliates | 11,049 | |||
Unrealized depreciation on foreign currency exchange contracts | 4,993 | |||
Trustees’ fees and expenses payable | 3,905 | |||
Accounting and administration expenses payable to affiliates | 2,489 | |||
Legal fees payable to affiliates | 1,147 | |||
Reports and statements to shareholders expenses payable to affiliates | 488 | |||
Income distribution payable | 25 | |||
|
| |||
Total liabilities | 24,071,788 | |||
|
| |||
Total Net Assets | $ | 661,086,261 | ||
|
|
30
Table of Contents
Net Assets Consist of: | ||||
Paid-in capital | $ | 625,622,827 | ||
Undistributed net investment income | 300,385 | |||
Accumulated net realized loss on investments | 23,654,035 | |||
Net unrealized appreciation of investments | 11,044,074 | |||
Net unrealized appreciation of foreign currencies | (291 | ) | ||
Net unrealized depreciation of foreign currency exchange contracts | (3,842 | ) | ||
Net unrealized depreciation of futures contracts | 626,201 | |||
Net unrealized depreciation of swap contracts | (157,128 | ) | ||
|
| |||
Total Net Assets | $ | 661,086,261 | ||
|
| |||
Net Asset Value | ||||
Class A: | ||||
Net assets | $ | 263,947,889 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 18,577,241 | |||
Net asset value per share | $ | 14.21 | ||
Sales charge | 5.75 | % | ||
Offering price per share, equal to net asset value per share / (1 – sales charge) | $ | 15.08 | ||
Class C: | ||||
Net assets | $ | 204,549,474 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 14,372,939 | |||
Net asset value per share | $ | 14.23 | ||
Class R: | ||||
Net assets | $ | 3,086,328 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 217,192 | |||
Net asset value per share | $ | 14.21 | ||
Institutional Class: | ||||
Net assets | $ | 189,502,570 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 13,338,804 | |||
Net asset value per share | $ | 14.21 | ||
1 Investments, at cost | $ | 660,944,458 | ||
3 Foreign currencies, at cost | 256,402 | |||
3 See Note 12 in “Notes to financial statements.” |
See accompanying notes, which are an integral part of the financial statements.
31
Table of Contents
Delaware Wealth Builder Fund | Six months ended May 31, 2018 (Unaudited) |
Investment Income: | ||||
Dividends | $ | 7,391,466 | ||
Interest | 4,741,870 | |||
Foreign tax withheld | (288,220 | ) | ||
|
| |||
11,845,116 | ||||
|
| |||
Expenses: | ||||
Management fees | 2,227,233 | |||
Distribution expenses – Class A | 344,606 | |||
Distribution expenses – Class C | 1,099,410 | |||
Distribution expenses – Class R | 8,861 | |||
Dividend disbursing and transfer agent fees and expenses | 387,623 | |||
Reports and statements to shareholders expenses | 95,949 | |||
Accounting and administration expenses | 77,140 | |||
Legal fees | 69,226 | |||
Custodian fees | 42,333 | |||
Registration fees | 33,275 | |||
Audit and tax fees | 23,118 | |||
Trustees’ fees and expenses | 15,768 | |||
Other | 40,594 | |||
|
| |||
Expenses before interest expense | 4,465,136 | |||
Interest expense | 1,218 | |||
Less expenses paid indirectly | (4,317 | ) | ||
|
| |||
Total operating expenses | 4,462,037 | |||
|
| |||
Net Investment Income | 7,383,079 | |||
|
|
32
Table of Contents
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | $ | 28,784,999 | ||
Foreign currencies | 11,533 | |||
Foreign currency exchange contracts | (16,227 | ) | ||
Futures contracts | (1,470,579 | ) | ||
Options written | 355 | |||
Swap contracts | (273,647 | ) | ||
|
| |||
Net realized gain | 27,036,434 | |||
|
| |||
Net change in unrealized appreciation (depreciation) of: | ||||
Investments | (32,496,443 | ) | ||
Foreign currencies | (11,657 | ) | ||
Foreign currency exchange contracts | (3,842 | ) | ||
Futures contracts | 1,566,062 | |||
Swap contracts | 117,346 | |||
|
| |||
Net change in unrealized appreciation (depreciation) | (30,828,534 | ) | ||
|
| |||
Net Realized and Unrealized Loss | (3,792,100 | ) | ||
|
| |||
Net Increase in Net Assets Resulting from Operations | $ | 3,590,979 | ||
|
|
See accompanying notes, which are an integral part of the financial statements.
33
Table of Contents
Statements of changes in net assets
Delaware Wealth Builder Fund
Six months ended | ||||||||
5/31/18 (Unaudited) | Year ended 11/30/17 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 7,383,079 | $ | 16,487,907 | ||||
Net realized gain | 27,036,434 | 26,446,430 | ||||||
Net change in unrealized appreciation (depreciation) | (30,828,534 | ) | 23,132,642 | |||||
|
|
|
| |||||
Net increase in net assets resulting from operations | 3,590,979 | 66,066,979 | ||||||
|
|
|
| |||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (3,093,853 | ) | (6,460,107 | ) | ||||
Class C | (1,572,767 | ) | (4,557,137 | ) | ||||
Class R | (33,806 | ) | (61,239 | ) | ||||
Institutional Class | (2,507,346 | ) | (5,303,643 | ) | ||||
Net realized gain: | ||||||||
Class A | (852,114 | ) | — | |||||
Class C | (744,983 | ) | — | |||||
Class R | (7,734 | ) | — | |||||
Institutional Class | (701,901 | ) | — | |||||
|
|
|
| |||||
(9,514,504 | ) | (16,382,126 | ) | |||||
|
|
|
| |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 3,802,216 | 50,478,605 | ||||||
Class C | 3,350,591 | 17,815,034 | ||||||
Class R | — | 722,521 | ||||||
Institutional Class | 18,793,550 | 96,767,403 | ||||||
Net assets from merger*: | ||||||||
Class A | 34,209,151 | — | ||||||
Class C | 10,597,997 | — | ||||||
Class R | 1,907,750 | — | ||||||
Institutional Class | 4,798,603 | — |
34
Table of Contents
Six months ended | ||||||||
5/31/18 (Unaudited) | Year ended 11/30/17 | |||||||
Capital Share Transactions (continued): | ||||||||
Net asset value of shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | 3,732,296 | 6,003,456 | ||||||
Class C | 2,220,953 | 4,192,231 | ||||||
Class R | 48,180 | 60,760 | ||||||
Institutional Class | 2,928,579 | 4,701,398 | ||||||
|
|
|
| |||||
86,389,866 | 180,741,408 | |||||||
|
|
|
| |||||
Cost of shares redeemed: | ||||||||
Class A | $ | (31,632,395 | ) | $ | (89,148,963 | ) | ||
Class C | (30,959,141 | ) | (97,966,095 | ) | ||||
Class R | (2,217,556 | ) | (1,866,979 | ) | ||||
Institutional Class | (39,937,007 | ) | (62,703,837 | ) | ||||
|
|
|
| |||||
(104,746,099 | ) | (251,685,874 | ) | |||||
|
|
|
| |||||
Decrease in net assets derived from capital share transactions | (18,356,233 | ) | (70,944,466 | ) | ||||
|
|
|
| |||||
Net Decrease in Net Assets | (24,279,758 | ) | (21,259,613 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 685,366,019 | 706,625,632 | ||||||
|
|
|
| |||||
End of period | $ | 661,086,261 | $ | 685,366,019 | ||||
|
|
|
| |||||
Undistributed net investment income | $ | 300,385 | $ | 125,078 | ||||
|
|
|
|
*See Note 5 in “Notes to financial statements.”
See accompanying notes, which are an integral part of the financial statements.
35
Table of Contents
Delaware Wealth Builder Fund Class A
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets4,5 |
Ratio of expenses to average net assets prior to fees waived4,6 |
Ratio of net investment income to average net assets7 |
Ratio of net investment income to average net assets prior to fees waived6 |
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 distributor. Performance would have been lower had the waiver not been in effect. |
4 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
5 | The ratios of expenses to average net assets excluding interest expense and dividend expense for the six months ended May 31, 2018 and years ended Nov. 30, 2017 and 2016 were 1.11% and 1.08%, 1.12%, respectively. |
6 | Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended May 31, 2018 are reflected on the “Statement of operations.” |
7 | The ratios of net investment income to average net assets excluding interest expense and dividend expense for the six months ended May 31, 2018 and years ended Nov. 30, 2017 and 2016 were 2.27% and 2.52%, 2.05%, respectively. |
See accompanying notes, which are an integral part of the financial statements.
36
Table of Contents
Six months ended 5/31/181 | Year ended | |||||||||||||||||||||||
(Unaudited) | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | 11/30/13 | |||||||||||||||||||
$ | 14.62 | $ | 13.64 | $ | 13.16 | $ | 13.73 | $ | 12.81 | $ | 10.94 | |||||||||||||
0.16 | 0.36 | 0.27 | 0.32 | 0.31 | 0.32 | |||||||||||||||||||
(0.36 | ) | 0.98 | 0.52 | (0.58 | ) | 0.92 | 1.85 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.20 | ) | 1.34 | 0.79 | (0.26 | ) | 1.23 | 2.17 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.16 | ) | (0.36 | ) | (0.31 | ) | (0.31 | ) | (0.31 | ) | (0.30 | ) | |||||||||||||
(0.05 | ) | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.21 | ) | (0.36 | ) | (0.31 | ) | (0.31 | ) | (0.31 | ) | (0.30 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 14.21 | $ | 14.62 | $ | 13.64 | $ | 13.16 | $ | 13.73 | $ | 12.81 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(1.43%) | 9.90% | 6.11% | (1.91%) | 9.74% | 20.07% | |||||||||||||||||||
$ | 263,948 | $ | 256,157 | $ | 270,324 | $ | 291,876 | $ | 315,098 | $ | 297,117 | |||||||||||||
1.11% | 1.09% | 1.13% | 1.10% | 1.10% | 1.12% | |||||||||||||||||||
1.11% | 1.09% | 1.13% | 1.10% | 1.10% | 1.16% | |||||||||||||||||||
2.27% | 2.51% | 2.04% | 2.38% | 2.35% | 2.62% | |||||||||||||||||||
2.27% | 2.51% | 2.04% | 2.38% | 2.35% | 2.58% | |||||||||||||||||||
36% | 81% | 102% | 67% | 56% | 51% | |||||||||||||||||||
|
37
Table of Contents
Financial highlights
Delaware Wealth Builder Fund Class C
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income2 | ||||||||||||||||||||
Net realized and unrealized gain (loss) | ||||||||||||||||||||
Total from investment operations | ||||||||||||||||||||
Less dividends and distributions from: | ||||||||||||||||||||
Net investment income | ||||||||||||||||||||
Net realized gain | ||||||||||||||||||||
Total dividends and distributions | ||||||||||||||||||||
Net asset value, end of period | ||||||||||||||||||||
Total return3 | ||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||
Net assets, end of period (000 omitted) | ||||||||||||||||||||
Ratio of expenses to average net assets4,5,6 | ||||||||||||||||||||
Ratio of net investment income to average net assets5,7 | �� | |||||||||||||||||||
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. |
4 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
5 | Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended May 31, 2018 are reflected on the “Statement of operations.” |
6 | The ratios of expenses to average net assets excluding interest expense and dividend expense for the six months ended May 31, 2018 and years ended Nov. 30, 2017 and 2016 were 1.86% and 1.83%, 1.87%, respectively. |
7 | The ratios of net investment income to average net assets excluding interest expense and dividend expense for the six months ended May 31, 2018 and years ended Nov. 30, 2017 and 2016 were 1.52% and 1.77%, 1.30%, respectively. |
See accompanying notes, which are an integral part of the financial statements.
38
Table of Contents
Six months ended 5/31/181 | Year ended | |||||||||||||||||||||||
(Unaudited) | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | 11/30/13 | |||||||||||||||||||
$ | 14.65 | $ | 13.66 | $ | 13.18 | $ | 13.75 | $ | 12.83 | $ | 10.96 | |||||||||||||
0.11 | 0.25 | 0.17 | 0.22 | 0.21 | 0.23 | |||||||||||||||||||
(0.37 | ) | 0.99 | 0.52 | (0.58 | ) | 0.92 | 1.85 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.26 | ) | 1.24 | 0.69 | (0.36 | ) | 1.13 | 2.08 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.11 | ) | (0.25 | ) | (0.21 | ) | (0.21 | ) | (0.21 | ) | (0.21 | ) | |||||||||||||
(0.05 | ) | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.16 | ) | (0.25 | ) | (0.21 | ) | (0.21 | ) | (0.21 | ) | (0.21 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 14.23 | $ | 14.65 | $ | 13.66 | $ | 13.18 | $ | 13.75 | $ | 12.83 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(1.82% | ) | 9.13% | 5.30% | (2.63%) | 8.90% | 19.13% | ||||||||||||||||||
$ | 204,549 | $ | 225,604 | $ | 283,243 | $ | 298,833 | $ | 308,975 | $ | 254,961 | |||||||||||||
1.86% | 1.84% | 1.88% | 1.85% | 1.85% | 1.87% | |||||||||||||||||||
1.52% | 1.76% | 1.29% | 1.63% | 1.60% | 1.87% | |||||||||||||||||||
36% | 81% | 102% | 67% | 56% | 51% | |||||||||||||||||||
|
39
Table of Contents
Financial highlights
Delaware Wealth Builder Fund Class R
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income2 | ||||||||||||||||||||
Net realized and unrealized gain (loss) | ||||||||||||||||||||
Total from investment operations | ||||||||||||||||||||
Less dividends and distributions from: | ||||||||||||||||||||
Net investment income | ||||||||||||||||||||
Net realized gain | ||||||||||||||||||||
Total dividends and distributions | ||||||||||||||||||||
Net asset value, end of period | ||||||||||||||||||||
Total return3 | ||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||
Net assets, end of period (000 omitted) | ||||||||||||||||||||
Ratio of expenses to average net assets4,5 | ||||||||||||||||||||
Ratio of expenses to average net assets prior to fees waived4,6 | ||||||||||||||||||||
Ratio of net investment income to average net assets7 | ||||||||||||||||||||
Ratio of net investment income to average net assets prior to fees waived6 | ||||||||||||||||||||
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 distributor. Performance would have been lower had the waiver not been in effect. |
4 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
5 | The ratios of expenses to average net assets excluding interest expense and dividend expense for the six months ended May 31, 2018 and years ended Nov. 30, 2017 and 2016 were 1.36% and 1.33%, 1.37%, respectively. |
6 | Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended May 31, 2018 are reflected on the “Statement of operations.” |
7 | The ratios of net investment income to average net assets excluding interest expense and dividend expense for the six months ended May 31, 2018 and years ended Nov. 30, 2017 and 2016 were 2.02% and 2.27%, 1.80%, respectively. |
See accompanying notes, which are an integral part of the financial statements.
40
Table of Contents
Six months ended 5/31/181 | Year ended | |||||||||||||||||||||||
(Unaudited) | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | 11/30/13 | |||||||||||||||||||
$ | 14.62 | $ | 13.63 | $ | 13.16 | $ | 13.73 | $ | 12.81 | $ | 10.94 | |||||||||||||
0.15 | 0.32 | 0.24 | 0.29 | 0.28 | 0.28 | |||||||||||||||||||
(0.37 | ) | 0.99 | 0.51 | (0.58 | ) | 0.92 | 1.86 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.22 | ) | 1.31 | 0.75 | (0.29 | ) | 1.20 | 2.14 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.14 | ) | (0.32 | ) | (0.28 | ) | (0.28 | ) | (0.28 | ) | (0.27 | ) | |||||||||||||
(0.05 | ) | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.19 | ) | (0.32 | ) | (0.28 | ) | (0.28 | ) | (0.28 | ) | (0.27 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 14.21 | $ | 14.62 | $ | 13.63 | $ | 13.16 | $ | 13.73 | $ | 12.81 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(1.52% | ) | 9.70% | 5.76% | (2.15%) | 9.46% | 19.77% | ||||||||||||||||||
$ | 3,086 | $ | 2,320 | $ | 3,229 | $ | 3,682 | $ | 3,983 | $ | 3,030 | |||||||||||||
1.36% | 1.34% | 1.38% | 1.35% | 1.35% | 1.37% | |||||||||||||||||||
1.36% | 1.34% | 1.38% | 1.35% | 1.35% | 1.46% | |||||||||||||||||||
2.02% | 2.26% | 1.79% | 2.13% | 2.10% | 2.37% | |||||||||||||||||||
2.02% | 2.26% | 1.79% | 2.13% | 2.10% | 2.28% | |||||||||||||||||||
36% | 81% | 102% | 67% | 56% | 51% | |||||||||||||||||||
|
41
Table of Contents
Financial highlights
Delaware Wealth Builder Fund Institutional Class
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income2 | ||||||||||||||||||||
Net realized and unrealized gain (loss) | ||||||||||||||||||||
Total from investment operations | ||||||||||||||||||||
Less dividends and distributions from: | ||||||||||||||||||||
Net investment income | ||||||||||||||||||||
Net realized gain | ||||||||||||||||||||
Total dividends and distributions | ||||||||||||||||||||
Net asset value, end of period | ||||||||||||||||||||
Total return3 | ||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||
Net assets, end of period (000 omitted) | ||||||||||||||||||||
Ratio of expenses to average net assets4,5,6 | ||||||||||||||||||||
Ratio of net investment income to average net assets4,5,7 | ||||||||||||||||||||
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. |
4 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
5 | Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended May 31, 2018 are reflected on the “Statement of operations.” |
6 | The ratios of expenses to average net assets excluding interest expense and dividend expense for the six months ended May 31, 2018 and years ended Nov. 30, 2017 and 2016 were 0.86% and 0.83%, 0.87%, respectively. |
7 | The ratios of net investment income to average net assets excluding interest expense and dividend expense for the six months ended May 31, 2018 and years ended Nov. 30, 2017 and 2016 were 2.52% and 2.77%, 2.30%, respectively. |
See accompanying notes, which are an integral part of the financial statements.
42
Table of Contents
Six months ended 5/31/181 | Year ended | |||||||||||||||||||||||
(Unaudited) | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | 11/30/13 | |||||||||||||||||||
$ | 14.63 | $ | 13.64 | $ | 13.16 | $ | 13.73 | $ | 12.81 | $ | 10.94 | |||||||||||||
0.18 | 0.39 | 0.30 | 0.36 | 0.35 | 0.35 | |||||||||||||||||||
(0.37 | ) | 0.99 | 0.52 | (0.58 | ) | 0.92 | 1.85 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.19 | ) | 1.38 | 0.82 | (0.22 | ) | 1.27 | 2.20 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.18 | ) | (0.39 | ) | (0.34 | ) | (0.35 | ) | (0.35 | ) | (0.33 | ) | |||||||||||||
(0.05 | ) | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.23 | ) | (0.39 | ) | (0.34 | ) | (0.35 | ) | (0.35 | ) | (0.33 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 14.21 | $ | 14.63 | $ | 13.64 | $ | 13.16 | $ | 13.73 | $ | 12.81 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(1.30% | ) | 10.24% | 6.37% | (1.66%) | 10.01% | 20.37% | ||||||||||||||||||
$ | 189,503 | $ | 201,285 | $ | 149,830 | $ | 147,133 | $ | 149,914 | $ | 61,809 | |||||||||||||
0.86% | 0.84% | 0.88% | 0.85% | 0.85% | 0.87% | |||||||||||||||||||
2.52% | 2.76% | 2.29% | 2.63% | 2.60% | 2.87% | |||||||||||||||||||
36% | 81% | 102% | 67% | 56% | 51% | |||||||||||||||||||
|
43
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Notes to financial statements |
Delaware Wealth Builder Fund | May 31, 2018 (Unaudited) |
Delaware Group® Equity Funds V (Trust) is organized as a Delaware statutory trust and offers three series: Delaware Wealth Builder Fund, Delaware Small Cap Core Fund, and Delaware Small Cap Value Fund. These financial statements and the related notes pertain to Delaware Wealth Builder Fund (Fund). The Trust is an open-end investment company. The Fund is considered diversified under the Investment Company Act of 1940 (1940 Act), 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) instead of a front-end sales charge 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 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 US generally accepted accounting principles (US 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 LLC (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange on the valuation date. Equity securities 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, the mean between the bid and ask prices will be used, which approximates fair value. Equity securities listed on a foreign exchange are normally valued at the last quoted sales price on the valuation date. Other debt securities and credit default swap contracts are valued based upon valuations provided by an independent pricing service or broker/counterparty and reviewed by management. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. US government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. Valuations for fixed income securities utilize matrix systems, which reflect such factors as security prices, yields, maturities, and ratings, and are supplemented by dealer and exchange quotations. For asset-backed securities, collateralized mortgage obligations, commercial mortgage securities and US 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 contracts are valued at the daily quoted settlement prices. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith
44
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under the direction of the Trust’s Board of Trustees (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. The Fund may use fair value pricing more frequently for securities traded primarily in non-US markets because, among other things, most foreign markets close well before the Fund values its securities, generally as of 4:00pm 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. Whenever such a significant event occurs, the Fund may value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing). Restricted securities are valued at fair value using methods approved by the Board.
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 or to be taken on the Fund’s federal income tax returns through the six months ended May 31, 2018 and for all open tax years (years ended Nov. 30, 2015–Nov. 30, 2017), 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 in which it invests that may date back to the inception of the Fund. If applicable, the Fund recognizes interest accrued on unrecognized tax benefits in interest expense and penalties in other expenses on the “Statement of operations.” During the six months ended May 31, 2018, the Fund did not incur any interest or tax penalties.
Class Accounting – Investment income, common expenses, and realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Underlying Funds – The Fund may invest in other investment companies (Underlying Funds) to the extent permitted by the 1940 Act. The Underlying Funds in which the Fund invests include ETFs. The Fund will indirectly bear the investment management fees and other expenses of the Underlying Funds.
Repurchase Agreements – The Fund may purchase certain US government securities subject to the counterparty’s agreement to repurchase them at an agreed upon date and price. The counterparty will be required on a daily basis to maintain the value of the collateral subject to the agreement at not less than the repurchase price (including accrued interest). The agreements are conditioned upon the collateral being deposited under the Federal Reserve book-entry system with the Fund’s custodian or a third-party sub-custodian. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. All open repurchase agreements as of the date of this report were entered into on May 31, 2018, and matured on the next business day.
Short Sales – The Fund may make short sales in an attempt to protect against declines in an individual security or the overall market, to manage duration or for such other purposes consistent with the Fund’s
45
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Notes to financial statements
Delaware Wealth Builder Fund
1. Significant Accounting Policies (continued)
investment objectives and strategies. Typically, short sales are transactions in which the Fund sells a security it does not own and, at the time a short sale is effected, the Fund incurs an obligation to replace the security borrowed at whatever its price may be at the time the Fund purchases it for delivery to the lender. The price at such time may be more or less than the price at which the security was sold by the Fund. When a short sale transaction is closed out by delivery of the security, any gain or loss on the transaction generally is taxable as short-term capital gain or loss. Until the security is replaced, the Fund is required to pay the lender amounts equal to any dividends or interest that accrue during the period of the loan. To borrow the security, the Fund also may be required to pay a premium, which would increase the cost of the security sold. The proceeds of the short sale, and potentially additional margin, will be retained by the broker from whom the security is borrowed, to the extent necessary to meet margin requirements, until the short position is closed out.
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 US dollars at the exchange rate of such currencies against the US dollar. Transaction gains or losses resulting from changes in exchange rates during the reporting period or upon settlement of the foreign currency transaction are reported in operations for the current period. The Fund generally bifurcates that portion of realized gains and losses on investments in debt securities which is due to changes in foreign exchange rates from that which is due to changes in market prices of debt securities. That portion of gains (losses), which is due to changes in foreign exchange rates, is included on the “Statement of operations” under “Net realized gain (loss) on foreign currencies.” For foreign equity securities, these changes are included on the “Statement of operations” under “Net realized and unrealized gain (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 Fund is an investment company, whose financial statements are prepared in conformity with US GAAP. Therefore, the Fund follows the accounting and reporting guidelines for investment companies. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other – Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Funds® by Macquarie (Delaware Funds) are generally allocated among such funds on the basis of average net assets. Management fees and certain other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Discounts and premiums on debt securities are accreted or amortized to interest income, respectively, over the lives of the respective securities using the effective interest method. Realized gain (loss) on paydowns of asset- and
46
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mortgage-backed securities are classified as interest income. 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. Distributions received from investments in master limited partnerships are recorded as return of capital on investments. 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, 2018.
The Fund receives earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. The expense paid under this arrangement is included on the “Statement of operations” under “Custodian fees” with the corresponding expense offset included in “Less expenses paid indirectly.” For the six months ended May 31, 2018, the Fund earned $3,852 under this arrangement.
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. If the amount earned is greater than $1, the expense paid under this arrangement is included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses” with the corresponding expense offset included in “Less expenses paid indirectly.” For the six months ended May 31, 2018, the Fund earned $465 under this arrangement.
2. Investment Management, Administration Agreements, and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Macquarie Investment Management Business Trust and the investment manager, an annual fee which is calculated daily and paid monthly at the 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 Investments Fund Services Company (DIFSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Fund. For these services, DIFSC’s fees are calculated daily and paid monthly based on the aggregate daily net assets of all funds within the Delaware Funds at the following annual rate: 0.00475% of the first $35 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $45 billion (Total Fee). Each fund in the Delaware Funds pays a minimum of $4,000, which, in aggregate, is subtracted from the Total
47
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Notes to financial statements
Delaware Wealth Builder Fund
2. Investment Management, Administration Agreements, and Other Transactions with Affiliates (continued)
Fee. Each fund then pays its portion of the remainder of the Total Fee on a relative NAV basis. For the six months ended May 31, 2018, the Fund was charged $15,250 for these services. This amount is included on the “Statement of operations” under “Accounting and administration expenses.”
DIFSC is also the transfer agent and dividend disbursing agent of the Fund. For these services, DIFSC’s fees are calculated daily and paid monthly based on the aggregate daily net assets of the retail funds within the Delaware Funds at the following annual 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% of average daily net assets in excess of $30 billion. The fees payable to DIFSC under the transfer agent agreement described above are allocated among all retail funds in the Delaware Funds on a relative NAV basis. For the six months ended May 31, 2018, the Fund was charged $68,255 for these services. This amount is included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses.” Pursuant to a sub-transfer agency agreement between DIFSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to the Fund. Sub-transfer agency fees are paid by the Fund and are also included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses.”
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and service (12b-1) 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 Class R shares. The fees are calculated daily and paid monthly. Institutional Class shares pay no 12b-1 fees.
As provided in the investment management agreement, the Fund bears a portion of the cost of certain resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to the Fund. For the six months ended May 31, 2018, the Fund was charged $14,658 for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates’ employees. This amount is included on the “Statement of operations” under “Legal fees.”
For the six months ended May 31, 2018, DDLP earned $21,105 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2018, DDLP received gross CDSC commissions of $6 and $4,022 on redemptions of the Fund’s Class A and Class C shares, respectively, and these commissions were entirely used to offset upfront commissions previously paid by DDLP to broker/dealers on sales of those shares.
Trustees’ fees include expenses accrued by the Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, DIFSC, and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Fund.
In addition to the management fees and other expenses of the Fund, the Fund indirectly bears the investment management fees and other expenses of the Underlying Funds. The amount of these fees and expenses incurred indirectly by the Fund will vary based upon the expense and fee levels of the Underlying Funds and the amount of shares that are owned of the Underlying Funds at different times.
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Cross trades for the six months ended May 31, 2018 were executed by the Fund pursuant to procedures adopted by the Board designed to ensure compliance with Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds of investment companies, or between a fund of an investment company and another entity, that are or could be considered affiliates by virtue of having a common investment advisor (or affiliated investment advisors), common directors/trustees and/or common officers. At its regularly scheduled meetings, the Board reviews such transactions for compliance with the procedures adopted by the Board. Pursuant to these procedures, for the six months ended May 31, 2018, the Fund engaged in securities purchases of $1,049,919, and sales of $6,552,498, which resulted in net realized losses of ($23,209).
3. Investments
For the six months ended May 31, 2018, the Fund made purchases and sales of investment securities other than US government securities and short-term investments as follows:
Purchases other than US government securities | $ | 235,824,888 | ||
Purchases of US government securities | 3,972,664 | |||
Sales other than US government securities | 298,576,792 | |||
Sales of US government securities | 15,247,491 |
At May 31, 2018, the cost and unrealized appreciation (depreciation) of investments and derivatives for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At May 31, 2018, the cost and unrealized appreciation (depreciation) of investments and derivatives for the Fund were as follows:
Cost of investments and derivatives | $ | 660,944,458 | ||
|
| |||
Aggregate unrealized appreciation of investments and derivatives | $ | 42,035,930 | ||
Aggregate unrealized depreciation of investments and derivatives | (30,991,856 | ) | ||
|
| |||
Net unrealized appreciation of investments and derivatives | $ | 11,044,074 | ||
|
|
US GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three-level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances. The Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-level hierarchy of inputs is summarized below and on the next page.
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) |
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Notes to financial statements
Delaware Wealth Builder 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, 2018:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Securities | ||||||||||||||||
Assets: | ||||||||||||||||
Common Stock | ||||||||||||||||
Consumer Discretionary | $ | 27,021,682 | $ | 174,389 | $ | — | $ | 27,196,071 | ||||||||
Consumer Staples | 36,390,507 | — | — | 36,390,507 | ||||||||||||
Diversified REITs | 1,470,908 | — | — | 1,470,908 | ||||||||||||
Energy | 41,131,094 | — | — | 41,131,094 | ||||||||||||
Financials | 44,375,568 | — | — | 44,375,568 | ||||||||||||
Healthcare | 75,242,585 | — | — | 75,242,585 | ||||||||||||
Healthcare REITs | 4,602,603 | — | — | 4,602,603 | ||||||||||||
Hotel REITs | 4,889,321 | — | — | 4,889,321 | ||||||||||||
Industrial REITs | 476,940 | — | — | 476,940 | ||||||||||||
Industrials | 31,044,331 | — | — | 31,044,331 | ||||||||||||
Information Technology | 41,824,662 | — | — | 41,824,662 | ||||||||||||
Information Technology REIT | 1,531,005 | — | — | 1,531,005 | ||||||||||||
Mall REITs | 1,279,797 | — | — | 1,279,797 | ||||||||||||
Manufactured Housing REITs | 1,513,791 | — | — | 1,513,791 | ||||||||||||
Materials | 9,837,675 | — | — | 9,837,675 | ||||||||||||
Multifamily REITs | 13,244,137 | — | — | 13,244,137 | ||||||||||||
Office REITs | 3,972,781 | — | — | 3,972,781 |
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Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Real Estate Operating/Development | $ | 4,503,270 | $ | 19,175 | $ | — | $ | 4,522,445 | ||||||||
Self-Storage REITs | 951,334 | — | — | 951,334 | ||||||||||||
Shopping Center REITs | 2,687,707 | — | — | 2,687,707 | ||||||||||||
Single Tenant REITs | 1,607,457 | — | — | 1,607,457 | ||||||||||||
Specialty REITs | 3,364,313 | — | — | 3,364,313 | ||||||||||||
Telecommunication Services | 21,193,283 | — | — | 21,193,283 | ||||||||||||
Utilities | 9,561,630 | — | — | 9,561,630 | ||||||||||||
Exchange-Traded Funds | 9,486,060 | — | — | 9,486,060 | ||||||||||||
Limited Partnerships1 | 2,034,540 | — | 5,717,806 | 7,752,346 | ||||||||||||
Master Limited Partnerships | 1,139,901 | — | — | 1,139,901 | ||||||||||||
Convertible Preferred Stock1 | 4,871,391 | 7,215,673 | — | 12,087,064 | ||||||||||||
Corporate Debt | — | 157,193,714 | — | 157,193,714 | ||||||||||||
Leveraged Non-Recourse Security | — | — | — | — | ||||||||||||
Municipal Bonds | — | 30,857,133 | — | 30,857,133 | ||||||||||||
Non-Agency Commercial Mortgage-Backed Security | — | 505,126 | — | 505,126 | ||||||||||||
Loan Agreements | — | — | 21,729 | 21,729 | ||||||||||||
Foreign Debt | — | 4,986,554 | — | 4,986,554 | ||||||||||||
US Treasury Obligations | — | 5,060,230 | — | 5,060,230 | ||||||||||||
Preferred Stock1 | 5,560,569 | 1,924,779 | — | 7,485,348 | ||||||||||||
Warrant | — | 928 | — | 928 | ||||||||||||
Short-Term Investments | — | 51,500,454 | — | 51,500,454 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Value of Securities | $ | 406,810,842 | $ | 259,438,155 | $ | 5,739,535 | $ | 671,988,532 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Derivatives2 | ||||||||||||||||
Assets: | ||||||||||||||||
Foreign Currency Exchange Contracts | $ | — | $ | 1,151 | $ | — | $ | 1,151 | ||||||||
Futures Contracts | 626,201 | — | — | 626,201 | ||||||||||||
Liabilities: | ||||||||||||||||
Foreign Currency Exchange Contract | $ | — | $ | (4,993 | ) | $ | — | $ | (4,993 | ) | ||||||
Swap Contract | — | (75,668 | ) | — | (75,668 | ) |
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Notes to financial statements
Delaware Wealth Builder Fund
3. Investments (continued)
1 Security 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 | |||||||||||||
Limited Partnerships | 26.24 | % | — | 73.76 | % | 100.00 | % | |||||||||
Convertible Preferred Stock | 40.30 | % | 59.70 | % | — | 100.00 | % | |||||||||
Preferred Stock | 74.29 | % | 25.71 | % | — | 100.00 | % |
2 Foreign currency exchange contracts, futures contracts, and swap contracts are valued at the unrealized appreciation (depreciation) on the instrument at the period end.
The security that has been valued at zero on the “Schedule of investments” is considered to be a Level 3 investment in this table.
During the six months ended May 31, 2018, there were no transfers between Level 1 investments, Level 2 investments, or Level 3 investments that had a significant impact to the Fund. This does not include transfers between Level 1 investments and Level 2 investments due to the Fund utilizing international fair value pricing during the year. In accordance with the fair valuation procedures described in Note 1, international fair value pricing of securities in the Fund occurs when market volatility exceeds an established rolling threshold. If the threshold is exceeded on a given date, then prices of international securities (those that traded on exchanges that close at a different time than the time that the Fund’s NAV is determined) are established using a separate pricing feed from a third-party vendor designed to establish a price for each such security as of the time that the Fund’s NAV is determined. Further, international fair value pricing uses other observable market-based inputs in place of the closing exchange price due to the events occurring after the close of the exchange or market on which the investment is principally traded, causing a change in classification between levels. The Fund’s policy is to recognize transfers between levels based on fair value at the beginning of the reporting period.
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim, or end of the period in relation to the Fund’s net assets. Management has determined not to provide a reconciliation of Level 3 investments as the Level 2 investments were not considered significant to the Fund’s net assets at the beginning, interim, or end of the period. Management has determined not to provide additional disclosure on Level 3 inputs since the Level 3 investments are not considered significant to the Fund’s net assets at the end of the period.
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4. Capital Shares
Transactions in capital shares were as follows:
Six months ended | Year ended | |||||||
5/31/18 | 11/30/17 | |||||||
Shares sold: | ||||||||
Class A | 643,240 | 3,558,392 | ||||||
Class C | 225,338 | 1,260,578 | ||||||
Class R | — | 49,560 | ||||||
Institutional Class | 1,793,737 | 6,849,903 | ||||||
Shares from merger: | ||||||||
Class A | 2,344,699 | — | ||||||
Class C | 725,393 | — | ||||||
Class R | 130,757 | — | ||||||
Institutional Class | 328,897 | — | ||||||
Shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | 258,982 | 423,219 | ||||||
Class C | 154,018 | 295,329 | ||||||
Class R | 3,339 | 4,288 | ||||||
Institutional Class | 203,096 | 331,025 | ||||||
|
|
|
| |||||
6,811,496 | 12,772,294 | |||||||
|
|
|
| |||||
Shares redeemed: | ||||||||
Class A | (2,184,913 | ) | (6,290,900 | ) | ||||
Class C | (2,134,756 | ) | (6,895,030 | ) | ||||
Class R | (75,572 | ) | (132,046 | ) | ||||
Institutional Class | (2,749,789 | ) | (4,406,185 | ) | ||||
|
|
|
| |||||
(7,145,030 | ) | (17,724,161 | ) | |||||
|
|
|
| |||||
Net decrease | (333,534 | ) | (4,951,867 | ) | ||||
|
|
|
|
53
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Notes to financial statements
Delaware Wealth Builder Fund
4. Capital Shares (continued)
Certain shareholders may exchange shares of one class for shares of another class in the same Fund. These exchange transactions are included as subscriptions and redemptions in the table above and the “Statements of changes in net assets.” For the six months ended May 31, 2018 and the year ended Nov. 30, 2017, the Fund had the following exchange transactions.
Exchange Redemptions | Exchange Subscriptions | |||||||||||||||||||
Institutional | ||||||||||||||||||||
Class A Shares | Class C Shares | Class A Shares | Class Shares | Value | ||||||||||||||||
Six months ended 5/31/18 | 12,246 | 71,652 | 2,873 | 83,995 | $ | 1,272,159 | ||||||||||||||
Year ended 11/30/17 | 1,609,809 | 119,691 | 10,386 | 1,718,180 | 24,317,380 |
5. Fund Merger
As of the close of business on Dec. 15, 2017, the Fund acquired all of the assets and liabilities of Delaware Foundation Growth Allocation Fund (“Acquired Fund”), an open-end investment company, in exchange for the shares of Delaware Wealth Builder Fund (“Acquiring Fund”) pursuant to a Plan and Agreement of Reorganization (“Reorganization”). For financial reporting purposes, assets received and shares issued by the Acquiring Fund were recorded at fair value. The shareholders of the Acquired Fund received shares of the respective class of the Acquiring Fund equal to the aggregate net asset value of their shares in the Acquired Fund by a taxable exchange prior to the Reorganization, as shown in the following table:
Acquired Fund Shares Outstanding | Shares Converted to Acquiring Fund | Acquired Fund Net Assets | Conversion Ratio | |||||
Class A | 3,642,448 | 2,344,699 | $34,209,151 | 0.644 | ||||
Class C | 1,167,237 | 725,393 | 10,597,997 | 0.621 | ||||
Class R | 205,030 | 130,757 | 1,907,750 | 0.638 | ||||
Institutional Class | 507,236 | 328,897 | 4,798,603 | 0.648 |
The net assets of the Acquiring Fund before the acquisition were $687,884,216. The net assets of the Acquiring Fund immediately following the acquisition were $739,397,717.
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If the acquisition had been completed on Dec. 1, 2017, the beginning of the Acquiring Fund’s reporting period, the Acquiring Fund’s pro forma results of operations for the six months ended May 31, 2018, would have been as follows (unaudited):
Net investment income | $ | 7,986,830 | (a) | |
Net realized gain | 31,489,199 | (b) | ||
Net change in unrealized appreciation (depreciation) | (29,614,061 | ) (c) | ||
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| |||
Net increase in net assets resulting from operations | $ | 9,861,968 | ||
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(a)$7,383,079, as reported in the Statement of operations, plus $603,751 net investment income from Delaware Foundation Growth Allocation Fund pre-merger.
(b)$27,036,434, as reported in the Statement of operations, plus $4,452,765 net realized gain from Delaware Foundation Growth Allocation Fund pre-merger.
(c)$(30,828,534), as reported in the Statement of operations, plus $1,214,473 net change in unrealized appreciation (depreciation) from Delaware Foundation Growth Allocation Fund pre-merger.
Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practical to separate the amounts of revenue and earnings of the Acquired Fund that have been included in the Fund’s Statement of operations since Dec. 18, 2017.
6. Line of Credit
The Fund, along with certain other funds in the Delaware Funds (Participants), is a participant in a $155,000,000 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 0.15%, which is generally allocated across the Participants based on a weighted average of the respective net assets of each Participant. The Participants are permitted to borrow up to a maximum of one-third of their net assets under the agreement. Each Participant is individually, and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit available under the agreement expires on Nov. 5, 2018.
The Fund had no amounts outstanding as of May 31, 2018, or at any time during the period then ended.
7. Derivatives
US 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 may enter into foreign currency exchange contracts and foreign cross currency exchange contracts as a way of managing foreign exchange rate risk. The Fund may enter into these contracts to fix the US 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 US dollar value of securities it already owns that are denominated in foreign currencies. In addition, the Fund may enter into these contracts to facilitate or expedite the settlement of portfolio transactions. The change in value is
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Notes to financial statements
Delaware Wealth Builder Fund
7. Derivatives (continued)
recorded as an unrealized gain or loss. When the contract is closed, a realized gain or loss is recorded equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
The use of foreign currency exchange contracts and foreign cross currency exchange contracts does not eliminate fluctuations in the underlying prices of the securities, but does establish a rate of exchange that can be achieved in the future. Although foreign currency exchange contracts and foreign cross currency exchange contracts limit the risk of loss due to an unfavorable change in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency change favorably. In addition, the Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts. The Fund’s maximum risk of loss from counterparty credit risk is the value of its currency exchanged with the counterparty. The risk is generally mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.
During the six months ended May 31, 2018, the Fund entered into foreign currency exchange contracts to fix the US dollar value of a security between trade date and settlement date.
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 contracts in the normal course of pursuing its investment objective. The Fund may invest in futures contracts to hedge its existing portfolio securities against fluctuations in value caused by changes in interest rates or market conditions. Upon entering into a futures contract, the Fund deposits cash or pledges US 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. At May 31, 2018, the Fund posted $877,000 in cash as margin for open futures contracts, which is included in “Cash collateral due from broker” on the “Statement of assets and liabilities.”
During the six months ended May 31, 2018, the Fund used futures contracts to hedge currency risks associated with the Fund’s investments.
Options Contracts — The Fund may enter into options contracts in the normal course of pursuing its investment objective. The Fund may buy or write options contracts for any number of reasons, including without limitation: to manage the Fund’s exposure to changes in securities prices caused by interest
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rates or market conditions and foreign currencies; as an efficient means of adjusting the Fund’s overall exposure to certain markets; to protect the value of portfolio securities; and as a cash management tool. The Fund may buy or write call or put options on securities, futures, swaps, swaptions, financial indices, and foreign currencies. When the Fund buys an option, a premium is paid and an asset is recorded and adjusted on a daily basis to reflect the current market value of the option 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 option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is treated as realized gain or loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has a realized gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. When writing options, the Fund is subject to minimal counterparty risk because the counterparty is only obligated to pay premiums and does not bear the market risk of an unfavorable market change. There were no open written option contracts at May 31, 2018.
During the six months ended May 31, 2018, the Fund used options contracts to receive premiums for writing options.
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 Financial Services LLC (S&P) or Baa3 by Moody’s Investors Service, Inc. (Moody’s) or is determined to be of equivalent credit 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, 2018, the Fund entered into CDS contracts as a purchaser of protection. 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 daily as unrealized appreciation or depreciation. A
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Notes to financial statements
Delaware Wealth Builder Fund
7. Derivatives (continued)
realized gain or loss is recorded upon a credit event (as defined in the CDS agreement) or the maturity or termination of the agreement. Initial margin and variation margin are posted to central counterparties for central cleared CDS basket trades, as determined by the applicable central counterparty. During the six months ended May 31, 2018, the Fund did not enter into any CDS contracts as a seller of protection.
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) for bilateral swap contracts, 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, and (2) for cleared swaps, trading these instruments through a central counterparty.
During the six months ended May 31, 2018, the Fund used CDS contracts to hedge against credit events.
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 contract on a given day. 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 “Schedule of investments.”
At May 31, 2018, the Fund posted $1,208,817 in cash collateral for open centrally cleared CDS contracts, which is included in “Cash collateral due from broker” on the “Statement of assets and liabilities.”
Fair values of derivative instruments as of May 31, 2018 were as follows:
Asset Derivatives Fair Value | ||||||||||||||||
Statements of Assets and Liabilities Location | Currency Contracts | Equity Contracts | Credit Contracts | Total | ||||||||||||
Unrealized appreciation on foreign currency exchange contracts | $ | 1,151 | $ | — | $ | — | $ | 1,151 | ||||||||
Variation margin due from broker on centrally cleared credit default swap contracts | — | — | 9,274 | 9,274 | ||||||||||||
Variation margin due from broker on futures contracts | — | 626,201 | 626,201 | |||||||||||||
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| |||||||||
Total | $ | 1,151 | $ | 626,201 | $ | 9,274 | $ | 636,626 | ||||||||
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Statements of Assets and Liabilities Location | Liability Derivatives Fair Value Credit Contracts | |
Unrealized depreciation on foreign currency exchange contracts | $4,993 |
*Includes cumulative appreciation/depreciation of futures contracts from the date the contracts were opened through May 31, 2018. Only current day variation margin is reported on the “Statement of assets and liabilities.
The effect of derivative instruments on the ”Statement of operations“ for the six months ended May 31, 2018 was as follows:
Net Realized Gain (Loss) on: | ||||||||||||||||||||
Foreign | Futures | Options | Swap | Total | ||||||||||||||||
Currency contracts | $ | (16,227 | ) | $ | — | $ | — | $ | — | $ | (16,227 | ) | ||||||||
Equity contracts | — | (1,470,579 | ) | 355 | — | (1,470,224 | ) | |||||||||||||
Credit contracts | — | — | — | (273,647 | ) | (273,647 | ) | |||||||||||||
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Total | $ | (16,227 | ) | $ | (1,470,579 | ) | $ | 355 | $ | (273,647 | ) | $ | (1,760,098 | ) | ||||||
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Net Change in Unrealized Appreciation (Depreciation) of: | ||||||||||||||||
Foreign | Futures | Swap | Total | |||||||||||||
Currency contracts | $ | (3,842 | ) | $ | — | $ | — | $ | (3,842 | ) | ||||||
Equity contracts | — | 1,566,062 | — | 1,566,062 | ||||||||||||
Credit contracts | — | — | 117,346 | 117,346 | ||||||||||||
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Total | $ | (3,842 | ) | $ | 1,566,062 | $ | 117,346 | $ | 1,679,566 | |||||||
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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, 2018.
Long Derivatives Volume | Short Derivatives Volume | |||||||
Foreign currency exchange contracts (average cost) | $ | 308,062 | $ | 904,661 | ||||
Futures contracts (average notional value) | — | 18,338,797 | ||||||
Options contracts (average notional value) | — | 29 | ||||||
CDS contracts (average notional value)* | 9,629,960 | — |
*Long represents buying protection and short represents selling protection.
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Notes to financial statements
Delaware Wealth Builder Fund
8. Offsetting
The Fund entered into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or a similar agreement with certain of its derivative contract counterparties in order to better define its contractual rights and to secure rights that will help the Fund mitigate its counterparty risk. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs certain 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), 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 on the ”Statement of assets and liabilities.“
At May 31, 2018, 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 | |||||||||||
BNY Mellon | $ 1,151 | $(4,993) | $(3,842) | |||||||||||
Counterparty | Net Position | Fair Value of Non-Cash Collateral Received | Cash Collateral Received(a) | Fair Value of Non-Cash Collateral Pledged | Cash Collateral Pledged | Net Exposure(b) | ||||||||
BNY Mellon | $(3,842) | $ — | $ — | $ — | $ — | $(3,842) |
Master Repurchase Agreements
Repurchase agreements are entered into by the Fund under Master Repurchase Agreements (each, an “MRA”). The MRA permits the Fund, under certain circumstances including an event of default (such as bankruptcy or insolvency), to offset payables and/or receivables with collateral held by and/or posted to the counterparty. As a result, one single net payment is created. Bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of the MRA counterparty’s bankruptcy or insolvency. Based on the terms of the MRA, the Fund receives securities as collateral with a market value in excess of the repurchase price at maturity. Upon a bankruptcy or insolvency of the MRA counterparty, the Fund would recognize a liability with respect to such excess collateral. The liability reflects the Fund’s obligation under bankruptcy law to return the excess to the counterparty. As of May 31, 2018, the following table is a summary of the Fund’s repurchase agreements by counterparty which are subject to offset under an MRA:
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Counterparty | Repurchase Agreements | Fair Value of Non-Cash Collateral Received(a) | Cash Collateral Received | Net Collateral Received | Net Exposure(b) | |||||||||||||||
Bank of America Merrill Lynch | $ | 5,666,265 | $ | (5,666,265 | ) | $ | — | $ | (5,666,265 | ) | $ | — | ||||||||
Bank of Montreal | 16,998,794 | (16,998,794 | ) | — | (16,998,794 | ) | — | |||||||||||||
BNP Paribas | 18,878,351 | (18,878,351 | ) | — | (18,878,351 | ) | — | |||||||||||||
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Total | $ | 41,543,410 | $ | (41,543,410 | ) | $ | — | $ | (41,543,410 | ) | $ | — | ||||||||
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(a)The value of the related collateral received exceeded the value of the repurchase agreements as of May 31, 2018.
(b)Net exposure 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 Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (1) 102% with respect to US securities and foreign securities that are denominated and payable in US dollars; and (2) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the 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. The collateral percentage with respect to the market value of the loaned security is determined by the security lending agent.
Cash collateral received by each fund is generally invested in a series of individual separate accounts, each corresponding to a fund. The investment guidelines permit each separate account to hold certain securities that would be considered eligible securities for a money market fund. Cash collateral received is generally invested in government securities; certain obligations issued by government sponsored enterprises; repurchase agreements collateralized by US Treasury securities; obligations issued by the central government of any Organization for Economic Cooperation and Development (OECD) country or its agencies, instrumentalities, or establishments; obligations of supranational organizations; commercial paper, notes, bonds, and other debt obligations; certificates of deposit, time deposits, and other bank obligations; and asset-backed securities. A fund can also accept US government securities and letters of credit (non-cash collateral) in connection with securities loans.
In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the
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Notes to financial statements
Delaware Wealth Builder Fund
9. Securities Lending (continued)
collateral received is insufficient to cover the value of the loaned securities and provided such collateral shortfall is not the result of investment losses, the lending agent has agreed to pay the amount of the shortfall to the Fund or, at the discretion of the lending agent, replace the loaned securities. The Fund continues to record dividends or interest, as applicable, on the securities loaned and is subject to changes in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to recover the securities from the borrower on demand. With respect to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent, and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.
The Fund may incur investment losses as a result of investing securities lending collateral. This could occur if an investment in the collateral investment account defaulted or became impaired. Under those circumstances, the value of a Fund’s cash collateral account may be less than the amount the Fund would be required to return to the borrowers of the securities and the Fund would be required to make up for this shortfall.
During the six months ended May 31, 2018, the Fund had no securities out on loan.
10. Credit and Market Risk
Some countries in which the Fund may invest require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, if there is deterioration in a country’s balance of payments or for other reasons, a country may impose temporary restrictions on foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially smaller, less liquid and more volatile than the major securities markets in the United States. Consequently, acquisition and disposition of securities by the Fund may be inhibited. In addition, a significant portion of the aggregate market value of equity securities listed on the major securities exchanges in emerging markets is held by a smaller number of investors. This may limit the number of shares available for acquisition or disposition by the Fund.
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. Some of these securities are
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collateralized mortgage obligations (CMOs). CMOs are debt securities issued by US government agencies or by financial institutions and other mortgage lenders, which are collateralized by a pool of mortgages held under an indenture. Prepayment of mortgages may shorten the stated maturity of the obligations and can result in a loss of premium, if any has been paid. Certain of these securities may be stripped (securities which provide only the principal or interest feature of the underlying security). The yield to maturity on an interest-only CMO is extremely sensitive not only to changes in prevailing interest rates, but also to the rate of principal payments (including prepayments) on the related underlying mortgage assets. A rapid rate of principal payments may have a material adverse effect on the Fund’s yield to maturity. If the underlying mortgage assets experience greater than anticipated prepayments of principal, the Fund may fail to fully recoup its initial investment in these securities even if the securities are rated in the highest rating categories.
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, 2018. 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 also invests in real estate acquired as a result of ownership of securities or other instruments, including issuers that invest, deal, or otherwise engage in transactions in real estate or interests therein. These instruments may include interests in private equity limited partnerships or limited liability companies that hold real estate investments (Real Estate Limited Partnerships). The Fund will limit its investments in Real Estate Limited Partnerships to 5% of its total assets at the time of purchase.
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 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 invests in bank loans and other securities that may subject it to direct indebtedness risk, the risk that the Fund will not receive payment of principal, interest, and other amounts due in connection with these investments and will depend primarily on the financial condition of the borrower. Loans that are fully secured offer the Fund more protection than unsecured loans in the event of nonpayment of scheduled interest or principal, although there is no assurance that the liquidation of collateral from a secured loan would satisfy the corporate borrower’s obligation, or that the collateral can be liquidated. Some loans or claims may be in default at the time of purchase. Certain of the loans and the other direct indebtedness acquired by the Fund may involve revolving credit facilities or other standby financing commitments that obligate the Fund to pay additional cash on a certain date or on demand. These commitments may require the Fund to increase its investment in a company at a time when the Fund might not otherwise decide to do so (including at a time when the company’s financial condition makes it unlikely that such amounts will be repaid). To the extent that the Fund is committed to advance additional funds, it will at all times hold and maintain cash or other high grade debt obligations in an amount sufficient to meet such commitments. When a loan agreement is purchased the Fund may pay an assignment fee. On an ongoing basis, the Fund may receive a commitment fee based on the undrawn
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Notes to financial statements
Delaware Wealth Builder Fund
10. Credit and Market Risk (continued)
portion of the underlying line of credit portion of a loan agreement. Prepayment penalty fees are received upon the prepayment of a loan agreement by a borrower. Prepayment penalty, facility, commitment, consent and amendment fees are recorded to income as earned or paid.
As the Fund may be required to rely upon another lending institution to collect and pass on to the Fund amounts payable with respect to the loan and to enforce the Fund’s rights under the loan and other direct indebtedness, an insolvency, bankruptcy, or reorganization of the lending institution may delay or prevent the Fund from receiving such amounts. The highly leveraged nature of many loans may make them especially vulnerable to adverse changes in economic or market conditions. Investments in such loans and other direct indebtedness may involve additional risk to the Fund.
The Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A promulgated under the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Board has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s 15% limit on investments in illiquid securities. Rule 144A and restricted securities held by the Fund have been identified on the ”Schedule of investments.“ Restricted securities are valued pursuant to the security valuation procedures described in Note 1.
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. General Motors Term Loan Litigation
The Fund received notice of a litigation proceeding related to a General Motors Corporation (G.M.) term loan participation previously held by the Fund in 2009. We believe the matter subject to the litigation notice may lead to a recovery from the Fund of certain amounts received by the Fund because a US Court of Appeals has ruled that the Fund and similarly situated investors were unsecured creditors rather than secured lenders of G.M. as a result of an erroneous Uniform Commercial Code filing made by a third party. The Fund received the full principal on the loans in 2009 after the G.M. bankruptcy. However, based upon the court ruling the estate is seeking to recover such amounts arguing that, as unsecured creditors, the Fund should not have received payment in full. Based upon currently available information related to the litigation and the Fund’s potential exposure, the Fund recorded a contingent liability of $901,538 and an asset of $270,461 based on the expected recoveries to unsecured creditors as of May 31, 2018 that resulted in a net decrease in the Fund’s NAV to reflect this potential recovery.
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13. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to May 31, 2018, that would require recognition or disclosure in the Fund’s financial statements.
65
Table of Contents
Other Fund information (Unaudited)
Delaware Wealth Builder Fund
Board consideration of sub-advisory agreements for Delaware Wealth Builder Fund at a meeting held May 16-17, 2018
At a meeting held on May 16-17, 2018, the Board of Trustees of Delaware Group® Equity Funds V, including a majority of non-interested or independent Trustees (the “Independent Trustees”), approved a new Sub-Advisory Agreement between Delaware Management Company (“DMC” or “Management”) and each of Macquarie Investment Management Global Limited (“MIMGL”) and Macquarie Funds Management Hong Kong (“MFMHK”) for Delaware Wealth Builder Fund (the “Fund”). MIMGL and MFMHK may also be referenced as “sub-advisor(s)” below.
In reaching the decision to approve the Sub-Advisory Agreements, the Board considered and reviewed information about each of MIMGL and MFMHK, including its personnel, operations, and financial condition, which had been provided by MIMGL and MFMHK, respectively. The Board also reviewed material furnished by DMC, including: a memorandum from DMC reviewing the Sub-Advisory Agreements and the various services proposed to be rendered by MIMGL and MFMHK; information concerning MIMGL’s and MFMHK’s organizational structure and the experience of their key investment management personnel; copies of MIMGL’s and MFMHK’s Form ADV, financial statements, compliance policies and procedures, and Codes of Ethics; relevant performance information provided with respect to MIMGL and MFMHK; and a copy of the Sub-Advisory Agreements.
In considering such information and materials, the Independent Trustees received assistance and advice from and met separately with independent counsel. The materials prepared by Management in connection with the approval of the Sub-Advisory Agreements were sent to the Independent Trustees in advance of the meeting. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s decision. This discussion of the information and factors considered by the Board (as well as the discussion above) is not intended to be exhaustive, but rather summarizes certain factors considered by the Board. In view of the wide variety of factors considered, the Board did not, unless otherwise noted, find it practicable to quantify or otherwise assign relative weights to the following factors. In addition, individual Trustees may have assigned different weights to various factors.
Nature, quality, and extent of services. The Board considered the nature, quality, and extent of services that MIMGL and MFMHK each would provide as a sub-advisor to the Fund. The Trustees considered the investment process to be employed by MIMGL and MFMHK in connection with DMC’s collaboration with MIMGL and MFMHK in managing the Fund, and the qualifications and experience of MIMGL and MFMHK’s equity teams with regard to implementing the Fund’s investment mandate. The Board considered MIMGL and MFMHK’s organization, personnel, and operations. The Trustees also considered Management’s review and recommendation process with respect to MIMGL and MFMHK, and Management’s favorable assessment as to the nature, quality, and extent of the sub-advisory services expected to be provided by MIMGL and MFMHK to the Fund. Based on their consideration and review of the foregoing factors, the Board concluded that the nature, quality, and extent of the sub-advisory services to be provided by MIMGL and MFMHK, as well as MIMGL and MFMHK’s ability to render such services based on its experience, organization and resources, were appropriate for the Fund, in light of the Fund’s investment objective, strategies, and policies.
66
Table of Contents
In discussing the nature of the services proposed to be provided by the sub-advisors, several Board members observed that, unlike traditional sub-advisors, who make the investment-related decisions with respect to the sub-advised portfolio, the relationship contemplated in this case is limited to access to the additional quantitative investment resources, related technology support, and trading capabilities of MIMGL and MFMHK.
Sub-advisory fees. The Board considered that DMC would not pay MIMGL and MFMHK fees in conjunction with the services that would be rendered to the sub-advised Fund. The Board concluded that, in light of the quality and extent of the services to be provided and the business relationships between the advisor and sub-advisors, the proposed fee arrangement was understandable and reasonable.
Investment performance. In evaluating performance, the Board considered that MIMGL and MFMHK would provide trade execution support, but that DMC’s portfolio managers for the Fund would retain portfolio management discretion over the Fund.
Economies of scale and fall-out benefits. The Board considered whether the proposed fee arrangement would reflect economies of scale for the benefit of Fund investors as assets in the Fund increased, as applicable. The Board also considered that DMC and its affiliates may benefit by leveraging the global resources of its affiliates.
67
Table of Contents
Board of trustees | ||||||
Shawn K. Lytle | Ann D. Borowiec | John A. Fry | Frances A. | |||
President and | Former Chief Executive | President | Sevilla-Sacasa | |||
Chief Executive Officer | Officer | Drexel University | Former Chief Executive | |||
Delaware Funds® | Private Wealth Management | Philadelphia, PA
Lucinda S. Landreth Former Chief Investment Officer | Officer | |||
by Macquarie | J.P. Morgan Chase & Co. | Banco Itaú International | ||||
Philadelphia, PA | New York, NY | Miami, FL | ||||
Thomas L. Bennett |
Joseph W. Chow |
Thomas K. Whitford | ||||
Chairman of the Board | Former Executive Vice | Assurant, Inc. | Former Vice Chairman | |||
Delaware Funds | President | New York, NY | PNC Financial Services Group | |||
by Macquarie | State Street Corporation | Pittsburgh, PA | ||||
Private Investor Rosemont, PA | Boston, MA |
Janet L. Yeomans | ||||
Former Vice President and | ||||||
Treasurer | ||||||
3M Company | ||||||
St. Paul, MN | ||||||
Affiliated officers
| ||||||
David F. Connor | Daniel V. Geatens | Richard Salus | ||||
Senior Vice President, | Vice President and | Senior Vice President and | ||||
General Counsel, | Treasurer | Chief Financial Officer | ||||
and Secretary | Delaware Funds | Delaware Funds | ||||
Delaware Funds | by Macquarie | by Macquarie | ||||
by Macquarie | Philadelphia, PA | Philadelphia, PA | ||||
Philadelphia, PA |
This semiannual report is for the information of Delaware Wealth Builder Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware Fund fact sheet for the most recently completed calendar quarter. These documents are available at delawarefunds.com/literature.
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-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 Schedule of Investments included in the Fund’s most recent Form N-Q are available without charge on the Fund’s website at delawarefunds.com/literature. 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 delawarefunds.com/proxy; and (ii) on the SEC’s website at sec.gov.
68
Table of Contents
US equity mutual fund
Delaware Small Cap Core Fund
May 31, 2018
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and its summary prospectus, which may be obtained by visiting delawarefunds.com/literature or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.
You can obtain shareholder reports and prospectuses online instead of in the mail.
Visit delawarefunds.com/edelivery.
Table of Contents
Experience Delaware Funds® by Macquarie
Macquarie Investment Management (MIM) is a global asset manager with offices throughout the United States, Europe, Asia, and Australia. We are active managers who prioritize autonomy and accountability at the investment team level in pursuit of opportunities that matter for our clients. Delaware Funds is one of the longest-standing mutual fund families, with more than 75 years in existence.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Funds or obtain a prospectus for Delaware Small Cap Core Fund at delawarefunds.com/literature.
Manage your account online
● | Check your account balance and transactions |
● | View statements and tax forms |
● | Make purchases and redemptions |
Visit delawarefunds.com/account-access.
Macquarie Asset Management (MAM) offers a diverse range of products including securities investment management, infrastructure and real asset management, and fund and equity-based structured products. Macquarie Investment Management (MIM) is the marketing name for certain companies comprising the asset management division of Macquarie Group. This includes the following registered investment advisers: Macquarie Investment Management Business Trust (MIMBT), Macquarie Funds Management Hong Kong Limited, Macquarie Investment Management Austria Kapitalanlage AG, Macquarie Investment Management Global Limited, Macquarie Investment Management Limited, Macquarie Investment Management Europe Limited, and Macquarie Capital Investment Management LLC.
The Fund is distributed by Delaware Distributors, L.P. (DDLP), an affiliate of MIMBT and Macquarie Group Limited.
Other than Macquarie Bank Limited (MBL), none of the entities noted are authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities, unless noted otherwise. The Fund is governed by US laws and regulations.
1 | ||||
3 | ||||
4 | ||||
9 | ||||
11 | ||||
12 | ||||
14 | ||||
23 | ||||
33 | ||||
35 |
Unless otherwise noted, views expressed herein are current as of May 31, 2018, and subject to change for events occurring after such date.
The Fund is not FDIC insured and is not guaranteed. It is possible to lose the principal amount invested.
Advisory services provided by Delaware Management Company, a series of MIMBT, a US registered investment advisor.
All third-party marks cited are the property of their respective owners.
© 2018 Macquarie Management Holdings, Inc.
Table of Contents
For the six-month period from December 1, 2017 to May 31, 2018 (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, 2017 to May 31, 2018.
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
Table of Contents
Disclosure of Fund expenses
For the six-month period from December 1, 2017 to May 31, 2018 (Unaudited)
Delaware Small Cap Core Fund
Expense analysis of an investment of $1,000
Beginning Account Value 12/1/17 | Ending Account Value 5/31/18 | Annualized Expense Ratio | Expenses Paid During Period 12/1/17 to 5/31/18* | |||||||||||||
| ||||||||||||||||
Actual Fund return† | ||||||||||||||||
Class A | $1,000.00 | $1,058.10 | 1.13% | $5.80 | ||||||||||||
Class C | 1,000.00 | 1,053.80 | 1.88% | 9.63 | ||||||||||||
Class R | 1,000.00 | 1,056.90 | 1.38% | 7.08 | ||||||||||||
Institutional Class | 1,000.00 | 1,059.50 | 0.88% | 4.52 | ||||||||||||
Class R6 | 1,000.00 | 1,060.40 | 0.75% | 3.85 | ||||||||||||
Hypothetical 5% return (5% return before expenses) |
| |||||||||||||||
Class A | $1,000.00 | $1,019.30 | 1.13% | $5.69 | ||||||||||||
Class C | 1,000.00 | 1,015.56 | 1.88% | 9.45 | ||||||||||||
Class R | 1,000.00 | 1,018.05 | 1.38% | 6.94 | ||||||||||||
Institutional Class | 1,000.00 | 1,020.54 | 0.88% | 4.43 | ||||||||||||
Class R6 | 1,000.00 | 1,021.19 | 0.75% | 3.78 |
* | “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
Table of Contents
Security type / sector allocation and
top 10 equity holdings
Delaware Small Cap Core Fund | As of May 31, 2018 (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.
Security type / sector | Percentage of net assets | |
| ||
Common Stock | 97.64% | |
Basic Materials | 8.22% | |
Business Services | 5.61% | |
Capital Goods | 9.58% | |
Communications Services | 1.46% | |
Consumer Discretionary | 3.49% | |
Consumer Services | 2.55% | |
Consumer Staples | 1.43% | |
Credit Cyclicals | 0.73% | |
Energy | 4.13% | |
Financials | 18.87% | |
Healthcare | 16.38% | |
Real Estate Investment Trusts | 6.49% | |
Technology | 14.94% | |
Transportation | 0.72% | |
Utilities | 3.04% | |
| ||
Short-Term Investments | 2.72% | |
| ||
Total Value of Securities | 100.36% | |
| ||
Liabilities Net of Receivables and Other Assets | (0.36%) | |
| ||
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 | |
| ||
GrubHub | 1.62% | |
Steven Madden | 1.42% | |
Proofpoint | 1.34% | |
Continental Building Products | 1.32% | |
SRC Energy | 1.26% | |
Quidel | 1.25% | |
WNS Holdings ADR | 1.19% | |
Neenah | 1.17% | |
Ligand Pharmaceuticals Class B | 1.15% | |
Encompass Health | 1.14% | |
|
3
Table of Contents
Schedule of investments | ||
Delaware Small Cap Core Fund | May 31, 2018 (Unaudited) |
Number of shares | Value (US $) | |||||||
| ||||||||
Common Stock – 97.64% | ||||||||
| ||||||||
Basic Materials – 8.22% | ||||||||
Balchem | 173,900 | $ | 16,769,177 | |||||
Boise Cascade | 827,665 | 39,479,621 | ||||||
Continental Building Products † | 1,517,599 | 45,907,370 | ||||||
Kaiser Aluminum | 331,200 | 36,518,112 | ||||||
Minerals Technologies | 479,100 | 34,974,300 | ||||||
Neenah | 498,663 | 40,466,502 | ||||||
Quaker Chemical | 181,600 | 27,757,560 | ||||||
Venator Materials † | 601,100 | 10,591,382 | ||||||
Worthington Industries | 683,200 | 32,759,440 | ||||||
|
| |||||||
285,223,464 | ||||||||
|
| |||||||
Business Services – 5.61% | ||||||||
ABM Industries | 908,779 | 25,863,850 | ||||||
ASGN † | 346,300 | 26,665,100 | ||||||
Casella Waste Systems † | 1,201,230 | 28,325,003 | ||||||
Convergys | 484,000 | 11,441,760 | ||||||
Kforce | 835,470 | 28,113,566 | ||||||
Navigant Consulting † | 861,300 | 20,981,268 | ||||||
US Ecology | 569,727 | 34,525,456 | ||||||
WageWorks † | 393,651 | 18,678,740 | ||||||
|
| |||||||
194,594,743 | ||||||||
|
| |||||||
Capital Goods – 9.58% | ||||||||
AAON | 15,745 | 480,223 | ||||||
Applied Industrial Technologies | 461,540 | 32,192,415 | ||||||
Barnes Group | 534,232 | 31,744,065 | ||||||
Belden | 388,500 | 21,468,510 | ||||||
Columbus McKinnon | 730,882 | 30,280,441 | ||||||
ESCO Technologies | 401,310 | 22,513,491 | ||||||
Federal Signal | 1,134,800 | 27,110,372 | ||||||
Granite Construction | 471,341 | 26,805,163 | ||||||
Kadant | 329,238 | 32,117,167 | ||||||
KLX † | 307,900 | 22,732,257 | ||||||
MasTec † | 236,600 | 11,037,390 | ||||||
MYR Group † | 742,300 | 28,979,392 | ||||||
Tetra Tech | 603,800 | 33,178,810 | ||||||
Woodward | 154,900 | 11,736,773 | ||||||
|
| |||||||
332,376,469 | ||||||||
|
| |||||||
Communications Services – 1.46% | ||||||||
ATN International | 446,144 | 24,015,932 | ||||||
InterXion Holding † | 419,691 | 26,801,467 | ||||||
|
| |||||||
50,817,399 | ||||||||
|
| |||||||
Consumer Discretionary – 3.49% | ||||||||
American Eagle Outfitters | 733,600 | 16,285,920 |
4
Table of Contents
Number of shares | Value (US $) | |||||||
| ||||||||
Common Stock (continued) | ||||||||
| ||||||||
Consumer Discretionary (continued) | ||||||||
Five Below † | 348,800 | $ | 24,663,648 | |||||
Malibu Boats Class A † | 726,468 | 31,150,948 | ||||||
Steven Madden | 930,950 | 49,200,708 | ||||||
|
| |||||||
121,301,224 | ||||||||
|
| |||||||
Consumer Services – 2.55% | ||||||||
Cheesecake Factory | 518,200 | 26,847,942 | ||||||
Chuy’s Holdings † | 590,300 | 17,384,335 | ||||||
Del Frisco’s Restaurant Group † | 583,200 | 7,727,400 | ||||||
Hawaiian Holdings | 306,682 | 11,347,234 | ||||||
Jack in the Box | 313,641 | 25,301,419 | ||||||
|
| |||||||
88,608,330 | ||||||||
|
| |||||||
Consumer Staples – 1.43% | ||||||||
J&J Snack Foods | 197,914 | 28,028,581 | ||||||
Prestige Brands Holdings † | 647,300 | 21,639,239 | ||||||
|
| |||||||
49,667,820 | ||||||||
|
| |||||||
Credit Cyclicals – 0.73% | ||||||||
Tenneco | 570,200 | 25,191,436 | ||||||
|
| |||||||
25,191,436 | ||||||||
|
| |||||||
Energy – 4.13% | ||||||||
Carrizo Oil & Gas † | 1,364,400 | 34,464,744 | ||||||
Keane Group † | 1,300,200 | 19,047,930 | ||||||
Pioneer Energy Services † | 2,929,300 | 16,111,150 | ||||||
SRC Energy † | 3,374,800 | 43,669,912 | ||||||
Superior Energy Services † | 1,214,687 | 13,276,529 | ||||||
US Silica Holdings | 544,100 | 16,829,013 | ||||||
|
| |||||||
143,399,278 | ||||||||
|
| |||||||
Financials – 18.87% | ||||||||
American Equity Investment Life Holding | 669,900 | 23,741,256 | ||||||
Bryn Mawr Bank | 282,859 | 13,280,230 | ||||||
CenterState Bank | 676,300 | 20,796,225 | ||||||
City Holding | 248,435 | 18,456,236 | ||||||
CoBiz Financial | 842,254 | 18,799,109 | ||||||
Essent Group † | 802,000 | 27,508,600 | ||||||
Evercore Class A | 333,300 | 34,796,520 | ||||||
FCB Financial Holdings Class A † | 418,600 | 25,513,670 | ||||||
First Bancorp | 514,755 | 21,418,956 | ||||||
First Financial Bancorp | 780,873 | 24,558,456 | ||||||
First Interstate BancSystem | 650,600 | 28,398,690 | ||||||
Great Western Bancorp | 810,900 | 35,347,131 | ||||||
Hope Bancorp | 1,553,780 | 27,952,502 | ||||||
Houlihan Lokey | 164,435 | 8,039,227 | ||||||
Independent Bank | 269,200 | 21,091,820 |
5
Table of Contents
Schedule of investments
Delaware Small Cap Core Fund
Number of shares | Value (US $) | |||||||
| ||||||||
Common Stock (continued) | ||||||||
| ||||||||
Financials (continued) | ||||||||
Independent Bank Group | 323,900 | $ | 24,373,475 | |||||
Infinity Property & Casualty | 166,800 | 24,135,960 | ||||||
MGIC Investment † | 2,716,900 | 28,228,591 | ||||||
Old National Bancorp | 1,466,600 | 26,325,470 | ||||||
Primerica | 311,300 | 30,616,355 | ||||||
Selective Insurance Group | 479,300 | 27,248,205 | ||||||
Sterling Bancorp | 1,300,700 | 31,932,185 | ||||||
Stifel Financial | 516,200 | 30,352,560 | ||||||
Umpqua Holdings | 1,201,000 | 28,271,540 | ||||||
United Bankshares | 552,609 | 20,142,598 | ||||||
WSFS Financial | 645,161 | 33,774,178 | ||||||
|
| |||||||
655,099,745 | ||||||||
|
| |||||||
Healthcare – 16.38% | ||||||||
Adamas Pharmaceuticals † | 876,100 | 25,091,504 | ||||||
Catalent † | 753,600 | 29,586,336 | ||||||
Clovis Oncology † | 461,400 | 21,667,344 | ||||||
CONMED | 518,040 | 35,563,446 | ||||||
CryoLife † | 1,239,493 | 34,148,032 | ||||||
Encompass Health | 611,200 | 39,575,200 | ||||||
Exact Sciences † | 638,700 | 38,028,198 | ||||||
Ligand Pharmaceuticals Class B † | 206,900 | 39,772,387 | ||||||
Medicines † | 771,800 | 26,133,148 | ||||||
Merit Medical Systems † | 719,187 | 36,894,293 | ||||||
Natera † | 1,136,233 | 13,248,477 | ||||||
NuVasive † | 369,200 | 18,925,192 | ||||||
Puma Biotechnology † | 243,000 | 12,866,850 | ||||||
Quidel † | 692,600 | 43,426,020 | ||||||
Repligen † | 740,400 | 32,340,672 | ||||||
Retrophin † | 1,085,700 | 30,410,457 | ||||||
Spark Therapeutics † | 265,900 | 21,216,161 | ||||||
Spectrum Pharmaceuticals † | 436,200 | 8,414,298 | ||||||
Vanda Pharmaceuticals † | 1,695,500 | 29,840,800 | ||||||
Wright Medical Group † | 1,258,000 | 31,399,680 | ||||||
|
| |||||||
568,548,495 | ||||||||
|
| |||||||
Real Estate Investment Trusts – 6.49% | ||||||||
Armada Hoffler Properties | 758,500 | 10,922,400 | ||||||
Cousins Properties | 969,200 | 9,129,864 | ||||||
EastGroup Properties | 293,100 | 27,325,713 | ||||||
First Industrial Realty Trust | 1,096,500 | 36,107,745 | ||||||
Gramercy Property Trust | 926,466 | 25,542,668 | ||||||
Kite Realty Group Trust | 1,758,700 | 27,594,003 | ||||||
Mack-Cali Realty | 1,267,900 | 25,066,383 |
6
Table of Contents
Number of shares | Value (US $) | |||||||
| ||||||||
Common Stock (continued) | ||||||||
| ||||||||
Real Estate Investment Trusts (continued) | ||||||||
Pebblebrook Hotel Trust | 784,700 | $ | 32,031,454 | |||||
Ramco-Gershenson Properties Trust | 2,569,500 | 31,604,850 | ||||||
|
| |||||||
225,325,080 | ||||||||
|
| |||||||
Technology – 14.94% | ||||||||
Anixter International † | 314,550 | 19,266,187 | ||||||
Apptio Class A † | 538,815 | 17,797,059 | ||||||
Brooks Automation | 915,700 | 29,925,076 | ||||||
ExlService Holdings † | 508,590 | 28,831,967 | ||||||
GrubHub † | 523,200 | 56,092,272 | ||||||
II-VI † | 632,300 | 27,789,585 | ||||||
j2 Global | 384,700 | 32,484,068 | ||||||
KeyW Holding † | 740,200 | 6,994,890 | ||||||
MACOM Technology Solutions Holdings † | 272,304 | 6,140,455 | ||||||
MaxLinear Class A † | 1,338,300 | 24,557,805 | ||||||
NETGEAR † | 423,310 | 25,589,090 | ||||||
Paycom Software † | 257,800 | 27,190,166 | ||||||
Plantronics | 347,420 | 25,309,547 | ||||||
Proofpoint † | 397,000 | 46,405,330 | ||||||
Q2 Holdings † | 464,600 | 26,551,890 | ||||||
Semtech † | 712,600 | 34,489,840 | ||||||
Silicon Laboratories † | 255,500 | 26,980,800 | ||||||
WNS Holdings ADR † | 804,998 | 41,167,598 | ||||||
Yelp † | 354,900 | 15,207,465 | ||||||
|
| |||||||
518,771,090 | ||||||||
|
| |||||||
Transportation – 0.72% | ||||||||
Knight-Swift Transportation Holdings | 615,864 | 25,053,348 | ||||||
|
| |||||||
25,053,348 | ||||||||
|
| |||||||
Utilities – 3.04% | ||||||||
NorthWestern | 668,200 | 36,403,536 | ||||||
South Jersey Industries | 1,047,800 | 34,703,136 | ||||||
Spire | 484,800 | 34,542,000 | ||||||
|
| |||||||
105,648,672 | ||||||||
|
| |||||||
Total Common Stock (cost $2,849,602,628) | 3,389,626,593 | |||||||
|
|
7
Table of Contents
Schedule of investments
Delaware Small Cap Core Fund
Principal amount° | Value (US $) | |||||||
| ||||||||
Short-Term Investments – 2.72% | ||||||||
| ||||||||
Discount Note – 0.53%≠ | ||||||||
Federal Home Loan Bank 1.48% 6/1/18 | 18,235,697 | $ | 18,235,697 | |||||
|
| |||||||
18,235,697 | ||||||||
|
| |||||||
Repurchase Agreements – 2.19% | ||||||||
Bank of America Merrill Lynch | 10,377,406 | 10,377,406 | ||||||
Bank of Montreal | 31,132,219 | 31,132,219 | ||||||
BNP Paribas | 34,574,508 | 34,574,508 | ||||||
|
| |||||||
76,084,133 | ||||||||
|
| |||||||
Total Short-Term Investments (cost $94,319,830) | 94,319,830 | |||||||
|
| |||||||
Total Value of Securities – 100.36% | $ | 3,483,946,423 | ||||||
|
|
≠ | The rate shown is the effective yield at the time of purchase. |
° | Principal amount shown is stated in US 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.
8
Table of Contents
Statement of assets and liabilities | ||
Delaware Small Cap Core Fund | May 31, 2018 (Unaudited) |
Assets: | ||||
Investments, at value1 | $ | 3,483,946,423 | ||
Cash | 137,030 | |||
Receivable for fund shares sold | 53,374,002 | |||
Receivable for securities sold | 3,093,891 | |||
Dividends and interest receivable | 1,700,279 | |||
|
| |||
Total assets | 3,542,251,625 | |||
|
| |||
Liabilities: | ||||
Payable for securities purchased | 62,901,216 | |||
Payable for fund shares redeemed | 4,791,587 | |||
Investment management fees payable to affiliates | 1,867,939 | |||
Other accrued expenses | 748,018 | |||
Distribution fees payable to affiliates | 220,374 | |||
Dividend disbursing and transfer agent fees and expenses payable to affiliates | 54,940 | |||
Audit and tax fees payable | 47,105 | |||
Trustees’ fees and expenses payable to affiliates | 18,280 | |||
Accounting and administration expenses payable to affiliates | 11,027 | |||
Legal fees payable to affiliates | 5,375 | |||
Reports and statements to shareholders expenses payable to affiliates | 2,528 | |||
|
| |||
Total liabilities | 70,668,389 | |||
|
| |||
Total Net Assets | $ | 3,471,583,236 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 2,858,498,180 | ||
Distributions in excess of net investment income | (355,233 | ) | ||
Accumulated net realized gain on investments | 73,416,324 | |||
Net unrealized appreciation of investments | 540,023,965 | |||
|
| |||
Total Net Assets | $ | 3,471,583,236 | ||
|
|
9
Table of Contents
Statement of assets and liabilities
Delaware Small Cap Core Fund
Net Asset Value | ||||
Class A: | ||||
Net assets | $ | 324,701,685 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 12,892,020 | |||
Net asset value per share | $ | 25.19 | ||
Sales charge | 5.75 | % | ||
Offering price per share, equal to net asset value per share / (1 – sales charge) | $ | 26.73 | ||
Class C: | ||||
Net assets | $ | 168,226,235 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 7,442,338 | |||
Net asset value per share | $ | 22.60 | ||
Class R: | ||||
Net assets | $ | 32,302,975 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 1,324,642 | |||
Net asset value per share | $ | 24.39 | ||
Institutional Class: | ||||
Net assets | $ | 2,549,975,632 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 98,923,814 | |||
Net asset value per share | $ | 25.78 | ||
Class R6: | ||||
Net assets | $ | 396,376,709 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 15,365,878 | |||
Net asset value per share | $ | 25.80 | ||
1 Investments, at cost | $ | 2,943,922,458 |
See accompanying notes, which are an integral part of the financial statements.
10
Table of Contents
Statement of operations | ||
Delaware Small Cap Core Fund | Six months ended May 31, 2018 (Unaudited) |
Investment Income: | ||||
Dividends | $ | 15,965,267 | ||
Interest | 549,702 | |||
|
| |||
16,514,969 | ||||
|
| |||
Expenses: | ||||
Management fees | 10,188,941 | |||
Dividend disbursing and transfer agent fees and expenses | 2,293,484 | |||
Distribution expenses — Class A | 391,548 | |||
Distribution expenses — Class C | 783,288 | |||
Distribution expenses — Class R | 80,379 | |||
Accounting and administration expenses | 288,469 | |||
Registration fees | 180,275 | |||
Legal fees | 94,573 | |||
Reports and statements to shareholders expenses | 92,118 | |||
Trustees’ fees and expenses | 70,355 | |||
Custodian fees | 49,747 | |||
Audit and tax fees | 17,501 | |||
Other | 33,439 | |||
|
| |||
14,564,117 | ||||
Less expenses paid indirectly | (2,803 | ) | ||
|
| |||
Total operating expenses | 14,561,314 | |||
|
| |||
Net Investment Income | 1,953,655 | |||
|
| |||
Net Realized and Unrealized Gain: | ||||
Net realized gain on investments | 81,472,278 | |||
Net change in unrealized appreciation (depreciation) of investments | 102,466,490 | |||
|
| |||
Net Realized and Unrealized Gain | 183,938,768 | |||
|
| |||
Net Increase in Net Assets Resulting from Operations | $ | 185,892,423 | ||
|
|
See accompanying notes, which are an integral part of the financial statements.
11
Table of Contents
Statements of changes in net assets
Delaware Small Cap Core Fund
Six months ended 5/31/18 (Unaudited) | Year ended 11/30/17 | |||||||
Increase in Net Assets from Operations: | ||||||||
Net investment income | $ | 1,953,655 | $ | 620,251 | ||||
Net realized gain | 81,472,278 | 207,474,687 | ||||||
Net change in unrealized appreciation (depreciation) | 102,466,490 | 170,832,691 | ||||||
|
|
|
| |||||
Net increase in net assets resulting from operations | 185,892,423 | 378,927,629 | ||||||
|
|
|
| |||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Institutional Class | (2,192,888 | ) | (849,453 | ) | ||||
Class R6 | (116,000 | ) | (2,555 | ) | ||||
Net realized gain: | ||||||||
Class A | (24,118,584 | ) | (3,903,942 | ) | ||||
Class C | (12,756,943 | ) | (1,510,740 | ) | ||||
Class R | (2,553,434 | ) | (346,986 | ) | ||||
Institutional Class | (168,589,255 | ) | (13,534,547 | ) | ||||
Class R6 | (3,843,994 | ) | (16,503 | ) | ||||
|
|
|
| |||||
(214,171,098 | ) | (20,164,726 | ) | |||||
|
|
|
| |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 58,748,855 | 161,876,763 | ||||||
Class C | 22,657,257 | 44,410,670 | ||||||
Class R | 4,217,341 | 6,940,237 | ||||||
Institutional Class | 637,615,469 | 1,456,982,329 | ||||||
Class R6 | 347,648,620 | 52,674,963 | ||||||
Net asset value of shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | 23,939,316 | 3,749,448 | ||||||
Class C | 12,623,788 | 1,476,159 | ||||||
Class R | 2,553,432 | 346,986 | ||||||
Institutional Class | 138,241,898 | 11,069,889 | ||||||
Class R6 | 3,959,994 | 19,058 | ||||||
|
|
|
| |||||
1,252,205,970 | 1,739,546,502 | |||||||
|
|
|
|
12
Table of Contents
Six months ended 5/31/18 (Unaudited) | Year ended 11/30/17 | |||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares redeemed: | ||||||||
Class A | $ | (76,724,779 | ) | $ | (246,287,634 | ) | ||
Class C | (17,761,551 | ) | (37,650,829 | ) | ||||
Class R | (6,695,162 | ) | (10,179,818 | ) | ||||
Institutional Class | (471,900,478 | ) | (745,224,675 | ) | ||||
Class R6 | (17,077,876 | ) | (8,942,832 | ) | ||||
|
|
|
| |||||
(590,159,846 | ) | (1,048,285,788 | ) | |||||
|
|
|
| |||||
Increase in net assets derived from capital share transactions | 662,046,124 | 691,260,714 | ||||||
|
|
|
| |||||
Net Increase in Net Assets | 633,767,449 | 1,050,023,617 | ||||||
Net Assets: | ||||||||
Beginning of period | 2,837,815,787 | 1,787,792,170 | ||||||
|
|
|
| |||||
End of period | $ | 3,471,583,236 | $ | 2,837,815,787 | ||||
|
|
|
| |||||
Distributions in excess of net investment income | $ | (355,233 | ) | $ | — | |||
|
|
|
|
See accompanying notes, which are an integral part of the financial statements.
13
Table of Contents
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 loss2 |
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 waived4 |
Ratio of net investment loss to average net assets |
Ratio of net investment loss to average net assets prior to fees waived4 |
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 distributor. Performance would have been lower had the waiver not been in effect. |
4 | Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the six months ended May 31, 2018 are reflected on the “Statement of operations.” |
See accompanying notes, which are an integral part of the financial statements.
14
Table of Contents
Six months ended 5/31/181 | Year ended | |||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | 11/30/13 | |||||||||||||||||||||||||||||
$ 25.74 | $ | 22.23 | $ | 20.32 | $ | 20.43 | $ | 19.54 | $ | 13.56 | ||||||||||||||||||||||||
(0.01 | ) | (0.03 | ) | (0.02 | ) | (0.04 | ) | (0.06 | ) | (0.04 | ) | |||||||||||||||||||||||
1.38 | 3.78 | 2.52 | 1.01 | 1.45 | 6.03 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
1.37 | 3.75 | 2.50 | 0.97 | 1.39 | 5.99 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
— | — | — | — | — | (0.01 | ) | ||||||||||||||||||||||||||||
(1.92) | (0.24 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | — | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
(1.92) | (0.24 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | (0.01 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
$ 25.19 | $ | 25.74 | $ | 22.23 | $ | 20.32 | $ | 20.43 | $ | 19.54 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
5.81% | 17.02% | 12.86% | 4.86% | 7.28% | 44.21% | |||||||||||||||||||||||||||||
$324,701 | $ | 324,710 | $ | 358,054 | $ | 266,427 | $ | 136,070 | $ | 69,386 | ||||||||||||||||||||||||
1.13% | 1.18% | 1.24% | 1.28% | 1.32% | 1.31% | |||||||||||||||||||||||||||||
1.13% | 1.18% | 1.24% | 1.28% | 1.32% | 1.35% | |||||||||||||||||||||||||||||
(0.05% | ) | (0.12% | ) | (0.09% | ) | (0.22% | ) | (0.30% | ) | (0.22% | ) | |||||||||||||||||||||||
(0.05% | ) | (0.12% | ) | (0.09% | ) | (0.22% | ) | (0.30% | ) | (0.26% | ) | |||||||||||||||||||||||
11% | 54% | 43% | 38% | 30% | 38% |
15
Table of Contents
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 assets4 |
Ratio of net investment loss to average net assets4 |
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. |
4 | Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the six months ended May 31, 2018 are reflected on the “Statement of operations.” |
See accompanying notes, which are an integral part of the financial statements.
16
Table of Contents
Six months ended 5/31/181 | Year ended | |||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | 11/30/13 | |||||||||||||||||||||||||||||
$ 23.38 | $ | 20.36 | $ | 18.80 | $ | 19.11 | $ | 18.45 | $ | 12.89 | ||||||||||||||||||||||||
(0.09 | ) | (0.19 | ) | (0.15 | ) | (0.18 | ) | (0.19 | ) | (0.15 | ) | |||||||||||||||||||||||
1.23 | 3.45 | 2.30 | 0.95 | 1.35 | 5.71 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
1.14 | 3.26 | 2.15 | 0.77 | 1.16 | 5.56 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
(1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
(1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
$ 22.60 | $ | 23.38 | $ | 20.36 | $ | 18.80 | $ | 19.11 | $ | 18.45 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
5.38% | 16.17% | 12.01% | 4.11% | 6.44% | 43.14% | |||||||||||||||||||||||||||||
$168,226 | $ | 154,837 | $ | 126,787 | $ | 99,019 | $ | 51,923 | $ | 25,828 | ||||||||||||||||||||||||
1.88% | 1.93% | 1.99% | 2.03% | 2.07% | 2.06% | |||||||||||||||||||||||||||||
(0.80% | ) | (0.87% | ) | (0.84% | ) | (0.97% | ) | (1.05% | ) | (0.97% | ) | |||||||||||||||||||||||
11% | 54% | 43% | 38% | 30% | 38% |
17
Table of Contents
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 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 waived4 |
Ratio of net investment loss to average net assets |
Ratio of net investment loss to average net assets prior to fees waived4 |
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 distributor. Performance would have been lower had the waiver not been in effect. |
4 | Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the six months ended May 31, 2018 are reflected on the “Statement of operations.” |
See accompanying notes, which are an integral part of the financial statements.
18
Table of Contents
Six months ended 5/31/181 | Year ended | |||||||||||||||||||||||
(Unaudited) | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | 11/30/13 | |||||||||||||||||||
$ 25.01 | $ | 21.66 | $ | 19.86 | $ | 20.04 | $ | 19.22 | $ | 13.36 | ||||||||||||||
(0.03) | (0.08 | ) | (0.06 | ) | (0.09 | ) | (0.11 | ) | (0.08 | ) | ||||||||||||||
1.33 | 3.67 | 2.45 | 0.99 | 1.43 | 5.94 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
1.30 | 3.59 | 2.39 | 0.90 | 1.32 | 5.86 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
(1.92) | (0.24 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
(1.92) | (0.24 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
$ 24.39 | $ | 25.01 | $ | 21.66 | $ | 19.86 | $ | 20.04 | $ | 19.22 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
5.69% | 16.73% | 12.60% | 4.60% | 7.03% | 43.86% | |||||||||||||||||||
$32,303 | $ | 33,112 | $ | 31,416 | $ | 28,178 | $ | 15,833 | $ | 12,785 | ||||||||||||||
1.38% | 1.43% | 1.49% | 1.53% | 1.57% | 1.56% | |||||||||||||||||||
1.38% | 1.43% | 1.49% | 1.53% | 1.57% | 1.64% | |||||||||||||||||||
(0.30%) | (0.37% | ) | (0.34% | ) | (0.47% | ) | (0.55% | ) | (0.47% | ) | ||||||||||||||
(0.30%) | (0.37% | ) | (0.34% | ) | (0.47% | ) | (0.55% | ) | (0.55% | ) | ||||||||||||||
11% | 54% | 43% | 38% | 30% | 38% | |||||||||||||||||||
|
19
Table of Contents
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 assets4 |
Ratio of net investment income (loss) to average net assets4 |
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. |
4 | Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the six months ended May 31, 2018 are reflected on the “Statement of operations.” |
See accompanying notes, which are an integral part of the financial statements.
20
Table of Contents
Six months ended 5/31/181 | Year ended | |||||||||||||||||||||||
(Unaudited) | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | 11/30/13 | |||||||||||||||||||
$ 26.29 | $ | 22.66 | $ | 20.65 | $ | 20.69 | $ | 19.74 | $ | 13.69 | ||||||||||||||
0.02 | 0.03 | 0.03 | 0.01 | (0.01 | ) | 0.01 | ||||||||||||||||||
1.42 | 3.86 | 2.57 | 1.03 | 1.46 | 6.08 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
1.44 | 3.89 | 2.60 | 1.04 | 1.45 | 6.09 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
(0.03 | ) | (0.02 | ) | — | — | — | (0.04 | ) | ||||||||||||||||
(1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
(1.95 | ) | (0.26 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | (0.04 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
$ 25.78 | $ | 26.29 | $ | 22.66 | $ | 20.65 | $ | 20.69 | $ | 19.74 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
5.95% | 17.31% | 13.15% | 5.15% | 7.51% | 44.64% | |||||||||||||||||||
$2,549,976 | $ | 2,275,563 | $ | 1,271,533 | $ | 620,220 | $ | 224,771 | $ | 81,858 | ||||||||||||||
0.88% | 0.93% | 0.99% | 1.03% | 1.07% | 1.06% | |||||||||||||||||||
0.20% | 0.13% | 0.16% | 0.03% | (0.05% | ) | 0.03% | ||||||||||||||||||
11% | 54% | 43% | 38% | 30% | 38% | |||||||||||||||||||
|
21
Table of Contents
Financial highlights
Delaware Small Cap Core Fund Class R6
Selected data for each share of the Fund outstanding throughout each period were as follows:
Six months ended 5/31/181 (Unaudited) | Year ended 11/30/17 | 5/2/162 to | ||||||||||
| ||||||||||||
Net asset value, beginning of period | $ | 26.32 | $ | 22.68 | $ | 19.09 | ||||||
Income from investment operations: | ||||||||||||
Net investment income3 | 0.04 | 0.06 | 0.03 | |||||||||
Net realized and unrealized gain | 1.42 | 3.86 | 3.56 | |||||||||
|
|
|
|
|
| |||||||
Total from investment operations | 1.46 | 3.92 | 3.59 | |||||||||
|
|
|
|
|
| |||||||
Less dividends and distributions from: | ||||||||||||
Net investment income | (0.06) | (0.04) | — | |||||||||
Net realized gain | (1.92) | (0.24) | — | |||||||||
|
|
|
|
|
| |||||||
Total dividends and distributions | (1.98) | (0.28) | — | |||||||||
|
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|
|
|
| |||||||
Net asset value, end of period | $ | 25.80 | $ | 26.32 | $ | 22.68 | ||||||
|
|
|
|
|
| |||||||
Total return4 | 6.04% | 17.45% | 18.81% | |||||||||
Ratios and supplemental data: | ||||||||||||
Net assets, end of period (000 omitted) | $ | 396,377 | $ | 49,594 | $ | 2 | ||||||
Ratio of expenses to average net assets5 | 0.75% | 0.79% | 0.82% | |||||||||
Ratio of net investment income to average net assets5 | 0.33% | 0.27% | 0.29% | |||||||||
Portfolio turnover | 11% | 54% | 43%6 | |||||||||
|
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | Date of commencement of operations; ratios have been annualized and total return has not been annualized. |
3 | The average shares outstanding method has been applied for per share information. |
4 | Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. |
5 | Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the six months ended May 31, 2018 are reflected on the “Statement of operations.” |
6 | Portfolio turnover is representative of the Fund for the entire year ended Nov. 30, 2016. |
See accompanying notes, which are an integral part of the financial statements.
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Notes to financial statements | ||
Delaware Small Cap Core Fund | May 31, 2018 (Unaudited) |
Delaware Group® Equity Funds V (Trust) is organized as a Delaware statutory trust and offers three series: Delaware Wealth Builder 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 (1940 Act), and offers Class A, Class C, Class R, Institutional Class, and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) instead of a front-end sales charge 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, Institutional Class, and Class R6 shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Class R6 shares do not pay any service fees, sub-accounting fees, and/or sub-transfer agency fees to any brokers, dealers, or other financial intermediaries.
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 US generally accepted accounting principles (US GAAP) and are consistently followed by the Fund.
Security Valuation – Equity securities, except those traded on the Nasdaq Stock Market LLC (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange on the valuation date. Equity securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If, on a particular day, an equity security does not trade, the mean between the bid and ask prices will be used, which approximates fair value. US 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 Trust’s Board of Trustees (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. Restricted securities are valued at fair value using methods approved by the Board.
Federal Income Taxes – No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. Management has analyzed the Fund’s tax positions taken or to be taken on the Fund’s federal income tax returns through the six months ended May 31, 2018 and for all open tax years (years ended Nov. 30, 2015–Nov. 30, 2017), and has concluded that no provision for federal income tax is required in the Fund’s financial statements. If applicable, the Fund recognizes interest accrued on unrecognized tax benefits in interest expense and
23
Table of Contents
Notes to financial statements
Delaware Small Cap Core Fund
1. Significant Accounting Policies (continued)
penalties in other expenses on the “Statement of operations.” During the six months ended May 31, 2018, the Fund did not incur any interest or tax penalties.
Class Accounting – Investment income, common expenses, and realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class. Class R6 shares are not allocated any expenses related to service fees, sub-accounting fees, and/or sub-transfer agency fees paid to brokers, dealers, or financial intermediaries.
Repurchase Agreements – The Fund may purchase certain US government securities subject to the counterparty’s agreement to repurchase them at an agreed upon date and price. The counterparty will be required on a daily basis to maintain the value of the collateral subject to the agreement at not less than the repurchase price (including accrued interest). The agreements are conditioned upon the collateral being deposited under the Federal Reserve book-entry system with the Fund’s custodian or a third-party sub-custodian. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. All open repurchase agreements as of the date of this report were entered into on May 31, 2018, and matured on the next business day.
Use of Estimates – The Fund is an investment company, whose financial statements are prepared in conformity with US GAAP. Therefore, the Fund follows the accounting and reporting guidelines for investment companies. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other – Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Funds® by Macquarie (Delaware Funds) are generally allocated among such funds on the basis of average net assets. Management fees and certain other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Discounts and premiums on debt securities are accreted or amortized to interest income, respectively, over the lives of the respective securities using the effective interest method. Distributions received from investments in real estate investment trusts (REITs) are recorded as dividend income on the ex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer. The Fund declares and pays dividends from net investment income 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. Such commission rebates are included on the “Statement of operations” under “Net realized gain on investments.” In general, best execution refers to many factors, including the price paid or received for a security, the
24
Table of Contents
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, 2018.
The Fund receives earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. The expense paid under this arrangement is included on the “Statement of operations” under “Custodian fees” with the corresponding expense offset included under “Less expenses paid indirectly.” For the six months ended May 31, 2018, the Fund earned $923 under this arrangement.
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. If the amount earned is greater than $1, the expense paid under this arrangement is included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses” with the corresponding expense offset included under “Less expenses paid indirectly.” For the six months ended May 31, 2018, the Fund earned $1,880 under this arrangement.
2. Investment Management, Administration Agreements, and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Macquarie Investment Management Business Trust and the investment manager, an annual fee which is calculated daily and paid monthly at the 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.
Delaware Investments Fund Services Company (DIFSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Fund. For these services, DIFSC’s fees are calculated daily and paid monthly based on the aggregate daily net assets of all funds within the Delaware Funds at the following annual rate: 0.00475% of the first $35 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $45 billion (Total Fee). Each fund in the Delaware Funds pays a minimum of $4,000, which, in aggregate, is subtracted from the Total Fee. Each fund then pays its portion of the remainder of the Total Fee on a relative net asset value (NAV) basis. For the six months ended May 31, 2018, the Fund was charged $59,944 for these services. This amount is included on the “Statement of operations” under “Accounting and administration expenses.”
DIFSC is also the transfer agent and dividend disbursing agent of the Fund. For these services, DIFSC’s fees are calculated daily and paid monthly based on the aggregate daily net assets of the retail funds within the Delaware Funds at the following annual 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% of average daily net assets in excess of $30 billion. The fees payable to DIFSC under the transfer agent agreement described above are allocated among all retail funds in the Delaware Funds on a relative NAV basis. This amount is included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses.” For the six months ended May 31, 2018, the Fund was charged $298,355 for these services. Pursuant to a sub-transfer agency agreement between DIFSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to the Fund. Sub-transfer agency fees are paid by the
25
Table of Contents
Notes to financial statements
Delaware Small Cap Core Fund
2. Investment Management, Administration Agreements, and Other Transactions with Affiliates (continued)
Fund and are also included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses.”
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and/or service (12b-1) 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 Class R shares. The fees are calculated daily and paid monthly. Institutional Class shares and Class R6 shares pay no 12b-1 fees.
As provided in the investment management agreement, the Fund bears a portion of the cost of certain resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to the Fund. For the six months ended May 31, 2018, the Fund was charged $34,355 for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates’ employees. This amount is included on the “Statement of operations” under “Legal fees.”
For the six months ended May 31, 2018, DDLP earned $48,069 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2018, DDLP received gross CDSC commissions of $50 and $8,431, on redemptions of the Fund’s Class A and Class C shares, respectively, and these commissions were entirely used to offset up-front commissions previously paid by DDLP to broker/dealers on sales of those shares.
Trustees’ fees include expenses accrued by the Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, DIFSC, 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, 2018, the Fund made purchases and sales of investment securities other than short-term investments as follows:
Purchases | $ | 768,860,933 | ||
Sales | 323,290,205 |
At May 31, 2018, the cost and unrealized appreciation (depreciation) of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At May 31, 2018, the cost and unrealized appreciation (depreciation) of investments for the Fund were as follows:
Cost of investments | $ | 2,943,922,458 | ||
|
| |||
Aggregate unrealized appreciation of investments | $ | 652,155,249 | ||
Aggregate unrealized depreciation of investments | (112,131,284 | ) | ||
|
| |||
Net unrealized appreciation of investments | $ | 540,023,965 | ||
|
|
US GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current
26
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market conditions. A three-level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances. The Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-level hierarchy of inputs is summarized 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.
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of May 31, 2018:
Level 1 | Level 2 | Total | ||||||||||
Securities | ||||||||||||
Assets: | ||||||||||||
Common Stock | $ | 3,389,626,593 | $ | — | $ | 3,389,626,593 | ||||||
Short-Term Investments | — | 94,319,830 | 94,319,830 | |||||||||
|
|
|
|
|
| |||||||
Total Value of Securities | $ | 3,389,626,593 | $ | 94,319,830 | $ | 3,483,946,423 | ||||||
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|
|
|
|
|
27
Table of Contents
Notes to financial statements
Delaware Small Cap Core Fund
3. Investments (continued)
During the six months ended May 31, 2018, 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 based on fair value at the beginning of the reporting period.
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim, or end of the period in relation to net assets. During the six months ended May 31, 2018, there were no Level 3 investments.
4. Capital Shares
Transactions in capital shares were as follows:
Six months ended | Year ended | |||||||
5/31/18 | 11/30/17 | |||||||
Shares sold: | ||||||||
Class A | 2,440,890 | 6,976,702 | ||||||
Class C | 1,045,317 | 2,100,726 | ||||||
Class R | 179,333 | 306,291 | ||||||
Institutional Class | 25,801,103 | 61,332,627 | ||||||
Class R6 | 14,009,973 | 2,255,245 | ||||||
Shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | 1,011,807 | 167,249 | ||||||
Class C | 592,386 | 71,973 | ||||||
Class R | 111,309 | 15,887 | ||||||
Institutional Class | 5,714,836 | 484,462 | ||||||
Class R6 | 163,636 | 834 | ||||||
|
|
|
| |||||
51,070,590 | 73,711,996 | |||||||
|
|
|
| |||||
Shares redeemed: | ||||||||
Class A | (3,177,826 | ) | (10,631,863 | ) | ||||
Class C | (819,271 | ) | (1,774,799 | ) | ||||
Class R | (290,068 | ) | (448,362 | ) | ||||
Institutional Class | (19,154,720 | ) | (31,365,381 | ) | ||||
Class R6 | (691,716 | ) | (372,199 | ) | ||||
|
|
|
| |||||
(24,133,601 | ) | (44,592,604 | ) | |||||
|
|
|
| |||||
Net increase | 26,936,989 | 29,119,392 | ||||||
|
|
|
|
28
Table of Contents
Certain shareholders may exchange shares of one class for shares of another class in the same Fund. These exchange transactions are included as subscriptions and redemptions in the table on the previous page and on the “Statements of changes in net assets.” For the six months ended May 31, 2018 and the year ended Nov. 30, 2017, the Fund had the following exchange transactions.
Exchange Redemptions | Exchange Subscriptions | |||||||||||||||||||||||||||
Institutional | Institutional | |||||||||||||||||||||||||||
Class A | Class C | Class | Class A | Class | Class R6 | |||||||||||||||||||||||
Shares | Shares | Shares | Shares | Shares | Shares | Value | ||||||||||||||||||||||
Six months ended 5/31/18 | 10,290 | 5,680 | 5 | 3,041 | 12,083 | — | $ | 363,217 | ||||||||||||||||||||
Year ended 11/30/17 | 4,562,936 | 182,362 | 189,608 | 98 | 4,638,858 | 189,373 | 113,439,504 |
5. Line of Credit
The Fund, along with certain other funds in the Delaware Funds (Participants), is a participant in a $155,000,000 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 0.15%, which is generally allocated across the Participants based on a weighted average of the respective net assets of each Participant. The Participants are permitted to borrow up to a maximum of one-third of their net assets under the agreement. Each Participant is individually, and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit available under the agreement expires on Nov. 5, 2018.
The Fund had no amounts outstanding as of May 31, 2018, or at any time during the period then ended.
29
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Notes to financial statements
Delaware Small Cap Core Fund
6. Offsetting
Master Repurchase Agreements
Repurchase agreements are entered into by the Fund under Master Repurchase Agreements (each, an MRA). The MRA permits the Fund, under certain circumstances including an event of default (such as bankruptcy or insolvency), to offset payables and/or receivables with collateral held by and/or posted to the counterparty. As a result, one single net payment is created. Bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of the MRA counterparty’s bankruptcy or insolvency. Based on the terms of the MRA, the Fund receives securities as collateral with a market value in excess of the repurchase price at maturity. Upon a bankruptcy or insolvency of the MRA counterparty, the Fund would recognize a liability with respect to such excess collateral. The liability reflects the Fund’s obligation under bankruptcy law to return the excess to the counterparty. As of May 31, 2018, the following table is a summary of the Fund’s repurchase agreements by counterparty which are subject to offset under an MRA:
Fair Value of | |||||||||||||||||||||||||
Repurchase | Non-Cash | Cash Collateral | Net Collateral | ||||||||||||||||||||||
Counterparty | Agreements | Collateral Received(a) | Received | Received | Net Exposure(b) | ||||||||||||||||||||
Bank of America Merrill Lynch | $10,377,406 | $(10,377,406) | $— | $(10,377,406) | $— | ||||||||||||||||||||
Bank of Montreal | 31,132,219 | (31,132,219) | — | (31,132,219) | — | ||||||||||||||||||||
BNP Paribas | 34,574,508 | (34,574,508) | — | (34,574,508) | — | ||||||||||||||||||||
Total | $76,084,133 | $(76,084,133) | $— | $(76,084,133) | $— |
(a)The value of the related collateral received exceeded the value of the repurchase agreements as of May 31, 2018.
(b)Net exposure represents the net 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 Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (1) 102% with respect to US securities and foreign securities that are denominated and payable in US dollars; and (2) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon the request of the borrower, BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security on any particular day may be more or less than the value of the security on loan. The collateral percentage with respect to the market value of the loaned security is determined by the security lending agent.
30
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Cash collateral received by each fund is generally invested in a series of individual separate accounts, each corresponding to a fund. The investment guidelines permit each separate account to hold certain securities that would be considered eligible securities for a money market fund. Cash collateral received is generally invested in government securities; certain obligations issued by government sponsored enterprises; repurchase agreements collateralized by US Treasury securities; obligations issued by the central government of any Organization for Economic Cooperation and Development (OECD) country or its agencies, instrumentalities or establishments; obligations of supranational organizations; commercial paper, notes, bonds and other debt obligations; certificates of deposit, time deposits, and other bank obligations; and asset-backed securities. A fund can also accept US government securities and letters of credit (non-cash collateral) in connection with securities loans.
In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the collateral received is insufficient to cover the value of the loaned securities and provided such collateral shortfall is not the result of investment losses, the lending agent has agreed to pay the amount of the shortfall to the Fund or, at the discretion of the lending agent, replace the loaned securities. The Fund continues to record dividends or interest, as applicable, on the securities loaned and is subject to changes in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to recover the securities from the borrower on demand. With respect to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent, and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.
The Fund may incur investment losses as a result of investing securities lending collateral. This could occur if an investment in the collateral investment account defaulted or became impaired. Under those circumstances, the value of the Fund’s cash collateral account may be less than the amount the Fund would be required to return to the borrowers of the securities and the Fund would be required to make up for this shortfall.
During the six months ended May 31, 2018, 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, 2018. 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 promulgated
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Notes to financial statements
Delaware Small Cap Core Fund
8. Credit and Market Risk (continued)
under the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Board has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s 15% limit on investments in illiquid securities. As of May 31, 2018, there were no Rule 144A securities held by the Fund. Restricted securities are valued pursuant to the security valuation procedures described in Note 1.
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, 2018, that would require recognition or disclosure in the Fund’s financial statements.
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Delaware Small Cap Core Fund
Board consideration of sub-advisory agreements for Delaware Small Cap Core Fund at a meeting held May 16-17, 2018
At a meeting held on May 16-17, 2018, the Board of Trustees of Delaware Group® Equity Funds V, including a majority of non-interested or independent Trustees (the “Independent Trustees”), approved a new Sub-Advisory Agreement between Delaware Management Company (“DMC” or “Management”) and each of Macquarie Investment Management Global Limited (“MIMGL”) and Macquarie Funds Management Hong Kong (“MFMHK”) for Delaware Small Cap Core Fund (the “Fund”). MIMGL and MFMHK may also be referenced as “sub-advisor(s)” below.
In reaching the decision to approve the Sub-Advisory Agreements, the Board considered and reviewed information about each of MIMGL and MFMHK, including its personnel, operations, and financial condition, which had been provided by MIMGL and MFMHK, respectively. The Board also reviewed material furnished by DMC, including: a memorandum from DMC reviewing the Sub-Advisory Agreements and the various services proposed to be rendered by MIMGL and MFMHK; information concerning MIMGL’s and MFMHK’s organizational structure and the experience of their key investment management personnel; copies of MIMGL’s and MFMHK’s Form ADV, financial statements, compliance policies and procedures, and Codes of Ethics; relevant performance information provided with respect to MIMGL and MFMHK; and a copy of the Sub-Advisory Agreements.
In considering such information and materials, the Independent Trustees received assistance and advice from and met separately with independent counsel. The materials prepared by Management in connection with the approval of the Sub-Advisory Agreements were sent to the Independent Trustees in advance of the meeting. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s decision. This discussion of the information and factors considered by the Board (as well as the discussion above) is not intended to be exhaustive, but rather summarizes certain factors considered by the Board. In view of the wide variety of factors considered, the Board did not, unless otherwise noted, find it practicable to quantify or otherwise assign relative weights to the following factors. In addition, individual Trustees may have assigned different weights to various factors.
Nature, quality, and extent of services. The Board considered the nature, quality, and extent of services that MIMGL and MFMHK each would provide as a sub-advisor to the Fund. The Trustees considered the investment process to be employed by MIMGL and MFMHK in connection with DMC’s collaboration with MIMGL and MFMHK in managing the Fund, and the qualifications and experience of MIMGL and MFMHK’s equity teams with regard to implementing the Fund’s investment mandate. The Board considered MIMGL and MFMHK’s organization, personnel, and operations. The Trustees also considered Management’s review and recommendation process with respect to MIMGL and MFMHK, and Management’s favorable assessment as to the nature, quality, and extent of the sub-advisory services expected to be provided by MIMGL and MFMHK to the Fund. Based on their consideration and review of the foregoing factors, the Board concluded that the nature, quality, and extent of the sub-advisory services to be provided by MIMGL and MFMHK, as well as MIMGL and MFMHK’s ability to render such services based on its experience, organization and resources, were appropriate for the Fund, in light of the Fund’s investment objective, strategies, and policies.
33
Table of Contents
Other Fund information
Delaware Small Cap Core Fund
Board consideration of sub-advisory agreements for Delaware Small Cap Core Fund at a meeting held May 16-17, 2018 (continued)
In discussing the nature of the services proposed to be provided by the sub-advisors, several Board members observed that, unlike traditional sub-advisors, who make the investment-related decisions with respect to the sub-advised portfolio, the relationship contemplated in this case is limited to access to the additional quantitative investment resources, related technology support, and trading capabilities of MIMGL and MFMHK.
Sub-advisory fees. The Board considered that DMC would not pay MIMGL and MFMHK fees in conjunction with the services that would be rendered to the sub-advised Fund. The Board concluded that, in light of the quality and extent of the services to be provided and the business relationships between the advisor and sub-advisors, the proposed fee arrangement was understandable and reasonable.
Investment performance. In evaluating performance, the Board considered that MIMGL and MFMHK would provide trade execution support, but that DMC’s portfolio managers for the Fund would retain portfolio management discretion over the Fund.
Economies of scale and fall-out benefits. The Board considered whether the proposed fee arrangement would reflect economies of scale for the benefit of Fund investors as assets in the Fund increased, as applicable. The Board also considered that DMC and its affiliates may benefit by leveraging the global resources of its affiliates.
34
Table of Contents
Board of trustees | ||||||||||
Shawn K. Lytle | Ann D. Borowiec | John A. Fry | Frances A. | |||||||
President and | Former Chief Executive | President | Sevilla-Sacasa | |||||||
Chief Executive Officer | Officer | Drexel University | Former Chief Executive | |||||||
Delaware Funds® | Private Wealth Management | Philadelphia, PA | Officer | |||||||
by Macquarie | J.P. Morgan Chase & Co. |
|
Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. New York, NY |
| Banco Itaú International | |||||
Philadelphia, PA | New York, NY | Miami, FL | ||||||||
Thomas L. Bennett Chairman of the Board Delaware Funds by Macquarie Private Investor Rosemont, PA |
Joseph W. Chow Former Executive Vice President State Street Corporation Boston, MA | |||||||||
Thomas K. Whitford | ||||||||||
Former Vice Chairman | ||||||||||
PNC Financial Services Group | ||||||||||
Pittsburgh, PA | ||||||||||
Janet L. Yeomans | ||||||||||
Former Vice President and | ||||||||||
Treasurer | ||||||||||
3M Company | ||||||||||
St. Paul, MN | ||||||||||
Affiliated officers | ||||||||||
David F. Connor | Daniel V. Geatens | Richard Salus | ||||||||
Senior Vice President, | Vice President and | Senior Vice President and | ||||||||
General Counsel, | Treasurer | Chief Financial Officer | ||||||||
and Secretary | Delaware Funds | Delaware Funds | ||||||||
Delaware Funds | by Macquarie | by Macquarie | ||||||||
by Macquarie | Philadelphia, PA | Philadelphia, PA | ||||||||
Philadelphia, PA |
This 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 Fund fact sheet for the most recently completed calendar quarter. These documents are available at delawarefunds.com/literature.
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-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 Schedule of Investments included in the Fund’s most recent Form N-Q are available without charge on the Fund’s website at delawarefunds.com/literature. 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 delawarefunds.com/proxy; and (ii) on the SEC’s website at sec.gov.
35
Table of Contents
US equity mutual fund
Delaware Small Cap Value Fund
May 31, 2018
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and its summary prospectus, which may be obtained by visiting delawarefunds.com/literature or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.
You can obtain shareholder reports and prospectuses online instead of in the mail.
Visit delawarefunds.com/edelivery.
Table of Contents
Experience Delaware Funds® by Macquarie
Macquarie Investment Management (MIM) is a global asset manager with offices throughout the United States, Europe, Asia, and Australia. We are active managers who prioritize autonomy and accountability at the investment team level in pursuit of opportunities that matter for our clients. Delaware Funds is one of the longest-standing mutual fund families, with more than 75 years in existence.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Funds or obtain a prospectus for Delaware Small Cap Value Fund at delawarefunds.com/literature.
Manage your account online
• | Check your account balance and transactions |
• | View statements and tax forms |
• | Make purchases and redemptions |
Visit delawarefunds.com/account-access.
Macquarie Asset Management (MAM) offers a diverse range of products including securities investment management, infrastructure and real asset management, and fund and equity-based structured products. Macquarie Investment Management (MIM) is the marketing name for certain companies comprising the asset management division of Macquarie Group. This includes the following registered investment advisers: Macquarie Investment Management Business Trust (MIMBT), Macquarie Funds Management Hong Kong Limited, Macquarie Investment Management Austria Kapitalanlage AG, Macquarie Investment Management Global Limited, Macquarie Investment Management Limited, Macquarie Investment Management Europe Limited, and Macquarie Capital Investment Management LLC.
The Fund is distributed by Delaware Distributors, L.P. (DDLP), an affiliate of MIMBT and Macquarie Group Limited.
Other than Macquarie Bank Limited (MBL), none of the entities noted are authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities, unless noted otherwise. The Fund is governed by US laws and regulations.
1 | ||||
Security type / sector allocation and top 10 equity holdings | 3 | |||
5 | ||||
10 | ||||
12 | ||||
14 | ||||
16 | ||||
26 | ||||
36 | ||||
38 |
Unless otherwise noted, views expressed herein are current as of May 31, 2018, and subject to change for events occurring after such date.
The Fund is not FDIC insured and is not guaranteed. It is possible to lose the principal amount invested.
Advisory services provided by Delaware Management Company, a series of MIMBT, a US registered investment advisor.
All third-party marks cited are the property of their respective owners.
© 2018 Macquarie Management Holdings, Inc.
Table of Contents
For the six-month period from December 1, 2017 to May 31, 2018 (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, 2017 to May 31, 2018.
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
Table of Contents
Disclosure of Fund expenses
For the six-month period from December 1, 2017 to May 31, 2018 (Unaudited)
Delaware Small Cap Value Fund
Expense analysis of an investment of $1,000
Beginning Account Value 12/1/17 | Ending Account Value 5/31/18 | Annualized Expense Ratio | Expenses Paid During Period 12/1/17 to 5/31/18* | |||||||||||||
Actual Fund return† | ||||||||||||||||
Class A | $1,000.00 | $1,013.90 | 1.16% | $5.82 | ||||||||||||
Class C | 1,000.00 | 1,010.10 | 1.91% | 9.57 | ||||||||||||
Class R | 1,000.00 | 1,012.70 | 1.41% | 7.08 | ||||||||||||
Institutional Class | 1,000.00 | 1,015.20 | 0.91% | 4.57 | ||||||||||||
Class R6 | 1,000.00 | 1,016.20 | 0.73% | 3.67 | ||||||||||||
Hypothetical 5% return (5% return before expenses) |
| |||||||||||||||
Class A | $1,000.00 | $1,019.15 | 1.16% | $5.84 | ||||||||||||
Class C | 1,000.00 | 1,015.41 | 1.91% | 9.60 | ||||||||||||
Class R | 1,000.00 | 1,017.90 | 1.41% | 7.09 | ||||||||||||
Institutional Class | 1,000.00 | 1,020.39 | 0.91% | 4.58 | ||||||||||||
Class R6 | 1,000.00 | 1,021.29 | 0.73% | 3.68 |
* | “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. |
In addition to the Fund’s expenses reflected above, the Fund also indirectly bears its portion of the fees and expenses of the investment companies in which it invests (Underlying Funds), including business development corporations and exchange-traded funds. The table above does not reflect the expenses of the Underlying Funds.
2
Table of Contents
Security type / sector allocation
and top 10 equity holdings
Delaware Small Cap Value Fund | As of May 31, 2018 (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.
Security type / sector | Percentage of net assets | |||
Common Stock² | 97.12% | |||
Basic Industry | 8.32% | |||
Business Services | 1.01% | |||
Capital Spending | 8.25% | |||
Consumer Cyclical | 3.47% | |||
Consumer Services | 8.31% | |||
Consumer Staples | 2.27% | |||
Energy | 7.64% | |||
Financial Services | 28.56% | |||
Healthcare | 4.25% | |||
Real Estate Investment Trusts | 7.74% | |||
Technology | 12.64% | |||
Transportation | 2.10% | |||
Utilities | 2.56% | |||
Short-Term Investments | 3.02% | |||
Total Value of Securities | 100.14% | |||
Liabilities Net of Receivables and Other Assets | (0.14%) | |||
Total Net Assets | 100.00% |
² | Narrow industries are utilized for compliance purposes for diversification whereas broad sectors are used for financial reporting. |
To monitor compliance with the Fund’s concentration guidelines as described in the Fund’s prospectus and statement of additional information, the Financial Services sector (as disclosed herein for financial reporting purposes) is subdivided into a variety of “industries” (in accordance with the requirements of the Investment Company Act of 1940). The Financial Services sector consisted of banks, diversified financial services, insurance, investment companies and savings & loans. As of May 31, 2018, such amounts, as a percentage of total net assets were 21.50%, 1.97%, 4.44%, 0.55% and 0.10%, respectively. The percentage in any such single industry will comply with the Fund’s concentration policy even if the percentage in the Financial Services sector for financial reporting purposes may exceed 25%.
3
Table of Contents
Security type / sector allocation
and top 10 equity holdings
Delaware Small Cap Value Fund
Holdings are for informational purposes only and are subject to change at any time. They are not a recommendation to buy, sell, or hold any security.
Top 10 equity holdings | Percentage of net assets | |||
East West Bancorp | 3.26% | |||
Synopsys | 2.11% | |||
Webster Financial | 2.09% | |||
MasTec | 1.84% �� | |||
Hancock Whitney | 1.84% | |||
Berry Global Group | 1.81% | |||
ITT | 1.81% | |||
Selective Insurance Group | 1.72% | |||
Olin | 1.68% | |||
Trinseo | 1.51% | |||
4
Table of Contents
Schedule of investments | ||
Delaware Small Cap Value Fund | May 31, 2018 (Unaudited) |
Number of shares | Value (US $) | |||||||
| ||||||||
Common Stock – 97.12%² | ||||||||
| ||||||||
Basic Industry – 8.32% | ||||||||
Berry Global Group † | 1,721,610 | $ | 83,136,547 | |||||
HB Fuller | 1,110,400 | 57,241,120 | ||||||
Minerals Technologies | 298,812 | 21,813,276 | ||||||
Olin | 2,377,300 | 76,858,109 | ||||||
Trinseo | 957,000 | 69,191,100 | ||||||
USG † | 1,395,300 | 57,877,044 | ||||||
Venator Materials † | 862,200 | 15,191,964 | ||||||
|
| |||||||
381,309,160 | ||||||||
|
| |||||||
Business Services – 1.01% | ||||||||
Deluxe | 397,200 | 26,429,688 | ||||||
WESCO International † | 332,900 | 19,757,615 | ||||||
|
| |||||||
46,187,303 | ||||||||
|
| |||||||
Capital Spending – 8.25% | ||||||||
Altra Industrial Motion | 793,543 | 32,813,003 | ||||||
Atkore International Group † | 1,213,700 | 26,215,920 | ||||||
EnPro Industries | 393,500 | 28,985,210 | ||||||
H&E Equipment Services | 963,500 | 33,308,195 | ||||||
ITT | 1,605,300 | 82,865,586 | ||||||
KLX † | 479,800 | 35,423,634 | ||||||
MasTec † | 1,810,359 | 84,453,247 | ||||||
Primoris Services | 1,243,200 | 32,410,224 | ||||||
Rexnord † | 739,900 | 21,590,282 | ||||||
|
| |||||||
378,065,301 | ||||||||
|
| |||||||
Consumer Cyclical – 3.47% | ||||||||
Barnes Group | 668,100 | 39,698,502 | ||||||
Knoll | 1,303,469 | 26,330,074 | ||||||
Meritage Homes † | 1,062,400 | 48,073,600 | ||||||
Standard Motor Products | 366,140 | 16,567,835 | ||||||
Tenneco | 640,500 | 28,297,290 | ||||||
|
| |||||||
158,967,301 | ||||||||
|
| |||||||
Consumer Services – 8.31% | ||||||||
Asbury Automotive Group † | 278,500 | 19,369,675 | ||||||
Cable One | 53,100 | 34,474,644 | ||||||
Cheesecake Factory | 581,200 | 30,111,972 | ||||||
Choice Hotels International | 587,900 | 47,237,765 | ||||||
Cinemark Holdings | 697,031 | 23,538,737 | ||||||
International Speedway Class A | 731,300 | 30,495,210 | ||||||
Meredith | 577,818 | 29,093,136 | ||||||
Sonic | 1,156,500 | 28,079,820 | ||||||
Steven Madden | 807,350 | 42,668,447 | ||||||
Texas Roadhouse | 335,300 | 20,778,541 | ||||||
UniFirst | 189,200 | 33,601,920 |
5
Table of Contents
Schedule of investments
Delaware Small Cap Value Fund
Number of shares | Value (US $) | |||||||
| ||||||||
Common Stock² (continued) | ||||||||
| ||||||||
Consumer Services (continued) | ||||||||
Wolverine World Wide | 1,222,700 | $ | 40,997,131 | |||||
|
| |||||||
380,446,998 | ||||||||
|
| |||||||
Consumer Staples – 2.27% | ||||||||
Core-Mark Holding | 665,800 | 12,996,416 | ||||||
J&J Snack Foods | 240,500 | 34,059,610 | ||||||
Pinnacle Foods | 506,200 | 32,366,428 | ||||||
Scotts Miracle-Gro Class A | 288,900 | 24,594,057 | ||||||
|
| |||||||
104,016,511 | ||||||||
|
| |||||||
Energy – 7.64% | ||||||||
Delek US Holdings | 823,600 | 45,940,408 | ||||||
Dril-Quip † | 507,200 | 24,370,960 | ||||||
Helix Energy Solutions Group † | 3,005,200 | 22,839,520 | ||||||
Oasis Petroleum † | 3,162,400 | 41,206,072 | ||||||
Patterson-UTI Energy | 2,739,700 | 56,656,996 | ||||||
Rowan Class A † | 2,241,900 | 34,973,640 | ||||||
SM Energy | 2,015,600 | 52,808,720 | ||||||
Southwest Gas Holdings | 617,300 | 46,729,610 | ||||||
Whiting Petroleum † | 464,775 | 24,363,505 | ||||||
|
| |||||||
349,889,431 | ||||||||
|
| |||||||
Financial Services – 28.56% | ||||||||
American Equity Investment Life Holding | 1,762,800 | 62,473,632 | ||||||
Bank of Hawaii | 662,400 | 56,257,632 | ||||||
Bank of NT Butterfield & Son | 243,700 | 11,636,675 | ||||||
Bofi Holding † | 107,700 | 4,438,317 | ||||||
Boston Private Financial Holdings | 2,228,000 | 37,876,000 | ||||||
Community Bank System | 795,900 | 47,658,492 | ||||||
East West Bancorp | 2,150,923 | 149,446,130 | ||||||
First Financial Bancorp | 1,849,700 | 58,173,065 | ||||||
First Interstate BancSystem | 988,700 | 43,156,755 | ||||||
First Midwest Bancorp | 1,842,000 | 48,389,340 | ||||||
FNB | 684,800 | 9,073,600 | ||||||
Great Western Bancorp | 1,490,550 | 64,973,075 | ||||||
Hancock Whitney | 1,677,600 | 84,299,400 | ||||||
Hanover Insurance Group | 512,300 | 62,111,252 | ||||||
Legg Mason | 821,300 | 30,609,851 | ||||||
Main Street Capital (BDC) | 661,500 | 25,414,830 | ||||||
NBT Bancorp | 996,400 | 37,962,840 | ||||||
Prosperity Bancshares | 659,400 | 47,760,342 | ||||||
S&T Bancorp | 784,756 | 35,447,429 | ||||||
Selective Insurance Group | 1,382,300 | 78,583,755 | ||||||
Stifel Financial | 1,014,200 | 59,634,960 |
6
Table of Contents
Number of shares | Value (US $) | |||||||
| ||||||||
Common Stock² (continued) | ||||||||
| ||||||||
Financial Services (continued) | ||||||||
Umpqua Holdings | 2,555,500 | $ | 60,156,470 | |||||
Valley National Bancorp | 3,929,900 | 49,949,029 | ||||||
Webster Financial | 1,493,300 | 95,720,530 | ||||||
WesBanco | 1,004,000 | 46,776,360 | ||||||
|
| |||||||
1,307,979,761 | ||||||||
|
| |||||||
Healthcare – 4.25% | ||||||||
Catalent † | 791,200 | 31,062,512 | ||||||
Haemonetics † | 303,700 | 27,439,295 | ||||||
Halyard Health † | 711,900 | 39,083,310 | ||||||
Service Corp. International | 761,500 | 27,939,435 | ||||||
STERIS | 563,780 | 58,542,915 | ||||||
Teleflex | 39,700 | 10,606,252 | ||||||
|
| |||||||
194,673,719 | ||||||||
|
| |||||||
Real Estate Investment Trusts – 7.74% | ||||||||
Brandywine Realty Trust | 2,908,537 | 47,292,812 | ||||||
Education Realty Trust | 666,433 | 24,351,462 | ||||||
Healthcare Realty Trust | 1,152,900 | 31,404,996 | ||||||
Highwoods Properties | 935,400 | 44,740,182 | ||||||
Lexington Realty Trust | 3,543,300 | 30,578,679 | ||||||
Life Storage | 362,600 | 33,547,752 | ||||||
Outfront Media | 2,339,200 | 46,409,728 | ||||||
Ramco-Gershenson Properties Trust | 2,001,689 | 24,620,775 | ||||||
Summit Hotel Properties | 2,309,700 | 35,315,313 | ||||||
Washington Real Estate Investment Trust | 1,271,200 | 36,458,016 | ||||||
|
| |||||||
354,719,715 | ||||||||
|
| |||||||
Technology – 12.64% | ||||||||
Cirrus Logic † | 507,700 | 19,028,596 | ||||||
CommScope Holding † | 1,437,548 | 42,148,907 | ||||||
MaxLinear Class A † | 1,060,900 | 19,467,515 | ||||||
NCR † | 833,759 | 25,096,146 | ||||||
NetScout Systems † | 993,406 | 26,821,962 | ||||||
ON Semiconductor † | 2,234,300 | 56,147,959 | ||||||
PTC † | 338,000 | 29,149,120 | ||||||
Super Micro Computer † | 1,333,800 | 32,144,580 | ||||||
Synopsys † | 1,099,300 | 96,815,351 | ||||||
Tech Data † | 467,219 | 40,559,281 | ||||||
Teradyne | 1,392,600 | 52,793,466 | ||||||
Tower Semiconductor † | 1,517,900 | 39,343,968 | ||||||
TTM Technologies † | 1,513,902 | 27,295,653 | ||||||
Viavi Solutions † | 1,856,100 | 17,651,511 | ||||||
Vishay Intertechnology | 2,577,100 | 54,634,520 | ||||||
|
| |||||||
579,098,535 | ||||||||
|
|
7
Table of Contents
Schedule of investments
Delaware Small Cap Value Fund
Number of shares | Value (US $) | |||||||
| ||||||||
Common Stock² (continued) | ||||||||
| ||||||||
Transportation – 2.10% | ||||||||
Kirby † | 258,100 | $ | 23,409,670 | |||||
Saia † | 333,350 | 27,468,040 | ||||||
Werner Enterprises | 1,155,000 | 45,276,000 | ||||||
|
| |||||||
96,153,710 | ||||||||
|
| |||||||
Utilities – 2.56% | ||||||||
ALLETE | 426,900 | 32,794,458 | ||||||
Black Hills | 688,400 | 40,037,344 | ||||||
El Paso Electric | 758,700 | 44,459,820 | ||||||
|
| |||||||
117,291,622 | ||||||||
|
| |||||||
Total Common Stock (cost $3,105,311,753) | 4,448,799,067 | |||||||
|
| |||||||
Principal amount° | ||||||||
| ||||||||
Short-Term Investments – 3.02% | ||||||||
| ||||||||
Discount Note – 0.58%≠ | ||||||||
Federal Home Loan Bank 0.00% 6/1/18 | 26,733,019 | 26,733,019 | ||||||
Repurchase Agreements – 2.44% | ||||||||
Bank of America Merrill Lynch | 15,212,986 | 15,212,986 | ||||||
Bank of Montreal | 45,638,956 | 45,638,956 | ||||||
BNP Paribas | 50,685,256 | 50,685,256 | ||||||
|
| |||||||
111,537,198 | ||||||||
|
| |||||||
Total Short-Term Investments (cost $138,270,217) | 138,270,217 | |||||||
|
| |||||||
Total Value of Securities – 100.14% | $ | 4,587,069,284 | ||||||
|
|
² | Narrow industries are utilized for compliance purposes for diversification whereas broad sectors are used for financial reporting. |
≠ | The rate shown is the effective yield at the time of purchase. |
° | Principal amount shown is stated in US dollars unless noted that the security is denominated in another currency. |
† | Non-income producing security. |
8
Table of Contents
BDC – Business Development Corporation
See accompanying notes, which are an integral part of the financial statements.
9
Table of Contents
Statement of assets and liabilities
Delaware Small Cap Value Fund | May 31, 2018 (Unaudited) |
Assets: | ||||
Investments, at value1 | $ | 4,587,069,284 | ||
Cash | 762,146 | |||
Receivable for securities sold | 9,275,123 | |||
Receivable for fund shares sold | 7,661,975 | |||
Dividends and interest receivable | 5,169,995 | |||
|
| |||
Total assets | 4,609,938,523 | |||
|
| |||
Liabilities: | ||||
Payable for fund shares redeemed | 12,731,712 | |||
Payable for securities purchased | 12,047,889 | |||
Investment management fees payable to affiliates | 2,481,910 | |||
Dividend disbursing and transfer agent fees and expenses payable to non-affiliates | 1,421,169 | |||
Distribution fees payable to affiliates | 295,485 | |||
Other accrued expenses | 253,379 | |||
Dividend disbursing and transfer agent fees and expenses payable to affiliates | 74,805 | |||
Audit and tax fees payable | 47,105 | |||
Trustees’ fees and expenses payable | 25,445 | |||
Accounting and administration expenses payable to affiliates | 14,891 | |||
Legal fees payable to affiliates | 7,483 | |||
Reports and statements to shareholders expenses payable to affiliates | 3,381 | |||
Income distribution payable | 321 | |||
|
| |||
Total liabilities | 29,404,975 | |||
|
| |||
Total Net Assets | $ | 4,580,533,548 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 3,111,658,348 | ||
Undistributed net investment income | 6,194,568 | |||
Accumulated net realized gain on investments | 119,193,318 | |||
Net unrealized appreciation of investments | 1,343,487,314 | |||
|
| |||
Total Net Assets | $ | 4,580,533,548 | ||
|
|
10
Table of Contents
Net Asset Value | ||||
Class A: | ||||
Net assets | $ | 834,735,755 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 12,427,191 | |||
Net asset value per share | $ | 67.17 | ||
Sales charge | 5.75 | % | ||
Offering price per share, equal to net asset value per share / (1 – sales charge) | $ | 71.27 | ||
Class C: | ||||
Net assets | $ | 103,830,741 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 1,867,747 | |||
Net asset value per share | $ | 55.59 | ||
Class R: | ||||
Net assets | $ | 76,243,343 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 1,170,567 | |||
Net asset value per share | $ | 65.13 | ||
Institutional Class: | ||||
Net assets | $ | 3,241,755,191 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 45,749,324 | |||
Net asset value per share | $ | 70.86 | ||
Class R6: | ||||
Net assets | $ | 323,968,518 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 4,567,780 | |||
Net asset value per share | $ | 70.92 | ||
| ||||
1 Investments, at cost | $ | 3,243,581,970 |
See accompanying notes, which are an integral part of the financial statements.
11
Table of Contents
Delaware Small Cap Value Fund | Six months ended May 31, 2018 (Unaudited) |
Investment Income: | ||||
Dividends | $ | 31,209,342 | ||
Interest | 604,366 | |||
|
| |||
31,813,708 | ||||
|
| |||
Expenses: | ||||
Management fees | 14,401,516 | |||
Dividend disbursing and transfer agent fees and expenses | 4,502,854 | |||
Distribution expenses – Class A | 1,051,937 | |||
Distribution expenses – Class C | 517,648 | |||
Distribution expenses – Class R | 196,522 | |||
Accounting and administration expenses | 414,060 | |||
Reports and statements to shareholders expenses | 214,411 | |||
Legal fees | 133,059 | |||
Registration fees | 100,412 | |||
Trustees’ fees and expenses | 100,339 | |||
Custodian fees | 55,970 | |||
Audit and tax fees | 17,527 | |||
Other | 50,793 | |||
|
| |||
21,757,048 | ||||
Less expenses paid indirectly | (1,639 | ) | ||
|
| |||
Total operating expenses | 21,755,409 | |||
|
| |||
Net Investment Income | 10,058,299 | |||
|
| |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain on investments | 140,703,285 | |||
Net change in unrealized appreciation (depreciation) of investments | (81,844,601 | ) | ||
|
| |||
Net Realized and Unrealized Gain | 58,858,684 | |||
|
| |||
Net Increase in Net Assets Resulting from Operations | $ | 68,916,983 | ||
|
|
See accompanying notes, which are an integral part of the financial statements.
12
Table of Contents
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Table of Contents
Statements of changes in net assets
Delaware Small Cap Value Fund
Six months | ||||||||
ended | ||||||||
5/31/18 | Year ended | |||||||
(Unaudited) | 11/30/17 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 10,058,299 | $ | 27,375,580 | ||||
Net realized gain | 140,703,285 | 108,206,465 | ||||||
Net change in unrealized appreciation (depreciation) | (81,844,601 | ) | 470,343,133 | |||||
|
|
|
| |||||
Net increase in net assets resulting from operations | 68,916,983 | 605,925,178 | ||||||
|
|
|
| |||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (3,486,330 | ) | (4,638,922 | ) | ||||
Class C | — | (42,490 | ) | |||||
Class R | (156,647 | ) | (281,262 | ) | ||||
Institutional Class | (19,451,442 | ) | (15,499,648 | ) | ||||
Class R6 | (1,633,719 | ) | (351,782 | ) | ||||
Net realized gain: | ||||||||
Class A | (8,017,252 | ) | — | |||||
Class C | (1,165,335 | ) | — | |||||
Class R | (794,794 | ) | — | |||||
Institutional Class | (28,368,595 | ) | — | |||||
Class R6 | (1,864,505 | ) | — | |||||
|
|
|
| |||||
(64,938,619 | ) | (20,814,104 | ) | |||||
|
|
|
| |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 79,493,828 | 440,751,690 | ||||||
Class C | 9,068,736 | 21,696,263 | ||||||
Class R | 9,682,629 | 26,217,173 | ||||||
Institutional Class | 364,648,439 | 1,490,574,808 | ||||||
Class R6 | 145,584,852 | 213,808,719 | ||||||
Net asset value of shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | 11,370,015 | 4,549,812 | ||||||
Class C | 1,146,823 | 40,532 | ||||||
Class R | 951,281 | 281,226 | ||||||
Institutional Class | 47,031,805 | 15,214,524 | ||||||
Class R6 | 3,491,535 | 351,782 | ||||||
|
|
|
| |||||
672,469,943 | 2,213,486,529 | |||||||
|
|
|
|
14
Table of Contents
Six months | ||||||||
ended | ||||||||
5/31/18 | Year ended | |||||||
(Unaudited) | 11/30/17 | |||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares redeemed: | ||||||||
Class A | $ | (137,168,782 | ) | $ | (556,756,789 | ) | ||
Class C | (11,993,392 | ) | (37,832,082 | ) | ||||
Class R | (18,486,730 | ) | (37,845,894 | ) | ||||
Institutional Class | (443,445,705 | ) | (817,565,441 | ) | ||||
Class R6 | (35,090,244 | ) | (29,505,064 | ) | ||||
|
|
|
| |||||
(646,184,853 | ) | (1,479,505,270 | ) | |||||
|
|
|
| |||||
Increase in net assets derived from capital share transactions | 26,285,090 | 733,981,259 | ||||||
|
|
|
| |||||
Net Increase in Net Assets | 30,263,454 | 1,319,092,333 | ||||||
Net Assets: | ||||||||
Beginning of period | 4,550,270,094 | 3,231,177,761 | ||||||
|
|
|
| |||||
End of period | $ | 4,580,533,548 | $ | 4,550,270,094 | ||||
|
|
|
| |||||
Undistributed net investment income | $ | 6,194,568 | $ | 20,864,407 | ||||
|
|
|
|
See accompanying notes, which are an integral part of the financial statements.
15
Table of Contents
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 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 assets4 |
Ratio of expenses to average net assets prior to fees waived4,5 |
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 distributor. Performance would have been lower had the waiver not been in effect. |
4 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
5 | Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the six months ended May 31, 2018 are reflected on the “Statement of operations.” |
See accompanying notes, which are an integral part of the financial statements.
16
Table of Contents
Six months ended 5/31/181 | Year ended | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
(Unaudited) | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | 11/30/13 | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
$ | 67.13 | $ | 58.16 | $ | 52.55 | $ | 54.87 | $ | 52.37 | $ | 39.75 | |||||||||||||||||||
0.09 | 0.34 | 0.28 | 0.32 | 0.15 | 0.12 | |||||||||||||||||||||||||
0.83 | 8.94 | 8.55 | 0.16 | 3.51 | 12.84 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
0.92 | 9.28 | 8.83 | 0.48 | 3.66 | 12.96 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(0.27 | ) | (0.31 | ) | (0.32 | ) | (0.18 | ) | (0.06 | ) | (0.09 | ) | |||||||||||||||||||
(0.61 | ) | — | (2.90 | ) | (2.62 | ) | (1.10 | ) | (0.25 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(0.88 | ) | (0.31 | ) | (3.22 | ) | (2.80 | ) | (1.16 | ) | (0.34 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
$ | 67.17 | $ | 67.13 | $ | 58.16 | $ | 52.55 | $ | 54.87 | $ | 52.37 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
|
1.39% |
| 16.01% | 18.47% | 0.90% | 7.12% | 32.87% | |||||||||||||||||||||||
$ | 834,736 | $ | 881,709 | $ | 870,158 | $ | 794,664 | $ | 775,076 | $ | 884,026 | |||||||||||||||||||
1.16% | 1.18% | 1.24% | 1.22% | 1.22% | 1.25% | |||||||||||||||||||||||||
1.16% | 1.18% | 1.24% | 1.22% | 1.22% | 1.29% | |||||||||||||||||||||||||
0.27% | 0.55% | 0.57% | 0.62% | 0.27% | 0.26% | |||||||||||||||||||||||||
0.27% | 0.55% | 0.57% | 0.62% | 0.27% | 0.22% | |||||||||||||||||||||||||
6% | 15% | 19% | 20% | 17% | 28% | |||||||||||||||||||||||||
|
|
17
Table of Contents
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 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 assets4,5 |
Ratio of net investment loss to average net assets5 |
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. |
4 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
5 | Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the six months ended May 31, 2018 are reflected on the “Statement of operations.” |
See accompanying notes, which are an integral part of the financial statements.
18
Table of Contents
Six months ended 5/31/181 | Year ended | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
(Unaudited) | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | 11/30/13 | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
$ | 55.65 | $ | 48.34 | $ | 44.24 | $ | 46.79 | $ | 45.11 | $ | 34.45 | |||||||||||||||||||
(0.13) | (0.10) | (0.07) | (0.06) | (0.22) | (0.20) | |||||||||||||||||||||||||
0.68 | 7.43 | 7.09 | 0.13 | 3.00 | 11.11 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
0.55 | 7.33 | 7.02 | 0.07 | 2.78 | 10.91 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
— | (0.02 | ) | (0.02 | ) | — | — | — | |||||||||||||||||||||||
(0.61 | ) | — | (2.90 | ) | (2.62 | ) | (1.10 | ) | (0.25 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(0.61 | ) | (0.02 | ) | (2.92 | ) | (2.62 | ) | (1.10 | ) | (0.25 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
$ | 55.59 | $ | 55.65 | $ | 48.34 | $ | 44.24 | $ | 46.79 | $ | 45.11 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
|
1.01% |
| 15.17% | 17.58% | 0.14% | 6.30% | 31.93% | |||||||||||||||||||||||
$ | 103,831 | $ | 105,757 | $ | 107,104 | $ | 108,890 | $ | 109,368 | $ | 99,099 | |||||||||||||||||||
1.91% | 1.93% | 1.99% | 1.97% | 1.97% | 2.00% | |||||||||||||||||||||||||
(0.48%) | (0.20%) | (0.18%) | (0.13%) | (0.48%) | (0.49%) | |||||||||||||||||||||||||
6% | 15% | 19% | 20% | 17% | 28% | |||||||||||||||||||||||||
|
|
19
Table of Contents
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 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 return4 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets5 |
Ratio of expenses to average net assets prior to fees waived5,6 |
Ratio of net investment income 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 | The amount is less than $0.005 per share. |
4 | Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during some of the periods shown reflects a waiver by the distributor. Performance would have been lower had the waiver not been in effect. |
5 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
6 | Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the six months ended May 31, 2018 are reflected on the “Statement of operations.” |
See accompanying notes, which are an integral part of the financial statements.
20
Table of Contents
Six months ended 5/31/181 | Year ended | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
(Unaudited) | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | 11/30/13 | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
$ | 65.05 | $ | 56.40 | $ | 51.05 | $ | 53.39 | $ | 51.06 | $ | 38.77 | |||||||||||||||||||
0.01 | 0.18 | 0.15 | 0.19 | 0.01 | —3 | |||||||||||||||||||||||||
0.80 | 8.66 | 8.30 | 0.14 | 3.42 | 12.54 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
0.81 | 8.84 | 8.45 | 0.33 | 3.43 | 12.54 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(0.12 | ) | (0.19 | ) | (0.20 | ) | (0.05 | ) | — | — | |||||||||||||||||||||
(0.61 | ) | — | (2.90 | ) | (2.62 | ) | (1.10 | ) | (0.25 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(0.73 | ) | (0.19 | ) | (3.10 | ) | (2.67 | ) | (1.10 | ) | (0.25 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
$ | 65.13 | $ | 65.05 | $ | 56.40 | $ | 51.05 | $ | 53.39 | $ | 51.06 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
|
1.27% |
| 15.71% | 18.19% | 0.63% | 6.85% | 32.55% | |||||||||||||||||||||||
$ | 76,243 | $ | 84,131 | $ | 83,557 | $ | 81,187 | $ | 82,577 | $ | 76,501 | |||||||||||||||||||
1.41% | 1.43% | 1.49% | 1.47% | 1.47% | 1.50% | |||||||||||||||||||||||||
1.41% | 1.43% | 1.49% | 1.47% | 1.47% | 1.58% | |||||||||||||||||||||||||
0.02% | 0.30% | 0.32% | 0.37% | 0.02% | 0.01% | |||||||||||||||||||||||||
0.02% | 0.30% | 0.32% | 0.37% | 0.02% | (0.07%) | |||||||||||||||||||||||||
6% | 15% | 19% | 20% | 17% | 28% | |||||||||||||||||||||||||
|
|
21
Table of Contents
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 assets4,5 |
Ratio of net investment income to average net assets5 |
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. |
4 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
5 | Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the six months ended May 31, 2018 are reflected on the “Statement of operations.” |
See accompanying notes, which are an integral part of the financial statements.
22
Table of Contents
Six months ended 5/31/181 | Year ended | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
(Unaudited) | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | 11/30/13 | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
$ | 70.83 | $ | 61.32 | $ | 55.23 | $ | 57.52 | $ | 54.83 | $ | 41.59 | |||||||||||||||||||
0.18 | 0.52 | 0.42 | 0.48 | 0.29 | 0.25 | |||||||||||||||||||||||||
0.88 | 9.42 | 9.02 | 0.16 | 3.67 | 13.43 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
1.06 | 9.94 | 9.44 | 0.64 | 3.96 | 13.68 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(0.42 | ) | (0.43 | ) | (0.45 | ) | (0.31 | ) | (0.17 | ) | (0.19 | ) | |||||||||||||||||||
(0.61 | ) | — | (2.90 | ) | (2.62 | ) | (1.10 | ) | (0.25 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(1.03 | ) | (0.43 | ) | (3.35 | ) | (2.93 | ) | (1.27 | ) | (0.44 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
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|
| |||||||||||||||||||
$ | 70.86 | $ | 70.83 | $ | 61.32 | $ | 55.23 | $ | 57.52 | $ | 54.83 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
|
1.52% |
| 16.30% | 18.77% | 1.15% | 7.38% | 33.22% | |||||||||||||||||||||||
$ | 3,241,755 | $ | 3,270,954 | $ | 2,166,172 | $ | 1,969,355 | $ | 1,768,420 | $ | 1,214,512 | |||||||||||||||||||
0.91% | 0.93% | 0.99% | 0.97% | 0.97% | 1.00% | |||||||||||||||||||||||||
0.52% | 0.80% | 0.82% | 0.87% | 0.52% | 0.51% | |||||||||||||||||||||||||
6% | 15% | 19% | 20% | 17% | 28% | |||||||||||||||||||||||||
|
|
23
Table of Contents
Financial highlights
Delaware Small Cap Value Fund Class R6
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income from investment operations: |
Net investment income3 |
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 return4 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of net investment income to average net assets5,6 |
Portfolio turnover |
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | Date of commencement of operations; ratios have been annualized and total return has not been annualized. |
3 | The average shares outstanding method has been applied for per share information. |
4 | Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. |
5 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
6 | Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the six months ended May 31, 2018 are reflected on the “Statement of operations.” |
7 | Portfolio turnover is representative of the Fund for the entire year ended Nov. 30, 2016. |
See accompanying notes, which are an integral part of the financial statements.
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Six months ended 5/31/181 | Year ended | 5/2/162 to | ||||||||||||||||||||||||||||
(Unaudited) | 11/30/17 | 11/30/16 | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
$ | 70.95 | $ | 61.38 | $ | 51.46 | |||||||||||||||||||||||||
0.24 | 0.65 | 0.32 | ||||||||||||||||||||||||||||
0.88 | 9.43 | 9.60 | ||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
1.12 | 10.08 | 9.92 | ||||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
(0.54 | ) | (0.51 | ) | — | ||||||||||||||||||||||||||
(0.61 | ) | — | — | |||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
(1.15 | ) | (0.51 | ) | — | ||||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
$ | 70.92 | $ | 70.95 | $ | 61.38 | |||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
|
1.62% |
| 16.52% | 19.28% | ||||||||||||||||||||||||||
$ | 323,969 | $ | 207,719 | $ | 4,187 | |||||||||||||||||||||||||
0.73% | 0.75% | 0.77% | ||||||||||||||||||||||||||||
0.70% | 0.98% | 0.96% | ||||||||||||||||||||||||||||
6% | 15% | 19%7 | ||||||||||||||||||||||||||||
|
|
25
Table of Contents
Delaware Small Cap Value Fund | May 31, 2018 (Unaudited) |
Delaware Group® Equity Funds V (Trust) is organized as a Delaware statutory trust and offers three series: Delaware Wealth Builder 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 (1940 Act), and offers Class A, Class C, Class R, Institutional Class, and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) instead of a front-end sales charge 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, Institutional Class, and Class R6 shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Class R6 shares do not pay any service fees, sub-accounting fees, and/or sub-transfer agency fees to any brokers, dealers, or other financial intermediaries.
The investment objective of the Fund is to seek capital appreciation.
1. Significant Accounting Policies
The following accounting policies are in accordance with US generally accepted accounting principles (US GAAP) and are consistently followed by the Fund.
Security Valuation – Equity securities and exchange-traded funds (ETFs), except those traded on the Nasdaq Stock Market LLC (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange on the valuation date. Equity securities 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, the mean between the bid and ask prices will be used, which approximates fair value. US 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 Trust’s Board of Trustees (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. Restricted securities are valued at fair value using methods approved by the Board.
Federal 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 or to be taken on the Fund’s federal income tax returns through the six months ended May 31, 2018 and for all open tax years (years ended Nov. 30, 2015–Nov. 30, 2017), and has concluded that no provision for federal income tax is required in the Fund’s financial statements. If applicable, the Fund recognizes interest accrued on
26
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unrecognized tax benefits in interest expense and penalties in other expenses on the “Statement of operations.” During the six months ended May 31, 2018, the Fund did not incur any interest or tax penalties. In regard to foreign taxes only, the Fund has open tax years in certain foreign countries in which it invests 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. Class R6 shares are not allocated any expenses related to service fees, sub-accounting fees, and/or sub-transfer agency fees paid to brokers, dealers, or financial intermediaries.
Underlying Funds – The Fund may invest in other investment companies (Underlying Funds) to the extent permitted by the 1940 Act. The Underlying Funds in which the Fund invests include business development corporations (BDC) and ETFs. The Fund will indirectly bear the investment management fees and other expenses of the Underlying Funds.
Repurchase Agreements – The Fund may purchase certain US government securities subject to the counterparty’s agreement to repurchase them at an agreed upon date and price. The counterparty will be required on a daily basis to maintain the value of the collateral subject to the agreement at not less than the repurchase price (including accrued interest). The agreements are conditioned upon the collateral being deposited under the Federal Reserve book-entry system with the Fund’s custodian or a third-party sub-custodian. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. All open repurchase agreements as of the date of this report were entered into on May 31, 2018, and matured on the next business day.
Use of Estimates – The Fund is an investment company, whose financial statements are prepared in conformity with US GAAP. Therefore, the Fund follows the accounting and reporting guidelines for investment companies. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other – Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Funds® by Macquarie (Delaware Funds) are generally allocated among such funds on the basis of average net assets. Management fees and certain other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Discounts and premiums on debt securities are accreted or amortized to interest income, respectively, over the lives of the respective securities using the effective interest method. Distributions received from investments in real estate investment trusts (REITs) are recorded as dividend income on the ex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer. The Fund declares and pays dividends from net investment income and distributions from net realized gain on investments, if
27
Table of Contents
Notes to financial statements
Delaware Small Cap Value Fund
1. Significant Accounting Policies (continued)
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, 2018.
The Fund receives earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. The expense paid under this arrangement is included on the “Statement of operations” under “Custodian fees” with the corresponding expense offset included under “Less expenses paid indirectly.” For the six months ended May 31, 2018, the Fund earned $593 under this arrangement.
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. If the amount earned is greater than $1, the expense paid under this arrangement is included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses” with the corresponding expense offset included under “Less expenses paid indirectly.” For the six months ended May 31, 2018, the Fund earned $1,046 under this arrangement.
2. Investment Management, Administration Agreements, and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Macquarie Investment Management Business Trust and the investment manager, an annual fee which is calculated daily and paid monthly at the 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.
Delaware Investments Fund Services Company (DIFSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Fund. For these services, DIFSC’s fees are calculated daily and paid monthly based on the aggregate daily net assets of all Funds within the Delaware Funds at the following annual rate: 0.00475% of the first $35 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $45 billion (Total Fee). Each fund in the Delaware Funds pays a minimum of $4,000, which, in aggregate, is subtracted from the Total Fee. Each fund then pays its portion of the remainder of the Total Fee on a relative NAV basis. For the six months ended May 31, 2018, the Fund was charged $86,504 for these services. This amount is included on the “Statement of operations” under “Accounting and administration expenses.”
DIFSC is also the transfer agent and dividend disbursing agent of the Fund. For these services, DIFSC’s fees are calculated daily and paid monthly based on the aggregate daily net assets of the retail funds within the Delaware Funds at the following annual 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% of average daily net assets in excess of $30 billion.
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The fees payable to DIFSC under the transfer agent agreement described above are allocated among all retail funds in the Delaware Funds on a relative NAV basis. This amount is included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses.” For the six months ended May 31, 2018, the Fund was charged $435,128 for these services. Pursuant to a sub-transfer agency agreement between DIFSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to the Fund. Sub-transfer agency fees are paid by the Fund and are also included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses.”
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and service (12b-1) 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 Class R shares. The fees are calculated daily and paid monthly. Institutional Class and Class R6 shares pay no 12b-1 fees.
As provided in the investment management agreement, the Fund bears a portion of the cost of certain resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to the Fund. For the six months ended May 31, 2018, the Fund was charged $45,287 for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates’ employees. This amount is included on the “Statement of operations” under “Legal fees.”
For the six months ended May 31, 2018, DDLP earned $27,308 for commissions on sales of the Fund’s Class A shares. For the six months ended, May 31, 2018, DDLP received gross CDSC commissions of $18 and $2,411 on redemption of the Fund’s Class A and Class C shares, respectively, and these commissions were entirely used to offset up-front commissions previously paid by DDLP to broker/dealers on sales of those shares.
Trustees’ fees include expenses accrued by the Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, DIFSC, and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Fund.
In addition to the management fees and other expenses of the Fund, the Fund indirectly bears the investment management fees and other expenses of the Underlying Funds. The amount of these fees and expenses incurred indirectly by the Fund will vary based upon the expense and fee levels of the Underlying Funds and the amount of shares that are owned of the Underlying Funds at different times.
29
Table of Contents
Notes to financial statements
Delaware Small Cap Value Fund
3. Investments
For the six months ended May 31, 2018, the Fund made purchases and sales of investment securities other than short-term investments as follows:
Purchases | $ | 284,148,797 | ||
Sales | 355,876,615 |
At May 31, 2018, the cost and unrealized appreciation (depreciation) of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At May 31, 2018, the cost and unrealized appreciation (depreciation) of investments for the Fund were as follows:
Cost of investments | $ | 3,243,581,970 | ||
|
| |||
Aggregate unrealized appreciation of investments | $ | 1,391,440,927 | ||
Aggregate unrealized depreciation of investments | (47,953,613 | ) | ||
|
| |||
Net unrealized appreciation of investments | $ | 1,343,487,314 | ||
|
|
US GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three-level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances. The Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-level hierarchy of inputs is summarized below and on the next page.
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
30
Table of Contents
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, 2018:
Level 1 | Level 2 | Total | ||||||||||
Securities | ||||||||||||
Assets: | ||||||||||||
Common Stock | $ | 4,448,799,067 | $ | — | $ | 4,448,799,067 | ||||||
Short-Term Investments | — | 138,270,217 | 138,270,217 | |||||||||
|
|
|
|
|
| |||||||
Total Value of Securities | $ | 4,448,799,067 | $ | 138,270,217 | $ | 4,587,069,284 | ||||||
|
|
|
|
|
|
During the six months ended May 31, 2018, 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 based on fair value at the beginning of the reporting period.
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim, or end of the period in relation to net assets. During the six months ended May 31, 2018, there were no Level 3 investments.
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Table of Contents
Notes to financial statements
Delaware Small Cap Value Fund
4. Capital Shares
Transactions in capital shares were as follows:
Six months ended | Year ended | |||||||||
5/31/18 | 11/30/17 | |||||||||
Shares sold: | ||||||||||
Class A | 1,206,662 | 7,239,929 | ||||||||
Class C | 165,606 | 426,747 | ||||||||
Class R | 151,201 | 440,813 | ||||||||
Institutional Class | 5,252,071 | 23,247,010 | ||||||||
Class R6 | 2,093,528 | 3,307,662 | ||||||||
Shares issued upon reinvestment of dividends and distributions: | ||||||||||
Class A | 171,778 | 75,579 | ||||||||
Class C | 20,870 | 807 | ||||||||
Class R | 14,806 | 4,810 | ||||||||
Institutional Class | 674,291 | 240,092 | ||||||||
Class R6 | 50,051 | 5,551 | ||||||||
|
|
|
| |||||||
9,800,864 | 34,989,000 | |||||||||
|
|
|
| |||||||
Shares redeemed: | ||||||||||
Class A | (2,085,919 | ) | (9,142,742 | ) | ||||||
Class C | (219,215 | ) | (742,508 | ) | ||||||
Class R | (288,684 | ) | (633,928 | ) | ||||||
Institutional Class | (6,355,187 | ) | (12,635,791 | ) | ||||||
Class R6 | (503,365 | ) | (453,861 | ) | ||||||
|
|
|
| |||||||
(9,452,370 | ) | (23,608,830 | ) | |||||||
|
|
|
| |||||||
Net increase | 348,494 | 11,380,170 | ||||||||
|
|
|
|
Certain shareholders may exchange shares of one class for shares of another class in the same Fund. For the six months ended May 31, 2018 and year ended Nov. 30, 2017, the Fund had the following exchange transactions. These exchange transactions are included as subscriptions and redemptions in the table on the previous page and on the “Statements of changes in net assets.”
Exchange Redemptions | Exchange Subscriptions | |||||||||||||||||||||||||||
Class A Shares | Class C Shares | Institutional Class Shares | Class A Shares | Institutional Class Shares | Class R6 Shares | Value | ||||||||||||||||||||||
Six months ended 5/31/18 | 17,716 | 1,757 | 29 | 31 | 18,188 | — | $ | 1,266,513 | ||||||||||||||||||||
Year ended 11/30/17 | 3,650,914 | 10,474 | 19,860 | 671 | 3,470,119 | 19,831 | 221,673,975 |
32
Table of Contents
5. Line of Credit
The Fund, along with certain other funds in the Delaware Funds (Participants), is a participant in a $155,000,000 revolving line of credit intended to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants are charged an annual commitment fee of 0.15%, which is generally allocated across the Participants based on a weighted average of the respective net assets of each Participant. The Participants are permitted to borrow up to a maximum of one third of their net assets under the agreement. Each Participant is individually, and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit available under the agreement expires on Nov. 5, 2018.
The Fund had no amounts outstanding as of May 31, 2018, or at any time during the period then ended.
6. Offsetting
Repurchase agreements are entered into by the Fund under Master Repurchase Agreements (each, an MRA). The MRA permits the Fund, under certain circumstances including an event of default (such as bankruptcy or insolvency), to offset payables and/or receivables with collateral held by and/or posted to the counterparty. As a result, one single net payment is created. Bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of the MRA counterparty’s bankruptcy or insolvency. Based on the terms of the MRA, the Fund receives securities as collateral with a market value in excess of the repurchase price at maturity. Upon a bankruptcy or insolvency of the MRA counterparty, the Fund would recognize a liability with respect to such excess collateral. The liability reflects the Fund’s obligation under bankruptcy law to return the excess to the counterparty. As of April 30, 2018, the following table is a summary of the Fund’s repurchase agreements by counterparty which are subject to offset under an MRA:
Master Repurchase Agreements
Counterparty | Repurchase Agreements | Fair Value of Non-cash Collateral Received(a) | Cash Collateral Received | Net Collateral Received | Net Exposure(b) | ||||||||||||||||||||
Bank of America | $15,212,986 | $(15,212,986) | $— | $ | (15,212,986 | ) | $— | ||||||||||||||||||
Bank of Montreal | 45,638,956 | (45,638,956 | ) | — | (45,638,956 | ) | — | ||||||||||||||||||
BNP Paribas | 50,685,256 | (50,685,256 | ) | — | (50,685,256 | ) | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Total | $ | 111,537,198 | $ | (111,537,198 | ) | $ | — | $ | (111,537,198 | ) | $ | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
(a)The value of the related collateral received exceeded the value of the repurchase agreements as of May 31, 2018.
(b)Net exposure represents the net receivable (payable) that would be due from (to) the counterparty in the event of default.
33
Table of Contents
Notes to financial statements
Delaware Small Cap Value Fund
7. Securities Lending
The Fund, along with other funds in the Delaware Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (1) 102% with respect to US securities and foreign securities that are denominated and payable in US dollars; and (2) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the 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. The collateral percentage with respect to the market value of the loaned security is determined by the security lending agent.
Cash collateral received by each fund is generally invested in a series of individual separate accounts, each corresponding to a fund. The investment guidelines permit each separate account to hold certain securities that would be considered eligible securities for a money market fund. Cash collateral received is generally invested in government securities; certain obligations issued by government sponsored enterprises; repurchase agreements collateralized by US Treasury securities; obligations issued by the central government of any Organization for Economic Cooperation and Development (OECD) country or its agencies, instrumentalities or establishments; obligations of supranational organizations, commercial paper, notes, bonds and other debt obligations; certificates of deposit, time deposits, and other bank obligations; and asset-backed securities. A fund can also accept US government securities and letters of credit (non-cash collateral) in connection with securities loans.
In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the collateral received is insufficient to cover the value of the loaned securities and provided such collateral shortfall is not the result of investment losses, the lending agent has agreed to pay the amount of the shortfall to the Fund or, at the discretion of the lending agent, replace the loaned securities. The Fund continues to record dividends or interest, as applicable, on the securities loaned and is subject to changes in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to recover the securities from the borrower on demand. With respect to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent, and the borrower. The Fund records security lending income net of allocations to the security lending agent, and the borrower.
The Fund may incur investment losses as a result of investing securities lending collateral. This could occur if an investment in the collateral investment account defaulted or became impaired. Under those
34
Table of Contents
circumstances, the value of the Fund’s cash collateral account may be less than the amount the Fund would be required to return to the borrowers of the securities and the Fund would be required to make up for this shortfall.
During the six months ended May 31, 2018, the Fund had no securities out on loan.
8. Credit and Market Risk
The Fund invests in growth stocks (such as those in the financial services sector), which reflect projections of future earnings and revenue. These prices may rise or fall dramatically depending on whether those projections are met. These companies’ stock prices may be more volatile, particularly over the short term.
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, 2018. 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 promulgated under the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the 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, 2018, there were no Rule 144A securities held by the Fund. Restricted securities are valued pursuant to the security valuation procedures described in Note 1.
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, 2018, that would require recognition or disclosure in the Fund’s financial statements.
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Other Fund information (Unaudited)
Delaware Small Cap Value Fund
Board consideration of sub-advisory agreements for Delaware Small Cap Value Fund at a meeting held May 16-17, 2018
At a meeting held on May 16-17, 2018, the Board of Trustees of Delaware Group® Equity Funds V, including a majority of non-interested or independent Trustees (the “Independent Trustees”), approved a new Sub-Advisory Agreement between Delaware Management Company (“DMC” or “Management”) and each of Macquarie Investment Management Global Limited (“MIMGL”) and Macquarie Funds Management Hong Kong (“MFMHK”) for Delaware Small Cap Value Fund (the “Fund”). MIMGL and MFMHK may also be referenced as “sub-advisor(s)” below.
In reaching the decision to approve the Sub-Advisory Agreements, the Board considered and reviewed information about each of MIMGL and MFMHK, including its personnel, operations, and financial condition, which had been provided by MIMGL and MFMHK, respectively. The Board also reviewed material furnished by DMC, including: a memorandum from DMC reviewing the Sub-Advisory Agreements and the various services proposed to be rendered by MIMGL and MFMHK; information concerning MIMGL’s and MFMHK’s organizational structure and the experience of their key investment management personnel; copies of MIMGL’s and MFMHK’s Form ADV, financial statements, compliance policies and procedures, and Codes of Ethics; relevant performance information provided with respect to MIMGL and MFMHK; and a copy of the Sub-Advisory Agreements.
In considering such information and materials, the Independent Trustees received assistance and advice from and met separately with independent counsel. The materials prepared by Management in connection with the approval of the Sub-Advisory Agreements were sent to the Independent Trustees in advance of the meeting. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s decision. This discussion of the information and factors considered by the Board (as well as the discussion above) is not intended to be exhaustive, but rather summarizes certain factors considered by the Board. In view of the wide variety of factors considered, the Board did not, unless otherwise noted, find it practicable to quantify or otherwise assign relative weights to the following factors. In addition, individual Trustees may have assigned different weights to various factors.
Nature, quality, and extent of services. The Board considered the nature, quality, and extent of services that MIMGL and MFMHK each would provide as a sub-advisor to the Fund. The Trustees considered the investment process to be employed by MIMGL and MFMHK in connection with DMC’s collaboration with MIMGL and MFMHK in managing the Fund, and the qualifications and experience of MIMGL and MFMHK’s equity teams with regard to implementing the Fund’s investment mandate. The Board considered MIMGL and MFMHK’s organization, personnel, and operations. The Trustees also considered Management’s review and recommendation process with respect to MIMGL and MFMHK, and Management’s favorable assessment as to the nature, quality, and extent of the sub-advisory services expected to be provided by MIMGL and MFMHK to the Fund. Based on their consideration and review of the foregoing factors, the Board concluded that the nature, quality, and extent of the sub-advisory services to be provided by MIMGL and MFMHK, as well as MIMGL and MFMHK’s ability to render such services based on its experience, organization and resources, were appropriate for the Fund, in light of the Fund’s investment objective, strategies, and policies. In discussing the nature of the services proposed to be provided by the sub-advisors, several Board members observed that, unlike traditional sub-advisors, who make the investment-related decisions with respect to the sub-advised
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portfolio, the relationship contemplated in this case is limited to access to the additional quantitative investment resources, related technology support, and trading capabilities of MIMGL and MFMHK.
Sub-advisory fees. The Board considered that DMC would not pay MIMGL and MFMHK fees in conjunction with the services that would be rendered to the sub-advised Fund. The Board concluded that, in light of the quality and extent of the services to be provided and the business relationships between the advisor and sub-advisors, the proposed fee arrangement was understandable and reasonable.
Investment performance. In evaluating performance, the Board considered that MIMGL and MFMHK would provide trade execution support, but that DMC’s portfolio managers for the Fund would retain portfolio management discretion over the Fund.
Economies of scale and fall-out benefits. The Board considered whether the proposed fee arrangement would reflect economies of scale for the benefit of Fund investors as assets in the Fund increased, as applicable. The Board also considered that DMC and its affiliates may benefit by leveraging the global resources of its affiliates.
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Board of trustees | ||||||
Shawn K. Lytle | Ann D. Borowiec | John A. Fry | Frances A. | |||
President and Chief Executive Officer Delaware Funds® by Macquarie Philadelphia, PA
Thomas L. Bennett Chairman of the Board Delaware Funds by Macquarie Private Investor Rosemont, PA | Former Chief Executive Officer Private Wealth Management J.P. Morgan Chase & Co. New York, NY
Joseph W. Chow Former Executive Vice President State Street Corporation Boston, MA | President Drexel University Philadelphia, PA
Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. New York, NY | Sevilla-Sacasa Former Chief Executive Officer Banco Itaú International Miami, FL
Thomas K. Whitford Former Vice Chairman PNC Financial Services Group Pittsburgh, PA
Janet L. Yeomans Former Vice President and Treasurer 3M Company St. Paul, MN | |||
Affiliated officers | ||||||
David F. Connor | Daniel V. Geatens | Richard Salus | ||||
Senior Vice President, | Vice President and | Senior Vice President and | ||||
General Counsel, | Treasurer | Chief Financial Officer | ||||
and Secretary | Delaware Funds | Delaware Funds | ||||
Delaware Funds | by Macquarie | by Macquarie | ||||
by Macquarie | Philadelphia, PA | Philadelphia, PA | ||||
Philadelphia, PA |
This 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 Fund fact sheet for the most recently completed calendar quarter. These documents are available at delawarefunds.com/literature.
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-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 Schedule of Investments included in the Fund’s most recent Form N-Q are available without charge on the Fund’s website at delawarefunds.com/literature. 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 delawarefunds.com/proxy; and (ii) on the SEC’s website at sec.gov.
38
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. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits
(a) (1) Code of Ethics
Not applicable.
(2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are attached hereto as Exhibit 99.CERT.
(3) Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934.
Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized.
DELAWARE GROUP® EQUITY FUNDS V
SHAWN K. LYTLE | |
By: | Shawn K. Lytle |
Title: | President and Chief Executive Officer |
Date: | August 3, 2018 |
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.
SHAWN K. LYTLE | |
By: | Shawn K. Lytle |
Title: | President and Chief Executive Officer |
Date: | August 3, 2018 |
RICHARD SALUS | |
By: | Richard Salus |
Title: | Chief Financial Officer |
Date: | August 3, 2018 |