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, 2019 |
Item 1. Reports to Stockholders
Table of Contents
Semiannual report |
Multi-asset mutual fund
Delaware Wealth Builder Fund
May 31, 2019
Beginning on or about June 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of your Fund’s shareholder reports will no longer be sent to you by mail, unless you specifically request them from the Fund or from your financial intermediary, such as a broker/dealer, bank, or insurance company. Instead, you will be notified by mail each time a report is posted on the website and provided with a link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you do not need to take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by signing up at delawarefunds.com/edelivery. If you own these shares through a financial intermediary, you may contact your financial intermediary.
You may elect to receive paper copies of all future shareholder reports free of charge. You can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by contacting us at 800523-1918. If you own these shares through a financial intermediary, you may contact your financial intermediary to elect to continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with the Delaware Funds® by Macquarie or your financial intermediary. |
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 800523-1918. 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. As active managers, we prioritize autonomy and accountability at the investment team level in pursuit of opportunities that matter for clients. Delaware Funds is one of the longest-standing mutual fund families, with more than 80 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 products including securities investment management, infrastructure and real asset management, and fund and equity-based structured products. MIM is the marketing name for certain companies comprising the asset management division of Macquarie Group. This includes the following 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 Europe Limited, Macquarie Capital Investment Management LLC, and Macquarie Investment Management Europe S.A.
The Fund is distributed byDelaware 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 | ||||
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31 | ||||
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42 | ||||
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66 |
Unless otherwise noted, views expressed herein are current as of May 31, 2019, 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.
© 2019 Macquarie Management Holdings, Inc.
Table of Contents
For thesix-month period from December 1, 2018 to May 31, 2019 (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 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 entiresix-month period from Dec. 1, 2018 to May 31, 2019.
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 and assume reinvestment of all dividends and distributions.
1
Table of Contents
Disclosure of Fund expenses
For thesix-month period from December 1, 2018 to May 31, 2019 (Unaudited)
Delaware Wealth Builder Fund
Expense analysis of an investment of $1,000
Beginning Account Value 12/1/18 | Ending Account Value 5/31/19 | Annualized Expense Ratio | Expenses Paid During Period 12/1/18 to 5/31/19* | |||||||||
Actual Fund return† | ||||||||||||
Class A | $1,000.00 | $1,002.70 | 1.10% | $5.49 | ||||||||
Class C | 1,000.00 | 998.90 | 1.85% | 9.22 | ||||||||
Class R | 1,000.00 | 1,000.70 | 1.35% | 6.73 | ||||||||
Institutional Class | 1,000.00 | 1,004.00 | 0.85% | 4.25 | ||||||||
Hypothetical 5% return(5% return before expenses) |
| |||||||||||
Class A | $1,000.00 | $1,019.45 | 1.10% | $5.54 | ||||||||
Class C | 1,000.00 | 1,015.71 | 1.85% | 9.30 | ||||||||
Class R | 1,000.00 | 1,018.20 | 1.35% | 6.79 | ||||||||
Institutional Class | 1,000.00 | 1,020.69 | 0.85% | 4.28 |
*“Expenses Paid During Period” are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect theone-half year period).
†Because actual returns reflect only the most recentsix-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, 2019 (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 | 50.43% | |
Communication Services | 3.05% | |
Consumer Discretionary | 4.15% | |
Consumer Staples | 4.30% | |
Diversified REITs | 1.08% | |
Energy | 4.74% | |
Financials | 4.90% | |
Healthcare | 9.08% | |
Healthcare REITs | 1.44% | |
Hotel REITs | 0.13% | |
Industrial REITs | 0.31% | |
Industrials | 3.72% | |
Information Technology | 4.37% | |
Mall REITs | 0.32% | |
Manufactured Housing REITs | 0.38% | |
Materials | 1.14% | |
Mortgage REIT | 0.20% | |
Multifamily REITs | 3.01% | |
Office REITs | 0.22% | |
Real Estate Operating/Development | 0.51% | |
Self-Storage REITs | 0.02% | |
Shopping Center REITs | 0.17% | |
Single Tenant REITs | 0.56% | |
Specialty REITs | 0.86% | |
Utilities | 1.77% | |
Closed-End Funds | 0.65% | |
Convertible Preferred Stock | 1.65% | |
Exchange-Traded Funds | 1.70% | |
Limited Partnerships | 1.50% | |
Convertible Bonds | 9.67% | |
Brokerage | 0.29% | |
Capital Goods | 0.77% | |
Communications | 1.13% | |
Consumer Cyclical | 0.15% | |
ConsumerNon-Cyclical | 2.88% | |
Energy | 1.60% | |
Real Estate Investment Trusts | 0.32% | |
Technology | 2.27% |
3
Table of Contents
Security type / sector allocation and top 10 equity holdings
Delaware Wealth Builder Fund
Security type / sector | Percentage of net assets | |
Utilities | 0.26% | |
Corporate Bonds | 17.62% | |
Banking | 1.96% | |
Basic Industry | 2.35% | |
Capital Goods | 0.82% | |
Communications | 0.76% | |
Consumer Cyclical | 1.38% | |
ConsumerNon-Cyclical | 1.12% | |
Energy | 2.53% | |
Financials | 0.39% | |
Healthcare | 1.14% | |
Insurance | 0.41% | |
Media | 1.56% | |
Real Estate Investment Trusts | 0.73% | |
Services | 0.66% | |
Technology & Electronics | 0.71% | |
Transportation | 0.18% | |
Utilities | 0.92% | |
LeveragedNon-Recourse Security | 0.00% | |
Municipal Bonds | 6.74% | |
Non-Agency Commercial Mortgage-Backed Security | 0.10% | |
Sovereign Bonds | 1.08% | |
US Treasury Obligations | 0.26% | |
Preferred Stock | 0.98% | |
Short-Term Investments | 6.26% | |
Total Value of Securities | 98.64% | |
Receivables and Other Assets Net of Liabilities | 1.36% | |
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 | |
AT&T | 1.41% | |
Verizon Communications | 1.37% | |
BB&T | 1.24% | |
Occidental Petroleum | 1.21% | |
Equity Residential | 1.13% | |
Pfizer | 1.11% | |
AstraZeneca ADR | 1.11% | |
Lockheed Martin | 1.10% | |
Edison International | 1.09% | |
American International Group
| 1.09%
| |
5
Table of Contents
Delaware Wealth Builder Fund | May 31, 2019 (Unaudited) |
Number of shares | Value (US $) | |||||||
Common Stock – 50.43% | ||||||||
Communication Services – 3.05% | ||||||||
AT&T | 239,500 | $ 7,323,910 | ||||||
Century Communications =† | 1,625,000 | 0 | ||||||
KDDI | 19,400 | 496,891 | ||||||
Orange | 55,495 | 858,784 | ||||||
Verizon Communications | 130,700 | 7,103,545 | ||||||
|
| |||||||
15,783,130 | ||||||||
|
| |||||||
Consumer Discretionary – 4.15% | ||||||||
adidas | 2,684 | 766,223 | ||||||
Bridgestone | 18,000 | 669,468 | ||||||
DR Horton | 32,000 | 1,368,320 | ||||||
Ford Motor | 480,900 | 4,578,168 | ||||||
Hennes & Mauritz Class B | 32,175 | 480,945 | ||||||
LVMH Moet Hennessy Louis Vuitton | 1,349 | 509,037 | ||||||
Next | 9,652 | 703,586 | ||||||
Nordstrom | 90,000 | 2,817,000 | ||||||
Publicis Groupe | 14,870 | 813,226 | ||||||
Sodexo | 6,835 | 786,479 | ||||||
Swatch Group | 2,226 | 559,694 | ||||||
Target | 60,300 | 4,851,135 | ||||||
Whirlpool | 22,700 | 2,607,776 | ||||||
|
| |||||||
21,511,057 | ||||||||
|
| |||||||
Consumer Staples – 4.30% | ||||||||
Archer-Daniels-Midland | 73,200 | 2,805,024 | ||||||
Asahi Group Holdings | 4,500 | 197,595 | ||||||
British American Tobacco ADR | 101,084 | 3,504,582 | ||||||
Conagra Brands | 130,600 | 3,496,162 | ||||||
Danone | 11,926 | 952,640 | ||||||
Diageo | 5,270 | 221,664 | ||||||
Kao | 2,400 | 186,243 | ||||||
Kerry Group Class A | 1,808 | 208,040 | ||||||
Kirin Holdings | 8,600 | 185,999 | ||||||
Koninklijke Ahold Delhaize | 35,448 | 795,054 | ||||||
Kraft Heinz | 94,100 | 2,601,865 | ||||||
Lawson | 3,200 | 149,574 | ||||||
Mondelez International Class A | 55,300 | 2,812,005 | ||||||
Nestle | 9,898 | 981,869 | ||||||
Procter & Gamble | 27,700 | 2,850,607 | ||||||
Seven & i Holdings | 10,400 | 350,047 | ||||||
|
| |||||||
22,298,970 | ||||||||
|
| |||||||
Diversified REITs – 1.08% | ||||||||
American Tower | 11,401 | 2,380,187 |
6
Table of Contents
Number of shares | Value (US $) | |||||||
Common Stock(continued) | ||||||||
Diversified REITs(continued) | ||||||||
Cousins Properties | 166,825 | $ | 1,509,766 | |||||
Tritax EuroBox 144A # | 1,415,425 | 1,723,554 | ||||||
|
| |||||||
5,613,507 | ||||||||
|
| |||||||
Energy – 4.74% | ||||||||
Halliburton | 153,700 | 3,272,273 | ||||||
Occidental Petroleum | 126,200 | 6,280,974 | ||||||
Royal Dutch Shell ADR Class B | 89,000 | 5,594,540 | ||||||
TOTAL ADR | 109,300 | 5,628,950 | ||||||
Williams | 144,300 | 3,806,634 | ||||||
|
| |||||||
24,583,371 | ||||||||
|
| |||||||
Financials – 4.90% | ||||||||
American International Group | 110,300 | 5,633,021 | ||||||
Arthur J Gallagher & Co. | 33,600 | 2,829,120 | ||||||
Banco Espirito Santo =† | 105,000 | 0 | ||||||
Bank of New York Mellon | 83,900 | 3,581,691 | ||||||
BB&T | 137,400 | 6,423,450 | ||||||
JPMorgan Chase & Co. | 12,400 | 1,313,904 | ||||||
Wells Fargo & Co. | 126,000 | 5,590,620 | ||||||
|
| |||||||
25,371,806 | ||||||||
|
| |||||||
Healthcare – 9.08% | ||||||||
AbbVie | 60,400 | 4,633,284 | ||||||
Amgen | 17,200 | 2,867,240 | ||||||
Astellas Pharma | 40,800 | 546,758 | ||||||
AstraZeneca ADR | 154,100 | 5,760,258 | ||||||
Brookdale Senior Living † | 820,662 | 5,071,691 | ||||||
Cardinal Health | 94,300 | 3,967,201 | ||||||
CVS Health | 56,700 | 2,969,379 | ||||||
Fresenius Medical Care & Co. | 11,455 | 834,745 | ||||||
Johnson & Johnson | 31,500 | 4,131,225 | ||||||
Merck & Co. | 70,600 | 5,592,226 | ||||||
Mitsubishi Tanabe Pharma | 25,600 | 301,047 | ||||||
Novo Nordisk Class B | 16,958 | 798,015 | ||||||
Pfizer | 139,038 | 5,772,858 | ||||||
Quest Diagnostics | 31,300 | 3,001,983 | ||||||
Roche Holding | 3,111 | 817,111 | ||||||
|
| |||||||
47,065,021 | ||||||||
|
| |||||||
Healthcare REITs – 1.44% | ||||||||
Assura | 1,713,714 | 1,388,767 | ||||||
HCP | 82,600 | 2,619,246 | ||||||
Sabra Health Care REIT | 31,900 | 615,351 | ||||||
Welltower | 35,000 | 2,842,700 | ||||||
|
| |||||||
7,466,064 | ||||||||
|
|
7
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Number of shares | Value (US $) | |||||||
Common Stock(continued) | ||||||||
Hotel REITs – 0.13% | ||||||||
MGM Growth Properties Class A | 22,000 | $ | 676,500 | |||||
|
| |||||||
676,500 | ||||||||
|
| |||||||
Industrial REITs – 0.31% | ||||||||
Americold Realty Trust | 18,885 | 591,101 | ||||||
Liberty Property Trust | 16,200 | 769,014 | ||||||
Prologis | 2,976 | 219,242 | ||||||
|
| |||||||
1,579,357 | ||||||||
|
| |||||||
Industrials – 3.72% | ||||||||
Boeing | 3,400 | 1,161,474 | ||||||
G4S | 303,673 | 802,214 | ||||||
Honeywell International | 22,500 | 3,696,975 | ||||||
Lockheed Martin | 16,900 | 5,721,326 | ||||||
Makita | 24,300 | 845,748 | ||||||
Secom | 3,400 | 290,158 | ||||||
Securitas Class B | 53,909 | 892,268 | ||||||
SKF Class B | 34,542 | 535,832 | ||||||
United Technologies | 42,300 | 5,342,490 | ||||||
|
| |||||||
19,288,485 | ||||||||
|
| |||||||
Information Technology – 4.37% | ||||||||
Broadcom | 22,100 | 5,561,244 | ||||||
Cisco Systems | 86,000 | 4,474,580 | ||||||
Intel | 99,600 | 4,386,384 | ||||||
International Business Machines | 29,400 | 3,733,506 | ||||||
Microsoft | 27,709 | 3,427,049 | ||||||
Sabre | 53,500 | 1,084,980 | ||||||
|
| |||||||
22,667,743 | ||||||||
|
| |||||||
Mall REITs – 0.32% | ||||||||
Simon Property Group | 10,203 | 1,653,804 | ||||||
|
| |||||||
1,653,804 | ||||||||
|
| |||||||
Manufactured Housing REITs – 0.38% | ||||||||
Equity LifeStyle Properties | 1,125 | 136,867 | ||||||
Sun Communities | 14,600 | 1,843,542 | ||||||
|
| |||||||
1,980,409 | ||||||||
|
| |||||||
Materials – 1.14% | ||||||||
Air Liquide | 7,162 | 890,523 | ||||||
Dow | 38,833 | 1,815,831 | ||||||
DowDuPont | 104,600 | 3,192,392 | ||||||
|
| |||||||
5,898,746 | ||||||||
|
| |||||||
Mortgage REIT – 0.20% | ||||||||
Annaly Capital Management | 117,200 | 1,032,532 | ||||||
|
| |||||||
1,032,532 | ||||||||
|
|
8
Table of Contents
Number of shares | Value (US $) | |||||||
Common Stock(continued) | ||||||||
Multifamily REITs – 3.01% | ||||||||
Apartment Investment & Management Class A | 22,965 | $ | 1,147,102 | |||||
AvalonBay Communities | 350 | 71,053 | ||||||
Bluerock Residential Growth REIT | 71,300 | 815,672 | ||||||
Camden Property Trust | 16,660 | 1,721,978 | ||||||
Equity Residential | 76,310 | 5,843,057 | ||||||
Killam Apartment Real Estate Investment Trust | 161,400 | 2,265,284 | ||||||
NexPoint Residential Trust | 51,800 | 2,076,144 | ||||||
UDR | 37,075 | 1,660,219 | ||||||
|
| |||||||
15,600,509 | ||||||||
|
| |||||||
Office REITs – 0.22% | ||||||||
Columbia Property Trust | 53,000 | 1,133,140 | ||||||
|
| |||||||
1,133,140 | ||||||||
|
| |||||||
Real Estate Operating/Development – 0.51% | ||||||||
Grainger | 546,488 | 1,735,534 | ||||||
Postal Realty Trust Class A † | 55,000 | 904,750 | ||||||
|
| |||||||
2,640,284 | ||||||||
|
| |||||||
Self-Storage REITs – 0.02% | ||||||||
Extra Space Storage | 1,000 | 107,160 | ||||||
|
| |||||||
107,160 | ||||||||
|
| |||||||
Shopping Center REITs – 0.17% | ||||||||
Brixmor Property Group | 1,505 | 25,811 | ||||||
Regency Centers | 1,907 | 125,786 | ||||||
Retail Properties of America Class A | 59,008 | 701,605 | ||||||
|
| |||||||
853,202 | ||||||||
|
| |||||||
Single Tenant REITs – 0.56% | ||||||||
National Retail Properties | 23,100 | 1,236,543 | ||||||
Spirit Realty Capital | 12,500 | 533,250 | ||||||
STORE Capital | 33,586 | 1,149,313 | ||||||
|
| |||||||
2,919,106 | ||||||||
|
| |||||||
Specialty REITs – 0.86% | ||||||||
Cushman & Wakefield † | 56,181 | 947,212 | ||||||
Front Yard Residential | 100,206 | 1,146,357 | ||||||
Invitation Homes | 73,700 | 1,888,931 | ||||||
Safehold | 16,700 | 455,743 | ||||||
|
| |||||||
4,438,243 | ||||||||
|
| |||||||
Utilities – 1.77% | ||||||||
Edison International | 95,200 | 5,652,024 | ||||||
National Grid ADR | 70,108 | 3,525,030 | ||||||
|
| |||||||
9,177,054 | ||||||||
|
| |||||||
Total Common Stock(cost $269,635,013) | 261,339,200 | |||||||
|
|
9
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Number of shares | Value (US $) | |||||||
Closed-End Funds – 0.65% | ||||||||
Aberdeen Total Dynamic Dividend Fund | 108,235 | $ | 846,398 | |||||
Western Asset Emerging Markets Debt Fund | 185,780 | 2,524,750 | ||||||
|
| |||||||
TotalClosed-End Funds(cost $3,481,880) | 3,371,148 | |||||||
|
| |||||||
Convertible Preferred Stock – 1.65% | ||||||||
A Schulman 6.00% exercise price $52.33y | 2,140 | 2,198,850 | ||||||
AMG Capital Trust II 5.15% exercise price $198.02, maturity date 10/15/37 | 28,850 | 1,365,476 | ||||||
Bank of America 7.25% exercise price $50.00y | 1,198 | 1,593,472 | ||||||
El Paso Energy Capital Trust I 4.75% exercise price $34.49, maturity date 3/31/28 | 37,300 | 1,887,380 | ||||||
QTS Realty Trust 6.50% exercise price $47.03y | 13,804 | 1,534,177 | ||||||
|
| |||||||
Total Convertible Preferred Stock(cost $8,030,390) | 8,579,355 | |||||||
|
| |||||||
Exchange-Traded Funds – 1.70% | ||||||||
iShares MSCI Emerging Markets ETF | 22,800 | 928,188 | ||||||
iShares Preferred & Income Securities ETF | 29,900 | 1,092,546 | ||||||
SPDR Gold Shares † | 24,000 | 2,959,920 | ||||||
VanEck Vectors High-Yield Municipal Index ETF | 51,000 | 3,243,600 | ||||||
Vanguard FTSE Developed Markets ETF | 14,366 | 572,341 | ||||||
|
| |||||||
Total Exchange-Traded Funds(cost $8,685,740) | 8,796,595 | |||||||
|
| |||||||
Limited Partnerships – 1.50% | ||||||||
Merion Champion’s Walk =p† | 2,790,000 | 2,650,500 | ||||||
Merion Countryside 144A #=p† | 2,342,813 | 1,508,303 | ||||||
Merion The Ledges =p† | 3,822,000 | 3,630,900 | ||||||
|
| |||||||
Total Limited Partnerships(cost $6,228,595) | 7,789,703 | |||||||
|
| |||||||
Principal amount° | ||||||||
Convertible Bonds – 9.67% | ||||||||
Brokerage – 0.29% | ||||||||
GAIN Capital Holdings | ||||||||
5.00% exercise price $8.20, maturity date 8/15/22 | 1,764,000 | 1,490,823 | ||||||
|
| |||||||
1,490,823 | ||||||||
|
| |||||||
Capital Goods – 0.77% | ||||||||
Aerojet Rocketdyne Holdings | ||||||||
2.25% exercise price $26.00, maturity date 12/15/23 | 432,000 | 686,588 | ||||||
Cemex | ||||||||
3.72% exercise price $11.01, maturity date 3/15/20 | 1,961,000 | 1,958,659 | ||||||
Chart Industries | ||||||||
144A 1.00% exercise price $58.73, maturity date 11/15/24 # | 435,000 | 621,778 |
10
Table of Contents
Principal amount° | Value (US $) | |||||||
Convertible Bonds(continued) | ||||||||
Capital Goods(continued) | ||||||||
Dycom Industries | ||||||||
0.75% exercise price $96.89, maturity date 9/15/21 | 775,000 | $ | 747,299 | |||||
|
| |||||||
4,014,324 | ||||||||
|
| |||||||
Communications – 1.13% | ||||||||
DISH Network | ||||||||
2.375% exercise price $82.22, maturity date 3/15/24 | 2,135,000 | 1,860,252 | ||||||
GCI Liberty | ||||||||
144A 1.75% exercise price $370.52, maturity date 9/30/46 # | 1,626,000 | 1,841,539 | ||||||
Liberty Media | ||||||||
2.25% exercise price $34.71, maturity date 9/30/46 | 4,181,000 | 2,142,763 | ||||||
|
| |||||||
5,844,554 | ||||||||
|
| |||||||
Consumer Cyclical – 0.15% | ||||||||
Meritor | ||||||||
3.25% exercise price $39.92, maturity date 10/15/37 | 803,000 | 783,796 | ||||||
|
| |||||||
783,796 | ||||||||
|
| |||||||
ConsumerNon-Cyclical – 2.88% | ||||||||
BioMarin Pharmaceutical | ||||||||
1.50% exercise price $94.15, maturity date 10/15/20 | 1,105,000 | 1,223,716 | ||||||
FTI Consulting | ||||||||
144A 2.00% exercise price $101.38, maturity date 8/15/23 # | 1,548,000 | 1,654,425 | ||||||
Huron Consulting Group | ||||||||
1.25% exercise price $79.89, maturity date 10/1/19 | 1,940,000 | 1,930,808 | ||||||
Insulet | ||||||||
1.375% exercise price $93.18, maturity date 11/15/24 | 721,000 | 964,322 | ||||||
Jazz Investments I | ||||||||
1.875% exercise price $199.77, maturity date 8/15/21 | 1,105,000 | 1,089,846 | ||||||
Ligand Pharmaceuticals | ||||||||
0.75% exercise price $248.48, maturity date 5/15/23 | 864,000 | 727,920 | ||||||
Medicines | ||||||||
2.75% exercise price $48.97, maturity date 7/15/23 | 2,047,000 | 1,985,212 | ||||||
Paratek Pharmaceuticals | ||||||||
4.75% exercise price $15.90, maturity date 5/1/24 | 1,604,000 | 1,092,725 | ||||||
Retrophin | ||||||||
2.50% exercise price $38.80, maturity date 9/15/25 | 1,390,000 | 1,216,250 | ||||||
Team | ||||||||
5.00% exercise price $21.70, maturity date 8/1/23 | 1,514,000 | 1,511,897 | ||||||
Vector Group | ||||||||
1.75% exercise price $21.28, maturity date 4/15/20 • | 1,511,000 | 1,545,373 | ||||||
|
| |||||||
14,942,494 | ||||||||
|
|
11
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Convertible Bonds (continued) | ||||||||
Energy – 1.60% | ||||||||
Cheniere Energy | ||||||||
4.25% exercise price $138.38, maturity date 3/15/45 | 2,892,000 | $ | 2,241,300 | |||||
Helix Energy Solutions Group | ||||||||
4.25% exercise price $13.89, maturity date 5/1/22 | 2,574,000 | 2,436,318 | ||||||
PDC Energy | ||||||||
1.125% exercise price $85.39, maturity date 9/15/21 | 1,944,000 | 1,783,692 | ||||||
Tesla Energy Operations | ||||||||
1.625% exercise price $759.35, maturity date 11/1/19 | 1,970,000 | 1,842,764 | ||||||
|
| |||||||
8,304,074 | ||||||||
|
| |||||||
Real Estate Investment Trusts – 0.32% | ||||||||
Blackstone Mortgage Trust | ||||||||
4.75% exercise price $36.23, maturity date 3/15/23 | 1,599,000 | 1,637,254 | ||||||
|
| |||||||
1,637,254 | ||||||||
|
| |||||||
Technology – 2.27% | ||||||||
Boingo Wireless | ||||||||
144A 1.00% exercise price $42.32, maturity date 10/1/23 # | 2,009,000 | 1,709,208 | ||||||
CSG Systems International | ||||||||
4.25% exercise price $56.95, maturity date 3/15/36 | 1,429,000 | 1,536,537 | ||||||
Knowles | ||||||||
3.25% exercise price $18.43, maturity date 11/1/21 | 973,000 | 1,080,614 | ||||||
PROS Holdings | ||||||||
2.00% exercise price $48.63, maturity date 6/1/47 | 1,515,000 | 1,911,914 | ||||||
Quotient Technology | ||||||||
1.75% exercise price $17.36, maturity date 12/1/22 | 945,000 | 916,480 | ||||||
Synaptics | ||||||||
0.50% exercise price $73.02, maturity date 6/15/22 | 1,678,000 | 1,479,634 | ||||||
Verint Systems | ||||||||
1.50% exercise price $64.46, maturity date 6/1/21 | 1,503,000 | 1,642,639 | ||||||
Vishay Intertechnology | ||||||||
144A 2.25% exercise price $31.49, maturity date 6/15/25 # | 1,655,000 | 1,471,422 | ||||||
|
| |||||||
11,748,448 | ||||||||
|
| |||||||
Utilities – 0.26% | ||||||||
NRG Energy | ||||||||
144A 2.75% exercise price $47.74, maturity date 6/1/48 # | 1,303,000 | 1,343,719 | ||||||
|
| |||||||
1,343,719 | ||||||||
|
| |||||||
Total Convertible Bonds(cost $50,301,063) | 50,109,486 | |||||||
|
|
12
Table of Contents
Principal amount° | Value (US $) | |||||||
Corporate Bonds – 17.62% | ||||||||
Banking – 1.96% | ||||||||
Ally Financial 5.75% 11/20/25 | 798,000 | $ | 856,853 | |||||
Banco de Credito e Inversiones 144A 3.50% 10/12/27 # | 500,000 | 494,687 | ||||||
Bank of America 4.183% 11/25/27 | 680,000 | 702,632 | ||||||
Bank of China 144A 5.00% 11/13/24 # | 250,000 | 266,089 | ||||||
Bank of New York Mellon 2.661% 5/16/23 µ | 680,000 | 681,834 | ||||||
Credit Suisse Group 144A 6.25% #µy | 360,000 | 363,362 | ||||||
Fifth Third Bancorp 2.60% 6/15/22 | 600,000 | 600,162 | ||||||
Goldman Sachs Group 6.00% 6/15/20 | 600,000 | 620,436 | ||||||
JPMorgan Chase & Co. 6.75% µy | 700,000 | 769,552 | ||||||
Morgan Stanley 5.00% 11/24/25 | 600,000 | 654,325 | ||||||
PNC Financial Services Group 5.00% µy | 700,000 | 702,075 | ||||||
Popular 6.125% 9/14/23 | 455,000 | 475,475 | ||||||
Royal Bank of Scotland Group | ||||||||
3.875% 9/12/23 | 600,000 | 604,251 | ||||||
8.625% µy | 520,000 | 549,900 | ||||||
State Street 2.653% 5/15/23 µ | 600,000 | 602,343 | ||||||
SunTrust Bank 2.45% 8/1/22 | 600,000 | 597,924 | ||||||
Wells Fargo & Co. 3.813% (LIBOR03M + 1.23%) 10/31/23 • | 600,000 | 610,329 | ||||||
|
| |||||||
10,152,229 | ||||||||
|
| |||||||
Basic Industry – 2.35% | ||||||||
BHP Billiton Finance USA 144A 6.25% 10/19/75 #µ | 700,000 | 726,051 | ||||||
BMC East 144A 5.50% 10/1/24 # | 318,000 | 321,180 | ||||||
Boise Cascade 144A 5.625% 9/1/24 # | 375,000 | 376,875 | ||||||
Braskem Netherlands Finance 144A 4.50% 1/10/28 # | 750,000 | 732,187 | ||||||
Builders FirstSource 144A 5.625% 9/1/24 # | 140,000 | 140,350 | ||||||
Chemours 5.375% 5/15/27 | 379,000 | 344,890 | ||||||
CSN Resources 144A 7.625% 4/17/26 # | 500,000 | 503,287 | ||||||
DuPont de Nemours 4.205% 11/15/23 | 500,000 | 527,074 | ||||||
FMG Resources August 2006 144A 5.125% 5/15/24 # | 246,000 | 247,715 | ||||||
Freeport-McMoRan | ||||||||
4.55% 11/14/24 | 200,000 | 193,500 | ||||||
6.875% 2/15/23 | 614,000 | 643,933 | ||||||
Gold Fields Orogen Holdings BVI 144A 6.125% 5/15/29 # | 485,000 | 506,825 | ||||||
Hudbay Minerals 144A 7.625% 1/15/25 # | 470,000 | 468,825 | ||||||
Joseph T Ryerson & Son 144A 11.00% 5/15/22 # | 198,000 | 208,952 | ||||||
Klabin Austria 144A 7.00% 4/3/49 # | 500,000 | 498,250 | ||||||
Koppers 144A 6.00% 2/15/25 # | 434,000 | 409,859 | ||||||
Novelis 144A 6.25% 8/15/24 # | 467,000 | 478,675 | ||||||
OCP 144A 4.50% 10/22/25 # | 250,000 | 254,235 | ||||||
Olin | ||||||||
5.00% 2/1/30 | 135,000 | 130,444 |
13
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Corporate Bonds (continued) | ||||||||
Basic Industry(continued) | ||||||||
Olin | ||||||||
5.125% 9/15/27 | 437,000 | $ | 433,591 | |||||
SASOL Financing USA | ||||||||
5.875% 3/27/24 | 225,000 | 238,340 | ||||||
6.50% 9/27/28 | 275,000 | 300,996 | ||||||
Standard Industries | ||||||||
144A 4.75% 1/15/28 # | 445,000 | 426,644 | ||||||
144A 5.00% 2/15/27 # | 160,000 | 156,600 | ||||||
Starfruit Finco 144A 8.00% 10/1/26 # | 315,000 | 309,487 | ||||||
Steel Dynamics 5.00% 12/15/26 | 505,000 | 517,625 | ||||||
Suzano Austria 144A 6.00% 1/15/29 # | 500,000 | 534,375 | ||||||
Syngenta Finance 144A 5.182% 4/24/28 # | 500,000 | 505,833 | ||||||
Tronox Finance 144A 5.75% 10/1/25 # | 305,000 | 277,169 | ||||||
US Concrete 6.375% 6/1/24 | 10,000 | 10,225 | ||||||
Zekelman Industries 144A 9.875% 6/15/23 # | 715,000 | 752,538 | ||||||
|
| |||||||
12,176,530 | ||||||||
|
| |||||||
Capital Goods – 0.82% | ||||||||
Ardagh Packaging Finance 144A 6.00% 2/15/25 # | 275,000 | 272,993 | ||||||
Bombardier 144A 6.00% 10/15/22 # | 525,000 | 514,343 | ||||||
BWAY Holding | ||||||||
144A 5.50% 4/15/24 # | 551,000 | 540,724 | ||||||
144A 7.25% 4/15/25 # | 295,000 | 285,073 | ||||||
Crown Americas 4.75% 2/1/26 | 463,000 | 466,704 | ||||||
John Deere Capital 2.15% 9/8/22 | 600,000 | 595,325 | ||||||
L3 Technologies 3.85% 6/15/23 | 660,000 | 687,020 | ||||||
Siemens Financieringsmaatschappij 144A | 630,000 | 645,465 | ||||||
TransDigm 6.375% 6/15/26 | 237,000 | 233,741 | ||||||
|
| |||||||
4,241,388 | ||||||||
|
| |||||||
Communications – 0.76% | ||||||||
Baidu 3.875% 9/29/23 | 500,000 | 511,913 | ||||||
C&W Senior Financing 144A 7.50% 10/15/26 # | 250,000 | 256,875 | ||||||
Digicel Group Two 144A PIK 9.125% 4/1/24 #v | 853,636 | 234,750 | ||||||
Fox 144A 4.03% 1/25/24 # | 500,000 | 524,092 | ||||||
Level 3 Financing 5.375% 5/1/25 | 529,000 | 530,984 | ||||||
Sprint | ||||||||
7.125% 6/15/24 | 837,000 | 872,573 | ||||||
7.875% 9/15/23 | 22,000 | 23,687 | ||||||
T-Mobile USA 6.50% 1/15/26 | 460,000 | 486,450 | ||||||
Zayo Group | ||||||||
144A 5.75% 1/15/27 # | 15,000 | 15,450 |
14
Table of Contents
Principal amount° | Value (US $) | |||||||
Corporate Bonds(continued) | ||||||||
Communications(continued) | ||||||||
Zayo Group | ||||||||
6.375% 5/15/25 | 455,000 | $ | 469,787 | |||||
|
| |||||||
3,926,561 | ||||||||
|
| |||||||
Consumer Cyclical – 1.38% | ||||||||
Allison Transmission 144A 5.875% 6/1/29 # | 645,000 | 652,256 | ||||||
AMC Entertainment Holdings 6.125% 5/15/27 | 539,000 | 474,994 | ||||||
Boyd Gaming | ||||||||
6.00% 8/15/26 | 130,000 | 131,463 | ||||||
6.375% 4/1/26 | 542,000 | 560,347 | ||||||
Ford Motor Credit 3.096% 5/4/23 | 480,000 | 462,123 | ||||||
HD Supply 144A 5.375% 10/15/26 # | 290,000 | 296,525 | ||||||
Hilton Worldwide Finance 4.875% 4/1/27 | 545,000 | 550,199 | ||||||
KFC Holding 144A 5.25% 6/1/26 # | 470,000 | 477,050 | ||||||
Lennar | ||||||||
4.75% 5/30/25 | 460,000 | 466,900 | ||||||
5.875% 11/15/24 | 135,000 | 143,775 | ||||||
Levi Strauss & Co. 5.00% 5/1/25 | 490,000 | 502,250 | ||||||
MGM Resorts International | ||||||||
4.625% 9/1/26 | 10,000 | 9,750 | ||||||
5.75% 6/15/25 | 285,000 | 300,319 | ||||||
Penn National Gaming 144A 5.625% 1/15/27 # | 337,000 | 334,473 | ||||||
Penske Automotive Group 5.50% 5/15/26 | 409,000 | 406,444 | ||||||
PulteGroup 5.00% 1/15/27 | 15,000 | 15,225 | ||||||
Resorts World Las Vegas 144A 4.625% 4/16/29 # | 600,000 | 605,282 | ||||||
Scientific Games International | ||||||||
144A 8.25% 3/15/26 # | 375,000 | 378,053 | ||||||
10.00% 12/1/22 | 392,000 | 412,803 | ||||||
|
| |||||||
7,180,231 | ||||||||
|
| |||||||
ConsumerNon-Cyclical – 1.12% | ||||||||
Cott Holdings 144A 5.50% 4/1/25 # | 272,000 | 268,940 | ||||||
CVS Health 4.10% 3/25/25 | 680,000 | 704,495 | ||||||
JBS Investments 144A 7.25% 4/3/24 # | 650,000 | 673,569 | ||||||
JBS USA | ||||||||
144A 5.75% 6/15/25 # | 318,000 | 326,347 | ||||||
144A 6.50% 4/15/29 # | 305,000 | 321,013 | ||||||
144A 6.75% 2/15/28 # | 350,000 | 371,000 | ||||||
Live Nation Entertainment 144A 4.875% 11/1/24 # | 15,000 | 15,113 | ||||||
Pernod Ricard 144A 4.45% 1/15/22 # | 500,000 | 521,160 | ||||||
Pilgrim’s Pride 144A 5.75% 3/15/25 # | 535,000 | 543,025 | ||||||
Post Holdings | ||||||||
144A 5.00% 8/15/26 # | 311,000 | 307,113 |
15
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Corporate Bonds(continued) | ||||||||
ConsumerNon-Cyclical(continued) | ||||||||
Post Holdings | ||||||||
144A 5.625% 1/15/28 # | 160,000 | $ | 159,200 | |||||
144A 5.75% 3/1/27 # | 295,000 | 297,213 | ||||||
Shire Acquisitions Investments Ireland 2.875% 9/23/23 | 600,000 | 596,395 | ||||||
United Rentals North America 5.50% 5/15/27 | 713,000 | 721,021 | ||||||
|
| |||||||
5,825,604 | ||||||||
|
| |||||||
Energy – 2.53% | ||||||||
AmeriGas Partners 5.875% 8/20/26 | 469,000 | 487,174 | ||||||
Antero Resources 5.625% 6/1/23 | 331,000 | 328,517 | ||||||
Cheniere Corpus Christi Holdings | ||||||||
5.125% 6/30/27 | 23,000 | 23,863 | ||||||
7.00% 6/30/24 | 235,000 | 262,542 | ||||||
Cheniere Energy Partners 5.25% 10/1/25 | 305,000 | 305,616 | ||||||
Chesapeake Energy | ||||||||
7.00% 10/1/24 | 205,000 | 187,319 | ||||||
8.00% 1/15/25 | 175,000 | 161,875 | ||||||
Crestwood Midstream Partners 5.75% 4/1/25 | 484,000 | 490,050 | ||||||
Energy Transfer Partners 5.875% 3/1/22 | 600,000 | 640,589 | ||||||
Genesis Energy 6.75% 8/1/22 | 662,000 | 661,173 | ||||||
Hilcorp Energy I 144A 5.00% 12/1/24 # | 240,000 | 233,400 | ||||||
Israel Electric 144A 4.25% 8/14/28 # | 500,000 | 516,900 | ||||||
MPLX 4.875% 12/1/24 | 600,000 | 642,750 | ||||||
Murphy Oil 6.875% 8/15/24 | 850,000 | 881,380 | ||||||
Murphy Oil USA 5.625% 5/1/27 | 609,000 | 627,270 | ||||||
Newfield Exploration 5.375% 1/1/26 | 423,000 | 459,140 | ||||||
NuStar Logistics 5.625% 4/28/27 | 493,000 | 480,049 | ||||||
ONEOK 7.50% 9/1/23 | 545,000 | 633,541 | ||||||
Petrobras Global Finance 7.25% 3/17/44 | 400,000 | 425,250 | ||||||
Petroleos Mexicanos 6.75% 9/21/47 | 310,000 | 280,984 | ||||||
Precision Drilling 144A 7.125% 1/15/26 # | 680,000 | 649,400 | ||||||
QEP Resources | ||||||||
5.25% 5/1/23 | 275,000 | 259,155 | ||||||
5.625% 3/1/26 | 465,000 | 421,987 | ||||||
Sabine Pass Liquefaction 5.75% 5/15/24 | 600,000 | 658,006 | ||||||
Schlumberger Holdings 144A 3.75% 5/1/24 # | 500,000 | 515,124 | ||||||
Southwestern Energy | ||||||||
6.20% 1/23/25 | 14,000 | 13,086 | ||||||
7.75% 10/1/27 | 290,000 | 278,400 | ||||||
Targa Resources Partners | ||||||||
5.125% 2/1/25 | 10,000 | 10,075 | ||||||
5.375% 2/1/27 | 452,000 | 456,520 | ||||||
Tecpetrol 144A 4.875% 12/12/22 # | 250,000 | 239,897 |
16
Table of Contents
Principal amount° | Value (US $) | |||||||
Corporate Bonds (continued) | ||||||||
Energy(continued) | ||||||||
Transocean 144A 9.00% 7/15/23 # | 498,000 | $ | 513,538 | |||||
Transocean Proteus 144A 6.25% 12/1/24 # | 363,200 | 368,648 | ||||||
|
| |||||||
13,113,218 | ||||||||
|
| |||||||
Financials – 0.39% | ||||||||
AerCap Global Aviation Trust 144A 6.50% 6/15/45 #µ | 240,000 | 243,600 | ||||||
E*TRADE Financial 5.875% µy | 530,000 | 550,564 | ||||||
International Lease Finance 8.625% 1/15/22 | 600,000 | 682,248 | ||||||
Jefferies Group 5.125% 1/20/23 | 500,000 | 531,637 | ||||||
|
| |||||||
2,008,049 | ||||||||
|
| |||||||
Healthcare – 1.14% | ||||||||
Bausch Health 144A 5.50% 11/1/25 # | 630,000 | 634,725 | ||||||
Charles River Laboratories International 144A | ||||||||
5.50% 4/1/26 # | 625,000 | 650,781 | ||||||
Encompass Health | ||||||||
5.75% 11/1/24 | 410,000 | 413,690 | ||||||
5.75% 9/15/25 | 244,000 | 248,880 | ||||||
HCA | ||||||||
5.375% 2/1/25 | 729,000 | 763,788 | ||||||
5.875% 2/15/26 | 309,000 | 328,316 | ||||||
7.58% 9/15/25 | 219,000 | 248,565 | ||||||
Hill-Rom Holdings | ||||||||
144A 5.00% 2/15/25 # | 242,000 | 244,420 | ||||||
144A 5.75% 9/1/23 # | 272,000 | 279,480 | ||||||
Hologic 144A 4.625% 2/1/28 # | 300,000 | 294,000 | ||||||
MPH Acquisition Holdings 144A 7.125% 6/1/24 # | 203,000 | 202,493 | ||||||
Service Corp. International 4.625% 12/15/27 | 280,000 | 281,400 | ||||||
Tenet Healthcare | ||||||||
5.125% 5/1/25 | 345,000 | 343,275 | ||||||
8.125% 4/1/22 | 241,000 | 252,076 | ||||||
Teva Pharmaceutical Finance Netherlands III | ||||||||
6.00% 4/15/24 | 245,000 | 227,544 | ||||||
Universal Health Services 144A 5.00% 6/1/26 # | 5,000 | 5,100 | ||||||
WellCare Health Plans 144A 5.375% 8/15/26 # | 470,000 | 482,784 | ||||||
|
| |||||||
5,901,317 | ||||||||
|
| |||||||
Insurance – 0.41% | ||||||||
Acrisure 144A 8.125% 2/15/24 # | 160,000 | 164,700 | ||||||
HUB International 144A 7.00% 5/1/26 # | 660,000 | 650,694 | ||||||
Nuveen Finance 144A 4.125% 11/1/24 # | 600,000 | 639,259 | ||||||
USI 144A 6.875% 5/1/25 # | 698,000 | 678,805 | ||||||
XLIT 5.054% (LIBOR03M + 2.458%)y• | 10,000 | 9,642 | ||||||
|
| |||||||
2,143,100 | ||||||||
|
|
17
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Corporate Bonds(continued) | ||||||||
Media – 1.56% | ||||||||
Altice France 144A 7.375% 5/1/26 # | 565,000 | $ | 553,347 | |||||
AMC Networks 4.75% 8/1/25 | 505,000 | 495,531 | ||||||
CCO Holdings | ||||||||
144A 5.50% 5/1/26 # | 41,000 | 42,091 | ||||||
144A 5.75% 2/15/26 # | 218,000 | 226,720 | ||||||
144A 5.875% 5/1/27 # | 999,000 | 1,032,716 | ||||||
CSC Holdings | ||||||||
5.25% 6/1/24 | 5,000 | 5,051 | ||||||
6.75% 11/15/21 | 370,000 | 395,437 | ||||||
144A 7.50% 4/1/28 # | 400,000 | 428,000 | ||||||
144A 7.75% 7/15/25 # | 465,000 | 495,806 | ||||||
Gray Television 144A 5.875% 7/15/26 # | 473,000 | 486,457 | ||||||
Lamar Media | ||||||||
5.375% 1/15/24 | 155,000 | 159,030 | ||||||
5.75% 2/1/26 | 473,000 | 496,357 | ||||||
Netflix 5.875% 11/15/28 | 625,000 | 657,813 | ||||||
Nexstar Broadcasting 144A 5.625% 8/1/24 # | 15,000 | 15,150 | ||||||
Radiate Holdco 144A 6.625% 2/15/25 # | 10,000 | 9,825 | ||||||
Sinclair Television Group 144A 5.125% 2/15/27 # | 362,000 | 346,651 | ||||||
Sirius XM Radio | ||||||||
144A 5.00% 8/1/27 # | 855,000 | 845,381 | ||||||
144A 5.375% 4/15/25 # | 286,000 | 289,080 | ||||||
144A 5.375% 7/15/26 # | 20,000 | 20,219 | ||||||
Tribune Media 5.875% 7/15/22 | 433,000 | 439,906 | ||||||
Unitymedia 144A 6.125% 1/15/25 # | 325,000 | 335,091 | ||||||
Virgin Media Secured Finance 144A 5.25% 1/15/26 # | 330,000 | 329,587 | ||||||
|
| |||||||
8,105,246 | ||||||||
|
| |||||||
Real Estate Investment Trusts – 0.73% | ||||||||
American Tower 4.00% 6/1/25 | 600,000 | 625,199 | ||||||
Crown Castle International 5.25% 1/15/23 | 680,000 | 731,398 | ||||||
CyrusOne 5.375% 3/15/27 | 378,000 | 390,757 | ||||||
ESH Hospitality 144A 5.25% 5/1/25 # | 494,000 | 495,235 | ||||||
Iron Mountain US Holdings 144A 5.375% 6/1/26 # | 716,000 | 701,680 | ||||||
MGM Growth Properties Operating Partnership | ||||||||
4.50% 9/1/26 | 15,000 | 14,695 | ||||||
144A 5.75% 2/1/27 # | 160,000 | 165,000 | ||||||
SBA Communications 4.875% 9/1/24 | 670,000 | 666,047 | ||||||
|
| |||||||
3,790,011 | ||||||||
|
|
18
Table of Contents
Principal amount° | Value (US $) | |||||||
Corporate Bonds(continued) | ||||||||
Services – 0.66% | ||||||||
Advanced Disposal Services 144A 5.625% 11/15/24 # | 389,000 | $ | 406,505 | |||||
Aramark Services 144A 5.00% 2/1/28 # | 660,000 | 654,637 | ||||||
Ashtead Capital 144A 5.25% 8/1/26 # | 905,000 | 934,413 | ||||||
Avis Budget Car Rental 144A 6.375% 4/1/24 # | 104,000 | 107,640 | ||||||
Covanta Holding 5.875% 7/1/25 | 548,000 | 561,700 | ||||||
KAR Auction Services 144A 5.125% 6/1/25 # | 200,000 | 198,000 | ||||||
Prime Security Services Borrower | ||||||||
144A 5.75% 4/15/26 # | 310,000 | 306,900 | ||||||
144A 9.25% 5/15/23 # | 227,000 | 238,208 | ||||||
United Rentals North America 5.875% 9/15/26 | 5,000 | 5,194 | ||||||
|
| |||||||
3,413,197 | ||||||||
|
| |||||||
Technology & Electronics – 0.71% | ||||||||
Apple 2.10% 9/12/22 | 600,000 | 595,332 | ||||||
CDK Global | ||||||||
5.00% 10/15/24 | 161,000 | 165,920 | ||||||
5.875% 6/15/26 | 518,000 | 538,720 | ||||||
CDW Finance 5.00% 9/1/25 | 156,000 | 158,340 | ||||||
CommScope Technologies 144A 5.00% 3/15/27 # | 192,000 | 164,160 | ||||||
First Data 144A 5.75% 1/15/24 # | 605,000 | 621,335 | ||||||
Infor US 6.50% 5/15/22 | 447,000 | 453,231 | ||||||
Sensata Technologies UK Financing 144A | ||||||||
6.25% 2/15/26 # | 285,000 | 297,825 | ||||||
SS&C Technologies 144A 5.50% 9/30/27 # | 660,000 | 666,319 | ||||||
|
| |||||||
3,661,182 | ||||||||
|
| |||||||
Transportation – 0.18% | ||||||||
DAE Funding 144A 5.75% 11/15/23 # | 554,000 | 574,083 | ||||||
XPO Logistics 144A 6.125% 9/1/23 # | 368,000 | 372,055 | ||||||
|
| |||||||
946,138 | ||||||||
|
| |||||||
Utilities – 0.92% | ||||||||
AES | ||||||||
5.50% 4/15/25 | 5,000 | 5,176 | ||||||
6.00% 5/15/26 | 103,000 | 108,150 | ||||||
Calpine | ||||||||
144A 5.25% 6/1/26 # | 443,000 | 435,278 | ||||||
5.75% 1/15/25 | 65,000 | 63,064 | ||||||
144A 5.875% 1/15/24 # | 160,000 | 161,752 | ||||||
Emera 6.75% 6/15/76 µ | 500,000 | 537,107 | ||||||
Enel 144A 8.75% 9/24/73 #µ | 200,000 | 223,760 | ||||||
Engie Energia Chile 144A 4.50% 1/29/25 # | 500,000 | 517,942 | ||||||
Exelon 3.497% 6/1/22 | 600,000 | 611,263 | ||||||
National Rural Utilities Cooperative Finance | ||||||||
5.25% 4/20/46 µ | 700,000 | 718,270 |
19
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Corporate Bonds(continued) | ||||||||
Utilities(continued) | ||||||||
NextEra Energy Capital Holdings 3.15% 4/1/24 | 500,000 | $ | 506,546 | |||||
Vistra Operations | ||||||||
144A 5.50% 9/1/26 # | 650,000 | 666,933 | ||||||
144A 5.625% 2/15/27 # | 190,000 | 196,118 | ||||||
|
| |||||||
4,751,359 | ||||||||
|
| |||||||
Total Corporate Bonds(cost $91,023,115) | 91,335,360 | |||||||
|
| |||||||
LeveragedNon-Recourse Security – 0.00% | ||||||||
JPMorgan Fixed Income Pass Through Trust Auction 144A | ||||||||
0.24% 1/15/87 #¨= | 1,300,000 | 0 | ||||||
|
| |||||||
Total LeveragedNon-Recourse Security(cost $1,105,000) | 0 | |||||||
|
| |||||||
Municipal Bonds – 6.74% | ||||||||
Allentown, Pennsylvania Neighborhood Improvement Zone | ||||||||
Development Authority Revenue | ||||||||
(City Center Project) 144A 5.00% 5/1/42 # | 500,000 | 547,790 | ||||||
Arizona Industrial Development Authority | ||||||||
(American Charter Schools Foundation Project) 144A | ||||||||
6.00% 7/1/47 # | 1,000,000 | 1,120,700 | ||||||
Buckeye, Ohio Tobacco Settlement Financing Authority | ||||||||
(Asset-Backed Senior Turbo) | ||||||||
SeriesA-2 5.875% 6/1/47 | 1,250,000 | 1,204,687 | ||||||
SeriesA-2 6.00% 6/1/42 | 1,000,000 | 999,970 | ||||||
California Municipal Finance Authority | ||||||||
(Senior Lien LINXS APM Project) Series A 5.00% 12/31/47 (AMT) | 300,000 | 347,196 | ||||||
California State | ||||||||
(Various Purposes) 5.00% 11/1/43 | 1,000,000 | 1,132,540 | ||||||
California Statewide Communities Development Authority | ||||||||
(California Baptist University) Series A 6.375% 11/1/43 | 1,000,000 | 1,158,500 | ||||||
Capital Trust Agency | ||||||||
(University Bridge, LLC Student Housing Project) Series A 144A 5.25% 12/1/58 # | 1,000,000 | 1,020,980 | ||||||
City of Apple Valley, Minnesota | ||||||||
(Minnesota Senior Living Project) Series 2016 D | ||||||||
7.25% 1/1/52 | 1,000,000 | 1,026,820 | ||||||
City of Chicago, Illinois | ||||||||
(General Obligation Bonds Project) Series 2005D | ||||||||
5.50% 1/1/40 | 1,000,000 | 1,092,590 | ||||||
Colorado Health Facilities Authority Revenue | ||||||||
(Catholic Health Initiatives) Series A 5.25% 1/1/45 | 1,250,000 | 1,379,687 |
20
Table of Contents
Principal amount° | Value (US $) | |||||||
Municipal Bonds(continued) | ||||||||
Conley Road Transportation Development District, Missouri | ||||||||
5.375% 5/1/47 | 500,000 | $ | 516,690 | |||||
Cuyahoga County, Ohio | ||||||||
(Metrohealth System) | ||||||||
5.00% 2/15/57 | 1,000,000 | 1,097,810 | ||||||
5.50% 2/15/57 | 1,000,000 | 1,135,570 | ||||||
Dallas/Fort Worth International Airport, Texas | ||||||||
Series H 5.00% 11/1/42 (AMT) | 1,000,000 | 1,060,620 | ||||||
Dominion Water & Sanitation District, Colorado 6.00% 12/1/46 | 1,000,000 | 1,075,700 | ||||||
Florida Development Finance Surface Transportation Facilities Revenue | ||||||||
(Virgin Trains USA Passenger Rail Project) Series | ||||||||
A 144A 6.50% 1/1/49 #• | 1,150,000 | 1,157,544 | ||||||
Golden State Tobacco Securitization Settlement Revenue | ||||||||
SeriesA-1 5.25% 6/1/47 | 500,000 | 503,430 | ||||||
Illinois State | ||||||||
Series A 5.00% 12/1/34 | 625,000 | 699,156 | ||||||
Series A 5.00% 4/1/38 | 100,000 | 105,752 | ||||||
Montgomery County Industrial Development Authority Revenue | ||||||||
(Whitemarsh Continuing Care Retirement Community Project) Series A 5.375% 1/1/51 | 250,000 | 258,547 | ||||||
M-S-R Energy Authority, California | ||||||||
Series C 6.50% 11/1/39 | 1,000,000 | 1,502,580 | ||||||
New Jersey Economic Development Authority | ||||||||
(School Facilities Construction Bonds) 5.00% 6/15/40 | 250,000 | 270,713 | ||||||
New Jersey Transportation Trust Fund Authority | ||||||||
(Transportation Program Bonds) Series AA | ||||||||
5.00% 6/15/44 | 1,000,000 | 1,084,950 | ||||||
New York Liberty Development Revenue | ||||||||
(Goldman Sachs Headquarters) 5.25% 10/1/35 | 1,000,000 | 1,317,990 | ||||||
(World Trade Center Project)Class 1-3 144A | ||||||||
5.00% 11/15/44 # | 1,000,000 | 1,093,490 | ||||||
New York State Thruway Authority | ||||||||
Series J 5.00% 1/1/41 | 1,000,000 | 1,124,720 | ||||||
New York Transportation Development | ||||||||
(Delta Air Lines, Inc. LaGuardia Airport Terminals C&D | ||||||||
Redevelopment Project) 5.00% 1/1/34 (AMT) | 500,000 | 588,505 | ||||||
Palm Beach County, Florida Health Facilities Authority | ||||||||
(Sinai Residences Boca Raton Project) | ||||||||
Series A 7.25% 6/1/34 | 65,000 | 73,177 | ||||||
Series A 7.50% 6/1/49 | 325,000 | 367,777 |
21
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Municipal Bonds(continued) | ||||||||
Public Authority for Colorado Energy Natural Gas Revenue | ||||||||
6.50% 11/15/38 | 1,000,000 | $ | 1,523,730 | |||||
Public Finance Authority, Wisconsin | ||||||||
(Mary’s Woods at Marylhurst Project) Series A 144A | ||||||||
5.25% 5/15/47 # | 1,000,000 | 1,076,940 | ||||||
Puerto Rico Sales Tax Financing Revenue | ||||||||
SeriesA-1 4.55% 7/1/40 | 250,000 | 248,985 | ||||||
SeriesA-1 4.75% 7/1/53 | 250,000 | 241,797 | ||||||
SeriesA-1 5.00% 7/1/58 | 2,250,000 | 2,242,237 | ||||||
Salt Verde, Arizona Financial Senior Gas Revenue | ||||||||
5.00% 12/1/37 | 1,000,000 | 1,295,400 | ||||||
Tobacco Settlement Financing | ||||||||
Subordinate Series B 5.00% 6/1/46 | 500,000 | 534,720 | ||||||
Utility Debt Securitization Authority, New York | ||||||||
(Restructuring) Series TE 5.00% 12/15/41 | 750,000 | 852,803 | ||||||
Washington State | ||||||||
(Various Purpose) Series C 5.00% 2/1/41
|
| 700,000
|
|
| 840,532
|
| ||
|
| |||||||
Total Municipal Bonds(cost $32,650,050) | 34,923,325 | |||||||
|
| |||||||
| ||||||||
Non-Agency Commercial Mortgage-Backed Security – 0.10% | ||||||||
JPMBB Commercial Mortgage Securities Trust | ||||||||
Series2015-C33 A4 3.77% 12/15/48 | 500,000 | 529,619 | ||||||
|
| |||||||
TotalNon-Agency Commercial Mortgage-Backed Security(cost $528,066) | 529,619 | |||||||
|
| |||||||
| ||||||||
Sovereign Bonds – 1.08%D | ||||||||
Argentina – 0.13% | ||||||||
Argentine Republic Government International Bond | ||||||||
6.875% 1/11/48 | 1,000,000 | 671,260 | ||||||
|
| |||||||
671,260 | ||||||||
|
| |||||||
Dominican Republic – 0.05% | ||||||||
Dominican Republic International Bond 144A | ||||||||
6.00% 7/19/28 # | 250,000 | 264,063 | ||||||
|
| |||||||
264,063 | ||||||||
|
| |||||||
Indonesia – 0.77% | ||||||||
Indonesia Government International Bonds | ||||||||
144A 5.125% 1/15/45 # | 1,500,000 | 1,628,689 | ||||||
144A 6.75% 1/15/44 # | 1,800,000 | 2,355,714 | ||||||
|
| |||||||
3,984,403 | ||||||||
|
| |||||||
Russia – 0.08% | ||||||||
Russian Foreign Bond – Eurobond 144A 4.25% 6/23/27 # | 400,000 | 405,734 | ||||||
|
| |||||||
405,734 | ||||||||
|
|
22
Table of Contents
Principal amount° | Value (US $) | |||||||
Sovereign BondsD(continued) | ||||||||
| ||||||||
Uzbekistan – 0.05% | ||||||||
Republic of Uzbekistan Bond 144A 4.75% 2/20/24 # | 250,000 | $ | 254,469 | |||||
|
| |||||||
254,469 | ||||||||
|
| |||||||
Total Sovereign Bonds(cost $5,562,750) | 5,579,929 | |||||||
|
| |||||||
| ||||||||
US Treasury Obligations – 0.26% | ||||||||
| ||||||||
US Treasury Notes | ||||||||
2.00% 10/31/22 | 340,000 | 341,116 | ||||||
2.625% 2/15/29 | 970,000 | 1,011,414 | ||||||
|
| |||||||
Total US Treasury Obligations(cost $1,313,919) | 1,352,530 | |||||||
|
| |||||||
Number of shares | ||||||||
Preferred Stock – 0.98% | ||||||||
| ||||||||
Bank of America 2.15% µ | 440,000 | 478,782 | ||||||
Federal Home Loan Mortgage 6.02% | 40,000 | 494,000 | ||||||
GMAC Capital Trust I 8.303% (LIBOR03M + 5.79%) • | 5,000 | 129,100 | ||||||
Pebblebrook Hotel Trust 6.375% | 46,295 | 1,169,875 | ||||||
SITE Centers 6.50% | 19,800 | 488,664 | ||||||
Taubman Centers 6.50% | 68,477 | 1,771,500 | ||||||
Washington Prime Group 6.875% | 28,700 | 540,421 | �� | |||||
|
| |||||||
Total Preferred Stock(cost $5,621,415) | 5,072,342 | |||||||
|
| |||||||
| ||||||||
Short-Term Investments – 6.26% | ||||||||
| ||||||||
Money Market Mutual Funds – 6.26% | ||||||||
BlackRock FedFund - Institutional Shares(seven-day effective yield 2.30%) | 6,487,398 | 6,485,316 | ||||||
Fidelity Investments Money Market Government Portfolio - Class I(seven-day effective yield 2.27%) | 6,487,398 | 6,485,303 | ||||||
GS Financial Square Government Fund - Institutional Shares(seven-day effective yield 2.30%) | 6,487,398 | 6,485,305 | ||||||
Morgan Stanley Government Portfolio - Institutional Share Class(seven-day effective yield 2.29%) | 6,487,398 | 6,485,322 | ||||||
State Street Institutional US Government Money Market Fund - Investor Class(seven-day effective yield 2.24%) | 6,487,398 | 6,485,251 | ||||||
|
| |||||||
Total Short-Term Investments(cost $32,426,497) | 32,426,497 | |||||||
|
| |||||||
Total Value of Securities– 98.64% | 511,205,089 | |||||||
|
|
# | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At May 31, 2019, the aggregate value of Rule 144A securities was $65,366,855, which represents 12.61% of the Fund’s net assets. See Note 9 in “Notes to financial statements.” |
23
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
¨ | 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. |
v | PIK. 100% of the income received was in the form of both cash and par. |
= | 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.” |
° | Principal amount shown is stated in USD 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, 2019. 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, 2019, the aggregate value of restricted securities was $7,789,703, which represented 1.50% 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, 2019. For securities based on a published reference rate and spread, the reference rate and spread are indicated in their description above. The reference rate descriptions (i.e. LIBOR03M, LIBOR06M, etc.) used in this report are identical for different securities, but the underlying reference rates may differ due to the timing of the reset period. 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 | $ | 2,311,487 | $ | 2,401,352 | |||||||
Merion Champion’s Walk | 2/13/18 | 59,956 | 62,287 | |||||||||
Merion Champion’s Walk | 7/11/18 | 62,726 | 62,287 | |||||||||
Merion Champion’s Walk | 10/22/18 | 63,662 | 62,287 | |||||||||
Merion Champion’s Walk | 2/13/19 | 64,576 | 62,287 | |||||||||
Merion Countryside | 5/11/16 | — | 1,339,373 | |||||||||
Merion Countryside | 4/7/17 | — | 108,598 | |||||||||
Merion Countryside | 5/3/18 | — | 60,332 | |||||||||
Merion The Ledges | 9/26/18 | 3,666,188 | 3,630,900 | |||||||||
|
|
|
| |||||||||
Total | $ | 6,228,595 | $ | 7,789,703 | ||||||||
|
|
|
|
24
Table of Contents
The following futures contracts and swap contracts were outstanding at May 31, 2019:1
Futures Contracts
Contracts to Buy (Sell) | Notional Amount | Notional Cost (Proceeds) | Expiration Date | Value/ Unrealized Appreciation | Variation Margin Due from (Due to) Brokers | |||||||||||
(55) E-mini S&P 500 Index | $ (7,569,650) | $ | (7,708,921) | 6/21/19 | $ | 139,271 | $ | 147,898 |
Swap Contracts
CDS Contracts2
Reference Obligation/ | Notional Amount3 | Annual Protection Payments | Value | Upfront Payments Paid (Received) | Unrealized | Variation Margin Due from (Due to) Brokers | ||||||||||||||||||
Centrally Cleared/ Protection Purchased: | ||||||||||||||||||||||||
CDX.NA.HY.3256/20/24-Quarterly | 10,000,000 | 5.00% | $ | (450,825) | $ | (521,432) | $ | 70,607 | $ | (242,559) |
1See Note 7 in “Notes to financial statements.”
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 CDS agreement.
3Notional amount shown is stated in USD 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 $(32,916).
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
CDS – Credit Default Swap
CDX.NA.HY – Credit Default Swap Index North America High Yield
ETF – Exchange-Traded Fund
25
Table of Contents
Schedule of investments
Delaware Wealth Builder Fund
Summary of abbreviations: (continued)
GS – Goldman Sachs
ICE – Intercontinental Exchange
LIBOR – London Interbank Offered Rate
LIBOR03M – ICE LIBOR USD 3 Month
LIBOR06M – ICE LIBOR USD 6 Month
MSCI – Morgan Stanley Capital International
PIK –Payment-in-Kind
REIT – Real Estate Investment Trust
S&P – Standard & Poor’s
SPDR – S&P Depositary Receipts
USD – US Dollar
See accompanying notes, which are an integral part of the financial statements.
26
Table of Contents
Statement of assets and liabilities | ||
Delaware Wealth Builder Fund | May 31, 2019 (Unaudited) |
Assets: | ||||
Investments, at value1 | $ | 511,205,089 | ||
Foreign currencies, at value2 | 154,051 | |||
Cash collateral due from broker | 787,559 | |||
Cash | 366,437 | |||
Receivable for securities sold | 4,161,212 | |||
Dividends and interest receivable | 3,388,323 | |||
Foreign tax reclaims receivable | 468,848 | |||
Receivable for fund shares sold | 220,028 | |||
Variation margin due from broker on futures contracts | 147,898 | |||
|
| |||
Total assets | 520,899,445 | |||
|
| |||
Liabilities: | ||||
Payable for fund shares redeemed | 1,119,639 | |||
Upfront payments received on centrally cleared credit default swap contracts | 521,432 | |||
Investment management fees payable to affiliates | 292,614 | |||
Variation margin due to broker on centrally cleared credit default swap contracts | 242,559 | |||
Distribution fees payable to affiliates | 154,116 | |||
Swap payments payable | 101,389 | |||
Other accrued expenses | 93,061 | |||
Dividend disbursing and transfer agent fees and expenses payable | 77,895 | |||
Reports and statements to shareholders expenses payable | 28,662 | |||
Dividend disbursing and transfer agent fees and expenses payable to affiliates | 4,462 | |||
Trustees’ fees and expenses payable | 4,346 | |||
Accounting and administration expenses payable to affiliates | 2,048 | |||
Legal fees payable to affiliates | 1,291 | |||
Reports and statements to shareholders expenses payable to affiliates | 514 | |||
|
| |||
Total liabilities | 2,644,028 | |||
|
| |||
Total Net Assets | $ | 518,255,417 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 526,310,523 | ||
Total distributable earnings (loss) | (8,055,106 | ) | ||
|
| |||
Total Net Assets | $ | 518,255,417 | ||
|
|
27
Table of Contents
Statement of assets and liabilities
Delaware Wealth Builder Fund
Net Asset Value | ||||
Class A: | ||||
Net assets | $ | 245,652,794 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 18,696,068 | |||
Net asset value per share | $ | 13.14 | ||
Sales charge | 5.75 | % | ||
Offering price per share, equal to net asset value per share / (1 – sales charge) | $ | 13.94 | ||
Class C: | ||||
Net assets | $ | 113,338,046 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 8,608,805 | |||
Net asset value per share | $ | 13.17 | ||
Class R: | ||||
Net assets | $ | 1,706,137 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 129,828 | |||
Net asset value per share | $ | 13.14 | ||
Institutional Class: | ||||
Net assets | $ | 157,558,440 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 11,994,200 | |||
Net asset value per share | $ | 13.14 | ||
1Investments, at cost | $ | 516,593,493 | ||
2Foreign currencies, at cost | 158,394 |
See accompanying notes, which are an integral part of the financial statements.
28
Table of Contents
Statement of operations | ||
Delaware Wealth Builder Fund | Six months ended May 31, 2019 (Unaudited) |
Investment Income: | ||||
Interest | $ | 11,631,472 | ||
Dividends | 5,966,676 | |||
Foreign tax withheld | (95,583 | ) | ||
|
| |||
17,502,565 | ||||
|
| |||
Expenses: | ||||
Management fees | 1,776,509 | |||
Distribution expenses – Class A | 325,429 | |||
Distribution expenses – Class C | 620,745 | |||
Distribution expenses – Class R | 4,628 | |||
Dividend disbursing and transfer agent fees and expenses | 269,671 | |||
Accounting and administration expenses | 69,883 | |||
Reports and statements to shareholders expenses | 48,086 | |||
Legal fees | 42,422 | |||
Registration fees | 31,075 | |||
Audit and tax fees | 29,681 | |||
Custodian fees | 21,763 | |||
Trustees’ fees and expenses | 16,575 | |||
Other | 39,234 | |||
|
| |||
3,295,701 | ||||
Less expenses paid indirectly | (4,859 | ) | ||
|
| |||
Total operating expenses | 3,290,842 | |||
|
| |||
Net Investment Income | 14,211,723 | |||
|
|
29
Table of Contents
Statement of operations
Delaware Wealth Builder Fund
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | $ | (6,168,875 | ) | |
Foreign currencies | (28,269 | ) | ||
Foreign currency exchange contracts | (4,741 | ) | ||
Futures contracts | (238,870 | ) | ||
Options written | 1,301,809 | |||
Swap contracts | 150,033 | |||
|
| |||
Net realized loss | (4,988,913 | ) | ||
|
| |||
Net change in unrealized appreciation (depreciation) of: | ||||
Investments | (9,595,400 | ) | ||
Foreign currencies | (4,427 | ) | ||
Foreign currency exchange contracts | 24 | |||
Futures contracts | 105,787 | |||
Swap contracts | (87 | ) | ||
|
| |||
Net change in unrealized appreciation (depreciation) | (9,494,103 | ) | ||
|
| |||
Net Realized and Unrealized Loss | (14,483,016 | ) | ||
|
| |||
Net Decrease in Net Assets Resulting from Operations | $ | (271,293 | ) | |
|
|
See accompanying notes, which are an integral part of the financial statements.
30
Table of Contents
Statements of changes in net assets
Delaware Wealth Builder Fund
Six months ended | ||||||||
5/31/19 (Unaudited) | Year ended 11/30/18 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 14,211,723 | $ | 15,203,067 | ||||
Net realized gain (loss) | (4,988,913 | ) | 32,211,435 | |||||
Net change in unrealized appreciation (depreciation) | (9,494,103 | ) | (51,994,176 | ) | ||||
|
|
|
| |||||
Net decrease in net assets resulting from operations | (271,293 | ) | (4,579,674 | ) | ||||
|
|
|
| |||||
Dividends and Distributions to Shareholders from: | ||||||||
Distributable earnings: | ||||||||
Class A | (18,917,984 | ) | (7,546,199 | ) | ||||
Class C | (8,904,140 | ) | (3,570,496 | ) | ||||
Class R | (134,945 | ) | (67,220 | ) | ||||
Institutional Class | (12,822,033 | ) | (5,777,766 | ) | ||||
|
|
|
| |||||
(40,779,102 | ) | (16,961,681 | ) | |||||
|
|
|
| |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 10,408,654 | 58,772,382 | ||||||
Class C | 4,278,638 | 6,019,571 | ||||||
Class R | 112,543 | 744,682 | ||||||
Institutional Class | 14,658,118 | 49,348,771 | ||||||
Net assets from merger*: | ||||||||
Class A | — | 34,209,151 | ||||||
Class C | — | 10,597,997 | ||||||
Class R | — | 1,907,750 | ||||||
Institutional Class | — | 4,798,603 |
31
Table of Contents
Statements of changes in net assets
Delaware Wealth Builder Fund
Six months ended | ||||||||
5/31/19 (Unaudited) | Year ended 11/30/18 | |||||||
Capital Share Transactions (continued): | ||||||||
Net asset value of shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | $ | 17,955,728 | $ | 7,101,684 | ||||
Class C | 8,449,525 | 3,383,522 | ||||||
Class R | 133,981 | 72,796 | ||||||
Institutional Class | 11,630,626 | 5,187,021 | ||||||
|
|
|
| |||||
67,627,813 | 182,143,930 | |||||||
|
|
|
| |||||
Cost of shares redeemed: | ||||||||
Class A | (37,778,433 | ) | (73,756,847 | ) | ||||
Class C | (27,547,114 | ) | (102,200,279 | ) | ||||
Class R | (378,842 | ) | (2,999,542 | ) | ||||
Institutional Class | (41,092,735 | ) | (68,536,803 | ) | ||||
|
|
|
| |||||
(106,797,124 | ) | (247,493,471 | ) | |||||
|
|
|
| |||||
Decrease in net assets derived from capital share transactions | (39,169,311 | ) | (65,349,541 | ) | ||||
|
|
|
| |||||
Net Decrease in Net Assets | (80,219,706 | ) | (86,890,896 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 598,475,123 | 685,366,019 | ||||||
|
|
|
| |||||
End of period | $ | 518,255,417 | $ | 598,475,123 | ||||
|
|
|
|
*See Note 5 in “Notes to financial statements.”
See accompanying notes, which are an integral part of the financial statements.
32
Table of Contents
This page intentionally left blank.
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 net investment income to average net assets6 |
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 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 | The ratios of expenses to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 1.09%, 1.09%, and 1.12%, respectively. |
6 | The ratios of net investment income to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 2.40%, 2.51%, and 2.05%, respectively. |
See accompanying notes, which are an integral part of the financial statements.
34
Table of Contents
Six months ended 5/31/191 | Year ended | |||||||||||||||||||||||
|
| |||||||||||||||||||||||
(Unaudited) | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | |||||||||||||||||||
| ||||||||||||||||||||||||
$ | 14.15 | $ | 14.62 | $ | 13.64 | $ | 13.16 | $ | 13.73 | $ | 12.81 | |||||||||||||
0.35 | 0.35 | 0.36 | 0.27 | 0.32 | 0.31 | |||||||||||||||||||
(0.37 | ) | (0.43 | ) | 0.98 | 0.52 | (0.58 | ) | 0.92 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.02 | ) | (0.08 | ) | 1.34 | 0.79 | (0.26 | ) | 1.23 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.17 | ) | (0.34 | ) | (0.36 | ) | (0.31 | ) | (0.31 | ) | (0.31 | ) | |||||||||||||
(0.82 | ) | (0.05 | ) | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.99 | ) | (0.39 | ) | (0.36 | ) | (0.31 | ) | (0.31 | ) | (0.31 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 13.14 | $ | 14.15 | $ | 14.62 | $ | 13.64 | $ | 13.16 | $ | 13.73 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
0.27% | (0.56%) | 9.90% | 6.11% | (1.91%) | 9.74% | |||||||||||||||||||
$ | 245,653 | $ | 273,384 | $ | 256,157 | $ | 270,324 | $ | 291,876 | $ | 315,098 | |||||||||||||
1.10% | 1.09% | 1.09% | 1.13% | 1.10% | 1.10% | |||||||||||||||||||
5.26% | 2.41% | 2.51% | 2.04% | 2.38% | 2.35% | |||||||||||||||||||
| 37%
|
|
| 57%
|
|
| 81%
|
|
| 102%
|
|
| 67%
|
|
| 56%
|
| |||||||
|
35
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 |
Ratio of net investment income to average net assets6 |
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 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 | The ratios of expenses to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 1.84%, 1.84%, and 1.87%, respectively. |
6 | The ratios of net investment income to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 1.65%, 1.76%, and 1.30%, respectively. |
See accompanying notes, which are an integral part of the financial statements.
36
Table of Contents
Six months ended 5/31/191 | Year ended | |||||||||||||||||||||||
(Unaudited) | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | |||||||||||||||||||
$ | 14.18 | $ | 14.65 | $ | 13.66 | $ | 13.18 | $ | 13.75 | $ | 12.83 | |||||||||||||
0.30 | 0.24 | 0.25 | 0.17 | 0.22 | 0.21 | |||||||||||||||||||
(0.37 | ) | (0.43 | ) | 0.99 | 0.52 | (0.58 | ) | 0.92 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.07 | ) | (0.19 | ) | 1.24 | 0.69 | (0.36 | ) | 1.13 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.12 | ) | (0.23 | ) | (0.25 | ) | (0.21 | ) | (0.21 | ) | (0.21 | ) | |||||||||||||
(0.82 | ) | (0.05 | ) | — | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.94 | ) | (0.28 | ) | (0.25 | ) | (0.21 | ) | (0.21 | ) | (0.21 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 13.17 | $ | 14.18 | $ | 14.65 | $ | 13.66 | $ | 13.18 | $ | 13.75 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.11% | ) | (1.34% | ) | 9.13% | 5.30% | (2.63% | ) | 8.90% | ||||||||||||||||
$ | 113,338 | $ | 137,403 | $ | 225,604 | $ | 283,243 | $ | 298,833 | $ | 308,975 | |||||||||||||
1.85% | 1.84% | 1.84% | 1.88% | 1.85% | 1.85% | |||||||||||||||||||
4.51% | 1.66% | 1.76% | 1.29% | 1.63% | 1.60% | |||||||||||||||||||
37% | 57% | 81% | 102% | 67% | 56% |
37
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 net investment income to average net assets6 |
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 return is based on the change in a 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 | The ratios of expenses to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 1.34%, 1.34%, and 1.37%, respectively. |
6 | The ratios of net investment income to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 2.15%, 2.26%, and 1.80%, respectively. |
See accompanying notes, which are an integral part of the financial statements.
38
Table of Contents
Six months ended 5/31/191 (Unaudited) | ||||||||||||||||||||||||
Year ended | ||||||||||||||||||||||||
|
| |||||||||||||||||||||||
11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | ||||||||||||||||||||
$ | 14.16 | $ | 14.62 | $ | 13.63 | $ | 13.16 | $ | 13.73 | $ | 12.81 | |||||||||||||
0.33 | 0.31 | 0.32 | 0.24 | 0.29 | 0.28 | |||||||||||||||||||
(0.38 | ) | (0.42 | ) | 0.99 | 0.51 | (0.58 | ) | 0.92 | ||||||||||||||||
(0.05 | ) | (0.11 | ) | 1.31 | 0.75 | (0.29 | ) | 1.20 | ||||||||||||||||
(0.15 | ) | (0.30 | ) | (0.32 | ) | (0.28 | ) | (0.28 | ) | (0.28 | ) | |||||||||||||
(0.82 | ) | (0.05 | ) | — | — | — | — | |||||||||||||||||
(0.97 | ) | (0.35 | ) | (0.32 | ) | (0.28 | ) | (0.28 | ) | (0.28 | ) | |||||||||||||
$ 13.14 | $ 14.16 | $ 14.62 | $ 13.63 | $ 13.16 | $ 13.73 | |||||||||||||||||||
0.07% | (0.78%) | 9.70% | 5.76% | (2.15% | ) | 9.46% | ||||||||||||||||||
$ | 1,706 | $ | 1,968 | $ | 2,320 | $ | 3,229 | $ | 3,682 | $ | 3,983 | |||||||||||||
1.35% | 1.34% | 1.34% | 1.38% | 1.35% | 1.35% | |||||||||||||||||||
5.01% | 2.16% | 2.26% | 1.79% | 2.13% | 2.10% | |||||||||||||||||||
| 37%
|
|
| 57%
|
|
| 81%
|
|
| 102%
|
|
| 67%
|
|
| 56%
|
|
39
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 |
Ratio of net investment income to average net assets6 |
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 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 | The ratios of expenses to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 0.84%, 0.84%, and 0.87%, respectively. |
6 | The ratios of net investment income to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 2.65%, 2.76%, and 2.30%, respectively. |
See accompanying notes, which are an integral part of the financial statements.
40
Table of Contents
Six months ended 5/31/191 (Unaudited) | ||||||||||||||||||||||||
Year ended | ||||||||||||||||||||||||
|
| |||||||||||||||||||||||
11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | ||||||||||||||||||||
$ | 14.15 | $ | 14.63 | $ | 13.64 | $ | 13.16 | $ | 13.73 | $ | 12.81 | |||||||||||||
0.37 | 0.38 | 0.39 | 0.30 | 0.36 | 0.35 | |||||||||||||||||||
(0.37 | ) | (0.43 | ) | 0.99 | 0.52 | (0.58 | ) | 0.92 | ||||||||||||||||
— | (0.05 | ) | 1.38 | 0.82 | (0.22 | ) | 1.27 | |||||||||||||||||
(0.19 | ) | (0.38 | ) | (0.39 | ) | (0.34 | ) | (0.35 | ) | (0.35 | ) | |||||||||||||
(0.82 | ) | (0.05 | ) | — | — | — | — | |||||||||||||||||
(1.01 | ) | (0.43 | ) | (0.39 | ) | (0.34 | ) | (0.35 | ) | (0.35 | ) | |||||||||||||
$ 13.14 | $ 14.15 | $ 14.63 | $ 13.64 | $ 13.16 | $ 13.73 | |||||||||||||||||||
0.40% | (0.37% | ) | 10.24% | 6.37% | (1.66% | ) | 10.01% | |||||||||||||||||
$ | 157,558 | $ | 185,720 | $ | 201,285 | $ | 149,830 | $ | 147,133 | $ | 149,914 | |||||||||||||
0.85% | 0.84% | 0.84% | 0.88% | 0.85% | 0.85% | |||||||||||||||||||
5.51% | 2.66% | 2.76% | 2.29% | 2.63% | 2.60% | |||||||||||||||||||
| 37%
|
|
| 57%
|
|
| 81%
|
|
| 102%
|
|
| 67%
|
|
| 56%
|
|
41
Table of Contents
Notes to financial statements | ||
Delaware Wealth Builder Fund | May 31, 2019 (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 Fund is anopen-end investment company. The Fund is considered diversified under the Investment Company Act of 1940, as amended, and offers Class A, Class C, Class R, and Institutional Class shares. Class A shares are sold with a maximumfront-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 afront-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 Fund follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services – Investment Companies. 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. Investments in repurchase agreements are generally valued at par, which approximates fair value, each business day. 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
42
Table of Contents
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 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 innon-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 expected to be taken on the Fund’s federal income tax returns through the six months ended May 31, 2019 and for all open tax years (years ended Nov. 30, 2016–Nov. 30, 2018), 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, 2019, 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-partysub-custodian. In the event of default or bankruptcy by the other party to the agreement,
43
Table of Contents
Notes to financial statements
Delaware Wealth Builder Fund
1. Significant Accounting Policies (continued)
retention of the collateral may be subject to legal proceedings. At May 31, 2019, the Fund held no investments in repurchase agreements.
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 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 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
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on theex-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 mortgage-backed securities are classified as interest income. Distributions received from investments in real estate investment trusts (REITs) are recorded as dividend income on theex-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 theex-dividend date or as soon after theex-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 theex-dividend date.
The Fund receives earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. The expenses paid under this arrangement are included on the “Statement of operations” under “Custodian fees” with the corresponding expenses offset included under “Less expenses paid indirectly.” For the six months ended May 31, 2019, the Fund earned $4,460 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 expenses paid under this arrangement are included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses” with the corresponding expenses offset included under “Less expenses paid indirectly.” For the six months ended May 31, 2019, the Fund earned $399 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 rates 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 rates: 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. This amount is included on the “Statement of operations” under “Accounting and administration expenses.” For the six months ended May 31, 2019, the Fund was charged $12,470 for these services.
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Notes to financial statements
Delaware Wealth Builder Fund
2. Investment Management, Administration Agreements, and Other Transactions with Affiliates (continued)
DIFSC is also the transfer agent and dividend disbursing agent of the Fund. For these services, DIFSC’s fees were calculated daily and paid monthly based on the aggregate daily net assets of the retail funds within the Delaware Funds at the following annual rates: 0.014% of the first $20 billion; 0.011% of the next $5 billion; 0.007% of the next $5 billion; 0.005% of the next $20 billion; and 0.0025% of average daily net assets in excess of $50 billion. The fees payable to DIFSC under the shareholder services 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, 2019, the Fund was charged $27,504 for these services.
Pursuant to asub-transfer agency agreement between DIFSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certainsub-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.” The fees are calculated daily and paid as invoices are received on a monthly or quarterly basis.
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual12b-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 do not pay12b-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, 2019, the Fund was charged $9,326 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, 2019, DDLP earned $11,397 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2019, DDLP received gross CDSC commissions of $350 and $1,024 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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3. Investments
For the six months ended May 31, 2019, 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 | $ | 182,009,613 | ||
Purchases of US government securities | 11,461,575 | |||
Sales other than US government securities | 262,399,723 | |||
Sales of US government securities | 12,723,091 |
At May 31, 2019, the cost and unrealized appreciation (depreciation) of investments and derivatives for federal income tax purposes have been estimated since final tax characteristics cannot be determined until fiscal year end. At May 31, 2019, the cost and unrealized appreciation (depreciation) of investments and derivatives for the Fund were as follows:
Cost of investments and derivatives | $ | 516,462,560 | ||
|
| |||
Aggregate unrealized appreciation of investments and derivatives | $ | 25,967,813 | ||
Aggregate unrealized depreciation of investments and derivatives | (31,536,838 | ) | ||
|
| |||
Net unrealized depreciation of investments and derivatives | $ | (5,569,025 | ) | |
|
|
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 on the next page.
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Notes to financial statements
Delaware Wealth Builder Fund
3. Investments (continued)
Level 1 – | Inputs are quoted prices in active markets for identical investments. (Examples: equity securities,open-end investment companies, futures contracts, exchange-traded options contracts) | |
Level 2 – | Other observable inputs, including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, and default rates) or other market-corroborated inputs. (Examples: debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities) | |
Level 3 – | Significant unobservable inputs, including the Fund’s own assumptions used to determine the fair value of investments. (Examples: broker-quoted securities, fair valued securities) |
Level 3 investments are valued using significant unobservable inputs. The Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity, and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.
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The table below and on the following page summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of May 31, 2019:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Securities | ||||||||||||||||
Assets: | ||||||||||||||||
Common Stock | ||||||||||||||||
Communication Services | $14,427,455 | $ | 1,355,675 | $ | — | $ | 15,783,130 | |||||||||
Consumer Discretionary | 17,008,878 | 4,502,179 | — | 21,511,057 | ||||||||||||
Consumer Staples | 18,278,285 | 4,020,685 | — | 22,298,970 | ||||||||||||
Diversified REITs | 5,613,507 | — | — | 5,613,507 | ||||||||||||
Energy | 24,583,371 | — | — | 24,583,371 | ||||||||||||
Financials | 25,371,806 | — | — | 25,371,806 | ||||||||||||
Healthcare | 43,767,345 | 3,297,676 | — | 47,065,021 | ||||||||||||
Healthcare REITs | 7,466,064 | — | — | 7,466,064 | ||||||||||||
Hotel REITs | 676,500 | — | — | 676,500 | ||||||||||||
Industrial REITs | 1,579,357 | — | — | 1,579,357 | ||||||||||||
Industrials | 15,922,265 | 3,366,220 | — | 19,288,485 | ||||||||||||
Information Technology | 22,667,743 | — | — | 22,667,743 | ||||||||||||
Mall REITs | 1,653,804 | — | — | 1,653,804 | ||||||||||||
Manufactured Housing REITs | 1,980,409 | — | — | 1,980,409 | ||||||||||||
Materials | 5,008,223 | 890,523 | — | 5,898,746 | ||||||||||||
Mortgage REIT | 1,032,532 | — | — | 1,032,532 | ||||||||||||
Multifamily REITs | 15,600,509 | — | — | 15,600,509 | ||||||||||||
Office REITs | 1,133,140 | — | — | 1,133,140 | ||||||||||||
Real Estate Operating/Development | 2,640,284 | — | — | 2,640,284 | ||||||||||||
Self-Storage REITs | 107,160 | — | — | 107,160 | ||||||||||||
Shopping Center REITs | 853,202 | — | — | 853,202 | ||||||||||||
Single Tenant REITs | 2,919,106 | — | — | 2,919,106 | ||||||||||||
Specialty REITs | 4,438,243 | — | — | 4,438,243 | ||||||||||||
Utilities | 9,177,054 | — | — | 9,177,054 | ||||||||||||
Exchange-Traded Funds | 8,796,595 | — | — | 8,796,595 | ||||||||||||
Limited Partnerships | — | — | 7,789,703 | 7,789,703 | ||||||||||||
Convertible Preferred Stock1 | 5,015,029 | 3,564,326 | — | 8,579,355 | ||||||||||||
Corporate Debt | — | 141,444,846 | — | 141,444,846 | ||||||||||||
LeveragedNon-Recourse Security | — | — | — | — | ||||||||||||
Municipal Bonds | — | 34,923,325 | — | 34,923,325 | ||||||||||||
Non-Agency Commercial Mortgage-Backed Security | — | 529,619 | — | 529,619 | ||||||||||||
Foreign Debt | — | 5,579,929 | — | 5,579,929 | ||||||||||||
US Treasury Obligations | — | 1,352,530 | — | 1,352,530 | ||||||||||||
Preferred Stock1 | 4,578,342 | 494,000 | — | 5,072,342 |
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Notes to financial statements
Delaware Wealth Builder Fund
3. Investments (continued)
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Closed End Fund | $ | 3,371,148 | $ | — | $ | — | $ | 3,371,148 | ||||||||
Short-Term Investments | 32,426,497 | — | — | 32,426,497 | ||||||||||||
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| |||||||||
Total Value of Securities Before Options Written | $ | 298,093,853 | $ | 205,321,533 | $ | 7,789,703 | $ | 511,205,089 | ||||||||
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| |||||||||
Liabilities: | ||||||||||||||||
Derivatives2 | ||||||||||||||||
Assets: | ||||||||||||||||
Futures Contracts | $ | 139,271 | $ | — | $ | — | $ | 139,271 | ||||||||
Swap Contract | — | 70,607 | — | 70,607 |
1Security type is valued across multiple levels. Level 1 investments represent exchange-traded investments, Level 2 investments represent investments with observable inputs or matrix-priced 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 value of these security types:
Level 1 | Level 2 | Total | ||||||||||
Convertible Preferred Stock | 58.45 | % | 41.55 | % | 100.00 | % | ||||||
Preferred Stock | 90.26 | % | 9.74 | % | 100.00 | % |
2Futures 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, 2019, 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.
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A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim, or end of the period in relation to the Fund’s net assets.
Limited Partnerships | Loan Agreements | Total | ||||||||||
Beginning balance Nov. 30, 2018 | $ 9,669,138 | $ 20,183 | $ 9,689,321 | |||||||||
Purchases | 65,566 | — | 65,566 | |||||||||
Sales | — | (20,183) | (20,183 | ) | ||||||||
Amortization | (2,013,914 | ) | — | (2,013,914 | ) | |||||||
Net change in unrealized appreciation (depreciation) | 68,913 | — | 68,913 | |||||||||
Ending balance May 31, 2019 | $ 7,789,703 | $ — | $ 7,789,703 | |||||||||
Net change in unrealized appreciation from investments still held at the end of the period | $ 68,913 | $ — | $ 68,913 |
When market quotations are not readily available for one or more portfolio securities, the Fund’s NAV shall be calculated by using the “fair value” of the securities as determined by the Pricing Committee. Such “fair value” is the amount that the Fund might reasonably expect to receive for the security (or asset) upon its current sale. Each such determination should be based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. Examples of such factors may include, but are not limited to: (i) the type of security, (ii) the size of the holding, (iii) the initial cost of the security, (iv) the existence of any contractual restrictions of the security’s disposition, (v) the price and extent of public trading in similar securities of the issuer or of comparable companies, (vi) quotations or evaluated prices from broker/dealers and/or pricing services, (vii) information obtained from the issuer, analysts, and/or appropriate stock exchange (for exchange-traded securities), (viii) an analysis of the company’s financial statements, and (ix) an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
The Pricing Committee, or its delegate, employs various methods for calibrating these valuation approaches, including due diligence of the Fund’s pricing vendors and periodic back-testing of the prices that are fair valued under these procedures and reviews of any market related activity. The pricing of all securities fair valued by the Pricing Committee is subsequently reported to and approved by the Board on a quarterly basis.
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Notes to financial statements
Delaware Wealth Builder Fund
3. Investments (continued)
Quantitative information about Level 3 fair value measurements for the Fund are as follows:
Assets | Value | Valuation | Unobservable | |||||||||
Limited Partnership | $1,508,303 | Market cap rate method | Trailing 12 months NOI, adjusted for assets and liabilities; liquidity discount | |||||||||
Limited Partnership | 6,281,400 | Acquisition price | Acquisition price adjusted for liquidity discount | |||||||||
Total | $7,789,703 |
A significant change to the inputs may result in a significant change to the valuation.
4. Capital Shares
Transactions in capital shares were as follows:
Six months ended | Year ended | |||||||
5/31/19 | 11/30/18 | |||||||
Shares sold: | ||||||||
Class A | 782,043 | 4,082,871 | ||||||
Class C | 321,513 | 414,960 | ||||||
Class R | 8,459 | 51,084 | ||||||
Institutional Class | 1,100,402 | 3,412,530 | ||||||
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 | 1,438,706 | 494,157 | ||||||
Class C | 677,859 | 234,968 | ||||||
Class R | 10,744 | 5,054 | ||||||
Institutional Class | 932,237 | 360,758 | ||||||
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| |||||
5,271,963 | 12,586,128 | |||||||
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Six months ended | Year ended | |||||||
5/31/19 | 11/30/18 | |||||||
Shares redeemed: | ||||||||
Class A | (2,840,685 | ) | (5,120,956 | ) | ||||
Class C | (2,081,069 | ) | (7,087,765 | ) | ||||
Class R | (28,437 | ) | (206,501 | ) | ||||
Institutional Class | (3,162,308 | ) | (4,741,179 | ) | ||||
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|
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| |||||
(8,112,499 | ) | (17,156,401 | ) | |||||
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|
|
| |||||
Net decrease | (2,840,536 | ) | (4,570,273 | ) | ||||
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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 tables on the previous page and on the “Statements of changes in net assets.” For the six months ended May 31, 2019 and year ended Nov. 30, 2018, the Fund had the following exchange transactions:
Exchange Redemptions | Exchange Subscriptions | |||||||||||||||||||
Institutional | ||||||||||||||||||||
Class A | Class C | Class A | Class | |||||||||||||||||
Shares | Shares | Shares | Shares | Value | ||||||||||||||||
Six months ended 5/31/19 | 7,323 | 26,314 | 18,794 | 14,884 | $ | 451,488 | ||||||||||||||
Year ended 11/30/18 | 27,361 | 374,773 | 298,584 | 106,942 | 5,847,175 |
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”), anopen-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 table on the next page.
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Notes to financial statements
Delaware Wealth Builder Fund
5. Fund Merger (continued)
�� | 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.
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 Nov 30, 2018, would have been as follows (unaudited):
Net investment income | $ | 15,806,818 | (a) | |
Net realized gain | 36,664,200 | (b) | ||
Net change in unrealized appreciation (depreciation) | (50,776,959 | ) (c) | ||
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| |||
Net increase in net assets resulting from operations | $ | 1,694,059 | ||
|
|
(a)$15,203,067, as reported in the “Statement of operations,” plus $603,751 net investment income from Delaware Foundation® Growth Allocation Fundpre-merger.
(b)$32,211,435, as reported in the “Statement of operations,” plus $4,452,765 net realized gain from Delaware Foundation Growth Allocation Fundpre-merger.
(c)$(51,994,176), as reported in the “Statement of operations,” plus $1,217,217 net change in unrealized appreciation (depreciation) from Delaware Foundation Growth Allocation Fundpre-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 $220,000,000 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 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 ofone-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. 4, 2019.
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The Fund had no amounts outstanding as of May 31, 2019, 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 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, 2019, the Fund entered into foreign currency exchange contracts to hedge the U.S. dollar value of securities it already owns that are denominated in foreign currencies.
Futures Contracts— A futures contract is an agreement in which the writer (or seller) of the contract agrees to deliver to the buyer an amount of cash or securities equal to a specific dollar amount times the difference between the value of a specific security or index at the close of the last trading day of the contract and the price at which the agreement is made. The Fund may use futures 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
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Notes to financial statements
Delaware Wealth Builder Fund
7. Derivatives (continued)
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, 2019, the Fund posted $400,000 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, 2019, the Fund used futures contracts to hedge the Fund’s existing portfolio securities against fluctuations in value caused by changes in interest rates or market conditions.
Options Contracts— 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 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, 2019.
During the six months ended May 31, 2019, the Fund used options contracts to manage the Fund’s exposure to changes in securities prices caused by interest rates or market conditions.
Swap Contracts— The Fund may enter into CDS contracts in the normal course of pursuing its investment objective. The Fund may enter into CDS contracts in order to hedge against a credit event, to enhance total return or to gain exposure to certain securities or markets. The Fund will not be permitted to enter into any swap transactions unless, at the time of entering into such transactions, the unsecured long-term debt of the actual counterparty, combined with any credit enhancements, is rated at leastBBB- 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
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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, 2019, 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 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, 2019, 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, 2019, 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, 2019, the Fund posted $787,559 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.”
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Notes to financial statements
Delaware Wealth Builder Fund
7. Derivatives (continued)
Fair values of derivative instruments as of May 31, 2019 were as follows:
Asset Derivatives Fair Value | ||||||||||||||||
Statement of Assets and Liabilities Location | Equity Contracts | Credit Contracts | Total | |||||||||||||
Variation margin due from broker on centrally cleared credit default swap contracts | $ | — | $ | 70,607 | $ | 70,607 | ||||||||||
Variation margin due from broker on futures contracts* | 139,271 | — | 139,271 | |||||||||||||
|
|
|
|
|
| |||||||||||
Total | $ | 139,271 | $ | 70,607 | $ | 209,878 | ||||||||||
|
|
|
|
|
|
*Includes cumulative appreciation/depreciation of futures contracts from the date the contracts were opened through May 31, 2019. 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, 2019 was as follows:
Net Realized Gain (Loss) on: | ||||||||||||||||||||
Foreign | Futures Contracts | Options | Swap | Total | ||||||||||||||||
Currency contracts | $ | (4,741 | ) | $ | — | $ | — | $ | — | $ | (4,741) | |||||||||
Equity contracts | — | (238,870 | ) | 1,301,809 | — | 1,062,939 | ||||||||||||||
Credit contracts | — | — | — | 150,033 | 150,033 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | (4,741 | ) | $ | (238,870 | ) | $ | 1,301,809 | $ | 150,033 | $ | 1,208,231 | ||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net Change in Unrealized Appreciation (Depreciation) of: | ||||||||||||||||||||
Foreign | Futures | Swap | Total | |||||||||||||||||
Currency contracts | $24 | $ — | $— | $ 24 | ||||||||||||||||
Equity contracts | — | 105,787 | — | 105,787 | ||||||||||||||||
Credit contracts | — | — | (87) | (87) | ||||||||||||||||
Total | $24 | $105,787 | $(87) | $105,724 |
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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, 2019.
Long Derivatives Volume | Short Derivatives Volume | |||||||
Foreign currency exchange contracts (average cost) | $ | 196,990 | $ | 285,607 | ||||
Futures contracts (average notional value) | 464,229 | 8,219,160 | ||||||
Options contracts (average notional value) | — | 92,055 | ||||||
CDS contracts (average notional value)* | 3,808,871 | — |
*Long represents buying protection and short represents selling protection.
8. 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 of the Trust 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
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Notes to financial statements
Delaware Wealth Builder Fund
8. Securities Lending (continued)
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 bynon-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, 2019, the Fund had no securities out on loan.
9. Credit and Market Risk
When interest rates rise, fixed income securities (i.e. debt obligations) generally will decline in value. These declines in value are greater for fixed income securities with longer maturities or durations.
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 thanBBB- 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, 2019. 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
9. 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 theday-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.
10. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
11. Recent Accounting Pronouncements
In March 2017, the FASB issued an Accounting Standards Update (ASU), ASU2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic310-20), Premium Amortization on Purchased Callable Debt Securities which amends the amortization period for certain callable debt securities purchased at a premium, shortening such period to the earliest call date. The ASU2017-08 does not require any accounting change for debt securities held at a discount; the discount continues to be amortized to maturity. The ASU2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2018. At this time, management is evaluating the implications of these changes on the financial statements.
In August 2018, the FASB issued an ASU2018-13, which changes certain fair value measurement disclosure requirements. The ASU2018-13, in addition to other modifications and additions, removes the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation process for Level 3
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fair value measurements. The ASU2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2019. At this time, management is evaluating the implications of these changes on the financial statements.
12. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to May 31, 2019, that would require recognition or disclosure in the Fund’s financial statements.
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Other Fund information (Unaudited)
Delaware Wealth Builder Fund
Board consideration ofsub-advisory agreements for Delaware Wealth Builder Fund at a meeting
held February27-28, 2019
At a meeting held on Feb.27-28, 2019, the Board of Trustees (the “Board”) of Delaware Wealth Builder Fund (the “Fund”), including a majority ofnon-interested or independent Trustees (the “Independent Trustees”), approved newSub-Advisory Agreements between Delaware Management Company (“DMC” or “Management”) and Macquarie Investment Management Europe Limited (“MIMEL”), Macquarie Investment Management Austria Kapitalanlage (“MIMAK”), and Macquarie Investment Management Global Limited (“MIMGL”), respectively. MIMEL, MIMAK, and MIMGL may also be referenced as“sub-advisors” below.
In reaching the decision to approve theSub-Advisory Agreements, the Board considered and reviewed information about each of MIMEL, MIMAK, and MIMGL, including its personnel, operations, and financial condition, which had been provided by MIMEL, MIMAK, and MIMGL, respectively. The Board also reviewed material furnished by DMC in advance of the meeting, including: a memorandum from DMC reviewing theSub-Advisory Agreements and the various services proposed to be rendered by MIMEL, MIMAK, and MIMGL; information concerning MIMEL’s, MIMAK’s, and MIMGL’s organizational structure and the experience of their key investment management personnel; copies of MIMEL’s, MIMAK’s, and MIMGL’s Form ADV, financial statements, compliance policies and procedures, and Codes of Ethics; relevant performance information provided with respect to MIMEL, MIMAK, and MIMGL; and a copy of theSub-Advisory Agreements.
In considering such information and materials, the Independent Trustees received assistance and advice from and met separately with their independent counsel. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s decision to approve theSub-Advisory Agreements. 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, extent, and quality of services. In considering the nature, extent, and quality of the services to be provided by thesub-advisors, the Board reviewed the services to be provided by eachsub-advisor pursuant to eachSub-Advisory Agreement and as described at the meeting. The Board reviewed materials provided by thesub-advisors regarding the experience and qualifications of the personnel who will be responsible for providing services to the Fund. The Board also considered relevant performance information provided with respect to eachsub-advisor. In discussing the nature of the services proposed to be provided by thesub-advisors, it was observed that, unlike traditionalsub-advisors who make all of the investment-related decisions with respect to asub-advised portfolio, the relationship between DMC (the Fund’s investment manager) and thesub-advisors as currently contemplated is primarily more of a collaborative effort between DMC and thesub-advisors and a cross pollination of investment ideas. The Board further noted the stated intention under the newSub-Advisory Agreements that DMC would have the sole discretion to delegate portions of the implementation of the Fund’s strategy to thesub-advisors, who would be permitted to execute Fund trades and exercise investment discretion pursuant to that delegation and subject to DMC oversight. However, DMC and the Fund’s named portfolio managers will
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continue to retain principal responsibility for the Fund’s strategy and investment process and be primarily responsible for theday-to-day management of the Fund’s portfolio. Based upon these considerations, the Board was satisfied with the nature and quality of the overall services to be provided by thesub-advisors to the Fund and its shareholders and was confident in the abilities of thesub-advisors to provide quality services to the Fund and its shareholders.
Investment performance.In regard to the appointment of thesub-advisors for the Fund, the Board reviewed information on prior performance for thesub-advisors. In evaluating performance, the Board considered that thesub-advisors would provide investment advice and recommendations, including with respect to specific securities, but that DMC’s portfolio managers for the Fund would retain principal responsibility for the Fund’s strategy as described above. In addition, the Board considered that thesub-advisors would also execute Fund security trades on behalf of DMC and be permitted by DMC to exercise investment discretion for securities in certain markets where DMC wanted to utilize asub-advisor’s specialized market knowledge.
Sub-advisory fees.The Board considered that DMC would pay thesub-advisors asub-advisory fee based on the extent to which asub-advisor provides services to the Fund as described in theSub-Advisory Agreements. In considering the appropriateness of thesub-advisory fees, the Board also reviewed and considered the fees in light of the nature, extent, and quality of thesub-advisory services to be provided by eachsub-advisor, as more fully discussed above. The Board noted that thesub-advisory fees are paid by DMC to eachsub-advisor and are not additional fees borne by the Fund, and that the management fee paid by the Fund to DMC would stay the same at current asset levels. The Board was provided with information showing an estimate of thesub-advisory fees to be paid to eachsub-advisor based on a projection ofsub-advisor allocations given certain historical investment trends, as well as information regarding the expected impact thesub-advisory arrangements would have on the profitability of DMC. The Board also noted that, given the collaborative nature of the services to be provided by thesub-advisors to the Fund, there were no comparable accounts and corresponding fees to which thesub-advisors were able to compare this arrangement. The Board concluded that, in light of the quality and extent of the services to be provided and the business relationships between DMC and thesub-advisors, the proposed fee arrangement was understandable and reasonable.
Profitability, economies of scale, and fall out benefits.Information about eachsub-advisor’s profitability from its relationship with the Fund was not available because it had not begun to provide services to the Fund. With regard to potentialfall-out benefits derived or to be derived by thesub-advisors and their affiliates in connection with their relationship to the Fund, the Board considered the potential benefit to DMC and thesub-advisors of marketing a global approach on the portfolio management of their fixed income investment strategies. The Trustees also noted that economies of scale are shared with the Fund and its shareholders through investment management fee breakpoints in DMC’s fee schedule for the Fund so that as the Fund grows in size, its effective investment management fee rate declines.
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Board of trustees | ||||||
Shawn K. Lytle | Ann D. Borowiec | Lucinda S. Landreth | Thomas K. Whitford | |||
President and | Former Chief Executive | Former Chief Investment | Former Vice Chairman | |||
Chief Executive Officer | Officer | Officer | PNC Financial Services Group | |||
Delaware Funds® | Private Wealth Management | Assurant, Inc. | Pittsburgh, PA | |||
by Macquarie | J.P. Morgan Chase & Co. | New York, NY |
Christianna Wood Chief Executive Officer and President | |||
Philadelphia, PA | New York, NY | Frances A. Sevilla-Sacasa | ||||
Thomas L. Bennett | Joseph W. Chow | |||||
Chairman of the Board | Former Executive Vice | Former Chief Executive | Gore Creek Capital, Ltd. | |||
Delaware Funds | President | Officer | Golden, CO | |||
by Macquarie | State Street Corporation | Banco Itaú International | Janet L. Yeomans Former Vice President and Treasurer 3M Company St. Paul, MN | |||
Private Investor | Boston, MA | Miami, FL | ||||
Rosemont, PA
| John A. Fry | |||||
Jerome D. Abernathy | President | |||||
Managing Member | Drexel University | |||||
Stonebrook Capital | Philadelphia, PA | |||||
Management, LLC | ||||||
Jersey City, NJ | ||||||
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 FormN-Q or FormN-PORT (available for filings after March 31, 2019). The Fund’s FormsN-Q or FormsN-PORT, 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 800523-1918; 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 FormN-Q or FormN-PORT are available without charge on the Fund’s website at delawarefunds.com/literature. The Fund’s FormsN-Q and FormsN-PORT 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 800SEC-0330.
Information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recently disclosed12-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.
66
Table of Contents
Semiannual report
US equity mutual fund
Delaware Small Cap Core Fund
May 31, 2019
Beginning on or about June 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of your Fund’s shareholder reports will no longer be sent to you by mail, unless you specifically request them from the Fund or from your financial intermediary, such as a broker/dealer, bank, or insurance company. Instead, you will be notified by mail each time a report is posted on the website and provided with a link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you do not need to take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by signing up at delawarefunds.com/edelivery. If you own these shares through a financial intermediary, you may contact your financial intermediary.
You may elect to receive paper copies of all future shareholder reports free of charge. You can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by contacting us at 800523-1918. If you own these shares through a financial intermediary, you may contact your financial intermediary to elect to continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with the Delaware Funds® by Macquarie or your financial intermediary.
|
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 800523-1918. 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. As active managers, we prioritize autonomy and accountability at the investment team level in pursuit of opportunities that matter for clients. Delaware Funds is one of the longest-standing mutual fund families, with more than 80 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. MIM is the marketing name for certain companies comprising the asset management division of Macquarie Group. This includes the following 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, Macquarie Capital Investment Management LLC, and Macquarie Investment Management Europe S.A.
The Fund is distributed byDelaware 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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34 |
Unless otherwise noted, views expressed herein are current as of May 31, 2019, 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.
© 2019 Macquarie Management Holdings, Inc.
Table of Contents
For thesix-month period from December 1, 2018 to May 31, 2019 (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 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 entiresix-month period from Dec. 1, 2018 to May 31, 2019.
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 and assume reinvestment of all dividends and distributions.
1
Table of Contents
Disclosure of Fund expenses
For thesix-month period from December 1, 2018 to May 31, 2019 (Unaudited)
Delaware Small Cap Core Fund
Expense analysis of an investment of $1,000
Beginning Account Value 12/1/18 | Ending Account Value 5/31/19 | Annualized Expense Ratio | Expenses Paid During Period 12/1/18 to 5/31/19* | |||||||||||||
| ||||||||||||||||
Actual Fund return† | ||||||||||||||||
Class A | $1,000.00 | $957.10 | 1.10% | $5.37 | ||||||||||||
Class C | 1,000.00 | 953.10 | 1.85% | 9.01 | ||||||||||||
Class R | 1,000.00 | 955.60 | 1.35% | 6.58 | ||||||||||||
Institutional Class | 1,000.00 | 958.10 | 0.85% | 4.15 | ||||||||||||
Class R6 | 1,000.00 | 958.60 | 0.72% | 3.52 | ||||||||||||
Hypothetical 5% return(5% return before expenses) |
| |||||||||||||||
Class A | $1,000.00 | $1,019.45 | 1.10% | $5.54 | ||||||||||||
Class C | 1,000.00 | 1,015.71 | 1.85% | 9.30 | ||||||||||||
Class R | 1,000.00 | 1,018.20 | 1.35% | 6.79 | ||||||||||||
Institutional Class | 1,000.00 | 1,020.69 | 0.85% | 4.28 | ||||||||||||
Class R6 | 1,000.00 | 1,021.34 | 0.72% | 3.63 |
*“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 theone-half year period).
†Because actual returns reflect only the most recentsix-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 (Underlying Funds) in which it invests. 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 Core Fund | As of May 31, 2019 (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 | 97.72 | % | |||
Basic Materials | 7.18 | % | |||
Business Services | 5.53 | % | |||
Capital Goods | 9.99 | % | |||
Communications Services | 1.64 | % | |||
Consumer Discretionary | 3.93 | % | |||
Consumer Services | 2.40 | % | |||
Consumer Staples | 1.96 | % | |||
Credit Cyclicals | 0.30 | % | |||
Energy | 2.04 | % | |||
Financials | 17.43 | % | |||
Healthcare | 15.33 | % | |||
Information Technology | 15.88 | % | |||
Media | 0.46 | % | |||
Real Estate Investment Trusts | 8.39 | % | |||
Transportation | 0.48 | % | |||
Utilities | 4.78 | % | |||
Short-Term Investments | 3.15 | % | |||
Total Value of Securities | 100.87 | % | |||
Liabilities Net of Receivables and Other Assets | (0.87 | %) | |||
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 | ||||
Q2 Holdings | 1.73 | % | |||
Spire | 1.68 | % | |||
NorthWestern | 1.59 | % | |||
Essent Group | 1.57 | % | |||
South Jersey Industries | 1.51 | % | |||
j2 Global | 1.48 | % | |||
Selective Insurance Group | 1.35 | % | |||
MGIC Investment | 1.35 | % | |||
Repligen | 1.33 | % | |||
WNS Holdings ADR
|
| 1.28
| %
|
3
Table of Contents
Schedule of investments | ||
Delaware Small Cap Core Fund | May 31, 2019 (Unaudited) |
Number of shares | Value (US $) | |||||||
| ||||||||
Common Stock – 97.72% | ||||||||
| ||||||||
Basic Materials – 7.18% | ||||||||
Balchem | 291,986 | $ | 26,480,210 | |||||
Boise Cascade | 1,400,637 | 31,094,141 | ||||||
Coeur Mining † | 3,961,240 | 11,249,922 | ||||||
Continental Building Products † | 1,853,080 | 42,287,286 | ||||||
Kaiser Aluminum | 496,962 | 44,289,253 | ||||||
Minerals Technologies | 835,043 | 43,405,535 | ||||||
Neenah | 741,120 | 42,362,419 | ||||||
Quaker Chemical | 199,820 | 36,139,445 | ||||||
Worthington Industries | 1,169,173 | 39,915,566 | ||||||
|
| |||||||
317,223,777 | ||||||||
|
| |||||||
Business Services – 5.53% | ||||||||
ABM Industries | 1,153,882 | 41,828,223 | ||||||
ASGN † | 593,101 | 30,088,014 | ||||||
BrightView Holdings † | 1,263,809 | 21,118,248 | ||||||
Casella Waste Systems Class A † | 1,159,254 | 44,886,315 | ||||||
Kforce | 271,841 | 9,446,475 | ||||||
Navigant Consulting | 1,300,002 | 28,600,044 | ||||||
US Ecology | 645,226 | 38,403,852 | ||||||
WageWorks † | 596,810 | 29,822,596 | ||||||
|
| |||||||
244,193,767 | ||||||||
|
| |||||||
Capital Goods – 9.99% | ||||||||
Applied Industrial Technologies | 693,733 | 37,690,514 | ||||||
Barnes Group | 581,855 | 30,093,541 | ||||||
Belden | 513,984 | 26,315,981 | ||||||
Columbus McKinnon | 1,300,735 | 47,164,651 | ||||||
ESCO Technologies | 480,785 | 33,602,064 | ||||||
Federal Signal | 1,931,443 | 46,142,173 | ||||||
Granite Construction | 874,946 | 35,164,080 | ||||||
Kadant | 503,555 | 40,878,595 | ||||||
MasTec † | 628,105 | 29,200,601 | ||||||
MYR Group † | 1,018,398 | 32,884,071 | ||||||
Tetra Tech | 833,401 | 56,271,236 | ||||||
Woodward | 240,140 | 26,156,049 | ||||||
|
| |||||||
441,563,556 | ||||||||
|
| |||||||
Communications Services – 1.64% | ||||||||
ATN International | 422,504 | 24,716,484 | ||||||
InterXion Holding † | 645,923 | 47,610,984 | ||||||
|
| |||||||
72,327,468 | ||||||||
|
| |||||||
Consumer Discretionary – 3.93% | ||||||||
American Eagle Outfitters | 2,425,944 | 42,211,426 | ||||||
Five Below † | 349,130 | 44,943,505 |
4
Table of Contents
Number of shares | Value (US $) | |||||||
| ||||||||
Common Stock(continued) | ||||||||
| ||||||||
Consumer Discretionary(continued) | ||||||||
Malibu Boats Class A † | 852,093 | $ | 30,590,139 | |||||
Steven Madden | 1,854,536 | 56,118,259 | ||||||
|
| |||||||
173,863,329 | ||||||||
|
| |||||||
Consumer Services – 2.40% | ||||||||
Cheesecake Factory | 830,722 | 35,928,727 | ||||||
Chuy’s Holdings † | 537,335 | 11,885,850 | ||||||
Hawaiian Holdings | 620,393 | 15,497,417 | ||||||
Jack in the Box | 513,092 | 42,689,254 | ||||||
|
| |||||||
106,001,248 | ||||||||
|
| |||||||
Consumer Staples – 1.96% | ||||||||
J&J Snack Foods | 301,268 | 48,458,958 | ||||||
Prestige Consumer Healthcare † | 1,315,799 | 38,197,645 | ||||||
|
| |||||||
86,656,603 | ||||||||
|
| |||||||
Credit Cyclicals – 0.30% | ||||||||
Tenneco Class A | 1,314,992 | 13,071,020 | ||||||
|
| |||||||
13,071,020 | ||||||||
|
| |||||||
Energy – 2.04% | ||||||||
Carrizo Oil & Gas † | 2,801,794 | 28,522,263 | ||||||
Keane Group † | 2,616,559 | 19,205,543 | ||||||
KLX Energy Services Holdings † | 374,899 | 7,385,510 | ||||||
Patterson-UTI Energy | 1,758,668 | 18,694,641 | ||||||
SRC Energy † | 1,739,030 | 8,243,002 | ||||||
US Silica Holdings | 764,048 | 7,930,818 | ||||||
|
| |||||||
89,981,777 | ||||||||
|
| |||||||
Financials – 17.43% | ||||||||
American Equity Investment Life Holding | 1,293,150 | 36,609,077 | ||||||
Bryn Mawr Bank | 434,393 | 15,881,408 | ||||||
CenterState Bank | 1,824,362 | 39,935,284 | ||||||
City Holding | 461,464 | 33,709,945 | ||||||
Essent Group † | 1,474,167 | 69,212,141 | ||||||
First Bancorp | 872,726 | 30,903,228 | ||||||
First Financial Bancorp | 1,743,816 | 38,921,973 | ||||||
First Interstate BancSystem Class A | 790,902 | 29,192,193 | ||||||
Great Western Bancorp | 1,426,993 | 44,336,672 | ||||||
Hamilton Lane Class A | 533,807 | 26,241,952 | ||||||
Hope Bancorp | 647,068 | 8,327,765 | ||||||
Independent Bank | 417,232 | 28,935,039 | ||||||
Independent Bank Group | 762,222 | 39,361,144 | ||||||
MGIC Investment † | 4,405,905 | 59,700,013 | ||||||
Old National Bancorp | 2,538,723 | 40,467,245 | ||||||
Primerica | 163,510 | 18,780,759 | ||||||
Selective Insurance Group | 835,339 | 59,852,039 |
5
Table of Contents
Schedule of investments
Delaware Small Cap Core Fund
Number of shares | Value (US $) | |||||||
| ||||||||
Common Stock(continued) | ||||||||
| ||||||||
Financials(continued) | ||||||||
Sterling Bancorp | 579,829 | $ | 11,196,498 | |||||
Stifel Financial | 1,009,821 | 54,156,700 | ||||||
Umpqua Holdings | 717,383 | 11,456,607 | ||||||
United Community Banks | 308,223 | 8,170,992 | ||||||
Valley National Bancorp | 3,107,279 | 30,513,480 | ||||||
WSFS Financial | 869,418 | 34,507,200 | ||||||
|
| |||||||
770,369,354 | ||||||||
|
| |||||||
Healthcare – 15.33% | ||||||||
Adamas Pharmaceuticals † | 1,872,197 | 8,799,326 | ||||||
Array BioPharma † | 1,285,586 | 33,965,182 | ||||||
CONMED | 661,596 | 53,245,246 | ||||||
CryoLife † | 1,244,773 | 35,787,224 | ||||||
Ligand Pharmaceuticals Class B † | 368,855 | 39,607,650 | ||||||
Medicines † | 1,022,576 | 36,454,834 | ||||||
Merit Medical Systems † | 903,809 | 46,663,659 | ||||||
Natera † | 1,825,596 | 41,806,148 | ||||||
NuVasive † | 575,192 | 33,338,128 | ||||||
Puma Biotechnology † | 760,377 | 11,245,976 | ||||||
Quidel † | 825,191 | 45,633,062 | ||||||
Repligen † | 844,081 | 58,638,307 | ||||||
Retrophin † | 2,051,728 | 38,018,520 | ||||||
Spark Therapeutics † | 219,905 | 23,969,645 | ||||||
Spectrum Pharmaceuticals † | 2,262,385 | 16,651,154 | ||||||
Supernus Pharmaceuticals † | 761,153 | 22,857,425 | ||||||
Tabula Rasa HealthCare † | 497,692 | 22,480,748 | ||||||
Ultragenyx Pharmaceutical † | 486,726 | 26,735,859 | ||||||
Vanda Pharmaceuticals † | 2,001,142 | 29,376,765 | ||||||
Wright Medical Group † | 1,705,204 | 52,383,867 | ||||||
|
| |||||||
677,658,725 | ||||||||
|
| |||||||
Information Technology – 15.88% | ||||||||
Anixter International † | 507,409 | 27,075,344 | ||||||
Arlo Technologies † | 78,022 | 267,615 | ||||||
Blackbaud | 207,140 | 15,933,209 | ||||||
Brooks Automation | 1,485,810 | 52,731,397 | ||||||
ExlService Holdings † | 799,565 | 47,382,222 | ||||||
II-VI † | 1,285,343 | 40,398,330 | ||||||
j2 Global | 776,621 | 65,461,384 | ||||||
LendingTree † | 94,475 | 35,498,037 | ||||||
MACOM Technology Solutions Holdings † | 317,189 | 4,488,224 | ||||||
MaxLinear † | 1,664,642 | 35,240,471 | ||||||
Mimecast † | 477,469 | 21,677,093 |
6
Table of Contents
Number of shares | Value (US $) | |||||||
| ||||||||
Common Stock(continued) | ||||||||
| ||||||||
Information Technology(continued) | ||||||||
NETGEAR † | 684,187 | $ | 17,241,512 | |||||
Paylocity Holding † | 316,616 | 31,731,256 | ||||||
Plantronics | 584,722 | 24,014,533 | ||||||
Proofpoint † | 63,100 | 7,089,916 | ||||||
Q2 Holdings † | 1,044,390 | 76,491,124 | ||||||
Rapid7 † | 721,243 | 37,684,947 | ||||||
Semtech † | 952,122 | 37,923,019 | ||||||
Silicon Laboratories † | 409,427 | 38,310,084 | ||||||
SYNNEX | 70,527 | 6,115,396 | ||||||
WNS Holdings ADR † | 1,024,440 | 56,692,510 | ||||||
Yelp † | 725,395 | 22,291,388 | ||||||
|
| |||||||
701,739,011 | ||||||||
|
| |||||||
Media – 0.46% | ||||||||
Nexstar Media Group Class A | 201,960 | 20,226,294 | ||||||
|
| |||||||
20,226,294 | ||||||||
|
| |||||||
Real Estate Investment Trusts – 8.39% | ||||||||
American Assets Trust | 268,016 | 12,165,246 | ||||||
Armada Hoffler Properties | 1,431,189 | 23,614,619 | ||||||
Cousins Properties | 4,059,703 | 36,740,312 | ||||||
EastGroup Properties | 471,800 | 52,369,800 | ||||||
First Industrial Realty Trust | 1,505,976 | 52,272,427 | ||||||
Kite Realty Group Trust | 2,924,087 | 44,446,122 | ||||||
Mack-Cali Realty | 1,671,273 | 37,971,323 | ||||||
Pebblebrook Hotel Trust | 1,295,068 | 36,041,742 | ||||||
Physicians Realty Trust | 1,648,285 | 30,180,098 | ||||||
RPT Realty | 3,703,536 | 45,072,033 | ||||||
|
| |||||||
370,873,722 | ||||||||
|
| |||||||
Transportation – 0.48% | ||||||||
Hub Group Class A † | 548,015 | 21,350,664 | ||||||
|
| |||||||
21,350,664 | ||||||||
|
| |||||||
Utilities – 4.78% | ||||||||
NorthWestern | 988,595 | 70,130,929 | ||||||
South Jersey Industries | 2,108,698 | 66,529,422 | ||||||
Spire | 893,476 | 74,444,420 | ||||||
|
| |||||||
211,104,771 | ||||||||
|
| |||||||
Total Common Stock(cost $4,503,311,892) | 4,318,205,086 | |||||||
|
|
7
Table of Contents
Schedule of investments
Delaware Small Cap Core Fund
Number of shares | Value (US $) | |||||||
| ||||||||
Short-Term Investments – 3.15% | ||||||||
| ||||||||
Money Market Mutual Funds – 3.15% | ||||||||
BlackRock FedFund – Institutional Shares(seven-day effective yield 2.30%) | 27,835,427 | $ | 27,824,575 | |||||
Fidelity Investments Money Market Government Portfolio - Class I(seven-day effective yield 2.27%) | 27,835,427 | 27,824,518 | ||||||
GS Financial Square Government Fund – Institutional Shares(seven-day effective yield 2.30%) | 27,835,427 | 27,824,542 | ||||||
Morgan Stanley Government Portfolio – Institutional Share Class(seven-day effective yield 2.29%) | 27,835,427 | 27,824,610 | ||||||
State Street Institutional US Government Money Market Fund – Investor Class(seven-day effective yield 2.24%) | 27,835,427 | 27,824,278 | ||||||
|
| |||||||
Total Short-Term Investments(cost $139,122,523) | 139,122,523 | |||||||
|
| |||||||
Total Value of Securities – 100.87% | $ | 4,457,327,609 | ||||||
|
|
† | Non-income producing security. |
Summary of Abbreviations:
ADR – American Depositary Receipt
GS – Goldman Sachs
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, 2019 (Unaudited) |
Assets: | ||||
Investments, at value1 | $ | 4,457,327,609 | ||
Receivable for fund shares sold | 10,429,441 | |||
Receivable for securities sold | 6,089,479 | |||
Dividends and interest receivable | 2,790,850 | |||
|
| |||
Total assets | 4,476,637,379 | |||
|
| |||
Liabilities: | ||||
Payable for securities purchased | 47,122,915 | |||
Payable for fund shares redeemed | 6,841,002 | |||
Investment management fees payable to affiliates | 2,529,653 | |||
Other accrued expenses | 912,400 | |||
Distribution fees payable to affiliates | 195,167 | |||
Dividend disbursing and transfer agent fees and expenses payable to affiliates | 38,798 | |||
Trustees’ fees and expenses payable to affiliates | 37,560 | |||
Accounting and administration expenses payable to affiliates | 15,192 | |||
Legal fees payable to affiliates | 6,710 | |||
Reports and statements to shareholders expenses payable to affiliates | 4,378 | |||
|
| |||
Total liabilities | 57,703,775 | |||
|
| |||
Total Net Assets | $ | 4,418,933,604 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 4,622,012,933 | ||
Total distributable earnings (loss) | (203,079,329 | ) | ||
|
| |||
Total Net Assets | $ | 4,418,933,604 | ||
|
|
9
Table of Contents
Statement of assets and liabilities
Delaware Small Cap Core Fund
Net Asset Value | ||||
Class A: | ||||
Net assets | $ | 257,451,069 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 12,499,361 | |||
Net asset value per share | $ | 20.60 | ||
Sales charge | 5.75 | % | ||
Offering price per share, equal to net asset value per share / (1 – sales charge) | $ | 21.86 | ||
Class C: | ||||
Net assets | $ | 139,448,561 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 7,690,502 | |||
Net asset value per share | $ | 18.13 | ||
Class R: | ||||
Net assets | $ | 25,997,831 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 1,310,075 | |||
Net asset value per share | $ | 19.84 | ||
Institutional Class: | ||||
Net assets | $ | 3,439,486,155 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 162,905,987 | |||
Net asset value per share | $ | 21.11 | ||
Class R6: | ||||
Net assets | $ | 556,549,988 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 26,339,723 | |||
Net asset value per share | $ | 21.13 | ||
1Investments, at cost | $ | 4,642,434,415 |
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, 2019 (Unaudited) |
Investment Income: | ||||
Dividends | $ | 25,169,920 | ||
Interest | 520,810 | |||
|
| |||
25,690,730 | ||||
|
| |||
Expenses: | ||||
Management fees | 13,961,444 | |||
Dividend disbursing and transfer agent fees and expenses | 2,839,469 | |||
Distribution expenses — Class A | 332,919 | |||
Distribution expenses — Class C | 748,309 | |||
Distribution expenses — Class R | 67,840 | |||
Accounting and administration expenses | 409,713 | |||
Reports and statements to shareholders expenses | 297,059 | |||
Registration fees | 222,583 | |||
Trustees’ fees and expenses | 131,300 | |||
Legal fees | 104,103 | |||
Custodian fees | 72,123 | |||
Audit and tax fees | 17,960 | |||
Other | 65,748 | |||
|
| |||
19,270,570 | ||||
Less expenses paid indirectly | (11,925 | ) | ||
|
| |||
Total operating expenses | 19,258,645 | |||
|
| |||
Net Investment Income | 6,432,085 | |||
|
| |||
Net Realized and Unrealized Loss: | ||||
Net realized loss on investments | (11,199,076 | ) | ||
Net change in unrealized appreciation (depreciation) of investments | (184,242,303 | ) | ||
|
| |||
Net Realized and Unrealized Loss | (195,441,379 | ) | ||
|
| |||
Net Decrease in Net Assets Resulting from Operations | $ | (189,009,294 | ) | |
|
|
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 5/31/19 | Year ended 11/30/18 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 6,432,085 | $ | 13,516,669 | ||||
Net realized gain (loss) | (11,199,076 | ) | 343,964,368 | |||||
Net change in unrealized appreciation (depreciation) | (184,242,303 | ) | (438,421,978 | ) | ||||
|
|
|
| |||||
Net decrease in net assets resulting from operations | (189,009,294 | ) | (80,940,941 | ) | ||||
|
|
|
| |||||
Dividends and Distributions to Shareholders from: | ||||||||
Distributable earnings: | ||||||||
Class A | (23,201,283 | ) | (24,118,583 | ) | ||||
Class C | (15,155,451 | ) | (12,756,944 | ) | ||||
Class R | (2,408,871 | ) | (2,553,434 | ) | ||||
Institutional Class | (284,199,890 | ) | (170,782,143 | ) | ||||
Class R6 | (35,356,232 | ) | (3,959,994 | ) | ||||
|
|
|
| |||||
(360,321,727 | ) | (214,171,098 | ) | |||||
|
|
|
| |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 43,658,966 | 122,183,732 | ||||||
Class C | 9,059,820 | 55,673,270 | ||||||
Class R | 2,651,592 | 9,215,190 | ||||||
Institutional Class | 873,277,808 | 2,097,348,975 | ||||||
Class R6 | 219,311,797 | 501,388,246 | ||||||
Net asset value of shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | 22,970,955 | 23,939,317 | ||||||
Class C | 15,002,741 | 12,623,788 | ||||||
Class R | 2,408,397 | 2,553,432 | ||||||
Institutional Class | 234,609,635 | 138,241,898 | ||||||
Class R6 | 33,313,487 | 3,959,994 | ||||||
|
|
|
| |||||
1,456,265,198 | 2,967,127,842 | |||||||
|
|
|
|
12
Table of Contents
Six months ended 5/31/19 (Unaudited) | Year ended 11/30/18 | |||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares redeemed: | ||||||||
Class A | $ | (62,395,699 | ) | $ | (161,013,497 | ) | ||
Class C | (29,641,350 | ) | (40,269,838 | ) | ||||
Class R | (3,629,340 | ) | (14,304,721 | ) | ||||
Institutional Class | (680,391,461 | ) | (819,289,460 | ) | ||||
Class R6 | (61,784,478 | ) | (125,112,319 | ) | ||||
|
|
|
| |||||
(837,842,328 | ) | (1,159,989,835 | ) | |||||
|
|
|
| |||||
Increase in net assets derived from capital share transactions | 618,422,870 | 1,807,138,007 | ||||||
|
|
|
| |||||
Net Increase in Net Assets | 69,091,849 | 1,512,025,968 | ||||||
Net Assets: | ||||||||
Beginning of period | 4,349,841,755 | 2,837,815,787 | ||||||
|
|
|
| |||||
End of period | $ | 4,418,933,604 | $ | 4,349,841,755 | ||||
|
|
|
|
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 income (loss)2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of net investment income (loss) to average net assets |
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 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. |
See accompanying notes, which are an integral part of the financial statements.
14
Table of Contents
Six months ended 5/31/191 | Year ended | |||||||||||||||||||||||||
(Unaudited) | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | |||||||||||||||||||||
|
| |||||||||||||||||||||||||
$ 23.91 | $ | 25.74 | $ | 22.23 | $ | 20.32 | $ | 20.43 | $ | 19.54 | ||||||||||||||||
0.01 | 0.05 | (0.03 | ) | (0.02 | ) | (0.04 | ) | (0.06 | ) | |||||||||||||||||
(1.33 | ) | 0.04 | 3.78 | 2.52 | 1.01 | 1.45 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
(1.32 | ) | 0.09 | 3.75 | 2.50 | 0.97 | 1.39 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
(0.02 | ) | — | — | — | — | — | ||||||||||||||||||||
(1.97 | ) | (1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
(1.99 | ) | (1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
$ 20.60 | $ | 23.91 | $ | 25.74 | $ | 22.23 | $ | 20.32 | $ | 20.43 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
(4.29% | ) | 0.44% | 17.02% | 12.86% | 4.86% | 7.28% | ||||||||||||||||||||
$257,451 | $ | 288,721 | $ | 324,710 | $ | 358,054 | $ | 266,427 | $ | 136,070 | ||||||||||||||||
1.10% | 1.12% | 1.18% | 1.24% | 1.28% | 1.32% | |||||||||||||||||||||
0.09% | 0.19% | (0.12% | ) | (0.09% | ) | (0.22% | ) | (0.30% | ) | |||||||||||||||||
15% | 38% | 54% | 43% | 38% | 30% | |||||||||||||||||||||
|
|
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 (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of net investment loss to average net assets |
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 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. |
See accompanying notes, which are an integral part of the financial statements.
16
Table of Contents
Six months ended 5/31/191 | Year ended | ||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | ||||||||||||||||||||||||||||
$ 21.38 | $ | 23.38 | $ | 20.36 | $ | 18.80 | $ | 19.11 | $ | 18.45 | |||||||||||||||||||||||
(0.06 | ) | (0.13 | ) | (0.19 | ) | (0.15 | ) | (0.18 | ) | (0.19 | ) | ||||||||||||||||||||||
(1.22 | ) | 0.05 | 3.45 | 2.30 | 0.95 | 1.35 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
(1.28 | ) | (0.08 | ) | 3.26 | 2.15 | 0.77 | 1.16 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
(1.97 | ) | (1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
(1.97 | ) | (1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
$ 18.13 | $ | 21.38 | $ | 23.38 | $ | 20.36 | $ | 18.80 | $ | 19.11 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
(4.69% | ) | (0.31% | ) | 16.17% | 12.01% | 4.11% | 6.44% | ||||||||||||||||||||||||||
$139,449 | $ | 168,400 | $ | 154,837 | $ | 126,787 | $ | 99,019 | $ | 51,923 | |||||||||||||||||||||||
1.85% | 1.87% | 1.93% | 1.99% | 2.03% | 2.07% | ||||||||||||||||||||||||||||
(0.66% | ) | (0.56% | ) | (0.87% | ) | (0.84% | ) | (0.97% | ) | (1.05% | ) | ||||||||||||||||||||||
15% | 38% | 54% | 43% | 38% | 30% |
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 (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of net investment loss to average net assets |
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 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. |
See accompanying notes, which are an integral part of the financial statements.
18
Table of Contents
Six months ended 5/31/191 | Year ended | ||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | ||||||||||||||||||||||||||||
$ 23.12 | $ | 25.01 | $ | 21.66 | $ | 19.86 | $ | 20.04 | $ | 19.22 | |||||||||||||||||||||||
(0.02 | ) | (0.02 | ) | (0.08 | ) | (0.06 | ) | (0.09 | ) | (0.11 | ) | ||||||||||||||||||||||
(1.29 | ) | 0.05 | 3.67 | 2.45 | 0.99 | 1.43 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
(1.31 | ) | 0.03 | 3.59 | 2.39 | 0.90 | 1.32 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
(1.97 | ) | (1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
(1.97 | ) | (1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
$ 19.84 | $ | 23.12 | $ | 25.01 | $ | 21.66 | $ | 19.86 | $ | 20.04 | |||||||||||||||||||||||
|
|
|
|
| �� |
|
|
|
| ||||||||||||||||||||||||
(4.44% | ) | 0.19% | 16.73% | 12.60% | 4.60% | 7.03% | |||||||||||||||||||||||||||
$25,998 | $ | 28,138 | $ | 33,112 | $ | 31,416 | $ | 28,178 | $ | 15,833 | |||||||||||||||||||||||
1.35% | 1.37% | 1.43% | 1.49% | 1.53% | 1.57% | ||||||||||||||||||||||||||||
(0.16% | ) | (0.06% | ) | (0.37% | ) | (0.34% | ) | (0.47% | ) | (0.55% | ) | ||||||||||||||||||||||
15% | 38% | 54% | 43% | 38% | 30% |
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 (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of net investment income (loss) to average net assets |
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 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. |
See accompanying notes, which are an integral part of the financial statements.
20
Table of Contents
Six months ended 5/31/191 | Year ended | |||||||||||||||||||||||
(Unaudited) | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | |||||||||||||||||||
$ 24.50 | $ | 26.29 | $ | 22.66 | $ | 20.65 | $ | 20.69 | $ | 19.74 | ||||||||||||||
0.04 | 0.11 | 0.03 | 0.03 | 0.01 | (0.01 | ) | ||||||||||||||||||
(1.37 | ) | 0.05 | 3.86 | 2.57 | 1.03 | 1.46 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
(1.33 | ) | 0.16 | 3.89 | 2.60 | 1.04 | 1.45 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
(0.09 | ) | (0.03 | ) | (0.02 | ) | — | — | — | ||||||||||||||||
(1.97 | ) | (1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
(2.06 | ) | (1.95 | ) | (0.26 | ) | (0.59 | ) | (1.08 | ) | (0.50 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
$ 21.11 | $ | 24.50 | $ | 26.29 | $ | 22.66 | $ | 20.65 | $ | 20.69 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
(4.19% | ) | 0.69% | 17.31% | 13.15% | 5.15% | 7.51% | ||||||||||||||||||
$3,439,486 | $ | 3,451,251 | $ | 2,275,563 | $ | 1,271,533 | $ | 620,220 | $ | 224,771 | ||||||||||||||
0.85% | 0.87% | 0.93% | 0.99% | 1.03% | 1.07% | |||||||||||||||||||
0.34% | 0.44% | 0.13% | 0.16% | 0.03% | (0.05% | ) | ||||||||||||||||||
15% | 38% | 54% | 43% | 38% | 30% | |||||||||||||||||||
|
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:
|
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income3 |
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 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 assets |
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 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 | 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.
22
Table of Contents
Six months ended 5/31/191 | Year ended | 5/2/162 to | ||||||||||||||
(Unaudited) | 11/30/18 | 11/30/17 | 11/30/16 | |||||||||||||
$ 24.54 | $ | 26.32 | $ | 22.68 | $ | 19.09 | ||||||||||
0.05 | 0.15 | 0.06 | 0.03 | |||||||||||||
(1.37 | ) | 0.05 | 3.86 | 3.56 | ||||||||||||
|
|
|
|
|
| |||||||||||
(1.32 | ) | 0.20 | 3.92 | 3.59 | ||||||||||||
|
|
|
|
|
| |||||||||||
(0.12 | ) | (0.06 | ) | (0.04 | ) | — | ||||||||||
(1.97 | ) | (1.92 | ) | (0.24 | ) | — | ||||||||||
|
|
|
|
|
| |||||||||||
(2.09 | ) | (1.98 | ) | (0.28 | ) | — | ||||||||||
|
|
|
|
|
| |||||||||||
$ 21.13 | $ | 24.54 | $ | 26.32 | $ | 22.68 | ||||||||||
|
|
|
|
|
| |||||||||||
(4.14% | ) | 0.86% | 17.45% | 18.81% | ||||||||||||
$556,550 | $ | 413,332 | $ | 49,594 | $ | 2 | ||||||||||
0.72% | 0.74% | 0.79% | 0.82% | |||||||||||||
0.47% | 0.57% | 0.27% | 0.29% | |||||||||||||
15% | 38% | 54% | 43% | 5 | ||||||||||||
|
23
Table of Contents
Notes to financial statements | ||
Delaware Small Cap Core Fund | May 31, 2019 (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 Fund is anopen-end investment company. The Fund is considered diversified under the Investment Company Act of 1940, as amended, and offers Class A, Class C, Class R, Institutional Class, and Class R6 shares. Class A shares are sold with a maximumfront-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 afront-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/orsub-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 Fund follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services – Investment Companies. 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.Open-end investment companies are valued at their published net asset value (NAV). US government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. Investments in repurchase agreements are generally valued at par, which approximates fair value, each business day. 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
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the Fund’s tax positions taken or expected to be taken on the Fund’s federal income tax returns through the six months ended May 31, 2019 and for all open tax years (years ended Nov. 30,2016-Nov. 30, 2018), 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 penalties in other expenses on the “Statement of operations.” During the six months ended May 31, 2019, 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/orsub-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-partysub-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. At May 31, 2019, the Fund held no investments in repurchase agreements.
Use of Estimates— 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 theex-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 theex-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 theex-dividend date.
The Fund receives earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. The expenses paid under this arrangement are included on
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Notes to financial statements
Delaware Small Cap Core Fund
1. Significant Accounting Policies (continued)
the “Statement of operations” under “Custodian fees” with the corresponding expenses offset included under “Less expenses paid indirectly.” For the six months ended May 31, 2019, the Fund earned $10,148 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 expenses paid under this arrangement are included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses” with the corresponding expenses offset included under “Less expenses paid indirectly.” For the six months ended May 31, 2019, the Fund earned $1,777 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 rates 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 rates: 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. This amount is included on the “Statement of operations” under “Accounting and administration expenses.” For the six months ended May 31, 2019, the Fund was charged $84,131 for these services.
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 rates: 0.014% of the first $20 billion; 0.011% of the next $5 billion; 0.007% of the next $5 billion; 0.005% of the next $20 billion; and 0.0025% of average daily net assets in excess of $50 billion. The fees payable to DIFSC under the shareholder services 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, 2019, the Fund was charged $215,537 for these services. Pursuant to asub-transfer agency agreement between DIFSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certainsub-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.” The fees are calculated daily and paid as invoices are received on a monthly or quarterly basis.
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual12b-1 fee of 0.25% of the average daily net assets of the Class A shares,
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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 do not pay12b-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, 2019, the Fund was charged $63,425 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, 2019, DDLP earned $17,513 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2019, DDLP received gross CDSC commissions of $28,720 and $12,419, 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 investment companies (Underlying Funds) in which it invests. 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.
Cross trades for the six months ended May 31, 2019 were executed by the Fund pursuant to procedures adopted by the Board designed to ensure compliance with Rule17a-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, 2019, the Fund engaged in Rule17a-7 securities sales of $8,465,620, which did not result in a net realized gain or loss. The Fund did not engage in Rule17a-7 securities purchases for the six months ended May 31, 2019.
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Notes to financial statements
Delaware Small Cap Core Fund
3. Investments
For the six months ended May 31, 2019, the Fund made purchases and sales of investment securities other than short-term investments as follows:
Purchases | $ | 838,854,915 | ||
Sales | 623,516,220 |
At May 31, 2019, the cost and unrealized appreciation (depreciation) of investments for federal income tax purposes have been estimated since final tax characteristics cannot be determined until fiscal year end. At May 31, 2019, the cost and unrealized appreciation (depreciation) of investments for the Fund were as follows:
Cost of investments | $ | 4,642,434,415 | ||
|
| |||
Aggregate unrealized appreciation of investments | $ | 388,679,549 | ||
Aggregate unrealized depreciation of investments | (573,786,355 | ) | ||
|
| |||
Net unrealized depreciation of investments | $ | (185,106,806 | ) | |
|
|
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.
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) |
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Level 3 investments are valued using significant unobservable inputs. The Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity, and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of May 31, 2019:
Level 1 | ||||
Securities | ||||
Assets: | ||||
Common Stock | $ | 4,318,205,086 | ||
Short-Term Investments | 139,122,523 | |||
|
| |||
Total Value of Securities | $ | 4,457,327,609 | ||
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|
During the six months ended May 31, 2019, 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 the Fund’s net assets. During the six months ended May 31, 2019, there were no Level 3 investments.
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Notes to financial statements
Delaware Small Cap Core Fund
4. Capital Shares
Transactions in capital shares were as follows:
Six months ended | Year ended | |||||||
5/31/19 | 11/30/18 | |||||||
Shares sold: | ||||||||
Class A | 2,089,401 | 4,906,025 | ||||||
Class C | 500,888 | 2,466,280 | ||||||
Class R | 130,685 | 380,376 | ||||||
Institutional Class | 41,501,783 | 81,160,139 | ||||||
Class R6 | 10,531,217 | 19,845,721 | ||||||
Shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | 1,278,296 | 1,011,807 | ||||||
Class C | 945,352 | 592,386 | ||||||
Class R | 138,973 | 111,309 | ||||||
Institutional Class | 12,750,523 | 5,714,837 | ||||||
Class R6 | 1,809,532 | 163,636 | ||||||
|
|
|
| |||||
71,676,650 | 116,352,516 | |||||||
|
|
|
| |||||
Shares redeemed: | ||||||||
Class A | (2,942,922 | ) | (6,460,395 | ) | ||||
Class C | (1,632,541 | ) | (1,805,769 | ) | ||||
Class R | (176,462 | ) | (598,874 | ) | ||||
Institutional Class | (32,194,502 | ) | (32,589,388 | ) | ||||
Class R6 | (2,846,113 | ) | (5,048,255 | ) | ||||
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|
|
| |||||
(39,792,540 | ) | (46,502,681 | ) | |||||
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|
|
| |||||
Net increase | 31,884,110 | 69,849,835 | ||||||
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|
|
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, 2019 and the year ended Nov. 30, 2018, 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 5/31/19 | 10,690 | 3,027 | — | 1,154 | 11,919 | — | $ | 289,167 | ||||||||||||||||||||
Year ended 11/30/18 | 18,792 | 14,031 | 153,738 | 10,080 | 20,821 | 153,562 | 4,907,742 |
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5. Line of Credit
The Fund, along with certain other funds in the Delaware Funds (Participants), is a participant in a $220,000,000 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 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 ofone-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. 4, 2019.
The Fund had no amounts outstanding as of May 31, 2019, or at any time during the period then ended.
6. 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.
Cash collateral received by each fund of the Trust 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. The 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 Small Cap Core Fund
6. 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 bynon-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, 2019, the Fund had no securities out on loan.
7. Credit and Market Risk
The Fund invests a significant portion of its assets in small companies and may be subject to certain risks associated with ownership of securities of such companies. Investments in small sized companies may be more volatile than investments in larger companies for a number of reasons, which include limited financial resources or a dependence on narrow product lines.
The Fund invests in REITs and is subject to the risks associated with that industry. If the Fund holds real estate directly as a result of defaults or receives rental income directly from real estate holdings, its tax status as a regulated investment company may be jeopardized. There were no direct real estate holdings during the six months ended May 31, 2019. 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 Board has delegated to DMC theday-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, 2019, there were no Rule 144A securities held by the Fund. Restricted securities are valued pursuant to the security valuation procedures described in Note 1.
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8. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
9. Recent Accounting Pronouncements
In August 2018, the FASB issued an ASU2018-13, which changes certain fair value measurement disclosure requirements. The ASU2018-13, in addition to other modifications and additions, removes the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2019. At this time, management is evaluating the implications of these changes on the financial statements.
10. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to May 31, 2019, that would require recognition or disclosure in the Fund’s financial statements.
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Board of trustees | ||||||
Shawn K. Lytle | Ann D. Borowiec | Lucinda S. Landreth | Thomas K. Whitford | |||
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
Jerome D. Abernathy Managing Member | 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
John A. Fry President Drexel University | Former Chief Investment Officer Assurant, Inc. New York, NY
Frances A. Sevilla-Sacasa Former Chief Executive Officer Banco Itaú International Miami, FL | Former Vice Chairman PNC Financial Services Group Pittsburgh, PA
Christianna Wood Chief Executive Officer and President Gore Creek Capital, Ltd. Golden, CO
Janet L. Yeomans Former Vice President and Treasurer 3M Company St. Paul, MN | |||
Stonebrook Capital | Philadelphia, PA | |||||
Management, LLC | ||||||
Jersey City, NJ | ||||||
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 FormN-Q or FormN-PORT (available for filings after March 31, 2019). The Fund’s FormsN-Q or FormsN-PORT, 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 800523-1918; 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 FormN-Q or FormN-PORT are available without charge on the Fund’s website at delawarefunds.com/literature. The Fund’s FormsN-Q and FormsN-PORT 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 800SEC-0330.
Information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recently disclosed12-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.
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Semiannual report
US equity mutual fund
Delaware Small Cap Value Fund
May 31, 2019
Beginning on or about June 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of your Fund’s shareholder reports will no longer be sent to you by mail, unless you specifically request them from the Fund or from your financial intermediary, such as a broker/dealer, bank, or insurance company. Instead, you will be notified by mail each time a report is posted on the website and provided with a link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you do not need to take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by signing up at delawarefunds.com/edelivery. If you own these shares through a financial intermediary, you may contact your financial intermediary.
You may elect to receive paper copies of all future shareholder reports free of charge. You can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by contacting us at 800523-1918. If you own these shares through a financial intermediary, you may contact your financial intermediary to elect to continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with the Delaware Funds® by Macquarie or your financial intermediary.
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 800523-1918. 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.
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Experience Delaware Funds®by Macquarie
Macquarie Investment Management (MIM) is a global asset manager with offices throughout the United States, Europe, Asia, and Australia. As active managers, we prioritize autonomy and accountability at the investment team level in pursuit of opportunities that matter for clients. Delaware Funds is one of the longest-standing mutual fund families, with more than 80 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. MIM is the marketing name for certain companies comprising the asset management division of Macquarie Group. This includes the following 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 Europe Limited, Macquarie Capital Investment Management LLC, and Macquarie Investment Management Europe S.A.
The Fund is distributed byDelaware 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 |
Unless otherwise noted, views expressed herein are current as of May 31, 2019, 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.
© 2019 Macquarie Management Holdings, Inc.
Table of Contents
For thesix-month period from December 1, 2018 to May 31, 2019 (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 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 entiresix-month period from Dec. 1, 2018 to May 31, 2019.
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 and assume reinvestment of all dividends and distributions.
1
Table of Contents
Disclosure of Fund expenses
For thesix-month period from December 1, 2018 to May 31, 2019 (Unaudited)
Delaware Small Cap Value Fund
Expense analysis of an investment of $1,000
Beginning Account Value 12/1/18 | Ending Account Value 5/31/19 | Annualized Expense Ratio | Expenses Paid During Period 12/1/18 to 5/31/19* | |||||||||||||
Actual Fund return† | ||||||||||||||||
Class A | $1,000.00 | $956.40 | 1.16 | % | $5.66 | |||||||||||
Class C | 1,000.00 | 952.90 | 1.91 | % | 9.30 | |||||||||||
Class R | 1,000.00 | 955.20 | 1.41 | % | 6.87 | |||||||||||
Institutional Class | 1,000.00 | 957.60 | 0.91 | % | 4.44 | |||||||||||
Class R6 | 1,000.00 | 958.40 | 0.72 | % | 3.52 | |||||||||||
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 | 1,021.34 | 0.72 | % | 3.63 | |||||||||||
*“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 theone-half year period).
†Because actual returns reflect only the most recentsix-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 Fund.
2
Table of Contents
Security type / sector allocation and top 10 equity holdings
Delaware Small Cap Value Fund | As of May 31, 2019 (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 | 96.77% | |
Basic Industry | 5.67% | |
Business Services | 0.82% | |
Capital Spending | 8.38% | |
Consumer Cyclical | 3.56% | |
Consumer Services | 9.67% | |
Consumer Staples | 3.40% | |
Energy | 4.86% | |
Financial Services | 29.01% | |
Healthcare | 3.59% | |
Real Estate Investment Trusts | 9.09% | |
Technology | 12.00% | |
Transportation | 1.88% | |
Utilities | 4.84% | |
Short-Term Investments | 2.97% | |
Total Value of Securities | 99.74% | |
Receivables and Other Assets Net of Liabilities | 0.26% | |
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, and investment companies. As of May 31, 2019, such amounts, as a percentage of total net assets were 21.15%, 2.53%, 4.65%, and 0.68%, 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%.
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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 | 2.48% | |
MasTec | 2.46% | |
ITT | 1.98% | |
Hancock Whitney | 1.89% | |
Selective Insurance Group | 1.88% | |
Synopsys | 1.72% | |
Stifel Financial | 1.69% | |
Meritage Homes | 1.66% | |
Webster Financial | 1.63% | |
Outfront Media | 1.56% | |
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Table of Contents
Delaware Small Cap Value Fund | May 31, 2019 (Unaudited) |
Number of shares | Value (US $) | |||||||
Common Stock – 96.77%² | ||||||||
Basic Industry – 5.67% | ||||||||
Berry Global Group † | 1,237,410 | $ | 58,183,018 | |||||
Ferro Corp † | 1,335,716 | 18,085,595 | ||||||
HB Fuller | 905,100 | 35,688,093 | ||||||
Louisiana-Pacific | 1,418,200 | 32,363,324 | ||||||
Olin | 2,793,400 | 54,778,574 | ||||||
Trinseo | 465,900 | 17,163,756 | ||||||
|
| |||||||
216,262,360 | ||||||||
|
| |||||||
Business Services – 0.82% | ||||||||
Deluxe | 409,800 | 15,244,560 | ||||||
WESCO International † | 343,300 | 16,076,739 | ||||||
|
| |||||||
31,321,299 | ||||||||
|
| |||||||
Capital Spending – 8.38% | ||||||||
Altra Industrial Motion | 1,351,843 | 42,407,315 | ||||||
Atkore International Group † | 1,415,700 | 33,113,223 | ||||||
H&E Equipment Services | 1,053,800 | 25,617,878 | ||||||
ITT | 1,309,200 | 75,436,104 | ||||||
MasTec † | 2,015,559 | 93,703,338 | ||||||
Primoris Services | 1,282,400 | 23,390,976 | ||||||
Rexnord † | 976,400 | 25,689,084 | ||||||
|
| |||||||
319,357,918 | ||||||||
|
| |||||||
Consumer Cyclical – 3.56% | ||||||||
Barnes Group | 689,000 | 35,635,080 | ||||||
Knoll | 1,304,969 | 25,629,591 | ||||||
Meritage Homes † | 1,260,100 | 63,131,010 | ||||||
Standard Motor Products | 270,240 | 11,452,771 | ||||||
|
| |||||||
135,848,452 | ||||||||
|
| |||||||
Consumer Services – 9.67% | ||||||||
Asbury Automotive Group † | 287,300 | 21,314,787 | ||||||
Cable One | 34,300 | 38,314,815 | ||||||
Caleres | 944,800 | 17,818,928 | ||||||
Cheesecake Factory | 599,600 | 25,932,700 | ||||||
Choice Hotels International | 606,400 | 49,900,656 | ||||||
Cinemark Holdings | 982,431 | 37,322,554 | ||||||
Cracker Barrel Old Country Store | 183,200 | 28,778,888 | ||||||
International Speedway Class A | 363,900 | 16,288,164 | ||||||
Meredith | 447,218 | 23,152,476 | ||||||
Steven Madden | 873,725 | 26,438,919 | ||||||
Texas Roadhouse | 424,900 | 21,780,374 | ||||||
UniFirst | 258,200 | 40,996,996 | ||||||
Wolverine World Wide | 729,600 | 20,385,024 | ||||||
|
| |||||||
368,425,281 | ||||||||
|
|
5
Table of Contents
Schedule of investments
Delaware Small Cap Value Fund
Number of shares | Value (US $) | |||||||
Common Stock² (continued) | ||||||||
Consumer Staples – 3.40% | ||||||||
Core-Mark Holding | 625,500 | $ | 23,068,440 | |||||
J&J Snack Foods | 228,600 | 36,770,310 | ||||||
Performance Food Group † | 644,754 | 25,371,070 | ||||||
Scotts Miracle-Gro | 335,000 | 29,992,550 | ||||||
Spectrum Brands Holdings | 274,600 | 14,463,182 | ||||||
|
| |||||||
129,665,552 | ||||||||
|
| |||||||
Energy – 4.86% | ||||||||
Delek US Holdings | 1,070,800 | 32,777,188 | ||||||
Dril-Quip † | 467,400 | 19,280,250 | ||||||
Ensco Rowan Class A | 1,589,937 | 13,307,773 | ||||||
Helix Energy Solutions Group † | 2,984,900 | 20,177,924 | ||||||
KLX Energy Services Holdings † | 190,360 | 3,750,092 | ||||||
Oasis Petroleum † | 3,694,800 | 19,212,960 | ||||||
Patterson-UTI Energy | 2,958,100 | 31,444,603 | ||||||
SM Energy | 2,274,100 | 26,447,783 | ||||||
Whiting Petroleum † | 1,018,575 | 18,721,409 | ||||||
|
| |||||||
185,119,982 | ||||||||
|
| |||||||
Financial Services – 29.01% | ||||||||
American Equity Investment Life Holding | 1,655,700 | 46,872,867 | ||||||
Bank of NT Butterfield & Son | 567,700 | 18,745,454 | ||||||
Boston Private Financial Holdings | 151,436 | 1,552,219 | ||||||
Community Bank System | 582,700 | 36,016,687 | ||||||
East West Bancorp | 2,212,823 | 94,531,798 | ||||||
First Financial Bancorp | 1,851,700 | 41,329,944 | ||||||
First Hawaiian | 1,754,800 | 43,676,972 | ||||||
First Interstate BancSystem Class A | 942,500 | 34,787,675 | ||||||
First Midwest Bancorp | 1,940,600 | 37,822,294 | ||||||
FNB | 4,845,700 | 53,302,700 | ||||||
Great Western Bancorp | 1,554,950 | 48,312,297 | ||||||
Hancock Whitney | 1,893,100 | 71,899,938 | ||||||
Hanover Insurance Group | 481,500 | 58,820,040 | ||||||
Legg Mason | 847,300 | 30,180,826 | ||||||
Main Street Capital (BDC) | 656,100 | 26,007,804 | ||||||
NBT Bancorp | 939,000 | 33,757,050 | ||||||
Prosperity Bancshares | 569,500 | 36,909,295 | ||||||
S&T Bancorp | 673,456 | 25,389,291 | ||||||
Selective Insurance Group | 1,000,332 | 71,673,788 | ||||||
Stifel Financial | 1,203,500 | 64,543,705 | ||||||
Umpqua Holdings | 3,012,800 | 48,114,416 | ||||||
Valley National Bancorp | 4,657,000 | 45,731,740 | ||||||
Webster Financial | 1,400,400 | 62,009,712 |
6
Table of Contents
Number of shares | Value (US $) | |||||||
Common Stock² (continued) | ||||||||
Financial Services (continued) | ||||||||
WesBanco | 910,000 | $ | 32,332,300 | |||||
Western Alliance Bancorp † | 1,006,700 | 41,425,705 | ||||||
|
| |||||||
1,105,746,517 | ||||||||
|
| |||||||
Healthcare – 3.59% | ||||||||
Avanos Medical † | 814,800 | 30,701,664 | ||||||
Catalent † | 712,800 | 32,432,400 | ||||||
Service Corp. International | 676,900 | 29,695,603 | ||||||
STERIS | 329,480 | 44,044,886 | ||||||
|
| |||||||
136,874,553 | ||||||||
|
| |||||||
Real Estate Investment Trusts – 9.09% | ||||||||
Brandywine Realty Trust | 3,159,037 | 47,733,049 | ||||||
Healthcare Realty Trust | 109,200 | 3,520,608 | ||||||
Highwoods Properties | 964,900 | 42,320,514 | ||||||
Lexington Realty Trust | 3,547,100 | 32,526,907 | ||||||
Life Storage | 373,900 | 35,999,092 | ||||||
Outfront Media | 2,412,900 | 59,477,985 | ||||||
RPT Realty | 2,096,702 | 25,516,863 | ||||||
Spirit Realty Capital | 866,200 | 36,952,092 | ||||||
Summit Hotel Properties | 2,433,000 | 27,809,190 | ||||||
Washington Real Estate Investment Trust | 1,308,900 | 34,829,829 | ||||||
|
| |||||||
346,686,129 | ||||||||
|
| |||||||
Technology – 12.00% | ||||||||
Cirrus Logic † | 515,100 | 19,249,287 | ||||||
Coherent † | 147,400 | 16,218,422 | ||||||
CommScope Holding † | 1,119,648 | 18,082,315 | ||||||
Flex † | 2,764,600 | 24,715,524 | ||||||
MaxLinear † | 867,600 | 18,367,092 | ||||||
NCR † | 1,113,759 | 34,081,025 | ||||||
NetScout Systems † | 867,806 | 21,269,925 | ||||||
ON Semiconductor † | 2,179,300 | 38,704,368 | ||||||
Synopsys † | 563,200 | 65,579,008 | ||||||
Tech Data † | 488,919 | 44,320,507 | ||||||
Teradyne | 1,344,900 | 56,674,086 | ||||||
Tower Semiconductor † | 1,546,800 | 23,047,320 | ||||||
TTM Technologies † | 2,147,702 | 18,319,898 | ||||||
Viavi Solutions † | 1,914,800 | 23,073,340 | ||||||
Vishay Intertechnology | 2,344,400 | 35,728,656 | ||||||
|
| |||||||
457,430,773 | ||||||||
|
| |||||||
Transportation – 1.88% | ||||||||
Kirby † | 258,400 | 19,994,992 |
7
Table of Contents
Schedule of investments
Delaware Small Cap Value Fund
Number of shares | Value (US $) | |||||||
Common Stock² (continued) | ||||||||
Transportation (continued) | ||||||||
Saia † | 333,750 | $ | 19,691,250 | |||||
Werner Enterprises | 1,150,700 | 32,081,516 | ||||||
|
| |||||||
71,767,758 | ||||||||
|
| |||||||
Utilities – 4.84% | ||||||||
ALLETE | 440,200 | 36,047,978 | ||||||
Black Hills | 723,900 | 55,161,180 | ||||||
El Paso Electric | 668,900 | 38,929,980 | ||||||
Southwest Gas Holdings | 636,800 | 54,217,152 | ||||||
|
| |||||||
184,356,290 | ||||||||
|
| |||||||
Total Common Stock(cost $3,092,312,346) | 3,688,862,864 | |||||||
|
| |||||||
| ||||||||
Short-Term Investments – 2.97% | ||||||||
Money Market Mutual Funds – 2.97% | ||||||||
BlackRock FedFund - Institutional Shares(seven-day effective yield 2.30%) | 22,657,517 | 22,648,332 | ||||||
Fidelity Investments Money Market Government Portfolio - Class I(seven-day effective yield 2.27%) | 22,657,516 | 22,648,284 | ||||||
GS Financial Square Government Fund - Institutional Shares(seven-day effective yield 2.30%) | 22,657,516 | 22,648,304 | ||||||
Morgan Stanley Government Portfolio - Institutional Share Class(seven-day effective yield 2.29%) | 22,657,516 | 22,648,362 | ||||||
State Street Institutional US Government Money Market Fund - Investor Class(seven-day effective yield 2.24%) | 22,657,516 | 22,648,082 | ||||||
|
| |||||||
Total Short-Term Investments(cost $113,241,364) | 113,241,364 | |||||||
|
| |||||||
Total Value of Securities – 99.74% | 3,802,104,228 | |||||||
|
|
² | Narrow industries are utilized for compliance purposes for diversification whereas broad sectors are used for financial reporting. |
† | Non-income producing security. |
Summary of abbreviations:
BDC – Business Development Corporation
GS – Goldman Sachs
See accompanying notes, which are an integral part of the financial statements.
8
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Table of Contents
Statement of assets and liabilities
Delaware Small Cap Value Fund | May 31, 2019 (Unaudited) |
Assets: | ||||
Investments, at value1 | $ | 3,802,104,228 | ||
Cash | 219,243 | |||
Receivable for fund shares sold | 16,812,823 | |||
Dividends and interest receivable | 10,805,774 | |||
Receivable for securities sold | 4,939,646 | |||
|
| |||
Total assets | 3,834,881,714 | |||
|
| |||
Liabilities: | ||||
Payable for fund shares redeemed | 13,217,117 | |||
Payable for securities purchased | 5,732,567 | |||
Investment management fees payable to affiliates | 2,227,514 | |||
Dividend disbursing and transfer agent fees and expenses payable | 1,261,889 | |||
Other accrued expenses | 225,896 | |||
Distribution fees payable to affiliates | 224,242 | |||
Dividend disbursing and transfer agent fees and expenses payable to affiliates | 33,830 | |||
Trustees’ fees and expenses payable to affiliates | 32,922 | |||
Accounting and administration expenses payable to affiliates | 13,290 | |||
Legal fees payable to affiliates | 5,884 | |||
Reports and statements to shareholders expenses payable to affiliates | 3,781 | |||
|
| |||
Total liabilities | 22,978,932 | |||
|
| |||
Total Net Assets | $ | 3,811,902,782 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 3,140,319,391 | ||
Total distributable earnings (loss) | 671,583,391 | |||
|
| |||
Total Net Assets | $ | 3,811,902,782 | ||
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|
10
Table of Contents
Net Asset Value | ||||
Class A: | ||||
Net assets | $ | 608,757,267 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 11,233,483 | |||
Net asset value per share | $ | 54.19 | ||
Sales charge | 5.75 | % | ||
Offering price per share, equal to net asset value per share / (1 – sales charge) | $ | 57.50 | ||
Class C: | ||||
Net assets | $ | 68,032,733 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 1,541,892 | |||
Net asset value per share | $ | 44.12 | ||
Class R: | ||||
Net assets | $ | 52,147,069 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 994,323 | |||
Net asset value per share | $ | 52.44 | ||
Institutional Class: | ||||
Net assets | $ | 2,644,945,325 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 46,093,372 | |||
Net asset value per share | $ | 57.38 | ||
Class R6: | ||||
Net assets | $ | 438,020,388 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 7,625,445 | |||
Net asset value per share | $ | 57.44 | ||
1Investments, at cost | $ | 3,205,553,710 |
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, 2019 (Unaudited) |
Investment Income: | ||||
Dividends | $ | 41,777,616 | ||
Interest | 415,646 | |||
|
| |||
42,193,262 | ||||
|
| |||
Expenses: | ||||
Management fees | 12,711,323 | |||
Dividend disbursing and transfer agent fees and expenses | 3,563,151 | |||
Distribution expenses – Class A | 813,511 | |||
Distribution expenses – Class C | 363,366 | |||
Distribution expenses – Class R | 145,281 | |||
Accounting and administration expenses | 371,568 | |||
Reports and statements to shareholders expenses | 197,920 | |||
Trustees’ fees and expenses | 118,459 | |||
Legal fees | 104,028 | |||
Registration fees | 83,076 | |||
Custodian fees | 54,050 | |||
Audit and tax fees | 17,986 | |||
Other | 69,467 | |||
|
| |||
18,613,186 | ||||
Less expenses paid indirectly | (6,921 | ) | ||
|
| |||
Total operating expenses | 18,606,265 | |||
|
| |||
Net Investment Income | 23,586,997 | |||
|
| |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain on investments | 78,536,770 | |||
Net change in unrealized appreciation (depreciation) of investments | (276,778,522 | ) | ||
|
| |||
Net Realized and Unrealized Loss | (198,241,752 | ) | ||
|
| |||
Net Decrease in Net Assets Resulting from Operations | $ | (174,654,755 | ) | |
|
|
See accompanying notes, which are an integral part of the financial statements.
12
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Statements of changes in net assets
Delaware Small Cap Value Fund
Six months ended 5/31/19 (Unaudited) | Year ended 11/30/18 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 23,586,997 | $ | 33,357,980 | ||||
Net realized gain | 78,536,770 | 244,545,395 | ||||||
Net change in unrealized appreciation (depreciation) | (276,778,522 | ) | (552,002,875 | ) | ||||
|
|
|
| |||||
Net decrease in net assets resulting from operations | (174,654,755 | ) | (274,099,500 | ) | ||||
|
|
|
| |||||
Dividends and Distributions to Shareholders from: | ||||||||
Distributable earnings: | ||||||||
Class A | (48,159,678 | ) | (11,503,582 | ) | ||||
Class C | (5,793,001 | ) | (1,165,335 | ) | ||||
Class R | (4,426,662 | ) | (951,441 | ) | ||||
Institutional Class | (192,050,571 | ) | (47,820,037 | ) | ||||
Class R6 | (29,190,659 | ) | (3,498,224 | ) | ||||
|
|
|
| |||||
(279,620,571 | ) | (64,938,619 | ) | |||||
|
|
|
| |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 65,679,479 | 164,517,883 | ||||||
Class C | 8,251,010 | 14,056,663 | ||||||
Class R | 5,675,847 | 16,145,594 | ||||||
Institutional Class | 453,468,042 | 735,000,602 | ||||||
Class R6 | 112,077,150 | 285,889,067 | ||||||
Net asset value of shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | 47,116,404 | 11,370,015 | ||||||
Class C | 5,707,402 | 1,146,823 | ||||||
Class R | 4,426,273 | 951,281 | ||||||
Institutional Class | 186,340,898 | 47,031,805 | ||||||
Class R6 | 28,524,928 | 3,491,535 | ||||||
|
|
|
| |||||
917,267,433 | 1,279,601,268 | |||||||
|
|
|
|
14
Table of Contents
Six months ended 5/31/19 (Unaudited) | Year ended 11/30/18 | |||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares redeemed: | ||||||||
Class A | $ | (161,577,644 | ) | $ | (257,975,480 | ) | ||
Class C | (11,689,148 | ) | (39,418,359 | ) | ||||
Class R | (13,734,257 | ) | (32,694,944 | ) | ||||
Institutional Class | (409,819,751 | ) | (1,092,309,296 | ) | ||||
Class R6 | (51,159,318 | ) | (71,544,371 | ) | ||||
|
|
|
| |||||
(647,980,118 | ) | (1,493,942,450 | ) | |||||
|
|
|
| |||||
Increase (Decrease) in net assets derived from capital share transactions | 269,287,315 | (214,341,182 | ) | |||||
|
|
|
| |||||
Net Decrease in Net Assets | (184,988,011 | ) | (553,379,301 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 3,996,890,793 | 4,550,270,094 | ||||||
|
|
|
| |||||
End of period | $ | 3,811,902,782 | $ | 3,996,890,793 | ||||
|
|
|
|
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 (loss) from investment operations: | ||
Net investment income2 | ||
Net realized and unrealized gain (loss) | ||
Total from investment operations | ||
Less dividends and distributions from: | ||
Net investment income | ||
Net realized gain | ||
Total dividends and distributions | ||
Net asset value, end of period | ||
Total return3 | ||
Ratios and supplemental data: | ||
Net assets, end of period (000 omitted) | ||
Ratio of expenses to average net assets | ||
Ratio of net investment income to average net assets | ||
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 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. |
See accompanying notes, which are an integral part of the financial statements.
16
Table of Contents
Six months ended 5/31/191 | Year ended | |||||||||||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | |||||||||||||||||||||||||||||||||||||
$ | 61.81 | $ | 67.13 | $ | 58.16 | $ | 52.55 | $ | 54.87 | $ | 52.37 | |||||||||||||||||||||||||||||||
0.28 | 0.37 | 0.34 | 0.28 | 0.32 | 0.15 | |||||||||||||||||||||||||||||||||||||
(3.52 | ) | (4.81 | ) | 8.94 | 8.55 | 0.16 | 3.51 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
(3.24 | ) | (4.44 | ) | 9.28 | 8.83 | 0.48 | 3.66 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
(0.42 | ) | (0.27 | ) | (0.31 | ) | (0.32 | ) | (0.18 | ) | (0.06 | ) | |||||||||||||||||||||||||||||||
(3.96 | ) | (0.61 | ) | — | (2.90 | ) | (2.62 | ) | (1.10 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
(4.38 | ) | (0.88 | ) | (0.31 | ) | (3.22 | ) | (2.80 | ) | (1.16 | ) | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
$ | 54.19 | $ | 61.81 | $ | 67.13 | $ | 58.16 | $ | 52.55 | $ | 54.87 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
(4.36% | ) | (6.70% | ) | 16.01% | 18.47% | 0.90% | 7.12% | |||||||||||||||||||||||||||||||||||
$ | 608,757 | $ | 733,864 | $ | 881,709 | $ | 870,158 | $ | 794,664 | $ | 775,076 | |||||||||||||||||||||||||||||||
1.16% | 1.15% | 1.18% | 1.24% | 1.22% | 1.22% | |||||||||||||||||||||||||||||||||||||
1.00% | 0.56% | 0.55% | 0.57% | 0.62% | 0.27% | |||||||||||||||||||||||||||||||||||||
9% | 18% | 15% | 19% | 20% | 17% | |||||||||||||||||||||||||||||||||||||
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 income (loss)2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of net investment income (loss) to average net assets |
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 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. |
See accompanying notes, which are an integral part of the financial statements.
18
Table of Contents
Six months ended 5/31/191 | Year ended | ||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | ||||||||||||||||||||||||||||
$ | 50.96 | $ | 55.65 | $ | 48.34 | $ | 44.24 | $ | 46.79 | $ | 45.11 | ||||||||||||||||||||||
0.06 | (0.10 | ) | (0.10 | ) | (0.07 | ) | (0.06 | ) | (0.22 | ) | |||||||||||||||||||||||
(2.94 | ) | (3.98 | ) | 7.43 | 7.09 | 0.13 | 3.00 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
(2.88 | ) | (4.08 | ) | 7.33 | 7.02 | 0.07 | 2.78 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
— | — | (0.02 | ) | (0.02 | ) | — | — | ||||||||||||||||||||||||||
(3.96 | ) | (0.61 | ) | — | (2.90 | ) | (2.62 | ) | (1.10 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
(3.96 | ) | (0.61 | ) | (0.02 | ) | (2.92 | ) | (2.62 | ) | (1.10 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
| �� |
|
|
|
| ||||||||||||||||||||||
$ | 44.12 | $ | 50.96 | $ | 55.65 | $ | 48.34 | $ | 44.24 | $ | 46.79 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
(4.71% | ) | (7.41% | ) | 15.17% | 17.58% | 0.14% | 6.30% | ||||||||||||||||||||||||||
$ | 68,033 | $ | 74,828 | $ | 105,757 | $ | 107,104 | $ | 108,890 | $ | 109,368 | ||||||||||||||||||||||
1.91% | 1.90% | 1.93% | 1.99% | 1.97% | 1.97% | ||||||||||||||||||||||||||||
0.25% | (0.19% | ) | (0.20% | ) | (0.18% | ) | (0.13% | ) | (0.48% | ) | |||||||||||||||||||||||
9% | 18% | 15% | 19% | 20% | 17% |
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 (loss) from investment operations: | ||||||||||||||||||||
Net investment income2 | ||||||||||||||||||||
Net realized and unrealized gain (loss) | ||||||||||||||||||||
Total from investment operations | ||||||||||||||||||||
Less dividends and distributions from: | ||||||||||||||||||||
Net investment income | ||||||||||||||||||||
Net realized gain | ||||||||||||||||||||
Total dividends and distributions | ||||||||||||||||||||
Net asset value, end of period | ||||||||||||||||||||
Total return3 | ||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||
Net assets, end of period (000 omitted) | ||||||||||||||||||||
Ratio of expenses to average net assets | ||||||||||||||||||||
Ratio of net investment income to average net assets | ||||||||||||||||||||
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 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. |
See accompanying notes, which are an integral part of the financial statements.
20
Table of Contents
Six months ended 5/31/191 | Year ended | |||||||||||||||||||||||||||||
(Unaudited) | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | |||||||||||||||||||||||||
$ | 59.86 | $ | 65.05 | $ | 56.40 | $ | 51.05 | $ | 53.39 | $ | 51.06 | |||||||||||||||||||
0.21 | 0.20 | 0.18 | 0.15 | 0.19 | 0.01 | |||||||||||||||||||||||||
(3.41 | ) | (4.66 | ) | 8.66 | 8.30 | 0.14 | 3.42 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(3.20 | ) | (4.46 | ) | 8.84 | 8.45 | 0.33 | 3.43 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(0.26 | ) | (0.12 | ) | (0.19 | ) | (0.20 | ) | (0.05 | ) | — | ||||||||||||||||||||
(3.96 | ) | (0.61 | ) | — | (2.90 | ) | (2.62 | ) | (1.10 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(4.22 | ) | (0.73 | ) | (0.19 | ) | (3.10 | ) | (2.67 | ) | (1.10 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
$ | 52.44 | $ | 59.86 | $ | 65.05 | $ | 56.40 | $ | 51.05 | $ | 53.39 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(4.48% | ) | (6.92% | ) | 15.71% | 18.19% | 0.63% | 6.85% | |||||||||||||||||||||||
$ | 52,147 | $ | 62,791 | $ | 84,131 | $ | 83,557 | $ | 81,187 | $ | 82,577 | |||||||||||||||||||
1.41% | 1.40% | 1.43% | 1.49% | 1.47% | 1.47% | |||||||||||||||||||||||||
0.75% | 0.31% | 0.30% | 0.32% | 0.37% | 0.02% | |||||||||||||||||||||||||
9% | 18% | 15% | 19% | 20% | 17% |
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 (loss) from investment operations: | ||||||||||||||||||||
Net investment income2 | ||||||||||||||||||||
Net realized and unrealized gain (loss) | ||||||||||||||||||||
Total from investment operations | ||||||||||||||||||||
Less dividends and distributions from: | ||||||||||||||||||||
Net investment income | ||||||||||||||||||||
Net realized gain | ||||||||||||||||||||
Total dividends and distributions | ||||||||||||||||||||
Net asset value, end of period | ||||||||||||||||||||
Total return3 | ||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||
Net assets, end of period (000 omitted) | ||||||||||||||||||||
Ratio of expenses to average net assets | ||||||||||||||||||||
Ratio of net investment income to average net assets | ||||||||||||||||||||
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 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. |
See accompanying notes, which are an integral part of the financial statements.
22
Table of Contents
Six months ended 5/31/191 | Year ended | |||||||||||||||||||||||||||||
(Unaudited) | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | 11/30/14 | |||||||||||||||||||||||||
$ | 65.29 | $ | 70.83 | $ | 61.32 | $ | 55.23 | $ | 57.52 | $ | 54.83 | |||||||||||||||||||
0.37 | 0.57 | 0.52 | 0.42 | 0.48 | 0.29 | |||||||||||||||||||||||||
(3.71 | ) | (5.08 | ) | 9.42 | 9.02 | 0.16 | 3.67 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(3.34 | ) | (4.51 | ) | 9.94 | 9.44 | 0.64 | 3.96 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(0.61 | ) | (0.42 | ) | (0.43 | ) | (0.45 | ) | (0.31 | ) | (0.17 | ) | |||||||||||||||||||
(3.96 | ) | (0.61 | ) | — | (2.90 | ) | (2.62 | ) | (1.10 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(4.57 | ) | (1.03 | ) | (0.43 | ) | (3.35 | ) | (2.93 | ) | (1.27 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
$ | 57.38 | $ | 65.29 | $ | 70.83 | $ | 61.32 | $ | 55.23 | $ | 57.52 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
(4.24% | ) | (6.46% | ) | 16.30% | 18.77% | 1.15% | 7.38% | |||||||||||||||||||||||
$ | 2,644,945 | $ | 2,731,344 | $ | 3,270,954 | $ | 2,166,172 | $ | 1,969,355 | $ | 1,768,420 | |||||||||||||||||||
0.91% | 0.90% | 0.93% | 0.99% | 0.97% | 0.97% | |||||||||||||||||||||||||
1.25% | 0.81% | 0.80% | 0.82% | 0.87% | 0.52% | |||||||||||||||||||||||||
| 9%
|
|
| 18%
|
|
| 15%
|
|
| 19%
|
|
| 20%
|
|
| 17%
|
|
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 (loss) from investment operations: |
Net investment income3 |
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 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 assets |
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 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 | 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.
24
Table of Contents
Six months ended 5/31/191 | Year ended | 5/2/162 to | |||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/18 | 11/30/17 | 11/30/16 | ||||||||||||||||||||||||||||||||
$ | 65.41 | $ 70.95 | $ 61.38 | $ | 51.46 | ||||||||||||||||||||||||||||||
0.43 | 0.69 | 0.65 | 0.32 | ||||||||||||||||||||||||||||||||
(3.74 | ) | (5.08 | ) | 9.43 | 9.60 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
(3.31 | ) | (4.39 | ) | 10.08 | 9.92 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
(0.70 | ) | (0.54 | ) | (0.51 | ) | — | |||||||||||||||||||||||||||||
(3.96 | ) | (0.61 | ) | — | — | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
(4.66 | ) | (1.15 | ) | (0.51 | ) | — | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
$ | 57.44 | $ 65.41 | $ 70.95 | $ | 61.38 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
(4.16% | ) | (6.29% | ) | 16.52% | 19.28% | ||||||||||||||||||||||||||||||
$ | 438,021 | $394,064 | $207,719 | $ 4,187 | |||||||||||||||||||||||||||||||
0.72% | 0.72% | 0.75% | 0.77% | ||||||||||||||||||||||||||||||||
1.44% | 0.99% | 0.98% | 0.96% | ||||||||||||||||||||||||||||||||
9% | 18% | 15% | 19% | 5 |
25
Table of Contents
Notes to financial statements | ||
Delaware Small Cap Value Fund | May 31, 2019 (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 Fund is anopen-end investment company. The Fund is considered diversified under the Investment Company Act of 1940, as amended, and offers Class A, Class C, Class R, Institutional Class, and Class R6 shares. Class A shares are sold with a maximumfront-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 afront-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/orsub-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 Fund follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services – Investment Companies. 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.Open-end investment companies are valued at their published net asset value (NAV). US government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. Investments in repurchase agreements are generally valued at par, which approximates fair value, each business day. 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
26
Table of Contents
current year. Management has analyzed the Fund’s tax positions taken or expected to be taken on the Fund’s federal income tax returns through the six months ended May 31, 2019 and for all open tax years (years ended Nov. 30, 2016–Nov. 30, 2018), 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 penalties in other expenses on the “Statement of operations.” During the six months ended May 31, 2019, 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/orsub-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-partysub-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. At May 31, 2019, the Fund held no investments in repurchase agreements.
Use of Estimates– 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 theex-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 theex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer. The Fund declares and
27
Table of Contents
Notes to financial statements
Delaware Small Cap Value Fund
1. Significant Accounting Policies (continued)
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 theex-dividend date.
The Fund receives earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. The expenses paid under this arrangement are included on the “Statement of operations” under “Custodian fees” with the corresponding expenses offset included under “Less expenses paid indirectly.” For the six months ended May 31, 2019, the Fund earned $6,006 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 expenses paid under this arrangement are included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses” with the corresponding expenses offset included under “Less expenses paid indirectly.” For the six months ended May 31, 2019, the Fund earned $915 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 rates 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 rates: 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. This amount is included on the “Statement of operations” under “Accounting and administration expenses.” For the six months ended May 31, 2019, the Fund was charged $76,230 for these services.
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 rates: 0.014% of the first $20 billion; 0.011% of the next $5 billion; 0.007% of the next $5 billion; 0.005% of the next $20 billion; and 0.0025% of average daily net assets in excess of $50 billion. The fees payable to DIFSC under the shareholder services 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, 2019, the Fund was charged $194,838 for these services.
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Pursuant to asub-transfer agency agreement between DIFSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certainsub-transfer agency services to the Fund. Subtransfer 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.” The fees are calculated daily and paid as invoices are received on a monthly or quarterly basis.
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual12b-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 do not pay12b-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, 2019, the Fund was charged $57,186 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, 2019, DDLP earned $16,920 for commissions on sales of the Fund’s Class A shares. For the six months ended May 31, 2019, DDLP received gross CDSC commissions of $9,258 and $2,287 on redemption of the Fund’s Class A and Class C shares, respectively, and these commissions were entirely used to offset upfront commissions previously paid by DDLP to broker/dealers on sales of those shares.
Trustees’ fees include expenses accrued by the Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, 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 Fund. The amount of these fees and expenses incurred indirectly by the Fund will vary based upon the expense and fee levels of the Underlying Fund and the amount of shares that are owned of the Underlying Fund at different times.
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Notes to financial statements
Delaware Small Cap Value Fund
3. Investments
For the six months ended May 31, 2019, the Fund made purchases and sales of investment securities other than short-term investments as follows:
Purchases | $ | 337,049,152 | ||
Sales | 406,660,201 |
At May 31, 2019, the cost and unrealized appreciation (depreciation) of investments for federal income tax purposes have been estimated since final tax characteristics cannot be determined until fiscal year end. At May 31, 2019, the cost and unrealized appreciation (depreciation) of investments for the Fund were as follows:
Cost of investments | $ | 3,205,553,710 | ||
|
| |||
Aggregate unrealized appreciation of investments | $ | 859,487,187 | ||
Aggregate unrealized depreciation of investments | (262,936,669 | ) | ||
|
| |||
Net unrealized appreciation of investments | $ | 596,550,518 | ||
|
|
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.
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
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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, 2019:
Level 1 | ||||
Securities | ||||
Assets: | ||||
Common Stock | $ | 3,688,862,864 | ||
Short-Term Investments | 113,241,364 | |||
|
| |||
Total Value of Securities | $ | 3,802,104,228 | ||
|
|
During the six months ended May 31, 2019, 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, 2019, there were no Level 3 investments.
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Notes to financial statements
Delaware Small Cap Value Fund
4. Capital Shares
Transactions in capital shares were as follows:
Six months 5/31/19 | Year ended 11/30/18 | |||||||
Shares sold: | ||||||||
Class A | 1,186,495 | 2,478,313 | ||||||
Class C | 186,031 | 256,541 | ||||||
Class R | 104,404 | 251,704 | ||||||
Institutional Class | 7,602,869 | 10,515,739 | ||||||
Class R6 | 1,897,932 | 4,075,356 | ||||||
Shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | 977,925 | 171,779 | ||||||
Class C | 145,005 | 20,871 | ||||||
Class R | 94,821 | 14,806 | ||||||
Institutional Class | 3,655,893 | 674,291 | ||||||
Class R6 | 559,532 | 50,051 | ||||||
|
|
|
| |||||
16,410,907 | 18,509,451 | |||||||
|
|
|
| |||||
Shares redeemed: | ||||||||
Class A | (2,803,635 | ) | (3,912,064 | ) | ||||
Class C | (257,422 | ) | (709,620 | ) | ||||
Class R | (253,841 | ) | (510,815 | ) | ||||
Institutional Class | (7,000,917 | ) | (15,532,652 | ) | ||||
Class R6 | (856,721 | ) | (1,028,271 | ) | ||||
|
|
|
| |||||
(11,172,536 | ) | (21,693,422 | ) | |||||
|
|
|
| |||||
Net increase (decrease) | 5,238,371 | (3,183,971 | ) | |||||
|
|
|
|
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 on the “Statements of changes in net assets.” For the six months ended May 31, 2019, and the year ended Nov. 30, 2018, the Fund had the following exchange transactions:
Exchange Redemptions | Exchange Subscriptions | |||||||||||||||||||||||||||||||
Institutional | Institutional | |||||||||||||||||||||||||||||||
Class A | Class C | Class | Class R6 | Class A | Class | Class R6 | ||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | Shares | Shares | Shares | Value | |||||||||||||||||||||||||
Six months ended 05/31/19 | 1,329 | 1,106 | 61 | 5,490 | 879 | 6,774 | 61 | $ | 464,918 | |||||||||||||||||||||||
Year ended 11/30/18 | 41,984 | 70,004 | 574,181 | 6,184 | 52,297 | 51,349 | 573,522 | 48,981,556 |
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5. Line of Credit
The Fund, along with certain other funds in the Delaware Funds (Participants), is a participant in a $220,000,000 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 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 ofone-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. 4, 2019.
The Fund had no amounts outstanding as of May 31, 2019, or at any time during the period then ended.
6. 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 of the Trust 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. The Fund can also accept US government securities and letters of credit(non-cash collateral) in connection with securities loans.
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Notes to financial statements
Delaware Small Cap Value Fund
6. Securities Lending (continued)
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 bynon-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, 2019, the Fund had no securities out on loan.
7. 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, 2019. 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 Board has delegated to DMC, theday-to-day functions of determining whether individual securities are liquid for
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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, 2019, there were no Rule 144A securities held by the Fund. Restricted securities are valued pursuant to the security valuation procedures described in Note 1.
8. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
9. Recent Accounting Pronouncements
In August 2018, the FASB issued an Accounting Standards Update2018-13, which changes certain fair value measurement disclosure requirements. The ASU2018-13, in addition to other modifications and additions, removes the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2019. At this time, management is evaluating the implications of these changes on the financial statements.
10. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to May 31, 2019, that would require recognition or disclosure in the Fund’s financial statements.
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Board of trustees
| ||||||
Shawn K. Lytle 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
Jerome D. Abernathy Managing Member Stonebrook Capital Management, LLC Jersey City, NJ | Ann D. Borowiec 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
John A. Fry President Drexel University Philadelphia, PA | Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. New York, NY
Frances A. Sevilla-Sacasa Former Chief Executive Officer Banco Itaú International Miami, FL | Thomas K. Whitford Former Vice Chairman PNC Financial Services Group Pittsburgh, PA
Christianna Wood Chief Executive Officer and President Gore Creek Capital, Ltd. Golden, CO
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 FormN-Q or FormN-PORT (available for filings after March 31, 2019). The Fund’s FormsN-Q or FormsN-PORT, 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 800523-1918; 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 FormN-Q or FormN-PORT are available without charge on the Fund’s website at delawarefunds.com/literature. The Fund’s FormsN-Q and FormsN-PORT 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 800SEC-0330.
Information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recently disclosed12-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.
36
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Included as part of report to shareholders filed under Item 1 of this Form N-CSR.
(b) Divestment of securities in accordance with Section 13(c) of the Investment Company Act of 1940.
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures
The registrant’s principal executive officer and principal financial officer have evaluated the registrant’s disclosure controls and procedures within 180 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 semiannual period covered by the report to stockholders included herein 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 5, 2019 |
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 5, 2019 |
RICHARD SALUS | |
By: | Richard Salus |
Title: | Chief Financial Officer |
Date: | August 5, 2019 |